Americanwest Bank v. Real Estate Investor Education et al

Filing 231

MEMORANDUM DECISION and ORDER re 230 Minute Order on Motion Hearing. Follows oral order of 5/23/2017. Signed by Judge Clark Waddoups on 5/23/2017. (blh)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
BANNER BANK,
Plaintiff,

MEMORANDUM DECISION AND
ORDER

v.
REAL ESTATE INVESTOR
EDUCATION, LLC et al.,
Defendants.

Case No. 2:12-cv-763-CW
District Judge Judge Clark Waddoups

Before the court is Plaintiff Banner Bank’s Motion to Alter and Amend filed April 27,
2017 (Dkt. No. 206), which asks the court to reconsider its February 21, 2017 order (Dkt. No.
196) and March 29, 2017 memorandum decision (Dkt. No. 198). The court’s order and
memorandum decision resolved Banner Bank’s motions for summary judgment largely in
Banner Bank’s favor. The order denied summary judgment, however, as to Banner Bank’s right
to foreclose on James Smith’s interest in the contested properties; and the memorandum decision
denied summary judgment as to Loree Smith’s counterclaim for breach of contract. The instant
motion alleges that new evidence and legal citations show that Banner Bank should have been
granted summary judgment on each issue. The motion has been fully briefed, and the court heard
oral argument during the pretrial conference held May 23, 2017. After carefully considering the
arguments set forth in the briefing and at oral argument, the court DENIES Banner Bank’s
motion without prejudice.
Federal Rule of Civil Procedure 54(b) notes the authority of the court to “revise[]” “any
order or other decision . . . that adjudicates fewer than all the claims or the rights and liabilities of

fewer than all the parties.” “On motion and just terms,” Federal Rule 60(b) authorizes the court
to “relieve a party from a[n] . . . order” for any of a number of reasons, including “(1) mistake,
inadvertence, surprise, or excusable neglect; (2) newly discovered evidence that, with reasonable
diligence, could not have been discovered in time to move for a new trial under Rule 59(b); . . .
or (6) any other reason that justifies relief.”
Banner Bank has not, however, presented new evidence or pointed the court to previously
undiscussed law that would require amendment of the summary judgment order and
memorandum decision. First, Banner Bank seeks an order amending the February 21, 2017
order, granting summary judgment in Banner Bank’s favor on its right to foreclose James
Smith’s interests in the properties at issue, because Oregon law provides that where handwritten
and typewritten terms of an instrument are contradictory, the handwritten terms govern. (Dkt.
No. 206, p. 20–21 (citing Or. Rev. Stat. Ann. § 42.270).) But the Oregon courts have only
applied this statute when a contract exists and the issue before the court is instead a matter of
interpretation.
For instance, in Zygar v. Johnson, 10 P.3d 326 (Or. App. 2000), the Oregon Court of
Appeals applied Oregon Revised Statute § 42.270 to a dispute over the terms of a contract for the
sale of property. Id. at 327. There the court noted that “buyer and sellers entered into a contract”
that contained typewritten provisions with handwritten checkmarks and a handwritten term that
the sale was “SUBJECT TO PURCHASER’S APPROVAL OF A PEST & DRYROT
REPORT.” Id. The parties had intended to enter a sale for the property, and the only dispute was
whether the handwritten term constituted a condition precedent to the sale or if the standard
printed provisions governed. Id. at 328. Thus the court did not have to determine whether there

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was a meeting of the minds, but only whether the handwritten “portion of the contract” was
enforceable. Id. at 329. Applying the statute, the court concluded the handwritten term did apply.
See also Pierce v. N. Pac. Ry. Co., 271 P. 976 (Or. 1928) (applying Or. Rev. Stat. § 42.270 when
there was no explanation for handwriting on a printed contract other than that the handwriting
expressed the agreement of the parties); Emmert v. O’Brien, 697 P.2d 222 (Or. App. 1985)
(concluding the handwriting on a contract governs where it is an expression of the parties’
agreement).
Here, unlike Zygar, the handwriting that appears on the recorded trust deed was not
added upon entry of the contract but after the fact by a single party. 1 Although Banner Bank may
still provide evidence that it was in fact the parties’ intention for James Smith to convey his
interest in the parcels regardless of whether Loree Smith signed the Trust Deed, that remains an
issue of disputed fact and cannot be decided as a matter of summary judgment. Because Banner
Bank has not shown that the handwriting on the Trust Deed was mutually agreed upon by the
parties, and therefore it has not shown that the handwriting was an expression of the parties’
agreement, this newly cited Oregon statute does not provide a basis upon which the court can
amend its prior order and grant summary judgment in Banner Bank’s favor.
Second, Banner Bank seeks an order amending the court’s prior memorandum decision
and granting it summary judgment of Loree Smith’s breach of contract counterclaim. Banner
Bank cites two grounds for amendment: (1) that the court previously ruled that Loree Smith was
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The court recognizes, without making any finding at this time, that Banner Bank has brought forth evidence that
James Smith admitted to having executed the Trust Deed. (Dkt. No. 228, pp. 4–5 & Exhibit U.) The circumstances
surrounding delivery are not, however, resolved, and James Smith’s admission does not extend to the line drawn
through Loree Smith’s name on the first page of the Trust Deed or the X drawn through the notary block
corresponding with Loree Smith’s signature. Thus, Banner Bank’s citations to the record do not now resolve the
disputed facts regarding the validity of the Trust Deed.

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properly joined as a defendant to the suit and (2) that a newly acquired title report shows James
Smith’s interest in the condominium was never transferred to Loree Smith. 2 Banner Bank raised
its first argument in its reply memorandum in support of its motion for summary judgment. (Dkt.
No. 164, pp. 46–47). Banner Bank now claims that it is not culpable for breach of contract for
naming Loree Smith in a lawsuit, despite its having released all claims against her, where the
court declined to dismiss her from the action. As the court noted in its memorandum decision,
“the court’s decision not to dismiss Loree Smith has no bearing on whether Banner Bank
violated an agreement by naming her in a suit.” (Dkt. No. 198, p. 4 n.2.) Whether the parties
have complied with the rules of civil procedure and other governing law, which the court was at
that time considering, is an separate analysis from whether the Banner Bank was contractually
obligated not to name her in a lawsuit or cloud her title by filing the Trust Deed. And Banner
Bank’s further citation to the record of the hearing on the motion to dismiss does not change that
conclusion.
Banner Bank’s second argument for amendment of the memorandum decision—that the
Lane County land records “conclusively reflect that James Smith’s . . . interest was never
conveyed”—is an overstatement of the circumstances of this case, as the newly produced title
report on its own does not resolve the issue of if, and when, Loree Smith owned the
condominium out right. While the newly acquired title report shows the condominium was titled
in James Smith’s name (Dkt. No. 206, Exhibit E), the title report does not preclude the
possibility that James Smith conveyed his interest to Loree Smith without recording a new deed.

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The court does not now address Banner Bank’s discussion of Loree Smith’s entitlement to attorney fees should she
prevail on her breach of contract counterclaim because the issue of fees was not addressed in the underlying motion
for summary judgment. The court will consider the issue at such time as it is properly before the court.

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Rather, the title report simply establishes Loree Smith’s position in relation to a subsequent bona
fide purchaser. See Or. Rev. Stat. § 93.640.
The title report is also contradicted by Banner Bank’s own statements in its motion for
summary judgment. Banner Bank stated, “On November 29, 2012, the Florida divorce court
entered the Interim Order for Equitable Distribution which reflected that the condominium was
distributed to Loree Smith as a partial equitable distribution in the divorce case. A copy of the
Interim Order is attached as part of Exhibit W to the Appendix.” (Dkt. No. 120, p. 15.) Exhibit
W is in fact a copy of the Interim order, which states, “it is hereby ORDERED and ADJUDGED
. . . [t]hat the properties identified . . . are hereby distributed to the Wife,” including the
condominium. Banner Bank’s motion further notes that “[o]n December 17, 2014, a Bifurcated
Final Judgment of Dissolution of Marriage Retaining Jurisdiction was entered in the Florida
divorce case dissolving the marriage of James and Loree Smith. A copy of the Judgment of
Dissolution of Marriage is attached to the Appendix as Exhibit X.” (Dkt. No. 120, p. 15.) Exhibit
X acknowledges the November 2012 agreement for partial equitable distribution and asserts that
the agreement “shall remain in full force and effect as permanent Orders of the Court.” Thus,
Banner Bank’s own statements support the fact that Banner Bank’s recorded trust deed
encumbered Loree Smith’s undivided interest in the condominium for a substantial period and
directly contradicts Banner Bank’s assertions in its motion to alter that “the condominium has
never been titled solely in the name of Loree Smith” and that “the Trust Deed was indeed
reconveyed released from the condominium while James Smith still had a one-half legal
ownership interest therein.” (Dkt. No. 206, p. 16.) These remaining disputed issues of material
fact must be resolved before the court can decide the legal issue.

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None of Banner Bank’s other arguments regarding Loree Smith’s interest in the property
are persuasive to require a correction of the court’s prior decision as a matter of law. The fact
that a divorce proceeding may be sealed has no bearing on whether it was proper to record a trust
deed against a property subject to that divorce. And any such argument is undermined by the fact
that Banner Bank was eventually able to acquire records of the divorce as evidenced by its
having referenced the divorce documents in its motion for summary judgment. Likewise, the fact
that the distribution was an interim equitable distribution subject to revision does not change the
facts that Loree Smith had an interest in the property, that the interim order was not amended
before Banner Bank released the condominium from the Trust Deed, and that the final
dissolution of marriage made all prior partial equitable distribution agreements “permanent
Orders of the Court.”
In sum, the new citations and evidence that Banner Bank presents do not resolve the
remaining issues of disputed fact and justify amendment of the prior rulings on summary
judgment. The court will consider any such evidence and legal arguments presented by the
parties during the bench trial scheduled for June 5–7, 2017. The motion to alter is DENIED
without prejudice. (Dkt. No. 206.)
DATED this 23rd day of May, 2017.

BY THE COURT:

Clark Waddoups
United States District Judge

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