Sunrise Oaks Capital Fund, LLC v. Maughan Family Partnership

2012 UT App 271, 288 P.3d 295, 718 Utah Adv. Rep. 107, 2012 WL 4450354, 2012 Utah App. LEXIS 279
CourtCourt of Appeals of Utah
DecidedSeptember 27, 2012
Docket20110044-CA
StatusPublished

This text of 2012 UT App 271 (Sunrise Oaks Capital Fund, LLC v. Maughan Family Partnership) is published on Counsel Stack Legal Research, covering Court of Appeals of Utah primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sunrise Oaks Capital Fund, LLC v. Maughan Family Partnership, 2012 UT App 271, 288 P.3d 295, 718 Utah Adv. Rep. 107, 2012 WL 4450354, 2012 Utah App. LEXIS 279 (Utah Ct. App. 2012).

Opinion

MEMORANDUM DECISION

ORME, Judge:

% 1 Appellants (the Maughans) appeal from the denial of their requested relief from the sheriff's sale of their property. Appellee (Sunrise) argues for affirmance and requests an award of its attorney fees and costs incurred on appeal. We affirm and remand to the district court to determine the amount of *296 Sunrise's fees and costs reasonably incurred on appeal.

T2 The Maughans executed a note and trust deed in favor of Sunrise in March 2008. The trust deed secured the Maughans' repayment obligation with a sixty-acre parcel of land in Weber County. The Maughans supplied the property description and tax identification number incorporated in the trust deed. The Maughans also owned an adjacent sixty-acre property that was included in the same tax parcel, with the same tax identification number. The adjacent parcel was not intended to be pledged as security and was not described in the trust deed.

T3 The Maughans defaulted, and Sunrise commenced this action to judicially foreclose its trust deed. Sunrise obtained summary judgment in its favor. In October 2009, the district court issued a writ of execution directing the Weber County Sheriff to sell the property described in the trust deed. The property described in the writ contained the tax identification number and the correct metes and bounds description from the trust deed. In November 2009, however, the sheriff published a notice of sale containing the metes and bounds description for the larger tax parcel corresponding to the tax identification number, including the adjacent property not secured by the trust deed. 1 At the ensuing sale, the property was sold to Sunrise for $135,000. The certificate of sale prepared and recorded by the sheriff also described the property using the description of the larger tax parcel, erroneously including the adjacent sixty-acre parcel. When Sunrise was made aware of the incongruence between the property description in the certificate of sale and the description in the trust deed, Sunrise contacted the sheriff to correct the certificate. The sheriff immediately complied with the request and revised the certificate to describe the property sold using the property description from the trust deed.

{ 4 The Maughans filed an objection to the sheriff's sale in January 2010, claiming that the price paid by Sunrise was "substantially inadequate." In February 2010, the district court found the Maughans' objection to be "without merit." In May 2010, the Mau-ghans filed a motion to set aside the sheriff's sale and order of summary judgment, ostensibly pursuant to rule 60) of the Utah Rules of Civil Procedure. For the first time, the Maughans alleged that there was a mistake in the property description used in the certificate of sale prepared by the sheriff. In early September-approximately nine months after the sale and three months after filing their motion to set aside-the Mau-ghans asserted in their supplemental briefing on the motion that the notice of sale was flawed and rendered the sheriff's sale invalid. The district court again ruled against the Maughans.

1 5 On appeal, the Maughans contend that the secured property was not sold for adequate value at the sheriff's sale. The Mau-ghans also argue that the court committed error in determining that the sheriff's sale was valid and enforceable. 2

16 "There is a general policy to sustain a sheriffs sale. The policy of the courts is to uphold judicial sales except when they are manifestly unfair.... [Elspecially this is true in a state such as Utah which has a substantial period of redemption." Beesley v. Hatch, 863 P.2d 1319, 1322 (Utah 1993) (citation and internal quotation marks omitted). District courts are afforded a "high degree of discretion" in determining whether to set aside a sheriff's sale. Pyper v. Bond (Pyper II), 2011 UT 45, ¶ 24, 258 P.3d 575, aff'g 2009 UT App 331, 224 P.3d 713. This discretion, however, is not limitless. On the contrary, our jurisprudence has developed a rather specific and systematic methodology *297 for considering challenges to sheriff's sales like the instant one.

One of the main justifications for setting aside a sheriffs sale or extending the redemption period involves the interplay of two factors: (1) gross inadequacy of the purchase price and (2) irregularity in the sale so as to indicate at least slight cireum-stances of unfairness. "These factors operate on a sliding seale. Thus, the greater the disproportionality in price, the less unfairness or fewer irregularities a party must demonstrate before a court may justifiably extend a redemption period or set aside a sheriff's sale."

Meguerditchian v. Smith, 2012 UT App 176, ¶ 10, 284 P.3d 658 (emphasis added) (internal citations, additional internal quotation marks, and footnote omitted) (quoting Pyper II, 2011 UT 45, ¶ 15, 258 P.3d 575). In short, a party must demonstrate both a grossly inadequate price and irregularity in the conduct of the sale before this "sliding scale" even comes into play. That is, recognition of the sliding seale should not obscure the debtor's fundamental obligation to establish both an inadequate price and irregularity in the sale. See Pyper II, 2011 UT 45, ¶ 16, 258 P.3d 575. See also Mark Mfg. Co. v. Joseph Nelson Supply Co., 65 Utah 320, 237 P. 223, 227 (1925) (noting "that where inadequacy of price is shown [,] the courts will be quick to seize upon other irregularities in the conduct of the sale, and such irregularities, coupled with inadequacy of price, may be sufficient grounds for avoiding the sale") (emphasis added) (citation and internal quotation marks omitted).

17 The Maughans argue that the $135,000 sale price bid at the December 2009 sheriffs sale was "substantially inadequate and created an inequitable situation of unfair dealing." They first objected to the sale price in early 2010 when they filed a motion challenging the sheriff's sale and requesting that the district court quash the writ of execution. In denying that motion, the court focused on the inadequacy of the evidence presented by the Maughans with regard to the price obtained at the sheriff's sale:

Notably, [the Maughans] have not submitted an appraisal for the subject property and acknowledge that the property's current value is unknown. The Maughans base their argument that the sales price from the property's sheriff's sale was substantially inadequate [as compared to] the sales prices of neighboring properties from nearly three and a half (8 %) years ago, a time at which [the Maughans] acknowledge that the market and property values were significantly greater than current values. Additionally, [the Maughans'] assertion that these neighboring properties are comparable to the subject property is founded upon the opinion of Russell Maughan, a defendant in this litigation whose credentials for appraising and comparing real property have not been established. Moreover, [the Maughans] have not submitted any evidence that a ready market for the subject property exists. Accordingly, the Court finds that [the Maughans'] outdated, self-serving, and insufficient evidence carries little weight with regard to establishing a current value for the subject property.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Management Services Corp. v. Development Associates
617 P.2d 406 (Utah Supreme Court, 1980)
Pyper v. Bond
2011 UT 45 (Utah Supreme Court, 2011)
Pyper v. Bond
2009 UT App 331 (Court of Appeals of Utah, 2009)
Mark Mfg. Co. v. Joseph Nelson Supply Co.
237 P. 223 (Utah Supreme Court, 1925)
Meguerditchian v. Smith
2012 UT App 176 (Court of Appeals of Utah, 2012)
Beesley v. Hatch
863 P.2d 1319 (Utah Supreme Court, 1993)

Cite This Page — Counsel Stack

Bluebook (online)
2012 UT App 271, 288 P.3d 295, 718 Utah Adv. Rep. 107, 2012 WL 4450354, 2012 Utah App. LEXIS 279, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sunrise-oaks-capital-fund-llc-v-maughan-family-partnership-utahctapp-2012.