CitiMortgage, Inc. v. Stephenson
| Decision Date | 13 August 2015 |
| Docket Number | No. 20110771–CA.,20110771–CA. |
| Citation | 358 P.3d 1113,2015 UT App 205 |
| Court | Utah Court of Appeals |
| Parties | CITIMORTGAGE, INC., Plaintiff and Appellee, v. Terry STEPHENSON and Norma Tipton, Defendants and Appellants. |
Andrew M. Wadsworth, Salt Lake City, Attorney for Appellant Terry Stephenson.
Ronald G. Russell and Rodger M. Burge, Salt Lake City, Attorneys for Appellant Norma Tipton.
Bryce D. Panzer, Salt Lake City, Attorney for Appellee.
Opinion
¶ 1 This case involves the proper interpretation of an order of the district court: did the court merely set aside a prior judgment and return the parties to the status quo ante, or did it also adjudicate their respective rights? In denying a post-judgment motion, the district court maintained that it intended to resolve the merits of the dispute. We agree and affirm.
¶ 2 In 1997, Eugene and Mavis Stephenson created the Stephenson Family Trust (the Trust) and named Eugene as the trustee.1 They transferred to Eugene, as trustee, certain real property (the Property).
¶ 3 In 2005, a doctor opined that Eugene and Mavis were “so confused or detached from reality that they are not capable of properly taking the medications prescribed for them.” On November 28, 2006, another doctor provided Eugene and Mavis's grandson, John Stephenson, a “Professional Opinion Letter” stating that Eugene suffered from dementia, was “unable to give informed consent for” his medical care, and “would benefit by having a legal guardian.” On December 6, 2006, John filed a petition in probate court that sought his appointment as legal guardian of Eugene and Mavis; this petition was granted on January 5, 2007. Mavis died the following month.
¶ 4 However, in the eight-day window between John's receiving the doctor's opinion letter and filing the guardianship petition, Eugene executed a warranty deed (the Warranty Deed) transferring the Property from Eugene, as trustee, to John. After the petition was granted, John refinanced the mortgage on the Property. The new loan was secured by a trust deed against the Property (the Trust Deed) in favor of First Colony Mortgage Company. The Trust Deed was assigned to CitiMortgage Inc. in 2010 and forms the basis for CitiMortgage's claimed interest.
¶ 5 In 2009 the probate court named Eugene and Mavis's son, Terry Stephenson, as successor trustee of the Trust. Terry filed a motion seeking to revoke the appointment of John as guardian and to invalidate the Warranty Deed that transferred the Property from Eugene, as trustee, to John. The next day, Terry recorded a Notice of Lis Pendens on the Property but did not otherwise notify CitiMortgage. The same day, Eugene died, rendering the guardianship issue moot.
¶ 6 On December 17, 2009, the probate court ruled that the Warranty Deed was void ab initio because Eugene had not been competent to sign it. Six months later, the probate court issued an order invalidating the Trust Deed pursuant to a motion by Terry. The probate court reasoned that because the Warranty Deed conveying the Property to John was void ab initio, the Trust Deed executed by John was also void. The probate court deeded the Property to Terry, as trustee of the Trust, by judicial deed.
¶ 7 Terry executed a trust deed against the Property in favor of Norma Tipton, as trustee of the Tipton Family Trust. We refer collectively to Terry, the trustee of the Trust, and Norma Tipton, the trustee of the Tipton Family Trust, as Defendants.
¶ 8 CitiMortgage then filed this suit in the district court, arguing that its predecessor-in-interest was a necessary party to the probate proceedings. CitiMortgage sought a declaration that the Trust Deed constituted a valid encumbrance on the Property, prior and superior to the interests of Defendants. Defendants responded that CitiMortgage's predecessor-in-interest was not a necessary party, because the core issue in the probate proceeding was whether the Warranty Deed's transfer from Eugene to John was invalid due to Eugene's incompetence.
¶ 9 The district court granted summary judgment in favor of CitiMortgage. It ruled that The district court's ruling also instructed CitiMortgage to “submit an order consistent with this ruling within 10 days.”
¶ 10 The proposed order stated “that the ... Trust Deed is a valid and enforceable encumbrance on the Property with priority over the interests of the Defendants, and that the ... Trust Deed is not affected by the orders entered in the Probate Proceeding.” (Emphasis added.) Defendants' counsel approved the order as to form, and the district court signed it. Defendants appealed this order.
¶ 11 Defendants also filed a rule 60(b) motion challenging the order. See Utah R. Civ. P. 60(b). Their motion argued that the order as proposed, approved, and entered went too far—that because the only question before the court was the enforceability of the order of the probate court invalidating the Trust Deed, the district court erred by not only setting aside that order but also by adjudicating the priority of the Trust Deed. In light of the notice of appeal, the district court did not rule on the rule 60(b) motion. However, we stayed the appeal and remanded the case to give the district court the opportunity to rule on the motion.
¶ 12 On remand, the district court ruled that its earlier order was “clear and unambiguous” and focused on “the effect and import of the Probate Court Orders.” Defendants filed a second notice of appeal from the district court's order disposing of the rule 60(b) motion. We consolidated the appeals.
¶ 13 Defendants contend that the district court erred by failing to rule that CitiMortgage's claims were barred by res judicata. Defendants also contend that the order signed by the district court is ambiguous as to whether it adjudicates the priority of CitiMortgage's interest in the Property. “An appellate court reviews a trial court's legal conclusions and ultimate grant or denial of summary judgment for correctness and views the facts and all reasonable inferences drawn therefrom in the light most favorable to the nonmoving party.” Orvis v. Johnson, 2008 UT 2, ¶ 6, 177 P.3d 600 (citations and internal quotation marks omitted).
¶ 14 Defendants contend that the district court “erred in finding that [CitiMortgage] was not bound by the Orders of the Probate Court[,] because claim preclusion and issue preclusion can act to bar a party from asserting claims or issues that have been fully litigated in prior proceedings.”
¶ 15 “Res judicata embraces two distinct doctrines: claim preclusion and issue preclusion.” Conder v. Hunt, 2000 UT App 105, ¶ 9, 1 P.3d 558 (citing Madsen v. Borthick, 769 P.2d 245, 247 (Utah 1988) ). Claim preclusion, the branch of res judicata relied upon by Defendants here, “operates as a complete bar to a second action based on a claim that was (or could have been) raised in a prior action.” Id. Claim preclusion and issue preclusion share a common requirement that the party to be bound was either a party to or in privity with a party to the earlier proceeding. See Moss v. Parr Waddoups Brown Gee & Loveless, 2012 UT 42, ¶¶ 21, 23, 285 P.3d 1157. “The legal definition of a person in privity with another, is a person so identified in interest with another that he represents the same legal right.” Searle Bros. v. Searle, 588 P.2d 689, 691 (Utah 1978) ; see also Hansen v. Bank of N.Y. Mellon, 2013 UT App 132, ¶¶ 7, 10, 303 P.3d 1025.
¶ 16 Here, Defendants assert that John was in privity with CitiMortgage “because of their mutual and/or successive alleged rights to property.” CitiMortgage responds that this issue is unpreserved and that, in any event, CitiMortgage was not in privity with John.
¶ 17 We first consider preservation. CitiMortgage asserts that Defendants argued below only that CitiMortgage was not a necessary party to the probate proceeding, but never argued that CitiMortgage was in privity with John and thus bound even if it was a necessary party. Defendants respond, “While these arguments may not have been as clearly set out as might be hoped, evidence on all necessary elements [was] before the District Court.” We agree with CitiMortgage that the issue of res judicata was not preserved below.
¶ 18 It is well settled that “claims not raised before the trial court may not be raised on appeal.” State v. Holgate, 2000 UT 74, ¶ 11, 10 P.3d 346. To preserve an issue for appeal, a defendant “must enter an objection on the record that is both timely and specific.” State v. Rangel, 866 P.2d 607, 611 (Utah Ct.App.1993). “The objection must be specific enough to give the trial court notice of the very error of which [the party] complains.” State v. Bryant, 965 P.2d 539, 546 (Utah Ct.App.1998) (citation and internal quotation marks omitted). Thus, to be preserved for appeal, an issue “must be presented to the trial court in such a way that the trial court has an opportunity to rule on that issue.” 438 Main St. v. Easy Heat, Inc., 2004 UT 72, ¶ 51, 99 P.3d 801 (citation and internal quotation marks omitted).
¶ 19 Having reviewed the arguments presented to the district court, we conclude that Defendants did not give the court the opportunity to rule on res judicata in general or privity in particular. The gist of Defendants' claim was that CitiMortgage was “not a necessary or interested party in the probate proceeding.” In support of this claim, they argued that CitiMortgage “had no interest in the subject of the Probate Proceeding” and indeed had “no standing or ability to contest the competence evaluation of Eugene Stephenson and had no ability under the law to avoid the resulting...
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