2015 UT App 301

THE UTAH COURT OF APPEALS

JP MORGAN CHASE BANK, NA,

Appellee,

v.

SHANNON WRIGHT AND RUSSELL S. WALKER,

Appellants.

Memorandum Decision

No. 20140625-CA

Filed December 17, 2015

Third District Court, Salt Lake Department

The Honorable Robert P. Faust

No. 120900600

Russell S. Walker, David R. Williams, and Anthony 

M. Grover, Attorneys for Appellants

Leslie Van Frank and Bradley M. Strassberg, 

Attorneys for Appellee

SENIOR JUDGE RUSSELL W. BENCH authored this Memorandum 

Decision, in which JUDGES JOHN A. PEARCE and KATE A. TOOMEY

concurred.

1

BENCH, Senior Judge:

¶1 Shannon Wright2 appeals the district court’s order 

granting summary judgment in favor of JP Morgan Chase Bank, 

 

1. The Honorable Russell W. Bench, Senior Judge, sat by special 

assignment as authorized by law. See generally Utah R. Jud. 

Admin. 11-201(6).

2. The other appellant, Russell S. Walker, is also a party to this 

action in his capacity as trustee for the all-inclusive trust deed. 

But for simplicity, we refer only to Wright throughout this 

opinion.
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20140625-CA 2 2015 UT App 301

NA (Chase) and denying Wright’s motion for summary 

judgment. She also challenges the district court’s award of 

attorney fees to Chase. We affirm.

¶2 In 2004, Daniel and Eden Ellingson agreed to purchase 

Wright’s home. The Statement of Settlement, dated June 25, 2004, 

indicated that the parties agreed to a purchase price of $650,000, 

that Wright would provide a ‚New Loan‛ in the amount of 

$341,000 to the Ellingsons, and that the balance due from the 

Ellingsons, after a credit for interest and taxes, was $307,061.96. 

A promissory note (the first promissory note) and an allinclusive trust deed (the AITD), also dated June 25, 2004, 

evidenced a secured debt to Wright in the amount of $341,000. 

The AITD indicated that it was ‚subject and subordinate to‛ a 

previous mortgage from Countrywide Bank, also in the amount 

of $341,000 (the Countrywide mortgage). The AITD further 

provided, ‚Nothing in this Trust Deed, the Note, or any deed in 

connection herewith shall be deemed to be an assumption by the 

Trustor of the [Countrywide mortgage+.‛

¶3 Another promissory note (the second promissory note) 

and trust deed (the $309,000 trust deed), both dated August 11, 

2004,3 were drafted to secure the additional $309,000 debt owed

to Wright and her ex-husband as joint tenants. The promissory 

note provided that the full $309,000 would be due five years 

from the date of the note. The $309,000 trust deed was not 

recorded until October 2005. Wright maintains that she was 

unaware of these two instruments until after 2009.4

 

3. Although both documents are dated August 11, 2004, Eden 

Ellingson indicated in her deposition that she did not sign the 

trust deed until October 6, 2005, when it was notarized, and that 

she did not remember when she signed the promissory note.

4. Wright’s ex-husband, Travis Wright, handled the details of the 

sale to the Ellingsons.
JP Morgan Chase Bank v. Wright

20140625-CA 3 2015 UT App 301

¶4 In August 2004, the Ellingsons borrowed $400,000 from 

Chase.

5 Chase recorded a trust deed securing the loan on August 

12, 2004. From that loan, $333,667.07 was remitted directly to 

Countrywide to pay off the balance remaining on the 

Countrywide mortgage at that time. An additional $7,332.93—

the difference between the $341,000 secured by the AITD and the 

payoff amount of the Countrywide mortgage—was disbursed to 

Wright. By virtue of these payments, Chase believed that the 

AITD had been satisfied and that its trust deed would be in first 

position.

¶5 The Ellingsons made no additional payments to Wright

and subsequently filed for bankruptcy. On April 29, 2011, 

Wright filed a notice of default and sought to foreclose the AITD.

Chase demanded that Wright release the AITD based on the 

satisfaction of the Countrywide mortgage, but she refused. 

Chase then filed a complaint against Wright, requesting that the 

court order Wright to release the AITD or, alternatively, that the 

court equitably subrogate the AITD to Chase’s trust deed.

¶6 The parties filed cross-motions for summary judgment.

Because the AITD refers to both a new loan from Wright in the 

amount of $341,000 and the Countrywide mortgage, also in the 

amount of $341,000, Wright asserted in the district court that the 

AITD ‚references and secures a total debt of $682,000.‛ Chase, 

on the other hand, argued that the AITD secured only $341,000 

of the purchase price and that Wright was to use that 

$341,000 to pay off the Countrywide mortgage. According to 

Chase, the balance of the purchase price was secured by the 

$309,000 trust deed, which was recorded after Chase’s trust 

deed. The district court granted Chase’s motion and denied 

Wright’s, concluding that ‚*w+hen the Countrywide loan of 

$341,000 was paid off, it also satisfied the promissory note and 

 

5. The loan was actually obtained from Washington Mutual 

Bank, Chase’s predecessor in interest, but for simplicity, we refer 

to both entities as Chase.
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20140625-CA 4 2015 UT App 301

trust deed recorded for $341,000 by virtue of being an all 

inclusive trust deed.‛ The district court accordingly entered 

judgment declaring that the AITD was ‚invalid and of no further 

force and effect‛ and awarding Chase attorney fees. Wright

appeals.

I. Summary Judgment

¶7 Wright asserts that the district court erred in granting 

Chase’s motion for summary judgment and denying her motion. 

‚We review a district court’s grant of summary judgment for 

correctness and afford no deference to the court’s legal 

conclusions.‛ Salt Lake City Corp. v. Big Ditch Irrigation Co., 2011 

UT 33, ¶ 18, 258 P.3d 539.

¶8 In the district court, Wright argued that the AITD secured 

a total debt of $682,000—a $341,000 obligation to Wright and an 

additional $341,000 obligation equal to the amount owing on the 

Countrywide mortgage. On appeal, she instead states that the 

AITD should have been drafted in this way but acknowledges 

that, as prepared, the AITD secured ‚only . . . the $341,000 

*promissory note+.‛ Nevertheless, she asserts that the $341,000 

promissory note ‚requires the Ellingsons to pay Wright, and 

Wright alone‛ and that no provision in the note or the AITD 

permitted the Ellingsons to satisfy their obligation under those 

instruments by paying off the Countrywide mortgage on 

Wright’s behalf.

6

 

6. As far as we can tell, this variation of Wright’s argument 

appeared for the first time on appeal, but because Chase has not 

challenged the argument as unpreserved, and because Wright’s 

argument is, admittedly, complicated, we will assume that the 

argument is preserved. We do not, however, address Wright’s 

unpreserved argument regarding alleged mistakes made by the 

title company.
JP Morgan Chase Bank v. Wright

20140625-CA 5 2015 UT App 301

¶9 The district court determined that ‚by virtue of being an 

all inclusive trust deed,‛ the AITD was satisfied when Chase 

paid off the Countrywide mortgage. We agree and hold that this 

is so even under Wright’s reframed argument that the first

promissory note and the AITD required the Ellingsons to pay 

Wright directly rather than Countrywide.

¶10 An all-inclusive trust deed or 

wraparound mortgage may be defined as a second 

mortgage which includes or ‚wraps around,‛ 

but does not assume or extinguish the amount 

of an obligation under a prior mortgage on the 

property conveyed, with the buyer-wraparound 

mortgagor’s payments being calculated on the 

aggregate, plus interest, of the seller-wraparound 

mortgagee’s outstanding first-mortgage obligation 

plus the balance of the purchase price owed by the 

buyer-wraparound mortgagor.

James L. Isham, Annotation, Validity and Effect of “Wraparound” 

Mortgages Whereby Purchaser Incorporates into Agreed Payments to 

Grantor Latter’s Obligation on Initial Mortgage, 36 A.L.R. 4th 144, 

§ 2[a] (1985) (footnote omitted); see also id. § 1[a] n.1 (indicating 

that ‚‘wraparound mortgage,’ . . . ‘all-inclusive mortgage,’ ‘hold 

harmless mortgage,’ *and+ ‘overlapping mortgage’‛ are 

synonymous). Here, rather than secure the entire amount of the 

purchase price using an all-inclusive trust deed, the parties 

drafted a promissory note covering the amount of the 

Countrywide mortgage and secured it with the AITD. They then 

drafted a second promissory note and trust deed to secure the 

rest of the purchase price. This $309,000 trust deed, despite being 

dated the day before Chase’s trust deed was recorded, was 

ultimately recorded in second priority to the trust deed securing 

Chase’s loan to the Ellingsons, indicating the parties’ intent that 

Wright’s interest in the remaining $309,000 be subrogated to 

Chase’s mortgage.
JP Morgan Chase Bank v. Wright

20140625-CA 6 2015 UT App 301

¶11 Wright’s argument essentially asks that the funds paid to 

Countrywide on her behalf be credited against the second 

promissory note rather than the first promissory note, leaving 

intact her first priority interest under the AITD. While we 

acknowledge Wright’s point that no provision in the $341,000 

promissory note explicitly permitted the Ellingsons to pay 

Countrywide directly rather than Wright, the parties’ use of an 

all-inclusive trust deed, as well as their reference to the 

Countrywide mortgage in the AITD, directly links payment of 

the Countrywide mortgage to satisfaction of the first promissory 

note.

¶12 ‚The principal defining characteristic of a *wraparound 

mortgage] is the ‘wrapping’ of the existing debt owed by the 

seller to a prior seller or lending institution. The new buyer 

obligates herself or himself to the seller, who in turn remains 

obligated to pay the existing mortgage debt.‛ Adams v. George, 

812 P.2d 280, 282 (Idaho 1991). ‚*I+n the usual wraparound 

situation, the seller-wraparound mortgagee remains primarily 

responsible for paying his prior first mortgage, and makes 

payments on such first mortgage out of the amounts forwarded 

to him by the buyer-wraparound mortgagor.‛ Isham, 36 A.L.R. 

4th 144, § 2[a]. Thus, even if the Ellingsons had used the Chase 

loan to pay Wright directly, Wright would have been obligated, 

consistent with the AITD, to use those funds to pay off the 

Countrywide mortgage and she would be in the same position 

she is in now.

¶13 Furthermore, the parties’ explicit declaration that 

‚*n+othing in this *AITD or promissory note+ . . . shall be deemed 

to be an assumption by the Trustor of the [Countrywide 

mortgage+‛ indicates that the parties did not anticipate that the 

Ellingsons would be required to pay off the Countrywide 

mortgage in addition to paying off the first promissory note. The 

second promissory note and its accompanying trust deed 

confirm this, as they secure the remainder of the purchase price 
JP Morgan Chase Bank v. Wright

20140625-CA 7 2015 UT App 301

owed to Wright in excess of what was owed to Countrywide—

$309,000.7Indeed, if the Ellingsons were required to pay the total 

$341,000 owed to Wright under the first promissory note in 

addition to the funds already remitted to pay off the 

Countrywide mortgage, they would ultimately end up paying 

approximately $24,667 more than the contracted purchase price 

of the home.

¶14 ‚*W+hen *a+ debt is paid . . . the lender no longer has a 

legitimate interest in the security . . . .‛ Hector, Inc. v. United Sav. 

& Loan Ass’n, 741 P.2d 542, 545 (Utah 1987); see also 55 Am. Jur. 

2d Mortgages § 318 (‚*A+ mortgage cannot survive the extinction 

of the debt.‛). Thus, because the parties’ use of an all-inclusive 

trust deed demonstrated their intent that repayment of the 

$341,000 promissory note be used to pay off the Countrywide 

mortgage, the Ellingsons’ action in paying Countrywide directly 

had the effect of extinguishing the debt on the $341,000 

promissory note. Accordingly, the district court did not err in 

declaring the AITD to be ‚of no further force or effect‛ and in 

granting Chase’s motion for summary judgment.

II. Attorney Fees

¶15 Wright next argues that the district court erred in 

awarding Chase its attorney fees pursuant to Utah Code section 

57-1-38. ‚Generally the grant or denial of attorney fees is left to 

the district court’s sound discretion. However, to the extent that 

the *court’s ruling+ depends upon an interpretation of the 

applicable statute, the district court’s determination about what 

 

7. Despite Wright’s implicit assertion that payment of the 

Countrywide mortgage should be credited against the portion of 

the purchase price secured by the second promissory note, 

Wright has since assigned the second promissory note and trust 

deed to her mother to settle a debt owed by Wright’s exhusband, and Wright’s mother has made demand on the 

Ellingsons to pay the note.
JP Morgan Chase Bank v. Wright

20140625-CA 8 2015 UT App 301

the law requires is reviewed for correctness.‛ Warner v. Warner, 

2014 UT App 16, ¶ 16, 319 P.3d 711 (citations omitted).

¶16 Utah Code section 57-1-38 provides that 

[a] secured lender . . . who fails to release the 

security interest on a secured loan within 90 days 

after receipt of the final payment of the loan is 

liable to another secured lender on the real 

property or the owner or titleholder of the real 

property for . . . reasonable attorneys’ fees and 

court costs.

Utah Code Ann. § 57-1-38(3) (LexisNexis 2010). Nevertheless, an 

award of attorney fees for failing to release a trust deed ‚is penal 

in nature and . . . is not meant to penalize one who honestly, 

though mistakenly, refuses to release or discharge [the trust 

deed] because he believes that there has been no full 

satisfaction‛ of the debt. Shibata v. Bear River State Bank, 205 P.2d 

251, 254 (Utah 1949) (discussing the propriety of a fee award 

against a party who fails to release a mortgage); see also Hector, 

741 P.2d at 545 (indicating that the statute governing release of 

mortgages is ‚similar in wording and purpose‛ to the statute 

governing release of trust deeds). Thus, a party’s good faith in 

failing to release a trust deed is ‚an affirmative defense to an 

action brought under‛ section 57-1-38. See Hector, 741 P.2d at 545 

(considering an award of attorney fees under the predecessor 

statute to section 57-1-38).

¶17 Wright maintains that she should not be required to pay 

attorney fees because she acted in good faith in refusing to 

release the AITD. However, parties are required to plead 

affirmative defenses in their responsive pleading. See Utah R. 

Civ. P. 8(c). Although Chase requested attorney fees pursuant to 

Utah Code section 57-1-38(3) in its complaint, Wright did not 

raise good faith as an affirmative defense in her answer, and we 

are not aware of any attempt by Wright to amend her answer. 
JP Morgan Chase Bank v. Wright

20140625-CA 9 2015 UT App 301

Furthermore, the district court observed that ‚none of the ‘facts’ 

set forth in *Wright’s+ memorandum‛ in opposition to the award 

of attorney fees ‚are supported by any citation to the record, and 

no affidavit has been submitted.‛ Thus, Wright waived her 

good-faith defense, and the district court properly granted 

attorney fees to Chase. See id. R. 12(h).

III. Conclusion

¶18 We conclude that the first promissory note was satisfied 

when Chase paid off the Countrywide mortgage and remitted 

the balance of the $341,000 to Wright. Accordingly, the district

court correctly granted summary judgment in favor of Chase. 

Furthermore, because Wright failed to plead good faith as an 

affirmative defense to an award of attorney fees, the district

court did not err in awarding Chase its fees. Because Chase was 

awarded its fees in the district court and requested fees on 

appeal, Chase is also entitled to an award of its fees incurred on 

appeal. See Pack v. Case, 2001 UT App 232, ¶ 39, 30 P.3d 436 

(‚When a party who received attorney fees below prevails on 

appeal, the party is also entitled to fees reasonably incurred on 

appeal.‛ (citation and internal quotation marks omitted)). Thus, 

we affirm the district court’s rulings but remand for the district

court to calculate an award of fees and costs on appeal.