Dyck-O'Neal, Inc. v. Wilson

1. The Honorable Russell W. Bench, Senior Judge, sat by special
assignment as authorized by law. See generally Utah Code Jud.
Admin. R. 11-201(6).
2. Wilson also argues that the trial court erroneously denied his
rule 56(f) motion for a continuance and that summary judgment
was precluded by disputed material facts regarding the damages
element of DONI’s claim. See generally Utah R. Civ. P. 56(f). We
need not address these issues due to our determination that DONI
was not entitled to summary judgment. See infra ¶¶ 8–9.
2014 UT App 173
_________________________________________________________
THE UTAH COURT OF APPEALS
DYCK–O’NEAL, INC.,
Plaintiff and Appellee,
v.
EVAN N. WILSON,
Defendant and Appellant.
Memorandum Decision
No. 20130393-CA
Filed July 25, 2014
Fourth District Court, American Fork Department
The Honorable Christine S. Johnson
No. 110100084
L. Miles LeBaron, Attorney for Appellant
Brad G. DeHaan, Attorney for Appellee
SENIOR JUDGE RUSSELL W. BENCH authored this Memorandum
Decision, in which JUDGES STEPHEN L. ROTH and JOHN A. PEARCE
concurred.1
BENCH, Senior Judge:
¶1 Defendant Evan N. Wilson appeals from the trial court’s
grant of summary judgment in favor of Dyck–O’Neal, Inc. (DONI).2
We reverse and remand.

Dyck-O’Neal, Inc. v. Wilson
3. The Note was originally executed in favor of Axiom Financial,
LLC, whose successor-in-interest, Countrywide Bank, NA,
assigned its interest to DONI.
20130393-CA 2 2014 UT App 173
¶2 Summary judgment is appropriate when there are no
genuine issues of material fact and the moving party is entitled to
a judgment as a matter of law. Utah R. Civ. P. 56(c). We review the
trial “court’s legal conclusions and ultimate grant or denial of
summary judgment for correctness”; we view “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).
¶3 In February 2011, DONI filed a complaint seeking to recover
a deficiency from Wilson after he defaulted on a $185,000 note (the
Note) and requesting attorney fees and costs as provided by the
Note and Utah Code section 57-1-32. The Note was secured by a3
trust deed on real property located in Midway, Utah. According to
DONI, Wilson’s failure to make the scheduled payments on the
Note prompted the trustee to foreclose on the property. In its
original complaint, DONI titled its cause of action as “Deficiency,”
but in its Amended Complaint, DONI recast the cause of action as
“Breach of Contract for Deficiency.” The trial court granted DONI’s
motion for summary judgment based on a breach of contract
theory and awarded DONI the balance remaining on the Note.
¶4 Wilson challenges the trial court’s ruling as erroneous
because, as asserted on the “the face . . . of the pleadings,” DONI’s
cause of action was for a deficiency judgment based on Utah Code
section 57-1-32, not a breach of contract. Compare Utah Code Ann.
§ 57-1-32 (LexisNexis 2010) (requiring a party seeking a deficiency
judgment to set forth in its complaint “the entire amount of the
indebtedness that was secured by the trust deed, the amount for
which the property was sold, and the fair market value of the
property at the date of sale”), with Bair v. Axiom Design, LLC, 2001
UT 20, ¶ 14, 20 P.3d 388 (listing the prima facie elements of a breach
of contract claim as “(1) [the existence of] a contract,
(2) performance by the party seeking recovery, (3) breach of the

Dyck-O’Neal, Inc. v. Wilson
20130393-CA 3 2014 UT App 173
contract by the other party, and (4) damages”). We determine that
under either theory for relief, there is simply not enough
information in the record to determine whether DONI is entitled to
a judgment as a matter of law.
¶5 In summary judgment proceedings, “the moving party has
an initial burden of informing the trial court of the basis for the
motion and identifying the portions of the pleadings or supporting
documents which it believes demonstrate[] an absence of a genuine
issue of material fact.” TS 1 P’ship v. Allred, 877 P.2d 156, 158 (Utah
Ct. App. 1994); see also Orvis, 2008 UT 2, ¶ 10 (“Where the moving
party would bear the burden of proof at trial, the movant must
establish each element of his claim in order to show that he is
entitled to judgment as a matter of law.”). The movant must
“affirmatively provide factual evidence establishing that there is no
genuine issue of material fact” and cannot satisfy this burden by
“merely point[ing] out a lack of evidence in the nonmoving party’s
case.” Orvis, 2008 UT 2, ¶ 16. As a result, it is possible “that
summary judgment may be inappropriate” regardless of whether
the nonmoving party “properly respond[s] to the motion.” See id.
¶6 In order to pursue a contractual right to recover under the
Note, DONI must demonstrate that it is a sold-out junior lienor—“a
creditor originally secured by a second lien against real property
but unsecured as a result of the senior’s foreclosure.” See City
Consumer Servs., Inc. v. Peters, 815 P.2d 234, 236 (Utah 1991). A
creditor whose interest is secured by a trust deed is limited in
enforcing its debt by the “one-action rule.” Id. at 235–36. Though
that rule is couched in terms of mortgages, “Utah cases, as well as
cases from many other jurisdictions, have held that the one-action
rule applies to trust deeds.” Id. at 236. This rule prohibits “a
creditor whose loan is in default . . . from suing the debtor
personally on the note until it first forecloses against the real
property,” unless that creditor is a “‘sold out junior lienor.’” Id. at
236–37. In other words, the one-action rule precludes a creditor
from pursuing a debtor personally “until the property securing the
debt [is] exhausted or lost, which [may] occur[] when . . . [a] senior
lien-holder[] foreclose[s] on the property.” See APS v. Briggs, 927

Dyck-O’Neal, Inc. v. Wilson
20130393-CA 4 2014 UT App 173
P.2d 670, 674 (Utah Ct. App. 1996); cf. Timm v. Dewsnup, 2003 UT
47, ¶ 33, 86 P.3d 699 (“The fundamental lesson to be drawn from
our cases interpreting the one-action rule is that its primary
objective is to place the personal assets of a mortgagor beyond the
reach of a mortgagee until the value of the pledged property is
exhausted.”).
¶7 DONI did not provide sufficient information to demonstrate
that it is a sold-out junior lienor. DONI merely asserted that it is an
unsecured junior creditor, having lost its security interest under the
Note when a senior creditor foreclosed on the property. DONI
provided no information regarding the foreclosure and, indeed, has
maintained throughout the course of these proceedings that the
foreclosure on the property was prompted by Wilson’s non-
payment of the Note between DONI and Wilson. Presumably, this
would entitle only DONI to pursue foreclosure. It is difficult to
understand how a senior creditor, who is not party to the Note
between DONI and Wilson, could pursue foreclosure based on the
debtor’s default on a junior interest. Cf. Restatement (Third) of
Prop.: Mortgages § 7.1 (1997) (“A valid foreclosure of a mortgage
terminates all interests in the foreclosed real estate that are junior
to the mortgage being foreclosed and whose holders are properly
joined or notified under applicable law. Foreclosure does not
terminate interests in the foreclosed real estate that are senior to the
mortgage being foreclosed.”).
¶8 Furthermore, if DONI, or the trustee under the trust deed,
initiated the foreclosure, DONI cannot now pursue a breach of
contract claim against Wilson. See Cox v. Green, 696 P.2d 1207, 1208
(Utah 1985) (per curiam) (holding that Utah Code “section 57-1-32
provides the exclusive procedure for securing a deficiency
judgment following a trustee’s sale of the real property under a
trust deed” and that a creditor is prohibited from pursuing both a
sale of the property and “any other remedy, including damages for
breach of contract, which might have been available to [it]”). In that
situation, DONI would be limited to seeking a deficiency judgment
in accordance with Utah Code section 57-1-32, which DONI admits
it has not adequately pleaded. Because DONI has not provided
sufficient information to prove whether it is a junior or senior lien

Dyck-O’Neal, Inc. v. Wilson
20130393-CA 5 2014 UT App 173
holder and whether its security was extinguished by foreclosure of
a senior lien holder, we cannot determine which cause of action
DONI could have and should have pursued. Accordingly, DONI
has failed to demonstrate that it is entitled to recover on a breach
of contract cause of action against Wilson as a matter of law.
¶9 In conclusion, although DONI properly provided an
affidavit with its motion for summary judgment, “there are still
questions that remain unanswered about the salient facts
pertaining to” DONI’s cause of action and rights under the Note.
See Dyck–O’Neal, Inc. v. Sapan, No. 323735, 1996 WL 715410, at *2
(Conn. Super. Ct. Dec. 4, 1996). The trial court’s grant of summary
judgment is reversed, and this case is remanded for further
proceedings.