Case Information
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T HE U TAH C OURT OF A PPEALS
D IANE D I M EO , Plaintiff Appellee, v.
N UPETCO A SSOCIATES LLC, Defendant Appellant. Memorandum Decision No.
Filed July
Second District, Farmington Department Honorable John R. Morris
No.
James C. Swindler Callie Buys, Attorneys for Appellant
George A. Hunt Mark R. Anderson, Attorneys for Appellee J UDGE G REGORY K. O RME authored Memorandum Decision, which J UDGES W ILLIAM A. T HORNE J R S TEPHEN L. R OTH
concurred.
ORME, Judge:
¶1 Nupetco Associates, LLC (Nupetco) appeals rulings granting partial summary favor Diane DiMeo, denying motion for judgment, dismissing its counterclaim. case revolves around trust conveyed over thirty years ago DiMeo’s predecessors in interest, who died We reverse remand for further proceedings. July B.I. Associates several members
Strand family executed promissory $373,909.13 favor
DiMeo Murray First Thrift & Loan Company. Payment on note was monthly, final payment due ten years later in July 1992. The note was secured by deed granted security in real property owned by Vern Strand, who were among on note. The note was transferred several times before ultimately being acquired by Nupetco. ¶3 Both passed away in 1987. Following their deaths, Michael Strand, also one original obligors, was the one who made occasional payments on note. In 1990, the note had been paid in full, waived any defenses his payment obligation. He continued make periodic payments over next fifteen years. Neither nor Eleanor ever made payment on note before their deaths, neither their estates made payment following their deaths. Diane DiMeo, who been appointed Eleanor’s personal representative, brought action quiet title property securing argued could enforced because barred by statute limitations. both moved summary judgment. ruled favor DiMeo. The first ruled Vern, Eleanor, estates were no longer liable on because statute limitations had run obligation no later than 1998. See Utah Code Ann. § 78B ‐ 2 ‐ 309(2) (LexisNexis 2012) (requiring an action brought on writing within six years its creation); id. § 78B ‐ 2 ‐ 113(1) (explaining limitations begins anew each time payment or acknowledgment debt debtor). [1] court 1. Utah Code sections 78B ‐ 2 ‐ 309 78B ‐ 2 ‐ formerly appearing Utah Code sections 78 ‐ 12 ‐ 23 78 ‐ 12 ‐ respectively, were renumbered Utah Code Ann. § 78B ‐ amend. Nupetco next ruled that was unenforceable because Vern’s Eleanor’s legal status note changed that of to sureties when, to of limitations, Nupetco’s ability to collect them had expired. district court further modifications, such as extension note’s payoff date permitting payments, were made to note after and Eleanor’s death. Reasoning because sureties are exonerated when material modifications underlying contract without consent, district court concluded “any security pledged [by Eleanor] secure obligation must . . discharged, no recourse may security enforcement [n]ote.” filed a motion seeking have district court alter amend judgment. The motion denied.
¶5 filed an amended complaint adding additional parties action. filed an answer and counterclaim, seeking judgment Strand as as deed. dismissed pleading. appeals. “An appellate reviews trial court’s legal conclusions ultimate grant denial judgment for correctness.” Orvis Johnson (citation internal quotation marks omitted). Summary judgment is appropriate when party can “show there no genuine issue material fact moving party entitled a matter law.” Utah R. Civ. P. 56(c). No issue material fact exists because parties stipulated all relevant facts, neither party contests Michael’s obligation (...continued) substance these statutes remains unchanged renumbered versions, we cite most recent codification convenience to reader. v. Nupetco on the note is alive well. only remaining question is whether the trust deed validly secures the obligations due under We conclude it does Nupetco’s motion for judgment—not DiMeo’s—should have been granted.
¶7 A trust deed secures obligations under a note by transferring a security interest in real property a trustee be held until debt is repaid. Utah Code Ann. § 57 1 ‐ 19 (LexisNexis 2010); First Sec. Bank Utah , NA v. Banberry Crossing , 780 P.2d 1253, 1256 (Utah 1989). other words, pledged property is used as collateral for can foreclosed event default. See Black’s Law Dictionary 476 (9th ed. 2009); Restatement (Third) Property: Mortgages Introduction (1997). Here, Michael has failed meet his obligations note now held by Nupetco—a secured by trust deed grants security interest property formerly owned by and now owned Eleanor’s estate. Because Michael has failed to repay loan, is entitled foreclose trust deed. Indeed, this remedy law requires pursue because “one action” “security first” rule prevents Nupetco pursuing judgment against personally until security real property has been first applied against amount due. Utah Code Ann. § 78B 6 901(1) (“There one action recovery debt, enforcement right, secured solely mortgage upon real estate[.]”); Machock v. Fink , 12, 137 P.3d 779 (“We have interpreted as preventing creditor ‘suing debtor note until it first forecloses real property.’ We also recognized statute’s applicability deeds.”) (quoting City Consumer Servs., Inc. Peters , P.2d (Utah 1991)); APS Briggs 672–73 (Utah Ct. App. 1996) (holding one action rule requires “the security exhausted first”). ¶8 DiMeo does dispute these general precepts but argues correct denying summary because it was v. unenforceable. The district court arrived at conclusion by first determining that the statute of limitations barred from seeking remedy against Vern and personally. The court pointed Holloway Wetzel , P.2d (Utah 1935), which states that “a part payment . . by one of two more joint and several obligors does not of itself suspend the of the statute of limitations against the other co ‐ obligor.” Id. at 568. The district court concluded that under Holloway , Strand’s periodic continued payments the did suspend the six year statute of limitations Eleanor, because neither nor ever any payment, the ability recover against them expired, at latest, We agree with district court’s conclusion ability to obtain deficiency Vern, Eleanor, their estates has long since expired due their longstanding failure make payments due under note. While some may have misgivings about continued relevance Depression era case adjusting rights between co obligors, it appears that Holloway good law it applied correctly district court excuse Vern, Eleanor, estates from any personal liability amounts Our agreement with district court’s analysis, however, ends there. surety issue seized upon district simply does hold water. Neither district nor cite any legal precedent support conclusion when limitations ran, Vern’s Eleanor’s legal status changed sureties—a change would occurred outside writing after couple’s death. court’s analysis at odds with basic maxim contract interpretation, namely contracts are interpreted accordance plain meaning terms, absent some ambiguity. See , e.g. , Central Florida Invs. Inc. Parkwest Assocs. , (“If language within four corners contract is unambiguous, parties’ intentions plain meaning contractual language, contract may be interpreted matter law.”). also Merrick Young Inc. v.
DiMeo Wal Mart Real Estate Bus. Trust , 2011 App 257 P.3d 1031 (“The goal of contract interpretation is to give effect to the contracting parties’ intentions at the time the contract made.”). does not mention or contemplate type of suretyship. Am. Jur. 2d Suretyship § 9 (2012) (“[T]o determine suretyship status, the first looks to the substance of the entire transaction rather than its form. Generally, an agreement suretyship must writing must be explicit.”). More fundamentally, neither nor the explains how the mere fact some obligors on the can no longer held personally liable undercuts continued vitality of deed as security for It is clear to us of the statute of limitations only prevents imposing liability on for amounts after security is sold proceeds applied debt. It had no legal effect pair’s status as co on note, much less did it transform them into sureties. Cf. Kamas Sec. Co. Taylor , 226 (Utah 1950) (holding “‘effect of limitations bar remedy but not discharge the obligation’”) (quoting Restatement of Security § cmt. (1941)). Even Strand somehow become sureties, modifications underlying contract would have exonerated pledge real property security for debt. While argues time extension repayment granted Strand, his payments, were material modifications original contract, such minor alterations nature or degree would trigger a discharge pledge security suretyship law. See Restatement (Third) Suretyship & Guaranty § (1996) (“If principal obligor obligee agree modification, other than an extension time complete release principal obligor’s duties pursuant underlying . . secondary obligor discharged unperformed duties pursuant secondary obligation.”) (emphasis added). Perhaps
(continued...) ¶10 Finally, we consider district court’s dismissal counterclaim. The counterclaim, as sought to be amended, requested foreclosure trust deed judgment against Strand, whom wished to added as party, in order to obtain deficiency judgment obligation still owed following sale secured property. The district court determined that Michael’s was irrelevant proceedings. However, having court erred ruling become sureties trust deed was unenforceable, we conclude dismissal counterclaim also error. Because trust deed can foreclosed—and must be before may seek a deficiency Michael—both Michael’s liability and trust deed were absolutely relevant, (...continued) most importantly, agreed such modifications terms trust deed. trust provides, with our emphasis, payments will made “payable order Beneficiary at times, manner interest therein set forth, extensions and/or renewals or modifications therein or thereof .” modifications payment schedule are within scope standard modification clause. Extending payment date allowing payments such extreme changes would render modification clause inapplicable contract void. Cf. Nature’s Sunshine Prods., Inc. Watson App ¶¶ 13–15, (explaining modification clauses deeds allow parties make routine modifications payment arrangements without affecting deed’s priority so long future lenders can reasonably assess financial position, but extraordinary changes—in case, modifying original terms include a new loan “totally unrelated original transaction” for more than sixteen times original principal—will qualify as modification). answer counterclaim should have been dismissed. And amendment sought should been permitted. ¶11 We reverse partial summary favor DiMeo remand instructions grant judgment favor reinstate counterclaim seeking deed, permit its amendment.
notes (LexisNexis 2012); id. § 78B amend. notes. As (continued...)