Opinion ID: 2600191
Heading Depth: 2
Heading Rank: 2

Heading: foreclosure on an unsecured debt

Text: ¶ 23 Mrs. Dewsnup next claims that as the lenders foreclosed on the trust deed property for $222,814.62 of debt, some of which was later found to be not secured by the trust deed property, the foreclosure sale was defective and that she is entitled to damages. However, at the time of the foreclosure, the lenders had a valid judgment for the full amount. When this court determined in Timm II that the $49,966.21 Arrow contract debt was not secured by the trust deed, we did not alter the status of that judgment lien. It remained intact. Rather, we remanded with instruction to the district court to determine what amount, if any, remained outstanding on the promissory notes secured by the trust deed. Timm II, 921 P.2d at 1394. When we remanded for yet a third time with the same instruction in Timm III, we noted that the foreclosure sale was defective only [f]or all amounts in excess of what remained owing on the promissory notes. Timm III, 1999 UT 105 at ¶ 15, 990 P.2d 942. Accordingly, the issue really before us is the amount foreclosed upon by the sale of the trust deed property, not whether the sale itself was defective. ¶ 24 Mrs. Dewsnup concedes in her brief to this court that some amount is due on attorney fees to collect the trust deed debt. At trial, the district court found that amount to be $88,911.67. This determination resulted from factual findings based upon testimony presented to the court. Utah Rule of Civil Procedure 52(a) provides that [f]indings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous.... To prevail against these findings on appeal, Mrs. Dewsnup faces a substantial burden. As the Utah Court of Appeals has correctly stated, The challenging party must marshal all relevant evidence presented at trial which tends to support the findings and demonstrate why the findings are clearly erroneous. West Valley City v. Majestic Inv. Co., 818 P.2d 1311, 1313 (Utah Ct.App.1991) (citations omitted). Here, Mrs. Dewsnup fails to cite any evidence or testimony that supports the district court's findings and, as a result, cannot demonstrate why these findings are clearly in error. Accordingly, we accept the district court's finding of $88,911.67 owing to the lenders at the time of the foreclosure sale. ¶ 25 Mrs. Dewsnup further asserts that she is entitled to the difference between the amount the lenders bid for the trust deed property, $115,000, and costs and attorney fees they incurred in collecting the secured debt, $88,911.67. We disagree. Section 57-1-29 of the Utah Code provides that once all the debt and attendant fees and costs are paid after a trustee's sale, any balance that may remain is to be paid to the person or persons legally entitled to the proceeds. Utah Code Ann. § 57-1-29 (2000). This court has interpreted the meaning of legal entitlement, noting that [a]lthough § 57-1-29 does not specifically mention junior trust deeds or lienholders, the surplus from the sale stands in the place of the foreclosed real estate and is subject to the same liens and interests that were attached to it.... .... ... [J]unior interests are protected by the requirement that the trustee distribute any surplus proceeds to the person legally entitled thereto. Randall v. Valley Title, 681 P.2d 219, 221 (Utah 1984). In other words, any excess left over from the non-judicial foreclosure sale on the trust deed property belongs not to Mrs. Dewsnup, but to other valid lienholders. ¶ 26 Therefore, upon the sale of the trust deed property to satisfy claims on the trust deed, the lenders as junior lienholders were legally entitled to any excess sufficient to satisfy the $49,966.21 judgment on the Arrow contract. In addition, as the excess amount is insufficient to totally retire the Arrow contract judgment, Mrs. Dewsnup has suffered no damages resulting from the foreclosure sale on the trust deed property. ¶ 27 We accordingly affirm the finding of the district court that the foreclosure sale was not defective and that Mrs. Dewsnup is not entitled to any attendant damages.