CHRISTIANSEN FORSTER, Judge
Opinion Third District Court, West Jordan Department
The Honorable James D. Gardner
No. 130405660 Karra J. Porter, Kristen C. Kiburtz, Edward T. Wells, and David D. Bennett, Attorneys for Appellants Brett N. Anderson and Scott R. Taylor, Attorneys for Appellee JUDGE MICHELE M. CHRISTIANSEN FORSTER authored this Opinion, in which JUDGES DAVID N. MORTENSEN and JILL M. POHLMAN concurred. CHRISTIANSEN FORSTER, Judge: ¶1 After Lynnette Noerring and Justine Noerring (collectively, the Noerrings) defaulted on a loan, Wells Fargo Bank, NA (Wells Fargo) prepared to foreclose on the real property that secured that loan. A title search revealed, however, that, due to some missing words, the security interest in the property had not been effectively conveyed. Wells Fargo filed this action seeking, among other things, reformation of a vesting deed. Following a bench trial, the court amended the deed of trust entered into by the parties to reflect what all parties believed they were doing at the time—creating and conveying an enforceable deed of trust to secure the loan. Appellants challenge that decision. We affirm.
Because Lynnette and Justine share a last name, we refer to each by her first name throughout this opinion. We intend no disrespect by the apparent informality.
BACKGROUND
¶2 On March 15, 2003, Lynnette created the OMI Trust, designating herself as the trustee and her daughter, Justine, as the sole beneficiary. The only asset placed into the trust was the real property (the Property) at issue in this action. ¶3 Lynnette refinanced the Property several times. In each instance, she transferred the Property by quitclaim deed from herself, as trustee of the OMI Trust, to herself as an individual. After executing a deed of trust on the Property and closing the refinance, Lynnette typically conveyed the Property back to herself, as the trustee of the OMI Trust, by quitclaim deed. ¶4 Lynnette broke from this pattern in one such iteration. In February 2006, Lynnette executed a quitclaim deed (the 2006 Quitclaim Deed), purportedly transferring the Property to Lynnette and Justine as individuals, which was recorded on March 3, 2006. Instead of identifying the grantor as the trustee of the OMI Trust—the record owner of the Property at the time—the 2006 Quitclaim Deed instead listed the grantor as "Lynnette Noerring, a married woman." Following the recording of that quitclaim deed, the Noerrings refinanced the mortgage on the Property with a loan from WMC Mortgage Corp., which loan was secured by a trust deed, also recorded on March 3, 2006. Consequently, the trial court ordered reformation of the New Century Trust Deed. The court changed the grantor of the Property from Lynnette and Justine, as individuals, to Lynnette, as trustee of the OMI Trust. Justine and Darwin Long (collectively, Appellants) challenge the trial court's decision.
By "recording" or "recorded" in this opinion, we refer to recordation of instruments at the Salt Lake County Recorder's Office.
Although not relevant to this appeal, we note for clarity that the New Century Note was sold and pooled together with other mortgage loans into an asset-backed trust. Wells Fargo Bank, NA is the trustee for that trust.
Following the second loan modification, Justine made two payments before defaulting, one in March and one in April 2011.
Justine succeeded Lynnette as the trustee of the OMI Trust and, in 2013, Darwin Long (Long) succeeded Justine as the trustee.
The court alternatively concluded that the 2006 Quitclaim Deed could be reformed based on the same reasoning. Although Wells Fargo initially requested the remedy of reformation of the 2006 Quitclaim Deed, it later asserted that the court could alternatively reform the New Century Trust Deed. Appellants did not challenge the court's adoption of this alternative remedy, but instead focused their arguments below, as on appeal, on the absence of the OMI Trust as a party to the New Century Trust Deed. The trial court could not reform the New Century Trust Deed, Appellants argued, because that reformation would entail drawing the OMI Trust—a separate legal entity that was not a party to the New Century Trust Deed—into that transaction. Because the trial court ordered reformation of the New Century Trust Deed, we likewise focus our attention on that aspect of the court's decision.
ISSUES AND STANDARDS OF REVIEW
¶9 Appellants raise three issues on appeal. First, they argue that Wells Fargo's reformation claims are barred by the nonclaim provisions of the Utah Uniform Trust Code and the Utah Probate Code (collectively, the Nonclaim Statutes). See Utah Code Ann. § 75-3-803(1) (LexisNexis Supp. 2018); id. § 75-7-509(1). Appellants raise this issue for the first time on appeal but assert that the issue can be addressed despite the lack of preservation because application of the Nonclaim Statutes present a jurisdictional bar to Wells Fargo's claims. "As a general rule, claims not raised before the trial court may not be raised on appeal." State v. Holgate, 2000 UT 74, ¶ 11, 10 P.3d 346. However, "because subject matter jurisdiction goes to the heart of a court's authority to hear a case, it is not subject to waiver and may be raised at any time, even if first raised on appeal." In re adoption of Baby E.Z., 2011 UT 38, ¶ 25, 266 P.3d 702 (quotation simplified). The applicability and interpretation of a statute is a question of law, which we review for correctness. Fuller v. Bohne, 2017 UT App 28, ¶ 9, 392 P.3d 898. ¶10 Second, Appellants argue that Wells Fargo's claims are barred by the three-year statute of limitations applicable to claims for relief on the ground of fraud or mistake. Utah Code Ann. § 78B-2-305(3). Whether a statute of limitations applies and whether the limitations period is subject to tolling are questions of law. Shiozawa v. Duke, 2015 UT App 40, ¶ 14, 344 P.3d 1174. However, the determination of when a party reasonably should have known the facts constituting the fraud or mistake claim is a question of fact. Id. We will not disturb the fact-finder's determination absent clear error. Sevy v. Security Title Co. of S. Utah, 902 P.2d 629, 634 (Utah 1995). ¶11 Third, Appellants contend that the trial court had no authority to reform a deed by substituting a third party as grantor, thereby creating a new deed. "Reformation of a deed is a proceeding in equity." RHN Corp. v. Veibell, 2004 UT 60, ¶ 35, 96 P.3d 935 (quotation simplified). In equity actions, we review the trial court's factual findings for clear error and its conclusions of law for correctness. Id. We will not overturn a trial court's formulation of an equitable remedy "unless it has abused its discretion." Ockey v. Lehmer, 2008 UT 37, ¶ 42, 189 P.3d 51 (quotation simplified).
Where the applicable provision has not substantively changed, we cite the most recent version of the Utah Code for convenience.
ANALYSIS
I. Nonclaim Statutes
¶12 Appellants assert that the trial court lacked jurisdiction to determine Wells Fargo's reformation claims because those claims were barred by Utah's Nonclaim Statutes. See Utah Code Ann. § 75-3-803(1) (LexisNexis Supp. 2018); id. § 75-7-509(1). Particularly, Appellants argue that, based on the Nonclaim Statutes, Wells Fargo was required to present its claim for reformation of the deed within one year of Lynnette's death. Because Wells Fargo did not seek reformation within this one-year window, Appellants argue, any claim is barred "against the deceased settlor's estate, the trustee, the trust estate, and the beneficiaries of the deceased settlor's trust." (Quoting Utah Code Ann. § 75-7-509(1).) Wells Fargo argues in response that the Nonclaim Statutes are not applicable to this action because "any proceeding to enforce any mortgage, pledge, or other lien upon property of the deceased settlor's estate" is exempt from the one-year presentment period. Utah Code Ann. § 75-7-509(4)(a). We first review the Nonclaim Statutes generally, then consider the applicability of the Nonclaim Statutes to Wells Fargo's reformation claims. ¶13 The Nonclaim Statutes generally require creditors to present claims against a decedent's estate or a deceased settlor within one year of the person's death. See id. § 75-3-803(1); id. § 75-7-509(1). Failure to present a claim timely will likely result in that claim being barred as against the trust or estate because the purpose of the Nonclaim Statutes is "to promote a speedy and efficient system" for settling and distributing the estate or trust of the decedent. See In re Estate of Ostler, 2009 UT 82, ¶ 20, 227 P.3d 242 (quoting In re Estate of Daigle, 634 P.2d 71, 76 (Colo. 1981) (en banc)). Indeed, the Utah Supreme Court has construed the Nonclaim Statutes "as a jurisdictional bar not subject to tolling." Id. ¶ 21. In reaching this conclusion, the supreme court adopted the reasoning employed by the Colorado Supreme Court in In re Estate of Randall, 441 P.2d 153 (Colo. 1968) (en banc), and Daigle. See Ostler, 2009 UT 82, ¶ 21. The Daigle court explained:
A nonclaim statute operates to deprive a court of jurisdiction. The personal representative of an estate can neither waive it nor toll it. A nonclaim statute imposes a condition precedent to the enforcement of a right of action; that is to say, the claim must be presented within the time set in the notice to creditors or be barred. A statute of limitations, on the other hand, does not bar the right of action but only the remedy. Such a statute may be tolled. Such a statute is a defense which is waived if not affirmatively pleaded.
¶18 We have observed that "reformation is an equitable remedy that permits the court to add new terms to a deed or alter the original language of a deed to conform to the parties' intent." FDIC v. Taylor, 2011 UT App 416, ¶ 45, 267 P.3d 949 (quotation simplified); see also Wells Fargo Bank, NA v. Coleman, 768 S.E.2d 604, 611 (N.C. Ct. App. 2015) ("Reformation is a well-established equitable remedy used to reframe written instruments where, through mutual mistake or the unilateral mistake of one party induced by fraud of the other, the written instrument fails to embody the parties' actual, original agreement." (quotation simplified)). Here, Wells Fargo sought equitable reformation of the 2006 Quitclaim Deed or the New Century Trust Deed. This cause of action falls outside of the definition of a claim under the Nonclaim Statutes. Accordingly, the one-year presentation period does not apply and the trial court had jurisdiction to decide the matter.
We note that Wells Fargo asserted several claims in its complaint, some of which may have been subject to the Nonclaim Statutes' one-year presentation period. But the decision of the trial court as well as the parties' argument on appeal focuses on Wells Fargo's cause of action for reformation. We accordingly limit our review to that legal theory.
II. Statute of Limitations
¶19 Appellants next argue that the trial court incorrectly identified the date that the statute of limitations for fraud or mistake began to run. An action to reform a deed based upon fraud or mistake must be brought within three years. Utah Code Ann. § 78B-2-305(3) (LexisNexis Supp. 2018). On its face, the 2006 Quitclaim Deed fails to illuminate the mistake at issue in this case—that the grantor was incorrectly identified for an effective transfer of title to the Property. ¶26 The mistake is also not apparent on the face of the New Century Trust Deed. Lynnette and Justine represented in the deed that they were title owners of the Property with authority to convey it. By endorsing the New Century Trust Deed, they further agreed to convey an interest in the Property to New Century as security for the New Century Note. Although Lynnette and Justine, in their individual capacities, could not do this in reality, this defect is not apparent in the trust deed. Consequently, Wells Fargo's knowledge of the contents of the 2006 Quitclaim Deed and the New Century Trust Deed does not equate to discovery of the facts constituting the mistake. See Smith, 17 P.2d at 270. The operation of the recording statute—imputing knowledge of the contents of the recorded deeds to New Century—did not impart notice of the mistakes at issue. ¶27 The trial court found that New Century had no knowledge of the mistake in the New Century Trust Deed when the loan closed in 2006. Rather, the court determined that Wells Fargo discovered the mistake in 2011 when completing a title search. We are not persuaded that, under the circumstances of this case, the recording statute imparting constructive notice supplants the court's fact-finding inquiry. We accordingly decline to disturb the trial court's findings.
The parties do not dispute either the applicable statute of limitations or whether it is subject to tolling under the statutory discovery rule. We therefore limit our review to the trial court's finding regarding Wells Fargo's discovery of the facts forming the basis of the mistake claim. See Shiozawa v. Duke, 2015 UT App 40, ¶ 14, 344 P.3d 1174.
To be certain, Lynnette's 2006 Quitclaim Deed did not effectively convey the Property because the OMI Trust was the title owner at the time and Lynnette listed herself, individually, as the grantor. But the deed was not defective simply because it could not convey title to the Property under the circumstances. Quitclaim deeds "do not imply the conveyance of any particular interest in property" but rather convey only the interest the grantor holds at the time, "be that interest what it may." See Nix v. Tooele County, 118 P.2d 376, 377 (Utah 1941); see also Holladay Towne Center, LLC v. Brown Family Holdings, LLC, 2011 UT 9, ¶ 31, 248 P.3d 452 (explaining that a "quitclaim deed conveys whatever interest the grantors possess at the time" (quotation simplified)). --------
III. Authority to Reform a Deed
¶28 Appellants also argue that the trial court lacked authority to reform the New Century Trust Deed because doing so involved substituting a third party into the deed and creating a 2004 UT 60, ¶ 36. Accordingly, we discern no error or lack of authority on the part of the trial court to reform the New Century Trust Deed. Because the parties intended to convey an enforceable security interest in the Property, and the OMI Trust would suffer no prejudice as a result of the reformation, we conclude the trial court did not err when it reformed the New Century Trust Deed. See Taylor, 2011 UT App 416, ¶ 46.
CONCLUSION
¶34 The trial court did not err when it granted Wells Fargo's request to reform the New Century Trust Deed. This particular cause of action—equitable reformation—is equitable in nature and therefore was not a "claim" within the meaning of the Nonclaim Statutes. Accordingly, the trial court had jurisdiction to decide the issues raised in this appeal. Additionally, we are not persuaded that, under the circumstances of this case, Wells Fargo had constructive notice of the mistakes in the 2006 Quitclaim Deed or New Century Trust Deed prior to 2011. Finally, we conclude that the trial court retained authority to reform the New Century Trust Deed to reflect the intent of the parties. We affirm.