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Sevastopouous v. Wells Fargo Bank, N.A.

United States District Court, D. Utah, Central Division

March 30, 2018

KATHLEEN SEVASTOPOUOUS, Petitioner,
v.
WELLS FARGO BANK, N.A., Respondent.

          MEMORANDUM DECISION AND ORDER GRANTING [5] WELLS FARGO BANK, N.A.'S MOTION TO DISMISS

          DAVID NUFFER, UNITED STATES DISTRICT JUDGE.

         Respondent Wells Fargo Bank (“Wells Fargo”) filed the Motion to Dismiss (“Motion”)[1]seeking (under Fed R. Civ. P. (12)(b)(6)) to dismiss Petitioner Kathleen Sevastopoulous's (“Petitioner”) Petition for Relief for Wrongful Lien Under Utah Code Ann. § 38- 9-205; Request for Hearing under Utah Code Ann. § 38-9-205(3)(b) (the “Petition”).[2] Wells Fargo argues that the encumbrance it has on property now owned by Petitioner cannot be a wrongful lien because Petitioner fails to allege that Wells Fargo recorded a lien without the authorization of the owner of the property at the time.[3] Petitioner opposed the Motion.[4] Wells Fargo replied in support.[5]

         After reviewing the parties' filings and relevant authority, Wells Fargo's Motion is GRANTED for the reasons set forth below.

         BACKGROUND FACTS[6]

         1. In 1973, Petitioner executed a trust agreement naming Marion Burrows Smith (“Ms. Smith”) as Trustee of the Kathleen Smith Trust (the “Trust”).[7]

         2. The Trust purchased the property located at 1425 Tomahawk Drive, Salt Lake City, UT 84103 (the “Property”) in 1984.[8]

         3. Under the language of the Trust, the Trust was to Terminate on the 40th birthday of the Petitioner, or on November 11, 1992.[9]

         4. On February 25, 2003, the Trust conveyed the Property to Ms. Smith.[10]

         5. On February 26, 2003, Ms. Smith obtained a line of credit from Wells Fargo pursuant to which Ms. Smith borrowed funds from Wells Fargo (the “2003 Loan”), secured by the Property (the “2003 Loan Transaction”)[11]

         6. Pursuant to the 2003 Loan Transaction, Ms. Smith signed a Deed of Trust (the “2003 Deed of Trust”) which was recorded on March 7, 2003.[12]

         7. At the time Wells Fargo recorded the 2003 Deed of Trust, the Property was owned by Ms. Smith.[13]

         8. On March 3, 2003, Ms. Smith conveyed the Property back to the Trust.[14]

         9. In March 2013, the Trust into a second line of credit transaction with Wells Fargo (the “2013 Loan Transaction”).[15]

         10. Pursuant to the terms of the 2013 Loan Transaction, on March 9, 2013, the Trust entered into a Short Form Open-End Deed of Trust (the “2013 Deed of Trust”).[16]

         11. The 2013 Deed of Trust was recorded on May 31, 2013.[17]

         12. At the time Wells Fargo recorded the 2013 Deed of Trust, the Property was owned by the Trust.[18]

         13. On June 3, 2013, Wells Fargo signed a Deed of Reconveyance conveying to Ms. Smith “the estate, title, and interest” held under the 2003 Deed of Trust.[19]

         14. On September 1, 2016, the Trust conveyed the Property to Petitioner.[20]

         PROCEDURAL BACKGROUND

         Petitioner originally filed this action in the Third Judicial District of the State of Utah.[21]As the caption of the Petition states, Petitioner sought relief for a wrongful lien under Utah Code Ann. § 38-9-205.[22] Under that statue, “a record interest holder of real property against which a wrongful lien is recorded may petition the district court in the county in which the document is recorded for summary relief to nullify the wrongful lien.”[23] The district court then reviews the petition for sufficiency.[24] If the district court finds the petition sufficient, the district court schedules a hearing and the petitioner is then required to serve a copy of the petition on the respondent and the notice of the hearing.[25]

         That process was not followed here. After the Petition was filed in state court, a summons was issued to Wells Fargo, [26] apparently without the review of sufficiency and issuance of the notice of hearing as required under Utah Code Ann. § 38-9-205. Wells Fargo then removed the petition from state court to the federal court based on diversity jurisdiction[27] and filed the Motion.

         To date, this action has proceeded as a typical civil action under the rules, notwithstanding the procedure specified in Utah statute. Therefore, it is appropriate to consider the Motion as one properly filed under Fed. R. Civ. 12.

         DISCUSSION

         Motion to ...


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