Bel Courtyard Invs., Inc. v. Wolfe

Decision Date06 September 2013
Docket NumberNo. 20110483–CA.,20110483–CA.
Citation742 Utah Adv. Rep. 34,310 P.3d 747
PartiesBEL COURTYARD INVESTMENTS, INC., Plaintiff and Appellant, v. Josh WOLFE and Maarie Isaacson, Defendants, Third-party Plaintiffs and Appellees, v. Mark Bellini, Third-party Defendant and Appellant.
CourtUtah Court of Appeals

OPINION TEXT STARTS HERE

James H. Deans, for Appellants.

Erik A. Olson and Burton G. Davis, for Appellees.

Judge STEPHEN L. ROTH authored this Opinion, in which Judges JAMES Z. DAVIS and CAROLYN B. McHUGH concurred.

Opinion

ROTH, Judge:

¶ 1 Bel Courtyard Investments, Inc. (BCI) and Mark Bellini (collectively, the landlords) appeal the district court's judgment in favor of Josh Wolfe and Maarie Isaacson (the tenants) for forcible detainer. We affirm and remand for calculation of attorney fees.

BACKGROUND

¶ 2 In October 2009, BCI purchased a residence located in Midway, Utah (the home), at a foreclosure sale after the owner defaulted on a residential construction loan.1 Through a series of conveyances, BCI transferred the home to the Michael J. and Margaret M. Bellini Revocable Trust (the trust). Mark Bellini is the president of BCI.

¶ 3 At the time of the purchase, the tenants lived in the home on a month-to-month lease from the original owners. Bellini contacted the tenants in October 2009 to negotiate a mutually acceptable move-out date, but the parties could not reach an agreement. BCI subsequently served the tenants with a five-day notice to terminate their tenancy that took effect on October 25, 2009.

¶ 4 Three days later, BCI filed an unlawful detainer suit against the tenants and moved the district court for leave to serve the complaint and summons by mail. The district court denied the motion without prejudice because BCI did not support the motion by affidavit as required by rule 4 of the Utah Rules of Civil Procedure, seeUtah R. Civ. P. 4(d)(4)(A). BCI filed a motion to reconsider on November 16, 2009, submitting the affidavit of a process server who stated his belief that the tenants were avoiding service and claimed to “have made 3 trips to the address given and [the tenants] [were] either never home or [would] not come to the door.” What the process server did not tell the court, however, was that he had made the three attempts over just two days, once on October 27, 2009, and twice the next day. Further, BCI knew as early as November 2, 2009, that the tenants' mailing address was in Lehi, Utah, and that the tenants could not receive mail at the home because they had no mailbox there.2

¶ 5 The district court granted the motion, unaware of these facts, and the clerk of court mailed the summons and complaint to the home on November 16, 2009. Perhaps as a precaution, BCI also posted a copy of the complaint and summons at the home on November 21, 2009, even though the district court's order did not authorize this method of service.

¶ 6 The tenants did not receive the summons or complaint by mail and filed no response; BCI moved for a default judgment. The district court entered judgment and issued an order of restitution (the restitution order) on November 25, 2009. BCI served the restitution order on the tenants, and two days later Bellini emailed Wolfe:

I am done playing games with you. The party is over. If you are not out by Saturday[, November 28, 2009,] at 6:30 p.m., you will be removed physically by the Sheriff. We will hire a moving company to carefully move your items to a storage unit for 30 days. You will then be charged for moving and storage of your items. If you do not reimburse us for the expenses we incur to move and store your items, we will sell everything and keep the proceeds as reimbursement.

Before the scheduled eviction, the tenants notified Bellini of their belief that the Protecting Tenants Against Foreclosure Act (the PTFA)—a federal statute that regulates the effect foreclosure of a federally related loan can have on the property's current tenants—entitled them to ninety days notice to quit instead of five. See12 U.S.C. § 5220 note (Supp. V 2011) (Effect of Foreclosure on Preexisting Tenancy). The next day on November 28, Bellini, accompanied by a deputy sheriff, took possession of the home with the tenants' personal property still inside and changed the locks. The tenants filed an answer and counterclaim with the district court on November 30, 2009, and moved to set aside the default judgment. The district court granted the tenants' motion, holding that BCI's attempt to serve the tenants was constitutionally deficient. However, the court allowed Bellini to retain possession of the home on a $12,000 cash bond.

¶ 7 In March 2010, the tenants filed an amended answer, counterclaim, and third-party complaint 3 that asserted new claims against Bellini, including forcible detainer. Bellini was personally served, and his attorney signed a stipulation five days before trial that Bellini would respond to the amended counterclaim and third-party complaint. Bellini appeared at trial, testified on behalf of BCI, and, according to the district court, “had a full and fair opportunity to defend, both as president of BCI and in his personal capacity.” The district court found that Bellini litigated the merits of the case and never objected to the court's personal jurisdiction over him.

¶ 8 At trial, the district court dismissed BCI's own unlawful detainer action for lack of standing because the company had conveyed the home to the trust just after the lawsuit was filed and never moved to substitute the trust as the real party in interest. The court also determined that BCI failed to give the tenants the requisite ninety-day notice to quit required under the PTFA. Finally, the court awarded the tenants damages for forcible detainer, finding that (1) the landlords “knew when they acquired possession that their legal right to do so under the PTFA was contested,” and (2) the landlords were aware that [the tenants] had no mailbox [at the home] and ... used a mailing address in [Lehi, Utah] when BCI moved for alternative service by mail addressed to the home. As a result, the court held, [t]he fact that BCI and Mark Bellini had a signed court order of restitution in hand does not absolve them of liability.” The landlords now appeal.

ISSUES AND STANDARDS OF REVIEW

¶ 9 On appeal, Bellini argues that he cannot be held liable for forcible detainer because the district court lacked personal jurisdiction over him. Specifically, he argues that because he never made a formal appearance submitting to the court's jurisdiction, he had “no notice he was on trial ... and did not have an adequate opportunity to respond to the claims made against him.” Whether the district court had personal jurisdiction is a question of law, which we review for correctness.Pohl, Inc. of Am. v. Webelhuth, 2008 UT 89, ¶ 8, 201 P.3d 944.

¶ 10 In addition, BCI and Bellini together appeal the district court's forcible detainer judgment on its merits. They argue that even if service of process by mail was constitutionally defective, BCI was entitled to act “on the then valid [restitution order] without risk of liability. In short, they maintain, [n]o forcible detainer can be committed when there is an order of restitution enforced, even when the court later determines it committed error in issuing the order of restitution.” We review the district court's findings of fact for clear error and its legal conclusions for correctness. Supernova Media, Inc. v. Pia Anderson Dorius Reynard & Moss, LLC, 2013 UT 7, ¶ 13, 297 P.3d 599. The landlords also argue that they did not violate Utah's forcible detainer statute because there were no “acts of menace or violence” involved in their taking possession of the property. We review the district court's application of the forcible detainer statute to the facts of this case for abuse of discretion. See Bonnie & Hyde, Inc. v. Lynch, 2013 UT App 153, ¶ 13, 305 P.3d 196 (citing Aris Vision Inst., Inc. v. Wasatch Prop. Mgmt., Inc., 2005 UT App 326, ¶ 16, 121 P.3d 24,aff'd,2006 UT 45, 143 P.3d 278).

ANALYSIS

¶ 11 We conclude that the district court properly exercised jurisdiction over Bellini. We also hold that the landlords' lack of candor in procuring the restitution order prevents them from using it as a shield against liability for forcible detainer.

I. The District Court Had Personal Jurisdiction over Bellini.

¶ 12 In support of his argument that the district court lacked personal jurisdiction, Bellini cites Arbogast Family Trust v. River Crossings, LLC, 2010 UT 40, 238 P.3d 1035. The issue in Arbogast was what actions a party must take to “appear” under rule 5(a) of the Utah Rules of Civil Procedure. Id. ¶¶ 16–17.Rule 5(a) entitles any party who has made a formal appearance to receive notice of “all pleadings and papers” filed in the litigation. Utah R. Civ. P. 5(a)(1), (a)(2)(B). In resolving the issue, the Utah Supreme Court held that a party must make a formal filing or submission to a district court in order to “appear” for purposes of rule 5(a). Arbogast, 2010 UT 40, ¶¶ 33–34, 238 P.3d 1035. Bellini argues that because he never filed an answer or other formal submission with the court in his individual capacity, he made no appearance to grant the district court jurisdiction over him.”

¶ 13 Arbogast, however, does not control the result in this case because whether a party has triggered its right to notice under rule 5(a) is analytically distinct from the broader issue of personal jurisdiction presented here. “It is axiomatic that a court acquires power to adjudicate by proper service of process[,] which imparts notice that the defendant is being sued and must appear and defend or suffer a default judgment.” Meyers v. Interwest Corp., 632 P.2d 879, 880 (Utah 1981). Indeed, ‘it is service of process, not actual knowledge of the commencement of the action, which confers jurisdiction.’ Saysavanh v. Saysavanh, 2006 UT App 385, ¶ 25, 145 P.3d 1166 (quoting Murdock v. Blake, 26 Utah 2d 22, 484 P.2d 164, 167 (1971))....

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