482 P.3d 237
Utah Ct. App.2021Background:
- In April 2010 Phillips borrowed $140,000 from his attorney Gregory Skabelund, secured by a trust deed; Skabelund prepared the documents and later formed Pdnulebaks LLC to hold the Property.
- Phillips defaulted in October 2010; non-judicial foreclosure was initiated and the trustee postponed the trustee’s sale orally multiple times (12 postponements over 276 days); parties entered a Settlement Agreement during the postponements.
- On December 21, 2012 S&S (an entity controlled by Skabelund) credit-bid and purchased the Property for $270,823.29; Phillips later recorded membership in Pdnulebaks and disputed the foreclosure.
- Appellants filed suit in December 2015 asserting multiple claims (malpractice, fraud, breach of fiduciary duty, breach of settlement agreement, and a request to set aside the trustee’s sale), and proffered a valuation expert.
- The district court dismissed or granted summary judgment on many claims, excluded Appellants’ valuation expert (because of fundamental zoning errors and untimely supplementation), and entered final judgment for defendants; Appellants appealed and defendants cross-appealed.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) Dismissal under Utah Code §57-1-27(2) (notice-of-postponement) | Notice defects (oral postponements) violated statute and sale should be set aside or deed void ab initio | District court also dismissed for pleading insufficiency; alternative grounds support dismissal | Affirmed — Appellants failed to challenge independent pleading-based ground; alternative void-ab-initio argument unpreserved |
| 2) Whether prejudice must be shown to set aside trustee’s sale; and whether prejudice should be presumed | Prejudice should be presumed from notice failure; or Adamson supports broader prejudice inquiry | Prejudice must be proved by showing chilled bidding and inadequate price per Concepts and its progeny | Affirmed — prejudice cannot be presumed; claimant must show chilled bidding/inadequate price; Concepts remains controlling |
| 3) Exclusion of Appellants’ valuation expert and denial to supplement report | Error was harmless or the corrections were minor; expert still admissible | Expert used wrong zoning, produced unreliable valuation, and supplementation was untimely and effectively a new report | Affirmed — exclusion and denial of supplementation were within the court’s discretion due to unreliable foundation and untimeliness |
| 4) Granting summary judgment sua sponte under Utah R. Civ. P. 56(f) (Seventh Order) | Court erred to grant judgment independently because expert exclusion did not defeat all claims | Court gave notice and time to respond; many claims’ damages depended on the excluded valuation | Affirmed in part — judgment proper as to claims 2–7 (damages theory depended on valuation); claim 1 was not foreclosed by expert exclusion |
| 5) Statute of limitations for malpractice claim (claim 1) | Malpractice damages did not accrue until foreclosure sale or until litigation resolved | Malpractice accrued when enforcement/default occurred (May 24, 2011); four‑year limitations applies | Held for defendants — malpractice claim accrued by May 24, 2011; action filed Dec 20, 2015 was time‑barred, so dismissal of claim 1 is affirmed on that ground |
| 6) Attorney fees on appeal | Appellants sought fees | Cross-appellants sought fees as prevailing parties | Cross-appellants entitled to reasonable appellate fees; appellants denied fees |
Key Cases Cited
- Bank of America v. Adamson, 391 P.3d 196 (Utah 2017) (explains void/voidable deed analysis and requires prejudice or fraud/unfair dealing to set aside a completed trustee’s sale)
- Concepts, Inc. v. First Sec. Realty Servs., Inc., 743 P.2d 1158 (Utah 1987) (notice defects warrant setting aside sale only where they chill bidding and cause inadequacy of price)
- Far West Bank v. Robertson, 406 P.3d 1134 (Utah Ct. App. 2017) (reiterates Concepts requirement that prejudice be shown by chilled bidding/inadequate price)
- Daniels v. Gamma West Brachytherapy, LLC, 221 P.3d 256 (Utah 2009) (supplementation may be struck when it effectively adds new expert opinions)
- Kell v. State, 194 P.3d 913 (Utah 2008) (prior authority on sua sponte summary judgment; discussed in light of rule 56(f) procedure)