Occidental/Nebraska Federal Sav. Bank v. Mehr

• Decision Date: 19 April 1990
• Docket Number: No. 890136-CA,890136-CA
• Citation: 791 P.2d 217
• Parties: OCCIDENTAL/NEBRASKA FEDERAL SAVINGS BANK, Plaintiff and Appellant, v. Daniel S. MEHR, Kathryn C. Mehr, Daniel S. Mehr II, and Deborah L. Mehr, Defendants and Appellees.
• Court: Utah Court of Appeals

Page 217

791 P.2d 217

OCCIDENTAL/NEBRASKA FEDERAL SAVINGS BANK, Plaintiff and Appellant, v. Daniel S. MEHR, Kathryn C. Mehr, Daniel S. Mehr II, and Deborah L. Mehr, Defendants and Appellees.

No. 890136-CA.

Court of Appeals of Utah.

April 19, 1990.

Glen W. Roberts (argued), Walker Kennedy III, Woodbury, Bettilyon, Jensen, Kesler & Swinton, Salt Lake City, for plaintiff and appellant.

Lynn S. Davies (argued), Richards, Brandt, Miller & Nelson, Salt Lake City, for defendants and appellees.

Before GREENWOOD, JACKSON and ORME, JJ.

OPINION

JACKSON, Judge:

Occidental/Nebraska Federal Savings Bank (Occidental) appeals a judgment in which the trial court concluded that, because a trustee's sale was valid, a subsequent trustee's sale of the same property under the same trust deed was of no effect. Occidental also appeals the trial court's grant of attorney fees and costs to the Mehrs as the prevailing parties. We affirm.

The parties stipulated to the facts at trial. In 1983, the Mehrs obtained a loan secured by a trust deed on certain real property. At the time this claim arose, Occidental was the beneficiary of the trust deed. The Mehrs fell behind in their payments, and on July 16, 1985, Occidental recorded a notice of default. This notice of default specifically identified the trust deed, gave the names of the Mehrs as the trustors, and included the book number and page number where the trust deed was recorded. This notice of default, however, misdescribed the property to be foreclosed by omitting three lots.

On September 9, 1985, Occidental recorded an amended notice of default which added the previously omitted lots to the property description. On November 13, 1985, Occidental mailed the Mehrs a notice of sale scheduling a trustee's sale of the complete property for December 16, 1985.

The only bid at the December 16, 1985, trustee's sale was from Occidental for $983,086.33. Occidental's purchase at this price resulted in a deficiency, stipulated to at trial, of $7,339.44. Within three months of the sale, as required by Utah Code Ann. § 57-1-32 (1974), Occidental sued to collect the deficiency resulting from the December trustee's sale. The trustee's deed from the December sale, however, had not been recorded.

After filing this action to collect the deficiency, Occidental claims it came to believe that the trustee's sale in December 1985 was procedurally defective. The defect is alleged to be in the sending of the notice of sale only two months after the filing of the amended notice of default, not the required three months, see Utah Code Ann. § 57-1-24 (1974). The notice of sale, however, was sent more than three months after the original notice of default was recorded.

Subsequently, Occidental sent a new notice of sale to the Mehrs scheduling a trustee's sale for April 16, 1986. The same property sold in December 1985 was sold a second time at a trustee's sale held on April 16, 1986. At this sale, Occidental again was the only bidder, bidding only $400,000, in contrast to its $983,086.33 bid in December.

Following the April sale, Occidental amended the complaint in its deficiency action to reflect the deficiency created by the April sale. In defense of the amended claim for a deficiency judgment, the Mehrs argued that the December trustee's sale was valid and that the April sale had no effect. The trial court concluded that the first trustee's sale was valid and entered judgment against the Mehrs for a $7,339.44 deficiency resulting from the December 1985 sale. The trial court also awarded attorney fees and costs of $4,451.98 to the Mehrs.

I.

Occidental contends that, because only two months elapsed from the filing of the amended notice of default until the notice of the initial sale was sent, the December 1985 trustee's sale pursuant to that notice of sale was invalid.

Utah Code Ann. § 57-1-23 (1974) confers upon a trust deed trustee the power to sell trust property if the trustor breaches a secured obligation. This power of sale must be exercised in accordance with Utah Code Ann. § 57-1-24 (1974), which provided:

The power of sale herein conferred upon the trustee shall not be exercised until:

(a) the trustee shall first file for record, in the office of the recorder of each county wherein the trust property or some part or parcel thereof is situated, a notice of default, identifying the trust deed by stating the name of the trustor named therein and giving the book and page where the same is recorded or a description of the trust property, and containing a statement that a breach of an obligation for which the trust property was conveyed as security has occurred, and setting forth the nature of such breach and of his election to sell or cause to be sold such property to satisfy the obligation;

(b) not less than three months shall thereafter elapse; and

(c) after the lapse of at least three months the trustee shall give notice of sale as provided in this act.

In this case, the original notice of default was filed on July 26, 1985. This notice identified the trust deed by naming the Mehrs as the trustors, and it identified the book and page number where the trust deed was recorded. This notice of default, however, contained an incomplete description of the property to be foreclosed.

Later, an amended notice of default was filed which described the whole property to be foreclosed. Two months after the amended notice of default was filed, Occidental gave notice that a trustee's sale of the entire property would be held on December 16, 1985. This sale proceeded as scheduled, and the trustee accepted Occidental's bid of $963,086.33.

Occidental now contends that the procedures it employed to exercise its rights as beneficiary of the trust deed were so defective that the ultimate objective of those procedures, the December 1985 trustee's sale, should be invalidated.

Generally in legal proceedings a party with knowledge of all the facts will not be allowed to take a position, pursue that position to fruition, and later, with no substantial change in circumstances, return to attack the validity of the prior position or the outcome flowing from it. See 28 Am.Jur.2d Estoppel and Waiver §§ 68-70 (1966). Occidental, the beneficiary of the trust deed, caused the first notice of default to be recorded and sent. Occidental also caused the amended notice of default, as well as the notice of sale, to be filed and sent. Occidental then caused a trustee's sale to be held pursuant to its own preparatory work. At all times Occidental had full knowledge of all relevant facts. To permit Occidental to follow through with the December 1985 trustee's sale relying on its work and then allow it, with the benefit of hindsight, to take an inconsistent position attacking its own work would ignore principles of estoppel arising when a party takes inconsistent positions. While such estoppel principles are most often applied in judicial actions, the facts and circumstances surrounding a nonjudicial foreclosure make the situations sufficiently similar. Not recognizing the applicability of these principles in similar situations would cast a shadow of uncertainty on numerous commercial procedures. Absent compelling reasons, Occidental cannot rely on its own claimed mistake to invalidate the first trustee's sale. We must determine whether there is sufficient justification to allow Occidental to invalidate the first sale based on the alleged procedural defect.

The "detailed procedural requirements for a trustee's sale of real property are intended to protect the debtor/trustor." Jones v. Johnson, 761 P.2d 37, 41 n. 2 (Utah Ct.App.1988). The objective of the notice requirements is to protect the rights of those with an interest in the property to be sold. The sufficiency of the notice or the validity of a subsequent sale will not be affected by immaterial errors and mistakes if those objectives are met. Concepts, Inc. v. First Sec. Realty Servs. Inc., 743 P.2d 1158, 1159 (Utah 1987).

In the case at hand, Occidental filed a notice of default regarding a particular deed of trust. This notice identified the trustor and the particular trust deed to be foreclosed. Especially where the trustor has not claimed to have been confused or otherwise prejudiced, the failure to describe fully and correctly the property to be foreclosed was not a flaw sufficient to vitiate the entire procedure. At the time, Utah Code Ann. § 57-1-24 (1974) required that the notice of default identify the trust deed by "stating the name of the trustor ... and giving the book and page where the same is recorded or a description of the trust property ..." (emphasis added). Because of the disjunctive language, the July 1985 notice of default complied with the requirements of ...