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Bank of America v. Adamson

Supreme Court of Utah

January 11, 2017

Bank of America, Appellant,
v.
Samuel D. Adamson and Courtney D. Adamson, Appellees.

         On Direct Appeal Fifth District, St. George Dep't The Honorable Jeffrey C. Wilcox No. 14050067

          Robert H. Scott, Salt Lake City, UT, Amy Miller, Washington D.C., Brian E. Pumphrey, Richmond, VA, for appellant

          John Christian Barlow, St. George, UT, for appellees

          Justice Durham authored the opinion of the Court in which Chief Justice Durrant, Associate Chief Justice Lee, Justice Himonas, and Judge Lawrence joined.

          Having been recused, Justice Pearce does not participate herein; District Judge Barry G. Lawrence sat.

          OPINION

          DURHAM, JUSTICE

         INTRODUCTION

         ¶1 This case involves a nonjudicial foreclosure sale conducted in violation of Utah Code section 57-1-21, which requires the trustee of the sale to maintain a physical office location within the state. Today we answer the question left open in Federal National Mortgage Association v. Sundquist, 2013 UT 45, 311 P.3d 1004, as to the appropriate remedy for this violation. Because we conclude, under the circumstances of this case, that the violation did not result in a void or voidable trustee's deed, we hold that the district court erred in dismissing the unlawful detainer action in favor of the Adamsons. We thus reverse and remand for further proceedings consistent with this opinion.

         BACKGROUND

         ¶2 Samuel D. Adamson refinanced his home in 2007 through a deed of trust.[1] Mr. Adamson defaulted on the loan in December 2008. Bank of America appointed ReconTrust as the successor trustee, which then executed and recorded a notice of default and election to sell on June 25, 2009. The notice included a phone number to reach ReconTrust with any questions.

         ¶3 Although Mr. Adamson had notice of the default and upcoming trustee sale date, he never contacted ReconTrust before the scheduled sale date, and did not attend the sale.[2] Neither did Mr. Adamson seek an injunction or file a lawsuit prior to the sale. On January 14, 2010, ReconTrust sold the property in a nonjudicial foreclosure sale to BAC Home Loans Services, LP. BAC Home Loans Services eventually merged with Bank of America, which then sold the property to Distressed Asset on December 18, 2013. Mr. Adamson and his wife, Courtney D. Adamson, have lived continuously on the property since the sale, and have not made a loan payment or paid property taxes since December 2008.

         ¶4 In 2014, Distressed Asset filed an unlawful detainer action against the Adamsons. At trial, the Adamsons argued that the trustee's sale was defective because ReconTrust did not meet the qualifications to serve as trustee under Utah Code section 57-1-21, which required ReconTrust to maintain a physical office location in Utah. Id. § 57-1-21(1)(a). The Adamsons argued that this defect rendered the sale void.

         ¶5 The district court noted that in Federal National Mortgage Association v. Sundquist, 2013 UT 45, ¶ 13, 311 P.3d 1004, we held that "ReconTrust is neither a member of the Utah State Bar nor a title insurance company or agency with an office in the State of Utah. ReconTrust was therefore not a qualified trustee with the power of sale under Utah Code sections 57-1-21 and 57-1-23." However, the district court also noted that "the Sundquist court expressly declined to decide what effect, if any, its determination that ReconTrust did not qualify as a trustee with the power of sale would have on the validity of the sale and resulting trust deed." See id. ¶ 50.

         ¶6 Although the district court found that Distressed Asset had made out "a prima facie case for unlawful detainer, " it concluded that the failure to satisfy Utah Code section 57-1-21 rendered the trustee sale void ab initio, and dismissed the unlawful detainer action. Distressed Asset appealed. We transferred the case to the court of appeals. Distressed Asset then assigned its rights, title, and interest in the property to Bank of America. After oral argument in the court of appeals, but before that court issued an opinion, we vacated our transfer order and recalled the case. We have jurisdiction pursuant to Utah Code section 78A-3-102(3)(j).

         STANDARD OF REVIEW

         ¶7 "We review questions of statutory interpretation for correctness, affording no deference to the district court's legal conclusions." Salt Lake City Corp. v. Evans Dev. Grp., LLC, 2016 UT 15, ¶ 9, 369 P.3d 1263 (citation omitted).

         ANALYSIS

         ¶8 Bank of America advances two main arguments on appeal: first, that we should overturn our decision in Federal National Mortgage Association v. Sundquist, 2013 UT 45, 311 P.3d 1004, and hold that the National Bank Act "preempts Utah law regarding a national bank's authority to exercise the power of sale;" and second—even if we do not overturn Sundquist—that the district court erred in finding the trustee sale void. We hold that Bank of America has failed to meet its burden of persuasion on its first argument because it was inadequately briefed, but we conclude the district court erred in finding the trustee sale void and in dismissing the unlawful detainer action.

         I. WE DECLINE TO OVERRULE SUNDQUIST, AS BANK OF AMERICA HAS NOT ADEQUATELY BRIEFED THIS ARGUMENT

         ¶9 Stare decisis is "a cornerstone of Anglo-American jurisprudence." State v. Guard, 2015 UT 96, ¶ 33, 371 P.3d 1 (citation omitted). Therefore, "[t]hose asking us to overturn prior precedent have a substantial burden of persuasion." State v. Menzies, 889 P.2d 393, 398 (Utah 1994). In order to meet this burden, "we must be 'clearly convinced that' prior caselaw 'was originally erroneous or is no longer sound because of changing ...


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