McQueen v. Jordan Pines Townhomes Owners Ass'n, Inc.

• Decision Date: 28 February 2013
• Docket Number: No. 20110312–CA.,20110312–CA.
• Citation: 298 P.3d 666,729 Utah Adv. Rep. 14
• Parties: Isaac McQUEEN, Plaintiff, Appellee, and Cross-appellant, v. JORDAN PINES TOWNHOMES OWNERS ASSOCIATION, INC., Defendant, Appellant, and Cross-appellee.
• Court: Utah Court of Appeals

298 P.3d 666

729 Utah Adv. Rep. 14

Isaac McQUEEN, Plaintiff, Appellee, and Cross-appellant,

v.JORDAN PINES TOWNHOMES OWNERS ASSOCIATION, INC., Defendant, Appellant, and Cross-appellee.

No. 20110312–CA.

Court of Appeals of Utah.

Feb. 28, 2013.

John D. Morris and Jamie L. Nopper, Attorneys for Appellant and Cross-appellee.

Bruce A. Maak, Attorney for Appellee and Cross-appellant.

Opinion

CHRISTIANSEN, Judge:

¶ 1 Defendant Jordan Pines Townhomes Owners Association, Inc. appeals the district court's grant of partial summary judgment in favor of plaintiff, Isaac McQueen. McQueen cross-appeals the district court's denial of his requested attorney fees. We affirm.

BACKGROUND ¹

¶ 2 Jordan Pines Townhomes Owners Association, Inc. (the Association) is a condominiumassociation located in West Jordan, Utah. Ownership of a Jordan Pines condominium unit requires owners to sign a condominium declaration by which they agree to pay assessments to the Association. The assessments cover exterior and clubhouse maintenance, snow removal, common utilities, and other expenses. If the required assessments are not paid, the condominium declaration provides for the creation of a lien that may be enforced through foreclosure or sale in accordance with the law of “deeds of trust or mortgages or in any other manner permitted by law.” In February 2006, McQueen purchased a condominium unit at Jordan Pines Townhomes and signed the required declaration. McQueen never actually occupied the unit and, instead, leased it out to several different tenants over a period of nineteen months.

¶ 3 At some point after he purchased the condominium unit, McQueen came to be in arrears on his assessment fees in the amount of $903.71.² The Association, acting through its attorney, initiated nonjudicial foreclosure proceedings on March 2, 2007, by recording with the office of the Salt Lake County Recorder a Notice of Lien against McQueen's unit. The Association later recorded a Notice of Default, posted a published Notice of Sale by Public Auction, and set the auction for September 11, 2007. Exchange Properties, Inc., a company owned by J. Daniel Fox (collectively, Exchange), was the only bidder at the auction. Exchange purchased McQueen's unit for $3,312.76. The purchase amount included the assessment fees arrearage, interest, the cost of selling the unit, and attorney fees incurred in pursuing the foreclosure against McQueen's unit. Once the Association delivered the deed to the unit, Exchange evicted McQueen's tenants.

¶ 4 On December 31, 2007, McQueen filed suit against Exchange and the Association seeking to quiet title to the unit and to recover damages for slander of title. McQueen thereafter filed a motion for partial summary judgment, arguing as a matter of law that (1) the nonjudicial foreclosure procedure followed by the Association was ineffective and void, (2) McQueen remained the owner of the subject property, and (3) title to the subject property should be quieted in favor of McQueen. On January 4, 2009, the district court granted McQueen's partial summary judgment motion and determined that the Association did not appoint a qualified trustee to perform the nonjudicial foreclosure sale as required by section 57–8–20 of the Condominium Ownership Act, see generallyUtah Code Ann. § 57–8–20(4) (LexisNexis 2010) (current version at id. § 57–8–44, –45 (Supp. 2012)), and the Trust Deed Act, see generally id.§§ 57–1–19 to –38 (2010 & Supp. 2012). Consequently, the court invalidated the sale of the condominium unit to Exchange and quieted title to the unit in McQueen.

¶ 5 McQueen next attempted to regain possession of his unit by contacting Exchange and counsel for the Association. When his efforts proved to be unsuccessful, McQueen filed an unlawful detainer action against Exchange and Exchange's tenants. The unlawful detainer action was tried before a different district court judge on April 6, 2009. The court took judicial notice of the prior partial summary judgment ruling and determined that McQueen was entitled to exclusive possession of the unit. Exchange did not appeal this ruling. McQueen retook possession of his condominium in April 2009.

¶ 6 On May 26, 2009, McQueen filed a second amended complaint in the quiet title case. In addition to the claims not resolved by the court's previous partial summary judgment ruling, the second amended complaint alleged that Exchange had committed waste and that McQueen was entitled to attorney fees. Following a bench trial in March 2010, the court entered final judgment against the Association and issued findings of fact and conclusions of law. Relevant to this appeal, the court ruled that McQueen was not entitled to attorney fees as a matter of law and dismissed that claim with prejudice. The court also confirmed its prior partial summary judgment ruling declaring the foreclosureprocedure as ineffective and void. Both parties appeal.

ISSUES AND STANDARDS OF REVIEW

¶ 7 On appeal, the Association argues that the district court erred as a matter of law in determining that the nonjudicial foreclosure proceeding conducted by the Association was ineffective and void because the Association failed to appoint a qualified trustee to conduct the nonjudicial foreclosure sale pursuant to the Condominium Ownership Act, see id. § 57–8–20(4) (2010); see generally id. § 57–8–1 to –41, and the Trust Deed Act, see id.§§ 57–1–19 to –38 (2010 & Supp. 2012). “Because summary judgment is granted as a matter of law, we review for correctness.” Harding v. Atlas Title Ins. Agency, Inc., 2012 UT App 236, ¶ 5, 285 P.3d 1260 (citation and internal quotation marks omitted). Whether a qualified trustee must be appointed to conduct a nonjudicial foreclosure or sale is a question of statutory interpretation. “ ‘The proper interpretation and application of a statute is a question of law which we review for correctness, affording no deference to the district court's legal conclusion.’ ” Ellison v. Stam, 2006 UT App 150, ¶ 16, 136 P.3d 1242 (quoting Gutierrez v. Medley, 972 P.2d 913, 914–15 (Utah 1998)).³

¶ 8 On cross-appeal, McQueen contends that the district court erred in ruling that the Association is not liable for certain of McQueen's attorney fees based upon the condominium declaration and Utah Code section 78B–5–826 or as a result of the consequential damages he incurred in pursuing clear title to the condominium unit. “We review the denial of an award of attorney fees as a matter of law for correctness.” PC Crane Serv., LLC v. McQueen Masonry, Inc., 2012 UT App 61, ¶ 23, 273 P.3d 396.

ANALYSIS

I. The Condominium Ownership Act and the Trust Deed Act Both Require that a Qualified Trustee Be Appointed To Conduct a Nonjudicial Foreclosure or Sale.

A. The Relevant Statutory Law

¶ 9 The question presented by the Association's appeal is how much of the Trust Deed Act, seeUtah Code Ann. §§ 57–1–19 to –46 (LexisNexis 2010 & Supp. 2012), is incorporated into the Condominium Ownership Act, see id. §§ 57–8–1 to –41, by the latter's provision that a lien for nonpayment of a condominium unit assessment may be enforced through foreclosure or sale according to the law of deeds of trust or mortgages. See id.§ 57–8–20(4)(a)–(b) (2010). The relevant portion of the Condominium Ownership Act is Utah Code subsection 57–8–20(4)(a)–(b), which was the controlling statute at the time litigation commenced in this case. See id.⁴ Under this statute, nonpayment of a condominium unit assessment resulted in a lien in favor of the management of the condominium association. See id. That is,

if any unit owner fails or refuses to pay an assessment when due, that amount constitutes a lien on the interest of the owner in the property, and upon the recording of notice of lien by the manager or management committee it is a lien upon the unit owner's interest in the property prior to all other liens and encumbrances....

Id.§ 57–8–20(4)(a).⁵

¶ 10 Based upon McQueen's arrearage, there is no dispute the Association had a rightful lien against McQueen's condominium unit in this case. Rather, the parties disagree about the procedure undertaken by the Association to foreclose on that lien. The statute also sets forth the procedure for enforcing an assessment lien:

The lien for nonpayment of an assessment may be enforced by sale or foreclosure of the unit owner's interest by the manager or management committee. The sale or foreclosure shall be conducted in the same manner as foreclosures in deeds of trust or mortgages or in any other manner prescribed by law.

Id.§ 57–8–20(4)(b). As noted in the Condominium Ownership Act, the sale or foreclosure of an assessment lien must be conducted in the same manner as foreclosures involving trust deeds, mortgages, or any other method permitted by law. Utilization of a trust deed in a foreclosure allows property to be nonjudicially foreclosed, often making a trust deed the preferred option over the traditional mortgage foreclosure process that requires judicial involvement. Nonjudicial trust deed foreclosures and sales are governed by the Trust Deed Act. Accordingly, we turn to the specific requirements of the Trust Deed Act to determine the appropriate procedure for enforcing an assessment lien by nonjudicial foreclosure.

¶ 11 Relevant to our analysis is section 57–1–19(3), which defines a trust deed as a device that “convey[s] real property to a trustee in trust to secure the performance of an obligation of the trustor or other person named in the deed to a beneficiary.” Id.§ 57–1–19(3) (2010). Additionally, section 57–1–21 is applicable here and states that the power of sale “may only be exercised by the trustee of a trust deed if the trustee is qualified under Subsection (1)(a)(i) or (iv).” Id.§ 57–1–21(3). Notably, section 57–1–21(4) mandates that

[a] trust deed with an unqualified trustee or without a trustee shall be effective to create a lien on the trust property, but the power of sale and other trustee powers under the...