Amos v. Aspen Alps 123, LLC, Court of Appeals No. 08CA2009 (Colo. App. 1/7/2010)

Decision Date07 January 2010
Docket NumberCourt of Appeals No. 08CA2009.
PartiesBetty G. Amos and Estate of Thomas R. Righetti, Plaintiffs-Appellants and Cross-Appellees, v. Aspen Alps 123, LLC and Equitable Bank, Defendants-Appellees and Cross-Appellants.
CourtColorado Court of Appeals

In this action seeking to set aside a public trustee foreclosure, plaintiffs, Betty G. Amos (Amos) and the estate (Estate) of Thomas Righetti (Righetti), her late husband, the former owners, appeal from a summary judgment in favor of defendant, Equitable Bank (Bank), the foreclosing creditor; a judgment in favor of intervenor, Aspen Alps 123, LLC (AA123), the purchaser, following a bench trial; and attorney fees awards to both the Bank and AA123. We reverse the attorney fees awarded to AA123; reverse the trial court's judgment quieting title in AA123, and remand for the trial court to determine whether the foreclosure should be set aside. We otherwise affirm.

JUDGMENT AFFIRMED IN PART, REVERSED IN PART AND CASE REMANDED WITH DIRECTIONS.

Holland & Hart LLP, Wiley Mayne, Jr., Christopher Heaphey, Denver, Colorado, for Plaintiff-Appellants and Cross-Appellees

Garfield & Hecht P.C., Matthew Ferguson, Christopher Bryan, Aspen, Colorado, for Defendant-Appellee and Cross-Appellant Aspen Alps 123, LLC

Duncan Ostrander & Dingess, P.C., Richard Rodriguez, James Birch, Denver, Colorado, for Defendant-Appellee and Cross-Appellant Equitable Bank

Opinion by JUDGE WEBB

I. Facts

This case involves a condominium unit in Aspen jointly owned by Amos and Righetti, who executed a deed of trust on the unit for the benefit of the Bank. When Righetti died in 2002, Amos and his daughter, Brandy Righetti, were named copersonal representatives of the Estate, which now holds Righetti's interest in the unit.

In 2006, based on an undisputed loan default, the Bank initiated foreclosure through the public trustee, who is not a party to this appeal, and commenced a C.R.C.P. 120 proceeding for an order authorizing sale. Amos, who was then represented by counsel, received timely notice of the C.R.C.P. 120 proceeding in her individual capacity. Brandy Righetti did not receive any notice. Neither Amos nor the Estate opposed the order authorizing sale.

The public trustee held the foreclosure sale on February 28, 2007. Neither Amos nor the Estate submitted a bid. After the Bank bid the amount of its debt, three persons bid competitively until the bid was $1.86 million. Then they agreed to stop bidding and form AA123 to purchase the condominium unit.

According to Amos, she mailed a letter to the public trustee as notice of intent to redeem on April 6, well before the redemption notice deadline. However, the public trustee never received the letter. Amos's attorney notified the public trustee on May 8 of her intention to redeem, nine days beyond the notice deadline. Although Amos wired the necessary funds on the May 14 redemption date, based on direction from AA123, the public trustee did not allow her to redeem.

Amos brought this action against the public trustee and the Bank to enjoin issuance of the deed to AA123 and to compel the public trustee to allow her to redeem, and she recorded a notice of lis pendens. After a hearing, the trial court refused to enter a preliminary injunction, finding that the April 6 letter was back dated and probably had never been mailed. The public trustee issued the deed to AA123 on August 14. On August 27, Amos recorded a second notice of lis pendens.

Amos proceeded on two claims: she had substantially complied with the redemption procedures and the Bank had failed to strictly comply with the notice requirements of C.R.C.P. 120 as to the Estate. AA123 filed counterclaims to quiet title in its favor, as well as for damages and attorney fees under section 38-35-109(3), C.R.S. 2009, under section 38-35-204, C.R.S. 2009, and based on slander of title. On summary judgment, the C.R.C.P. 120 claim was decided in favor of the Bank.

Shortly before trial, Amos added an allegation of illegal bid rigging by the principals of AA123 at the foreclosure sale. The trial court accepted this allegation only as a defense to the quiet title counterclaim. At trial, her redemption claim was dismissed under

C.R.C.P. 41(b).

After trial, the court entered a detailed order holding that the principals in AA123 had not engaged in bid rigging and quieted title in favor of AA123. It awarded AA123 attorney fees against both Amos and the Estate on the bases that the two lis pendens were spurious documents and slandered title to the condominium unit. It also awarded the Bank attorney fees against both Amos and the Estate under a pledge agreement signed by Amos.

II. Defects in the C.R.C.P. 120 Notice to the Estate Do Not Require That the Foreclosure Sale be Voided

Amos first contends the Bank failed to strictly comply with the notice requirements of C.R.C.P. 120; the trial court erred in holding that the Bank had to comply only with the public trustee's notice obligations under section 38-38-505, C.R.S. 2009; and voiding the foreclosure sale is the proper remedy.1 We agree with the trial court that C.R.C.P. 120 requires strict compliance and that the Bank did not do so as to the Estate. However, we conclude that section 38-38-505 does not supplant the notice requirements of C.R.C.P. 120 and that undisputed actual notice to the Estate precludes a remand to set aside the sale.

The trial court found, with record support, that the Bank gave Amos notice in her individual capacity; Amos received it timely; the address where notice was sent to Righetti, who had been deceased for several years by this time, was incorrect; and Brandy Righetti was not sent any notice.

In dismissing Amos's C.R.C.P. 120 claims on summary judgment, the court reasoned that the Estate was not entitled to notice under C.R.C.P. 120 because the Estate's interest was not of record when the Bank moved for an order authorizing sale under C.R.C.P. 120, and section 38-38-505(2) excuses the public trustee from giving notice to a personal representative "unless the claim or interest of such person then appears of record."

We review a summary judgment de novo. Natural Energy Resources Co. v. Upper Gunnison Water Conservancy Dist., 142 P.3d 1265, 1276 (Colo. 2006). Statutory interpretation is also reviewed de novo. Stamp v. Vail Corp., 172 P.3d 437, 442 (Colo. 2007).

We construe statutes to effect legislative intent, starting with the language, and giving words and phrases their ordinary meaning. Spahmer v. Gullette, 113 P.3d 158, 162 (Colo. 2005). If the language is unambiguous, we apply it as written unless the result would be absurd. Garhart ex rel. Tinsman v. Columbia/HealthONE, L.L.C., 95 P.3d 571, 591 (Colo. 2004); see § 2-4-201(1)(c), C.R.S. 2009. Court rules are subject to the same principles of interpretation as statutes. Leaffer v. Zarlengo, 44 P.3d 1072, 1078 (Colo. 2002).

C.R.C.P. 120 includes notification requirements to obtain an order authorizing sale for, among other proceedings, public trustee foreclosures. It specifies the persons whose addresses must be provided to the C.R.C.P. 120 court by the party seeking an order authorizing sale:

When the property to be sold is real property and the power of sale is contained in a deed of trust to a public trustee, the motion shall state the name and last known address, as shown by the records of the moving party, of the grantor of such deed of trust, of the current record owner of the property to be sold, and of any person known or believed by the moving party to be personally liable upon the indebtedness secured by the deed of trust, as well as the names and addresses of those persons who appear to have acquired a record interest in such real property . . . .

C.R.C.P. 120(a).

A. The Trial Court Misapplied Section 38-38-505(2)

Section 38-38-505, which governs the conduct of the public trustee in foreclosure proceedings involving interests of deceased or incapacitated individuals, provides in pertinent part:

The public trustee shall not be required to give notice of such foreclosure proceedings to any heir-at-law, legatee, devisee, creditor, conservator, guardian, personal representative, executor, or administrator of any decedent or mental incompetent or incapacitated person or to any person claiming by, through, or under any decedent or mental incompetent or incapacitated person unless the claim or interest of such person then appears of record.

§ 38-38-505(2).

The statute predates C.R.C.P. 120, which governs a "very specialized civil proceeding." Plymouth Capital Co. v. Dist. Court, 955 P.2d 1014, 1015 (Colo. 1998). It has never been amended to cover the responsibilities of a party seeking an order authorizing sale under C.R.C.P. 120. Neither C.R.C.P. 120 nor the Committee Comment for that rule mentions section 38-38-505. The Bank cites no authority, nor have we found any, applying the statute to define or limit notice responsibilities under C.R.C.P. 120.

The Bank argues that section 38-38-505 and C.R.C.P. 120 are "coexistent and consistent" because they contain similar language and the Supreme Court Committee on the Rules of Civil Procedure did not reference nor propose any changes to section 38-38-505. But lack of a statutory reference in the Comment does not subordinate the rule to the statute. We fail to see how these observations, without more, authorize supplanting the requirements of C.R.C.P. 120 with those of the statute.2

Accordingly, we conclude that section 38-38-505 is irrelevant to the notice requirements of C.R.C.P. 120.

B. Absent Prejudice, Lack of Strict Compliance with C.R.C.P. 120 Does Not Require That the Foreclosure Be Voided

C.R.C.P. 120 establishes judicial supervision of public trustee foreclosures. Princeville Corp. v. Brooks, 188 Colo. 37, 40-41, 533 P.2d 916, 918 (1975). It affords interested persons due process by preventing ex...

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