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Sterling Fiduciaries LLC v. JPMorgan Chase Bank NA

Court of Appeals of Utah

August 3, 2017

Sterling Fiduciaries LLC, Stone Unturned Trust, DM Bunker LLC, 4MACBOYS LLC, Craig Van Leeuwen, and New Lands Development LLC, Appellants,
v.
JPMorgan Chase Bank NA and Benjamin Woolf, Appellees.

         Third District Court, Salt Lake Department The Honorable Andrew H. Stone No. 130900470

          Dwight J. Epperson, Attorney for Appellants.

          James D. Gilson and J. Tayler Fox, Attorneys for Appellee JPMorgan Chase Bank NA.

          Jonathan R. Rudd and Meagan Rudd, Attorneys for Appellee Benjamin Woolf.

          Judge David N. Mortensen authored this Opinion, in which Judges Gregory K. Orme and Stephen L. Roth concurred. [1]

          MORTENSEN, Judge.

         ¶1 Sterling Fiduciaries LLC for a second time appeals to this court, raising issues with a lower court's disposition of questions surrounding competing interests in certain real property (the Property).[2] Because we determine that the issues raised here were previously decided by this court in Sterling Fiduciaries LLC v. JPMorgan Chase Bank NA, 2016 UT App 107, 372 P.3d 741, lack merit, are issues over which we lack jurisdiction, or are unpreserved, we affirm.

         BACKGROUND

         ¶2 In 2007, L. Kip McRae and Kimberly A. McRae (the McRaes) obtained a loan for the Property. They executed a $900, 000 promissory note in favor of Taylor, Bean & Whitaker Mortgage Corp. (Lender), who recorded a deed of trust in Salt Lake County. The deed named Mortgage Electronic Registration Systems Inc. (MERS) as the beneficiary on behalf of "Lender and Lender's successors and assigns." Lender thereafter sold the note, "which was subsequently transferred multiple times to other lenders." MERS tracked these transfers in its internal database, although the individual transfers were not part of the public record. Eventually, JPMorgan Chase Bank NA (Chase) became servicer-and, ultimately, owner-of the note.[3] The McRaes made their monthly mortgage payments to Chase beginning around April 2009 and continued to do so until they stopped paying on the note in October 2012.

         ¶3 In October 2010, the McRaes filed a quiet title action, naming Lender as the sole defendant. They did not name or serve MERS or any successor, including Chase. While the action was pending, the McRaes transferred the Property to Sterling. Sterling subsequently recorded a deed of trust in favor of 4MACBOYS LLC in Salt Lake County. Lender never answered the McRaes' complaint, and the district court granted default judgment quieting title against Lender. The default judgment was recorded in January 2012.

         ¶4 In November 2012, Benjamin Woolf entered into a contract to purchase the Property from Sterling. In December 2012, DM Bunker LLC filed a notice of financial interest in the Property in Salt Lake County.[4] In January 2013, Woolf filed the present suit against Sterling and the McRaes, alleging breach of the parties' real estate purchase contract.[5] Chase-who was, and currently is, "in possession of the original endorsed-in-blank Note"-eventually intervened in the action.

         ¶5 During discovery, DM Bunker served Bank of America NA with a subpoena seeking "documents related to its prior ownership of th[e] loan."[6] Bank of America was "unable to locate any of the records requested with the information provided."

         ¶6 Chase filed a motion for summary judgment in April 2014. The district court granted summary judgment on Chase's claim for declaratory relief that the McRaes' default judgment had not quieted title as to Chase or extinguished the deed of trust. It also granted summary judgment on Chase's breach of contract claim against the McRaes for defaulting under the note. The district court denied summary judgment on Chase's claim against all defendants for judicial foreclosure of the deed of trust. But after Chase filed a motion to reconsider that denial, on October 2, 2015, the district court granted summary judgment on the judicial foreclosure claim, entered a decree of foreclosure, and entered an order of sale to allow foreclosure of the trust deed. Appellants sought review of the summary judgment in Chase's favor, and on temporary remand from this court, the district court clarified that "its October 2, 2015 [summary judgment] Order constitutes the final, appealable order of the Court, in accordance with Rule 54(b) of the Utah Rules of Civil Procedure." Accordingly, only the issues connected with the October 2, 2015 order are before us on appeal.

         ¶7 Some of the parties involved in this appeal were contemporaneously fighting over the Property in another case. When MERS assigned its interest in the trust deed to Chase, Sterling filed suit against Chase, "asserting that the assignment to Chase was void because no document evidencing Chase's interest was recorded in the county records" and "because title to the property had been quieted in December 2011." Sterling Fiduciaries LLC v. JPMorgan Chase Bank NA, 2016 UT App 107, ¶ 6, 372 P.3d 741. The district court in that case concluded "that the [McRaes'] default judgment did not quiet title as to Chase's or MERS's interests in the property." Id. ¶ 7. Sterling appealed, and we affirmed. Id. ¶¶ 8, 21. Our decision was based on the determination "that the trust deed provided constructive notice of both MERS's and Chase's interests in the property." Id. ¶ 21. Accordingly, we concluded in Sterling Fiduciaries that the McRaes' "default judgment did not quiet title as to Chase" and "Sterling was not a bona fide purchaser." Id.

         ISSUES AND STANDARDS OF REVIEW

         ¶8 Appellants raise five issues on appeal.[7] First, they argue that Chase's beneficial interest was void "as against a subsequent purchaser like [Sterling]" because the interest was not recorded prior to Sterling's purchase of the Property. Second, Appellants argue that the McRaes' default judgment quieted title against Chase. Third, Appellants argue that DM Bunker's interest, having been recorded in December 2012-before Chase recorded the assignment of the deed of trust in January 2013- has priority over Chase's claimed interest. Fourth, Appellants argue that the district court erroneously granted default judgment against Van Leeuwen. Fifth, Appellants argue that the contract underlying Woolf's complaint expired and, upon expiration, became unenforceable.

         ¶9 The first three issues call into question the district court's grant of summary judgment. "We review a district court's grant of summary judgment for correctness and afford no deference to the court's legal conclusions." Salt Lake City ...


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