Court Opinion

ID: 5177177
Source: CourtListenerOpinion
Date Created: 2022-01-06 01:07:06.819356+00
Date Added: 2024-06-11T08:26:22.836807
License: Public Domain

VOROS, Judge
(dissenting):
¶ 12 I respectfully dissent. On November 2, 2012, counsel for BMBT walked into a hearing on Defendants’ motion to bifurcate and walked out having had their complaint dismissed with prejudice. Defendants’ oral motion to dismiss was granted, and BMBT’s oral motion to amend was denied. The ruling was based on the trial court’s conclusion that the underlying documents created a security interest in the Property. The trial court acted decisively and perhaps — ulti*1176mately — correctly. But in my judgment the dismissal was premature because without resort to extrinsic evidence the documents are ambiguous.
¶ 13 Neither document before the court was in the form of a mortgage or trust deed. Each was produced from a printed form that the parties adapted, with strikeouts and insertions, to a use other than its intended use. The resulting documents are imprecise and confusing. One document is titled “Quitclaim Deed (Two Individuals to Husband — and Wife).” It states:
[The Millers] do hereby remise, release, quitclaim, grant and convey unto BMBT, LLC, and a Limited Liability Company, ■Husband -and — Wife; as sole joint tenants with rights of survivorship, hereinafter “Grantees,” the following lands....
The other document is titled “Promissory Note And Security Agreement.” Its boilerplate language contemplates a transaction involving personal property. It states, for example:
As (Collateral”) [sic] Maker here by [sic] authorizes Holder to file a UCC financing Statement in the appropriate state or states to protect this security interest. Holder has a right to foreclose and take immediate possession of part or all of the Collateral immediately upon any default of this note and have all other rights provided for pursuant to section nine of the Utah Uniform Commercial Code.
¶ 14 BMBT seeks the opportunity to present extrinsic evidence of the parties’ intent. “Before the [trial] court may consider extrinsic evidence of the parties’ intent ..., it must first conclude that the contract is facially ambiguous.” Wilson v. Johnson, 2010 UT App 137, ¶ 8, 234 P.3d 1156 (citing Daines v. Vincent, 2008 UT 51, ¶ 25,190 P.3d 1269). A contract provision is ambiguous “if it is capable of more than one reasonable interpretation because of uncertain meanings of terms, missing terns, or other facial deficiencies.” Daines, 2008 UT 51, ¶25, 190 P.3d 1269 (citations and internal quotation marks omitted). To determine if a contract is facially ambiguous, “a judge [must] first review relevant and credible extrinsic evidence offered to demonstrate that there is in fact an ambiguity.” Id. ¶ 31. Further, when two agreements are “executed ‘substantially contemporaneously’ and are clearly interrelated,” they must be construed as a whole and harmonized if possible. Winegar v. Froerer Corp., 813 P.2d 104, 109 (Utah 1991) (quoting Atlas Corp. v. Clovis Nat’l Bank, 737 P.2d 225, 229 (Utah 1987))
¶ 15 These two documents are on their faces inconsistent, and neither purports to be a mortgage or trust deed. The Quitclaim Deed describes an absolute conveyance; the Promissory Note And Security Agreement describes a security agreement governed by the Uniform Commercial Code. I therefore cannot agree that they are unambiguous.
¶ 16 I do agree that Defendants’ interpretation of these documents is “arguably more reasonable” than BMBT’s. See Holladay Bank & Trust v. Gunnison Valley Bank, 2014 UT App 17, ¶ 18, 319 P.3d 747. But that does not mean that, read together, the documents are unambiguous. “So long as competing interpretations are reasonably based on the natural and ordinary meaning of the terms of the contract and generally consistent with interpretive canons, both fall within the permissible spectrum of reasona-bility that courts use to determine ambiguity.” Id. True, “equitable mortgages are generally found when what appears to be an absolute conveyance on its face was actually intended as a mortgage.” Burkhardt v. Bailey, 260 Mich.App. 636, 680 N.W.2d 453, 465 (2004). But here the documents are not so clear that extrinsic evidence need not even be considered in determining what “was actually intended.” See id.
¶ 17 Moreover, BMBT makes another, and subtler, argument. It observes that the Promissory Note And Security Agreement provides that the entire principal was due “in a single lump sum on or before March 1st 2004.” The Note further provides that upon default, BMBT “has a right to foreclose and take immediate possession” of the Property. Although the documents are both dated December 1, 2003, they were not recorded until November 1, 2006-after the Note’s due date. BMBT thus argues that the “intent of the parties could be found to be” that BMBT “was entitled to title and possession of the property” upon the Millers’ default, that the Millers did default, and that BMBT then *1177recorded the Deed as authorized by the Promissory Note And Security Agreement. I cannot see how this theoretical possibility may be excluded without resort to extrinsic evidence. No court has considered whether this explanation enjoys factual support or, if it does, whether BMBT acted within its rights.
¶ 18 In sum, I agree with BMBT that the trial court erred in granting Defendants’ oral motion to dismiss. I would reverse the judgment of dismissal and let the matter proceed at least to the summary judgment stage.