SMS Fin., LLC v. CBC Fin. Corp.
2017 UT 90
| Utah | 2017Background
- SMS obtained a Nevada judgment against CBC (Oct 2012), domesticated in Utah (Jan 16, 2013) and recorded an abstract in Salt Lake County on March 4, 2013.
- CBC entered into a Real Estate Purchase Contract (REPC) to sell Salt Lake County property to Kevin Gates (Feb 15, 2013); Gates assigned to Call Center Building, LLC (Mar 19, 2013).
- Title commitments (Mar 21 & 26, 2013) disclosed SMS’s judgment, but the REPC closed and CBC conveyed the property to Call Center by special warranty deed on Mar 27, 2013.
- SMS later sought writ of execution on the judgment lien (May 12, 2015); Call Center intervened to protect its property interest.
- District court denied SMS’s writ, holding equitable conversion protected Call Center’s interest because the REPC was capable of specific enforcement when SMS recorded its abstract. SMS appealed.
Issues
| Issue | Plaintiff's Argument (SMS) | Defendant's Argument (Call Center) | Held |
|---|---|---|---|
| Whether equitable conversion applies to non‑installment land sale contracts | Equitable conversion should be limited to seller‑financed installment contracts | Equitable conversion applies when contract is capable of specific enforcement, regardless of installment structure | Equitable conversion applies to any executory land sale contract once capable of specific enforcement |
| When equitable conversion protects buyer from seller’s creditors | Equitable conversion didn’t apply because REPC had unfulfilled, buyer‑friendly conditions and purchaser hadn’t tendered price | Unfulfilled buyer‑beneficial conditions can be waived; tender not required if buyer ready to perform | Equitable conversion protects buyer when contract is capable of specific enforcement; the REPC was so capable despite some unfulfilled conditions |
| Whether recording of judgment before/after REPC affects lien attachment | SMS emphasized timing of recording to attach lien to property | Call Center argued buyer’s equitable interest existed when abstract recorded, so lien could not attach to land | Lien did not attach to land because buyer’s equitable interest was protectable at time of recording |
| Policy concerns about defeating judgment liens by sales contracts | SMS warned debtors could evade creditors by entering sham or open escrow arrangements | Court noted safeguards: sham‑transaction doctrine, fraudulent‑transfer remedies, other remedies to reach seller’s contractual interest | Court rejected broad policy objection and limited ruling to contracts capable of specific enforcement |
Key Cases Cited
- Allred v. Allred, 393 P.2d 791 (Utah 1964) (applies equitable conversion to enforceable executory land‑sale contracts)
- Cannefax v. Clement, 818 P.2d 546 (Utah 1991) (equitable conversion treats vendor’s legal title as held for vendee when contract enforceable)
- Estate of Willson v. State Tax Comm’n, 499 P.2d 1298 (Utah 1972) (equitable conversion pending completion of enforceable executory contract)
- Lach v. Deseret Bank, 746 P.2d 802 (Utah Ct. App. 1987) (applies equitable conversion to non‑installment land sale contracts)
- Butler v. Wilkinson, 740 P.2d 1244 (Utah 1987) (vendee’s equitable interest and remedies; liens attach only to the nature of the interest)
- Noor v. Centreville Bank, 996 A.2d 928 (Md. Ct. Spec. App. 2010) (equitable conversion requires seller’s duty enforceable by specific performance)