Brady v. Park

Decision Date08 May 2019
Docket NumberNo. 20160425,20160425
Citation445 P.3d 395
Parties Don BRADY, Sinnikka Brady, Don Brady Interior Design, and Finnish Touch Day Spa, Appellees and Cross-Appellants, v. Kang S. PARK, Kang Sik Park, and Bank of Utah, Appellants and Cross-Appellees.
CourtUtah Supreme Court

¶1 This is the latest chapter in a contract dispute that began nearly twenty years ago. The parties’ dispute stems from a seller-financed real estate transaction in 1996. On one side are Kang S. Park (the seller-financer), his trust (represented by Mr. Park as trustee), and the Bank of Utah (the custodian of Mr. Park’s IRA account) (collectively, Park Defendants). On the other side are the Bradys (the buyers). The Bradys purchased the real estate in question with two promissory notes. One of the notes required the Bradys to make an installment payment each month, in the amount of $ 5,923.61, from January 1, 1997 to October 1, 2006; and a final balloon payment, consisting of the remaining unpaid principal and accrued interest, on October 31, 2006. The note applied a 10 percent base interest rate on the unpaid principal. And it established two consequences in the event the Bradys missed an installment payment: (1) a late fee (equal to 10 percent of the missed installment payment), and (2) a bump up in the base interest rate (10 percent) to a default interest rate (20 percent) until the note was "brought current."

¶2 Although the Bradys made monthly installment payments throughout the life of the note, when the time came to pay the final balloon payment, the parties disagreed over the amount owing. The Bradys filed suit for declaratory relief in 2006 and have been locked in litigation ever since.

¶3 Most of the disagreements between the parties relate to the manner in which the amount owed is calculated. Although many disputed issues have been resolved through two rounds of litigation in the district court and one round in the court of appeals, the parties now ask us to resolve seven final issues.

¶4 The first and most important issue is what the note’s 20 percent default interest provision requires in order to be "brought current," thereby returning the note’s interest rate back to a base 10 percent rate after a missed installment payment had bumped up the interest rate to the 20 percent default rate. Because the currency of the note determines when, and for how long, 20 percent default interest accrued throughout the ten year life of the note, our resolution of this issue will significantly affect the amounts owed under the note.

¶5 The Bradys argue that the note’s currency is exclusively tied to the monthly installment payments. In other words, they argue that the 20 percent default interest begins accruing when an installment payment becomes late, and it stops once the late installment payment is paid. During a previous appeal, the Park Defendants argued that, in addition to late installment payments, the note also required the Bradys to pay any of the additional, accrued default interest to bring it current. This issue was resolved by the court of appeals in a decision upon which we denied certiorari review.1 On remand, the Park Defendants argued that the note is not current if there is any unpaid 10 percent penalty fee amount. But the district court rejected this argument.

¶6 The Park Defendants now argue that the mandate rule precluded the district court from reaching this question. We hold that the district court was not so precluded. The Park Defendants also argue that the district court erred in determining that the 10 percent late fee need not be paid to bring the note current. We hold that the district court erred in deciding this issue by construing an ambiguity in the note against the Park Defendants, as drafters, without first considering extrinsic evidence. Accordingly, we remand this question to the district court for a new determination after considering relevant extrinsic evidence.

¶7 The second issue before us is whether the note’s 10 percent late fee provision applies to the final balloon payment. The district court, after considering extrinsic evidence, held that it did not and that it would be unconscionable if it did. The Park Defendants challenge both determinations. We affirm the court’s interpretation of the note on this point because it was not clearly erroneous. Because our resolution of this issue renders a consideration of the unconscionability issue unnecessary, we decline to address it.

¶8 The third issue before us is whether the district court violated the mandate rule when it applied installment payment dates differing from the court’s previously accepted payment dates. We hold that it did. Accordingly, we reverse the district court’s payment date determination and remand for a new accounting in accordance with the pre-appeal payment dates.

¶9 The fourth issue before us is whether the district court erred when it awarded pre- and postjudgment interest to the Bradys at a rate of 10 percent. The Park Defendants argue that this was not authorized under the plain language of Utah Code sections 15-1-1 and 15-1-4. We agree. Accordingly, we reverse and remand to the district court for an entry of default interest at an appropriate rate.

¶10 The fifth issue is whether the district court erred in denying the Park Defendantsrule 60(b) motion. The Park Defendants argue that the district court erred by failing to remove the "joint and several" designation from the final judgment because two of the Park DefendantsPaul M. Halliday, as trustee of two trust deeds,2 and the Bank of Utah, as custodian of Mr. Park’s IRA account—were in the litigation only as part of a claim for injunctive relief. We hold that the district court’s ruling on the rule 60(b) motion was not clearly erroneous, so we affirm.

¶11 The sixth issue on appeal is raised by both parties. After the latest round of litigation, the district court concluded that neither party had prevailed and, therefore, neither party was entitled to attorney fees. Because our rulings on the other issues in this case may have upended the basis for the court’s attorney fees decision, we remand for a new attorney fees determination.

¶12 The seventh and final issue is raised by the Bradys. They assert that we do not have jurisdiction over Mr. Park’s IRA, because the Bank of Utah, as custodian of Mr. Park’s IRA, failed to file a timely notice of appeal. We hold that even though we do not have jurisdiction over the Bank of Utah, our jurisdiction over the IRA’s owner and beneficiary necessarily includes jurisdiction over the IRA.


¶13 Don and Sinnika Brady purchased commercial property from Kang S. Park3 in 1996 for $ 755,625. The Bradys paid Mr. Park in the form of two promissory notes. The smaller note was for $ 80,625 and the larger was for $ 675,000. Each note was secured by two trust deeds: one on the commercial property and one on a Summit County investment property owned by the Bradys. Only the larger note (Note) is at issue here. The Note bore interest at a rate of 10 percent per year on the unpaid principal. Under the terms of the Note, the Bradys were required to make monthly payments of $ 5,923.61 starting on January 1, 1997, and a final balloon payment on October 31, 2006 consisting of "the entire principal balance together with interest thereon." Importantly, the Note specified two consequences for a late payment—a 10 percent late fee and a bump up to a 20 percent default interest rate:

If payment is not made within five (5) days of due date, a late fee of 10 percent will be due. If payment is not made within 5 days of due date the entire balance shall bear interest at the rate of 20% until note is brought current.

The Note was prepared by a title company, but the 20 percent default interest provision was included at Mr. Park’s request.

¶14 The Bradys made the first three payments on time, but made the April 1, 1997 payment late. On May 2, 1997, they made a double payment comprising the April and May payments plus a 10 percent late fee (10 percent of the late installment payment) for the April payment. But they did not pay off any of the default interest that had accrued from the date the payment was due until the date the late installment payment was paid. The Bradys made other payments late, but ultimately made every monthly installment payment. Seeking to refinance the Note, and believing their payments had kept the Note current, the Bradys approached Mr. Park through a bank loan officer in 2000 to obtain a payoff amount.

¶15 According to the Bradys, Mr. Park did not respond to their payoff request until 2002, when he provided a payoff amount between $ 1.4 million and $ 1.5 million. That is when the Bradys first learned that Mr. Park believed the Note had not been current, and had been accruing interest at a 20 percent rate, since March 1997. The Bradys disputed Mr. Park’s calculation and over the next four years asked Mr. Park for a corrected payoff amount. They claim Mr. Park did not respond until October 18, 2006—thirteen days before the balloon payment was due—when he notified the Bradys that the payoff amount was $ 2,585,398. Mr. Park calculated these amounts based on his assumption that the Note had not been current since the March 1997 payment, so it had been accruing interest at a 20 percent rate.

¶16 After receiving the October 2006 payoff calculation, the Bradys sued Mr. Park to receive a judicial determination of the amounts owed on the Note. The Bradys also alleged a number of other claims, including a request for injunctive relief4 against the Bank of Utah, as custodian of Mr. Park’s IRA, and Paul M. Halliday, as trustee of two trust deeds securing the Note. They also sought damages for Mr. Park’s alleged refusal to accept their tenders of payment. The Park Defendants counter-sued with a number of contract-related claims, including breach of contract.

¶17 After a bench trial, the district court ruled, among other things, that the Note required the Bradys, in...

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