2019 UT App 199

THE UTAH COURT OF APPEALS

NEIL ALAN JOHNSON AND JODI LYN JOHNSON,

Appellants,

v.

NATIONSTAR MORTGAGE LLC,

Appellee.

Opinion

No. 20180417-CA

Filed December 12, 2019

Fourth District Court, Provo Department

The Honorable Christine S. Johnson

No. 180400119

Judson T. Pitts, Attorney for Appellants

Robert H. Scott and Jason T. Baker, Attorneys

for Appellee

JUDGE JILL M. POHLMAN authored this Opinion, in which 

JUDGES DAVID N. MORTENSEN and RYAN M. HARRIS concurred.

POHLMAN, Judge:

¶1 Appellants Neil Alan Johnson and Jodi Lyn Johnson 

(collectively, the Johnsons) appeal the district court’s dismissal 

of their claims against Nationstar Mortgage LLC, with respect to 

the Johnsons’ mortgage on a home in Lehi, Utah (the Property). 

The Johnsons contend that the court erred in concluding that 

their claims under the Truth in Lending Act are barred by the 

doctrine of res judicata. We disagree with the Johnsons and 

affirm.
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BACKGROUND

¶2 In April 2007, the Johnsons financed ownership of the 

Property through a loan evidenced by a promissory note (the 

Note) and secured by a trust deed on the Property. The trust 

deed, duly recorded in the Utah County recorder’s office, named 

Varent Inc. as the lender and Mortgage Electronic Registration 

Systems Inc. (MERS) as the nominal beneficiary. The trust deed 

was later assigned to Nationstar Mortgage LLC and U.S. Bank 

NA.

¶3 The Note required the Johnsons to make payments on the 

first day of each month and that any amounts still owing under 

the Note as of the maturity date in May 2037 would be due at 

that time. Additionally, the Johnsons agreed to nonjudicial 

foreclosure of the Property in the event of default.

¶4 The Johnsons defaulted on the Note, and a notice of 

default was recorded in the Utah County recorder’s office on 

October 30, 2009. The default notice accelerated the loan, making 

the entire obligation “immediately due and payable.” A trustee’s 

sale was scheduled for September 2010.

The First Suit

¶5 The Johnsons filed suit in September 2010 (the First Suit), 

naming as defendants, among others, Varent’s former CEO, 

MERS, and the foreclosure trustee. The Johnsons sought relief 

from the nonjudicial foreclosure proceedings that had been 

initiated against them, alleging that it appeared “no entity exists 

today with the right to commence a non-judicial foreclosure on 

[the Property]” and that there was a controversy over “whether 

or not any of the Defendants are qualified or entitled to sell [the 

Property].” Among the factual bases allegedly entitling them to 

relief, the Johnsons claimed that “[o]n or about March 17, 2010, 

[they] executed and recorded their Notice of Right to Cancel” 
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20180417-CA 3 2019 UT App 199

pursuant to the Truth in Lending Act (TILA), see generally 15 

U.S.C. § 1635 (2018), and that “[c]opies of [the Johnsons’] 

executed and recorded Notice of Right to Cancel was delivered 

to all known Defendants by same Process on or about March 26, 

2010.” As relief, among other requests, the Johnsons asked the 

court to enjoin the defendants from exercising their remedies 

under the trust deed.

¶6 Several of the defendants—including the trustee and the 

beneficiary under the trust deed at the time—filed a motion to 

dismiss the First Suit with prejudice pursuant to rule 12(b)(6) of 

the Utah Rules of Civil Procedure. In their motion, the 

defendants addressed the TILA allegations and argued that the 

Johnsons had failed to state a claim for relief under TILA where 

“multiple courts have rejected the [Johnsons’] premise” that 

“mere declaration of rescission of a loan for purported TILA 

violations” automatically cancels “the security interest 

represented by the recorded deed of trust so as to terminate any 

right to proceed with nonjudicial foreclosure.” (Citing Large v. 

Conseco Fin. Servicing Corp., 292 F.3d 49, 54–55 (1st Cir. 2002).) In 

response, the Johnsons filed their own motion to dismiss 

(without prejudice), stating that they wanted to file their 

complaint in federal court.

¶7 In January 2011, the district court granted the defendants’ 

motion to dismiss with prejudice. In so doing, it specifically 

addressed the Johnsons’ TILA allegations. The court adopted the 

reasoning set forth in the cases cited by the defendants and 

rejected the Johnsons’ premise that “mere declaration of 

rescission of a loan for purported TILA violations” automatically 

cancels “the security interest represented by the recorded deed 

of trust so as to terminate any right to proceed with nonjudicial 

foreclosure.” For this reason (and others not relevant to this 

appeal), the court concluded that the Johnsons’ complaint failed 

to state a claim.
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¶8 The Johnsons did not appeal the dismissal of the First 

Suit. Instead, between September 2010 and June 2017, they filed 

seven bankruptcies, all of which were dismissed. No trustee’s 

sale occurred during that time period.1

The Present Suit

¶9 In December 2017, U.S. Bank issued a notice of sale of the 

Property, scheduled for January 2018. That January, shortly 

before the sale was to take place, the Johnsons filed the 

complaint in the present suit (the Present Suit). The complaint 

named Nationstar and U.S. Bank as defendants, and through it 

the Johnsons sought injunctive and declaratory relief against the 

scheduled nonjudicial foreclosure sale.

¶10 In an attempt to distinguish the Present Suit from the 

previous two, the Johnsons asserted in the complaint that the 

December 2017 notice of sale was an “independent and separate 

action” not covered by the rulings in the previous suits. More 

specifically, the Johnsons argued that the rulings in those suits 

should have “no legal effect on the ability of a Court to apply the 

fact of the [Johnsons’] Notice of Right to Cancel upon other facts

as presented to the Court here.” They also alleged that the 

United States Supreme Court’s decision in Jesinoski v. 

 

1. In 2017, the Johnsons filed a second suit in which they also 

alleged, among other things, that they were entitled to relief 

from the nonjudicial foreclosure proceedings pursuant to their 

TILA rescission. The district court dismissed the suit with 

prejudice, concluding, among other things, that the Johnsons’ 

TILA rescission claim was barred by the doctrine of claim 

preclusion because the court in the First Suit considered and 

rejected that claim and all the elements of claim preclusion had 

been met. The Johnsons timely appealed the dismissal, and this 

court dismissed that appeal without prejudice for lack of finality.
Johnson v. Nationstar Mortgage

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Countrywide Home Loans, Inc., 135 S. Ct. 790 (2015),2 essentially 

“overruled the decisions” relied upon by the district court when 

it dismissed their TILA rescission claims in the previous suits.

Thus, the court was “not barred from legally re-interpreting” the 

effect of the Johnsons’ 2010 rescission notice on the trustee’s 

authority to conduct the foreclosure sale in 2018.

¶11 Notwithstanding the Johnsons’ requests for relief, the 

foreclosure sale took place on January 19, 2018, with U.S. Bank as 

the successful bidder. On January 29, 2018, Nationstar and U.S. 

Bank3 filed a rule 12(b)(6) motion to dismiss, arguing, among 

other things, that the TILA rescission claims raised in the 

complaint with respect to the propriety of the foreclosure on the 

Property had already “been heard and rejected by two prior 

courts” and were accordingly barred under the doctrine of res 

judicata.

¶12 The district court granted the motion to dismiss. The 

court agreed that the claims raised in the Present Suit were 

 

2. In Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790

(2015), the Supreme Court addressed whether a borrower, to 

effectively exercise rescission rights under TILA, is required to 

file a lawsuit within three years of the loan’s consummation, or 

whether it is sufficient for the borrower to simply provide 

written notice to the lender within the three-year period. Id. at 

791–93. The Court held that the relevant TILA provisions 

unequivocally indicate that “a borrower need only provide 

written notice to a lender in order to exercise his right to 

rescind” and that “so long as the borrower notifies within three 

years after the transaction is consummated, his rescission is 

timely.” Id. at 792–93. In other words, “[t]he statute does not also 

require him to sue within three years.” Id. at 792.

3. U.S. Bank has not made an appearance in this appeal.
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barred by the claim preclusion branch of res judicata. It

determined that all three elements of claim preclusion had been 

met with respect to the injunctive and declaratory relief 

requested. While the court acknowledged that the new notice of 

sale served on the Johnsons in December 2017 was a “new fact” 

that “could not have been considered” in previous litigation, it

identified the relevant “transaction” at issue as the 2007 loan and 

the “later attempt to rescind it under TILA.” In this respect, the 

court explained that the “facts required to raise that TILA claim 

were known and raised during both” of the previous suits, 

noting that if those facts were “excised from the present case, 

there is no cause of action.”

¶13 Additionally, the court explained that the Johnsons’ 

reliance on Jesinoski was misplaced because “the test for claim 

preclusion does not include a requirement to review the prior 

case for legal error.” If the Johnsons believed “that the [First Suit]

was improperly dismissed,” the court explained, an appeal “was 

their remedy.” Thus, concluding that the claims in the Present 

Suit arose from the same transaction as that involved in the First 

Suit, the court dismissed the Present Suit as barred.

¶14 The Johnsons timely appeal the dismissal of their 

complaint.

ISSUE AND STANDARD OF REVIEW

¶15 The Johnsons raise one issue on appeal that we address 

on the merits.

4 They argue that the district court erred in 

 

4. The Johnsons also ask that we determine that the district court 

committed reversible error in declining to grant their request to 

apply the TILA procedures to their case rather than Utah’s 

nonjudicial foreclosure statutes. Because we conclude that the 

(continued...)
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concluding that claims based on their TILA rescission were

barred under the claim preclusion branch of res judicata. 

“Whether a claim is barred by res judicata is a question of law 

that we review for correctness.” Gillmor v. Family Link, LLC, 2012 

UT 38, ¶ 9, 284 P.3d 622.

ANALYSIS 

¶16 The Johnsons argue that the district court erred in 

concluding that their claims with respect to their TILA rescission 

are barred by the claim preclusion branch of res judicata. While 

they make several arguments with respect to the correct 

characterization of a TILA rescission, they essentially argue that 

reliance on their TILA rescission as a basis for injunctive relief in 

the First Suit did not amount to raising a claim for claim 

preclusion purposes. We disagree.

¶17 Claim preclusion is a branch of res judicata “premised on 

the principle that a controversy should be adjudicated only 

once,” and it thereby precludes a party from relitigating a claim.

Mack v. Utah State Dep’t of Commerce, 2009 UT 47, ¶ 29, 221 P.3d 

194 (cleaned up). To determine whether res judicata bars a claim, 

courts evaluate three elements:

First, both cases must involve the same parties or 

their privies. Second, the claim that is alleged to be 

barred must have been presented in the first suit or 

be one that could and should have been raised in 

the first action. Third, the first suit must have 

resulted in a final judgment on the merits.

 

(...continued)

district court properly dismissed the Present Suit as claim 

precluded, we have no occasion to address this related issue.
Johnson v. Nationstar Mortgage

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Gillmor v. Family Link, LLC, 2012 UT 38, ¶ 10, 284 P.3d 622 

(cleaned up).

¶18 The Johnsons do not appear to contest the district court’s 

specific determinations with respect to the elements themselves.

Instead, the Johnsons argue that the district court incorrectly

determined that the TILA rescission issue was a claim at all,

primarily by characterizing their TILA rescission as an “absolute 

defense” to the nonjudicial foreclosure proceedings.

¶19 Our supreme court has defined claims or causes of action 

broadly, explaining that they are “the aggregate of operative 

facts which give rise to a right enforceable in the courts.” 

Swainston v. Intermountain Health Care, Inc., 766 P.2d 1059, 1061 

(Utah 1988) (cleaned up); accord Mack, 2009 UT 47, ¶ 19; American 

Estate Mgmt. Corp. v. International Inv. & Dev. Corp., 1999 UT App 

232, ¶ 9, 986 P.2d 765. More specifically, a claim is “the situation 

or state of facts which entitles a party to sustain an action and 

gives him the right to seek judicial interference in his behalf,” 

petitioning “the court to award a remedy for injury suffered,” 

while a cause of action “is necessarily comprised of specific 

elements which must be proven before relief is granted.” 

Swainston, 766 P.2d at 1061 (cleaned up). Both are “resolved by a 

judicial pronouncement providing or denying the requested 

remedy.” Id.; see also Claim, Black’s Law Dictionary (11th ed. 

2019) (defining “claim” as “[t]he assertion of an existing right; 

any right to payment or to an equitable remedy, even if 

contingent or provisional,” or “[a]n interest or remedy 

recognized at law; the means by which a person can obtain a 

privilege, possession, or enjoyment of a right or thing”); Cause of 

Action, Black’s Law Dictionary (11th ed. 2019) (defining “cause of 

action” as “[a] group of operative facts giving rise to one or more 

bases for suing; a factual situation that entitles one person to 

obtain a remedy in court from another person,” or “[a] legal 

theory of a lawsuit”).
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¶20 Applying these principles, we conclude that the Johnsons 

have not shown that their request for relief in the First Suit on 

the basis of TILA rescission is not a claim subject to preclusion. 

Regardless of whether their TILA rescission might be 

characterized under the TILA framework as a defense in the 

abstract, the Johnsons treated their TILA rescission as a claim or 

cause of action for relief in the First Suit. See Pohl v. U.S. Bank, 

859 F.3d 1226, 1230–31 (10th Cir. 2017) (rejecting the appellants’ 

assertion that their TILA rescission was not a claim for claim 

preclusion purposes, concluding, based on the definition of 

“claim,” that “it is apparent that once the lender rejected the 

[appellants’] notice [of rescission], they had a ‘claim’ for 

rescission and a ‘claim’ for TILA violations”). In the First Suit,

the Johnsons sought to enforce their rights in the Property and 

affirmatively requested relief from the nonjudicial foreclosure 

proceedings in progress against their interests, citing the TILA 

rescission as a basis for granting such relief. See Mack, 2009 UT 

47, ¶ 19 (“A party has a claim if the alleged facts give rise to a 

right enforceable in the courts.” (cleaned up)). To that end, the 

district court in the First Suit plainly resolved their requested 

entitlement to relief based on the fact of the TILA rescission, 

concluding that the rescission did not preclude the lenders’ 

“right to proceed with nonjudicial foreclosure.” See Swainston, 

766 P.2d at 1061. The Johnsons did not appeal that decision. And 

apart from delineating the burdens and procedures applicable to 

rescissions under TILA and their supposed applicability 

following Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790 

(2015), supra note 2, the Johnsons do not otherwise explain why 

claim preclusion does not apply to the actions they affirmatively 

took to enforce their rights—i.e., filing suit seeking judicial relief 

from the nonjudicial foreclosure proceedings on the basis of their 

TILA rescission.

¶21 For these reasons, we affirm the district court’s 

determination that the Johnsons’ request for relief on the basis of 

their TILA rescission is barred by the doctrine of res judicata.
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20180417-CA 10 2019 UT App 199

CONCLUSION5

¶22 We conclude that the district court properly dismissed the 

Present Suit on the basis of res judicata. Accordingly, we affirm.

 

5. In a single sentence of the conclusion in its brief, Nationstar

asks this court to award it attorney fees incurred on appeal 

pursuant to rule 33 of the Utah Rules of Appellate Procedure. 

Rule 33 provides that if an appellate court determines that an 

appeal taken is “either frivolous or for delay, it shall award just 

damages, which may include . . . reasonable attorney fees, to the 

prevailing party.” Utah R. App. P. 33(a). “[P]arties seeking 

attorney fees under rule 33 face a high bar.” Porenta v. Porenta, 

2017 UT 78, ¶ 51, 416 P.3d 487. This is because the “imposition of 

such a sanction is a serious matter and only to be used in 

egregious cases, lest the threat of such sanctions should chill 

litigants’ rights to appeal lower court decisions.” Id. (cleaned 

up). Here, Nationstar has not explained why the Johnsons’ 

appeal meets this standard. Because Nationstar has not 

demonstrated that rule 33 fees are justified, we decline to award 

them.