2010-1 RADC/CADC Venture, LLC v. Dos Lagos, LLC2010-1 RADC/CADC Venture, LLC v. Dos Lagos, LLC
Case Information
*1
T HE U TAH C OURT OF A PPEALS
2010-1 RADC/CADC V ENTURE , LLC,
Appellee, v.
D OS L AGOS , LLC; M ELLON V ALLEY , LLC; R OLAND N EIL F AMILY L IMITED P ARTNERSHIP ; R OLAND N. W ALKER ; AND S ALLY W ALKER ,
Appellants. Opinion No. 20140675-CA Filed April 28, 2016 Second District Court, Farmington Department The Honorable John R. Morris No. 110700200 Clifford V. Dunn, Michael C. Dunn, Evan A. Schmutz, and Jordan K. Cameron, Attorneys for Appellants
Richard C. Terry and Jeremiah R. Taylor, Attorneys for Appellee
J UDGE G REGORY K. O RME authored this Opinion, in which J UDGES M ICHELE M. C HRISTIANSEN and K ATE A. T OOMEY concurred.
ORME, Judge: This appeal comes to us from the district court’s grant of
summary judgment in favor of 2010-1 RADC/CADC Venture, 1. Judge James Z. Davis heard the arguments in this case but did not have the opportunity to vote on this Opinion prior to his death. See State v. Goins , 2016 UT App 57, n.1. Judge Kate A. Toomey substituted for Judge Davis and, having reviewed the briefs and listened to the oral arguments, participated fully in the court’s resolution of this appeal.
LLC (RADC). Appellants challenge the summary judgment on a number of grounds. We affirm.
BACKGROUND
¶2 The pertinent facts of this case are undisputed. In 2007, Appellants Dos Lagos, LLC, and Mellon Valley, LLC, (Borrowers) received a $2.5 million loan from America West Bank. The loan was personally guaranteed by Appellants Roland N. Walker, Sally Walker, and the Roland Neil Family Limited Partnership (the Guarantors). Later that year, America West entered into a loan participation agreement with Utah First Federal Credit Union, whereby Utah First obtained a fifty-two percent interest in the loan and America West retained a forty- eight percent interest.
¶3 One year later, on December 5, 2008, Borrowers executed a Change in Terms Agreement, which, among other things, extended their promissory note (the Note) with America West. The Note was secured by real property owned by Mellon Valley (the Property). The FDIC ultimately closed America West and seized
America West’s interest in the Note, which it thereafter sold to RADC at auction. Borrowers defaulted on the Note and received multiple letters notifying them of the default and requesting payment. In December 2010, RADC purchased the Property— which was valued at $1,510,000—at a trustee’s sale for $1,060,000. At the time of the sale, the total amount owing on the Note was $3,426,701.91, leaving a deficiency of $1,916,701.91 between the amount owed and the value of the Property. Utah First, whose interest in the Note had not been affected by America West’s demise and the transfer of its interest, filed an action seeking a deficiency judgment the next month. In its original Complaint, Utah First was the only named plaintiff and it erroneously indicated that the total amount owed on the Note was just $1,819,774.97. Dos Lagos filed a motion to dismiss, in part because RADC was not included as a party. The parties stipulated to allow amendment, and the First Amended Complaint added RADC as a plaintiff. It did not, however, correct the amount owed. Utah First and RADC sought leave to amend again and filed the Second Amended Complaint in September 2012, alleging the amount due as the full $3,426,701.91. RADC and Utah First filed motions for summary
judgment, seeking a deficiency of $1,916,701.91. Borrowers
subsequently filed a motion to dismiss and a motion for
summary judgment. The district court denied Utah First’s
motion for summary judgment, determining that there were
issues of fact surrounding the validity of the loan participation
agreement that had been executed by Utah First and America
West. But it granted RADC’s motion for summary judgment
against Borrowers, awarding RADC a deficiency judgment,
calculated as the difference between the full amount due under
the Note and the value of the property at the time of its sale to
RADC,
see
against the Guarantors on the ground that judgment had been awarded against Borrowers on the obligation guaranteed by the Guarantors. The district court granted the motion, and 2. RADC suggests that this amount represented Utah First’s fifty-two percent interest in the total amount owed on the Note. But by our math, fifty-two percent of $3,426,701.91 is $1,781,884.99.
Borrowers and the Guarantors (collectively, Appellants) now appeal.
ISSUES AND STANDARD OF REVIEW Appellants first argue that RADC’s claim did not relate
back to the original Complaint and was therefore barred by the statute of limitations. They next contend that the district court erred by awarding RADC the full amount due under the Note rather than just its pro rata share. Finally, Appellants claim that it was error for the district court to grant summary judgment against the Guarantors. All of the issues raised involve the district court’s interpretation and application of the law in granting summary judgment. ‚*W]e review the *district+ court’s legal conclusions for correctness, affording those legal conclusions no deference.‛ Ault v. Holden , 2002 UT 33, ¶ 15, 44 P.3d 781.
ANALYSIS
I. RADC’s Claim Was Not Time-Barred. The resolution of Appellant’s primary argument on
appeal depends on the operation of the applicable statute of
limitations.
plaintiff in any complaint filed against Borrowers within three months of the trustee’s sale. There is also no dispute that Utah First’s original Complaint was filed within that three-month window. What we must determine, then, is whether the original Complaint operates to satisfy the three-month requirement for RADC as well as for Utah First. Appellants contend that the First Amended Complaint
impermissibly added a party to the proceeding in violation of
the applicable statute of limitations. Rule 15(c) of the Utah Rules
of Civil Procedure allows an amended complaint to ‚relate*+
back to the date of the original pleading‛ if ‚the claim
. . . asserted in the amended pleading arose out of the conduct,
transaction, or occurrence set forth or attempted to be set forth in
the original pleading.‛
principal exception is articulated in
Sulzen v. Williams
, 1999 UT
App 76,
[W]hile generallyRule 15(c) . . . will not apply to an amendment which substitutes or adds new parties for those brought before the court by the original pleadings, [the Utah Supreme Court has] made an exception to the general rule. The exception operates where there is a relation back, as to both plaintiff and defendant, when new and old parties have an identity of interest; so it can be assumed or proved the relation back is not prejudicial.
Id.
¶ 14 (alterations and omission in original) (citation and
internal quotation marks omitted). ‚The rationale of
demonstrated by the identity of interest between Utah First and
RADC. The cases cited by Appellants in relation to this point are
unhelpful, as they address a framework that is inapplicable to
the facts of this case. For instance, Appellants suggest that
because ‚RADC and Utah First are two separate and distinct
entities,‛ there can be no relation back. We acknowledge that it is
often necessary to look at the connection between the business
operations of the original and added parties,
see Russell v.
Standard Corp.
, 898 P.2d 263, 265 (Utah 1995), but that factor
alone is insufficient to resolve an identity-of-interest question.
We cannot ignore the fact that although there is no direct
business or ongoing contractual relationship between Utah First
and RADC, this case centers around
one
debt,
one
promissory
note, and
one
trustee’s sale. In very simple terms, there is but one
‚conduct, transaction, or occurrence‛ on which all claims are
based.
See
this one should be decided in a single action.
Cf.
II. It Was Not Error for the District Court to Award RADC the
Full Deficiency Amount. Appellants next challenge two aspects of the district
court’s order concerning the amount of the judgment. First, they argue that the district court should not have awarded judgment in the amount sought by the Second Amended Complaint—the full deficiency amount—but should instead have limited any judgment to a sum calculated with reference to the amount claimed to be due in the original Complaint. Second, Appellants argue that it was error to award the entire deficiency judgment amount to RADC, even though the district court expressly made that judgment subject to any later-determined interest of Utah First. We conclude that the district court did not err in either regard.
A. Plaintiffs Were Entitled to Recover the Full Deficiency
Amount.
¶16 The original Complaint claimed that the total amount still
due on the Note was $1,819,774.97. The First Amended
Complaint, which added RADC as a plaintiff, left that amount
unchanged. Finally, in the Second Amended Complaint, the
amount due on the Note was updated to correct the full amount
actually due on the Note and to state the amount still due
following the sale of the land securing the Note—$1,916,701.91.
When Plaintiffs moved for summary judgment, they sought a
deficiency judgment in this amount.
Appellants point to the language of
argue that Plaintiffs were limited to pursuing the amount
indicated in the original Complaint. Specifically, the statute
mandates that ‚the complaint shall set forth the entire amount of
the indebtedness.‛
other things, a showing that Appellants took reasonable action— or reasonably refrained from action—based on the misstatement of the amount of indebtedness included in the original Complaint. See Salt Lake City Corp. v. Big Ditch Irrigation Co. , 2011 UT 33, ¶ 41, 258 P.3d 539. According to Appellants, without citation to any portion of the record, ‚[Borrowers] did not engage in a trial and negotiation strategy that they would or could have employed had the total amount due under the note been originally asserted as the same amount as ultimately claimed.‛ This is not the sort of inaction that is contemplated by the doctrine of estoppel. But even if Appellants might have acted differently in the
months following the filing of the original Complaint had it included the amount actually due, the Second Amended Complaint was filed in September 2012. The district court did not grant RADC’s motion for summary judgment until April 2013. Thus, even ignoring the fact that Borrowers likely always knew—and surely should have known—the full amount owed under the Note, they had seven months between the filing of the Second Amended Complaint and the district court’s order during which they could have ‚engage*d+ in a *different+ trial and negotiation strategy‛ when confronted with the increased amount, if so inclined. Because they did not do so then, there is no reason to assume they would have done so earlier. It was therefore not error for the district court to enter judgment based on the amount alleged in the Second Amended Complaint once that amount was proven.
B. It Was Not Error for RADC to Receive Judgment Based on
the Full Amount Due on the Note. RADC had only a forty-eight percent interest in the Note, but the district court awarded the entire deficiency amount to RADC, albeit subject to any subsequently determined interest of Utah First. We acknowledge that, at first glance, it might appear that Appellants make a compelling argument. After all, it seems somewhat intuitive that as a forty-eight percent owner of the Note, RADC should have received judgment for only forty-eight percent of the amount still owing on the Note. Appellants complain that the district court’s order,
making the judgment subject to any subsequently determined
interest of Utah First, ‚cited no law.‛ But after registering this
complaint, Appellants direct this court to no statute, case, or
other authority that supports their contention that the district
court got this wrong. Appellants’ failure to carry their burden of
persuasion on appeal is a sufficient ground for us to reject this
argument.
See Hi-Country Estates Homeowners Ass’n v. Jesse
Rodney Dansie Living Trust
,
protects Appellants from having to pay the debt twice—once to RADC and once to Utah First.
III. Summary Judgment Against the Guarantors Will Not Be
Disturbed.
¶23 Finally, Appellants contend that the district court erred by granting summary judgment against the Guarantors. Appellants’ straightforward argument is that judgment was improperly granted against Borrowers on the underlying obligation and so the judgment against the Guarantors is likewise invalid. Appellants recognize that their arguments on behalf of the Guarantors rise or fall with their arguments on behalf of Borrowers, arguing that ‚if the judgment that forms the basis of the judgment against the guarantors is overturned, then the judgment against guarantors must also be overturned.‛ Because we have declined to disturb the judgment against Borrowers, we have no occasion to disturb the judgment against the Guarantors.
CONCLUSION We reject Appellants’ arguments on appeal. RADC was
properly added as a plaintiff to the case in the First Amended Complaint because that amendment relates back to the original Complaint. The district court did not err by awarding judgment for the entire deficiency amount or by awarding that full amount to RADC, subject, of course, to its obligation to account to Utah First for its share of any proceeds recovered. Finally, Appellants have not demonstrated any reason why the judgment against the Guarantors should be disturbed. Affirmed.