US Bank National Association et al v. Martenson et al

Filing 36

MEMORANDUM DECISION and Order on Motion to Consolidate-This case is consolidated with case 1:12cv182 CW. Signed by Judge Clark Waddoups on 8/7/13. (jmr)

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION

SVEN MARTENSON, and SUSAN
MARTENSON,

MEMORANDUM DECISION AND
ORDER ON MOTION TO
CONSOLIDATE

Plaintiff,
Case No. 1:12-CV-00182
v.
Judge Clark Waddoups
WELLS FARGO BANK, N.A. and US
BANK NATIONAL ASSOCIATION,
Defendants.

Before the court is Plaintiffs’ Motion to Consolidate and Realign the Parties (Dkt. No.
13), filed October 12, 2012. The cases at issue consist of claims by the Martensons for
“Wrongful Foreclosure” currently pending before this court and a claim by US Bank for
“Unlawful Detainer” pending before Judge David Nuffer. Plaintiffs assert seven causes of action
in the Wrongful Foreclosure case including the following: (1) breach of contract and breach of
good faith and fair dealing, (2) negligent supervision, (3) quiet title through wrongful disclosure,
(4) quiet title through undue influence, (5) fraud, (6) negligence and (7) estoppel. The
Martensons named US Bank as a defendant in the Wrongful Foreclosure action alleging it
bought the property at issue in this case at an auction from Wells Fargo and now claims title and
the right to possession. US Bank filed the Unlawful Detainer action in state court, alleging the
Martensons refused to vacate the property after receiving Notices to Quit. The Martensons
removed the case to federal court.

Pursuant to Rule 42 of the Federal Rules of Civil Procedure a court may consolidate
cases before the court that involve “common questions of law or fact.” Fed. R. Civ. P. 42. Also,
in determining whether to consolidate, “the court must weigh the costs versus the benefits of
consolidation.” Leeds v. Matrixx Initiatives, Inc., 2:10-cv-199DAK, 2012 U.S. Dist. LEXIS
47279, at *4 (D. Utah April 2, 2012) (citation omitted). Consolidation is appropriate under the
local District rules where “cases arise from substantially the same transaction or event . . . .”
D.U. Civ. R. 42-1.
Plaintiffs argue that the Wrongful Foreclosure and Unlawful Detainer cases should be
consolidated because they involve common questions of fact and law. Plaintiffs note that both
claims arise from the same foreclosure leading to the issue in both cases of the contested right of
possession of the house. Defendants oppose consolidation, arguing that Unlawful Foreclosure
involves pre-foreclosure issues of fact and law, whereas the Unlawful Detainer involves postforeclosure issues of fact and law.
Defendants cite Aparicio v. Wells Fargo Bank, N.A., to support their assertion. 2:11-cv00495, 2011 U.S. Dist. LEXIS 128235 (D. Utah Oct. 17, 2011). In Aparicio the court denied
consolidation of a claim for wrongful foreclosure pending in federal court and a claim for
unlawful detainer pending in state court, finding actions pending in separate jurisdictions could
not be properly consolidated. The court observed that “questions of fact and law related to an
unlawful detainer action are significantly different to those presented in this action involving
quiet title, slander of title, negligence, foreclosure fraud, breach of implied covenant of good
faith and fair dealing and unjust enrichment.” Id. at 25.
Aparicio, however, is distinguishable from the present case. First, both cases are pending
in federal court. Second, the right of possession is an issue that substantially affects the decision

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in both cases. The first element of an unlawful detainer case after foreclosure is that the person
“(1) defaulted on his or her obligations resulting in disposition of the property by a trustee’s sale
. . . .” Utah Code Ann. § 78B-6-802.5 (2013). The Wrongful Foreclosure case involves a claim
that Plaintiffs defaulted on their obligation only because of fraudulent misrepresentations from
Wells Fargo preventing the Martensons from being able to use their statutory right to reinstate
the loan 90 days after the notice of default. Also the Wrongful Foreclosure case involves a claim
for estoppel to void the trustee’s deed. If the trustee’s deed was void and the property was not
properly sold, then the Unlawful Detainer may be improper. Thus, a substantial question of law
related to the Wrongful Foreclosure is a question of law that also affects the Unlawful Detainer.
Defendants contend that the proper remedy for the Martensons to prevent or delay
eviction would have been to challenge the foreclosure sale prior to the foreclosure. In cases that
involve fraud, however, there is an exception to the usual requirement of challenging a
foreclosure prior to sale. See Reynolds v. Woodall, 2012 UT App. 206, ¶ 14, 285 P.3d 7
(explaining that a trustee’s sale will not be set aside unless it involves fraud or unfair dealing).
Since Plaintiffs’ complaint includes accusations of fraud and unfair dealing in that they allege
that they were told to ignore the notice of default and that a loan modification would be worked
out, the trustee’s sale may still be set aside even though they did not seek an injunction prior to
sale.
The Defendants argue that even assuming arguendo that the cases involve common
issues of fact or law, the costs of consolidation outweigh the benefits because an unlawful
detainer action is an expedited proceeding under Utah statutory law. Utah Code Ann. § 78B-6810 (1)(b)(2013). Under the facts of this case the court is not persuaded. The court concludes that
consolidation would promote judicial economy. Under Utah law permissive or compulsory

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counterclaims may be brought in an unlawful detainer case. Bichler v. DEI Sys., Inc., 2009 UT
63, ¶ 25, 220 P.3d 1203. Significantly, counterclaims related to possession must be resolved
prior to entry of final judgment. Id. at ¶ 32. Thus, if the Unlawful Detainer case were not
consolidated and were to be remanded to state court, the facts and issues related to the Wrongful
Foreclosure case could be asserted as counterclaims that would need to be decided before entry
of final judgment on the Unlawful Detainer action.
The Martensons are asking the court to realign the parties in order to satisfy diversity
jurisdiction. “[I]t is settled that where . . . there is no diversity of citizenship based on the initial
alignment of the parties in an action commenced in state court, a defendant may nonetheless
remove the case to federal court and request realignment of the parties to produce the requisite
diversity.” Lott v. Scottsdale Ins. Co., 811 F. Supp. 2d 1220, 1223 (E.D. Va. 2011). “When
appropriate, parties will be realigned; however, this is to be done only after real rather than
apparent interests have been ascertained.” Farmers Alliance Mut. Ins. Co. v. Jones, 570 F.2d
1384, 1387 (10th Cir. 1978). The fundamental adverse position of the Martensons to US Bank
and Wells Fargo is the interest in the property. If US Bank and the Martensons are realigned in
the Unlawful Detainer case then each party would be in a position adverse to their real interests.
Thus, the interests of the parties would properly be arranged if the parties were realigned.
It is therefore ORDERED that Plaintiffs’ Motion to Consolidate and Realign the Parties
(Dkt. No. 13) is hereby GRANTED. The present case will be consolidated with Case No. 1:12cv-00212, US Bank v. Martenson, currently assigned to District Judge David Nuffer.1

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Pending before Judge Nuffer is a motion to remand the Unlawful Detainer action. The court in
making this order to consolidate is not, however, reaching the merits on the issue of whether the
Unlawful Detainer action must be remanded to State court for lack of subject matter jurisdiction.
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SO ORDERED this 7th day of August, 2013.
BY THE COURT:

________________________________
Clark Waddoups
United States District Judge

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