Court Opinion

ID: 6318171
Source: CourtListenerOpinion
Date Created: 2022-02-28 21:16:14.972093+00
Date Added: 2024-06-11T09:01:35.039115
License: Public Domain

2022 UT App 23

               THE UTAH COURT OF APPEALS

                        NICK KELLY,
                Appellant and Cross-appellee,
                             v.
         TIMBER LAKES PROPERTY OWNERS ASSOCIATION,
                Appellee and Cross-appellant,
                               AND
               HOLLYVALE RENTAL HOLDINGS LLC,
                          Appellee.

                             Opinion
                        No. 20191079-CA
                     Filed February 17, 2022

            Fourth District Court, Heber Department
               The Honorable Jennifer A. Brown
                         No. 160500088

           Russell A. Cline, Attorney for Appellant and
                          Cross-appellee
       Jeremy C. Reutzel, James C. Dunkelberger, and Ryan
            M. Merriman, Attorneys for Appellee and
          Cross-appellant Timber Lakes Property Owners
                            Association
          Todd W. Prall, Attorney for Appellee Hollyvale
                      Rental Holdings LLC

    JUDGE GREGORY K. ORME authored this Opinion, in which
     JUDGES JILL M. POHLMAN and DIANA HAGEN concurred.

ORME, Judge:

¶1     To collect on past due assessments, Timber Lakes
Property Owners Association (Timber Lakes) conducted a
nonjudicial foreclosure on Nick Kelly’s property, which
Hollyvale Rental Holdings LLC purchased at auction. Following
the sale, Kelly sought to set aside the trustee’s deed to Hollyvale,
                       Kelly v. Timber Lakes

arguing, among other things, that Timber Lakes’ failure to wait
the statutory three-month period before publishing a notice of
trustee’s sale was against public policy and thus rendered the
foreclosure sale void. He also argued that this failure to wait the
full three-month period excused him from paying the past due
assessments under the first-to-breach rule.

¶2     The district court concluded that the nonjudicial
foreclosure did not violate public policy and granted summary
judgment to Timber Lakes and Hollyvale on that claim. Kelly’s
remaining claims proceeded to a bench trial, at which Kelly
presented what the court found to be a forged receipt as
evidence that he had paid at least a portion of the assessments
that Timber Lakes claimed were past due. Following the trial,
the court found in Timber Lakes’ favor and, based on a finding
that following summary judgment Kelly pursued his claims in
bad faith, awarded Timber Lakes its attorney fees incurred from
the point of summary judgment onward. The court, however,
denied Timber Lakes’ request for attorney fees incurred prior to
summary judgment.

¶3     Kelly appeals the court’s grant of summary judgment,
post-trial rulings, and the attorney fees award. As part of his
challenge to the court’s summary judgment order, Kelly raises
an argument for the first time on appeal and requests that we
review it for plain error. Timber Lakes cross-appeals the court’s
denial of its request for pre-summary-judgment attorney fees.
We affirm the district court in every respect and further hold
that, with limited exceptions, plain error review is not available
in the civil context. We remand only for calculation of an award
of attorney fees in favor of Timber Lakes, for attorney fees it
incurred on appeal.

20191079-CA                     2                2022 UT App 23
                      Kelly v. Timber Lakes

                        BACKGROUND 1

¶4      Timber Lakes is the homeowners association that governs
the Timber Lakes Estates development, located outside Heber
City. Timber Lakes derives its authority as a homeowners
association from the Declaration of Protective Covenants,
Conditions, Restrictions and Management Policies for Timber
Lakes Estates (the CC&Rs), which was recorded in Wasatch
County in 1989. The CC&Rs have not been amended since their
initial recordation.

¶5     Under the CC&Rs, each property owner within Timber
Lakes Estates “is deemed to covenant and agree to pay” annual
and special assessments to Timber Lakes, both of which
“together with interest, costs and reasonable attorney fees shall
be a charge on the land and shall be a continuing lien upon the
property against which each such assessment is made.” The
CC&Rs further provide that for assessments that are over 90
days past due, Timber Lakes “may bring an action at law against
the Owner personally obligated to pay the [assessments] or
foreclose the lien against the property.” Timber Lakes’ bylaws,

1. This appeal arises from the district court’s grant of summary
judgment and from its findings of fact and conclusions of law
following a bench trial. Accordingly, “in reviewing [the] court’s
grant of summary judgment, we view the facts and all
reasonable inferences drawn therefrom in the light most
favorable to the nonmoving party and recite the facts
[corresponding to those issues] accordingly.” Ockey v. Club Jam,
2014 UT App 126, ¶ 2 n.2, 328 P.3d 880 (quotation simplified).
And “on appeal from a bench trial, we view the evidence in a
light most favorable to the trial court’s findings, and therefore
recite the facts [corresponding to the issues arising from the
bench trial] consistent with that standard and only present
conflicting evidence to the extent necessary to clarify the issues
raised on appeal.” Linebaugh v. Gibson, 2020 UT App 108, n.5, 471
P.3d 835 (quotation simplified).

20191079-CA                     3               2022 UT App 23
                       Kelly v. Timber Lakes

which were adopted in 1979, also provide that it is the duty of
Timber Lakes’ board of directors “[t]o foreclose the lien against
any property for which assessments are not paid within ninety
(90) days after due date or to bring an action at law against the
Owner personally obligated to pay the same.”

¶6      On November 17, 2011, Kelly purchased property within
Timber Lakes Estates (the Property). Prior to closing on the sale,
Kelly delivered a $1,000 money order to the seller’s agent to
cover unpaid assessments on the Property. And at the time of
closing, the title company issued a check in the amount of
$909.41 to Timber Lakes, $809.41 of which was designated as
“delinquent dues” and the remaining $100 as a “transfer fee.”
Kelly also testified at trial that on November 24, 2011, he went
into the Timber Lakes office and paid $1,839 in cash to cover
current and future assessments. He provided a copy of a receipt
at trial in support of this assertion.

¶7      On February 24, 2016, Timber Lakes, through counsel,
sent Kelly a letter informing him that it intended to conduct a
nonjudicial foreclosure on the Property to collect past due
assessments and that Kelly could “prevent a foreclosure action”
by contacting Timber Lakes and making payment arrangements.
The letter also informed Kelly of his right to instead demand a
judicial foreclosure. On May 2, 2016, Timber Lakes recorded a
notice of default and election to sell against the Property (the
Notice of Default). The Notice of Default indicated that Kelly
had been informed of his right to request a judicial foreclosure at
least 30 days prior and that he “did not request a judicial
foreclosure.” By July 2016, Timber Lakes’ records indicated that
Kelly owed over five thousand dollars in unpaid assessments,
late fees, and interest. Its records did not reflect the $1,839 cash
payment Kelly claimed to have made on November 24, 2011.
And in early July 2016, Timber Lakes, again through counsel,
recorded and published a Notice of Trustee’s Sale that set
August 1, 2016, as the public auction date.

20191079-CA                     4                 2022 UT App 23
                      Kelly v. Timber Lakes

¶8      On July 18, 2016, Kelly, who at the time was in Puerto
Rico on business and had been away for “many months,” was
informed for the first time either by his daughter or by an
employee that the Notice of Trustee’s Sale had been posted on
the Property. Kelly immediately called Timber Lakes’ property
management company, which conversation he recorded. Kelly
told an agent of the property management company that
although he “may owe something,” it was not the amount that
was alleged and that he was in Puerto Rico and needed time to
retrieve supporting documentation. The agent informed Kelly
that the Timber Lakes board of directors would be holding a
meeting on August 17 and that she would request that Timber
Lakes’ counsel postpone the August 1 sale date until August 18
so that the board could consider further postponement of the
sale at that meeting.

¶9     That same day, Kelly also spoke with a paralegal at the
law firm that represented Timber Lakes, which conversation he
also recorded. During that conversation, Kelly acknowledged, “I
believe that we actually do owe for some HOA. But make no
mistake, it might have been for partial of this year, and it might
have been for a little bit of last year. But that’s it.” He also
confirmed that he had documentation of prior payments but
explained that they were not readily accessible because he was in
Puerto Rico and was not due back for another three weeks. 2 He
also stated that “if I need to call somebody, if I need to get my
attorney on it to get something stopped before I get up there, I
have no problem doing that.”

¶10 Following the call, and at Kelly’s request, the paralegal
emailed Kelly “copies of statements, notices and return mail sent

2. In an email sent that same day to the agent of the property
management company, Kelly indicated that he would not be
able to return to Utah until September—at least a month and a
half later. The agent replied that they would not be able to
postpone the trustee’s sale of the Property past August 18, 2016.

20191079-CA                     5               2022 UT App 23
                        Kelly v. Timber Lakes

to the addresses” the law firm had on file for Kelly. The
paralegal also informed Kelly,

       [W]e are not postponing the foreclosure sale date
       beyond August 18, 2016. You need to pay off the
       account in our office . . . or provide copies of your
       bank statements showing payments to Timber
       Lakes . . . [that] cleared your account along with
       copies of the front and back sides of all checks
       clearly showing they were cashed by Timber Lakes
       . . . or its agents.

¶11 The district court later found that “[a]side from making
contact with Timber Lakes and its legal counsel and asking them
to postpone the sale, [Kelly] took no affirmative action to enjoin
the trustee’s sale.” The court further noted that “Kelly testified at
the trial that he had family and friends who were available to
him to either help him provide evidence of his claimed
payments or to present payment to Timber Lakes. He chose not
to have them do so.” And despite having claimed he had an
attorney, Kelly did not engage counsel to enjoin the trustee’s
sale.

¶12 The Timber Lakes board of directors held its scheduled
meeting on August 17, 2016. The board discussed the pending
trustee’s sale of the Property but decided against postponing the
sale any further. The trustee’s sale of the Property took place the
next day, on August 18, 2016. Hollyvale, the highest bidder,
purchased the Property at auction.

¶13 In September 2016, Kelly filed suit against Timber Lakes
and Hollyvale seeking to set aside the trustee’s deed to
Hollyvale as void and to quiet title in the Property. Kelly also
asserted, among other things, claims for breach of contract and
breach of the implied covenant of good faith and fair dealing
against Timber Lakes. He later amended his complaint to add a
claim for mistake against both defendants and a request for an
accounting against Timber Lakes. Timber Lakes counterclaimed

20191079-CA                      6                 2022 UT App 23
                        Kelly v. Timber Lakes

for declaratory judgment on the validity of the sale and for an
award of attorney fees.

¶14 In early 2017, all three parties filed motions for partial
summary judgment, seeking “a determination by the Court
regarding the validity of Timber Lakes’ trustee’s sale” of the
Property. Kelly argued that the sale was “void because the
trustee did not wait the statutorily required time before giving
‘notice of sale.’” Specifically, Kelly argued that the trustee was
statutorily required to wait at least three months after recording
the Notice of Default before giving the Notice of Trustee’s Sale.
See Utah Code Ann. § 57-1-24 (LexisNexis 2020). But here, the
Notice of Default was recorded on May 2, 2016, and the Notice
of Trustee’s Sale was recorded and published in early July
2016—approximately one month short of the requisite
three-month waiting period. Alternatively, he argued that the
premature recordation of the Notice of Trustee’s Sale rendered
the sale voidable. Timber Lakes argued “that the sale is valid
because it substantially complied with the notice requirements.”

¶15 The district court denied Kelly’s motion and granted
Timber Lakes’ and Hollyvale’s motions on the ground that the
sale of the Property was not void or voidable. The court
concluded that the trustee’s deed was not void because
recording the Notice of Trustee’s Sale approximately one month
early did not rise to the level of violating public policy. The court
further held that Kelly had not demonstrated the sale was
voidable because he had “not alleged that the alleged defect in
the Sale deprived [him] of the right to cure [his] default or bring
an injunction to challenge the adequacy of the notice prior to the
Sale.” Indeed, it was undisputed that Kelly had actual notice of
the sale as early as July 18, 2016, but “did nothing to enjoin it.”
The court further ruled that even if the sale was voidable,
“Hollyvale’s status as a bona fide purchaser defeats [Kelly’s]
motion.” Accordingly, the court dismissed Kelly’s claim seeking
to set aside the sale of the Property and all claims Kelly asserted
against Hollyvale. But the court allowed Kelly’s remaining
claims for damages against Timber Lakes, premised on theories

20191079-CA                      7                 2022 UT App 23
                       Kelly v. Timber Lakes

of breach of contract, breach of the covenant of good faith and
fair dealing, and entitlement to an accounting, to go forward.

¶16 Around that same time, Kelly also moved for leave to
amend his complaint for a second time to add a claim against
Timber Lakes for failure to comply with applicable statutes,
specifically Utah Code sections 57-1-24 to -26 governing
nonjudicial foreclosure of trust deeds. Following a hearing on
the matter, the court denied Kelly’s motion to substantively
amend his complaint.

¶17 In July 2018, the case proceeded to a three-day bench trial
on the remaining claims. Regarding his claim for breach of
contract, Kelly argued that he was excused from paying the
assessments because Timber Lakes was the first to breach the
contract when it failed to wait three months after recording the
Notice of Default before posting the Notice of Trustee’s Sale.
Kelly also provided evidence that he had paid the assessments,
including his testimony and a copy of a receipt dated November
24, 2011—Thanksgiving Day—indicating that he had paid $1,839
in cash to the Timber Lakes office for current and future
assessments. To rebut this evidence, Timber Lakes provided
bank records showing no deposit reflecting Kelly’s claimed
payment. Timber Lakes also called a handwriting expert, who
testified that the receipt was a forgery. Finally, it introduced
evidence that the Timber Lakes office was closed on November
24 for the Thanksgiving holiday and therefore no one would
have been on hand to receive payments on that day or issue
receipts.

¶18 In February 2019, the district court extended its findings
of fact and conclusions of law, ruling against Kelly on all claims.
As relevant to this appeal, the court held that Kelly’s
first-to-breach argument “ignores the reason for the Notice of
Default and . . . Notice of the Trustee’s Sale in the first place.”
And “[u]nless [Kelly] could demonstrate to the Court that he
actually had paid his dues,” which burden Kelly had not
satisfied, “he would be in the position of having been the first to

20191079-CA                     8                2022 UT App 23
                       Kelly v. Timber Lakes

breach the contract.” The court found that Kelly’s testimony
“had some credibility issues,” while the handwriting expert
“was highly qualified, and credible in his testimony.”
Accordingly, the court found that Kelly “never actually paid
[his] dues and may have attempted to perpetrate a fraud on this
Court by relying upon a forged receipt to claim that [he] had.”
Based on these findings, the court held that Timber Lakes was
not the first party to breach the contract.

¶19 Timber Lakes then sought attorney fees under Utah Code
section 78B-5-825 (the bad faith statute) and the CC&Rs and
bylaws. The court held that the CC&Rs and bylaws did not
apply “to this somewhat unique situation regarding litigation
after a foreclosure sale has occurred, given that they are drafted
to apply to collection efforts up to and including a foreclosure.”
The court further noted that this “result is . . . somewhat
equitable, given that it is undisputed that Timber Lakes did not
comply with the foreclosure statute in terms of the notice of sale.
Although the Court did find that the sale was valid, that finding
was based primarily on the existence of a bona fide purchaser
and the timing of Mr. Kelly’s objections.” But based on the
forged receipt, the court determined that the bad faith statute
was satisfied and awarded Timber Lakes attorney fees it
“incurred from the point of the court’s summary judgment
ruling through trial and post-trial briefing on the attorney’s fees
issue.”

¶20   Kelly appeals, and Timber Lakes cross-appeals.

            ISSUES AND STANDARDS OF REVIEW

¶21 Kelly raises several issues on appeal. First, he argues that
the trustee’s sale of the Property is void because Timber Lakes
lacked the statutory and contractual authority to conduct a
nonjudicial foreclosure sale. Kelly acknowledges that this

20191079-CA                     9                2022 UT App 23
                        Kelly v. Timber Lakes

argument is unpreserved, but he contends that the plain error
exception to our preservation rule applies. 3 Timber Lakes
counters by arguing that plain error review is unavailable in civil
cases. For the reasons discussed in Section I below, we agree
with Timber Lakes and decline to address the merits of Kelly’s
argument through the lens of plain error.

¶22 Next, Kelly argues that the district court erred in failing to
declare the trustee’s sale void on summary judgment. “We

3. Alternatively, Kelly asserts that the exceptional circumstances
exception to our preservation rule applies. “We apply the
exceptional circumstances exception to reach an unpreserved
issue where a rare procedural anomaly has either prevented an
appellant from preserving an issue or excuses a failure to do so.”
State v. Van Huizen, 2019 UT 1, ¶ 22, 435 P.3d 202 (quotation
simplified). If a rare procedural anomaly exists, “it opens the
door to a deeper inquiry” in which courts consider additional
factors, such as “(a) whether the failure to address an
unpreserved issue would result in manifest injustice, (b) whether
there is a significant constitutional right or liberty interest at
stake, and (c) judicial economy.” Id. ¶ 22 n.4 (quotation
simplified). Here, Kelly does not discuss the threshold inquiry of
the exceptional circumstances exception. Instead, he merely
asserts that permitting Timber Lakes to conduct an unauthorized
nonjudicial foreclosure would result in a “manifest injustice”
because “like lack of subject matter jurisdiction, lack of authority
or a violation of statute should be a defense that can be raised at
any time.” Because Kelly has not demonstrated that a rare
procedural anomaly prevented or excused him from raising this
argument before the district court, he has not shown that
exceptional circumstances overcome our preservation rule.
   To the extent Kelly argues that, like subject matter jurisdiction,
a lack-of-authority argument should not be subject to our
preservation rule, he cites no authority in support of this
contention and has thus not carried his burden of persuasion on
appeal. See Bank of Am. v. Adamson, 2017 UT 2, ¶ 13, 391 P.3d 196.

20191079-CA                     10                 2022 UT App 23
                        Kelly v. Timber Lakes

review a district court’s grant of summary judgment for
correctness and afford no deference to the court’s legal
conclusions.” Jones v. Farmers Ins. Exch., 2012 UT 52, ¶ 6, 286 P.3d
301 (quotation simplified).

¶23 Kelly also contends that the district court erred in
concluding, following a bench trial, that Timber Lakes was not
the first to breach the contract and that it did not breach the
implied covenant of good faith and fair dealing. “Following a
bench trial, we review a trial court’s legal conclusions for
correctness, according the trial court no particular deference.”
Camco Constr. Inc. v. Utah Baseball Academy Inc., 2018 UT App 78,
¶ 36, 424 P.3d 1154 (quotation simplified). We review the court’s
findings of fact for clear error, granting “due regard . . . to the
opportunity of the trial court to judge the credibility of the
witnesses.” Id. (quotation simplified).

¶24 Finally, both Kelly and Timber Lakes challenge the
district court’s attorney fees award. Kelly argues that the court
misapplied the bad faith statute when it awarded attorney fees
incurred by Timber Lakes after the entry of summary judgment
in its favor. “We review a trial court’s grant of attorney fees
under the bad faith statute as a mixed question of law and fact.”
Fadel v. Deseret First Credit Union, 2017 UT App 165, ¶ 16, 405
P.3d 807 (quotation simplified). A party is entitled to attorney
fees under the bad faith statute when an action or defense is both
“(1) without merit, and (2) not brought or asserted in good
faith.” In re Discipline of Sonnenreich, 2004 UT 3, ¶ 46, 86 P.3d 712.
“The ‘without merit’ determination is a question of law, and
therefore we review it for correctness.” Fadel, 2017 UT App 165,
¶ 16 (quotation simplified). “A finding of bad faith is a question
of fact and is reviewed by this court under the clearly erroneous
standard.” Id. (quotation simplified). Furthermore, “because the
good faith element implicates fact-intensive questions about the
losing party’s subjective intent, a lower court’s finding on this
element typically will be afforded a substantial measure of
discretion.” Linebaugh v. Gibson, 2020 UT App 108, ¶ 23, 471 P.3d
835 (quotation simplified).

20191079-CA                      11                2022 UT App 23
                        Kelly v. Timber Lakes

¶25 And on cross-appeal, Timber Lakes argues that the
district court erred in determining that it was not entitled, under
the CC&Rs and bylaws, to all attorney fees it reasonably
incurred in defending against Kelly’s action. “Whether attorney
fees are recoverable in an action is a question of law, which we
review for correctness.” Martin v. Kristensen, 2019 UT App 127,
¶ 31, 450 P.3d 66 (quotation simplified), aff’d, 2021 UT 17, 489
P.3d 198. See Brady v. Park, 2019 UT 16, ¶ 32, 445 P.3d 395
(“[L]egal questions that pertain to the attorney fees issue . . . are
reviewed for correctness.”).

                            ANALYSIS

               I. Plain Error Review in Civil Cases

¶26 Kelly argues that Timber Lakes lacked statutory and
contractual authority to conduct a nonjudicial foreclosure on the
Property. Specifically, Kelly points to the Utah Community
Association Act (the UCAA). See generally Utah Code Ann.
§§ 57-8a-101 to -703 (LexisNexis 2020). The UCAA, which our
Legislature enacted in 2004, grants homeowners associations
statutory liens on properties for unpaid assessments and costs of
collection. See id. § 57-8a-301(1)(a). To enforce the statutory lien
under the UCAA, “an association may . . . cause a lot to be sold
through nonjudicial foreclosure as though the lien were a deed
of trust.” Id. § 57-8a-302(1)(a). It further provides that
associations that predate the UCAA’s 2004 enactment “may
amend the declaration to make applicable to the association a
provision of this chapter.” Id. § 57-8a-107(1).

¶27 Kelly argues that Timber Lakes lacked the statutory
authority to conduct a nonjudicial foreclosure on the Property
because it never amended the CC&Rs to adopt the relevant
provisions of the UCAA authorizing nonjudicial foreclosure for
unpaid assessments. Indeed, the CC&Rs had never been
amended since their initial recordation in 1989. Kelly
additionally argues that Timber Lakes lacked contractual

20191079-CA                     12                 2022 UT App 23
                       Kelly v. Timber Lakes

authority to conduct a nonjudicial foreclosure on the Property
because the CC&Rs limit Timber Lakes to two remedies for
unpaid assessments: (1) bringing an action at law against the
property owner personally or (2) bringing an action at law to
foreclose the lien, which he asserts is limited to judicial
foreclosures.

¶28 Kelly concedes that he did not preserve these issues
before the district court and accordingly asks us to review them
under the plain error doctrine. Timber Lakes counters,
challenging the application of plain error review in the civil
context. We agree with Timber Lakes and therefore have no
occasion to consider the merits of Kelly’s argument.

¶29 “The plain error standard of review is typically raised in
the context of a criminal proceeding,” and “it is generally
unusual for a party to raise the plain error standard in a civil
matter.” Danneman v. Danneman, 2012 UT App 249, ¶ 10 n.5, 286
P.3d 309. Indeed, “there is an ongoing debate about the
propriety of civil plain error review.” Utah Stream Access Coal. v.
Orange Street Dev., 2017 UT 82, ¶ 14 n.2, 416 P.3d 553. Our
Supreme Court has stated that, in the absence of an opportunity
to address the question head on, it neither endorses nor
repudiates “the ongoing viability of plain error review in civil
cases.” Id. And although Utah appellate courts have occasionally
applied plain error review in civil cases, they have been careful
to emphasize that they did so only because neither party
challenged the applicability of the plain error doctrine in those
cases. See, e.g., H&P Invs. v. iLux Cap. Mgmt. LLC, 2021 UT App
113, ¶ 21 n.2, 500 P.3d 906; Freight Tec Mgmt. Group Inc. v. Chemex
Inc., 2021 UT App 92, ¶ 39 n.11, 499 P.3d 894; Miner v. Miner,
2021 UT App 77, ¶ 11 n.3, 496 P.3d 242; Cook Martin Poulson PC v.
Smith, 2020 UT App 57, ¶ 22 n.3, 464 P.3d 541; Tronson v. Eagar,
2019 UT App 212, ¶ 18 n.7, 457 P.3d 407; Gerwe v. Gerwe, 2018 UT
App 75, ¶ 6 n.1, 424 P.3d 1113; Danneman, 2012 UT App 249, ¶ 10
n.5.

20191079-CA                    13                2022 UT App 23
                       Kelly v. Timber Lakes

¶30 Here, however, Timber Lakes directly challenges the
availability of plain error review in civil cases. Accordingly, we
must consider this important, oft-avoided question before we
can reach the merits of Kelly’s unpreserved argument. We begin
by discussing the context and policy considerations in which the
plain error standard developed in Utah and conclude by
determining whether, given the context and policy
considerations behind the standard, it is applicable in civil cases.

¶31 “Our appellate system has developed along the
adversarial model, which is founded on the premise that parties
are in the best position to select and argue the issues most
advantageous to themselves, while allowing an impartial
tribunal to determine the merits of those arguments.” State v.
Johnson, 2017 UT 76, ¶ 8, 416 P.3d 443. See Robert J. Labrum,
History and Application of the Plain Error Doctrine in Utah, 2000
Utah L. Rev. 537, 537–38 (2000) [hereinafter Labrum] (identifying
as a basic premise of the adversarial model “that out of the sharp
clash of proofs presented by adversaries is most likely to come
information from which a neutral and passive decision maker
can resolve a litigated dispute in a manner that is acceptable
both to the parties and to society”) (quotation simplified). Put
differently, “[u]nder our adversary system, the responsibility for
detecting error is on the party asserting it, not on the court.”
Patterson v. Patterson, 2011 UT 68, ¶ 16, 266 P.3d 828. See Johnson,
2017 UT 76, ¶ 14 (“Under our adversarial system, the parties
have the duty to identify legal issues and bring arguments
before an impartial tribunal to adjudicate their respective rights
and obligations.”).

¶32 In the appellate context, this responsibility explains our
preservation rule, which provides that “[w]hen a party fails to
raise and argue an issue in the trial court, it has failed to
preserve the issue, and an appellate court will not typically reach
that issue[.]” Johnson, 2017 UT 76, ¶ 15. “This system preserves
judicial economy and fairness between the parties.” Id. ¶ 8. Our
preservation rule promotes judicial economy in that it, among
other things, “encourages parties to resolve their controversies at

20191079-CA                     14                2022 UT App 23
                         Kelly v. Timber Lakes

the trial level,” “allows the trial judge to correct errors at the trial
level,” establishes a comprehensive record for appeal, and helps
alleviate the otherwise heavy burden on appellate courts. See
generally David William Navarro, Jury Interrogatories and the
Preservation of Error in Federal Civil Cases: Should the Plain-Error
Doctrine Apply?, 30 St. Mary’s L.J. 1163, 1173–76 (1999), cited in
Utah Stream Access Coal., 2017 UT 82, ¶ 14 n.2. The rule also
promotes fairness between the parties because if no objection
was made in the trial court, “the adverse party would not be
compelled to overcome the objection by presenting a rebuttal,
providing an alternative argument, establishing an alternative
defense, or introducing new evidence in an effort to overcome
such an objection.” Id. at 1175. By extension, “that party would
be restricted from introducing new evidence, defenses, and
factual arguments in an appellate court in order to rebut or
defend an unpreserved issue.” Id.

¶33 Historically speaking, the adversarial model is the
product of merging two separate methods of review under the
old English court system: the writ of error and the appeal in
equity. Johnson, 2017 UT 76, ¶¶ 9–10. The writ of error was
applicable to rulings from the English courts of law and was
“strictly limited to reviewing orders and judgments made by the
court of law on issues raised in that court.” Id. ¶ 9. Conversely,
the appeal in equity applied to the review of rulings from the
English courts of equity. Id. Under this method of review,
“appellate courts in equity were free to consider any issue de
novo and developed flexible procedures to address the needs of
individual cases.” Id. (quotation simplified). For example, one of
the procedures applied in appeals in equity “was the device of
rehearing, which allowed the court to address new facts or law
not originally raised by the parties.” Barry A. Miller, Sua Sponte
Appellate Rulings: When Courts Deprive Litigants of an Opportunity
to Be Heard, 39 San Diego L. Rev. 1253, 1263–64 (2002), cited in
Johnson, 2017 UT 76, ¶¶ 9–11.

¶34 While the adversarial model employed in most American
appellate courts today more closely resembles the writ of error

20191079-CA                       15                 2022 UT App 23
                        Kelly v. Timber Lakes

method of review, Johnson, 2017 UT 76, ¶ 10, the model’s
appeal-in-equity roots are still present insofar as appellate courts
“retain [the] discretion to balance the need for procedural
regularity with the demands of fairness,” id. ¶ 12 (quotation
simplified). See id. (stating that “there is widespread agreement
that appellate courts have the authority to” address issues that
were not raised in the district court) (quotation simplified).
Consequently, “[a]ppellate judges across the country have
wrestled with the correct balance between law and equity and
the scope of review on appeal.” Id. ¶ 11. Thus, “[i]n an effort to
serve the policy considerations of judicial economy and fairness
to the parties, to preserve the adversarial model, and to provide
clear guidelines to litigants,” appellate courts have resolved this
tension by “limit[ing] [their] discretion by creating exceptions to
the general preservation rule.” Id. ¶ 13. And so an appellate
court will address an unpreserved issue only if the appellant
establishes that an exception to the preservation rule applies.
Id. ¶ 19. The three exceptions generally recognized in Utah are
plain error, ineffective assistance of counsel, and exceptional
circumstances. Id. Only plain error merits discussion here.

¶35 Under the current iteration of the plain error standard of
review, “a defendant must establish that (i) an error exists;
(ii) the error should have been obvious to the trial court; and
(iii) the error is harmful.” Id. ¶ 20 (quotation simplified). In Utah,
the gradual development of the plain error standard had its
genesis in the criminal context in 1931, when our Supreme Court
stated in State v. Stenback, 2 P.2d 1050 (Utah 1931), that, in capital
cases, the Court “may and should sua sponte consider manifest
and prejudicial errors which are neither assigned nor argued.”4

4. This early version of the plain error standard of review differs
from the current version in several respects, but most notably the
early version permitted an appellate court to sua sponte review
the record for errors not raised in the trial court or on appeal.
Our Supreme Court has since clarified when an appellate court
                                                     (continued…)

20191079-CA                      16                2022 UT App 23
                        Kelly v. Timber Lakes

Id. at 1056. See State v. Tillman, 750 P.2d 546, 551 (Utah 1987)
(plurality opinion), disagreed with on other grounds by State v.
Hummel, 2017 UT 19, 393 P.3d 314; Labrum, 2000 Utah L. Rev. at
541. And a few years later, in State v. Cobo, 60 P.2d 952 (Utah
1936), criticized by State v. Mitchell, 278 P.2d 618 (Utah 1955),
when faced with an unpreserved issue raised for the first time on
appeal, the Court extended the exception articulated in Stenback
beyond capital cases to also include “cases of grave and serious
charged offenses and convictions of long terms of imprisonment,
cases involving the life and liberty of the citizen.” 5 Id. at 958. See
Tillman, 750 P.2d at 551; Labrum, 2000 Utah L. Rev. at 541–42. In
such cases, the Court further clarified that the exception allows
appellate courts to notice and correct an unpreserved or waived
error “when palpable error is made to appear on the face of the
record and to the manifest prejudice of the accused.” Cobo, 60
P.2d at 958. A few months later, the Court extended the
exception to criminal convictions that would bring the defendant
“into public contempt and disrepute of great intensity.” State v.
Waid, 67 P.2d 647, 652 (Utah 1937). See Labrum, 2000 Utah L.
Rev. at 543. Finally, the following year, the Court suggested that
the exception extended to all criminal cases. State v. Arnold, 79
P.2d 87, 87 (Utah 1938). See Labrum, 2000 Utah L. Rev. at 543–44.

¶36 Over the next fifty years, our Supreme Court sporadically
applied or considered the “palpable error” and “manifest
prejudice” criteria articulated in Cobo but only in criminal cases.
See, e.g., State v. Dubois, 98 P.2d 354, 360 (Utah 1940); State v.

(…continued)
may address an issue sua sponte. See State v. Johnson, 2017 UT 76,
¶¶ 16, 40–53, 416 P.3d 443.

5. The Cobo court also noted that other jurisdictions had
sometimes extended this exception to civil cases, but it did not
address the role of the exception in the civil context in Utah. See
State v. Cobo, 60 P.2d 952, 958 (Utah 1936), criticized by State v.
Mitchell, 278 P.2d 618 (Utah 1955).

20191079-CA                      17                 2022 UT App 23
                        Kelly v. Timber Lakes

Peterson, 240 P.2d 504, 507 (Utah 1952); State v. Sanchez, 361 P.2d
174, 175 (Utah 1961) (stating that the standard may be applied
“in serious criminal cases, under special circumstances, where
the interests of justice so require”); State v. Poe, 441 P.2d 512, 515
& n.9 (Utah 1968) (citing Cobo in support of the proposition that
although the error was not preserved, the court “will not allow
such a technicality to influence its decision in a case such as
this”); State v. Wood, 648 P.2d 71, 77 (Utah 1982) (stating that the
standard is the “established rule” for direct appeals in capital
cases). See also State v. Kazda, 545 P.2d 190, 193 (Utah 1976)
(stating that the Cobo “exception is applied only rarely where
there appears to be a substantial like[l]ihood that an injustice has
resulted”). But see Mitchell, 278 P.2d at 621 (“[I]f no request is
made for instructions on lesser offenses, and none is given, such
failure to instruct is not reviewable as a matter of right on
appeal.”).

¶37 Although a product of the common law, a limited form of
the plain error doctrine was eventually codified in rule 103 of the
Utah Rules of Evidence (rule 103); 6 rule 19 of the Utah Rules of

6. Rule 103 was codified as rule 4 in the original Utah Rules of
Evidence that our Supreme Court adopted in 1971. Labrum, 2000
Utah L. Rev. at 546. Rule 4 stated that “the court in its discretion,
and in the interests of justice, may review the erroneous
admission of evidence even though the grounds of the objection
thereto were not correctly stated.” Utah R. Evid. 4(b) (1971). See
Labrum, 2000 Utah L. Rev. at 546. However, our Supreme Court
interpreted the phrase “not correctly stated” to mean that the
objection had to be “vague or incorrectly stated” and that the
rule thus did not apply to wholly unpreserved evidentiary
challenges. See State v. McCardell, 652 P.2d 942, 947 (Utah 1982)
(quotation simplified). See also State v. Lesley, 672 P.2d 79, 81
(Utah 1983). In 1983, when rule 4 was repealed and replaced by
rule 103, a substantive change was made permitting plain error
review of unpreserved evidentiary challenges. See Labrum, 2000
Utah L. Rev. at 546–47. The earlier version of rule 103 stated,
                                                     (continued…)

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                        Kelly v. Timber Lakes

Criminal Procedure (rule 19), see Labrum, 2000 Utah L. Rev. at
546–47; and rule 51 of the Utah Rules of Civil Procedure (rule
51). Rule 103 provides that, as concerns challenges to evidentiary
rulings, “[a] court may take notice of a plain error affecting a
substantial right, even if the claim of error was not properly
preserved.” Utah R. Evid. 103(e). Rules 19 and 51 provide for a
more limited context in which the plain error standard applies,
each stating that “[u]nless a party objects to an instruction or the
failure to give an instruction, the instruction may not be assigned
as error except to avoid a manifest injustice.” Utah R. Crim. P.
19(e); Utah R. Civ. P. 51(f). 7 Accordingly, as will be discussed in

(…continued)
“Nothing in this rule precludes taking notice of plain errors
affecting substantial rights although they were not brought to
the attention of the court.” Utah R. Evid. 103(d) (1985). See also id.
R. 103(e) (2020) (“A court may take notice of a plain error
affecting a substantial right, even if the claim of error was not
properly preserved.”).

7. An earlier version of rule 51 stated that “the appellate court, in
its discretion and in the interests of justice, may review the
giving or failure to give an instruction.” Utah R. Civ. P. 51 (1985).
In Crookston v. Fire Insurance Exchange, 817 P.2d 789 (Utah 1991),
our Supreme Court held that this clause of rule 51 “embodies the
same concept” as rule 19’s use of the term “manifest injustice.”
See id. at 799. And in 2002, this provision of rule 51 was amended
to match the language of rule 19 verbatim. See Utah R. Civ. P.
51(d) (2002).
   It is also worth noting that a much more expansive version of
the plain error doctrine in the criminal context has been codified
in the Federal Rules of Criminal Procedure than appears in rule
19, which is limited to jury instructions. See Utah R. Crim. P. 19.
Namely, rule 52 of the Federal Rules of Criminal Procedure
provides more generally that “[a] plain error that affects
substantial rights may be considered even though it was not
brought to the court’s attention.” Fed. R. Crim. P. 52(b).
                                                       (continued…)

20191079-CA                      19                2022 UT App 23
                        Kelly v. Timber Lakes

greater detail below, although there is no significant difference
in their current application, the plain error doctrine historically
is the product of two separate branches: the common law and
codified rules.

¶38 In light of the aforementioned rules, subsequent cases
further developed the plain error doctrine along lines that more
closely resemble its current iteration. In State v. Eldredge, 773 P.2d
29 (Utah 1989), the defendant raised an unpreserved evidentiary
challenge. See id. at 35. Our Supreme Court held that under rule
103, a court may take notice of a plain error if two requirements
are met: “[F]irst . . . that the error be ‘plain,’ i.e., from our
examination of the record, we must be able to say that it should
have been obvious to a trial court that it was committing error,”
and “second . . . that the error affect the substantial rights of the
accused, i.e., that the error be harmful.” Id. In discussing the first
requirement, the Court stated that “the premise of rule 103(d)[8]
is that the ends of justice must not be lost sight of in the pursuit
of procedural regularity and that when an error is plain, a trial
court can legitimately be said to have had a reasonable
opportunity to address and correct it, even in the absence of an
objection.” Id. at 36. And concerning the second requirement, the
Court noted “that the harmfulness standard set forth in rule 103
is substantively identical to that of Utah Rule of Criminal

(…continued)
Conversely, like its Utah counterpart, the Federal Rules of Civil
Procedure provide for plain error review only in the context of
civil jury instructions. See Fed. R. Civ. P. 51(d)(2) (“A court may
consider a plain error in the instructions that has not been
preserved . . . if the error affects substantial rights.”).

8. When our Supreme Court issued State v. Eldredge, 773 P.2d 29
(Utah 1989), the relevant provision of rule 103 was found in
subsection 103(d), which has since been moved, with some
minor adjustments in phraseology, to subsection 103(e). Compare
Utah R. Evid. 103(d) (1985), with id. R. 103(e) (2020).

20191079-CA                      20                2022 UT App 23
                        Kelly v. Timber Lakes

Procedure 30,” id. at 35 n.9, which provides that “[a]ny error,
defect, irregularity or variance which does not affect the
substantial rights of a party shall be disregarded,” Utah R. Crim.
P. 30(a). A few years later, this standard evolved into its current
form in State v. Dunn, 850 P.2d 1201 (Utah 1991), abrogated on
other grounds by State v. Silva, 2019 UT 36, 456 P.3d 718, when the
Court added a third element that had previously only been
implied: that “an error exists.” See id. at 1208; Labrum, 2000 Utah
L. Rev. at 559.

¶39 A few days after issuing Eldredge, our Supreme Court
issued State v. Verde, 770 P.2d 116 (Utah 1989), in which it
addressed the “manifest injustice” standard of rule 19
concerning jury instruction errors in criminal cases. See id. at 121.
The Court “conclude[d] that in most circumstances, the term
‘manifest injustice’ is synonymous with the ‘plain error’
standard expressly provided in Utah Rule of Evidence 103(d)
and elaborated upon in Eldredge.” Id. at 121–22. See Johnson, 2017
UT 76, ¶ 57 n.16 (stating that “in most circumstances the term
‘manifest injustice’ [in rule 19] is synonymous with the ‘plain
error’ standard” but also noting that under rule 19, instructional
errors in the criminal context can also be reviewed for ineffective
assistance of counsel and exceptional circumstances) (quotation
simplified). And a few years later, in Crookston v. Fire Insurance
Exchange, 817 P.2d 789 (Utah 1991), the Court held that rule 51’s
standard for reviewing unpreserved objections to civil jury
instructions “embodies the same concept” as rule 19. See id. at
799. See Jensen v. Sawyers, 2005 UT 81, ¶ 61, 130 P.3d 325 (“We
have interpreted manifest injustice [of rule 51] to be synonymous
with plain error and that the same analytical model applies to
[rule 51 and rule 19].”).

¶40 Plain error review was first applied in the civil context in
D.B. v. Division of Occupational and Professional Licensing, 779 P.2d

20191079-CA                     21                 2022 UT App 23
                        Kelly v. Timber Lakes

1145 (Utah Ct. App. 1989), 9 in which this court, applying rule
103, addressed an unpreserved evidentiary issue and
determined that the petitioner suffered “substantial prejudice,”
warranting reversal. See id. at 1148–49. Next, our Supreme Court
briefly addressed plain error in the context of instructional error
under rule 51 in Crookston, but disposed of the appeal on the
ground that the appellant had “not begun to make the showing
required by rule 51.” See 817 P.2d at 799. Shortly thereafter, Utah
appellate courts began reviewing unpreserved issues for plain
error in civil cases that either fell outside of the ambit of rule 103
and rule 51 or applied plain error review without discussion of
the rules. See, e.g., Heslop v. Bank of Utah, 839 P.2d 828, 839–40
(Utah 1992); Classic Cabinets, Inc. v. All Am. Life Ins. Co., 1999 UT
App 88, ¶ 17, 978 P.2d 465; Larsen v. Johnson, 958 P.2d 953, 956
(Utah Ct. App. 1998); Davis v. Grand County Service Area, 905 P.2d
888, 892–94 (Utah Ct. App. 1995), abrogated on other grounds
by Gillett v. Price, 2006 UT 24, 135 P.3d 861. The question of
whether the common law branch of plain error review was
applicable in civil cases was not commented on until 2017, when
our Supreme Court, without either endorsing or repudiating the
practice, noted that there is an “ongoing debate about the
propriety of civil plain error review” and indicated its
willingness “to enter this debate” in an appropriate case. See
Utah Stream Access Coal. v. Orange Street Dev., 2017 UT 82, ¶ 14
n.2, 416 P.3d 553. Such a case had yet to present itself until now,
and as discussed above, Utah appellate courts have continued to
apply plain error review in civil cases where neither party
challenged the practice.

¶41 Following our review of the development of and policy
considerations behind the plain error standard in Utah, we

9. In some prior civil appeals, our Supreme Court reversed using
the term “plain error” but under circumstances where the issue
being reviewed was preserved. See, e.g., Price-Orem Inv. Co. v.
Rollins, Brown & Gunnell, Inc., 713 P.2d 55, 60 (Utah 1986); Kish v.
Wright, 562 P.2d 625, 629 (Utah 1977).

20191079-CA                      22                2022 UT App 23
                        Kelly v. Timber Lakes

conclude that, unless expressly authorized by rule, see, e.g., Utah
R. Evid. 103(e); Utah R. Civ. P. 51(f), the plain error exception to
our preservation rule does not properly extend to ordinary civil
appeals. This is because the considerations for applying plain
error review in the civil context do not weigh as heavily as they
do in the criminal context, against the substantial considerations
underlying our preservation rule: judicial economy and fairness.
See supra ¶ 32.

¶42 The interests at stake in civil cases are generally not as
fundamental as those at stake in criminal cases. 10 As noted
above, plain error review first developed in criminal cases
“involving the life and liberty of the citizen,” such as capital
cases and “cases of grave and serious charged offenses and
convictions of long terms of imprisonment.” State v. Cobo, 60
P.2d 952, 958 (Utah 1936), criticized by State v. Mitchell, 278 P.2d
618 (Utah 1955). Although this standard was originally limited to
certain criminal appeals, it was eventually extended to all of
them due to the significant liberty interests at stake in such cases.
Conversely, the economic and property interests that are
typically the subject of civil cases are not as fundamental as the

10. We recognize that some civil cases involve significant
interests on par with those at issue in criminal cases, such as
fundamental constitutional rights, termination of parental rights,
and liberty interests in certain civil-criminal hybrid proceedings
(e.g., probation revocation hearings). See Follo v. Florindo, 2009
VT 11, ¶ 16, 970 A.2d 1230 (stating that plain error review is
available only in civil cases involving fundamental rights and in
quasi-criminal cases). See also In re A.M., 2009 UT App 118, ¶ 18
n.6, 208 P.3d 1058 (stating that parental termination hearings are
civil in nature); State v. Hudecek, 965 P.2d 1069, 1071 (Utah Ct.
App. 1998) (stating that probation revocation proceedings are
civil in nature). We do not address whether and to what extent
plain error review should apply in such cases.

20191079-CA                     23                 2022 UT App 23
                        Kelly v. Timber Lakes

liberty interests at stake in criminal cases. 11 See United States v.
Courtney, 816 F.3d 681, 683 (10th Cir. 2016) (recognizing the
higher interests at stake in criminal cases); Deppe v. Tripp, 863
F.2d 1356, 1364 (7th Cir. 1988) (“In civil cases where economic
and property interests are usually at stake, as opposed to
criminal cases where more substantial liberty interests are
involved, a plain error doctrine is unneeded.”).

¶43 Furthermore, the application of plain error review in
ordinary civil cases prejudices the faultless party, who is then
obliged to bear the additional financial burden of briefing the
issues on appeal and dealing with a possible remand for a new

11. For this reason, many of the jurisdictions that apply plain
error review in the civil context apply a stricter standard of
review to civil cases than to criminal cases. See, e.g., United States
v. Courtney, 816 F.3d 681, 683 (10th Cir. 2016) (“We recognize that
in all cases, the burden of establishing plain error lies with the
appellant, however this burden is extraordinary and nearly
insurmountable in civil cases.”) (quotation simplified); C.B. v.
City of Sonora, 769 F.3d 1005, 1016 (9th Cir. 2014) (“[T]he plain
error standard of review in the civil context is similar to, but
stricter than, the plain error standard of review applied in
criminal cases.”); Deppe v. Tripp, 863 F.2d 1356, 1362 (7th Cir.
1988) (stating that plain error review may be available in civil
cases “if a moving party can demonstrate (1) that exceptional
circumstances exist, (2) that substantial rights are affected, and
(3) that a miscarriage of justice will result if the doctrine is not
applied”) (emphasis in original); Wittenbrook v. Electronics
Recycling Services, Inc., 104 N.E.3d 876, 885 (Ohio Ct. App. 2018)
(“In appeals of civil cases, the plain error doctrine is not favored
and may be applied only in the extremely rare case involving
exceptional circumstances where error, to which no objection
was made at the trial court, seriously affects the basic fairness,
integrity, or public reputation of the judicial process, thereby
challenging the legitimacy of the underlying judicial process
itself.”) (quotation simplified).

20191079-CA                      24                2022 UT App 23
                       Kelly v. Timber Lakes

trial or other proceeding so that their opponent might be
relieved of an error the opponent’s attorney could have raised at
the time it occurred. See Deppe, 863 F.2d at 1361 (“Requiring a
non-erring party to bear the burden of his opponent’s errors may
not be reasonable in many circumstances and in fact may
constitute a miscarriage of justice.”). This reasoning is squarely
in line with the American system of litigation, under which “a
party voluntarily chooses her attorney and therefore is generally
bound by the acts or omissions of his or her attorney.” Menzies v.
Galetka, 2006 UT 81, ¶ 76, 150 P.3d 480. Indeed, having
voluntarily chosen its attorney, a party cannot “avoid the
consequences of the acts or omissions of this freely selected
agent” by claiming that doing so “imposes an unjust penalty on
the client,” Link v. Wabash R.R. Co., 370 U.S. 626, 633–34 (1962),
especially where alleviation of the “penalty” would impose a
financial burden on the other party.

¶44 For the foregoing reasons, we hold that plain error review
is not available in ordinary civil cases unless expressly
authorized by rule. Accordingly, because no rule allows such a
review in this case, we have no occasion to address Kelly’s
argument, raised for the first time on appeal, that Timber Lakes
lacked statutory and contractual authority to conduct a
nonjudicial foreclosure of the Property.

                 II. Validity of the Trustee’s Sale

¶45 “When title to real property is at issue, the need for
finality is at its apex.” Bank of Am. v. Adamson, 2017 UT 2, ¶ 17,
391 P.3d 196 (quotation simplified). For this reason, “once a
trustee sale is completed,” and the trustee conveys a deed to the
successful bidder, “the remedy of setting aside the sale will be
applied only in cases which reach unjust extremes.” Id. ¶ 20
(quotation simplified).

¶46 “[T]here are three categories of deeds: void, voidable, and
valid.” Id. A deed is void ab initio if it violates public policy.
Id. ¶ 21. In such cases, the deed “cannot be ratified or accepted,

20191079-CA                     25                    2022 UT App 23
                        Kelly v. Timber Lakes

and anyone can attack its validity in court.” Id. ¶ 20 (quotation
simplified). To establish that a deed is void, the challenging
party must make “a showing free from doubt that the [deed] is
against public policy.” Ockey v. Lehmer, 2008 UT 37, ¶ 21, 189
P.3d 51 (quotation simplified). And in determining whether a
deed is against public policy, courts look to the following two
factors: “1) legislative statements of public policy, and
2) whether the conveyance ‘harmed the public as a whole.’”
Adamson, 2017 UT 2, ¶ 21 (quoting Ockey, 2008 UT 37, ¶¶ 19,
23-24).

¶47 A deed is voidable when “the interests of the debtor were
sacrificed or there was some attendant fraud or unfair dealing.”
Id. ¶ 22 (quotation simplified). “A voidable deed is valid against
the world, because only the injured party has standing to ask the
court to set it aside.” Id. ¶ 20 (quotation simplified). But absent
“evidence of fraud or other unfair dealing, the [debtor] is
required to show he suffered prejudice from some defect in the
sale,” id. ¶ 23, and must also “establish a causal connection
between the defect and the prejudice,” id. ¶ 24. Furthermore,
unless the debtor challenges the sale before title passes into the
hands of a bona fide purchaser, id. ¶ 25, “the only remedy left to
a [debtor] under a voidable deed is damages from the party
causing the injury,” id. ¶ 26.

¶48 Finally, if a deed “results from only inconsequential
errors that do not affect the validity of the sale,” i.e., errors that
do not prejudice the debtor, the deed is valid and may not be set
aside. See id. ¶¶ 20, 24.

¶49 Kelly argues that the district court erred in determining
that the premature recordation of the Notice of Trustee’s Sale did
not render the sale of the Property void. Specifically, Kelly
points out, a trustee is statutorily required to wait “at least three
months” between recording a notice of default and recording a
notice of sale. See Utah Code Ann. § 57-1-24 (LexisNexis 2020).
This provides the trustor a “statutory right to cure the default,
which . . . must be exercised during the three-month grace

20191079-CA                      26                2022 UT App 23
                       Kelly v. Timber Lakes

period before a trustee’s sale is held.” Adamson, 2017 UT 2, ¶ 16
(quotation simplified). But here, the trustee recorded the Notice
of Default on May 2, 2016, and recorded the Notice of Trustee’s
Sale in early July 2016—approximately one month short of the
requisite three-month waiting period.

¶50 Kelly argues that the early recordation of the Notice of
Trustee’s Sale violated public policy because “the legislature
imposed certain ‘obligations’ and ‘restrictions’” on parties
electing to proceed with nonjudicial foreclosures to protect the
debtor. And, he asserts, “[t]he law is clear that a three-month
grace period must be provided before a trustee’s sale is held.”
Although Kelly correctly states the purpose behind the
procedural requirements for trustee’s sales, we disagree that the
premature recordation of the Notice of Trustee’s Sale rises to the
level of violating public policy.

¶51 “The detailed procedural requirements for a trustee’s sale
of real property are intended to protect the debtor/trustor,” and
“the objective of the notice requirements is to protect the rights
of those with an interest in the property to be sold.”
Occidental/Nebraska Fed. Savings Bank v. Mehr, 791 P.2d 217, 220
(Utah Ct. App. 1990) (quotation simplified). But a failure to
adhere to procedural requirements does not automatically rise to
the level of a public policy violation. Our Supreme Court has
held that “failure of the trustee to strictly comply with the
statutory requirements of the Trust Deed Act” renders the deed
issued following the nonjudicial foreclosure sale at most
voidable, and the debtor is still required to show prejudice and
“a causal connection between the defect and the prejudice”
before the deed will be set aside. Adamson, 2017 UT 2, ¶ 24. See
Timm v. Dewsnup, 2003 UT 47, ¶ 37, 86 P.3d 699 (“Whatever
irregularities [the debtor] may allege in the technicalities of the
notice requirement, they are immaterial if she does not
demonstrate that she was unable to protect her interests, or if
there were a resulting effect of chilling the bidding and causing
an inadequacy of price.”) (quotation simplified).

20191079-CA                    27                2022 UT App 23
                        Kelly v. Timber Lakes

¶52 Kelly contends that the trustee’s failure to wait the full
three-month period is not a mere technical violation. Indeed, he
asserts that “the assumption that the trustor would use this full
time was the basis for the Utah Supreme Court holding that in
most cases a trustee’s deed cannot be voided for ‘technical
defects’ in the foreclosure process after the foreclosure sale.” In
support of this contention, he points to the Court’s statement
that the requirement “that a trustor assert her rights before the
trustee’s sale . . . is consistent with the statutory right to cure the
default, which also must be exercised during the three-month
grace period before a trustee’s sale is held.” Adamson, 2017 UT 2,
¶ 16 (quotation simplified). He further asserts that if failure to
adhere to the prescribed timeframe were not against public
policy, there would be “nothing to constrain the [sale] of
property by reducing the time period prescribed by [the] Utah
Trust Deed Act by 40 days or even 60 days” and that “the notice
could arguably then be slashed to 24 hours.” We disagree.

¶53 Where irregularities in the procedure are at issue, absent
“exceptional circumstances, the proper remedy is to seek an
injunction prior to a sale, which allows a debtor to challenge
irregularities and protect her rights before the sale is completed
and a trustee’s deed is executed and delivered to the purchaser.”
Reynolds v. Woodall, 2012 UT App 206, ¶ 15, 285 P.3d 7. See
Adamson, 2017 UT 2, ¶ 16 (“A trustor may by acquiescence and
failure to assert his rights at the proper time be estopped to set
up irregularities in the foreclosure proceedings to defeat rights
of the purchaser.”) (quotation simplified). We would thus agree
with Kelly that a deed violates public policy if the three-month
period is reduced to such a degree as to amount to an
exceptional circumstance, meaning the trustor, once notified,
lacked a reasonable time in which to enjoin the foreclosure. See
RJW Media, Inc. v. CIT Group/Consumer Fin., Inc., 2008 UT App
476, ¶ 30, 202 P.3d 291 (stating that “the trial court should have
concluded that [the] trustee’s sale was void” because the trustee
conducted a sale after it issued a notice of cancellation of a
previously scheduled sale and conducted the newly scheduled
sale without issuing a new notice of default and providing a new

20191079-CA                      28                 2022 UT App 23
                       Kelly v. Timber Lakes

three-month wait period). This approach balances the competing
legislative    purposes       of   protecting    the    debtor, see
Occidental/Nebraska, 791 P.2d at 220 (“The detailed procedural
requirements for a trustee’s sale of real property are intended to
protect the debtor/trustor.”) (quotation simplified), and the need
for finality in transactions involving title to real property, see
Adamson, 2017 UT 2, ¶ 17 (“When title to real property is at issue,
the need for finality is at its apex.”) (quotation simplified).

¶54 Here, following a bench trial, the district court specifically
found, and we quote:

          •   Aside from making contact with Timber
              Lakes and its legal counsel and asking them
              to postpone the sale, [Kelly] took no
              affirmative action to enjoin the trustee’s sale.

          •   Mr. Kelly testified at the trial that he had
              family and friends who were available to
              him to either help him provide evidence of
              his claimed payments or to present payment
              to Timber Lakes. He chose not to have them
              do so.

          •   Mr. Kelly could have tendered payment,
              reserving his rights to challenge Timber
              Lakes’ position as to nonpayment, [thereby]
              preventing the sale from proceeding.

          •   During his communications with Timber
              Lakes, Mr. Kelly made reference to having
              counsel, but he did not instruct counsel to
              act on his behalf to seek to enjoin the
              trustee’s sale.

Based on these findings, which Kelly does not challenge on
appeal, it is clear that the early recordation of the Notice of

20191079-CA                     29                 2022 UT App 23
                        Kelly v. Timber Lakes

Trustee’s Sale was not so premature as to prevent Kelly from
acting to protect his interests in the Property.

¶55 This court addressed a similar situation in
Occidental/Nebraska. In that case, the trustee recorded an
amended notice of default on September 9, 1985, to correct an
omission of three lots in the original notice’s property
description, which it had recorded approximately six weeks
earlier. See 791 P.2d at 218–19. The trustee mailed a notice of
trustee’s sale on November 13—approximately one month short
of the 3-month waiting period. See id. at 219. Following sale of
the property, the trustee, dissatisfied with the price it paid at its
own sale, moved to set the sale aside as invalid on the ground
that “only two months elapsed from the filing of the amended
notice of default until the notice of the . . . sale was sent.” See id.
This court first determined that although the original notice of
default failed to include three lots in the property description,
the original notice nonetheless met the statutory requirements
and “was sufficient to alert those with an interest in the trust
property of impending foreclosure.” Id. at 220. Alternatively, the
court held that although the notice of the trustee’s sale was sent
only two months after the amended notice of default, “the only
kinds of defects in the notice of a foreclosure sale that will justify
a renunciation of the sale are those that would have the effect of
chilling the bidding and causing an inadequacy of price.” Id. at
221 (quotation simplified). And although the trustee “failed to
comply strictly with the procedural requirements that should
precede a trustee’s sale[,] . . . the steps taken afforded all parties
the rights and protections the statutory requirements for a
nonjudicial foreclosure were intended to ensure.” Id.

¶56 Kelly contends that Occidental/Nebraska is distinguishable
from the present case because “[i]n that case, the property owner
had the full ‘protection period’ prior to sale on the property.”
Specifically, he points to this court’s holding that the original
notice of sale—sent more than three months prior to the second
notice of sale—served as sufficient notice to the trustors. See id. at
220. Kelly is correct in that regard, but as described above, this

20191079-CA                      30                 2022 UT App 23
                      Kelly v. Timber Lakes

court alternatively held that although the notice of sale was sent
prematurely, this defect in the notice did not justify setting the
sale aside absent a showing of prejudice. See id. at 221. By so
holding, this court necessarily determined that an inadequate
wait-period rendered the trustee’s deed at most voidable—not
void ab initio, as Kelly asserts.

¶57 For these reasons, we conclude that the premature
recordation of the Notice of Trustee’s Sale was not against public
policy and thus the trustee’s deed of sale was not void ab initio.
The deed is at best voidable, but because Kelly does not
challenge on appeal the district court’s holding that the deed
was not voidable, we have no occasion to further consider
Kelly’s challenge to the deed based on the insufficient
wait-period.

                       III. First to Breach

¶58 The governing documents of a homeowners association,
including the recorded CC&Rs and bylaws, “constitute a
contract between the association and the property owners.”
Swan Creek Homeowners Ass’n v. Warne, 2006 UT 22, ¶ 44, 134
P.3d 1122. See Workman v. Brighton Props., Inc., 1999 UT 30, ¶ 10,
976 P.2d 1209 (“Recorded restrictive covenants are enforceable
against property owners who purchased land subject to those
covenants.”) (quotation simplified). And under the first to
breach rule, “a party first guilty of a substantial or material
breach of contract cannot complain if the other party thereafter
refuses to perform” and “can neither insist on performance by
the other party nor maintain an action against the other party for
a subsequent failure to perform.” Backbone Worldwide Inc. v.
LifeVantage Corp., 2019 UT App 80, ¶ 25, 443 P.3d 780 (quotation
simplified).

¶59 At trial, Kelly argued that because Timber Lakes failed to
wait the requisite three months before recording the Notice of
Trustee’s Sale, Timber Lakes was the first to breach the contract.
Accordingly, he contended “that he was excused from paying

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                       Kelly v. Timber Lakes

the dues that Timber Lakes alleged were due and owing.” The
district court rejected this argument, stating that Kelly’s
“argument ignores the reason for the Notice of Default . . . and
the Notice of Trustee’s Sale in the first place”—that Kelly “had
failed to pay his homeowners’ dues.” The court held that Kelly’s
“failure would constitute a breach of contract which would be
first in time before any of the actions taken by Timber Lakes.”

¶60 Kelly contends that, “[i]n fact, exactly the opposite is
true.” Namely, he asserts that he “was excused from failing to
pay all assessments owed by August 18, 2016, the date of the
trustee’s sale, because Timber Lake[s] had breached its contract
in its failure to provide Kelly with additional time to pay the
assessments that were owed, or challenge the trustee’s [sale].”
He explains that “the terms of the agreement . . . included a
three-month cure period, in the event Timber Lakes commenced
a nonjudicial foreclosure proceeding” and that “Timber Lakes’
failure to give [him] enough time to pay his assessments excused
[his] failure to pay the delinquent assessment before the trustee’s
sale was held.” In support of his assertion that Timber Lakes had
a contractual duty to provide the full three-month wait-period,
Kelly points to, among other things, Timber Lakes’ bylaws,
which provide that “[i]t shall be the duty of the Board of
Directors . . . [t]o supervise all officers, agents and employees of
[Timber Lakes] and to see that their duties are properly
performed.” Kelly states that the board’s duty to supervise
extended to ensuring that those conducting the nonjudicial
foreclosure on the Property complied with the governing
statutes.

¶61 But, as applicable here, the CC&Rs and bylaws permit
Timber Lakes to foreclose as a remedy for past due assessments.
Both documents obligate property owners to pay annual and
special assessments. They further provide that for assessments
that are more than 90 days past due, Timber Lakes “may bring
an action at law against the Owner personally obligated to pay
the same or foreclose the lien against the property.” Thus,

20191079-CA                     32                2022 UT App 23
                       Kelly v. Timber Lakes

foreclosure as a means to collect on past due assessments is a
contractual remedy invoked in response to Kelly’s prior breach.

¶62 Kelly correctly asserts that he had a “statutory right to
cure the default, which . . . must be exercised during the
three-month grace period before a trustee’s sale is held,” see Bank
of Am. v. Adamson, 2017 UT 2, ¶ 16, 391 P.3d 196 (quotation
simplified), but this right was triggered only after Timber Lakes
initiated nonjudicial foreclosure proceedings as a remedy for his
existing breach in failing to pay assessments. Indeed, the
three-month period is provided specifically for the purpose of
curing an already existing default or breach. See id. Thus, any
missteps undertaken during the foreclosure process occurred in
the context of Timber Lakes’ pursuit of a remedy in response to
Kelly’s initial breach. And Kelly does not cite any legal
authority, nor are we aware of any, supporting the proposition
that failure to properly execute a remedy, in and of itself,
constitutes a breach of contract. For this reason, Kelly’s
argument is unavailing. 12

12. Kelly also argues that Timber Lakes breached the implied
covenant of good faith and fair dealing (the covenant). “The
implied covenant of good faith and fair dealing . . . inheres in
every contract.” Backbone Worldwide Inc. v. LifeVantage Corp., 2019
UT App 80, ¶ 16, 443 P.3d 780 (quotation simplified). It
“prohibits the parties from intentionally injuring the other
party’s right to receive the benefits of the contract, and prevents
either party from impeding the other’s performance of his
obligations by rendering it difficult or impossible for the other to
continue performance.” Id. (quotation simplified).
   Kelly contends that Timber Lakes breached the covenant when
it “fail[ed] to grant Kelly’s request for additional time at the
August 17, 2016 Board meeting.” He asserts that because the
value of the Property far exceeded the past due assessment
amount and because Utah Code section 57-1-27 allowed Timber
Lakes to postpone the sale for up to 45 days without having to
                                                      (continued…)

20191079-CA                     33                2022 UT App 23
                         Kelly v. Timber Lakes

                          IV. Attorney Fees

¶63 Both Kelly and Timber Lakes challenge the district court’s
attorney fees award. Kelly argues that the court misapplied the
bad faith statute when it awarded Timber Lakes attorney fees
“incurred from the point of the court’s summary judgment
ruling through trial and post-trial briefing on the attorney’s fees
issue.” Timber Lakes cross-appeals, arguing that the court
erroneously declined to award pre-summary-judgment attorney
fees pursuant to the CC&Rs and bylaws. Finally, Timber Lakes
seeks an award of attorney fees on appeal. We address each
argument in turn.

A.     The Bad Faith Statute

¶64 The bad faith statute provides that “[i]n civil actions, the
court shall award reasonable attorney fees to a prevailing party
if the court determines that the action or defense to the action
was without merit and not brought or asserted in good faith[.]”
Utah Code Ann. § 78B-5-825(1) (LexisNexis 2018). The bad faith
statute “is narrowly drawn and not meant to be applied to all
prevailing parties in all civil suits.” In re Discipline of Sonnenreich,
2004 UT 3, ¶ 46, 86 P.3d 712 (quotation simplified). To that end, a
court must determine that an action or defense is both
“(1) without merit, and (2) not brought or asserted in good faith”
before awarding attorney fees under the statute. Id.

(…continued)
re-notice it, “Timber Lakes’ decision to deny that request was
arbitrary and capricious and/or in bad faith.” But merely
declining to exercise discretion in a breaching party’s favor does
not rise to the level of taking action to “render[] it difficult or
impossible for the other to continue performance.” Id. (quotation
simplified). Thus, Timber Lakes’ decision not to postpone the
sale for a second time did not violate the covenant.

20191079-CA                       34                 2022 UT App 23
                        Kelly v. Timber Lakes

¶65 An action or defense “is without merit if it is frivolous, is
of little weight or importance having no basis in law or fact, or
clearly lacks a legal basis for recovery.” Wardley Better Homes &
Gardens v. Cannon, 2002 UT 99, ¶ 30, 61 P.3d 1009 (quotation
simplified). “[A] finding of bad faith turns on a factual
determination of a party’s subjective intent.” Sonnenreich, 2004
UT 3, ¶ 49. “A party acts in bad faith when he brings an action
[or defense] and either (1) lacks an honest belief in the propriety
of the activities in question, (2) intends to take unconscionable
advantage of others, or (3) intends to or has knowledge of the
fact that his actions will hinder, delay, or defraud others.”
Wardley, 2002 UT 99, ¶ 29. Thus, an unmeritorious action may
still be “in good faith as long as there is an honest belief that it is
appropriate and as long as there is no intent to hinder, delay,
defraud, or take advantage of the other party.” Boyer v. Boyer,
2008 UT App 138, ¶ 24, 183 P.3d 1068 (quotation simplified).

¶66 Kelly argues that the district court’s finding of bad faith
was in error because the “[b]ad faith must be relevant or
material.” 13 Specifically, he contends that “the ‘forged receipt’
was of negligible significance to the issues raised at trial”
because even if he “had paid the $1,83[9] payment, Kelly still
would have owed assessments.” Instead, he asserts that his
theory at trial was that “Timber Lakes breached the contract first
by not giving him the time allowed by contract . . . to pay the
assessments.” Accordingly, he asserts that “essentially the same
trial would have been . . . held irrespective of the legitimacy of
the $1,83[9] payment.”

13. Kelly also claims that Timber Lakes “failed to meet its burden
that the claim lacks merit,” but he does not support this assertion
with any analysis or citation to authority. For this reason, he has
not carried his burden of persuasion on this issue, and we have
no occasion to address his challenge to the first prong of the bad
faith statute. See Bank of Am. v. Adamson, 2017 UT 2, ¶ 13, 391
P.3d 196.

20191079-CA                      35                 2022 UT App 23
                        Kelly v. Timber Lakes

¶67 This is at odds with the district court’s view of the trial’s
necessity. In its order, the court specifically stated that Timber
Lakes was entitled to attorney fees incurred from the point “the
case continued solely because Kelly continued to maintain that
he had paid the homeowners’ association fees at issue in this
case.” The court stated that Timber Lakes would not have been
entitled to attorney fees under the bad faith statute had the case
ended when the court concluded on summary judgment that the
trustee’s deed was neither void nor voidable. But “Kelly
continued to assert the payment of his HOA Fees in bad faith,”
the court determined, based on its finding that Kelly had forged
the receipt on which he relied at trial. 14 The court further stated
that “[t]he question of whether Kelly paid the HOA Fees or not
was central to the breach of contract issue and the breach of duty
[of] good faith and fair dealing.” First, “because if he had not
paid, he was the first-breaching party and would not be entitled
to relief.” And second, “with respect to the procedures being a
potential breach of the contract documents, again, if he did not
pay, he could not rely upon that because he was the first
breaching party.”

¶68 In any event, we review a district court’s finding of bad
faith for clear error. See Fadel v. Deseret First Credit Union, 2017
UT App 165, ¶ 16, 405 P.3d 807. Under that standard, “this court
will affirm a finding of bad faith when there is sufficient
evidence in the record to support a finding” of bad faith. Id. ¶ 35
(quotation simplified). See Jensen v. Cannon, 2020 UT App 124,

14. The bad faith statute refers to a party not bringing an action or
defense in good faith. See Utah Code Ann. § 78B-5-825(1)
(LexisNexis 2018). The district court here did not conclude that
the action was not brought in good faith. Instead, it determined
that the action was not continued in good faith after summary
judgment was awarded to Timber Lakes. Because Kelly does not
challenge the application of the statute under these
circumstances, we assume, without deciding, that the bad faith
statute applies if the elements are otherwise met.

20191079-CA                     36                 2022 UT App 23
                         Kelly v. Timber Lakes

¶ 44, 473 P.3d 637 (“We . . . will reverse [a court’s bad faith]
finding only if it is against the clear weight of the evidence or we
otherwise reach a firm conviction that a mistake has been
made.”) (quotation simplified). Moreover, “because the good
faith element implicates fact-intensive questions about the losing
party’s subjective intent, a lower court’s finding on this element
typically will be afforded a substantial measure of discretion.”
Linebaugh v. Gibson, 2020 UT App 108, ¶ 23, 471 P.3d 835
(quotation simplified).

¶69 Here, the district court’s finding of Kelly’s bad faith was
based on his submission of a forged receipt at trial. Thus, even
assuming that “essentially the same trial would have been . . .
held irrespective of the legitimacy of the $1,83[9] payment” as
Kelly asserts, the relevancy of the forged receipt went toward
Kelly’s subjective intent in pursuing the remaining claims that
were not dismissed on summary judgment. And Utah appellate
courts have repeatedly held that a party’s proffer of untruthful
evidence is sufficient to pass clear error review of a bad faith
finding. See Wardley, 2002 UT 99, ¶ 29 (“Wardley automatically
lacked an honest belief in the propriety of bringing a suit to
collect a commission under a fraudulently-obtained listing
agreement.”); Topik v. Thurber, 739 P.2d 1101, 1104 (Utah 1987)
(“[T]he trial court’s findings that defendant’s defense was
partially in bad faith and that his testimony constituted ‘willful
falsehoods’ support the court’s decision to award attorney fees
in this case, and in accordance with the applicable standard of
review, we do not disturb those findings.”) (footnote omitted);
Blum v. Dahl, 2012 UT App 198, ¶ 13, 283 P.3d 963 (“The trial
court’s belief that [the plaintiff] testified untruthfully is sufficient
to support a finding of bad faith, and we will not disturb it on
appeal.”) (quotation simplified); Gallegos v. Lloyd, 2008 UT App
40, ¶ 17, 178 P.3d 922 (same).

¶70 Accordingly, we conclude that the district court did not
clearly err in finding that Kelly proceeded to trial on his
remaining claims in bad faith.

20191079-CA                       37                 2022 UT App 23
                       Kelly v. Timber Lakes

B.     The CC&Rs and Bylaws

¶71 In its cross-appeal, Timber Lakes asserts that under the
CC&Rs and bylaws, it is contractually entitled to the remaining
attorney fees it incurred in this litigation. “If the legal right to
attorney fees is established by contract, Utah law clearly requires
the court to apply the contractual attorney fee provision and to
do so strictly in accordance with the contract’s terms.” Express
Recovery Services Inc. v. Olson, 2017 UT App 71, ¶ 8, 397 P.3d 792
(quotation simplified). Additionally, “we interpret the
provisions of [governing documents] as we would a contract.”
View Condo. Owners Ass'n v. MSICO, LLC, 2005 UT 91, ¶ 21, 127
P.3d 697.

¶72 Under the CC&Rs, each property owner within Timber
Lakes Estates “is deemed to covenant and agree to pay to”
Timber Lakes annual and special assessments, both of which,
“together with interest, costs and reasonable attorney fees shall
be a charge on the land and shall be a continuing lien upon the
property against which each assessment is made.” The CC&Rs
further provide that Timber Lakes “may bring an action at law
against the Owner personally obligated to pay the [assessments]
or foreclose the lien against the property.” Similarly, Timber
Lakes’ bylaws provide,

       Any assessments which are not paid when due
       shall be delinquent. If the assessment is not paid
       within ninety (90) days after the due date, . . .
       [Timber Lakes] may bring an action at law against
       the Owner personally obligated to pay the same or
       foreclose the lien against the property; and interest,
       costs and reasonable attorney fees of any such
       action shall be added to the amount of such
       assessment.

The district court denied Timber Lakes’ request for attorney fees
incurred prior to the summary judgment phase under the
CC&Rs and bylaws, stating that the documents “are drafted to

20191079-CA                     38                2022 UT App 23
                        Kelly v. Timber Lakes

apply to collection efforts up to and including foreclosure,”
which fees Timber Lakes already recovered via foreclosure.

¶73 Timber Lakes asserts that because its “various claims and
defenses all hinged on validating the prior foreclosure and
establishing that Kelly did in fact fail to pay his annual
assessments,” its efforts in this case were “essentially a collection
action to retain the funds it had recovered to pay Kelly’s unpaid
fees.” And “[i]n that respect, [its] counterclaim is ‘an action at
law against [an] Owner personally obligated to pay’ annual
assessments.” It further argues that “the counterclaim also
involves efforts to ‘foreclose the lien against’ Kelly’s property”
because “had Kelly prevailed on his claims, the foreclosure sale
would have been declared invalid, and he would have regained
title to the property.” And “[h]ad Kelly complied with the
proper procedure” of seeking an injunction prior to the trustee’s
sale, “it would have allowed [Timber Lakes] prior to the Sale to
seek fees and costs for litigating Kelly’s foreclosure defenses and
allegations relating to unpaid assessments.”

¶74 But the CC&Rs and bylaws do not contain language
creating a contractual right to attorney fees for “any action
arising from” the aforementioned collection efforts, or
something similar. Instead, the attorney fee provisions in the
governing documents are strictly limited to collection efforts on
past due assessments, either through initiating an action against
the owner or through foreclosing on the owner’s property.
Indeed, the provisions grant the right to attorney fees only in
collection actions or foreclosure proceedings specifically initiated
as a result of assessments being more than 90 days past due. The
documents are entirely silent as to attorney fees in actions that
arise after the aforementioned actions or foreclosure proceedings
are completed, as was the case here. For this reason, because
courts must “apply the contractual attorney fee provision . . .
strictly in accordance with the contract’s terms,” Express Recovery
Services, 2017 UT App 71, ¶ 8 (quotation simplified), the district
court did not err in denying Timber Lakes’ request for additional
attorney fees based on the CC&Rs and bylaws.

20191079-CA                     39                 2022 UT App 23
                      Kelly v. Timber Lakes

C.    Attorney Fees on Appeal

¶75 Lastly, Timber Lakes requests an award of attorney fees
incurred on appeal. “Generally, when a party who received
attorney fees below prevails on appeal, the party is also entitled
to fees reasonably incurred on appeal.” Fadel v. Deseret First
Credit Union, 2017 UT App 165, ¶ 38, 405 P.3d 807 (quotation
simplified). This principle likewise “applies when the basis for
attorney fees in the trial court is the bad faith statute.” Id.
(quotation simplified). Accordingly, because Timber Lakes was
awarded attorney fees below for defending against, as relevant
here, Kelly’s first-to-breach argument and claim for breach of the
covenant, we grant Timber Lakes’ request, but limit the award to
attorney fees reasonably incurred in defending the district
court’s holdings on those two issues.

                         CONCLUSION

¶76 We affirm the district court in every respect and remand
for the sole purpose of calculating an award for Timber Lakes’
attorney fees reasonably incurred on appeal in addressing
Kelly’s first-to-breach and implied covenant of good faith and
fair dealing arguments.

20191079-CA                    40               2022 UT App 23