Deleeuw v. Nationstar Mortgage

2018 UT App 59
THE UTAH COURT OF APPEALS
BRAD DELEEUW,
Appellant,
v.
NATIONSTAR M ORTGAGE LLC AND NATIONSTAR
M ORTGAGE PROPERTIES LLC,
Appellees.
Opinion
No. 20170034-CA
Filed April 12, 2018
Fourth District Court, Provo Department
The Honorable Derek P. Pullan
No. 160401076
Steven R. Sumsion, Attorney for Appellant
Robert H. Scott and Jason T. Baker, Attorneys
for Appellees
JUDGE D AVID N. M ORTENSEN authored this Opinion, in which
JUDGES M ICHELE M. C HRISTIANSEN and R YAN M. HARRIS
concurred.
MORTENSEN, Judge:
¶1 	Having not made any payment since 2008, Appellant
Brad Deleeuw faults the holder of the trust deed note on his
home for not foreclosing faster. The district court dismissed his
complaint, which asserted that the statute of limitations for
foreclosure had expired and that the note holder should be stuck
with 	the 	debt. 	The 	district 	court 	ruled 	that 	the 	statute 	of
limitations did not start running until the note was accelerated in
2016 and that even 	now the statute of limitations has not
expired. Deleeuw asserts on appeal that the district court erred,
arguing that the statute of limitations started to run when he first

Deleeuw v. Nationstar Mortgage
20170034-CA 	2 	2018 UT App 59
failed to make a payment and defaulted in 2008, and that the
statute of limitations expired in 2014. We disagree and affirm.
BACKGROUND
¶2 	SCME Mortgage Inc. (SCME) loaned $224,000 to Deleeuw
in November 2003 in exchange for Deleeuw’s promise to repay
the loan in full, plus interest. This agreement was reduced to
writing by way of a signed note (the Note). The Note was
secured by a deed of trust (the Deed of Trust) on Deleeuw’s
residence in American Fork, Utah (the Property), and it placed
no conditions on his obligation to repay the debt. The Deed of
Trust 	designated 	SCME 	as 	the 	lender, 	Mortgage 	Electronic
Registration Systems Inc. as the beneficiary, and Precision Title
Insurance Agency of Utah Inc. as the trustee. The Note was later
assigned to and is currently in the possession of the successor-in-
interest, Nationstar Mortgage LLC (Nationstar).
¶3 	In the Note, Deleeuw agreed to pay principal and interest
each month. He further agreed that if he had not repaid the loan
in full by the maturity date, December 1, 2033, he would pay the
Note in full at that time. Additionally, the Note stipulated that if
Deleeuw missed his monthly payment when due, he would be
in default. In the event of a default, the note holder (Note
Holder) would be permitted to “send [Deleeuw] a written notice
telling [Deleeuw] that if [he did] not pay the overdue amount by
a certain date, the Note Holder may require [him] to pay
immediately the full amount of Principal which has not been
paid and all the interest [owed] on that amount.”
¶4 	Further, the Note provided that “[e]ven if, at a time when
[Deleeuw is] in default, the Note Holder does not require [him]
to pay immediately in full as described above, the Note Holder
will still have the right to do so if [Deleeuw is] in default at a
later time.” The Note also specified “how and under what

Deleeuw v. Nationstar Mortgage
20170034-CA 	3 	2018 UT App 59
conditions 	[Deleeuw] 	may 	be 	required 	to 	make 	immediate
payment in full of all amounts [owed] under this Note.”
¶5 	Under the Deed of Trust, additional protections were
given to the Note Holder and the following acceleration clause
was agreed upon:
Lender 	shall 	give 	notice 	to 	Borrower 	prior 	to
acceleration following Borrower’s breach of any
covenant 	or 	agreement 	in 	this 	Security
Instrument . . . . [which] 	shall 	specify: 	(a) 	the
default; (b) the action required to cure the default;
(c) a date, not less than 30 days from the date the
notice is given to Borrower, by which the default
must be cured; and (d) that failure to cure the
default on or before the date specified in the notice
may result in acceleration of the sums secured by
the 	Security 	Instrument 	and 	the 	sale 	of 	the
Property . . . . If the default is not cured on or
before the date specified in the notice, Lender at its
option may require immediate payment in full of
all sums secured by this Security Instrument.
¶6 	Deleeuw has not made a payment on the Note since
August 2008 and has been in default under the terms of the Note
since 	September 	2008. 	Orange 	Title 	Insurance 	Agency 	Inc.
(Orange Title) was substituted as trustee under the Deed of Trust
on April 2, 2013, and again on July 10, 2014.1 As trustee, Orange
Title filed three notices of default against Deleeuw: one in April
2014, 	which 	was 	cancelled; 	one 	in 	July 	2014, 	which 	was
1. Orange Title was substituted as trustee on two separate
occasions due to an error in the legal description of the Property
during the first substitution. That error is not at issue in this
appeal.

Deleeuw v. Nationstar Mortgage
20170034-CA 	4 	2018 UT App 59
cancelled; and one in February 2016, which accelerated the
remaining payments under the Note.
¶7 	In July 2016, Nationstar, through Orange Title, attempted
to foreclose on the Property. Deleeuw brought an action to
prevent foreclosure, arguing that Nationstar’s efforts to foreclose
were barred by a six-year statute of limitations that had expired.
In his complaint, Deleeuw alleged causes of action for injunctive
relief 	barring 	foreclosure, 	quiet 	title 	to 	the 	Property, 	and
declaratory 	relief 	stating 	that 	the 	statute 	of 	limitations 	for
foreclosure had expired. All of Deleeuw’s claims were premised
on the argument that the general statute of limitations for
written contracts, Utah Code section 78B-2-309, applied to the
foreclosure and that the statute of limitations had expired.
¶8 	Nationstar moved to dismiss, arguing that the applicable
statute of limitations was not the general statute for written
contracts, but was instead the statute of limitations found in
Article 3 of the Uniform Commercial Code (the UCC), which it
asserted had not expired. The district court agreed and granted
Nationstar’s motion to dismiss with prejudice. Deleeuw now
appeals.
ISSUE AND STANDARD OF REVIEW
¶9 	Deleeuw 	challenges 	the 	district 	court’s 	grant 	of
Nationstar’s motion to dismiss. We review a district court’s
decision to grant or deny a motion to dismiss for correctness,
giving no deference to the decision of the lower court. See State v.
Hamilton, 2003 UT 22, ¶ 17, 70 P.3d 111.
ANALYSIS
¶10 	Deleeuw argues that the district court erred in granting
Nationstar’s motion to dismiss because it applied the wrong

Deleeuw v. Nationstar Mortgage
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statute of limitations. 	Deleeuw contends that the statute of
limitations 	period 	for 	foreclosure 	under 	a 	deed 	of 	trust 	is
governed by Utah Code section 78B-2-309, not Article 3 of the
Uniform Commercial Code. We disagree.
¶11 	Utah Code section 57-1-34 provides that
[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 2009) (emphasis added).
The 	parties 	disagree 	on 	which 	“period 	prescribed 	by 	law”
applies in this situation. Deleeuw asserts that the statute of
limitations applicable here is Utah Code section 78B-2-309, the
six-year statute of limitations for an action on an instrument in
writing, 	and 	that 	the 	limitations 	period 	began 	to 	run 	on
September 1, 2008—the date that he first failed to make a
monthly 	mortgage 	payment. 	See 	id. 	§ 	78B-2-309 	(2012).
Nationstar, 	however, 	asserts 	that 	the 	applicable 	statute 	of
limitations is found in Utah Code section 70A-3-118(1), the six-
year statute of limitations for negotiable instruments under the
UCC, 	which 	began 	to 	run 	on 	February 	5, 	2016, 	the 	date
Nationstar accelerated the payments under the Note. See id.
§ 70A-3-104(1) (2009) (negotiable instrument); id. § 70A-3-118(1)
(statute of limitations).
¶12 	The statute of limitations for an action on an instrument
in writing generally begins to run at the time of the breach—that is,
the date of the first missed payment. See Goldenwest Fed. Credit
Union v. Kenworthy, 2017 UT App 191, ¶¶ 3, 7 n.4, 406 P.3d 253

Deleeuw v. Nationstar Mortgage
20170034-CA 	6 	2018 UT App 59
(running the statute of limitations from the time of breach, which
is the time of the first missed payment or the maturity date). In
contrast, the UCC statute of limitations states that “an 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.” Utah Code Ann.
§ 70A-3-118(1) 	(emphasis 	added). 	Thus, 	while 	both 	statutes
prescribe six-year limitation periods, they contain potentially
different triggering dates for the commencement of the six-year
periods.
¶13 	When two statutory provisions conflict, the more specific
provision governs. Millett v. Clark Clinic Corp., 609 P.2d 934, 936
(Utah 1980). Our supreme court has stated that “where the
Uniform Commercial Code sets forth a limitation period for a
specific type of action, this limitation controls over an older,
more general statute of limitations.” Perry v. Pioneer Wholesale
Supply Co., 681 P.2d 214, 216 (Utah 1984). As such, the more
specific UCC statute of limitations applies to the Note and the
Deed 	of 	Trust 	at 	issue 	here. 	The 	Note 	in 	question 	was
accelerated in February 2016, and that event started the running
of the limitations period. Because the six-year limitations period
started 	running 	in 	February 	2016, 	it 	will 	not 	expire 	until
February 2022.
¶14 	We 	draw 	support 	for 	our 	conclusion 	from 	a 	recent
decision of Utah’s federal district court, which offers persuasive,
but not binding, interpretive guidance regarding the applicable
statute 	of limitations 	period. 	In that 	decision, 	the 	plaintiffs
executed a promissory note and deed of trust to secure a loan of
$235,000. Lewis v. Caliber Home Loans, Inc., No. 2:16-cv-01252,
2018 WL 485967, at *1 (D. Utah Jan. 18, 2018), appeal docketed, No.
18-4020 (10th Cir. Feb. 16, 2018). The plaintiffs defaulted on their
loan in 2009, their debt was accelerated in 2014, and the trustee
attempted to foreclose on the property in 2016. Id. The plaintiffs

Deleeuw v. Nationstar Mortgage
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asserted the same argument that Deleeuw presents here—that is,
the statute of limitations began to run from the date of the first
failure to make payment. See id. at *1–2. The defendants asserted
that the UCC applied and that the statute of limitations began to
run on the date of acceleration. Id. at *2. Analogous to the
present case before us, the issue of what statute of limitations
applies was presented in the context of a motion for summary
judgment. See id. The federal district court analyzed the same
statutes discussed here and reasoned that because the UCC
statute 	was 	the 	more 	specific 	provision, 	the 	UCC 	statute
governed. Id. Based on this conclusion, the federal district court
rejected the plaintiffs’ argument, holding that the statute of
limitations began running on the date of acceleration. Id. at *3.
We find the reasoning of the Lewis court persuasive insofar as it
supports our independent conclusion that the more specific UCC
statute of limitations controls.
¶15 	Contrary 	to 	both 	our 	reading 	of 	the 	law 	and 	the
conclusion in Lewis, Deleeuw argues that Bevan v. Boyce, 2006 UT
App 	31U 	(per 	curiam), 	controls in 	this 	case. 	In 	Bevan, 	we
dismissed the plaintiff’s argument that real estate transactions
involving deeds of trust are governed by the UCC, stating that
“trust deeds are not regulated by the Uniform Commercial Code
but instead are regulated by Utah Code sections 57-1-1 through
57-1-44.” Id. para. 3. However, the present case does not involve
a real estate transaction—it involves the use of the Property to
secure Deleeuw’s debt by way of an underlying contractual
obligation—and Deleeuw fails to incorporate Utah Code section
57-1-34 into his analysis. That section plainly requires that a
court determine the statute of limitations for foreclosure under a
deed of trust by reference to the limitations period on the
underlying obligation. See Utah Code Ann. § 57-1-34 (LexisNexis
2009); supra ¶ 11. Here, that underlying obligation is the loan. It
is irrelevant that the UCC does not apply to deeds of trust in
other contexts. Therefore, it is clear, through case law and
statutory 	construction, 	that 	the 	UCC 	statute 	of 	limitations

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20170034-CA 	8 	2018 UT App 59
applies in this case because it is the more specific provision. See
Millett, 609 P.2d at 936.2
¶16 	Deleeuw further argues that even if the UCC should apply,
it cannot. His rationale is that because the Deed of Trust deals
with a real property transaction, it is not a negotiable instrument,
and negotiability is required for the UCC to apply. While it is
unclear whether this issue was presented to the district court
and thus preserved, we address it to clarify the law and reject his
premise outright. Certainly, the Deed of Trust is not a negotiable
2. In an attempt to argue that the statute of limitations begins to
run at the time of the first missed payment, Deleeuw points us to
DiMeo v. Nupetco Associates, LLC, 2013 UT App 188, 309 P.3d 251,
and Christensen v. American Heritage Title Agency, Inc., 2016 UT
App 36, 368 P.3d 125, which Deleeuw claims support that
proposition. However, in both of these cases, we simply applied
the statute of limitations agreed on by the parties and went on to
address separate legal issues. See DiMeo, 2013 UT App 188, ¶ 9
(determining whether foreclosure was appropriate where the
statute of limitations had run against one, but not all co-obligors
on a note secured by a deed of trust); Christensen, 2016 UT App
36, ¶ 18 (holding that “[t]he parties do not dispute that the
amended complaints, raising the foreclosure claims and adding
the 	foreclosure 	defendants to 	the 	suit, 	were 	filed 	after 	the
expiration of the six-year statute of limitations”). Neither case
analyzed the application of competing statutes of limitations, nor
held that the UCC is inapplicable to foreclosures on deeds of
trust securing negotiable instruments. Therefore, those cases are
not binding on this particular set of facts. While Deleeuw may be
correct 	that 	the 	statute 	of 	limitations 	for 	an 	action 	on 	an
instrument in writing begins to run at the time of the breach—
that is, the date of the first missed payment, see supra ¶ 11—that
is not the case here when read with Utah Code section 70A-3-
104(1) and Utah Code section 57-1-34.

Deleeuw v. Nationstar Mortgage
20170034-CA 	9 	2018 UT App 59
instrument under the UCC, but the Note is. To be negotiable
under Utah Code section 70A-3-104(1), an instrument must: (1)
be signed by the maker or drawer, (2) contain an unconditional
promise or order to pay a sum certain in money, (3) be payable
on demand or at a definite time, and (4) be payable to order or to
bearer. Calfo v. D.C. Stewart Co., 717 P.2d 697, 699 (Utah 1986).
Here, the Note was signed by Deleeuw; it is payable to Note
Holder; it contains an unconditional promise to pay $224,000;
and states that all amounts owed must be paid by December 1,
2033, the maturity date of the loan. Therefore, the Note is a
negotiable instrument within the meaning of the UCC.3 Because
the Note is a negotiable instrument, any lawsuit to enforce the
Note is governed by the UCC statute of limitations. Again,
although 	the 	Note 	is 	an 	agreement 	in 	writing 	that 	might
otherwise be subject to the limitations period of Utah Code
section 78B-2-309, the more specific UCC limitations period
governs. See Millett, 609 P.2d at 936; see also Van Leeuwen v. Bank
of Am. NA, No. 2:14-cv-00703, 2015 WL 5618048, at *3 (D. Utah
Sept. 24, 2015) (rejecting the plaintiff’s argument that the statute
of limitations ran from the borrower’s last payment on the loan
and concluding that the UCC statute of limitations applied
instead).
3. Deleeuw also contends that “[w]here a promissory note and
trust deed are executed together as part of the same transaction,
they must be considered together.” (Citing Trethway v. Furstenau,
2001 UT App 400, ¶ 9, 40 P.3d 649.) However, he fails to cite any
authority that transmutes a negotiable instrument into a non-
negotiable instrument based on an outside reference to a deed of
trust. In fact, our supreme court has held the opposite. See Calfo
v. 	D.C. 	Stewart 	Co., 	717 	P.2d 	697, 	700 	(Utah 	1986) 	(“[A]n
instrument’s 	negotiability 	must 	be 	determinable 	from 	what
appears on its face and without reference to extrinsic facts.”).

Deleeuw v. Nationstar Mortgage
20170034-CA 	10 	2018 UT App 59
¶17 	The Note in the present case evidences an underlying
obligation to pay money on a loan, not a real estate transaction.
See Utah Code Ann. § 57-1-34. Just because the mechanism by
which Deleeuw is forced to pay back the loan happens to be tied
to a real property foreclosure does not make this a real estate
transaction. The relevant analysis should focus solely on the
underlying obligation, not the security instrument employed.
¶18 	The obligation secured by the Deed of Trust in this case is
the Note from November 2003 in which Deleeuw promised to
pay $224,000. The statute of limitations began to run in February
2016 when that Note was accelerated. Because the six-year
statute of limitations has not yet expired, Nationstar is permitted
to foreclose. Therefore, the district court did not err in granting
Nationstar’s motion to dismiss.
CONCLUSION
¶19 	For these reasons, we conclude that the UCC applies to
this case and the statute of limitations began to run at the time
the 	debt 	was 	accelerated. 	Therefore, 	Nationstar’s 	right 	to
foreclose on the Property is not time-barred and the district court
correctly dismissed Deleeuw’s complaint seeking to prevent
foreclosure. We affirm.