Norton et al v. Wells Fargo Bank NA

Filing 11

MEMORANDUM DECISION denying 3 Motion for Temporary Restraining Order. Signed by Judge Dale A. Kimball on 12/8/16. (dla)

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

RAY E. NORTON, LARUE NORTON,
and DIANA NORTON NAYLOR,
Plaintiffs,

MEMORANDUM DECISION
AND ORDER DENYING
TEMPORARY RESTRAINING ORDER

vs.
Case No. 2:16CV1185DAK
WELLS FARGO BANK, N.A.,
Judge Dale A. Kimball
Defendant.

This matter is before the court on Plaintiffs Ray E. Norton, LaRue Norton, and Diana
Norton Naylor’s Motion for Temporary Restraining Order. On December 2, 2016, the court held
a hearing on Plaintiffs’ motion. At the hearing, Plaintiffs were represented by Dwight Epperson
and Defendant was represented by Robert H. Scott and Alan M. Hurst. The court took the
motion under advisement. Based on the briefing filed by the parties and the law and facts
relevant to the pending motions, the court issues the following Memorandum Decision and
Order.
BACKGROUND
On or about December 3, 2004, Plaintiff Diana Norton Naylor obtained a loan from North
County Real Estate, Inc., dba HMC Funding, in the original principal amount of $186,900.00,
represented in a Note she signed that same date. The Note is secured by a Trust Deed, also dated
December 3, 2004, in which Naylor, as borrower and grantor, granted to HMC, as beneficiary, a
lien on and security interest in property located at 210 South 200 East, in Midway, Utah.

After February 2010, Plaintiffs were unable to make a payment on the Note. On June 22,
2010, Naylor entered into a loan modification agreement that brought the loan current through
August 1, 2010. Naylor defaulted under the Note and loan modification agreement by failing to
pay as of September, 2010.
The Note that Naylor signed provided, in relevant part: “If I do not pay the full amount of
each monthly payment on the date it is due, I will be in default.” Note ¶ 7(B). “If I am in
default, the Note Holder may send me a written notice telling me that if I do not pay the overdue
amount by a certain date, the Note Holder may require me to pay immediately the full amount of
Principal which has not been paid and all the interest that I owe on that amount.” Id. ¶ 7(C).
“Even if, at the time when I am in default, the Note Holder does not require me to pay
immediately in full as described above, the Note Holder will still have the right to do so if I am in
default at a later time.” Id. ¶ 7(D). The Note further explained to Naylor that “[t]his Note is a
uniform instrument with limited variations in some jurisdictions. In addition to the protections to
the Note Holder under this Note, a . . . Deed of Trust . . . , dated the same date as this Note,
protects the Note Holder from possible losses which might result if I do not keep the promises
which I make in this Note. That Security Instrument describes how and under what conditions I
may be required to make immediate payment in full of all amounts I owe under this Note.” Id. ¶
11.
The Trust Deed was assigned to Wells Fargo on March 19, 2012. On April 19, 2012,
First American Title Co. of Utah, trustee under the Trust Deed, recorded a notice of default and
accelerated the remaining payments under the loan. This Notice of Default states that Naylor
was in default of her obligation under the loan by failing to make the monthly payment that was
due September 1, 2010. The Trustee issued a Notice of Trustee’s Sale, setting a foreclosure sale
of the property on November 16, 2016.

Plaintiffs filed the instant action in state court on November 15, 2016. Defendants
removed the case to federal court.
DISCUSSION
Plaintiffs seek a temporary restraining order to prevent Defendant from foreclosing on
their property. In order to obtain injunctive relief, the moving party must establish:
(1) substantial likelihood that the movant will eventually prevail on
the merits; (2) a showing that the movant will suffer irreparable
injury unless the injunction issues; (3) proof that the threatened
injury to the movant outweighs whatever damage the proposed
injunction may cause the opposing party; and (4) a showing that
the injunction, if issued, would not be adverse to the public
interest.
SCFC ILC, Inc. v. Visa USA, Inc., 936 F.2d 1096, 1098 (10th Cir. 1991). Because a preliminary
injunction is an extraordinary remedy, the “right to relief must be clear and unequivocal.” Id.
Plaintiffs argue that Defendant’s ability to foreclose on the property is barred by the
applicable Utah statute of limitations. Under Utah Code Annotated Section 57-1-34, “[a] person
shall, within the period prescribed by law for the commencement of an action on an obligation
secured by a trust deed: (1) commence an action to foreclose the trust deed; or (2) file for record
a notice of default under Section 57-1-24.” In this action, the parties dispute which “period
prescribed by law,” i.e. statute of limitation, applies to Defendant’s proposed foreclosure of
Plaintiffs’ property.
Plaintiffs assert that six-year statute of limitation under Utah Code Annotated Section
78B-2-309 for an action on a written agreement should apply and run from the date that Plaintiffs
first failed to make a monthly mortgage payment in February 2010. Defendant, however,
contends that because the Note obligation secured by the Trust Deed is a negotiable instrument,
the statute of limitations in the Uniform Commercial Code applies. The UCC statute of
limitations, Utah Code Annotated Section 70A-3-118(1), provides that “an action to enforce the

obligation of a party to pay a note payable at a definite time must be commenced within six years
after the due date or dates stated in the note or, if a due date is accelerated, within six years after
the accelerated due date.” Id.
When two statutory provisions conflict, the more specific provision governs over the
more general one. Millett v. Clark Clinic Corp., 609 P.2d 934, 936 (Utah 1980). “[W]here the
Uniform Commercial Code sets forth a limitation period for a specific type of action, this
limitation controls over an older, more general statute of limitations.” Perry v. Pioneer
Wholesale Supply Co., 681 P.2d 214, 216 (Utah 1984).
The specific UCC statute of limitation period applies to the Note and Trust Deed at issue
in this case rather than the more general statute of limitation applicable to written contracts. The
obligation secured by the Trust Deed is a negotiable instrument . The Note in question was
ultimately due January 1, 2035, and accelerated on April 19, 2012. Six years have not passed
from either date and, thus, the statute of limitations has not run.
This is the same analysis adopted by Van Leeuwen v. Bank of America, 2015 WL
5618048, at *3 (D. Utah Sept. 24, 2015). Plaintiffs cite Tasila v. Isbell, 2015 WL 1467589, *2
(D. Utah March 27, 2015), in support of their argument that Defendant’s non-judicial foreclosure
should be barred as untimely. But in Tasila, the court ran the six-year statute of limitations from
the date the trust deed matured, not the date the party failed to make payments. Therefore, Tasila
does not support Plaintiffs’ position.
In this case, the statute of limitations has not run and does not bar Defendant from
conducting a non-judicial foreclosure. Accordingly, Plaintiffs have failed to establish any
likelihood of success on the merits and their motion for a temporary restraining order is denied.
CONCLUSION
Plaintiffs’ Motion for Temporary Restraining Order is DENIED

DATED this 8th day of December, 2016.
BY THE COURT:

____________________________________
DALE A. KIMBALL,
United States District Judge