VT Holdings LLC, Matthew D. Scott, and Nelson Moak, Appellants,
My Investing Place LLC, First American Title Insurance Agency LLC, Karen Ogden, and Real Capital Funding LTD, Appellees.
District Court, St. George Department The Honorable Thomas M.
Higbee No. 100503684
W. Pendleton, Attorney for Appellants
A. Olson, Bruce R. Baird, David C. Castleberry, Ronald G.
Russell, and Matthew J. Ball, Attorneys for Appellees
Diana Hagen authored this Opinion, in which Judges Michele M.
Christiansen Forster and Jill M. Pohlman concurred.
This appeal stems from a judicial foreclosure action brought
by lenders VT Holdings LLC, Matthew D. Scott, and Nelson Moak
(collectively, VT Holdings) against property owner My
Investing Place LLC (MIP) and lenders Karen Ogden and Real
Capital Funding LTD (collectively, RCF). Although VT Holdings
had previously executed a document reconveying its
fourth-position trust deed to RCF, it claimed that the
reconveyance was ineffective because it never provided RCF
with an original copy of the document. VT Holdings also
sought damages against First American Title Insurance Agency
LLC (First American) for wrongfully recording the
reconveyance based on an electronically transmitted document.
Following a bench trial, the district court determined that
the reconveyance was effective because the parties had agreed
to conduct business electronically. The court dismissed VT
Holdings' claims and quieted title to the property at
issue in favor of RCF. We affirm.
MIP purchased real property (the Property) from VT Holdings,
which MIP financed through several sources. RCF provided a
bridge loan of $2.8 million to MIP in exchange for a
promissory note secured by a first deed of trust with
assignment of rents to RCF as the beneficiary and First
American as the trustee. MIP intended to obtain permanent
financing from other sources and to repay RCF's bridge
loan within ninety days. First American recorded the RCF
trust deed, and, as intended by the parties, the RCF trust
deed was in first priority position. MIP also obtained
financing from two other outside sources and those loans were
secured by trust deeds recorded in second and third
positions. Finally, VT Holdings provided $450, 000 in seller
financing secured by a trust deed in fourth position.
Ultimately, MIP defaulted on all four loans secured by the
four trust deeds. RCF, based on its first priority position,
had two options: it could foreclose its trust deed or
"it could take back deeds in lieu of foreclosure."
Although taking the deeds in lieu of foreclosure was a
"riskier" choice, RCF determined it was the
"most viable" option because the value of the
Property was less than the value of the RCF trust deed.
The lenders in second and third positions reconveyed their
trust deeds to RCF. RCF also requested a reconveyance from VT
Holdings. Two of RCF's partners, Brady Boman and Ray
Zoll, contacted Moak, the majority owner of VT Holdings, and
asked him to authorize a request for reconveyance (the
Request for Reconveyance). Without a reconveyance, Boman and
Zoll told Moak that RCF would foreclose the RCF trust deed,
which would "wipe out" VT Holdings' interest.
Boman testified that during this time "there were some
discussions about [Moak] being involved with [developing the
Property] in the future, but they were very general and very
Three of RCF's representatives testified that Moak agreed
to the reconveyance. Because Boman's practice was to
deliver the originals of the documents to the title company
for recording, he told Moak that he would need the original
copy of the Request for Reconveyance. According to Boman,
Moak would sign the Request for Reconveyance, "fax it to
Zoll's office, and then deliver the original in due
time." After the conversations with Moak, Zoll emailed
Moak the Request for Reconveyance. Moak and his business
partner, Scott, signed and notarized it. Moak then faxed the
Request for Reconveyance back to RCF.
According to Moak, he signed, notarized, and faxed the
Request for Reconveyance "only as a showing of good
faith to demonstrate that he would be willing to deliver the
original if some sort of agreement could be reached regarding
his future participation" in developing the Property.
But he did not communicate that intent or place any
conditions on the Request for Reconveyance when he faxed it
to RCF. RCF's paralegal testified that when she followed
up with Moak, he agreed to sign and return the Request for
Reconveyance without providing any conditions or asking her
to wait to send it to First American for recording. A few
days after he faxed the Request for Reconveyance back to RCF,
Moak met with one of RCF's representatives who "was
not impressed with anything [Moak] had to offer"
regarding future participation in developing the Property.
That representative did not ask Moak for the original copy of
the Request for Reconveyance and Moak "did not volunteer
RCF delivered the Request for Reconveyance to First American
via email. First American recorded the reconveyance (the Full
Reconveyance) and mailed a copy of the Full Reconveyance to
VT Holdings' business address, which released VT
Holdings' trust deed and gave RCF clear title to the
Property. According to Moak, he did not receive the copy of
the Full Reconveyance and was not made aware of it until one
year later. After waiting a few months, Moak attempted to
contact RCF about the Full Reconveyance, but was
unsuccessful. Moak then contacted First American and
requested that it rescind the Full Reconveyance because Moak
never gave RCF an original copy of the Request for
Reconveyance and had never intended VT Holdings' trust
deed to be reconveyed. After Moak complied with the
requirement for requesting a rescission of a recorded
reconveyance, First American recorded a Rescission and Notice
of Erroneous Recordation (the Rescission).
Following the Rescission, VT Holdings initiated this lawsuit,
seeking judicial foreclosure of its trust deed and naming MIP
and RCF as defendants. VT Holdings sought judgment in the amount
of $472, 500, "plus interest at the rate of fifteen
percent" and an order "extinguishing any interest
of [the named defendants] in [the Property]." In the
same lawsuit, VT Holdings sued First American for erroneously
reconveying VT Holdings' trust deed without authorization
and for the expenses VT Holdings would "reasonably incur
in successfully defending [its] interest and priority in [the
Property]" and "the diminution ...