Court Opinion

ID: 5138798
Source: CourtListenerOpinion
Date Created: 2021-12-21 15:12:55.645246+00
Date Added: 2024-06-11T08:24:11.813498
License: Public Domain

2018 UT App 7

               THE UTAH COURT OF APPEALS

                      SHANE MORRIS,
                         Appellee,
                             v.
                  OFF-PISTE CAPITAL LLC,
               Appellant and Cross-appellee,
                             v.
          AMERICAN HOME MORTGAGE SERVICING INC.,
               Appellee and Cross-appellant.

                       Amended Opinion1
                        No. 20150008-CA
                      Filed January 5, 2018

           Third District Court, Salt Lake Department
                 The Honorable Robert P. Faust
                          No. 080904328

         Bradley L. Tilt and Sara E. Bouley, Attorneys for
                  Appellant and Cross-appellee
        Ronald G. Russell, Bentley J. Tolk, and Jeffery A.
        Balls, Attorneys for Appellee and Cross-appellant
             American Home Mortgage Servicing Inc.

SENIOR JUDGE STEPHEN L. ROTH authored this Opinion, in which
JUDGES KATE A. TOOMEY and DAVID N. MORTENSEN concurred.2

1. This Amended Opinion replaces the Opinion in Case No.
20150008-CA issued on August 24, 2017. Off-Piste Capital LLC
filed a petition for rehearing, and we called for a response.
Without changing our ultimate conclusion, we grant the petition
for the narrow purpose of clarifying our analysis of the Notice of
Interest question in Part I.B. We deny the petition in all other
respects.

2. Senior Judge Stephen L. Roth began work on this case as an
active member of the Utah Court of Appeals. He retired before
                                               (continued…)
                     Morris v. Off-Piste Capital

ROTH, Judge:

¶1     This case involves multiple competing claims related to a
parcel of real property (the Property). After a trial, the district
court quieted title to the Property in Short Sale Services LLC.
Off-Piste Capital LLC appeals, arguing that its claim to title is
superior to Short Sale’s for a variety of reasons. American Home
Mortgage Servicing Inc. cross-appeals, claiming that the court
improperly determined that it was bound by a default judgment
entered against a different party. We affirm in part and reverse
in part.

                         BACKGROUND

              Off-Piste’s Involvement with the Property

¶2      The Property is a parcel of residential real estate located
in a Draper development, which Todd Smith bought in 2005. To
finance the purchase, Smith borrowed money from various
entities. As security for one of his loans, Smith executed a trust
deed on the Property and conveyed it to Smart Assets LLC (the
Smart Trust Deed), a company managed by Brian Smart. Smith
defaulted on this loan almost immediately, which initiated a
procession of transfers and proceedings that ultimately resulted
in this action.

(…continued)
the petition for rehearing was filed, and continued to serve on
the panel as a senior judge sitting by special assignment as
authorized by law. See generally Utah R. Jud. Admin. 11-
201(6). Judge J. Frederic Voros, Jr. was a member of the panel
that initially decided this case, but retired before the petition for
rehearing was filed. Judge Kate A. Toomey replaced Judge
Voros and fully participated in this Amended Opinion.

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                    Morris v. Off-Piste Capital

¶3     Smart Assets, acting in concert with Smith after he
defaulted, assigned the Smart Trust Deed to “SS Services, LLC”3
in November 2006 (the SS Services Assignment). Smith later told
Smart Assets that the SS Services Assignment had been lost and
asked Smart Assets to execute a duplicate, which Smart Assets
did in March 2007. However, the replacement document Smith
presented for signature was not a duplicate of the original
assignment to SS Services. Instead, the second document was an
assignment of the Smart Trust Deed to a different entity, Capital
360 LLC (the Capital 360 Assignment), something Smart Assets
did not realize at the time it signed what it believed was a
replacement of the original. These two competing assignments
are the root of the direct appeal.

¶4     In January 2007—before execution of the Capital 360
Assignment—SS Services recorded a Notice of Interest based on
the SS Services Assignment, though it did not record the
assignment itself. The Notice of Interest explained the nature of
SS Services’ interest in the Property, specifically identifying its
acquisition of the Smart Trust Deed through the SS Services
Assignment. According to the court, the Notice of Interest
“specifically and clearly [gave] notice that ‘an unrecorded
Assignment of Deed of Trust’ relating to and specifically
concerning the Property exists.” The Notice of Interest contained
an accurate legal description of the Property and correctly
identified the trustor, trustee, beneficiaries, and recording
information (including recording date, entry number, book, and
page) for the Smart Trust Deed. And the court found that, in
addition to describing the “legal interest SS Services had” under
the assignment, the Notice of Interest provided “a valid address
where further information about the unrecorded assignment
could be found.”

3. The district court eventually determined that SS Services LLC
was a misnomer of Short Sale Services LLC (Short Sale). Whether
that determination was correct is an issue on appeal.

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                     Morris v. Off-Piste Capital

¶5     After recording the Notice of Interest, SS Services began a
foreclosure proceeding that concluded in a trustee’s sale under
the Smart Trust Deed. On April 30, 2007, SS Services recorded a
trustee’s deed conveying full title to the Property to SS Services.
However, on April 2, 2007—after SS Services recorded the
Notice of Interest in January but before it recorded its trustee’s
deed on April 30—Capital 360 recorded the Capital 360
Assignment. Capital 360 then moved ahead with its own
foreclosure proceeding based on the Capital 360 Assignment.

¶6     It was through Capital 360’s foreclosure proceeding that
Off-Piste became entangled in the Property. Off-Piste agreed to
loan $1.75 million for the purchase of the Property to Canyon
Vines Holding and Investments LLC. Canyon Vines secured the
loan with its own trust deed to the Property in favor of its lender
Off-Piste. Off-Piste recorded the Canyon Vines trust deed on
March 2, 2008. Under the terms of the loan, Canyon Vines was to
repay Off-Piste in full within fourteen days, but Canyon Vines
immediately defaulted on the loan.

¶7     Eventually, another claimant to an interest in the
Property, Shane Morris, brought this lawsuit, originally a
judicial foreclosure action. Morris named multiple parties
including Off-Piste in an attempt to clear the tangled web of title.
Off-Piste instituted its own quiet title action via third-party
complaint.

¶8     At trial, Off-Piste argued that its predecessor, Capital 360,
had a superior claim to the Property compared to SS Services’
claim. Specifically, Off-Piste sought to prove that Capital 360
was a bona fide purchaser of the Property and, because Capital
360 recorded the Capital 360 Assignment before the SS Services
Assignment was recorded, its interest took priority over SS
Services’ interest by operation of law.

¶9     The district court ruled in favor of SS Services. It found
that SS Services paid valuable consideration for its assignment
from Smart Assets and that, in an abundance of caution, SS

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                     Morris v. Off-Piste Capital

Services had obtained an assignment of the underlying
promissory note from Smart Assets as well. According to the
court, the additional assignment was “further evidence[] that a
valid and legal assignment was made to SS Services.”

¶10 Regarding the purported assignment of the Smart Trust
Deed to Capital 360, the court made three key determinations.
First, it found that Smart Assets had no intent to assign the
Smart Trust Deed to Capital 360 because Smart Assets was not
aware that the second assignment it executed named a party
different from the first assignment to SS Services. Second, it
found that Capital 360 paid no consideration for its purported
assignment from Smart Assets. And third, it found that Capital
360 did not take its interest in good faith because the Notice of
Interest put it on notice of the prior assignment of the Smart
Trust Deed to SS Services. The court set aside Capital 360’s
interest in the Property—which also extinguished Off-Piste’s
interest—and quieted title to the Property in SS Services.

     American Home Mortgage’s Involvement with the Property

¶11 Cross-appellant American Home Mortgage Servicing Inc.
(AHM)4 also claims an interest in the Property, which arose as a
result of Smith conveying the Property to Zach Sorensen by
warranty deed in 2006, after the Smart Trust Deed had been
recorded. Sorensen financed his purchase with loans from Castle
& Cooke Mortgage LLC, and he secured the loans’ promissory
notes by executing trust deeds to the Property. The trust deeds
named Castle & Cooke as the lender and Mortgage Electronic
Registration Systems Inc. (MERS) as the beneficial interest holder

4. In its brief, AHM refers to itself variously as American Home
Mortgage Servicing Inc. in some instances (e.g., in the notice of
cross-appeal) and American Home Mortgage Corp. in others
(e.g., in recorded documents). We presume the names either
refer to the same entity or to entities in privity with one another;
the context seems to require it, and no one claims otherwise.

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                    Morris v. Off-Piste Capital

of the deed and the nominee of the lender as well as the lender’s
“successors and assigns.”5 These trust deeds were recorded, and
the title company’s failure to clear the Property of prior
encumbrances, among them the Smart Trust Deed, was a matter
of contention below but is not an issue on appeal. Castle
& Cooke then apparently endorsed one or both notes in favor of
AHM, which endorsements carried with them an assignment of
interest in the trust deeds securing the notes.6 See Utah Code
Ann. § 57-1-35 (LexisNexis 2010) (“The transfer of any debt
secured by a trust deed shall operate as a transfer of the security
therefor.”). Because under the terms of the deeds MERS
remained the nominee and continued to hold the deed for AHM
(as a successor or assign of Castle & Cooke), this set of
transactions was apparently not recorded.

5. The MERS relationship to lenders has been a topic of interest
in many courts.
       At the origination of the loan, MERS is designated
       in the deed of trust as a nominee for the lender and
       the lender’s ‘successors and assigns,’ and as the
       deed’s ‘beneficiary’ which holds legal title to the
       security interest conveyed. If the lender sells or
       assigns the beneficial interest in the loan to another
       MERS member, the change is recorded only in the
       MERS database, not in county records, because
       MERS continues to hold the deed on the new
       lender’s behalf.
Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034, 1039
(9th Cir. 2011).

6. If the record is clear on the exact nature and process of AHM’s
acquisition of its purported interest in the Property, AHM’s brief
does not cite to that evidence. However, our resolution of the
cross-appeal involves a threshold legal issue that the district
court decided on summary judgment, so our review does not
turn on the nature of or basis for AHM’s interest.

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                    Morris v. Off-Piste Capital

¶12 Shane Morris did not name AHM as a defendant when he
initiated the original lawsuit. Seeking “Notice[s] of Non-Interest”
from various parties, Morris received a letter from Castle
& Cooke’s attorney that disclaimed his client’s interest in the
Property. But the letter also informed Morris that the reason
Castle & Cooke disclaimed any interest was because it had
assigned its interests to AHM, “who [was] the current party in
interest to the first mortgage originated by Castle & Cooke.”
Morris later amended his complaint to add a quiet title action.
But despite the letter, Morris continued to name Castle & Cooke
as a defendant and did not add AHM or MERS as a party.

¶13 Later, Off-Piste filed a third-party complaint also seeking
to quiet title in the Property, the essence of which we explained
above. The third-party complaint did not name AHM, but Off-
Piste eventually named MERS as a defendant. Within a month of
joining MERS in the quiet title case, Off-Piste learned, through a
telephone conversation between the manager of Off-Piste and
counsel for AHM, that AHM claimed an interest in the Property.
Despite that information and Off-Piste’s acknowledgement that
it understood the importance of “bring[ing] all the parties [with
an interest] to the litigation; otherwise, they are not covered,”
Off-Piste never named AHM as a defendant. Off-Piste did,
however, obtain a default judgment against MERS after MERS
failed to answer the third-party complaint. The default
purported to extinguish any claims that MERS had to the
Property.

¶14 Roughly a year later, AHM moved for and was granted
permission to intervene in the lawsuit. Off-Piste then moved for
summary judgment against AHM on the ground that the default
judgment against MERS was binding on AHM as well.
Specifically, Off-Piste argued that AHM’s interest flowed
through the Castle & Cooke trust deeds, which named MERS as
the beneficiary, and thus AHM’s interest flowed through MERS
itself. Because the default judgment stated that “[MERS] and all
persons claiming under [MERS] have no right, title, lien, or
estate in or to the [Property],” Off-Piste contended that AHM’s

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                    Morris v. Off-Piste Capital

interest had already been adjudicated—and eliminated—by the
court.

¶15 AHM opposed the summary judgment and also filed
motions to set aside the default judgment and for leave to
conduct discovery. After a hearing, the court agreed with Off-
Piste. It denied AHM’s motions and granted summary judgment
against AHM, concluding that “[t]he default judgment entered
against MERS . . . is binding upon and applicable to AHM.” As a
result, AHM did not participate at trial. AHM now cross-appeals
from the summary judgment decision.

            ISSUES AND STANDARDS OF REVIEW

¶16 Off-Piste claims on direct appeal that the trial court made
eight errors of various types. According to Off-Piste, however,
the “outcome of this case depends upon which of those two
competing assignments” from Smart Assets—one to SS Services
and one to Capital 360—”gives rise to the legally superior and
enforceable chain of title.” Thus, the threshold question is
whether “the district court erred in concluding” the assignment
from Smart Assets to SS Services “[was] valid at all.” If we
decide the court was correct, the second question is whether the
court “erred in ruling that the predecessor at the root of [Off-
Piste’s] chain of title,” Capital 360, “was not a bona fide
purchaser” of the Property. We resolve Off-Piste’s other issues
only to the extent they are necessary to answer the main
questions presented.

¶17 Off-Piste’s claims present mixed questions of law and fact
because the district court was called on to apply “a legal
standard to a set of facts unique to a particular case.” Murray v.
Utah Labor Comm’n, 2013 UT 38, ¶ 24, 308 P.3d 461 (citation and
internal quotation marks omitted). “Findings of fact are entitled
to the most deference” and “are accordingly overturned only
when clearly erroneous.” In re Adoption of Baby B., 2012 UT 35,
¶ 40, 308 P.3d 382 (citation and internal quotation marks

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                     Morris v. Off-Piste Capital

omitted). “We take a fresh look at questions of law decided by a
lower court, according no deference to its resolution of such
issues.” Id. ¶ 41.

¶18 AHM’s cross-appeal consists of four claims of error. But
as with Off-Piste’s appeal, these issues distill into one core
question: whether the court correctly determined on summary
judgment that AHM was bound by the default judgment against
MERS. “An appellate court reviews a trial court’s legal
conclusions and ultimate grant or denial of summary judgment
for correctness and views the facts and all reasonable inferences
drawn therefrom in the light most favorable to the nonmoving
party.” Orvis v. Johnson, 2008 UT 2, ¶ 6, 177 P.3d 600 (citations
and internal quotation marks omitted).

                            ANALYSIS

                       I. Off-Piste’s Appeal

¶19 In its essence, this is a quiet title case involving two
competing chains of title to the Property. Following trial, the
district court set aside Capital 360’s interest and quieted title in
Short Sale. Because Off-Piste’s interest in the Property flowed
from Capital 360, the court’s decision to set aside Capital 360’s
deed also extinguished Off-Piste’s interest. To resurrect its
interest in the Property, Off-Piste makes two core arguments on
appeal: first, that the assignment from Smart Assets to Short Sale
was not valid, and second, that even if the assignment was valid,
Capital 360 was a bona fide purchaser with a superior claim to
the Property because it recorded its interest before Short Sale
did. We address each argument in turn.

A.     Smart Assets’ Assignment to Short Sale/SS Services

¶20 The threshold issue in this appeal is whether the district
court correctly determined that SS Services was a misnomer
for—and thus legally equivalent to—Short Sale Services. Based

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                     Morris v. Off-Piste Capital

on its misnomer conclusion, the court determined that Smart
Assets’ assignment of the Smart Trust Deed to SS Services was
valid and conveyed an interest in the Property to Short Sale. Off-
Piste argues that the misnomer doctrine does not apply and that
the court erred as a matter of law. Off-Piste focuses on the fact
that the assignment named SS Services as the assignee and
argues the assignment was therefore “void because SS Services
was a non-existent entity.”

¶21 “It is well-settled that an attempted conveyance of land to
a nonexisting entity is void.” Julian v. Petersen, 966 P.2d 878, 881
(Utah Ct. App. 1998). However, “courts endeavor to carry out
the grantor’s intention whenever [it] is possible.” Kelly v. Hard
Money Funding, Inc., 2004 UT App 44, ¶ 22, 87 P.3d 734 (citation
and internal quotation marks omitted). Thus, “the misnomer of a
corporation generally will not be treated by the courts as
material, if the identity of the corporation is reasonably clear or
can be ascertained by sufficient evidence.” Id. (brackets, citation,
and internal quotation marks omitted). The identity of a
corporation is reasonably clear when “there is enough expressed
[in the document] to show that there is such an artificial being,
and to distinguish it from all others.” Id. (citation and internal
quotation marks omitted); see also Moultrie County v. Fairfield, 105
U.S. 370, 377 (1881) (“[I]f a corporation is misnamed in a statute,
the statute is not thereby rendered inoperative if there is enough
from which to ascertain what corporation is meant.”).

¶22 Our review of relevant case law indicates that resolution
of a misnomer question involves a fact-sensitive inquiry based
on the particular circumstances. See HM of Topeka, LLC v. Indian
Country Mini Mart, 236 P.3d 535, 540 (Kan. Ct. App. 2010) (in the
context of a contract, focusing on whether the parties “were not,
or were not likely to have been, misled by the misidentification”
of the corporation); accord Hard Money Funding, 2004 UT App 44,
¶ 24 (examining “[t]he circumstantial evidence surrounding the
situation”). Further, it appears that the misnomer doctrine serves
the overriding policy goal of construing documents related to
real property in keeping with the intent of parties. See Hartman v.

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                     Morris v. Off-Piste Capital

Potter, 596 P.2d 653, 656 (Utah 1979) (“[T]he main object in
construing a deed is to ascertain the intention of the parties,
especially that of the grantor[.]”). Put simply, the misnomer
doctrine works to protect the grantor’s wishes when a drafting
mistake was an error of form rather than of substance,
particularly when third parties are not misled to their injury. See
HM of Topeka, 236 P.3d at 540; see also Sunstone at Colorado Springs
Homeowners Ass’n, Inc. v. White, 56 P.3d 127, 130 (Colo. App.
2002) (concluding that “the variation or misnomer in plaintiff’s
name as set forth in the [legal document was] immaterial” in
part because “there [was] no evidence that the misnomer . . .
frustrated the identification of plaintiff or caused confusion to
defendants”).

¶23 In this case, the district court found that “there [was] no
SS Services, LLC, registered in Utah,” but it nevertheless
concluded that Smart Assets’ assignment of the Smart Trust
Deed to SS Services was valid and conveyed the interest to Short
Sale. According to the court, “There was never any dispute that
SS Services meant Short Sale Services, LLC.” Indeed, the court
found that SS Services was shorthand used “both internally and
by third parties” and that “[n]o evidence [was] presented
documenting that anyone was confused, prejudiced, or misled in
any way by this use of” SS Services. Thus, the court concluded
“that SS Services . . . [was] the misnomer of defendant Short Sale
Services, LLC” and the “use of the misnomer was immaterial
and legally insignificant.”

¶24 Off-Piste argues that an incorrect corporate name is only a
misnomer if there is enough information to distinguish the entity
from all others, and here “there [was] nothing on the face of [the]
documents from which one could discern or distinguish that [SS
Services] meant an otherwise completely unmentioned ‘Short
Sale Services, LLC.’” In essence, Off-Piste contends that the SS in
SS Services could have referred to “any other entity whose name
might have two s-words or initials in it” and therefore the
misnomer doctrine does not apply.

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                     Morris v. Off-Piste Capital

¶25 We agree with the district court. The essential misnomer
question is not whether the assignment’s use of “SS Services,
LLC” could conceivably have, in the abstract, referred to some
entity other than Short Sale. Rather, the inquiry is focused on
whether the “identity of the corporation is reasonably clear or
can be ascertained by sufficient evidence.” Hard Money Funding,
2004 UT App 44, ¶ 22 (citation and internal quotation marks
omitted). Here, the court found that the name SS Services was
used as shorthand both internally and by third parties, which
indicates that the identity of the corporate entity was
“reasonably clear.” See id. Additionally, the document that Off-
Piste challenges on appeal included more information than just
the shorthand name of the assignee. In fact, the assignment also
contained a physical address for SS Services. Thus, even if we
assume for sake of argument that the use of SS Services standing
alone lacked the reasonable clarity required by the misnomer
doctrine, the address was additional “sufficient evidence” from
which the true identity of SS Services could be ascertained. See
id.

¶26 Finally, we note that the circumstances surrounding the
assignment also support the district court’s conclusion. For
instance, Smart Assets—the grantor or assignor—displayed its
intent to assign the Smart Trust Deed when it executed the
assignment and treated it as valid. See id. ¶ 24 (“Moreover, the
clarity of [the grantors’] intentions is made plain by the fact that
[they] . . . then proceeded to act as if the property had been
validly conveyed to [the misnamed grantee] . . . .”). And Short
Sale likewise acted in every way like the party who had received
the assignment, first by giving Smart Assets over $250,000 in
consideration and then by proceeding to foreclose on the
Property under its newly-assigned right. Further, the district
court’s finding that “[n]o evidence [was] presented documenting
that anyone was confused, prejudiced, or misled in any way” by
the misnomer is unchallenged on appeal.

¶27 We therefore affirm the district court’s determination that
SS Services was a misnomer for Short Sale: the assignment of the

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                     Morris v. Off-Piste Capital

Smart Trust Deed was reasonably clear to the parties on its face,
contained additional information from which the true identity of
SS Services could be ascertained, and conformed to the intent of
the parties to the transaction. See Hartman v. Potter, 596 P.2d 653,
656 (Utah 1979); Hard Money Funding, 2004 UT App 44, ¶ 22.

B.     Capital 360’s Status as a Bona Fide Purchaser

¶28 We now turn to Off-Piste’s contention that, even if the SS
Services Assignment was valid, Capital 360’s later assignment
took priority because Capital 360 was a bona fide purchaser and
was the first to record. Specifically, Off-Piste asserts that the
court incorrectly found that “Capital 360 had notice of the
unrecorded” SS Services Assignment. According to this
argument, Capital 360 had a superior claim to the Property
because it took its interest without notice of Short Sale’s already-
existing interest and went on to record the interest before its
rival did.

¶29 Utah is a race-notice jurisdiction, which means timing
matters. “Each document not recorded as provided in this title is
void as against any subsequent purchaser . . . if: (1) the
subsequent purchaser purchased the property in good faith and
for a valuable consideration; and (2) the subsequent purchaser’s
document is first duly recorded.” Utah Code Ann. § 57-3-103
(LexisNexis 2010). Thus, the party that records its interest first
generally takes priority over another interest holder, even if the
other party acquired its interest earlier in time. But for a
subsequent purchaser’s interest to take priority by being
recorded first, the subsequent purchaser must have taken its
interest in good faith. See id. § 57-3-103(1). As our supreme court
recently put it, “where two purchasers claim title to real
property, the subsequent purchaser prevails [only] so long as he
took the property in good faith and was the first to record his
interest.” Pioneer Builders Co. of Nevada v. K D A Corp., 2012 UT
74, ¶ 22, 292 P.3d 672.

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                    Morris v. Off-Piste Capital

¶30 A party who takes an interest in good faith is also known
as a bona fide purchaser, or BFP.7 Baldwin v. Burton, 850 P.2d
1188, 1197 (Utah 1993). “[T]o take property in good faith, a
subsequent purchaser must take title to the property without
notice of a prior, unrecorded interest in the property.” Pioneer
Builders, 2012 UT 74, ¶ 23 (citation and internal quotation marks
omitted). Notice can take one of two forms: actual notice or
constructive notice. In this case, no party contends that Capital
360 had actual notice of SS Services’ interest in the Property, and
we thus focus on constructive notice.

¶31 Constructive notice “may result from [either] record
notice or inquiry notice.” Id. Record notice “results from a record
or is imputed by the recording statutes.” Id. ¶ 24 (citation and
internal quotation marks omitted). Under the statute, properly
recorded documents “impart notice to all persons of their
contents.” Utah Code Ann. § 57-3-102(1) (LexisNexis 2010).
“Thus, when documents filed with the county recorder disclose
an interest in a particular property, a subsequent purchaser has
record notice of the competing interest and does not take in good
faith.” Pioneer Builders, 2012 UT 74, ¶ 24.

¶32 With that background in mind, we turn to the district
court’s decision below. The court found, and no party contests
on appeal, that Capital 360 recorded the Capital 360 Assignment

7. In the proceedings below and in the briefing on appeal, the
court and parties acknowledged the various transactions at issue
are properly considered encumbrances on the Property rather
than purchases or transfers of it. Under modern Utah law that
distinction does not make a difference. See South Sanpitch Co. v.
Pack, 765 P.2d 1279, 1281 (Utah Ct. App. 1988) (explaining that a
predecessor recording statute applied “not only the transfers of
estates or interests in land, but also mortgages, incumbrances,
etc.” (citation and internal quotation marks omitted)). We
therefore treat the common term “bona fide purchaser” as
applying to the assignments at issue here.

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                     Morris v. Off-Piste Capital

before Short Sale recorded the SS Services Assignment.
However, the court nonetheless quieted title in Short Sale
because it determined that Capital 360 did not take its interest in
good faith and was therefore not a bona fide purchaser entitled
to priority under the recording statute. To reach that conclusion,
the court made several key findings and conclusions. First, as we
discussed above, the court determined that SS Services was
“merely a misnomer of Short Sale Services, LLC.” Thus, in terms
of notice, “the use of the misnomer [had] no legal effect” because
the Notice of Interest that Short Sale recorded “sufficiently
identified the proper grantee” and “did not cause any harm to
any third party.” (Internal quotation marks omitted.) Second, the
court concluded that Short Sale’s Notice of Interest “was
properly executed and recorded” and “gave notice of the
unrecorded assignment to [Short Sale] of the Property.” Third,
the court concluded that “Capital 360 was not a bona fide
purchaser . . . because the Smart [Trust] Deed was previously
assigned to [Short Sale, and] Capital 360 had notice of such prior
interest by virtue of the recorded” Notice of Interest. In short, the
court determined that “[Short Sale’s] interest in the [Property]
was ‘first in time,’” that the Notice of Interest legally informed
all parties of that fact, and “therefore no one after [Short Sale
could] claim to be a bona fide [purchaser] without notice.”

¶33 Off-Piste argues that the court “erroneously concluded
Capital 360 had notice of [Short Sale’s] unrecorded” interest in
the Property. Specifically, Off-Piste claims that the “Notice of
Interest [was] facially defective and, as a matter of law, provides
no relevant constructive notice.” According to Off-Piste, the
defect flows from the fact that the Notice of Interest identified
Brian Smart rather than Smart Assets as the assignor; and
because the assignable interest belonged to Brian Smart’s
company Smart Assets, not to Brian Smart the individual, Brian
Smart had no interest in the Property to assign. Accordingly,
Off-Piste asserts that “the Notice of Interest was a ‘wild’
document.” Off-Piste then cites Pioneer Builders for the
proposition that “‘wild’ deeds are defective,” and “‘a person
who records a defective deed imparts to subsequent purchasers

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                     Morris v. Off-Piste Capital

notice only that his claimed interest is defective.’” (Quoting id.,
2012 UT 74, ¶ 53.)

¶34 As we understand it, Off-Piste’s argument is that a notice
of interest related to an assignment must correctly name the
assignor to be valid. Specifically, Off-Piste asserts that the Notice
of Interest incorrectly stated the name of the assignor of the SS
Services Assignment. According to Off-Piste, if that error had
existed in the assignment itself, the error would have rendered
the SS Services Assignment an invalid “wild” document under
Pioneer Builders. See id. ¶ 53. Thus, concludes Off-Piste, the Notice
of Interest was itself invalid and did not put Capital 360 on
constructive notice of a prior unrecorded interest in the
Property.

¶35 We are not persuaded by Off-Piste’s argument for two
reasons. First, the unstated premise of the argument is that a
notice of interest has the same requirements as the underlying
document to which it refers, in this case the requirement to
correctly name the assignor. It does not. A notice of interest has a
different purpose from a deed or an assignment and the Utah
Code reflects that fact. Under Utah law, a notice of interest is
simply a way to “preserve and keep effective” “an interest in
land,” see Utah Code Ann. § 57-9-4(1) (LexisNexis 2010), and it
has similarly simple requirements, see Russell v. Thomas, 2000 UT
App 82, ¶ 13, 999 P.2d 1244 (suggesting that the requirements for
a notice of interest are “minimal[]”). “Any person claiming an
interest in land may preserve and keep effective such interest by
filing for record . . . a notice in writing, duly verified by oath,
setting forth the nature of the claim.” Utah Code Ann. § 57-9-
4(1). In addition to stating the nature of the claim, “to be
effective and to be recorded, the notice . . . shall contain a legal
description of all land affected by the notice.” Id. § 57-9-5.

¶36 We thus reject the premise on which Off-Piste bases its
argument. To be valid, a notice of interest must set forth the
nature of the claimant’s claim and the legal description of the
land affected by that claim, and the Notice of Interest at issue

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                     Morris v. Off-Piste Capital

here did both. It stated the nature of Short Sale’s interest, namely
that Short Sale had acquired an interest in the Property through
an assignment that “assigned and transferred all beneficial
interest under [the original Smart Trust Deed].” That assignment
was valid, as we determined above. In addition, the Notice of
Interest identified the book and page where the Smart Trust
Deed was recorded, and it accurately set forth the legal
description of the land affected by the interest, namely the
Property’s legal description, its county parcel number, and its
address. Therefore, even if we assume without deciding that the
Notice of Interest’s misnaming of Brian Smart as the assignor
(instead of his company Smart Assets) was more than a
scrivener’s error, that error is irrelevant to determining the legal
effect of the Notice of Interest—correctly naming the assignor of
an interest is simply not a legal prerequisite for recording a valid
notice of interest.

¶37 Second, and for many of the same reasons, we are not
persuaded by Off-Piste’s reliance on the wild deed analysis in
Pioneer Builders. Indeed, that case does not appear to apply here
because a notice of interest seems to be different in kind from the
trust deeds at issue there. See 2012 UT 74, ¶ 51. Pioneer Builders
explains that “[a] wild deed is a deed executed by a grantor who
does not have record ownership of the property.” Id. Here, the
Notice of Interest was neither a deed nor executed by the
grantor. Instead, it was recorded by Short Sale, the assignee (or
grantee), as authorized by the Utah law explained above. See
Utah Code Ann. § 57-9-4(1). And unlike in Pioneer Builders where
the underlying “conveyance was not legitimate,” 2012 UT 74,
¶ 54, the underlying conveyance in this case—the SS Services
Assignment—was valid for the reasons discussed previously. In
other words, Pioneer Builders analyzed the legal consequences
flowing from an invalid conveyance, whereas this case involves
the opposite—analysis of the legal consequences flowing from a
valid conveyance. We are therefore not convinced that the wild
deed doctrine applies to this situation.

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                     Morris v. Off-Piste Capital

¶38 We conclude that the Notice of Interest’s arguably
incorrect identification of Brian Smart as the assignor rather than
Smart Assets, the company he managed, does not nullify the
legal effect of the Notice of Interest. It imparted notice of its
information to the world—that the very trust deed on which
Capital 360 based its interest had already been assigned to
another party. See Utah Code Ann. § 57-3-102(1) (LexisNexis
2010) (stating that recorded documents “impart notice to all
persons of their contents”). “[T]o take property in good faith, a
subsequent purchaser must take title to the property without
notice of a prior, unrecorded interest in the property.” Pioneer
Builders, 2012 UT 74, ¶ 23 (citation and internal quotation marks
omitted). Here, Capital 360 did not take its own later assignment
of the Smart Trust Deed in good faith because it had constructive
notice of a prior assignment through the recorded Notice of
Interest. We therefore affirm the district court’s determination
that Capital 360 was not a bona fide purchaser entitled to
priority under Utah’s race-notice statute.

C.     Off-Piste’s Remaining Claims

¶39 As Off-Piste states in its brief, “The outcome of this case
depends upon which of those two competing assignments of the
Smart Trust Deed”—one to Short Sale and one to Capital 360—
”gives rise to the legally superior and enforceable chain of title.”
As discussed above, we have affirmed the district court’s
determinations that the assignment to Short Sale was valid and
that Capital 360 was not a bona fide purchaser entitled to
priority under the race-notice statute. Those determinations
effectively resolve the issues presented in Off-Piste’s appeal and
we therefore only briefly address its remaining six claims.

¶40 First, Off-Piste contends that the “district court erred in
concluding the [Capital 360 Assignment] was executed without
intent,” a conclusion the court reached essentially on the basis
that Smith had misrepresented what turned out to be the Capital
360 Assignment as merely a duplicate of the original assignment
to SS Services. See Winegar v. Froerer Corp., 813 P.2d 104, 110

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                     Morris v. Off-Piste Capital

(Utah 1991) (“A conveyance is valid only upon delivery . . . with
present intent to transfer.”). But even if the court erred in that
regard, the error was harmless because the court set aside
Capital 360’s alleged interest in the Property on a number of
independent alternative grounds, only one of which was based
on the assignor’s lack of intent. See Bahnmaier v. Northern Utah
Healthcare Corp., 2017 UT App 105, ¶ 23 (explaining that “we do
not need to address the district court’s analysis of [one of the
bases for its decision] because we affirm on the court’s
alternative ground”). We have already affirmed one of the
court’s other grounds, namely its conclusion that Capital 360
was not a bona fide purchaser. It is therefore irrelevant whether
Smart Assets intended to assign an interest to Capital 360 or
not—Short Sale’s interest took priority because it was first in
time and all other parties had notice of that fact. See Homeside
Lending, Inc. v. Miller, 2001 UT App 247, ¶ 17, 31 P.3d 607
(“Normally, competing interests in land have priority in order of
their creation in point of time, following the general rule first in
time, superior in right.” (ellipses, citation, and internal quotation
marks omitted)).

¶41 Second, Off-Piste argues that the “district court erred in
analyzing whether Off-Piste was a BFP.” This argument is based
on the premise that, “[i]f (and because) Capital 360 was a BFP,”
Short Sale’s interest “became void as against Capital 360” and all
subsequent claimants “including ultimately Off-Piste.”
(Emphasis omitted.) However, we have rejected the premise on
which Off-Piste’s argument is based. Because we have affirmed
that Capital 360 was not a BFP, any claim of error that rests on
Capital 360’s BFP status necessarily fails.

¶42 Third and fourth, Off-Piste raises two evidence-related
arguments: one, that the “district court erred in excluding
evidence regarding the [alleged consideration]” that Capital 360
paid for its interest in the Property, and two that the “district
court erred in denying Off-Piste’s motion to conduct additional
discovery” related to “the key issue of consideration.” These
arguments are aimed at the court’s determination that “Capital

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                    Morris v. Off-Piste Capital

360 did not provide valuable consideration for [its] assignment.”
That is, Off-Piste argues that two evidentiary errors prevented it
from proving that Capital 360 gave valuable consideration for
the Capital 360 Assignment. But as we have explained, the
court’s ultimate determination that Capital 360’s interest in the
Property did not have priority over the SS Services Assignment
rested on independent alternative grounds. Even if the court had
allowed the contested evidence and concluded that Capital 360
paid valuable consideration for its interest, the court still
correctly determined that Capital 360 was not a bona fide
purchaser because it had notice of Short Sale’s prior interest. See
Utah Code Ann. § 57-3-103(1) (LexisNexis 2010) (requiring that,
to take advantage of the race-notice statute, the purchaser must
have “purchased the property in good faith and for a valuable
consideration” (emphasis added)). Thus, even if the district court
made an evidentiary error, the error was harmless in the broader
context of the court’s determination that Capital 360 was not a
BFP—that decision was independently correct under the court’s
good faith analysis.

¶43 Fifth, Off-Piste asserts that the district court erred in
denying its post-trial motion to amend its complaint “to add a
claim for judicial foreclosure.” But Off-Piste does not explain
how a judicial foreclosure proceeding would have been
appropriate given the district court’s conclusion that “Off-Piste
[had] no claim or interest in the property.” While Off-Piste may
possibly have sought such an amendment to preserve certain
procedural steps in the event the district court’s holding was
overturned on appeal, that has not happened. As a consequence,
we do not need to reach this argument.

¶44 Finally, the issue of whether Capital 360 gave
consideration for its assignment arose again after trial. Off-Piste
moved for a new trial based on evidence that “was not
discovered by Off-Piste until after the close of the first day of
trial,” which motion the court denied. But once again, the newly
discovered evidence that Off-Piste claims entitled it to a new
trial—a “$200,000 Note” that parties “failed to reveal” during

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                     Morris v. Off-Piste Capital

discovery—related to the question of whether Capital 360 paid
consideration for its interest in the Property. As we have
explained, the issue of consideration is irrelevant in light of our
affirmance of the court’s alternative conclusion that Capital 360
was not a BFP.

¶45 For these reasons, we do not reach the merits of Off-
Piste’s final claims, and we affirm the district court’s decision to
quiet title to the Property in Short Sale.

          II. American Home Mortgage’s Cross-Appeal

¶46 As with Off-Piste’s direct appeal, AHM’s cross appeal is
in essence a quiet title case involving various entangled interests
in the Property. Before trial, the district court entered a default
judgment against MERS, concluding that “[MERS] and all
persons claiming under [MERS] have no right, title, lien, or
estate in or to the [Property].” On summary judgment after
AHM intervened, the court determined that AHM claimed its
interest under MERS because the trust deed created an agency
relationship between MERS and the deed’s beneficial interest
holder, originally the lender Castle & Cooke, that extended to all
Castle & Cooke’s successors in interest. And because AHM was
the successor to Castle & Cooke, MERS was therefore also an
agent for AHM. Accordingly, the court found that service of the
lawsuit on MERS “constituted valid service upon AHM,” and
thus the default against MERS was “binding upon and
applicable to AHM” as well.

¶47 AHM argues that the court erred in its reasoning because
the default against MERS was not binding on AHM as a matter
of property law. According to AHM, a “‘party who seeks to
quiet title to a piece of land must join all known persons who are
claiming title.’” (Quoting 7 Charles A. Wright et al., Federal
Practice and Procedure § 1621 (3d ed. 1998).) Thus, AHM asserts
that the default did not bind it “because [Off-Piste] did not name
AHM in the quiet title action despite having actual knowledge
that AHM claimed an interest in the Property.”

20150008-CA                     21                 2018 UT App 7
                    Morris v. Off-Piste Capital

¶48 We agree with AHM. Under Utah’s quiet title statute, a
“judgment shall be conclusive against” only two classes of
persons. See Utah Code Ann. § 78B-6-1315(4) (LexisNexis 2012).
One class consists of “all the persons named in the summons and
complaint who have been served” and the other class consists of
“all unknown persons as stated in the complaint and summons
who have been served by publication.” Id. These two groups are
mutually exclusive because persons that were named and served
cannot by definition be unknown persons—a claimant to title
cannot be at once known and unknown.

¶49 In this case, AHM was a known “person” because the
quiet title plaintiffs—Morris in the original action and Off-Piste
in its third-party complaint—had actual notice that AHM
claimed an interest in the Property. Morris knew from Castle
& Cooke’s attorney that Castle & Cooke had assigned its
interests to AHM, which made AHM a successor in interest
under the Castle & Cooke loans. And Off-Piste knew that AHM
claimed an interest in the Property through a phone
conversation its manager had with AHM’s attorney.8 Therefore,

8. Off-Piste contends that its phone conversation with AHM did
not give rise to actual knowledge that AHM claimed an interest
in the Property. In essence, Off-Piste’s point is that AHM’s
counsel was himself “unsure which entity owned the [Castle
& Cooke] interest”; it could have been American Home
Mortgage Servicing Inc., American Home Mortgage Corp., see
supra ¶ 11 n.2, or some other securitization trust. According to
Off-Piste, the conversation could not constitute actual
knowledge because it would “have had to guess which” of the
various entities actually owned the interest. We believe that,
when Off-Piste’s manager testified that AHM’s counsel told him
“[t]hey do have an interest in the property,” the manager
disclosed that he knew AHM claimed some sort of interest in the
Property, even if the exact nature of the interest was unknown.
But even if we agreed with Off-Piste and reached the opposite
conclusion, it is uncontestable that the conversation put Off-Piste
                                                     (continued…)

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                     Morris v. Off-Piste Capital

AHM was not an unknown person subject to service by
publication. Cf. Jackson Constr. Co. v. Marrs, 2004 UT 89, ¶ 11, 100
P.3d 1211 (“[L]itigants may not resort to service by publication
until they have first undertaken reasonably diligent efforts to
locate the party to be served.”).

¶50 Because AHM was a known person, the quiet title
judgment entered against it could only be conclusive if AHM
was named in the summons and complaint and served with
process. See Utah Code Ann. § 78B-6-1315(4) (LexisNexis 2012);
see also Sterling Fiduciaries LLC v. JPMorgan Chase Bank NA, 2016
UT App 107, ¶ 10, 372 P.3d 741 (determining that, because the
plaintiff had constructive notice that a bank claimed an interest
in real property, the bank “could not have been considered an
‘unknown’ person” under the quiet title statute and the bank
therefore had to be named in the quiet title action to be bound by
it). Here, because AHM was neither named nor served by either
of the quiet title plaintiffs, the quiet title judgment was not
conclusive against AHM.

¶51 Off-Piste’s contrary argument—that, as the district court
concluded, “AHM [was] bound due to its relationship [with]
MERS”— does not persuade us otherwise. In our recent Sterling

(…continued)
on inquiry notice that some entity in addition to MERS claimed
an interest in the Property. Cf. Pioneer Builders Co. of Nevada v.
K D A Corp., 2012 UT 74, ¶ 25, 292 P.3d 672 (explaining that a
party “may not shut his eyes or his ears to avoid information or
remain wilfully ignorant of facts that give rise to a duty to
inquire” (citation and internal quotation marks omitted)). And
inquiry notice of a person’s existence is sufficient to make that
person “known” under the quiet title statute. See Sterling
Fiduciaries LLC v. JPMorgan Chase Bank NA, 2016 UT App 107,
¶ 10, 372 P.3d 741 (concluding that, because the plaintiff had
constructive notice of a bank’s interest, the bank “could not have
been considered an ‘unknown’ person” for quiet title purposes).

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                      Morris v. Off-Piste Capital

Fiduciaries decision we considered the relationship between a
bank and MERS that was functionally identical to the one at
issue here. 2016 UT App 107, ¶ 3. We recognized that MERS’
interest as a nominee is distinct from the interest of the
underlying beneficial interest holder, the lender (or the lender’s
successors and assigns). See id. ¶ 13. And we concluded that,
because those interests were distinct, quiet title actions must
name both MERS and the underlying interest holder for those
parties to be bound by the quiet title judgment. See id. ¶¶ 17–18.
In short, it is the language of the quiet title statute that controls
whether title can be quieted in or against a party, not the legal
nuances of an agent-principal relationship between the parties.

¶52 We further note that our conclusion accords with another
facet of the quiet title statute. The statute proscribes default
judgments from being entered against unknown defendants.
Utah Code Ann. § 78B-6-1315(3) (LexisNexis 2012) (“The court
may not enter any judgment by default against unknown
defendants . . . .”). Thus, for the default to have bound AHM,
AHM must have first been a known defendant. And if AHM was
a known defendant, then it must have been “named in the
summons and complaint [and] served” with process for the
judgment to have been effective. See id. § 78B-6-1315(4). That is,
AHM cannot simultaneously have been unknown for purposes
of service but known for purposes of default.9

9. While we do not decide the point here, we also note that our
decision appears to comport with a general principle of quiet
title claims. It is hornbook law that, “[t]o succeed in an action to
quiet title to real estate, a party must prevail on the strength of
his own claim to title and not on the weakness of a defendant’s
title or even its total lack of title.” Gillmor v. Blue Ledge Corp., 2009
UT App 230, ¶ 14, 217 P.3d 723 (citation and internal quotation
marks omitted). Because the district court determined, and we
have affirmed, that Off-Piste has no interest in the Property—the
strength of its own claim to title is nil—it seems to follow that
                                                           (continued…)

20150008-CA                       24                   2018 UT App 7
                    Morris v. Off-Piste Capital

¶53 We therefore reverse the district court’s entry of summary
judgment against AHM and remand for any further proceedings
that may be appropriate. And because we resolve this quiet title
issue under the language of the quiet title statute and remand to
the district court, we do not address the remainder of AHM’s
cross-appeal. Nor do we reach or express an opinion on the
court’s determination that MERS is an agent for AHM or any
other interest holder under the trust deeds at issue.

                         CONCLUSION

¶54 We conclude that the district court correctly determined
that SS Services was a misnomer for Short Sale Services. Because
the use of SS Services rather than Short Sale was of no legal
effect, the court correctly concluded that the Notice of Interest
put Capital 360 on notice of a prior unrecorded interest in the
Property. Capital 360 was therefore not a bona fide purchaser of
the Property entitled to priority under the recording statute.
Short Sale’s interest in the Property was superior to Off-Piste’s
purported interest and we affirm the court’s order quieting title
in Short Sale.

¶55 We also conclude that the quiet title judgments bind
parties known to have an interest in property only if they are

(…continued)
Off-Piste’s attempts to prove otherwise cannot have
extinguished AHM’s interest. That is, it seems that AHM’s
interest in the Property could not have been extinguished by a
party that did not have its own valid interest in the Property in
the first instance. And this line of reasoning also suggests that,
while a certificate of default might be entered against a
defendant who fails to appear, a default judgment quieting title
against the defendant cannot be entered until the plaintiff
affirmatively proves his or her interest. But, again, we leave that
question for another day.

20150008-CA                    25                 2018 UT App 7
                  Morris v. Off-Piste Capital

named in the suit and served with process. Because AHM was a
known party but was not named or served, we reverse the
district court’s summary judgment decision that quieted title
against AHM. We remand the case for further action consistent
with this opinion.

20150008-CA                  26                 2018 UT App 7