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Maa Prospector Motor Lodge, LLC v. Palmer

Supreme Court of Utah

September 28, 2017

MAA Prospector Motor Lodge, LLC, Appellee,
v.
Ray W. Palmer, et al., Appellants.

         On Direct Appeal Seventh District, San Juan The Honorable Lyle R. Anderson No. 140700016

          Ronald G. Russell, Royce B. Covington, Jeffery A. Balls, Salt Lake City, for appellee

          Craig C. Halls, Blanding, for appellant

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

          Having recused herself, Justice Durham does not participate herein; District Court Judge Kent R. Holmberg sat.

          OPINION

          Lee, Associate Chief Justice.

         ¶ 1 This case involves the same unstayed court order at issue in 2DP Blanding, LLC v. Palmer, 2017 UT 62, ___P.3d ___. The order authorized a foreclosure sale of real property. The sale was executed while the litigation was on appeal. In this case, MAA Prospector purchased property (Parcel 1) at the foreclosure sale. Unlike 2DP Blanding, MAA Prospector had actual notice of Palmer's appeal of the foreclosure order when it purchased the property. We are asked whether such notice means that MAA Prospector took the property subject to the outcome of the appeal. We answer this question in the negative. We reaffirm our statement in 2DP Blanding that "an appellant who takes no action to preserve his interests in property at issue on appeal has no recourse against a lawful third-party purchaser." 2DP Blanding, 2017 UT 62, ¶ 1. And we accordingly affirm the district court's award of summary judgment to MAA Prospector.

         ¶ 2 We also affirm the award of attorney fees to MAA Prospector. Palmer raises credible statutory arguments for reversal but ignores adverse controlling authority. And we decline to overrule our precedent where Palmer has failed to contend that it was wrongly decided or subject to being overruled.

         I

         ¶ 3 This case is an offshoot of a lien dispute between Ray Palmer and First National Bank. In July 2003, Palmer agreed to sell two parcels of commercial real estate to JDJ Holdings, Inc. JDJ obtained two loans to finance the purchase-one from First National and one from Palmer. Both loans were secured by trust deeds. First National recorded its deed on December 5, 2013 and had first position. Palmer recorded his deed on December 12, 2013 and had second position.

         ¶ 4 Due to a flaw in the initial loan approval, First National was required to record a new deed after Palmer recorded his deed. Before recording the new deed, First National got an erroneous title report that failed to show the Palmer deed. And despite having knowledge of Palmer's loan at its inception, First National relied on the erroneous title report and simply revoked its original deed and recorded the new deed on March 8, 2004. The bank did not obtain a subordination agreement from Palmer. The new deed accordingly appeared to elevate Palmer's deed to first position. But no one discovered this repositioning at the time.

         ¶ 5 Five years later, JDJ defaulted on both loans. Palmer and First National both claimed that their deed was entitled to senior position. The deed holders initiated legal proceedings to settle the dispute, and the district court granted summary judgment to First National. The court held that the bank was entitled to equitable reinstatement of its original deed. It also authorized First National to "exercise all rights and remedies provided by its Trust Deed with respect to the Property, " including proceeding with a foreclosure sale.

         ¶ 6 Palmer appealed the court's decision on April 8, 2011. He challenged the lien priority established by the district court's order. But he did not formally seek or obtain a stay of the order. And he did not file a lis pendens on the property at any point during the litigation. On June 29, 2011, First National issued a Notice of Trustee's Sale under its reinstated trust deed, and a trustee's sale was held on August 8, 2011.

         ¶ 7 To this extent this case is procedurally identical to the 2DP Blanding case. See 2DP Blanding, LLC v. Palmer, 2017 UT 62, ¶¶ 2-6, ___P.3d ___. Yet there are two elements of this case that set it apart from 2DP Blanding. First, the trust deed between Palmer and the original purchaser of Parcel 1, JDJ, authorized Palmer to seek attorney fees from JDJ if it defaulted on the loan and foreclosure proceedings were necessary.[1] Second, MAA Prospector purchased Parcel 1 directly ...


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