Ira v. Am. Heritage Title Agency, Inc., 20140714–CA.

• Decision Date: 19 February 2016
• Docket Number: No. 20140714–CA.,20140714–CA.
• Citation: 368 P.3d 125
• Parties: Roger P. CHRISTENSEN IRA and Roger P. Christensen, Appellants, v. AMERICAN HERITAGE TITLE AGENCY, INC., et al., Appellees.
• Court: Utah Court of Appeals

368 P.3d 125

Roger P. CHRISTENSEN IRA and Roger P. Christensen, Appellants,

v.AMERICAN HERITAGE TITLE AGENCY, INC., et al.,¹ Appellees.

No. 20140714–CA.

Court of Appeals of Utah.

Feb. 19, 2016.

Roger P. Christensen, Paul A. Christensen, and Karra J. Porter, Salt Lake City, for Appellants.

Bryan H. Booth and John W. Mann, Salt Lake City, for Appellees, Fifth Third Mortgage Company, Nationstar Mortgage, LLC, and Bank of New York Mellon.

Anthony W. Schofield, Peter C. Schofield, Adam D. Wahlquist, Lehi, and Alexander Dushku, Salt Lake City, for Appellees, First American Title Company, First American Title Insurance Agency LLC, Claude Lewis, Marlene Millett, Marlies Kramer, Gary Sturdevant, Fabio Cavalcante, and Jessica Cavalcante.

Jeffrey L. Silvestrini and Jonathan D. Bletzacker, Salt Lake City, for Appellees, American Heritage Title Agency, Inc., Heritage Companies Inc., and Mercury Settlement Services of Utah.

Jeffrey J. Steele, Salt Lake City, for Appellee, Rick Smith.

W. Jeffery Fillmore and Marc L. Turman, Salt Lake City, for Appellee, Founders Title Company.

Ronald G. Russell and Rodger M. Burge, Salt Lake City, for Appellee, Quicken Loans, Inc.

Judge KATE A. TOOMEY authored this Opinion, in which Justice JOHN A. PEARCE and Senior Judge RUSSELL W. BENCH concurred.²

Opinion

TOOMEY, Judge:

¶ 1 The Roger P. Christensen IRA and Roger P. Christensen (collectively, Plaintiff) appeal from the district court's dismissal of their foreclosure claims related to three properties. We affirm.

BACKGROUND³

¶ 2 In 2005, Plaintiff made several loans to Bradley Lancaster and Lancaster's company BRL Properties, LLC (BRL) for the purpose of investing in real estate. Each loan was secured by a trust deed on a property and provided that Lancaster would repay the loan with interest when the property was sold, approximately six months later. Sometime in 2009, Plaintiff discovered that Lancaster misappropriated and converted the loaned funds.

¶ 3 Rick Smith acted as the escrow agent and the title insurance agent for all of the transactions, and he was responsible for disbursing the proceeds of the loans and for recording the related trust deeds. At the time, Smith was an agent of several companies, including Mercury Settlement Services of Utah; Heritage Companies, Inc.; American Heritage Title Agency, Inc.; First American Title Insurance Agency, LLC and/or First American Title Company.⁴

¶ 4 Three transactions are relevant to this appeal. The first involved a property on Annapolis Drive. On April 8, 2005, Lancaster signed a promissory note for $119,340 in favor of Plaintiff. The note provided that the entire principal and interest was due by October 8, 2005. As security for payment of the note, Lancaster executed a trust deed for the Annapolis Drive property. Lancaster defaulted on the note by failing to repay the loan. On August 26, 2005, BRL transferred the Annapolis Drive property via warranty deed to Claude Lewis. Lewis later executed a trust deed on the property in favor of Fifth Third Mortgage Company with Genuine Title, LLC as trustee.⁵

¶ 5 The second loan involved a property on Bury Road. On August 30, 2005, Lancaster signed a promissory note for $83,650 on behalf of BRL in favor of Plaintiff. The note provided that it would be due on November 30, 2005. Lancaster executed a trust deed on the Bury Road property as security. Lancaster and BRL again defaulted. BRL executed another trust deed on the Bury Road property in favor of Rick Lamont and Sunday Larson, with First American Title Insurance Agency, LLC as trustee, in late November 2005. And in February 2007, BRL transferred the Bury Road property to Fabio and Jessica Cavalcante. Sometime later, Mortgage Electronic Registration Services, Inc. (MERS), with Founders Title Company as trustee, claimed an interest in the Bury Road property based on trust deeds signed in 2007 and 2011.

¶ 6 The third loan involved a property on Jordan Point Drive. On October 27, 2005, Lancaster and BRL signed a promissory note for $43,000 in favor of Plaintiff. The note was due by April 27, 2006, and it was secured by a trust deed on the Jordan Point Drive property. Lancaster and BRL similarly defaulted on this note. In April 2008, BRL transferred the Jordan Point Drive property via warranty deed to Gary Sturdevant who then later sold the property to Marlene Millett and Marlies Kramer on October 1, 2013.

¶ 7 On March 2, 2011, Plaintiff filed suit against Lancaster, Smith, Mercury Settlement Services, Heritage Companies, and American Heritage Title Agency. Plaintiff's complaint raised claims against Lancaster for accounting and conversion. Its claims against the other defendants included breach of fiduciary duties, negligence, and successor liability. Plaintiff's complaint sought a return of the lost funds, an accounting, and attorney fees. It also sought joint and several liability with regard to Lancaster and Smith. But, the complaint did not specifically reference the promissory notes related to the Annapolis Drive, Bury Road, or Jordan Point Drive properties, nor did it mention foreclosure on those properties.

¶ 8 Two years later, during the course of discovery, Plaintiff amended its complaint. Filed on October 4, 2013, the amended complaint raised—for the first time—claims seeking foreclosure on the Annapolis Drive, Bury Road, and Jordan Point Drive properties. It also added as foreclosure defendants those parties alleged to have inferior interests in the properties securing the promissory notes signed by Lancaster. These foreclosure defendants included Lewis, Fifth Third Mortgage Company (Genuine Title, LLC, Trustee), Freedom Mortgage Corporation, the Cavalcantes, Lamont, Larson, MERS (Founders Title Company, Trustee), Sturdevant, and Countrywide Funding Corporation (Guardian Title Company of Utah, Trustee). Plaintiff subsequently filed another amended complaint in March 2014, adding Millett and Kramer as foreclosure defendants as well.

¶ 9 Millett, Kramer, Sturdevant, the Cavalcantes, and Founders Title moved to dismiss the foreclosure claims on the Bury Road and Jordan Point Drive properties. They argued that the applicable six-year statute of limitations barred the foreclosure claims against them. In their view, Lancaster's failure to pay by the due dates on the promissory notes constituted a default that triggered the statute of limitations. They further argued that the most recent date of default under the relevant promissory notes was April 27, 2006, and therefore Plaintiff was required to initiate foreclosure within six years of that date, by April 26, 2012. Because Plaintiff did not raise the foreclosure claims until October 4, 2013, almost eighteen months after the expiration of the six-year period, they argued the foreclosure of the Bury Road and Jordan Point Drive trust deeds was barred. Sturdevant argued that he should be dismissed because the complaint alleged he did not have an ownership interest in the property because he conveyed his interest in the Jordan Point Drive property to Millett and Kramer.

¶ 10 In opposing the motion, Plaintiff asserted that its foreclosure claims were timely because it commenced this action against Lancaster before the expiration of the six-year statute of limitations. Plaintiff further asserted that any amendments to the complaint related back to the date of the original complaint pursuant to rule 15(c) of the Utah Rules of Civil Procedure. Alternatively, Plaintiff argued that estoppel and equitable tolling prevented the application of the statute of limitations to this case.

¶ 11 The moving parties responded that relation back under rule 15(c) does not apply to new parties added to an amended complaint. They further asserted that they did not fall within the identity-of-interest or misnomer exceptions to the relation-back doctrine. Moreover, the moving parties argued that equitable principles did not apply, because they did not mislead or conceal any information from Plaintiff and had no role in the fraud Plaintiff alleged against the original defendants.

¶ 12 The district court ultimately dismissed the foreclosure claims on the Bury Road and Jordan Point Drive properties with regard to Millett, Kramer, Sturdevant, the Cavalcantes, and Founders Title Company. In its memorandum decision, the court first dismissed Sturdevant from the suit because he had no interest in the subject properties.⁶ The court then explained that if the foreclosure action relating to the Bury Road and Jordan Point Drive properties had been included in the original complaint on March 2, 2011, "it would have been timely" because the complaint is "within the six year statute of limitation of November 29, 2011 for the Bury Road Property" and "within the six year statute of limitation of April 26, 2012 for the Jordan Point Property." But because "it was not until October 4th, 2013 when the [amended complaints] brought foreclosure actions for the first time and added new parties to the suit," the court concluded that Plaintiff brought the foreclosure actions "after the expiration of the statute of limitations on both properties."

¶ 13 The district court further concluded that the amended complaints did not relate back to the date of the original complaint, reasoning that relation back does not apply where, as here, new parties are added to the suit in an amended complaint. The court determined that the exceptions to this rule were not applicable. Additionally, it rejected Plaintiff's claim that the statute of limitations was subject to estoppel or equitable tolling because "[t]here are no claims these defendants were fraudulent or any action by them was misleading toward Plaintiff[ ]." As the court explained, Plaintiff "knew in 2006 [it] had not been paid under the promissory notes ... and [that] the maker of the notes was in default." The court further stated that Plaintiff failed to provide an explanation "as to why [it] could not have brought foreclosure action within the six years after the...