Phillips v. Skabelund, 010721 UTCA, 20190552-CA

Docket Nº:20190552-CA
Opinion Judge:MORTENSEN, JUDGE.
Party Name:Peter O. Phillips and Pdnulebaks Utah LLC, Appellants and Cross-appellees, v. Gregory N. Skabelund and S&S Acres LLC, Appellees and Cross-appellants, and People's Intermountain Bank and Cache Title Company Inc., Appellees.
Attorney:Adam S. Affleck, Attorney for Appellants. Joseph M. Chambers and J. Brett Chambers, Attorneys for Appellees and Cross-appellants. Bradley L. Tilt and Sara E. Bouley, Attorneys for Appellee People's Intermountain Bank. Dustin Del Ericson, Attorney for Appellee Cache Title Company Inc.
Judge Panel:Judge David N. Mortensen authored this Opinion, in which Judges Michele M. Christiansen Forster and Kate Appleby concurred.
Case Date:January 07, 2021
Court:Court of Appeals of Utah

2021 UT App 2

Peter O. Phillips and Pdnulebaks Utah LLC, Appellants and Cross-appellees,

v.

Gregory N. Skabelund and S&S Acres LLC, Appellees and Cross-appellants,

and

People's Intermountain Bank and Cache Title Company Inc., Appellees.

No. 20190552-CA

Court of Appeals of Utah

January 7, 2021

Second District Court, Ogden Department The Honorable Michael D. DiReda No. 160903990

Adam S. Affleck, Attorney for Appellants.

Joseph M. Chambers and J. Brett Chambers, Attorneys for Appellees and Cross-appellants.

Bradley L. Tilt and Sara E. Bouley, Attorneys for Appellee People's Intermountain Bank.

Dustin Del Ericson, Attorney for Appellee Cache Title Company Inc.

Judge David N. Mortensen authored this Opinion, in which Judges Michele M. Christiansen Forster and Kate Appleby concurred.

OPINION

MORTENSEN, JUDGE.

¶1 This case primarily arises out of a trustee's sale, but there is a significant backstory. Peter O. Phillips and Pdnulebaks Utah LLC (collectively, Appellants) sued Gregory N. Skabelund and S&S Acres LLC (S&S) (collectively, Cross-appellants), Cache Title Company Inc. (Cache Title or Trustee), and People's Intermountain Bank (Bank) (collectively, Appellees) to set aside the sale of certain property and the trustee's deed thereto. Appellants assert a catalog of claimed errors stemming from orders resolving a motion to dismiss and multiple motions for summary judgment. Cross-appellants relatedly appeal certain orders to provide alternative grounds to sustain the court's final judgement in their favor. We affirm the district court's entries of judgment in favor of Appellees.

BACKGROUND1

¶2 In April 2010, Phillips, an experienced real-estate entrepreneur, sought a $140, 000 bridge loan[2] from Skabelund, his long-time legal counsel. The loan was backed by a promissory note and secured by a trust deed against certain property (Property) held by Phillips. Skabelund prepared the note and the trust deed, and loaned Phillips the money. Cache Title was named trustee.

¶3 Shortly after executing the trust deed and promissory note, Phillips conveyed the Property, subject to the trust deed, to an entity designed to hold the Property, designated as Pdnulebaks ("P" for Phillips and "Skabelund" written in reverse). Skabelund formed Pdnulebaks as a member managed company, and its original articles of organization reflected that Skabelund was the sole "member/manager."

¶4 On October 21, 2010, Phillips defaulted on the loan. Thereafter, Phillips and Skabelund had a falling out. In March 2011, Skabelund engaged Trustee to commence non-judicial foreclosure of the Property. On May 24, 2011, Trustee recorded a notice of default to begin that process.

¶5 On November 9, 2011, Phillips filed for bankruptcy. As part of that proceeding, Phillips listed among his assets "contingent and unliquidated claims" against Skabelund for "breach of contract, breach of fiduciary duty, conversion, malpractice, fraud, fraudulent misrepresentation, rescission and other potential claims." The bankruptcy case was dismissed three months later.

¶6 On March 30, 2012, Trustee recorded a notice of a trustee's sale to occur on a later date, as required by Utah's Trust Deed Act and the trust deed to the Property. Upon receipt of the notice, Phillips challenged the sale and threatened Skabelund with suit for breach of fiduciary duties to Pdnulebaks and himself. Skabelund instructed Trustee to postpone the sale and assigned the trust deed to S&S.3 As directed, Trustee postponed the sale for thirty days by public declaration at the time and place of the initially scheduled sale. Thereafter, Phillips demanded the Trustee's sale be canceled, and he recorded a Notice of Interest on the Property, asserting he was both the equitable owner of Pdnulebaks and the titular owner of the Property. At S&S's direction, Trustee again postponed the sale by public declaration. Ultimately, the Trustee's sale was postponed twelve times, each time by public declaration, for a total of 276 days; no single postponement exceeded forty-five days.

¶7 During the months between the initial and final foreclosure sales, the parties entered into a settlement agreement (Settlement Agreement) to resolve the foreclosure and related claims. The Settlement Agreement provided that "Phillips would release his claims relating to Skabelund's conflicted status vis-à-vis Pdnulebaks and the Trustee's sale in consideration for Skabelund transferring whatever rights he had in Pdnulebaks to Phillips . . . and then, following such transfer, giving Pdnulebaks . . . the normal non-judicial foreclosure time before Skabelund would schedule the trustee's sale." At some point, Skabelund provided Phillips with the information necessary to record his membership status in Pdnulebaks. The Property was sold at the Trustee's sale 152 days after the Settlement Agreement.

¶8 On December 21, 2012, S&S purchased the Property at the Trustee's sale by a credit bid of $270, 823.29-representing the amount owed under the note and trust deed. By mid-January 2013, Appellants had knowledge of the Trustee's sale. On December 30, 2013, S&S obtained a loan of $180, 000 from Bank, by a trust deed pledging the Property as collateral. In January 2014, Phillips recorded his membership in Pdnulebaks and renewed its expired status as a business entity.

Procedural History

¶9 On December 20, 2015, Appellants filed the underlying action. Appellants' original complaint sought to set aside the trustee's deed for violations of Utah Code section 57-1-27(2), which sets out the requirements for additional notice when a trustee's sale is postponed beyond its originally noticed date. That claim was dismissed by order ruling on a motion made pursuant to rule 12(b)(6) of the Utah Rules of Civil Procedure (First Order). During the pendency of the rule 12(b)(6) motion, Appellants moved to file an amended complaint, adding new claims and bolstering their previous claim. The motion to file an amended complaint was denied (Second Order).

¶10 Thereafter, Appellants moved for, and were permitted to submit, a third amended complaint, specifying eight claims: (1) malpractice for the trust deed and note against Skabelund, (2) malpractice in the formation of Pdnulebaks against Skabelund, (3) fraud in the formation of Pdnulebaks against Skabelund, (4) breach of the Settlement Agreement against S&S, (5) fraud relating to the postponement of the Trustee's sale against Skabelund and S&S, (6) breach of fiduciary duty as to Pdnulebaks against Skabelund, (7) a claim against S&S and Bank to set aside the Trustee's sale, and (8) breach of the trust deed against Cache Title.

¶11 The litigation proceeded through discovery, and multiple motions for summary judgment followed. In an order resolving cross-motions for summary judgment from Appellants and Bank, the court granted judgment to Bank on the seventh claim (Third Order). In response to a later motion, the court granted summary judgment in favor of S&S on all claims encompassed within the Settlement Agreement and subsequently granted judgment in favor of S&S and Skabelund on claims four and six (Fourth Order). The court later determined the Settlement Agreement also encompassed the first, second, third, fifth and seventh causes of action and granted summary judgment on each claim in favor of Skabelund and S&S (Fifth Order). In a separate order issued that same day, the court granted a motion to exclude Appellants' valuation expert and denied Appellants' motion to supplement that expert's report (Sixth Order). In response to the exclusion of Appellants' expert, Cache Title moved for, and was granted, summary judgment on the remaining eighth claim for breach of the trust deed. The court entered final judgment in January 2019.

¶12 The following month, Appellants moved to alter or amend three orders: the Fourth and Fifth Orders, which granted summary judgment to Skabelund and S&S, and the Sixth Order, which excluded Appellants' expert and denied the motion to supplement the expert's report. The court issued an order (Seventh Order) denying the motion but amending its prior orders. In the Seventh Order, the court amended the rationale used in the Fourth and Fifth Orders, stating it erred in determining that summary judgment was warranted based on the resolution reached under the Settlement Agreement. In lieu thereof, the court determined that summary judgment was still appropriate based on the exclusion of Appellants' expert, as ruled in the Sixth Order. The court gave each party thirty days to respond to its Seventh Order. Appellants did not offer a response.

¶13 Appellants appeal, and S&S and Skabelund cross-appeal.

ISSUES AND STANDARDS OF REVIEW

¶14 Appellants first contend that the district court erred in dismissing their claim that the Trustee's sale violated the Utah Trust Deed Act's notice-of-postponement provision in Utah Code section 57-1-27(2). But Appellants fail to challenge an independent basis for dismissal relied on by the district court.4And we have "no choice except to affirm," Kendall v. Olsen, 2017 UT 38, ¶ 9, 424 P.3d 12; see also id. ¶ 12 (stating that under "our rules of appellate procedure . . . we will not reverse a ruling of the district court that rests on independent alternative grounds where the appellant challenges only one of those grounds" (cleaned up)), because we "have no occasion to reach the merits of the[] claim[] here," id. ¶ 9.

¶15 Appellants next contend that the court erred in its Third Order, granting summary judgment to Bank on the seventh claim, on two points relating to the court's application of the law.5 "We review the district court's ultimate grant or denial of summary judgment for correctness. We give no deference to the...

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