Wells Fargo Bank v. Noerring

2018 UT App 232

THE UTAH COURT OF APPEALS

WELLS FARGO BANK, NA,
Appellee,
v.
JUSTINE NOERRING AND DARWIN LONG,
Appellants.

Opinion
No. 20160837-CA
Filed December 20, 2018

Third District Court, West Jordan Department
The Honorable James D. Gardner
No. 130405660

Karra J. Porter, Kristen C. Kiburtz, Edward T. Wells,
and David D. Bennett, Attorneys for Appellants
Brett N. Anderson and Scott R. Taylor, Attorneys
for Appellee

JUDGE MICHELE M. CHRISTIANSEN FORSTER authored this Opinion,
in which JUDGES DAVID N. MORTENSEN and JILL M. POHLMAN
concurred.

CHRISTIANSEN FORSTER, Judge:

¶1 After Lynnette Noerring and Justine Noerring
(collectively, the Noerrings) defaulted on a loan, Wells Fargo
Bank, NA (Wells Fargo) prepared to foreclose on the real
property that secured that loan. 1 A title search revealed,
however, that, due to some missing words, the security interest
in the property had not been effectively conveyed. Wells Fargo

1. Because Lynnette and Justine share a last name, we refer to
each by her first name throughout this opinion. We intend no
disrespect by the apparent informality.
 Wells Fargo Bank v. Noerring

filed this action seeking, among other things, reformation of a
vesting deed. Following a bench trial, the court amended the
deed of trust entered into by the parties to reflect what all parties
believed they were doing at the time—creating and conveying
an enforceable deed of trust to secure the loan. Appellants
challenge that decision. We affirm.

BACKGROUND

¶2 On March 15, 2003, Lynnette created the OMI Trust,
designating herself as the trustee and her daughter, Justine, as
the sole beneficiary. The only asset placed into the trust was the
real property (the Property) at issue in this action.

¶3 Lynnette refinanced the Property several times. In each
instance, she transferred the Property by quitclaim deed from
herself, as trustee of the OMI Trust, to herself as an individual.
After executing a deed of trust on the Property and closing the
refinance, Lynnette typically conveyed the Property back to
herself, as the trustee of the OMI Trust, by quitclaim deed.

¶4 Lynnette broke from this pattern in one such iteration. In
February 2006, Lynnette executed a quitclaim deed (the 2006
Quitclaim Deed), purportedly transferring the Property to
Lynnette and Justine as individuals, which was recorded on
March 3, 2006. 2 Instead of identifying the grantor as the trustee
of the OMI Trust—the record owner of the Property at the
time—the 2006 Quitclaim Deed instead listed the grantor as
“Lynnette Noerring, a married woman.” Following the
recording of that quitclaim deed, the Noerrings refinanced the
mortgage on the Property with a loan from WMC Mortgage
Corp., which loan was secured by a trust deed, also recorded on
March 3, 2006.

2. By “recording” or “recorded” in this opinion, we refer to
recordation of instruments at the Salt Lake County Recorder’s
Office.

20160837-CA 2 2018 UT App 232
 Wells Fargo Bank v. Noerring

¶5 Five months later, the Noerrings obtained a loan (the New
Century Note) from New Century Mortgage Corp. (New
Century). This loan satisfied the WMC loan and was, by its
terms, to be secured by a trust deed on the Property. In
executing the New Century Note, the Noerrings represented that
they were title owners of the Property. Along with the note, the
Noerrings executed several other documents at the closing,
acknowledging that the purpose of the transaction was for a
“residential mortgage loan,” which entailed providing the lender
a security interest in the Property. The New Century Trust Deed
was signed by both Lynnette and Justine and recorded on
August 29, 2006. The New Century Note was ultimately
assigned to Wells Fargo as trustee.3

¶6 The Noerrings later applied for and received two
modifications to the New Century Note and made payments for
approximately five years. 4 On February 25, 2010, Lynnette
passed away. 5 A little over a year later, Justine defaulted on the
New Century Note. A few months after the default, Wells Fargo
conducted a title search on the Property in anticipation of
foreclosure. The search revealed that the title owner of the
Property was Lynnette Noerring, as trustee for the OMI Trust,
and not Lynnette as an individual or Lynnette and Justine as
individuals.

3. Although not relevant to this appeal, we note for clarity that
the New Century Note was sold and pooled together with other
mortgage loans into an asset-backed trust. Wells Fargo Bank, NA
is the trustee for that trust.

4. Following the second loan modification, Justine made two
payments before defaulting, one in March and one in April 2011.

5. Justine succeeded Lynnette as the trustee of the OMI Trust
and, in 2013, Darwin Long (Long) succeeded Justine as the
trustee.

20160837-CA 3 2018 UT App 232
 Wells Fargo Bank v. Noerring

¶7 Wells Fargo then initiated this action seeking, among
other things, reformation of the 2006 Quitclaim Deed.
Specifically, Wells Fargo sought “[a] judgment reforming the
[2006 Quitclaim Deed] to reflect that Lynnette Noerring, as trustee
of the OMI Trust, conveyed the Property as the grantor to the
Noerrings, so that the Noerrings will be the correct owner and
grantor/trustor of the Property under the [New Century Trust
Deed].” (Emphasis added.) Wells Fargo also sought an order
declaring the New Century Trust Deed to be valid and that it
“encumbers and constitutes a first priority lien against the entire
Property.” Subsequently, Wells Fargo also requested that the
New Century Trust Deed be reformed to reflect that Lynnette, as
trustee of the OMI Trust, conveyed the security interest in the
Property.

¶8 Following a bench trial, the court concluded that Justine
and Lynnette, individually, and Lynnette, as trustee for the OMI
Trust, intended to grant a security interest in the Property to
New Century in order to secure the New Century Note. The trial
court found by clear and convincing evidence that the Noerrings
and New Century made a mutual mistake regarding the New
Century Trust Deed. Specifically, the court determined that the
Noerrings and New Century intended to create a valid trust
deed and convey a valid security interest in the Property.6

6. The court alternatively concluded that the 2006 Quitclaim
Deed could be reformed based on the same reasoning. Although
Wells Fargo initially requested the remedy of reformation of the
2006 Quitclaim Deed, it later asserted that the court could
alternatively reform the New Century Trust Deed. Appellants
did not challenge the court’s adoption of this alternative remedy,
but instead focused their arguments below, as on appeal, on the
absence of the OMI Trust as a party to the New Century Trust
Deed. The trial court could not reform the New Century Trust
Deed, Appellants argued, because that reformation would entail
drawing the OMI Trust—a separate legal entity that was not a
party to the New Century Trust Deed—into that transaction.
(continued…)

20160837-CA 4 2018 UT App 232
 Wells Fargo Bank v. Noerring

Consequently, the trial court ordered reformation of the
New Century Trust Deed. The court changed the grantor of
the Property from Lynnette and Justine, as individuals,
to Lynnette, as trustee of the OMI Trust. Justine and Darwin
Long (collectively, Appellants) challenge the trial court’s
decision.

ISSUES AND STANDARDS OF REVIEW

¶9 Appellants raise three issues on appeal. First, they argue
that Wells Fargo’s reformation claims are barred by the nonclaim
provisions of the Utah Uniform Trust Code and the Utah Probate
Code (collectively, the Nonclaim Statutes). See Utah Code Ann.
§ 75-3-803(1) (LexisNexis Supp. 2018); id. § 75-7-509(1). 7
Appellants raise this issue for the first time on appeal but assert
that the issue can be addressed despite the lack of preservation
because application of the Nonclaim Statutes present a
jurisdictional bar to Wells Fargo’s claims. “As a general rule,
claims not raised before the trial court may not be raised on
appeal.” State v. Holgate, 2000 UT 74, ¶ 11, 10 P.3d 346. However,
“because subject matter jurisdiction goes to the heart of a court’s
authority to hear a case, it is not subject to waiver and may be
raised at any time, even if first raised on appeal.” In re adoption of
Baby E.Z., 2011 UT 38, ¶ 25, 266 P.3d 702 (quotation simplified).
The applicability and interpretation of a statute is a question of
law, which we review for correctness. Fuller v. Bohne, 2017 UT
App 28, ¶ 9, 392 P.3d 898.

(…continued)
Because the trial court ordered reformation of the New Century
Trust Deed, we likewise focus our attention on that aspect of the
court’s decision.

7. Where the applicable provision has not substantively changed,
we cite the most recent version of the Utah Code for
convenience.

20160837-CA 5 2018 UT App 232
 Wells Fargo Bank v. Noerring

¶10 Second, Appellants argue that Wells Fargo’s claims are
barred by the three-year statute of limitations applicable to
claims for relief on the ground of fraud or mistake. Utah Code
Ann. § 78B-2-305(3). Whether a statute of limitations applies and
whether the limitations period is subject to tolling are questions
of law. Shiozawa v. Duke, 2015 UT App 40, ¶ 14, 344 P.3d 1174.
However, the determination of when a party reasonably should
have known the facts constituting the fraud or mistake claim is a
question of fact. Id. We will not disturb the fact-finder’s
determination absent clear error. Sevy v. Security Title Co. of S.
Utah, 902 P.2d 629, 634 (Utah 1995).

¶11 Third, Appellants contend that the trial court had no
authority to reform a deed by substituting a third party as
grantor, thereby creating a new deed. “Reformation of a deed is
a proceeding in equity.” RHN Corp. v. Veibell, 2004 UT 60, ¶ 35,
96 P.3d 935 (quotation simplified). In equity actions, we review
the trial court’s factual findings for clear error and its
conclusions of law for correctness. Id. We will not overturn a
trial court’s formulation of an equitable remedy “unless it has
abused its discretion.” Ockey v. Lehmer, 2008 UT 37, ¶ 42, 189
P.3d 51 (quotation simplified).

ANALYSIS

I. Nonclaim Statutes

¶12 Appellants assert that the trial court lacked jurisdiction to
determine Wells Fargo’s reformation claims because those claims
were barred by Utah’s Nonclaim Statutes. See Utah Code Ann.
§ 75-3-803(1) (LexisNexis Supp. 2018); id. § 75-7-509(1).
Particularly, Appellants argue that, based on the Nonclaim
Statutes, Wells Fargo was required to present its claim for
reformation of the deed within one year of Lynnette’s death.
Because Wells Fargo did not seek reformation within this
one‑year window, Appellants argue, any claim is barred
“against the deceased settlor’s estate, the trustee, the trust estate,
and the beneficiaries of the deceased settlor’s trust.” (Quoting

20160837-CA 6 2018 UT App 232
 Wells Fargo Bank v. Noerring

Utah Code Ann. § 75-7-509(1).) Wells Fargo argues in response
that the Nonclaim Statutes are not applicable to this action
because “any proceeding to enforce any mortgage, pledge, or
other lien upon property of the deceased settlor’s estate” is
exempt from the one-year presentment period. Utah Code Ann.
§ 75‑7‑509(4)(a). We first review the Nonclaim Statutes generally,
then consider the applicability of the Nonclaim Statutes to Wells
Fargo’s reformation claims.

¶13 The Nonclaim Statutes generally require creditors to
present claims against a decedent’s estate or a deceased settlor
within one year of the person’s death. See id. § 75‑3‑803(1); id.
§ 75-7-509(1). Failure to present a claim timely will likely result
in that claim being barred as against the trust or estate because
the purpose of the Nonclaim Statutes is “to promote a speedy
and efficient system” for settling and distributing the estate or
trust of the decedent. See In re Estate of Ostler, 2009 UT 82, ¶ 20,
227 P.3d 242 (quoting In re Estate of Daigle, 634 P.2d 71, 76 (Colo.
1981) (en banc)). Indeed, the Utah Supreme Court has construed
the Nonclaim Statutes “as a jurisdictional bar not subject to
tolling.” Id. ¶ 21. In reaching this conclusion, the supreme court
adopted the reasoning employed by the Colorado Supreme
Court in In re Estate of Randall, 441 P.2d 153 (Colo. 1968) (en
banc), and Daigle. See Ostler, 2009 UT 82, ¶ 21. The Daigle court
explained:

A nonclaim statute operates to deprive a court of
jurisdiction. The personal representative of an
estate can neither waive it nor toll it. A nonclaim
statute imposes a condition precedent to the
enforcement of a right of action; that is to say, the
claim must be presented within the time set in the
notice to creditors or be barred. A statute of
limitations, on the other hand, does not bar the
right of action but only the remedy. Such a statute
may be tolled. Such a statute is a defense which is
waived if not affirmatively pleaded.

20160837-CA 7 2018 UT App 232
 Wells Fargo Bank v. Noerring

Daigle, 634 P.2d at 75 (quotation simplified). Thus, the Nonclaim
Statutes are not statutes of limitation but impose a bar to
enforcement of late-filed claims against an estate. See Ostler, 2009
UT 82, ¶ 21. Accordingly, if Wells Fargo’s reformation claims are
made against Lynnette’s estate and the Nonclaim Statutes apply,
the trial court would have lacked jurisdiction to consider these
claims.

¶14 Wells Fargo asserts that its claims are exempt from the
one-year presentment period contained in the Nonclaim Statutes
because it is a lienholder. Relevant here, the Nonclaim Statutes
exempt “any proceeding to enforce any mortgage, pledge, or
other lien upon property of the deceased settlor’s estate or the
trust estate.” Utah Code Ann. § 75‑7‑509(4)(a). Wells Fargo
asserts that this provision applies in this case. We disagree.

¶15 Armed with the knowledge that a mistake in the 2006
Quitclaim Deed—and likewise an error in the New Century
Trust Deed—prevented foreclosure on the Property, Wells Fargo
filed a complaint in the trial court seeking reformation. Wells
Fargo requested that the New Century Trust Deed be reformed
to reflect a proper conveyance to New Century of a security
interest in the Property. Reformation was necessary, in Wells
Fargo’s view, because—absent altering the language of the New
Century Trust Deed—Wells Fargo could not proceed to foreclose
on the Property. Because of the mistake in the New Century
Trust Deed and lack of a valid security interest in the Property,
Wells Fargo sought a judgment for reformation, an equitable
remedy preliminary to any enforcement action under the
circumstances. Accordingly, Wells Fargo’s action below sought
to reframe the underlying vesting instrument, not to enforce its
terms.

¶16 But this conclusion does not end our inquiry. For Wells
Fargo’s claims to be jurisdictionally barred, they must constitute
“claims” within the meaning of the Nonclaim Statutes.
Appellants argue that Wells Fargo’s reformation claims are
“claims” within the Nonclaim Statutes and are therefore barred

20160837-CA 8 2018 UT App 232
 Wells Fargo Bank v. Noerring

because Wells Fargo did not present these reformation claims to
Lynnette Noerring’s estate within one year of Lynnette’s
passing. We also reject this argument and conclude that the
Nonclaim Statutes do not apply to the issues presented on
appeal.

¶17 As noted, the Nonclaim Statutes require presentation
within one year of claims against a decedent’s estate that
arose before the death of the decedent. In this context, “claims”
“include[] liabilities of the decedent . . . , whether arising in
contract, in tort, or otherwise, and . . . [do] not include . . .
demands or disputes regarding title of a decedent . . . to
specific assets alleged to be included in the estate.” Utah
Code Ann. § 75‑1‑201(6) (LexisNexis Supp. 2018). Put
another way, “claims” refer to debts or demands against the
decedent that might have been enforced in the decedent’s
lifetime. As used in this provision, however, “the term[] ‘claim’
does not include causes of action purely equitable, and in which
purely equitable relief is sought.” In re Estate of Sharp, 537 P.2d
1034, 1037 (Utah 1975); see also id. (determining that “equitable
claims for relief beyond the money judgment, such as for
enforcement of liens or trusts or for enforcement of rights in
specific property are not ‘claims’ within the [nonclaim] statutes”
(quotation simplified)). Thus, an equitable cause of action filed
against a decedent seeking reformation of an instrument is not
seeking re-payment of a “liability of the decedent,” which must
be presented to the administrator of the estate within the
statutory window. See Utah Code Ann. § 75-1-201(6). Because
Wells Fargo’s action below was not composed only of “claims”
within the meaning of the Nonclaim Statutes, the trial court did
not lack jurisdiction to consider and decide the matters now
before us. 8

8. We note that Wells Fargo asserted several claims in its
complaint, some of which may have been subject to the
(continued…)

20160837-CA 9 2018 UT App 232
 Wells Fargo Bank v. Noerring

¶18 We have observed that “reformation is an
equitable remedy that permits the court to add new terms to a
deed or alter the original language of a deed to conform to
the parties’ intent.” FDIC v. Taylor, 2011 UT App 416, ¶ 45, 267
P.3d 949 (quotation simplified); see also Wells Fargo Bank, NA v.
Coleman, 768 S.E.2d 604, 611 (N.C. Ct. App. 2015) (“Reformation
is a well‑established equitable remedy used to reframe
written instruments where, through mutual mistake or
the unilateral mistake of one party induced by fraud of the
other, the written instrument fails to embody the parties’
actual, original agreement.” (quotation simplified)). Here,
Wells Fargo sought equitable reformation of the 2006 Quitclaim
Deed or the New Century Trust Deed. This cause of action
falls outside of the definition of a claim under the
Nonclaim Statutes. Accordingly, the one-year presentation
period does not apply and the trial court had jurisdiction to
decide the matter.

II. Statute of Limitations

¶19 Appellants next argue that the trial court incorrectly
identified the date that the statute of limitations for fraud or
mistake began to run. An action to reform a deed based upon
fraud or mistake must be brought within three years. Utah Code
Ann. § 78B-2-305(3) (LexisNexis Supp. 2018). 9

(…continued)
Nonclaim Statutes’ one-year presentation period. But the
decision of the trial court as well as the parties’ argument on
appeal focuses on Wells Fargo’s cause of action for reformation.
We accordingly limit our review to that legal theory.

9. The parties do not dispute either the applicable statute of
limitations or whether it is subject to tolling under the statutory
discovery rule. We therefore limit our review to the trial court’s
finding regarding Wells Fargo’s discovery of the facts forming
(continued…)

20160837-CA 10 2018 UT App 232
 Wells Fargo Bank v. Noerring

¶20 Generally, the “statute of limitations begins to run upon
the happening of the last event necessary to complete the cause
of action.” Russell Packard Dev., Inc. v. Carson, 2005 UT 14, ¶ 20,
108 P.3d 741 (quotation simplified). A cause of action based
upon fraud or mistake, however, “does not accrue until the
discovery by the aggrieved party of the facts constituting the
fraud or mistake.” Utah Code Ann. § 78B-2-305(3); see also Russell
Packard, 2005 UT 14, ¶ 22 (explaining that “when a plaintiff first
has actual or constructive knowledge of the relevant facts
forming the basis of the cause of action—the statutory
limitations period begins to run”). “[D]etermining when a
plaintiff either discovered or reasonably should have discovered
his or her cause of action is often a difficult and intensely fact-
dependent inquiry.” Russell Packard, 2005 UT 14, ¶ 22. “Before a
statute of limitations may be tolled . . . the plaintiff must make
an initial showing that [it] did not know nor should have
reasonably known the facts underlying the cause of action in
time to reasonably comply with the limitations period.” Young
Res. Ltd. P'ship v. Promontory Landfill LLC, 2018 UT App 99, ¶ 27,
427 P.3d 457 (quotation simplified).

¶21 Here, the trial court determined that Wells Fargo
discovered the mistake—that Lynnette and Justine, in their
individual capacities, mistakenly pledged the Property as
security for the New Century Loan without being title owners—
in September 2011, when Wells Fargo completed a title search in
anticipation of foreclosure. Having brought the action within
three years of discovery of that information, the court concluded
that the statute of limitations did not bar Wells Fargo’s claim for
reformation. Appellants do not challenge this finding on appeal,
but instead assert that, as a matter of law, the statute of
limitations began running in 2006 because New Century had
actual or constructive knowledge of the New Century Trust

(…continued)
the basis of the mistake claim. See Shiozawa v. Duke, 2015 UT App
40, ¶ 14, 344 P.3d 1174.

20160837-CA 11 2018 UT App 232
 Wells Fargo Bank v. Noerring

Deed, which contained the mistaken statements. Because New
Century—and by imputation, Wells Fargo—had sufficient notice
of the mistake in the title to trigger the statute of limitations in
2006, they assert, the statute of limitations expired before the
complaint was filed in 2013. In other words, Appellants ask us to
supplant the trial court’s factual finding—the 2011 discovery of
the mistake—with a legal conclusion (constructive notice) that,
by operation of the recording statutes, Wells Fargo reasonably
should have known of the mistake in 2006.

¶22 In the context of Utah’s recording statutes, we recognize
two types of notice, actual and constructive. See FDIC v. Taylor,
2011 UT App 416, ¶ 36, 267 P.3d 949. “Actual notice arises from
actual knowledge of an unrecorded interest or infirmity in the
grantor’s title.” Haik v. Sandy City, 2011 UT 26, ¶ 14, 254 P.3d 171
(quotation simplified). Constructive notice, or notice arising by
presumption of law, takes two forms: record notice and inquiry
notice. See id. “Record notice results from a record or is imputed
by the recording statutes.” Id. (quotation simplified). Unlike
record notice, “inquiry notice occurs when circumstances arise
that should put a reasonable person on guard so as to require
further inquiry on his part,” though “inquiry notice does not
arise from records.” First Am. Title Ins. Co. v. J.B. Ranch, Inc., 966
P.2d 834, 838 (Utah 1998) (quotation simplified).

¶23 As we noted, Appellants do not challenge the trial court’s
finding that Wells Fargo had actual notice of the mistake in 2011.
Accordingly, we discern no error in the trial court’s findings and
do not further consider the actual notice argument. With respect
to inquiry notice, Appellants fail to explain the particular
circumstances here that would put a reasonable person on
guard. They instead assert generally that “had the real estate
industry been less ‘fast and loose’ leading up to the Great
Recession—[a] 2006 inquiry [into the Property’s title] would
have revealed the correct state of title.” Because the briefing on
this theory is inadequate to carry their burden of persuasion, we
do not consider it further. See Bank of Am. v. Adamson, 2017 UT 2,
¶ 12, 391 P.3d 196 (observing that “an appellant who fails to

20160837-CA 12 2018 UT App 232
 Wells Fargo Bank v. Noerring

adequately brief an issue will almost certainly fail to carry its
burden of persuasion on appeal” (quotation simplified)).

¶24 With regard to record notice, Appellants argue that Wells
Fargo had notice in 2006 of the recorded instruments as a matter
of law, which triggered the running of the statute of limitations.
To be sure, “from the time of recording with the appropriate
county recorder, [recorded deeds] impart notice to all persons of
their contents.” Utah Code Ann. § 57-3-102(1) (LexisNexis 2010).
However, Appellants’ argument conflates discovery of the facts
constituting a claim for mistake with notice presumed by the
recording of instruments. Our supreme court has cautioned,
“notice of the deed by reason of its being filed for record is not
notice [or discovery] of the facts constituting the fraud” or
mistake. Smith v. Edwards, 17 P.2d 264, 270 (Utah 1932).

¶25 Here, the trial court engaged in a “difficult and intensely
fact-dependent inquiry,” considered the instruments recorded,
and concluded that the event triggering the statute of limitations
occurred in 2011. See Russell Packard, 2005 UT 14, ¶ 22. We
discern no error in the court’s findings. Lynnette recorded the
2006 Quitclaim Deed conveying any interest she, in her
individual capacity, had in the Property to herself and Justine as
individuals. By recording the 2006 Quitclaim Deed, Lynnette
imparted notice to New Century of the contents of that deed. 10

10. To be certain, Lynnette’s 2006 Quitclaim Deed did not
effectively convey the Property because the OMI Trust was the
title owner at the time and Lynnette listed herself, individually,
as the grantor. But the deed was not defective simply because it
could not convey title to the Property under the circumstances.
Quitclaim deeds “do not imply the conveyance of any particular
interest in property” but rather convey only the interest the
grantor holds at the time, “be that interest what it may.” See Nix
v. Tooele County, 118 P.2d 376, 377 (Utah 1941); see also Holladay
Towne Center, LLC v. Brown Family Holdings, LLC, 2011 UT 9,
¶ 31, 248 P.3d 452 (explaining that a “quitclaim deed conveys
(continued…)

20160837-CA 13 2018 UT App 232
 Wells Fargo Bank v. Noerring

On its face, the 2006 Quitclaim Deed fails to illuminate the
mistake at issue in this case—that the grantor was incorrectly
identified for an effective transfer of title to the Property.

¶26 The mistake is also not apparent on the face of the New
Century Trust Deed. Lynnette and Justine represented in the
deed that they were title owners of the Property with authority
to convey it. By endorsing the New Century Trust Deed, they
further agreed to convey an interest in the Property to New
Century as security for the New Century Note. Although
Lynnette and Justine, in their individual capacities, could not do
this in reality, this defect is not apparent in the trust deed.
Consequently, Wells Fargo’s knowledge of the contents of the
2006 Quitclaim Deed and the New Century Trust Deed does not
equate to discovery of the facts constituting the mistake. See
Smith, 17 P.2d at 270. The operation of the recording statute—
imputing knowledge of the contents of the recorded deeds to
New Century—did not impart notice of the mistakes at issue.

¶27 The trial court found that New Century had no
knowledge of the mistake in the New Century Trust Deed when
the loan closed in 2006. Rather, the court determined that Wells
Fargo discovered the mistake in 2011 when completing a title
search. We are not persuaded that, under the circumstances of
this case, the recording statute imparting constructive notice
supplants the court’s fact-finding inquiry. We accordingly
decline to disturb the trial court’s findings.

III. Authority to Reform a Deed

¶28 Appellants also argue that the trial court lacked authority
to reform the New Century Trust Deed because doing so
involved substituting a third party into the deed and creating a

(…continued)
whatever interest the grantors possess at the time” (quotation
simplified)).

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 Wells Fargo Bank v. Noerring

new deed. By changing the identity of the grantor of the security
interest in the Property from Lynnette and Justine, as
individuals, to Lynnette, as trustee for the OMI Trust, they
argue, the court created an “entirely new” document. We
disagree.

¶29 “Reformation of a deed is appropriate where the terms of
the written instrument are mistaken in that they do not show the
true intent of the agreement between the parties.” RHN Corp. v.
Veibell, 2004 UT 60, ¶ 36, 96 P.3d 935 (quotation simplified).
Mutual mistake provides a basis to reform a written instrument.
See E & H Land, Ltd. v. Farmington City, 2014 UT App 237, ¶ 25,
336 P.3d 1077. Thus, “reformation is an equitable remedy that
permits the court to add new terms to a deed or alter the original
language of a deed to conform to the parties’ intent.” FDIC v.
Taylor, 2011 UT App 416, ¶ 45, 267 P.3d 949 (quotation
simplified).

¶30 Appellants first contend that the trial court improperly
substituted “a stranger [into] the deed.” We are not persuaded.
At the time Lynnette and Justine entered into the New Century
Trust Deed, Lynnette was the sole trustee of the OMI Trust and
Justine was the beneficiary. As trustee, Lynnette was
authorized—with consent of the beneficiary, Justine—to
mortgage or pledge the Property as security on behalf of the
trust. Here, the trial court determined that New Century,
Lynnette, and Justine intended to use the Property to secure the
New Century Note. Indeed, each party stated as much in the
resulting trust deed. Appellants do not challenge this finding,
nor do they assert that Lynnette, at that time, could not have
encumbered the Property on behalf of the OMI Trust. Instead,
they argue that the court could not add the OMI Trust entity to
the New Century Trust Deed.

¶31 There is no question that Lynnette, in her capacity as
trustee of the OMI Trust, did not sign the New Century Trust
Deed. This oversight prompted the present reformation
litigation. Lynnette and Justine, as individuals, and Lynnette, as
trustee of the OMI Trust, all shared the same interests, however,

20160837-CA 15 2018 UT App 232
 Wells Fargo Bank v. Noerring

and benefited from the loan. Though reformation is
inappropriate “when it will result in injury of innocent third
parties,” this is not such a situation. See 27 Williston on Contracts
§ 70:45 (4th ed. 2018). Had Lynnette, as trustee of the OMI Trust,
correctly transferred her interest in the Property for the New
Century Note, the individuals present would be identical, i.e.,
Lynnette, Justine, and New Century. Moreover, by Lynnette and
Justine’s involvement, Lynnette, as trustee of the OMI Trust, had
adequate notice of the transaction and opportunity to advance
any opposition. See Farmers Union Oil Co. of Garrison v. Smetana,
2009 ND 74, ¶ 20, 764 N.W.2d 665 (holding that “because of
the equitable nature of the remedy, reformation is unavailable
where its application would inflict an injury upon
innocent parties as a result of an act of which they had no
knowledge and for which they were not responsible” (quotation
simplified)). Appellants fail to explain how Lynnette, as trustee
of the OMI Trust, is a “stranger” to the trust deed or how the
trustee or the trust itself would suffer prejudice from the
reformation.

¶32 Appellants also contend that the trial court improperly
wielded the reformation tool to craft a completely new
document. We disagree. The reformation doctrine is generally
used to “add words omitted from a piece of paper,” and
Appellants correctly observe that this court has expressed some
skepticism about employing the remedy “to add the omitted
piece of paper (the deed).” See Taylor, 2011 UT App 416, ¶ 45
(affirming the trial court’s denial of a motion for summary
judgment on an alternative theory of reformation); see also id.
¶ 46 (observing that “[w]e have found no Utah cases applying
the reformation doctrine so expansively”).

¶33 There is no dispute in this case that Lynnette, as trustee
of the OMI Trust, did not sign either the 2006 Quitclaim Deed
or the New Century Trust Deed. Modifying Lynnette’s
designation as grantor on the New Century Trust
Deed, however, did not create a new document. It merely
added words to the New Century Trust Deed to “show the
true intent of the agreement between the parties.” See Veibell,

20160837-CA 16 2018 UT App 232
 Wells Fargo Bank v. Noerring

2004 UT 60, ¶ 36. Accordingly, we discern no error or lack
of authority on the part of the trial court to reform the
New Century Trust Deed. Because the parties intended to
convey an enforceable security interest in the Property, and
the OMI Trust would suffer no prejudice as a result of
the reformation, we conclude the trial court did not err when
it reformed the New Century Trust Deed. See Taylor, 2011
UT App 416, ¶ 46.

CONCLUSION

¶34 The trial court did not err when it granted Wells Fargo’s
request to reform the New Century Trust Deed. This particular
cause of action—equitable reformation—is equitable in nature
and therefore was not a “claim” within the meaning of the
Nonclaim Statutes. Accordingly, the trial court had jurisdiction
to decide the issues raised in this appeal. Additionally, we are
not persuaded that, under the circumstances of this case, Wells
Fargo had constructive notice of the mistakes in the 2006
Quitclaim Deed or New Century Trust Deed prior to 2011.
Finally, we conclude that the trial court retained authority to
reform the New Century Trust Deed to reflect the intent of the
parties. We affirm.

20160837-CA 17 2018 UT App 232