2016 UT App 89
THE UTAH COURT OF APPEALS
2010-1 RADC/CADC VENTURE, LLC,
Appellee,
v.
DOS LAGOS, LLC; MELLON VALLEY, LLC; ROLAND NEIL FAMILY
LIMITED PARTNERSHIP; ROLAND N. WALKER; AND SALLY WALKER,
Appellants.
Opinion
No. 20140675-CA
Filed April 28, 2016
Second District Court, Farmington Department
The Honorable John R. Morris
No. 110700200
Clifford V. Dunn, Michael C. Dunn, Evan A.
Schmutz, and Jordan K. Cameron, Attorneys
for Appellants
Richard C. Terry and Jeremiah R. Taylor, Attorneys
for Appellee
JUDGE GREGORY K. ORME authored this Opinion, in which JUDGES
MICHELE M. CHRISTIANSEN and KATE A. TOOMEY concurred.1
ORME, Judge:
¶1 This appeal comes to us from the district court’s grant of
summary judgment in favor of 2010-1 RADC/CADC Venture,
1. Judge James Z. Davis heard the arguments in this case but did
not have the opportunity to vote on this Opinion prior to his
death. See State v. Goins, 2016 UT App 57, n.1. Judge Kate A.
Toomey substituted for Judge Davis and, having reviewed the
briefs and listened to the oral arguments, participated fully in
the court’s resolution of this appeal.
2010-1 RADC/CADC Venture, LLC v. Dos Lagos, LLC
LLC (RADC). Appellants challenge the summary judgment on a
number of grounds. We affirm.
BACKGROUND
¶2 The pertinent facts of this case are undisputed. In 2007,
Appellants Dos Lagos, LLC, and Mellon Valley, LLC,
(Borrowers) received a $2.5 million loan from America West
Bank. The loan was personally guaranteed by Appellants Roland
N. Walker, Sally Walker, and the Roland Neil Family Limited
Partnership (the Guarantors). Later that year, America West
entered into a loan participation agreement with Utah First
Federal Credit Union, whereby Utah First obtained a fifty-two
percent interest in the loan and America West retained a forty-
eight percent interest.
¶3 One year later, on December 5, 2008, Borrowers executed
a Change in Terms Agreement, which, among other things,
extended their promissory note (the Note) with America West.
The Note was secured by real property owned by Mellon Valley
(the Property).
¶4 The FDIC ultimately closed America West and seized
America West’s interest in the Note, which it thereafter sold to
RADC at auction. Borrowers defaulted on the Note and received
multiple letters notifying them of the default and requesting
payment. In December 2010, RADC purchased the Property—
which was valued at $1,510,000—at a trustee’s sale for
$1,060,000. At the time of the sale, the total amount owing on the
Note was $3,426,701.91, leaving a deficiency of $1,916,701.91
between the amount owed and the value of the Property. Utah
First, whose interest in the Note had not been affected by
America West’s demise and the transfer of its interest, filed an
action seeking a deficiency judgment the next month.
¶5 In its original Complaint, Utah First was the only named
plaintiff and it erroneously indicated that the total amount owed
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2010-1 RADC/CADC Venture, LLC v. Dos Lagos, LLC
on the Note was just $1,819,774.97.2 Dos Lagos filed a motion to
dismiss, in part because RADC was not included as a party. The
parties stipulated to allow amendment, and the First Amended
Complaint added RADC as a plaintiff. It did not, however,
correct the amount owed. Utah First and RADC sought leave to
amend again and filed the Second Amended Complaint in
September 2012, alleging the amount due as the full
$3,426,701.91.
¶6 RADC and Utah First filed motions for summary
judgment, seeking a deficiency of $1,916,701.91. Borrowers
subsequently filed a motion to dismiss and a motion for
summary judgment. The district court denied Utah First’s
motion for summary judgment, determining that there were
issues of fact surrounding the validity of the loan participation
agreement that had been executed by Utah First and America
West. But it granted RADC’s motion for summary judgment
against Borrowers, awarding RADC a deficiency judgment,
calculated as the difference between the full amount due under
the Note and the value of the property at the time of its sale to
RADC, see Utah Code Ann. § 57-1-32 (LexisNexis 2010), subject
to any subsequently determined interest of Utah First. The
district court denied Borrowers’ motion to dismiss and motion
for summary judgment.
¶7 Shortly thereafter, RADC moved for summary judgment
against the Guarantors on the ground that judgment had been
awarded against Borrowers on the obligation guaranteed by the
Guarantors. The district court granted the motion, and
2. RADC suggests that this amount represented Utah First’s
fifty-two percent interest in the total amount owed on the Note.
But by our math, fifty-two percent of $3,426,701.91 is
$1,781,884.99.
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Borrowers and the Guarantors (collectively, Appellants) now
appeal.3
ISSUES AND STANDARD OF REVIEW
¶8 Appellants first argue that RADC’s claim did not relate
back to the original Complaint and was therefore barred by the
statute of limitations. They next contend that the district court
erred by awarding RADC the full amount due under the Note
rather than just its pro rata share. Finally, Appellants claim that
it was error for the district court to grant summary judgment
against the Guarantors. All of the issues raised involve the
district court’s interpretation and application of the law in
granting summary judgment. ‚*W]e review the *district+ court’s
legal conclusions for correctness, affording those legal
conclusions no deference.‛ Ault v. Holden, 2002 UT 33, ¶ 15, 44
P.3d 781.
ANALYSIS
I. RADC’s Claim Was Not Time-Barred.
¶9 The resolution of Appellant’s primary argument on
appeal depends on the operation of the applicable statute of
limitations. Section 57-1-32 of the Utah Code requires that ‚an
action . . . to recover the balance due upon [an] obligation for
which *a+ trust deed was given as security‛ must be commenced
‚within three months after any sale of property under a trust
deed.‛ See Utah Code Ann. § 57-1-32 (LexisNexis 2010).
Appellants argue that because RADC did not commence an
action against Borrowers within three months of the trustee’s
3. Utah First moved to voluntarily dismiss its claims without
prejudice, which the district court allowed over Borrowers’
objection. Utah First is therefore not a party to this appeal.
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sale, its claim was barred before it joined the action via the First
Amended Complaint.4
¶10 There is no dispute that RADC was not identified as a
plaintiff in any complaint filed against Borrowers within three
months of the trustee’s sale. There is also no dispute that Utah
First’s original Complaint was filed within that three-month
window. What we must determine, then, is whether the original
Complaint operates to satisfy the three-month requirement for
RADC as well as for Utah First.
¶11 Appellants contend that the First Amended Complaint
impermissibly added a party to the proceeding in violation of
the applicable statute of limitations. Rule 15(c) of the Utah Rules
of Civil Procedure allows an amended complaint to ‚relate*+
back to the date of the original pleading‛ if ‚the claim
. . . asserted in the amended pleading arose out of the conduct,
transaction, or occurrence set forth or attempted to be set forth in
the original pleading.‛ Utah R. Civ. P. 15(c). Relying on the Utah
Supreme Court’s opinion in Doxey-Layton Co. v. Clark, 548 P.2d
902 (Utah 1976), Appellants argue that this rule generally does
‚not apply to an amendment which substitutes or adds new
parties . . . whether plaintiff or defendant.‛ See id. at 906.
4. Appellants also take issue with the district court’s alternate
conclusion that ‚even if the claims of RADC do not relate back to
the original filing of the complaint, because the purposes of Utah
Code Ann. § 57-1-32 have been satisfied, RADC’s failure to
comply with the statute did not constitute an absolute bar to the
suit.‛ Because we conclude that RADC’s claim does relate back to
the filing of the original Complaint, we need not consider the
propriety of this alternate ruling. See generally Weber v. Snyderville
West, 800 P.2d 316, 320 (Utah Ct. App. 1990) (‚We may affirm the
trial court on any proper ground.‛).
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¶12 Of course, there are exceptions to this general rule. The
principal exception is articulated in Sulzen v. Williams, 1999 UT
App 76, 977 P.2d 497, where this court stated:
[W]hile generally Rule 15(c) . . . will not apply to an
amendment which substitutes or adds new parties
for those brought before the court by the original
pleadings, [the Utah Supreme Court has] made an
exception to the general rule. The exception
operates where there is a relation back, as to both
plaintiff and defendant, when new and old parties
have an identity of interest; so it can be assumed or
proved the relation back is not prejudicial.
Id. ¶ 14 (alterations and omission in original) (citation and
internal quotation marks omitted). ‚The rationale of Rule 15(c) is
that a party who has been notified of litigation concerning a
particular occurrence has been given all the notice that statutes
of limitations were intended to provide.‛ Baldwin County
Welcome Ctr. v. Brown, 466 U.S. 147, 150 n.3 (1984) (considering
the comparable federal rule). ‚The same general standard of
notice applies regardless of whether a litigant seeks to add
defendants, plaintiffs, or claims.‛ McClelland v. Deluxe Fin. Servs.,
Inc., 431 F. App’x 718, 723–24 (10th Cir. 2011) (considering the
comparable federal rule). Here, the First Amended Complaint
did nothing more than add RADC, a successor coholder of the
very note Utah First had sued upon, as a plaintiff. It did not
assert new claims. It therefore follows that when Utah First filed
the original Complaint, seeking the deficiency between the
amount owed on the Note and the value of the Property
purchased by RADC at the trustee’s sale, Borrowers received
sufficient notice to satisfy the rationale of rule 15(c).
¶13 The sufficiency of the notice to Borrowers is further
demonstrated by the identity of interest between Utah First and
RADC. The cases cited by Appellants in relation to this point are
unhelpful, as they address a framework that is inapplicable to
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the facts of this case. For instance, Appellants suggest that
because ‚RADC and Utah First are two separate and distinct
entities,‛ there can be no relation back. We acknowledge that it is
often necessary to look at the connection between the business
operations of the original and added parties, see Russell v.
Standard Corp., 898 P.2d 263, 265 (Utah 1995), but that factor
alone is insufficient to resolve an identity-of-interest question.
We cannot ignore the fact that although there is no direct
business or ongoing contractual relationship between Utah First
and RADC, this case centers around one debt, one promissory
note, and one trustee’s sale. In very simple terms, there is but one
‚conduct, transaction, or occurrence‛ on which all claims are
based. See Utah R. Civ. P. 15(c). There is perhaps no closer
identity of interest than that shared by two parties who are joint
holders of the same note. See generally Penrose v. Ross, 2003 UT
App 157, ¶ 16, 71 P.3d 631 (‚[A]n identity of interest requires
parties to have the ‘same’ interest.‛).
¶14 We also point out that as a policy matter, cases such as
this one should be decided in a single action. Cf. Utah Code Ann.
§ 78B-6-901(1) (LexisNexis 2012) (‚There is only one action for
the recovery of any debt, or the enforcement of any right,
secured solely by mortgage upon real estate and that action shall
be in accordance with the provisions of this chapter.‛). So long
as the rights of the parties are protected and the rules of law are
followed—which they were here by the notice given to
Borrowers via the initial Complaint and by the identity of
interest between RADC and Utah First—our judicial system
values judicial economy. See Okelberry v. West Daniels Land Ass’n,
2005 UT App 327, ¶ 11, 120 P.3d 34. By allowing the
amendments to the original Complaint, the district court
furthered this objective.
II. It Was Not Error for the District Court to Award RADC the
Full Deficiency Amount.
¶15 Appellants next challenge two aspects of the district
court’s order concerning the amount of the judgment. First, they
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argue that the district court should not have awarded judgment
in the amount sought by the Second Amended Complaint—the
full deficiency amount—but should instead have limited any
judgment to a sum calculated with reference to the amount
claimed to be due in the original Complaint. Second, Appellants
argue that it was error to award the entire deficiency judgment
amount to RADC, even though the district court expressly made
that judgment subject to any later-determined interest of Utah
First. We conclude that the district court did not err in either
regard.
A. Plaintiffs Were Entitled to Recover the Full Deficiency
Amount.
¶16 The original Complaint claimed that the total amount still
due on the Note was $1,819,774.97. The First Amended
Complaint, which added RADC as a plaintiff, left that amount
unchanged. Finally, in the Second Amended Complaint, the
amount due on the Note was updated to correct the full amount
actually due on the Note and to state the amount still due
following the sale of the land securing the Note—$1,916,701.91.
When Plaintiffs moved for summary judgment, they sought a
deficiency judgment in this amount.
¶17 Appellants point to the language of section 57-1-32 to
argue that Plaintiffs were limited to pursuing the amount
indicated in the original Complaint. Specifically, the statute
mandates that ‚the complaint shall set forth the entire amount of
the indebtedness.‛ Utah Code Ann. § 57-1-32 (LexisNexis 2010).
The question before us, as Appellants state it, is whether, based
on that language, RADC ‚should have been estopped from
arguing that the amount owing was more than what was
originally plead[ed+.‛
¶18 A successful claim of estoppel would require, among
other things, a showing that Appellants took reasonable action—
or reasonably refrained from action—based on the misstatement
of the amount of indebtedness included in the original
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Complaint. See Salt Lake City Corp. v. Big Ditch Irrigation Co., 2011
UT 33, ¶ 41, 258 P.3d 539. According to Appellants, without
citation to any portion of the record, ‚[Borrowers] did not
engage in a trial and negotiation strategy that they would or
could have employed had the total amount due under the note
been originally asserted as the same amount as ultimately
claimed.‛ This is not the sort of inaction that is contemplated by
the doctrine of estoppel.
¶19 But even if Appellants might have acted differently in the
months following the filing of the original Complaint had it
included the amount actually due, the Second Amended
Complaint was filed in September 2012. The district court did
not grant RADC’s motion for summary judgment until April
2013. Thus, even ignoring the fact that Borrowers likely always
knew—and surely should have known—the full amount owed
under the Note, they had seven months between the filing of the
Second Amended Complaint and the district court’s order
during which they could have ‚engage*d+ in a *different+ trial
and negotiation strategy‛ when confronted with the increased
amount, if so inclined. Because they did not do so then, there is
no reason to assume they would have done so earlier. It was
therefore not error for the district court to enter judgment based
on the amount alleged in the Second Amended Complaint once
that amount was proven.
B. It Was Not Error for RADC to Receive Judgment Based on
the Full Amount Due on the Note.
¶20 RADC had only a forty-eight percent interest in the Note,
but the district court awarded the entire deficiency amount to
RADC, albeit subject to any subsequently determined interest of
Utah First. We acknowledge that, at first glance, it might appear
that Appellants make a compelling argument. After all, it seems
somewhat intuitive that as a forty-eight percent owner of the
Note, RADC should have received judgment for only forty-eight
percent of the amount still owing on the Note.
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¶21 Appellants complain that the district court’s order,
making the judgment subject to any subsequently determined
interest of Utah First, ‚cited no law.‛ But after registering this
complaint, Appellants direct this court to no statute, case, or
other authority that supports their contention that the district
court got this wrong. Appellants’ failure to carry their burden of
persuasion on appeal is a sufficient ground for us to reject this
argument. See Hi-Country Estates Homeowners Ass’n v. Jesse
Rodney Dansie Living Trust, 2015 UT App 218, ¶ 8, 359 P.3d 655.
¶22 We do briefly note, however, that it would be unjust to
allow debtors to avoid responsibility for a substantial portion of
their obligations simply because one of two creditors on a single
debt takes the laboring oar in collecting the debt.5 See, e.g., Irons
v. American Nat’l Bank, 172 S.E. 629, 641 (Ga. 1933) (‚Any one of
the holders may foreclose, giving the notice required by law to
all holders concerned.‛); Zalesk v. Wolanski, 281 Ill. App. 54, 55
(1935) (determining that ‚the plaintiff, as one of the note holders,
under the terms of the trust deed, had the right to declare the
whole amount of the indebtedness due and unpaid‛). The
district court determined that Borrowers owed $1,916,701.91
under the Note. How that amount is divided between RADC
and Utah First is no business of Borrowers, provided that they
are the only two holders of the Note and the judgment
represents the total amount properly due under the Note. There
is no dispute that the amount awarded by summary judgment is
the total amount owed, and the qualifying language of the
judgment recognizes the possible interest of Utah First and
5. Of course, the creditor who obtains a judgment would then
have to account to the other creditor for its interest in the note or
other instrument. Cf. Joseph Nelson Supply Co. v. Leary, 164 P.
1047, 1049 (Utah 1917) (‚*A+ person who claims the contract
price, in whole or in part, which is due to the contractor . . . ,
takes the assignment subject to the claims for labor performed
and material furnished to the contractor, which was by him used
in the performance of his contract*.+‛).
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protects Appellants from having to pay the debt twice—once to
RADC and once to Utah First.
III. Summary Judgment Against the Guarantors Will Not Be
Disturbed.
¶23 Finally, Appellants contend that the district court erred by
granting summary judgment against the Guarantors.
Appellants’ straightforward argument is that judgment was
improperly granted against Borrowers on the underlying
obligation and so the judgment against the Guarantors is
likewise invalid. Appellants recognize that their arguments on
behalf of the Guarantors rise or fall with their arguments on
behalf of Borrowers, arguing that ‚if the judgment that forms the
basis of the judgment against the guarantors is overturned, then
the judgment against guarantors must also be overturned.‛
Because we have declined to disturb the judgment against
Borrowers, we have no occasion to disturb the judgment against
the Guarantors.
CONCLUSION
¶24 We reject Appellants’ arguments on appeal. RADC was
properly added as a plaintiff to the case in the First Amended
Complaint because that amendment relates back to the original
Complaint. The district court did not err by awarding judgment
for the entire deficiency amount or by awarding that full amount
to RADC, subject, of course, to its obligation to account to Utah
First for its share of any proceeds recovered. Finally, Appellants
have not demonstrated any reason why the judgment against the
Guarantors should be disturbed.
¶25 Affirmed.
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