Luke D. Jeppesen, Appellee,
Bank of Utah, Harry McMurdie, and Shira McMurdie, Appellants.
District Court, Provo Department The Honorable Christine S.
Johnson No. 150401095
D. Luthy and Marty E. Moore, Attorneys for Appellants
H. Booth and John W. Mann, Attorneys for Appellee
Diana Hagen authored this Opinion, in which Judges Gregory K.
Orme and Ryan M. Harris concurred.
Bank of Utah, Harry McMurdie, and Shira McMurdie
(collectively, the McMurdies) appeal the district court's
grant of summary judgment in favor of Luke D. Jeppesen
(Jeppesen). In 2001, Jeppesen's father, Zane Jeppesen
(Zane), persuaded Harry McMurdie (Harry) to invest $500, 000
in a real estate project in exchange for a promissory note
secured by a trust deed to real property Zane owned in Utah
County (the Alpine Property). Zane defaulted on the note in
2003, but negotiated three subsequent agreements promising to
pay the McMurdies by an extended due date. Many years later,
the McMurdies foreclosed on the Alpine Property, which Zane
had since conveyed to his son through a quitclaim deed.
Jeppesen brought a quiet title action. On cross-motions for
summary judgment, the district court ruled that the six-year
statute of limitations barred the nonjudicial foreclosure
sale of the Alpine Property. Because we determine that there
were genuine issues of material fact as to whether (1) the
2001 Note was extended or superseded by the subsequent
agreements, and (2) Jeppesen was estopped from asserting the
statute of limitations as a defense, we conclude the district
court erred in granting summary judgment. Accordingly, we
reverse and remand.
Between 1998 and 2004, Zane worked as an agent of Beverly
Hills Development Corporation, a real estate development
company engaged in a widespread fraud scheme (the Beverly
Hills project). During that time, Zane acquired a total of
134 Utah investors for the Beverly Hills project, raised
approximately $8 million, and earned nearly $1 million in
compensation. Most of the investments offered or sold by Zane
took the form of unsecured promissory notes. In some cases,
however, the promissory notes sold to investors were secured
by trust deeds recorded against the Alpine Property. This
case concerns the nonjudicial foreclosure sale of the Alpine
Property by one of those investors.
Harry had known Zane for several decades. In 2001, Zane
approached Harry about investing in the Beverly Hills
project. Zane assured him that his investment would be
secured by a first-position trust deed on the Alpine
Property, a five-acre parcel which Zane claimed was worth
$500, 000 per acre.
Harry agreed to invest some of his retirement funds held by
the Bank of Utah (the McMurdie IRA) in the project. On
September 24, 2001, Zane personally executed a promissory
note for a $500, 000 loan from the McMurdie IRA, secured by
two trust deeds recorded against the Alpine Property
(collectively, the 2001 Note). The 2001 Note required Zane to
make monthly payments of $5, 000, with the entire unpaid
principal and twelve percent interest due on March 24, 2003.
The 2001 Note provided that "the makers, sureties,
guarantors and endorsers hereof . . . consent to any and all
extensions of time, renewals, . . . or modifications that may
be granted by the holder hereof with respect to the payment
or other provisions of this note."
From October 2001 through March 2003, Zane made regular
payments of $5, 000 per month to the McMurdie IRA. But on the
maturity date of the 2001 Note, Zane executed a new
promissory note (the 2003 Note). The 2003 Note stated that
the full principal and interest would be due on March 24,
2004. Zane did not create a new trust deed, but the 2003 Note
listed the Alpine Property as the "Property
From April 2003 through March 2004, Zane made payments to the
McMurdie IRA. When the maturity date on the 2003 Note
arrived, Zane executed two new promissory notes, one for the
original $500, 000 investment and a second for $200, 271.11
in interest already due and owing on the original debt
(collectively, the 2004 Notes). The 2004 Notes stated that
"a Mortgage, Deed of Trust or Security Deed . . . dated
the same date as this Note, protects the Note Holder from
possible losses which might result if I do not keep the
promises which I make in the Note." Again, Zane did not
record a new trust deed, but the 2004 Notes listed the Alpine
Property as the "Property Address." The 2004 Notes
stated that the full principal and interest would be due on
March 24, 2005.
In early 2005, Zane was charged with two counts of securities
fraud, two counts of dealing unregistered securities, and two
counts of sale by an unauthorized agent based on his work for
the Beverly Hills project. He pled no contest and entered
into a Stipulation and Consent Order with the Utah Division
of Securities, restricting his ability to deal in securities,
prohibiting further fraudulent conduct, and requiring him to
pay a fine.
In September 2005, Zane filed for bankruptcy. The McMurdies
were aware of the bankruptcy filing, but they did not
challenge the discharge of Zane's underlying debt and did
not seek relief from the automatic stay so as to commence
foreclosure proceedings at that time. See generally
11 U.S.C. § 362 (2012). Zane assured Harry that "he
had gone to considerable expense with an attorney to carve .
. . [the Alpine Property] and [the McMurdies'] note out
of the bankruptcy" so the McMurdies were still
"safe with these instruments" and could "plan
on being repaid." On December 14, 2005, the bankruptcy
court entered an order of discharge for Zane, extinguishing
his personal liability for the debt. Although not evident from
the record, the bankruptcy trustee apparently abandoned the
bankruptcy estate's interest in the Alpine Property,
presumably because the secured interests exceeded the value
of the property.
Several years later, unbeknownst to the McMurdies, Zane
executed and recorded a quitclaim deed, conveying his
interest in the Alpine Property to his son, Jeppesen.
In 2011, aware that the repayment deadline under the 2004
Notes had passed on March 24, 2005 and that a six-year
statute of limitations had begun to run from that date, Harry
approached Zane to discuss the outstanding debt. The parties
executed two documents extending the maturity date of the
2004 Notes to March 24, 2013 (collectively, the 2011
Modification Agreement). These documents indicate that the
"Start Date of [the] Original Contract" was
"24 September 2001," the date of the 2001 Note. The
recitals explain that the 2001 Note was secured by two trust
deeds, which "remain liens of record against" the
Alpine Property, and that "the parties hereto desire to
enter into this Modification Agreement for the purpose of . .
. memorializing the terms by which the [trust deeds] will be
released." The 2011 Modification Agreements include an
"Extension of the Maturity Date" to March 24, 2013.
The parties signed the agreements on March 22, 2011, two days
before the statute of limitations was to run on the
When the maturity date of the 2011 Modification Agreements
approached, Zane and Harry agreed to extend the maturity date
by another three months (the 2013 Extension Agreements). The
2013 Extension Agreements again list the start date of the
original contract as "24 September 2001" and set a
new maturity date of June 24, 2013. Zane testified that the
purpose of the document was "[t]o keep Harry McMurdie
from foreclosing for three more months."
When Zane failed to pay the principal and accrued interest by
June 24, 2013, the McMurdies initiated nonjudicial
foreclosure proceedings against the Alpine Property. A
foreclosure sale was held on July 23, 2015, and a
trustee's deed conveying the property to the McMurdie IRA
was recorded on July 28, 2015. Jeppesen filed this quiet
title action one day before the foreclosure sale.
Jeppesen argued that the six-year statute of limitations
barred the nonjudicial foreclosure sale because the last
payment on the 2001 Note was received on March 18, 2004. On
cross-motions for summary judgment, the district court ruled
that the statute of limitations barred the McMurdies'