Court Opinion

ID: 5136762
Source: CourtListenerOpinion
Date Created: 2021-12-20 23:18:04.975836+00
Date Added: 2024-06-11T08:23:57.358107
License: Public Domain

2021 UT App 105

               THE UTAH COURT OF APPEALS

            GREG DANIELS AND SHARON K. DANIELS,
               Appellees and Cross-appellants,
                             v.
            DEUTSCHE BANK NATIONAL TRUST AND
                OCWEN LOAN SERVICING LLC,
               Appellants and Cross-appellees.

                            Opinion
                        No. 20190693-CA
                      Filed October 7, 2021

        Third District Court, Silver Summit Department
               The Honorable Kent R. Holmberg
                         No. 160500166

      Steven W. Dougherty and Jason E. Greene, Attorneys
              for Appellees and Cross-appellants
          R. Spencer Macdonald and Benjamin J. Mann,
          Attorneys for Appellants and Cross-appellees

JUDGE MICHELE M. CHRISTIANSEN FORSTER authored this Opinion,
 in which JUDGES RYAN M. HARRIS and DIANA HAGEN concurred.

CHRISTIANSEN FORSTER, Judge:

¶1      Deutsche Bank National Trust and Ocwen Loan Servicing
LLC (individually, Deutsche and Ocwen; collectively, Bank)
attempted to foreclose on a house owned by Greg and Sharon K.
Daniels (Homeowners) years after Homeowners defaulted on
their mortgage obligations. Homeowners brought suit,
contending that the statute of limitations had run on Bank’s right
to foreclose on the trust deed securing Homeowners’ loan. The
district court agreed with Homeowners, ruling that Bank’s right
to foreclose had been extinguished, quieting title in favor of
Homeowners, and awarding them attorney fees and costs. We
                     Daniels v. Deutsche Bank

affirm and remand for the calculation of fees and costs
Homeowners incurred on appeal.

                        BACKGROUND

¶2     In January 2007, Homeowners purchased a newly
constructed house (the Property) in Kamas, Utah. Homeowners
procured a loan of $333,000 (the Debt) from New Century
Mortgage Corporation (New Century) to finance their purchase.
The Debt was secured by a deed of trust (the Trust Deed)
naming Mortgage Electronic Registration Systems Inc. as the
beneficiary.

¶3     Greg Daniels, who was a real estate professional,
experienced a reduction in income due to the housing market
downturn, and by mid-2007, Homeowners had failed to make
some of the monthly payments on the Debt. Although
Homeowners had defaulted on the Debt, they continued to make
some full and partial payments between April 2007 and
November 2009. On September 25, 2008, the trustee recorded a
“Notice of Default & Election to Sell” on the Property. As a result
of the default notice, the Debt was accelerated and immediately
due in full. Despite the acceleration, New Century did not
schedule a trustee’s sale and undertook no immediate further
action to advance the foreclosure process.

¶4      Homeowners filed a bankruptcy petition on September
25, 2009, an action that stayed foreclosure proceedings. Saxon
Mortgage Services Inc. (Saxon), which in 2009 had been assigned
the servicing rights for the Debt, requested and was granted
relief from the automatic stay on October 21, 2009. Saxon then
assigned its right to service the Debt to Ocwen.

¶5    Homeowners’ obligation to pay the Debt was discharged
through bankruptcy in April 2010, resulting in Ocwen no longer
being able to enforce the Debt personally against Homeowners.
See National Fin. Co. of Utah v. Valdez, 359 P.2d 9, 10 (Utah 1961)
(“[A] discharge in bankruptcy is neither a payment nor the

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                    Daniels v. Deutsche Bank

extinguishment of debts. It is simply a bar to their enforcement
by legal proceedings.”).

¶6     After receiving notice of the change of servicers,
Homeowners wrote a letter to Ocwen on November 20, 2009,
explaining their financial hardship and requesting a
modification of the Debt. Along with the letter, Homeowners
submitted a hardship affidavit and additional financial
information on a form provided to them by Ocwen.

¶7     On February 16, 2010, Homeowners sought modification
of their Debt obligations through the federal Home Affordable
Modification Program (HAMP Plan). In documentation they
submitted in connection with the HAMP Plan, Homeowners
represented that they could not afford the mortgage payments
and were in default. The submitted documentation clearly
indicated that it concerned the mortgage and promissory note on
the Property; it contained repeated references to mortgage
payments, monthly loan payments, and delinquent amounts as
they concerned the Debt. Ocwen agreed to modify Homeowners’
Debt obligations upon Homeowners’ compliance with several
conditions. Under the proposed modification, Homeowners
agreed to a trial period during which they would be required to
make three monthly payments, which were about a thousand
dollars less than their original monthly payments, by February 1,
March 1, and April 1, 2010.

¶8     Homeowners made the first two payments on January 28
and February 25, but before they made the third, Ocwen notified
Homeowners that the trial plan was canceled and that they
would not be able to receive the HAMP Plan modification due to
tax-lien issues with the “mortgage title that prevent[ed]
acceptance into the program.” After being so notified,
Homeowners made no additional payments for the mortgage
modification. Thus, their last payment was made on February
25, 2010.

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                     Daniels v. Deutsche Bank

¶9     Homeowners sent three additional letters (dated
November 2010, April 2011, and October 2011) to Ocwen
explaining their financial hardship and seeking a mortgage
modification.

¶10 The November 2010 letter expressed that Homeowners
“want[ed] to keep [their] home” and “work with Ocwen” to that
end. Homeowners stated, “[W]e have been through bankruptcy
. . . and have been discharged from our debts, including Ocwen.”
Homeowners noted that the discharge of their debts would
“now make it easier to afford a modified mortgage.” They
requested of Ocwen, “Please review the information we have
provided, and help us stay in our home. We would welcome an
opportunity to mediate a new mortgage, and would be willing
to have an appraisal done, to help us both arrive at a fair value.”
New signed copies of the hardship affidavit and an Ocwen
financial form accompanied the letter.

¶11 The April 2011 letter recounted Homeowners’ financial
situation. Homeowners reiterated that while the Debt had been
“discharged in bankruptcy,” they hoped that “this attempt to
modify [their] mortgage” would allow them to stay in their
home. Homeowners also stated that this submission would be
their “last attempt” “for a mortgage modification.” Copies of
paystubs, financial statements, and income tax returns
accompanied the letter. An April 27, 2011 fax, only the cover of
which is in the record, purported to contain Homeowners’ recent
paystubs and was apparently submitted in connection with the
application for mortgage modification referenced in the April
2011 letter.

¶12 The October 2011 letter largely repeated what had been
set out in the April 2011 letter. Once again, Homeowners noted
that their mortgage obligation had been discharged in
bankruptcy. They further expressed that they had “submitted
multiple applications for a mortgage modification to Ocwen,
with no success so far,” but they nevertheless expressed hope

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                     Daniels v. Deutsche Bank

that “this attempt to modify” the mortgage would allow them
“to stay in [their] home.”

¶13 In January 2012, the beneficial interest in the Trust Deed
was transferred to Deutsche. In June 2014, Homeowners
appealed the denial of their mortgage modification. Ocwen
responded and explained (1) the reasons for the denial, (2) that
the Property had “a confirmed foreclosure sale date,”
and (3) that the “loan [was] not eligible for foreclosure
suspension because [Ocwen had] not received a recent
application.” Homeowners also formally requested and received
various documents so that they could conduct an audit of
the loan. Homeowners spoke with an Ocwen representative in
early July 2014 and said that Ocwen should “not be able”
to foreclose because of the bankruptcy and that they would be
open to a settlement for $80,000. On September 29, 2015, the
trustee recorded a new notice of default. This time, however, the
trustee recorded notice of a trustee’s sale. The notice was
published on April 5, 2016, and the sale was scheduled for
May 6, 2016.

¶14 In April 2016, Homeowners filed a complaint, followed by
an amended complaint a few days later, in which they sought a
declaratory judgment that the six-year statute of limitations had
run on Bank’s right to foreclose against the Property.
Homeowners also sought a decree quieting title to the Property
in their favor.

¶15 After a period of discovery, Homeowners filed a motion
for summary judgment (1) seeking a declaration that the statute
of limitations had run preventing foreclosure, (2) quieting title in
their favor, (3) directing Deutsche and Ocwen to reconvey the
Trust Deed to Homeowners, and (4) awarding Homeowners
attorney fees and costs. Bank filed its own motion for summary
judgment requesting that the district court determine that the
statute of limitations had not run and that it could foreclose on
the Property.

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                     Daniels v. Deutsche Bank

¶16 On May 3, 2016, the parties stipulated that any
“unexpired . . . statute of limitations or statute of repose
applicable to claims relating to the enforcement” of the Trust
Deed as identified in Homeowners’ amended complaint was
“tolled as of the date of filing” the complaint.

¶17 In May 2017, after full briefing and oral argument, the
district court entered an order granting in part Homeowners’
motion for summary judgment. The court concluded that the
“statute of limitations applicable” to Bank’s right to foreclose
was “established by the version of Utah Code Ann. § 57-1-34 that
was in effect at the time this action was commenced.” That
statute read as follows:

       The trustee’s sale of property under a trust deed
       shall be made, or an action to foreclose a trust deed
       as provided by law for the foreclosure of
       mortgages on real property shall be commenced,
       within the period prescribed by law for the
       commencement of an action on the obligation
       secured by the trust deed.

Utah Code Ann. § 57-1-34 (LexisNexis 2010).1 Thus, the
court concluded that to timely foreclose on the Property,
Bank needed to take the necessary foreclosure action—either
completion of a nonjudicial foreclosure sale or initiation of
a judicial foreclosure action—within the time period provided

1. The current version of the statute, effective May 10, 2016,
requires only that, for nonjudicial foreclosures, the filing of a
notice of default—rather than completion of a trustee’s sale—
happen within the limitations period: “A person shall, within the
period prescribed by law for the commencement of an action on
an obligation secured by a trust deed: (1) commence an action to
foreclose the trust deed; or (2) file for record a notice of default
under Section 57-1-24.” Utah Code Ann. § 57-1-34 (LexisNexis
Supp. 2020).

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                     Daniels v. Deutsche Bank

by the statute of limitations applicable to enforcement of the
Debt. And there was no doubt—based on either one of two
statutes, see id. § 78B-2-309 (2012); id. § 70A-3-118 (2009)—that
the applicable limitations period for a foreclosure action was six
years.2

¶18 But while the parties agreed that the applicable
limitations period was six years, they disagreed about when that
six-year limitations period started to run. Relevant to this
question is section 78B-2-113(1) of the Utah Code, which states as
follows:

2. The change in Utah Code section 78B-2-309 lends itself to
confusion in the context of this opinion. At the time relevant to
the events at issue, subsection (2) of the statute read as follows:
“An action may be brought within six years . . . upon any
contract, obligation, or liability founded upon an instrument in
writing . . . .” Utah Code Ann. § 78B-2-309(2) (LexisNexis 2012).
But as of May 2019, the language of subsection (2) was entirely
replaced with the following language:
       For a credit agreement, as defined in Section 25-5-4,
       the six-year period described in Subsection (1)
       begins the later of the day on which: (a) the debt
       arose; (b) the debtor makes a written
       acknowledgment of the debt or a promise to pay
       the debt; or (c) the debtor or a third party makes a
       payment on the debt.
Id. (Supp. 2021). To be clear, the current iteration of subsection
(2) is not relevant to this opinion except insofar as it is apt to
cause confusion, not in small part owing to its striking similarity
to Utah Code section 78B-2-113(1), which does play a central part
in this opinion. See id. § 78B-2-113(1) (LexisNexis 2018). The
relevant version of subsection (2) remains codified at Utah Code
section 78B-2-309(1)(b). See id. § 78B-2-309(1)(b) (LexisNexis
Supp. 2021).

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                      Daniels v. Deutsche Bank

       An action for recovery of a debt may be brought
       within the applicable statute of limitations from the
       date: (a) the debt arose; (b) a written
       acknowledgment of the debt or a promise to pay is
       made by the debtor; or (c) a payment is made on
       the debt by the debtor.

See id. § 78B-2-113(1) (2018). Relying on this statute, read in
conjunction with section 78B-2-309, see id. § 78B-2-309(2) (2012)
(“An action may be brought within six years . . . upon any
contract, obligation, or liability founded upon an instrument in
writing . . . .”), Homeowners argued that the six-year period
began running on the date they made their last payment on the
Debt, namely, February 25, 2010. Thus, Homeowners asserted,
“Since a trustee’s sale of the Property did not occur within six
years of [Homeowners’] last payment, [Bank was] barred from
taking any further action to enforce the Trust Deed.”

¶19 Bank took a different view and made four arguments in
response. First, relying on Utah Code section 70A-3-118(1), see id.
§ 70A-3-118(1) (2009) (“[A]n action to enforce the obligation of a
party to pay a note payable at a definite time must be
commenced within six years after the due date or dates stated in
the note or, if a due date is accelerated, within six years after the
accelerated due date.”), it argued that each monthly installment
Homeowners made on the Debt constituted a separate obligation
with its own six-year statute of limitations. Second, it argued
that the statute of limitations would not begin to run until the
maturity of the note for the Debt, which it identified as February
1, 2037. Third, it argued that the six-year limitations period
restarted with each notice of default. Fourth, it pointed to section
78B-2-113 and argued in the alternative that Homeowners had
made “a written acknowledgement of the debt and/or promise to
pay the debt,” resulting in “the statute of limitation [beginning]
to run anew.” “Thus,” Bank argued, “even under Homeowners’
interpretation of applicable law, [Bank had] six years from the
date of [the October 2011 letter] to foreclose.”

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                     Daniels v. Deutsche Bank

¶20 After considering the parties’ arguments, the court
concluded that the applicable limitations period began to run
“from the latest event described” in section 78B-2-113(1),
namely, the date on which (1) the Debt arose, (2) Homeowners
made written acknowledgment of or promise to pay the Debt, or
(3) Homeowners made a payment on the Debt. The court
rejected Bank’s argument that Homeowners’ communications
with Ocwen regarding loan modification constituted written
acknowledgment that would renew the limitations period of the
Debt. Addressing the October 2011 letter, see supra ¶ 12, the court
observed that the letter did not “specifically acknowledge the
[D]ebt” but instead stated “that the [D]ebt at issue had been
discharged in bankruptcy.” The court went on to conclude that
(1) Homeowners’ “purpose in sending the letter was to seek a
modification of their mortgage in order to stay in their home,”
(2) “[s]eeking to modify a mortgage is not equivalent to
acknowledging a debt or promising to pay a debt,” and
(3) seeking to modify a mortgage to prevent foreclosure “does
not renew the statute of limitation commencement date under”
section 78B-2-113.

¶21 Thus, the court determined “that the six-year statute of
limitations . . . began to run on the date of [Homeowners’] final
payment towards the [D]ebt, which was February 25, 2010.” The
court therefore concluded that “pursuant to Utah Code Ann.
§ 57-1-34, the statute of limitations [expired] on February 25,
2016,” and with its passing, Bank’s “right to enforce the Trust
Deed through a trustee’s sale or judicial foreclosure action” had
also expired.

¶22 The court also rejected an equitable estoppel argument
advanced by Bank. “[T]o support an equitable estoppel defense,”
the court explained that Bank

      must prove three things: (1) a statement,
      admission, act, or failure to act by one party
      inconsistent with a claim later asserted;
      (2) reasonable action or inaction by the other party,

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      taken on the basis of the first party’s statement,
      admission, act, or failure to act; and (3) injury to
      the second party that would result from allowing
      the first party to contradict or repudiate the
      statement, admission, act, or failure to act.

(Citing Baldassin v. Freeman, 2009 UT App 109U, para. 9.) The
court concluded that Bank had “failed to demonstrate any
inconsistency between the actions taken by [Homeowners]
during the limitations period and the position they [were] taking
in [the lawsuit].” In the court’s estimation, Homeowners’

      efforts to modify their mortgage in order to stay in
      their house was straight-forward and obvious.
      [They] did nothing to prevent [Bank] from rejecting
      [their] modification application and initiating a
      trustee’s sale or foreclosure action during the
      limitations [period]. There is no inconsistency
      between seeking a modification of a mortgage
      during the limitations period and asserting a
      statute of limitations defense after the limitations
      period has run. [Bank was] not lulled into inaction
      by [Homeowners’] pursuit of a mortgage
      modification.

Therefore, the court ruled that “equitable estoppel [did] not
weigh in here to prevent [Homeowners] from asserting a statute
of limitations bar on [Bank’s] right to” foreclose on the Property.

¶23 Even though the court determined that the statute of
limitations had run on Bank’s pursuit of foreclosure, it initially
rejected Homeowners’ request for quieting title to the Property
or, alternatively, requiring Bank to reconvey the Trust Deed.
However, after Homeowners filed a motion to reconsider, the
district court entered an order quieting title to the Property in
Homeowners’ favor. It reasoned that Bank no longer had an
interest in the Property because its beneficial interest—as

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                      Daniels v. Deutsche Bank

evidenced by the Trust Deed—could no longer be enforced.
Accordingly, the court concluded that Homeowners’ “claim to
title in the Property [was] superior to the Trustee’s claim,
because the Trustee no longer [had] any power to enforce the
Trust Deed.” Thus, because the Trust Deed was “ineffective but
remain[ed] a cloud on the title” and because Homeowners’
“claim and interest in the Property [was] superior” to Bank’s
interest, the court quieted title in Homeowners’ favor.

¶24 After final judgment was entered (1) declaring that the
statute of limitations had run on Bank’s ability to foreclose on
the Property and (2) quieting title in favor of Homeowners,
Homeowners filed a motion for attorney fees. Following briefing
and oral arguments, the court granted the motion and awarded
fees and costs in the amount of $95,523.04 to Homeowners. Bank
appeals.

             ISSUES AND STANDARDS OF REVIEW

¶25 Bank first contends that the district court erred in
determining that the statute of limitations had expired on its
right to foreclose on the Property. We review “[t]he application
of a statute of limitations . . . for correctness. But application of a
statute of limitations may also involve subsidiary factual
determinations, which we review in the light most favorable to
the non-moving party.” Moshier v. Fisher, 2019 UT 46, ¶ 6, 449
P.3d 145 (quotation simplified).

¶26 Bank next asserts that the court erred in quieting title to
the Property in Homeowners’ favor. “Determination of the
proper scope of a quiet title action presents a legal question that
we review for correctness.” Thatcher v. Lang, 2020 UT App 38,
¶ 21, 462 P.3d 397 (quotation simplified).

¶27 Lastly, Bank claims that the court erred in awarding
Homeowners their attorney fees. “Whether attorney fees are
recoverable in an action is a question of law, which we review

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                     Daniels v. Deutsche Bank

for correctness.” Valcarce v. Fitzgerald, 961 P.2d 305, 315 (Utah
1998).3

                            ANALYSIS

              I. Statute of Limitations on Foreclosure

A.     The statute of limitations started running with the last
       payment.

¶28 Under Utah law, the statute of limitations on the right to
foreclose on property pursuant to a deed of trust is tied to the
statute of limitations on the right to enforce the underlying debt
secured by the deed of trust. See Utah Code Ann. § 57-1-34
(LexisNexis 2010) (stating that foreclosure must be undertaken
“within the period prescribed by law for the commencement of
an action on the obligation secured by the trust deed”). The
statute of limitations for enforcement of an obligation secured by
a trust deed is six years. See id. § 70A-3-118 (2009); see also
Deleeuw v. Nationstar Mortgage LLC, 2018 UT App 59, ¶¶ 12–13,
424 P.3d 1075 (clarifying that the statute of limitations identified
in Utah Code section 70A-3-118(1) applies to foreclosure on a
trust deed). Because the statute of limitations for enforcement of
the underlying debt is six years, and because Utah law ties the
foreclosure limitations period to the debt-enforcement
limitations period, the applicable statute of limitations for
foreclosure actions is six years.

3. Homeowners also filed a motion asking us to strike Bank’s
reply brief on the grounds that it contains new arguments,
inaccurate and unsupported factual assertions, and an irrelevant
and immaterial argument. We deny this motion but note that we
have not relied on the challenged material contained in Bank’s
reply brief except insofar as to summarily reject Bank’s
exceptional-circumstances argument. See infra note 4.

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                     Daniels v. Deutsche Bank

¶29 The determinative questions in this case are when that
six-year period began to run, whether it was ever tolled or
restarted, and ultimately whether Bank’s right of foreclosure on
the Property is now time-barred. Prior to May 2016, Utah law
required that one of two actions be taken prior to expiration of
the six-year period: (1) completion of a “trustee’s sale of property
under a trust deed” or (2) the filing of “an action to foreclose a
trust deed.” See Utah Code Ann. § 57-1-34 (LexisNexis 2010); id.
amend. notes (Supp. 2020). Bank never completed a trustee’s sale
on the Property, and it did not commence any action for judicial
foreclosure. Thus, the resolution of this appeal hinges on
whether the limitations period on the Debt secured by the Trust
Deed ran before Bank completed a nonjudicial foreclosure sale
or initiated a judicial foreclosure on the Property. The district
court ruled that the limitations period began running on the date
of Homeowners’ last payment and expired six years later on
February 25, 2016, prior to the completion of a trustee’s sale.
Bank does not contest the district court’s conclusion that the six-
year limitations period began to run on February 25, 2010, when
Homeowners made their last payment. But Bank presents
several arguments to support its assertion that the statute of
limitations did not expire six years from that date but instead
was extended or tolled. We address these arguments in the
following sections.

B.     Homeowners did not acknowledge the Debt after the last
       payment.

¶30 A key issue on appeal, as noted by Bank during oral
argument, is whether the district court erred in determining that
various communications from Homeowners to Ocwen asking to
be considered for loan modification constituted written
acknowledgment of the Debt, even though it had been
discharged in bankruptcy.

¶31 Bank argues that Homeowners repeatedly acknowledged
the Debt when they sought mortgage relief from Ocwen.
Specifically, Bank asserts that Homeowners’ post-bankruptcy

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communications concerning mortgage modification, see supra
¶¶ 9–12, constituted written acknowledgment that they owed
and would pay the Debt. These communications, Bank argues,
“re-started the limitations period each time [Homeowners] sent
them.” Thus, by Bank’s reasoning, the six-year limitations period
repeatedly      re-started    with     Homeowners’        various
communications seeking mortgage modification because these
communications constituted written acknowledgment of the
Debt. We disagree.

¶32 To restart a statute of limitations, an acknowledgement of
a debt must be “clear, distinct, direct, unqualified, and
intentional.” See Wells Fargo Bank, NA v. Temple View Invs., 2003
UT App 441, ¶ 9, 82 P.3d 655; see also Salt Lake Transfer Co. v.
Shurtliff, 30 P.2d 733, 736 (Utah 1934) (“[N]othing short of a
distinct, direct, unqualified, and intentional admission of a
present, subsisting debt on which a party is liable will be
sufficient to take the obligation out of the statute and start it
running anew.”). Moreover, an acknowledgment “must be more
than a hint, a reference, or a discussion of an old debt; it must
amount to a clear recognition of the claim and liability as
presently existing.” See Beck v. Dutchman Coal. Mines Co., 269
P.2d 867, 870 (Utah 1954) (quotation simplified); accord Wells
Fargo, 2003 UT App 441, ¶ 9.

¶33 Contrary to Bank’s assertion, Homeowners never
acknowledged that they were still obligated to repay the Debt in
any of their communications in a “clear, distinct, direct,
unqualified, and intentional” manner. See Wells Fargo, 2003 UT
App 441, ¶ 9. Neither did Homeowners acknowledge that they
were “liable” for the Debt as “present” and “subsisting.” See Salt
Lake Transfer Co., 30 P.2d at 736. To the contrary, while
Homeowners certainly recognized that they had previously been
on the hook to repay their mortgage loan, in each
communication made to Ocwen after the bankruptcy
proceedings, they explicitly stated that the Debt had been
discharged in bankruptcy and that they were no longer
personally liable to repay it.

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                     Daniels v. Deutsche Bank

¶34 Bank counters by seeking to draw an equivalency
between Homeowners’ recognition of its continuing right to
foreclose on the Property and an acknowledgment of personal
liability on the Debt. But acknowledgement of a debt requires
more than recognizing a right to foreclose. “Debt has been
defined variously, but generally it is an obligation to pay a fixed
and certain sum of money. A debt is usually a monetary sum
that is owed to another.” Olsen v. Fair Co., 2016 UT App 46, ¶ 10,
369 P.3d 473 (quotation simplified). Thus, for Homeowners’
communications to constitute an acknowledgement of the Debt
after discharge by the bankruptcy court, Homeowners would
have had to acknowledge that they continued to personally owe
something to Bank. But Homeowners’ personal liability for the
Debt had been discharged by the bankruptcy court, and with
that discharge, any amount owed ceased to exist relative to
Homeowners personally. See Fitzgerald v. Critchfield, 744 P.2d
301, 305 (Utah Ct. App. 1987) (stating that discharge of a debt in
bankruptcy divests a debt “of its character as a legally
enforceable personal liability”). Acknowledgment of a right to
foreclose on the Property is not the same thing as
acknowledgment of personal liability on the Debt, especially
where, as here, Homeowners’ personal liability on the Debt had
been discharged in bankruptcy.

¶35 In their written communications with Ocwen,
Homeowners did not acknowledge the Debt or obligate
themselves to repay it despite their discharge; instead,
Homeowners were asking Ocwen not to exercise the right to
foreclose against the Trust Deed securing the Debt. In exchange
for not foreclosing, Homeowners proposed to enter into a new
deal that would allow Ocwen to recoup its losses while allowing
Homeowners to stay in their home. Homeowners certainly never
offered to repay the Debt that had been discharged, and they
never hinted that they might have some continuing or current
obligation to do so.

¶36 In sum, we agree with the district court’s determination
that Homeowners’ communications with Ocwen did not

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                      Daniels v. Deutsche Bank

function as an acknowledgment of the Debt because, at most,
those communications were a “reference” to “or a discussion of
an old debt,” not “a clear recognition of [a] claim and [a] liability
as presently existing.” See Beck, 269 P.2d at 870 (quotation
simplified).

C.     The running of the limitations period was not tolled by
       the bankruptcy stay or the statutory hold on the trustee’s
       sale.

¶37 Bank also argues that the statute of limitations was tolled
by two discrete events. It is unclear that these tolling issues were
preserved below. But assuming they were, we agree with
Homeowners that Bank’s arguments in this regard are
unpersuasive. See State v. Kitches, 2021 UT App 24, ¶ 28, 484 P.3d
415 (“[I]f the merits of a claim can easily be resolved in favor of
the party asserting that the claim was not preserved, we readily may
opt to do so without addressing preservation.”).

¶38 Tolling is essential to Bank’s argument on appeal because,
owing to the stipulation, see supra ¶ 16, if the limitations period
was tolled for a sufficient amount of time, Bank’s right to
foreclose would be evaluated under the current version of Utah
Code section 57-1-34, which became effective May 10, 2016,
rather than the version of the statute in effect prior to that date.
Prior to May 10, 2016, “[t]he trustee’s sale of property under a
trust deed [had to] be made, or an action to foreclose a trust deed
as provided by law for the foreclosure of mortgages on real
property [had to] be commenced, within the period prescribed
by law for the commencement of an action on the obligation
secured by the trust deed.” Utah Code Ann. § 57-1-34
(LexisNexis 2010); id. amend. notes (Supp. 2020). But as of May
10, 2016, the statute prescribed, “A person shall, within the
period prescribed by law for the commencement of an action on
an obligation secured by a trust deed: (1) commence an action to
foreclose the trust deed; or (2) file for record a notice of default
under Section 57-1-24.” Id. (Supp. 2020). Thus, the key difference
between the two statutes, as concerns nonjudicial foreclosure

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                      Daniels v. Deutsche Bank

efforts, was that prior to May 16, 2016, the trustee’s sale had to be
completed during the limitations period, but the current statute
requires only that a notice of default be recorded prior to the
running of the limitations period. Because a notice of default was
recorded before the limitations period had run, Bank clearly
would have the right to enforce its lien under the post-May 10,
2016 statute. But if the earlier statute controls, the limitations
period expired before Bank completed the necessary actions.

¶39 Bank first argues that the automatic stay associated with
Homeowners’ bankruptcy petition tolled the limitations period
for forty days. But the bankruptcy petition and automatic stay,
which occurred in September and October 2009, obviously
preceded the triggering of the running of the limitations period,
which the parties acknowledge began or was re-started on
February 25, 2010, the date of Homeowners’ last payment on the
Debt. Bank addresses this obstacle by arguing that because the
limitations period actually began with the filing of the first
notice of default and consequent acceleration of the due date on
September 25, 2008, the bankruptcy stay occurred after the
limitations period began. See id. § 70A-3-118(1) (2009) (“[A]n
action to enforce the obligation of a party to pay a note payable
at a definite time must be commenced within six years after the
due date or dates stated in the note or, if a due date is
accelerated, within six years after the accelerated due date.”).
Bank then asserts that Homeowners “re-started the statute of
limitations per Utah Code Ann. § 78B-2-113 by making a
payment on February 25, 2010 . . . , thus leading to a tolling of
the limitations period to February 25, 2016.” (Quotation
simplified.) In essence, Bank argues that tolling associated with
the bankruptcy stay from 2009 should be applied to the
subsequent limitations period triggered or re-started when
Homeowners made their last payment on February 25, 2010. We
find this argument unconvincing. Bank cites no precedent, nor
are we aware of any, that allows the “banking” of the time tolled
by a past action such that it can be applied to a limitations period
yet to be commenced by a new triggering event.

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                      Daniels v. Deutsche Bank

¶40 Bank also points to the three-month statutory hold
required before a trustee is allowed to conduct a trustee’s sale
after recording the notice of default in nonjudicial foreclosure
actions. See id. § 57-1-24(2) (2010) (“The power of sale conferred
upon the trustee . . . may not be exercised until . . . not less than
three months has elapsed from the time the trustee filed for
record [the notice of default].”). Bank contends that the language
in Utah Code section 78B-2-112 “tolls or extends any limitations
period to include such statutory prohibitions” as the three-
month hold identified in section 57-1-24(2). See id. § 78B-2-112
(2018) (“The duration of an injunction or statutory prohibition
which delays the filing of an action may not be counted as part
of the statute of limitations.”). We find this argument unavailing
because it misreads the plain language of the two statutes.
Section 78B-2-112 provides for tolling when a “statutory
prohibition . . . delays the filing of an action.” See id. But section
57-1-24(2) does not pertain to the filing of an action; rather, in
nonjudicial foreclosure proceedings, the statute prohibits a
trustee from exercising the power of sale until at least three
months have passed after recording a notice of default. See Napue
v. Gor-Mey West, Inc., 175 Cal. App. 3d 608, 616 (Ct. App. 1985)
(“Statutes of limitation, which fix the time within which a suit
must be commenced, are to be distinguished from other
procedural statutes fixing times to do acts or seek judicial relief.
The three-month [hold on conducting a trustee’s sale] does not
fix the time within which a suit must be commenced, but rather
fixes the time for curing a default in payments on a note secured
by a deed of trust. The three-month [hold] is, therefore, not a
statute of limitation.” (quotation simplified)).

¶41 In other words, the prohibition in section 57-1-24(2) is not
an injunction or a prohibition on the filing of an action but rather
suspends the time for a trustee to exercise the power of sale to
provide a period for the debtor to cure its default. Thus, reading
section 57-1-24(2) in light of section 78B-2-112 does nothing to
convert section 57-1-24(2) into a statute of limitations because
section 57-1-24(2) does not concern the filing of any action;
rather, it is a statutory hold on the trustee’s power of sale. In

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                      Daniels v. Deutsche Bank

short, because statutes of limitations fix the time within which a
suit must be filed, and because there is no action to be filed in
nonjudicial foreclosure proceedings, section 78B-2-112 does not
apply. See Bryan A. Garner, Garner’s Dictionary of Legal Usage 862
(3d ed. 2011) (“Action denotes a mode of proceeding in court . . .
to enforce a private right or redress or prevent a private
wrong. . . . Today, since virtually all jurisdictions have merged
the administration of law and equity, the terms action and suit
are interchangeable.” (quotation simplified)); id. at 361
(explaining that “file is often used as an ellipses for file suit”); see
also Napue, 175 Cal. App. 3d at 616 (“The statute of limitation
provisions of the Code of Civil Procedure are applicable to civil
actions and special proceedings of a civil nature both of which
are judicial remedies. A trustee’s sale pursuant to a power of sale
under a deed of trust is not a judicial remedy. Such trustee’s sale
is alternately referred to as an extrajudicial or nonjudicial
foreclosure. The statute of limitation provisions are, therefore,
clearly inapplicable to a trustee’s sale.” (quotation simplified)).
Accordingly, we reject Bank’s argument that the three-month
hold on conducting the trustee’s sale acted to toll the limitations
period.

D.     Equitable estoppel did not toll the statute of limitations.

¶42 Bank next claims that the district court “erred in not
tolling the statute of limitations via the ‘equitable estoppel’
doctrine.”4 To prevail on its claim of equitable estoppel, Bank
must prove each of three elements:

4. Alongside its equitable estoppel argument, Bank argues that
the federal prohibition on dual tracking tolled the statute of
limitations. Bank identifies no place in the record where this
issue was presented to the district court. And when a party fails
“to preserve an issue in the trial court, but seeks to raise it on
appeal . . . , this court will not typically reach the issue absent
some recognized exception.” State v. Johnson, 2017 UT 76, ¶ 17,
                                                     (continued…)

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                     Daniels v. Deutsche Bank

      (1) a statement, admission, act, or failure to act by
      one party inconsistent with a claim later asserted;
      (2) reasonable action or inaction by the other party
      taken or not taken on the basis of the first party’s
      statement, admission, act or failure to act; and (3)
      injury to the second party that would result from
      allowing the first party to contradict or repudiate
      such statement, admission, act, or failure to act.

Benge v. Cody Ekker Constr., 2019 UT App 164, ¶ 20, 451 P.3d 667
(quotation simplified); accord In re Koller, 2018 UT App 27, ¶ 23,
424 P.3d 926.

¶43 We agree with the district court that there is no evidence
that Homeowners’ actions were inconsistent with their claim
that foreclosure was barred by the running of the statute of
limitations. Seeking to avoid a foreclosure during the limitations
period and then later asserting a statute of limitations defense
after the limitations period had run is in no way inconsistent.
Instead, Homeowners’ actions were logically sequential. Having
repeatedly failed to convince Ocwen to agree to a mortgage
modification during the six-year limitations period,

(…continued)
416 P.3d 443. Bank nevertheless asserts that we should consider
this issue under the exceptional-circumstances doctrine. But
Bank has made no effort to explain how the exceptional-
circumstances doctrine applies here—except for the bald
assertion that it does. More specifically, it has failed to explain
what “rare procedural anomaly” prevented it from preserving
the issue or excused its failure to do so. See id. ¶ 29. And as our
supreme court has stated, “the showing of a rare procedural
anomaly has been requisite to invoking exceptional
circumstances.” See id. ¶ 31. Thus, we decline Bank’s invitation
to consider its dual-tracking-tolling argument.

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                      Daniels v. Deutsche Bank

Homeowners then asserted the obvious defense to foreclosure
once the limitations period had expired. Bank claims that
Homeowners’ requesting forbearance of foreclosure efforts is
“inconsistent” with their “later claim” that Bank “should then
be punished and permanently prevented from foreclosing on the
. . . Property.” But this assertion mischaracterizes the record,
which shows that (1) Ocwen cancelled the HAMP Plan in early
2010 and never offered the mortgage modification contemplated
by that plan, see supra ¶ 8, (2) Homeowners made repeated
efforts asking Ocwen to reconsider, see supra ¶¶ 9–12, and (3)
Homeowners asserted a statute of limitations defense after
receiving notice of the trustee’s sale, see supra ¶¶ 13–14. Rather
than displaying inconsistency, Homeowners pursued the
appropriate remedy available at the relevant time. In other
words, Homeowners acted exactly as one would expect them to
act relative to the circumstances in which they found themselves.

¶44 Moreover, Bank has not demonstrated that it acted
reasonably in failing to foreclose the Trust Deed within the
limitations period. Put another way, Homeowners’ repeated
attempts to enter into mortgage modification in no way induced
Bank not to pursue foreclosure after Homeowners abandoned
their modification requests. Our supreme court recently clarified
that the second prong of the equitable estoppel test “requires
reasonable action or inaction by the other party taken on the
basis of the first party’s statement, admission, act, or failure to
act—that is, a plaintiff must show not only that [it] was induced
into action or inaction by the defendant’s statement, admission,
act, or failure to act, but also that . . . [its] action or inaction was
reasonable.” Fitzgerald v. Spearhead Invs., LLC, 2021 UT 34, ¶ 28,
493 P.3d 644 (quotation simplified). According to the record,
Homeowners’ final request for mortgage modification was
submitted in October 2011, and the last communication
Homeowners had with Ocwen about the foreclosure was in July
2014. Ocwen is an experienced mortgage loan company. One
would expect that, as a sophisticated party, Ocwen would have
reasonably concluded that Homeowners had abandoned their
efforts to work out a modification after months of not hearing

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                     Daniels v. Deutsche Bank

from them. But even after it was apparent that a mortgage
modification was not likely, Ocwen did not act to foreclose on
the Property until after the limitations period had expired in
February 2016. We fail to see how Ocwen’s inaction can be
considered reasonable in these circumstances.

¶45 For the above reasons, Bank’s equitable estoppel
argument is unavailing.

E.    The running of the statute of limitations extinguished
      Bank’s right to foreclose.

¶46 Bank next argues that the district court erred in
determining that foreclosure was no longer an available remedy
after the limitations period expired.

¶47 We agree with the district court that the Trust Deed was
no longer enforceable as security on the Debt after the
limitations period had run. After Homeowners’ personal liability
for the Debt was discharged in bankruptcy, Bank no longer had
the right to collect from Homeowners; rather, what remained
after discharge was Bank’s right to foreclose against the
Property. But based on the applicable statute at the time, the
trustee’s sale had to have been completed by the time the
limitations period for enforcing the underlying obligation
expired, which was six years from the date of Homeowners’ last
payment. See Utah Code Ann. § 57-1-34 (LexisNexis 2010); id.
§ 78B-2-113(1)(c) (2018); id. § 70A-3-118 (2009).

¶48 Bank cites Kamas Securities Co. v. Taylor, 226 P.2d 111
(Utah 1950), for the assertion that “a pledge is not terminated by
the running of the statute of limitations against the claim secured
by the pledge, nor by the discharge of the claim in bankruptcy.”
Id. at 117 (quotation simplified). But “[t]his common law regime
has been altered by statute in Utah.” Cf. M.J. v. Wisan, 2016 UT
13, ¶ 47, 371 P.3d 21. Kamas was decided well over a decade
before section 57-1-34 was enacted by the Utah Legislature, see
Act of Mar. 7, 1961, ch. 181, § 16, 1961 Utah Laws 529, 537. And

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                     Daniels v. Deutsche Bank

“where a conflict arises between the common law and a statute
. . . , the common law must yield because the common law
cannot be an authority in opposition to our positive
enactments.” Gottling v. P.R. Inc., 2002 UT 95, ¶ 7, 61 P.3d 989
(quotation simplified). Thus, Utah Code section 57-1-34, owing
to more recent enactment, supplants the common law principle
contained in Kamas for the right to foreclose on a trust deed after
the statute of limitations on the underlying debt has expired.

¶49 Bank also cites DiMeo v. Nupetco Associates, LLC, 2013 UT
App 188, 309 P.3d 251, for the proposition that “foreclosure is
still an available remedy, even after the debt is discharged in
bankruptcy, and even after the statute of limitations has run.”
But DiMeo is easily distinguished from the case at hand. As an
initial matter, in DiMeo this court did not analyze the impact of
section 57-1-34, which, as noted, altered the common law regime
and created a separate statute of limitations for foreclosure
actions. But in addition, DiMeo is distinguishable on its facts. In
DiMeo, Vern and Eleanor Strand, along with at least one other
member of their family, were obligors on a promissory note,
which was secured by a trust deed granting a security interest in
Vern and Eleanor’s property. Id. ¶ 2. Vern and Eleanor died, but
another family member obligor—Michael—continued to make
periodic payments on the note. Id. ¶ 3. The district court “ruled
that the trust deed was unenforceable . . . due to the running of
the statute of limitations, [when the note holder’s] ability to
collect from [Vern and Eleanor] personally had expired.” Id. ¶ 4.
This court faulted the district court for not explaining “how the
mere fact that some obligors on the note can no longer be held
personally liable undercuts the continued vitality of the trust
deed as security for the note.” Id. ¶ 9. Importantly, in DiMeo, the
trust deed still validly secured Michael’s obligation due under
the note because the statute of limitations had not run as to him.
See id. ¶ 10.

¶50 In contrast, the limitations period at issue here—which
was triggered in February 2010 when Homeowners made their
final payment—ran in February 2016 and extinguished Bank’s

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                     Daniels v. Deutsche Bank

ability to foreclose. In other words, the running of the statute of
limitations prevented Bank from enforcing the trust deed. But in
this case, unlike in DiMeo, there is no co-obligor remaining.
There is no Michael Strand here. Homeowners are the only
obligors on the Debt, and neither they nor anyone else made
another payment after February 2010. Thus, DiMeo is of little
help to Bank. Indeed, in another case from this court discussing
DiMeo, the impact of Michael’s periodic payments is identified
as the key factor in upholding the right to foreclose. See Roger P.
Christensen IRA v. American Heritage Title Agency, Inc., 2016 UT
App 36, ¶ 24, 368 P.3d 125 (“The six-year statute of limitations
had not yet run as against Michael Strand. When [the note
holder] sought judgment on the note and foreclosure against
Michael Strand in 2009, its foreclosure action was timely because
Michael Strand continued making payments until about 2005.”
(quotation simplified)). Thus, because another obligor continued
to make payments, “DiMeo sheds little light on the present case,
and [Bank’s] reliance on DiMeo is misplaced.” See id.

¶51 Having determined (1) that Homeowners’ written
communications made after the last payment on the Debt fell
“short of the legal standard in Utah for an enforceable
acknowledgment” of the Debt, see Wells Fargo Bank, NA v. Temple
View Invs., 2003 UT App 441, ¶ 11, 82 P.3d 655, (2) that the
limitations period was not tolled by the bankruptcy stay or the
statutory hold on conducting a trustee’s sale, (3) that the doctrine
of equitable estoppel did not toll the limitations period, and
(4) that Bank’s right to foreclose was extinguished, we conclude
that the statute of limitations had expired and Bank was
accordingly barred from proceeding with the foreclosure.

                           II. Quiet Title

¶52 Having discerned no error in the district court’s decision
that the statute of limitations had expired on Bank’s right to
foreclose on the Property, we conclude that the court did not err
in quieting title in favor of Homeowners. Because Homeowners
held title to the Property, Homeowners had a superior claim to

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                      Daniels v. Deutsche Bank

the Property; accordingly, quieting title in favor of Homeowners
was appropriate. See WDIS, LLC v. Hi-Country Estates
Homeowners Ass’n, 2019 UT 45, ¶ 43, 449 P.3d 171 (“[A] a quiet
title claim analysis . . . requires the court to determine whether
[one claimant’s] property interest is superior to the interests of
the other named adverse claimants.”).5

                         III. Attorney Fees

¶53 Bank argues that the district court—in addition to
being incorrect about the underlying judgment—“erred on a
more fundamental level when it held that the [Trust Deed] was
not operative as to [Bank’s] ability to foreclose, but was
operative for the purposes of awarding attorney’s fees and
costs.” In fact, the district court did not rely solely on the Trust
Deed but coupled the attorney fees provision of the Trust Deed
with Utah’s reciprocal fee statute in awarding fees to
Homeowners. See Utah Code Ann. § 78B-5-826 (LexisNexis 2018)
(”A court may award costs and attorney fees to either party that
prevails in a civil action based upon any promissory note,
written contract, or other writing . . . when the provisions of the
promissory note, written contract, or other writing allow at
least one party to recover attorney fees.”). The court
reasoned that had Bank been “successful in seeking to enforce
the Trust Deed against [Homeowners’] property, [Bank] would
have been entitled to recover [its] reasonable attorneys’ fees
and costs incurred in the course of that action.” Thus the
court concluded that “the provisions of the Trust Deed would
allow at least one party in this action to recover attorney fees as
set forth in Utah Code § 78B-5-826 and the Supreme Court’s

5. In a cross-appeal, Homeowners ask us to review the district
court’s denial of their request for reconveyance. As Homeowners
point out in briefing, it is unnecessary for us to resolve this issue
because our affirmance of the district court’s issuance of the
quiet title declaration grants “substantially the same relief”
Homeowners sought in their motion for reconveyance.

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                      Daniels v. Deutsche Bank

decision in . . . Bylsma v. R.C. Willey.” See Bylsma v. R.C. Willey,
2017 UT 85, ¶ 89, 416 P.3d 595 (“And because [the creditor]
would have been entitled to fees if it had prevailed in
a collection action, the [debtors] have a statutory right to
seek fees under Utah Code section 78B-5-826 because
they succeeded on their claim for rescission.”). Bank counters
by arguing that if the Trust Deed “was an unenforceable
instrument as to [Bank], then [Homeowners] could not
have relied on it to obtain an award of fees and costs on
reciprocal basis.”

¶54 But Bank misunderstands the basis of the district court’s
award of fees. The court awarded fees pursuant to the reciprocal
fee statute, not under the provision of the Trust Deed.
The attorney fees provision of the Trust Deed merely triggered
the application of the reciprocal fee statute. Just as in Bylsma,
where an entire contract was rescinded and yet the
victorious debtors were still entitled to attorney fees under the
reciprocal fee statute, so it is here. See Bylsma, 2017 UT 85, ¶¶ 89–
92. Even though Bank lost the right to foreclose on the
Trust Deed after expiration of the limitations period, the
district court retained the discretion to award attorney fees
to Homeowners. Thus we find no error in the district court’s
award of attorney fees to Homeowners pursuant to the
reciprocal fee statute.

¶55 Finally, Homeowners ask for attorney fees on
appeal. “When a party who received attorney fees
below prevails on appeal, the party is also entitled to fees
reasonably incurred on appeal.” Win-Win Invs. LLC v. Dutson,
2021 UT App 18, ¶ 27, 483 P.3d 64 (quotation simplified).
Because the district court awarded fees below and because
Homeowners have prevailed on appeal, we grant their “request
for fees and costs on appeal and remand for the district court
to calculate the award.” See Thomas v. Thomas, 2021 UT App 8,
¶ 45, 481 P.3d 504.

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                     Daniels v. Deutsche Bank

                         CONCLUSION

¶56 We find no error in the district court’s determination that
the statute of limitations had run on Bank’s right to foreclose
against the Property, that the doctrine of equitable estoppel did
not toll the limitations period, and that Bank retained no right to
foreclose once the limitations period had run as to Homeowners.
Further, the court did not err in quieting title in favor of and
awarding attorney fees to Homeowners. We therefore affirm the
orders of the district court and remand for the district court to
calculate the amount of attorney fees and costs Homeowners
incurred on appeal.

20190693-CA                    27               2021 UT App 105