Macquarie Mortgages USA v. Premier Title Insurance Agency et al

Filing 122

MEMORANDUM DECISION granting 100 Premier's Motion for Summary Judgment; denying 102 Macquarie's Motion for Summary Judgment. Signed by Judge Dee Benson on 2/22/14. (jlw)

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

MACQUARIE MORTGAGES USA, INC., a
Delaware Corporation,
Plaintiff,

MEMORANDUM DECISION
AND ORDER

vs.
PREMIER TITLE INSURANCE AGENCY,
INC., a Utah corporation; DUSTIN
CHRISTENSEN, a married man; OTIS L.
ADAMS, a married man; SAND CANYON
CORPORATION, a California corporation,
f.k.a. OPTION ONE MORTGAGE
CORPORATION; WELLS FARGO BANK,
N.A., a national banking association, as trustee
for OPTION ONE MORTGAGE LOAN
TRUST 2007-3; UTAH LABOR
COMMISSION, a governmental agency;
DRAPER HEIGHTS SUBDIVISION H.O.A.,
a Utah non-profit corporation, a.k.a. / d.b.a.
DRAPER HEIGHTS HOMEOWNERS
ASSOCIATION and as DRAPER HEIGHTS
PLANNED UNIT DEVELOPMENT; ABC
COMPANY 1 through 5, inclusive; and DOE 1
through 5, inclusive;

Case No. 2:12-CV-674
Judge Dee Benson

Defendants.

Before the Court are the parties’ cross motions for summary judgment. (Dkt. Nos. 100 &
102.) The Court heard oral argument on these motions on January 22, 2014. 1 Having

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At that same hearing, the Court heard argument on Plaintiff’s Motion for Leave to File Third
Amended Complaint. (Dkt. No. 107.) That motion was granted on February 18, 2014. (Dkt.
No. 120.)
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considered the parties’ arguments, briefs, and the relevant law, the Court now issues the
following memorandum decision and order.
BACKGROUND
In January 2004, Macquarie Mortgages USA, Inc. (“Macquarie”) loaned a $490,000 lineof-credit (the “Line”) to Dustin Christensen. (Pl.’s Mot. for S.J. ¶ 1.) The Line was secured by a
deed of trust (the “Macquarie Trust Deed”) on Christensen’s home. (Pl.’s Mot. for S.J. ¶ 3.)
Premier Title Insurance Agency, Inc. (“Premier”) served as both Macquarie’s escrow agent for
the closing of the line-of-credit, and Macquarie’s trustee under the Macquarie Trust Deed. (Pl.’s
Mot. for S.J. ¶¶ 3-5.)
Pursuant to the loan agreement, Christensen was entitled to borrow funds on the Line
until the earlier of the Line’s maturity date, January 2034, or Christensen’s delivery to Macquarie
of: (1) his written election to terminate the Line and (2) the funds necessary to pay-in-full any
outstanding balance owed on the Line. (Third Am. Compl., Ex. A at 1, 6-7, 11.) The loan
agreement contemplated an “Early Termination Fee” at a fixed percentage of the initial credit
limit in the event that the Line was paid off and terminated at any time prior to the thirty-sixth
month following the date the Line was funded. (Id. at 7.) Specifically, the loan agreement
included an Early Termination Fee of 1% of the initial credit limit of $490,000, if the loan was
terminated and paid off between “during or after the 12th and before the 24th month after the date
the loan is funded.” (Id.)
For estate planning purposes, on June 3, 2004, Christensen transferred ownership of the
home to Benjamin Davis, as Trustee of the Rose Park Trust. (Def.’s Mem. In Opp’n, Ex. A ¶ 8.)
In April 2006, Davis sold the home to Otis Adams. (Id. at ¶ 9.) Adams used a mortgage loan

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from Novastar Mortgage, Inc. (“Novastar”) to purchase the home. (Third Am. Compl. ¶ 25.)
Premier was chosen to provide escrow and title services to Davis, Adams, and Novastar. (Id.)
Novastar’s closing instructions to Premier included the warning that Premier “not close
or fund [Adams’s loan] unless ALL conditions to these closing instructions and any
supplemental closing instructions have been satisfied.” (Pl.’s Mot. for S.J., Ex. 6 at 1.) The
Specific Closing Instructions required that Novastar’s new deed of trust be recorded in a first lien
position against the home. (Id. at 2.)
On April 6, 2006, Premier, acting on behalf of Davis, sent Macquarie a Request For
Payoff Statement (the “Payoff Statement”), requesting the payoff amount for the Line in
connection with Davis’s sale of the home to Adams. (Pl.’s Mot. for S.J., Ex. 4 at 1.)
In response to the Payoff Request, Macquarie sent to Premier a “Payoff Statement” dated
April 17, 2006. (Pl.’s Mot. for S.J., Ex. 5 at 1.) At the top of the Payoff Statement was the
following disclaimer:
PAYOFF QUOTE VALID ONLY FOR TODAY’S DATE
PAYOFF FUNDS ACCEPTED VIA WIRE TRANSFER ONLY
LINE OF CREDIT TERMINATION REQUEST MUST BE SENT.
(Id.)
The body of the Payoff Statement further read: “[t]o terminate your Equity Line of
Credit, we must have a written request, signed by everyone on the Equity Line of Credit
Agreement. . . . If this written request is not received, your Equity Line of Credit will not be
terminated.” (Id.) The “TOTAL AMOUNT TO PAY LOAN IN FULL” was $511,284.08,
which was comprised of $490,000.00 in principal, $6,411.62 in unpaid interest, $4,900.00 in
prepayment penalty, and $9,972.46 in escrow/impound overdraft fees. (Id.)
On April 17, 2006, Premier, acting on behalf of Davis, wired $511,284.08 to Macquarie.
(Third Am. Compl. ¶ 18.) That same day, Davis and Adams closed on the sale.
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Shortly after the closing, Christensen contacted Macquarie by phone to discuss the status
of the Line. (Def.’s Mot. for S.J., Ex. B ¶ 15.) Christensen informed Macquarie that the home
had been sold to Adams and requested that the automatic draft from Christensen’s bank account
be cancelled and the mortgage released. (Id.)
On April 21, 2006, Christensen again contacted Macquarie and informed Macquarie that
he no longer owned the home and that the mortgage needed to be released. (Id. at ¶ 16.) On
April 24, 2006, Christensen sent Macquarie a fax seeking confirmation that the Line had been
paid in full and had a zero balance. (Id. at ¶ 17.) On May 1, 2006, Christensen received a fax
from Macquarie confirming that the Line had a zero balance, but also indicating that Christensen
had a credit limit of $490,000. (Id. at ¶ 18.) Christensen later contacted Macquarie again to
inquire why Macquarie was holding open the Line. (Id. at ¶ 19.) Christensen again told
Macquarie that he had sold the home. (Id.) Macquarie responded that the Line had not been
terminated, and therefore Christensen could continue to use the Line despite the fact that he no
longer owned the home. (Id.) At some point thereafter, Christensen again started borrowing
against the Line.
In November 2006, Adams refinanced his Novastar mortgage loan with a new loan from
Option One Mortgage Corporation (the “Refinancing”). (Pl.’s Mot. for S.J. ¶ 28.) Equity Title
Insurance Agency, Inc. (“Equity Title”) rendered title and escrow services for the Refinancing.
Option One Mortgage Corporation later became known as Sand Canyon Corporation, Inc.
(“Sand Canyon”). (Id.) Wells Fargo is the successor-in-interest to Sand Canyon with regard to
the Refinancing.
In connection with the Refinancing, Terrie Lund of Equity Title contacted Premier to
discuss the status of the Macquarie Trust Deed. (Pl.’s Mot. for S.J., Ex. 9 ¶ 7.) According to

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Lund, Premier employee Pamela Landgren incorrectly assured Lund that the obligations
underlying the Macquarie Trust Deed had been paid off. (Id. at 8.) Premier also provided Equity
Title with a copy of the lender’s title policy that Premier had issued to Novastar, which insured
Novastar’s deed of trust in first position. (Id.) Landgren claims she does not recall ever
speaking to Lund, and further claims that at no time during her employment at Premier did she
ever speak with third parties about the status of loan obligations or the validity of deeds of trust.
(Decl. of Pamela Landgren at ¶¶ 4-5.)
On September 15, 2008, Christensen defaulted on his repayment obligation under the
Line. (Pl.’s Mot. for S.J. ¶ 18.)
On August 11, 2011, Premier erroneously caused a Reconveyance Deed to be recorded
(the “Reconveyance”). (Pl.’s Mot. for S.J. at 2.) On July 18, 2012, Premier caused a Rescission
of Reconveyance to be recorded (the “Rescission”). (Id.) There were no intervening liens
between the recording of the Reconveyance and the recording of the Rescission. (Id.)
On July 9, 2012, Macquarie filed its initial Complaint in this case. (Dkt. No. 1.) On
August 8, 2012, Macquarie filed its First Amended Complaint. (Dkt. No. 7.) On May 14, 2013,
Macquarie filed its Second Amended Complaint, which alleged six causes of action (“claims for
relief”): (1) judicial foreclosure – against Christensen, Adams, Sand Canyon, and Wells Fargo;
(2) reconveyance without satisfaction – against Premier; (3) negligence per se – against Premier;
(4) breach of contract – against Premier; (5) negligence, against Premier; and (6) breach of
fiduciary duty, against Premier. (Dkt. No. 69.)
On August 27, 2013, Macquarie, Wells Fargo, and Adams, stipulated that the Rescission
was effective to nullify the Reconveyance. (Dkt. No. 94, Joint Motion for Judgment Under Rule
54(b).) That joint motion also sought to dismiss Macquarie’s first cause of action, for judicial

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foreclosure, as well as Adams’s and Wells Fargo’s Counterclaims against Macquarie. (Id.) On
August 28, 2013, the Court entered a Judgment and Order, confirming the stipulation between
Macquarie, Wells Fargo, and Adams. (Dkt. No. 96, Judgment and Order of Dismissal with
Prejudice). As a result, Adams, Sand Canyon, and Wells Fargo were all dismissed from this
action. On September 6, 2013, by way of clarification, the Court further ordered that the
Judgment and Order of Dismissal with Prejudice is only binding on the parties who had
stipulated to the joint motion. (Dkt. No. 99, Order.)
On October 21, 2013, Macquarie filed a Motion for Leave to File Third Amended
Complaint. Macquarie’s Third Amended Complaint eliminated its first three causes of action
from its Second Amended Complaint, and asserted additional allegations in support of its fourth,
fifth, and sixth causes of action. 2 On February 18, 2014, the Court granted Macquarie’s Motion
to File Third Amended Complaint. Macquarie filed its Third Amended Complaint on February
19, 2014.
ANALYSIS
The April 2006 escrow and the November 2006 Refinancing are the bases for each of
Macquarie’s causes of action. Macquarie argues that Premier’s failure to submit a signed loan
termination request in April 2006, and Premier’s misinforming Equity Title in November 2006,
caused Macquarie damage.
Premier seeks summary judgment on each of Macquarie’s claims arguing, inter alia, that
the claims were not raised within the applicable statutes of limitations. 3 During oral argument,

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Specifically, Macquarie omitted its claim of judicial foreclosure based on the Judgment
and Order of Dismissal with Prejudice entered by the Court on August 28, 2013, and voluntarily
omitted its claims for reconveyance without satisfaction, and negligence per se.
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The relevant statutes of limitations are as follows:
Breach of contract:
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Macquarie acknowledged that absent tolling, its claims are barred by the applicable statute of
limitations. However, Macquarie argues that the statute of limitations for each claim should be
tolled because of Premier’s misleading conduct, and/or exceptional circumstances. 4
The issue of tolling is governed by state law. Fratus v. DeLand, 49 F.3d 673, 675 (10th
Cir. 1995). The Utah Supreme Court has recognized three circumstances in which the discovery
rule, which allows for tolling if a party could not have reasonably discovered the existence of a
claim within the limitations period, applies:
(1) in situations where the discovery rule is mandated by statute; (2) in situations
where a plaintiff does not become aware of the cause of action because of the
defendant’s concealment or misleading conduct; and (3) in situations where the
case presents exceptional circumstances and the application of the general rule
would be irrational or unjust, regardless of any showing that the defendant has
prevented the discovery of the cause of action.
Walker Drug Co., Inc. v. La Sal Oil Co., 902 P.2d 1229, 1231 (Utah 1995).
The parties agree that the discovery rule is not mandated by statute in this case. Instead,
Macquarie argues that both the misleading conduct and the exceptional circumstances
exceptions, apply here. Each argument is considered in turn.
A. Misleading Conduct
Under the misleading conduct doctrine, “Utah courts toll the running of the limitations
period if a plaintiff does not become aware of the cause of action because of the defendant's
concealment or misleading conduct.” Colosimo v. Roman Catholic Bishop, 2007 UT 25, ¶ 38,

if based on a written contract – six years, Utah Code Ann. § 78B-2-307
if based on an unwritten contract – four years, Utah Code Ann. § 78B-2-309
Negligence – four years, Utah Code Ann. § 78B-2-307
Breach of fiduciary duty – four years, Utah Code Ann. § 78B-2-307.
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Macquarie also argues in passing that the statute of limitations should be tolled based on
“fraud or mistake.” (Pl.’s Mot. for S.J. at 54 quoting Utah Code Ann. § 78B-2-305(3)).
However, because Macquarie’s complaint does not seek relief on the grounds of fraud or
mistake, the Court finds this statute inapplicable.
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156 P.3d 806 (additional quotations and citation omitted). In order to qualify for application of
the misleading conduct doctrine, “a plaintiff must demonstrate either (1) that the plaintiff neither
knew nor reasonably should have known of the facts underlying his or her cause of action before
the fixed limitations period expired; or (2) that notwithstanding the plaintiff's actual or
constructive knowledge of the facts underlying his or her cause of action within the limitations
period, a reasonably diligent plaintiff may have delayed in filing his or her complaint until after
the statute of limitations expired.” Russell Packard Dev., Inc. v. Carson, 2005 UT 14, ¶ 44, 108
P.3d 741.
In this case, Macquarie asserts that the misleading conduct rule applies because Premier
closed on the April 2006 escrow without first obtaining a signed loan termination request from
Christensen. (Pl.’s Reply at 10.) Macquarie also argues that Premier misinformed Equity Title
as to the Line balance and status of Macquarie’s Trust Deed, which prevented Macquarie from
uncovering Premier’s transgressions in connection with the April 2006 escrow. (Id.)
First, the Court notes that the parties’ competing claims make it unclear whether or not
Premier actually misinformed Equity Title. However, even assuming Premier had misinformed
Equity Title, the surrounding circumstances prevent Macquarie’s allegations from rising to the
level of misleading conduct.
It is undisputed that in April and May of 2006, Christensen contacted Macquarie on
numerous occasions, and informed Macquarie that the home had been sold. As Macquarie’s own
records indicate, it was also aware that Christensen had not submitted a signed termination
request. (Pl.’s Mot. for S.J., Ex. 10 at 1.) Further, the April 2006 transaction resulted in publicly
recorded documents reflecting the transfer of ownership of the property. Based on these facts
collectively, Macquarie knew, or should have known, all of the facts underlying its cause of

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action no later than May 2006, well before the statute of limitations had run. Carson, at ¶ 44.
Further, nothing in the record before the Court indicates that a reasonably diligent plaintiff in
Macquarie’s position would have delayed in filing his complaint until after the statute of
limitations expired. Id. Accordingly, Macquarie does not qualify for tolling under the fraudulent
concealment exception.
B. Exceptional Circumstances
To determine when exceptional circumstances warrant the application of the discovery
rule, Utah courts “apply a balancing test to weigh the hardship imposed on the claimant by the
application of the statute of limitations against any prejudice to the defendant resulting from the
passage of time.” Snow v. Rudd, 2000 UT 20, ¶ 11, 998 P.2d 262. However, when a plaintiff
raises claims of trustee misconduct, the Utah Supreme Court has found “in essence that the
balancing test has already been applied and to not apply the discovery rule would lead to unjust
results.” Estate of Davis v. Davis, 265 P.3d 813, 816 (Utah 2011) (internal citations omitted)
cert. denied, 272 P.3d 168 (Utah 2012).
This trustee rule stems from the fact that trustees are often “in the position of acting alone
on behalf of its beneficiary and without the beneficiary’s knowledge.” Walker v. Walker, 404
P.2d 253, 257 (Utah 1965). Therefore, the rule only applies “until something has occurred to
give a clear indication to [the beneficiary] that [the trustee] has repudiated his trust; or the
circumstances are such that [the beneficiary] must be charged with knowledge of such
repudiation.” Id.
Here, Premier was Macquarie’s trustee at the time of both the April 2006 Payoff
Statement and the November 2006 Refinancing. However, as previously stated, it is undisputed
that by no later than May 2006, Macquarie knew that the home had been sold despite neither

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Christensen nor Premier having submitted a signed line of credit termination request. Because of
these actions, Macquarie either was, or should have been, aware that Premier had repudiated its
trust. Therefore, Macquarie also fails to qualify for tolling under the exceptional circumstances
exception.
CONCLUSION
The statute of limitations for Macquarie’s causes of action all began to run no later than
May 2006. Thus, each statute of limitation had expired by May 2012 at the very latest.
Macquarie failed to file its initial complaint until July 2012. Because Macquarie does not qualify
for tolling under either the misleading conduct or exceptional circumstances exceptions,
Macquarie’s Motion for Summary Judgment is DENIED and Premier’s Motion for Summary
Judgment is GRANTED.

DATED this 22nd day of February, 2014.

___________________________________
Dee Benson
United States District Judge

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