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Banner Bank v. Real Estate Investor Education LLC

United States District Court, D. Utah

August 12, 2019

BANNER BANK, successor by merger of AmericanWest Bank which formerly did business in Utah as Far West Bank, Plaintiff,
v.
REAL ESTATE INVESTOR EDUCATION, LLC, a Nevada limited liability company; REAL ESTATE INVESTOR SUPPORT, LLC, a dissolved Nevada limited liability company; JAMES M. SMITH, a Utah resident, JMS MARKETING L.L.C., a Utah limited liability company; LOREE C. SMITH, an individual and JOHN DOES 1-10, Defendants. JAMES M. SMITH Counterclaimant,
v.
BANNER BANK, Counterclaim Defendant. LOREE C. SMITH, Counterclaimant,
v.
BANNER BANK, Counterclaimant,

          MEMORANDUM DECISION AND ORDER DENYING MOTION TO ALTER AND AMEND

          CLARK WADDOUPS, UNITED STATES DISTRICT COURT JUDGE

         Before the court is Banner Bank's Motion to Alter and Amend (ECF No. 294), which asks the court to alter certain findings and conclusions of law made in, and ultimately reverse, its May 6, 2019 Order (the “Order”) (ECF No. 291). The Order held that because Banner Bank breached the terms of its Consent, Waiver and Release Agreement (the “Release”) with Loree Smith (“Loree”) and initiated, pursued, and prosecuted this action in bad faith, it was required to reimburse the reasonable attorney fees Loree Smith incurred in this action. Banner Bank asserts that certain findings and conclusions in the Order are “contrary to the pleadings, documents, materials, trial evidence and governing law” and therefore justify alteration under Rule 59(e) of the Federal Rules of Civil Procedure. For the reasons stated herein, Banner Bank's motion is DENIED.

         “Rule 59(e) motions may be granted when ‘the court has misapprehended the facts, a party's position, or the controlling law.'” Nelson v. City of Albuquerque, 921 F.3d 925, 929 (10th Cir. 2019) (quoting Servants of the Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000)). Such motions, however, “are ‘not appropriate to revisit issues already addressed or advance arguments that could have been raised in prior briefing.'” Id. (quoting Servants of the Paraclete, 204 F.3d at 1012). As such, Rule 59(e) “‘may not be used to relitigate old matters, or to raise arguments or present evidence that could have been raised prior to the entry of judgment.'” Id. (quoting Exxon Shipping Co. v. Baker, 554 U.S. 471, 485 n.5 (2008) (internal quotations omitted)). Banner Bank's motion asserts ten arguments as to why the court should alter its decision. With these standards in mind, each argument will be discussed in turn.

         1. Banner Bank incorrectly asserts that the court erroneously found that the only declaratory relief Banner Bank sought was that Loree had no ownership interest in the Eleven Parcels.

         Banner Bank argues that the court should amend the Order to correct its erroneous finding that Banner Bank only sought declaratory relief that Loree had no ownership interest in the Eleven Parcels, because Banner Bank also sought relief against Loree as to her interests in JMS Marketing, LLC and real and personal property in South Carolina. The Order made no such finding.

         While the Order was primarily focused on Banner Bank's claim regarding the Eleven Parcels, as that was the primary issue in this litigation (see ECF No. 256 at 14-15), it expressly recognized that this was not the only claim brought by Banner Bank. (See ECF No. 291 at 4 (recognizing that Banner Bank's complaint “sought, inter alia, . . . declaratory judgment against Loree determining that she does not hold any interest in the Eleven Parcels”).) In determining that Banner Bank's action was meritless and brought in bad faith, the Court expressly considered Banner Bank's requests for relief as to Loree's interests in JMS Marketing, LLC and the South Carolina property. Nonetheless, the court takes this opportunity to clarify its ruling.

         As Banner Bank submits in its motion, these two claims, like its claim regarding the Eleven Parcels, were brought “solely to certain [sic] that the Bank would not be foreclosing on Loree's marital interest, if any, in real or personal property in South Carolina, Utah and Oregon which secured its loan.” (See ECF No. 294 at 5, n. 3.) But, as Banner Bank explicitly acknowledged, the validity of its security was governed by the status of title at the time that James Smith pledged as security his interests in the South Carolina property and JMS Marketing, LLC, so any after-obtained marital interest Loree may have received in the same could not have impacted Banner Bank's ability to foreclose. (See ECF No. 256 at 22 (“[T]he assertion that Loree Smith may have obtained an equitable interest in James Smith's interest in the condominium through the interim order of partial distribution made in November of 2012 or subsequent proceeding is entirely irrelevant because the Trust Deed conveyance was made when James Smith signed and had the Trust Deed delivered to the Bank in connection with closing on the 2009 loan transaction.”).) Moreover, as Loree expressly recognized, “her claim to an equitable interest in marital assets take[s] a back seat to legal disputes involving this property.” (ECF No. 27 at 2.) Thus, the reasons Banner Bank offers for asserting these claims prove that the claims are “of little weight or importance” and have “no basis in law or fact.” Those claims, like the claim regarding the Eleven Parcels, are therefore meritless. See Fadel v. Deseret First Credit Union, 2017 UT App 165, ¶ 32, 405 P.3d 807, 815.

         Not only were these claims meritless, but they were also brought in bad faith. The relief Banner Bank sought as to Loree's interests in JMS Marketing, LLC and the South Carolina property “relat[ed] to the Loan, ” and Banner Bank had therefore already promised Loree that it would not bring such claims against her. (See Pl. Ex. 11, at ¶ 4.) As is fully discussed in the Order, by forsaking its covenant with Loree and bringing claims against her that blatantly breached the Release, Banner Bank “lacked an honest belief in the propriety of” those claims. See Fadel, 2017 UT App 165, ¶ 35, 405 P.3d at 815. Thus, Banner Bank's claims regarding Loree's interests in JMS Marketing, LLC and the South Carolina property were brought in bad faith and justified Loree being awarded her attorney fees pursuant to Utah Code § 78B-5-825(1). The court therefore declines to alter its judgment.

         2. Banner Bank incorrectly asserts that the court erroneously found that Banner Bank only prevailed on its claims pertaining to the Eleven Parcels.

         Banner Bank argues that the court erred in concluding that Banner Bank only prevailed on its claims pertaining to the Eleven Parcels, but the Order does not make this finding, let alone address the claims on which Banner Bank prevailed. To the extent that Banner Bank is arguing that because it prevailed on some of its claims, it, and not Loree, was the “prevailing party, ” so Loree cannot recover attorneys fees under Utah Code § 78B-5-825(1), that argument is meritless. Under Utah law, “[w]hich party is the prevailing party is an appropriate question for the trial court.” R.T. Nielson Co. v. Cook, 2002 UT 11, ¶ 25, 40 P.3d 1119, 1126-27. Because Loree's breach of contract claim was the primary issue at trial, and because she prevailed on that claim, the court properly found that she was the prevailing party in this action. See id. at 1127 (noting that in determining which party was the prevailing party, a court may appropriately consider, among other things, “the number of claims, counterclaims, cross-claims, etc., brought by the parties” and “the importance of the claims relative to each other and their significance in the context of the lawsuit considered as a whole”). The Order therefore properly recognizes that Loree was the “prevailing party” in this action and was therefore entitled under Utah Code § 78B-5-825(1) to recover the attorneys fees she incurred in defending against Banner Bank's bad-faith action.

         3. Banner Bank incorrectly asserts that the court erroneously found that Banner Bank would not permit Loree to be dismissed.

         Again, Banner Bank attacks the merits of a conclusion that the court did not make.[1] The Order simply recognizes that Banner Bank opposed Loree's motion to dismiss, which it did, via its June 14, 2013 Memorandum in Response to Defendant Loree C. Smith's Motion to Dismiss (ECF No. 28) and its subsequent August 1, 2013, Objection and Response to Defendant Loree C. Smith's Motion Withdrawal of Motion and Memorandum in Opposition to the Improper Second Motion to Dismiss Filed by Defendant Loree Smith (ECF No. 36). While it is true that in its August 1, 2013 pleading, Banner Bank suggested that Loree should be dismissed, it predicated that suggestion with a declaration that the court “should deny Defendant's Smith conclusory and ill-supported First Motion to Dismiss on legal grounds” and conditioned it on the requirement that Loree “waive, subordinate, and disclaim any right, title or interest in the subject Property which [Banner Bank] is asserting to foreclose or executed [sic] upon.” (See ECF No. 36 at 13-14.) Thus, it was not erroneous for the court to recognize the fact that Banner Bank opposed Loree's motion to dismiss. (See ECF No. 291 at ¶ 35.)

         4. Because Banner Bank has previously argued that Loree was only named so that the court could determine her interests in the collateral, and this joinder was necessary, the argument is improperly raised here.

         Banner Bank argues that its action against Loree was necessary in order to determine her interest in the property. Banner Bank has made this argument numerous times in this action (see, e.g., ECF No. 256 at 10-13; ECF No. 262 at 17-18; ECF No. 263 at 52-53; ECF No. 228 at 5- 8), and it was expressly addressed, and dismissed, by the Order. (See ECF No. 291 at ¶ 29 (recognizing that the action was not required because, as Banner Bank acknowledged, the validity of its security liens “depended on the status of title at the time the Deed of Trust was signed and ...


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