[00:00:00] Speaker 03:
25-4030, Banner Bank versus Smith.

[00:00:04] Speaker 03:
Mr. Cull, if you could introduce yourself and you may proceed.

[00:00:08] Speaker 01:
Thank you, Your Honor.

[00:00:09] Speaker 01:
Stephen Cull of Rayquonia Nebicar.

[00:00:11] Speaker 01:
I am appearing on behalf of Banner Bank, which was formerly known as America West Bank, which had previously been known as Bar West Bank.

[00:00:22] Speaker 01:
This case, which has been long running, Your Honors,

[00:00:26] Speaker 01:
arises from a $2.3 million loan that was made by the bank to a couple of companies that were in Utah.

[00:00:34] Speaker 01:
They were involved in real estate.

[00:00:36] Speaker 01:
The principal of those companies was a man named James Smith.

[00:00:41] Speaker 01:
And James Smith guaranteed the loan.

[00:00:43] Speaker 01:
There was collateral that was pledged for the loan.

[00:00:46] Speaker 01:
The personal property collateral was located in Utah.

[00:00:50] Speaker 01:
There was a mortgage given on property in South Carolina.

[00:00:54] Speaker 01:
There was a deed of trust given on property in Oregon.

[00:00:59] Speaker 01:
The Oregon deed of trust encumbered 11 parcels of land and a one-half interest in a condominium.

[00:01:08] Speaker 01:
And the loan went into default.

[00:01:11] Speaker 01:
And because of complications dealing with how you can foreclose in these different states when you have either a mortgage or a deed of trust, that the proper procedure was to file the diversity action

[00:01:23] Speaker 01:
before the United States District Court here in Utah, and the South Carolina judge so ruled.

[00:01:29] Speaker 01:
And so as the case proceeded, Mr. Smith and the bank were able to reach a stipulation as to the foreclosure of the South Carolina property that was approved by the district court.

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And so there was a credit given on the loan as a result of that.

[00:01:47] Speaker 01:
So the South Carolina property fell out.

[00:01:50] Speaker 01:
As the case went on, the bank pursued

[00:01:53] Speaker 01:
filed its had filed its complaint and in filing its complaint it named Larry Smith as a party for purposes of declaratory relief only and the reason for that was the Oregon property the deed of trust rather encumbered an organ condominium and that condominium Reflected according to the title report that it was owned one half by James Smith and one half by Larry Smith

[00:02:23] Speaker 01:
And in addition to that, the Smiths had been married for some time, but were separated as strange.

[00:02:30] Speaker 01:
A divorce case was filed in Florida that went on, I think, for nearly 10 years.

[00:02:35] Speaker 01:
And so the bank's concerns were that what we had given a release to various parties, and Larry Smith was a third-party beneficiary of that release, they wanted to make certain that they didn't execute or that the district court didn't execute

[00:02:52] Speaker 01:
on any property that was owned by Larif Smith.

[00:02:56] Speaker 01:
And so the proper procedure under Utah law, which is incorporated under Rule 69, is that they named Larif Smith solely for the purpose of obtaining declaratory relief that she didn't have an interest in the collateral owned by James Smith.

[00:03:16] Speaker 01:
And as you all know, oftentimes spouses will come in and assert a marital interest in property

[00:03:22] Speaker 01:
The bank didn't want that to occur, so the proper procedure was to name her.

[00:03:27] Speaker 01:
She was named solely for purposes of declaratory relief as to whether she had an interest in the property.

[00:03:34] Speaker 01:
There was no claim of liability sought against her in any way.

[00:03:39] Speaker 01:
There was never any sort of receivership on the condo that was imposed.

[00:03:45] Speaker 01:
The bank didn't interfere with the rents that the two of them were sharing from the condominium and so forth.

[00:03:51] Speaker 01:
So what happened to the case?

[00:03:53] Speaker 04:
Let me stop you for just a second.

[00:03:54] Speaker 04:
So you would agree, though, that the text of the release does not specifically exclude actions for declaratory relief from the release?

[00:04:07] Speaker 01:
Yes.

[00:04:08] Speaker 04:
OK, so I mean, at least as a textual matter, your declaratory judgment action was covered by the language of the release.

[00:04:17] Speaker 01:
Yes.

[00:04:18] Speaker 01:
I mean, it talks about claims.

[00:04:19] Speaker 04:
And I think I, I think I understand from your briefing.

[00:04:22] Speaker 04:
I mean, you're not even really contesting that you've reached the release.

[00:04:26] Speaker 04:
You're just in your mind, it wouldn't give rise to attorney's fees or damages.

[00:04:34] Speaker 01:
That's correct.

[00:04:34] Speaker 01:
I mean, if you look at the specific text of the release, it talks about claims and other such relief.

[00:04:42] Speaker 01:
It doesn't mention that, that a release as to declaratory relief is granted.

[00:04:48] Speaker 01:
But I understand the term claim, as it's been defined by federal law, is a right to payment, generally.

[00:04:54] Speaker 01:
But you're right, for purposes of the briefing, we've asserted that the release applied in that I guess there could have been a breach of the release.

[00:05:04] Speaker 01:
But the release, as you pointed out, which is governed by Utah law, did not have an attorney seat clause.

[00:05:09] Speaker 01:
So what occurs?

[00:05:11] Speaker 01:
So what occurs is Lorraine Smith comes in and files a motion to dismiss.

[00:05:16] Speaker 01:
And the hearing comes on before

[00:05:18] Speaker 01:
And after the motion is filed, we said, if she will release any claim against the bank's collateral, which was just the one half interest of James Smith and the other property of James Smith, that we would dismiss her from the lawsuit because that was the sole purpose of joining her.

[00:05:39] Speaker 01:
After that occurred, then what transpired was she came back, amended her motion and said, no, I'm not going to release my claim

[00:05:48] Speaker 01:
that I may have against the condominium, and I'm asserting that the condominium is solely mine.

[00:05:55] Speaker 01:
And so because of that, she wasn't released.

[00:05:58] Speaker 01:
The judge then came back and said, well, in light of that, then I'm denying your motion to dismiss.

[00:06:04] Speaker 01:
You're properly a party before the court.

[00:06:06] Speaker 01:
You're necessary and indispensable for all the reasons that were stated by the court or by the bank.

[00:06:12] Speaker 01:
And so that ruling was made early on in the case.

[00:06:16] Speaker 01:
and it has stood through the entire case.

[00:06:20] Speaker 04:
Let me ask you this.

[00:06:22] Speaker 04:
Where did your offer to dismiss her, if she would basically disclaim an interest in the collateral, where did that fit in timing-wise with the 2014 judgment giving her Mr. Smith's right to the property, to the condo?

[00:06:40] Speaker 01:
It was at the very beginning.

[00:06:41] Speaker 01:
After the action had been filed, the motion to dismiss was filed, so it proceeded that.

[00:06:46] Speaker 01:
because of the commencement of the litigation.

[00:06:51] Speaker 01:
So in any event, the legal standard for bad faith here, which we've indicated and you're aware of, is that in order to establish inherent bad faith, there has to be clear evidence that the claims or action are taken entirely without merit, and that they have to be taken for a wrongful purpose, harassment, delay, improper purposes, and that you have to have a subjective intent to act in bad faith.

[00:07:16] Speaker 01:
The bank did none of that.

[00:07:17] Speaker 01:
The bank was simply seeking to enforce its trustee against the collateral that had been pledged.

[00:07:25] Speaker 01:
And so all of the bank's claims were meritorious.

[00:07:29] Speaker 01:
And there was no wrongful purpose.

[00:07:33] Speaker 01:
The only purpose was to protect.

[00:07:37] Speaker 01:
The only purpose was to make certain that the court, nor the bank, executed on property.

[00:07:45] Speaker 03:
Didn't the district court make fact findings that are contrary to that position that we'll have to review for clear error?

[00:07:55] Speaker 01:
I don't believe so, because my understanding of the Krebsinger opinion by the 10th Circuit is that if a finding of fact is based upon an erroneous legal conclusion, that the court reviews it de novo.

[00:08:12] Speaker 01:
What's the erroneous legal conclusion?

[00:08:15] Speaker 01:
He made a number.

[00:08:16] Speaker 01:
He ruled that the bank acted in bad faith by intentionally breaching the release.

[00:08:22] Speaker 01:
And under Utah law, the Utah Supreme Court has stated that an intentional breach of a contract or release is not bad faith and that a party may always breach a contract without suffering any penalty whatsoever.

[00:08:36] Speaker 01:
So repeatedly throughout his opinions, he's taken the view, oh, I understand.

[00:08:43] Speaker 01:
misrecall that she's properly joined under 2201 for declaratory relief, and she's properly named as a necessary and indispensable party.

[00:08:53] Speaker 01:
But that doesn't mean that your client didn't intentionally breach the contract.

[00:08:58] Speaker 01:
And because there was an intentional breach of the contract, that was bad faith in and of itself.

[00:09:03] Speaker 03:
Was there some deception involved also, altering some legal documents?

[00:09:10] Speaker 01:
No.

[00:09:11] Speaker 01:
With regards to the deed of trust, is that what the court?

[00:09:15] Speaker 01:
Yeah, the deed of trust, the other basis that the court relied upon was that the deed of trust had not been disclosed till the second day of trial.

[00:09:24] Speaker 01:
We have laid out a number of facts that are contrary to that.

[00:09:28] Speaker 01:
The deed of trust was attached as an exhibit to the complaint that was filed with the court.

[00:09:34] Speaker 01:
The deed of trust was a matter of public record.

[00:09:36] Speaker 01:
It was produced during discovery.

[00:09:38] Speaker 01:
Prior to trial, we had a pretrial conference

[00:09:41] Speaker 01:
with Judge Wadups, and he had ordered the parties to provide to the other side the exhibits that were going to be produced at trial.

[00:09:48] Speaker 01:
Lorrie Smith stipulated to the authenticity of the deed of trust.

[00:09:53] Speaker 01:
The only thing that she said was through her counsel is, I'm not going to stipulate to the little faint markings, but I would stipulate to the authenticity of the deed of trust.

[00:10:03] Speaker 01:
In addition to that, we had provided a certified copy of the deed of trust, which was admissible under the rules of the federal rules of evidence.

[00:10:11] Speaker 01:
But nevertheless, he said, I want the original deed of trust here and I want it tomorrow.

[00:10:16] Speaker 01:
So we had it sent down.

[00:10:18] Speaker 01:
After the judge looked at the original deed of trust, he said, I can't find anything significant from those markings.

[00:10:25] Speaker 01:
So very quickly then, because I'm running out of time, is that there was no subjective intent to do any wrongful purpose.

[00:10:35] Speaker 01:
It was only to protect her interest and to allow the bank to go forward

[00:10:39] Speaker 01:
If you've ever proceeded in trying to collect against a married couple or divorced couple, you know how they say, well, this belongs to you, this belongs to him, and so forth.

[00:10:49] Speaker 01:
There was all that justification for it.

[00:10:51] Speaker 01:
With regards to his ruling on alternative relief under Utah law, Utah law does not allow attorney's visas, compensatory damages.

[00:11:00] Speaker 01:
And we've cited the court to that.

[00:11:03] Speaker 01:
And the district judge cited the three cases

[00:11:07] Speaker 01:
The McLeve case did not address the American rule, but it awarded fees under a contempt statute.

[00:11:13] Speaker 01:
The Beck opinion does not mention the American rule, let alone award fees as compensatory damages.

[00:11:19] Speaker 01:
And the Ranch-Holmes opinion is directly contrary to the court's ruling that fees were only awardable and provided for by contract.

[00:11:27] Speaker 01:
So none of the three cases cited in his opinion regarding the alternative awarded fees applies.

[00:11:33] Speaker 01:
And then I'll just conclude by indicating that there was no objection made to the allocation of fees.

[00:11:40] Speaker 03:
What about the Fleetwood Services case, 2018 Utah Supreme Court?

[00:11:44] Speaker 03:
How would you distinguish that?

[00:11:45] Speaker 01:
I just have to stay to the court.

[00:11:49] Speaker 01:
I don't have that in front of me, so I can't make a meaningful response.

[00:11:53] Speaker 01:
I'd have to look at that.

[00:11:56] Speaker 01:
But just concluding then, the failure to allocate fees

[00:12:00] Speaker 01:
We cite the court to the Goodyear Tire and Rubber Company, which where the Supreme Court said when you award fees on grounds of bad faith, the fees must be allocated.

[00:12:10] Speaker 01:
We raised before the district court and we raised in the prior appeal that there had been no allocation.

[00:12:16] Speaker 01:
The bank prevailed on every counterclaim that was brought by Marie Smith.

[00:12:20] Speaker 01:
After the declaratory relief action was filed, she sued and brought numerous counterclaims

[00:12:25] Speaker 01:
and we obtained a serving judgment on all of them, including her counterclaim to rescind the deed of trust.

[00:12:33] Speaker 04:
One of her counterclaims was the breach.

[00:12:39] Speaker 01:
You didn't prevail on all of them.

[00:12:41] Speaker 01:
I was coming to that.

[00:12:44] Speaker 01:
All of her counterclaims, except for the breach of contract claim, which went to trial, and the breach of contract claim, the bank prevailed on because she failed to prove any damages at trial.

[00:12:55] Speaker 01:
And so as a result of that, they prevail.

[00:12:58] Speaker 01:
So, and let me just, I think this is really important in just concluding.

[00:13:03] Speaker 01:
So the senior vice president from Seattle flies down.

[00:13:07] Speaker 01:
We have a hearing before the judge and the judge says, look, if you could just have a settlement conference, we did, we couldn't settle.

[00:13:17] Speaker 01:
We came back before the judge.

[00:13:18] Speaker 01:
He says, look, if the bank would release its deed of trust,

[00:13:22] Speaker 01:
against the condominium, which is there's a dispute over, then things will go well for the bank.

[00:13:28] Speaker 01:
So immediately the senior vice president instructs counsel to immediately release the deed of trust against the Oregon property.

[00:13:38] Speaker 01:
So we immediately released the deed of trust before the Oregon property months before trial.

[00:13:44] Speaker 01:
And the only reason the case went to trial was because she was pursuing her counterclaim

[00:13:48] Speaker 01:
for breach of contract under the release.

[00:13:52] Speaker 01:
It didn't go to trial against Larry Smith on behalf of the bank.

[00:13:55] Speaker 01:
It went because of a counterclaim.

[00:13:57] Speaker 01:
And we prevailed on that counterclaim because Judge Waddups ruled there weren't any damages.

[00:14:03] Speaker 01:
He only awarded judgment for a bad faith attorney's fees under the Utah statute, which didn't apply.

[00:14:10] Speaker 01:
So the bank was chagrined to have a release collateral on a $2.3 million loan and to have done so in good faith

[00:14:18] Speaker 01:
only to have the district court come back and say, oh, well, it's bad faith because you didn't produce the deed of trust at trial.

[00:14:26] Speaker 01:
Why would the deed of trust wasn't deeded at trial?

[00:14:29] Speaker 01:
The deed of trust had been released in February, and the trial was in June.

[00:14:34] Speaker 01:
And then finally, we've raised a number of objections to the attorney's affidavit, Mr. Truman.

[00:14:40] Speaker 01:
We raised them before the district court, and we itemized the basis for our objections.

[00:14:47] Speaker 01:
I point to the court in the court's opinion in Ocelot 847, p.

[00:14:54] Speaker 01:
2nd, 1458.

[00:14:55] Speaker 01:
And when a party fails to respond to an argument regarding the attorney's fees, the position is waived.

[00:15:02] Speaker 01:
So our position is that Larice Smith has waived any response by failing to respond to any of our arguments regarding the allocation of fee or the affidavit.

[00:15:13] Speaker 01:
Thank you.

[00:15:14] Speaker 03:
Thank you, counsel.

[00:15:17] Speaker 03:
Let's hear from Mr. Drummond.

[00:15:21] Speaker 02:
May I please the court?

[00:15:23] Speaker 02:
Robert Drummond on behalf of Larice Smith.

[00:15:28] Speaker 02:
Merit can never be created by alteration and concealment.

[00:15:35] Speaker 02:
Merit is either meritorious on the facts, but it can never be created by alteration and concealment.

[00:15:45] Speaker 02:
On remand, the district court considered what this Tenth Circuit, what this court recognized, and considered Banner's conduct in the context of the bad faith exception to the American rule.

[00:16:04] Speaker 02:
The district court acknowledged the exceptionality of the application of that exception.

[00:16:11] Speaker 02:
The district court was very clear that this is an exceptional and extraordinary thing to do, as it should be.

[00:16:21] Speaker 02:
The American rule is foundational to our legal system, but it is no more foundational than the notion of candor with the court.

[00:16:35] Speaker 04:
So stop there for just a second.

[00:16:37] Speaker 04:
I mean, the award of fees to you by the district court under its inherent powers, I mean, this concealment idea, I'm not contesting that it didn't happen.

[00:16:53] Speaker 04:
I mean, obviously the documents that you were provided during discovery didn't have the notes on them.

[00:16:58] Speaker 04:
But what if they did?

[00:17:01] Speaker 04:
How does that change your case at all?

[00:17:04] Speaker 04:
Your case is based on release.

[00:17:07] Speaker 04:
It has nothing to do with a faulty deed of trust or anything like that.

[00:17:13] Speaker 04:
So what if they did conceal it from you?

[00:17:19] Speaker 04:
I mean, so what?

[00:17:21] Speaker 02:
because the alteration is what created the auspice that they had a legal interest in the 11 parcels in Unit 7.

[00:17:30] Speaker 02:
Banner Bank fails to disclose to this court

[00:17:34] Speaker 02:
would we put in our statement of facts that in September of 2010, the bank knowing it did not have a valid deed, and this is part of our supplemental appendix, the bank directed Dan Egan to do a revised deed of trust.

[00:17:50] Speaker 02:
There's an email that's part of the record included in the supplement that specifically instructs Mr. Egan, do a revised deed, removing unit seven,

[00:18:01] Speaker 02:
removing Larise Smith's name and only the 11 parcels of land because Larise Smith had no interest in the 11 parcels.

[00:18:10] Speaker 02:
And so they, in September of 2020, before the sale and before the release was even done, the bank knew they didn't have a valid deed.

[00:18:20] Speaker 02:
They instructed a revised deed.

[00:18:21] Speaker 02:
They never got it executed such that the original was sent back.

[00:18:25] Speaker 02:
And when the loan went into default, that is when the bank caused the initial deed of trust that specifically said, Lorrie Smith, James Smith, as husband and wife, collectively.

[00:18:41] Speaker 02:
So when the bank files its complaint and specifically says, Exhibit E, which is the trustee, it says, this is a true copy of what Mr. Smith executed and delivered to the bank.

[00:18:58] Speaker 02:
but never disclosed that the striking of Loree Smith's name, the striking of husband and wife, the striking of the signature block and the notary block was done subsequent to Mr. Smith signing that document.

[00:19:17] Speaker 02:
The bank specifically, not only, you know, altering the deed beforehand, that's not part of the bad faith.

[00:19:24] Speaker 02:
I mean, that's probably fraud, but that's not what gives rise to the attorney fees under the bad faith exception.

[00:19:31] Speaker 02:
It's when the bank filed the complaint and said, this deed is what Mr. Smith signed and sent to us was pure fabrication.

[00:19:40] Speaker 04:
Okay, so assume, I'll take your word for it, but what's that do for your client?

[00:19:46] Speaker 04:
I mean, your client still has a release.

[00:19:49] Speaker 04:
Nobody's disputing that your client has a release and your clients brought suit based on a release, not based on the other document.

[00:19:58] Speaker 02:
No, sir.

[00:19:59] Speaker 02:
Judge, they could have.

[00:20:01] Speaker 02:
Just as the district court noted, they could roll the dice and bring a deck action against Lorraine Smith based on a legitimate deed.

[00:20:11] Speaker 02:
And they could have said, look, we, we have reasons that we're going to run the risk of a breach of contract breach of the release, but we have a legitimate deed and we want this deck chat.

[00:20:23] Speaker 02:
We want this deck action.

[00:20:25] Speaker 02:
And then Larry Smith would have responded accordingly, but that's not what happened.

[00:20:29] Speaker 02:
The bank from the get-go puts it in the posture of.

[00:20:34] Speaker 02:
of asserting to the district court that Banner Bank has a legal interest in Unit 7 and a legal interest in the 11 parcels.

[00:20:47] Speaker 02:
They did not, because Mr. Smith and Lorrie Smith never signed that deed of trust.

[00:20:53] Speaker 02:
It was not an individual deed of trust.

[00:20:56] Speaker 02:
Therefore, if the bank had said, well,

[00:21:02] Speaker 02:
We have this deed of trust.

[00:21:03] Speaker 02:
We crossed out Loree's name.

[00:21:05] Speaker 02:
We're asserting it's valid.

[00:21:08] Speaker 02:
and we're disclosing that we altered the deed, but we think it's okay.

[00:21:14] Speaker 02:
They didn't do that.

[00:21:14] Speaker 02:
Then, Loree Smith could have responded appropriately.

[00:21:17] Speaker 02:
She would have filed a motion to Smith, probably dealt with the release issue, but we would have Judge gone out of the gate knowing that the bank was now asserting a legal interest in a claim because it altered a deed.

[00:21:32] Speaker 02:
This is what the district court found from the get-go was the improper purpose.

[00:21:37] Speaker 02:
You file a claim,

[00:21:38] Speaker 02:
conceal that you alter that claim to ostensibly give you merit to bring a case knowing that that concealment is covering up a pure fabrication.

[00:21:53] Speaker 04:
OK, let me ask you this.

[00:21:55] Speaker 04:
So the deed that marked through her name and marked through her notary block and that was ultimately recorded, I mean, that's publicly available.

[00:22:07] Speaker 04:
So it's a matter of record, right?

[00:22:09] Speaker 02:
Judge, here's the kicker, and I know where you're going, and tell me if I'm cutting you off.

[00:22:13] Speaker 02:
I don't mean to.

[00:22:14] Speaker 02:
Go ahead.

[00:22:15] Speaker 02:
I know where you're going.

[00:22:17] Speaker 02:
Mr. Bannerbank is not accurate when he represented to this court, and we put this in our brief.

[00:22:25] Speaker 02:
We never said we don't stipulate to the authenticity because of pencil-like markings.

[00:22:30] Speaker 04:
No, that's not where I'm going.

[00:22:32] Speaker 04:
Where I'm going is that this was information that was available to you, the strike through and everything.

[00:22:40] Speaker 04:
That's not something they sprung on you at trial.

[00:22:42] Speaker 04:
That was in the public record.

[00:22:44] Speaker 02:
No, sir.

[00:22:45] Speaker 02:
We only learned about it because they're representing, they're ostensibly saying... Are you disagreeing that it was in the public record?

[00:22:52] Speaker 02:
Well, their whole case was, their whole theory beginning discovery is that Mr. Smith crossed out Larise Smith's name, that he's the one that crossed out the notary block.

[00:23:04] Speaker 02:
And so while you had in the recorder's office, you had that document, that didn't tell you who struck it out.

[00:23:14] Speaker 02:
It was only in, and this is the part that I think the district court found incredibly reprehensible, it was only in

[00:23:22] Speaker 02:
Banner banks reply to our opposition to summary judgment that the bank said, oh, we made some alterations, but they're clerical, minor, and insignificant.

[00:23:34] Speaker 02:
Without those alterations, Your Honor,

[00:23:37] Speaker 02:
they don't have a claim to the 11 parcels of land or Unit 7.

[00:23:40] Speaker 02:
Those can hardly be said to be minor and clerical, yet they're trying to foreclose on Unit 7 because it's an undivided interest, and that they would have been in the position of having Lurie to either have to split profits with Banner Bank or to sell the property.

[00:23:59] Speaker 02:
That's what the court found.

[00:24:00] Speaker 02:
And Judge, incredibly significant is this.

[00:24:03] Speaker 02:
I went into the clerk's office.

[00:24:05] Speaker 02:
I flew out to Oregon to look at the deed.

[00:24:08] Speaker 02:
I looked at the deed in the clerk's office.

[00:24:10] Speaker 02:
Here's the problem, is that when you look at the deed they attached to the complaint, when you look at the deed in the clerk's office, you don't, obviously you see the strikethrough of the name and you see the strikethrough of the signature block.

[00:24:25] Speaker 02:
This is why I insisted that the original be produced at trial, was because only in the original, not even a certified photocopy does it appear, only in the original do you see whiteout,

[00:24:41] Speaker 02:
blue numbers, with indication of blue numbers under the whiteout, erasure, words that Judge Waddups could read part of, even though he drew no conclusion.

[00:24:53] Speaker 02:
Had we had that from the get-go, had the bank been honest and disclosed, not conceal this, we would have known from the get-go.

[00:25:04] Speaker 02:
They had crossed this out.

[00:25:06] Speaker 02:
They knew it wasn't recordable.

[00:25:09] Speaker 02:
And Judge, this is why their whole case falls apart, is because they're the ones that went to their own counsel and said, this deed is not recordable.

[00:25:21] Speaker 02:
Do us a new deed.

[00:25:23] Speaker 02:
Omit Larry Smith.

[00:25:25] Speaker 02:
Have just the 11 parcels and nobody else.

[00:25:29] Speaker 00:
And when- So, counsel, can I jump in here?

[00:25:33] Speaker 00:
Said several times the court found the court found, but I have to say that the.

[00:25:40] Speaker 00:
I'm looking at that order that we're reviewing and there's not much there.

[00:25:45] Speaker 00:
I mean, the court doesn't say here is the evidence of harassment that I am relying on.

[00:25:52] Speaker 00:
Here's the evidence of this was done without color.

[00:25:57] Speaker 00:
And then so the order doesn't do that.

[00:26:01] Speaker 00:
I mean, you're filling in so much of the facts, but I guess I'm trying to focus on what the district court actually found.

[00:26:12] Speaker 02:
Yes, Your Honor.

[00:26:13] Speaker 02:
So the district court, in our statement of facts to this court, other than a brief section at the end that we call additional facts, we track the original memorandum decision from the district court.

[00:26:26] Speaker 02:
So all of our statement of facts

[00:26:30] Speaker 02:
one through whatever they are before the additional facts are the findings of facts and conclusions.

[00:26:35] Speaker 02:
And we specifically say at the beginning, we set forth what Judge Wadup said.

[00:26:40] Speaker 02:
I make these findings of facts, conclusions of law, and they are interrelated in terms of if one can be read to be the other, I so intend it.

[00:26:49] Speaker 02:
On remand, the court specifically said, I am reaffirming each of those findings, and specifically says, and what's fascinating is the first finding of Banner, of the district court is this.

[00:27:04] Speaker 02:
Banner Bank's concealment of these alterations was intended to take unconscionable advantage of Loree, and therefore constituted bad faith.

[00:27:15] Speaker 02:
The court then goes on,

[00:27:17] Speaker 02:
And there's three other findings specifically that the court makes regarding the bad faith and the court sets out that concealing those sorts of things.

[00:27:28] Speaker 02:
What's fascinating to me is that when you go to Banner Banks brief,

[00:27:33] Speaker 02:
They only cite the last three, because there is no bad faith under the 10th Circuit and Supreme Court rulings unless the action was done for an improper purpose or an oppressive reason.

[00:27:52] Speaker 02:
And the very first finding of the district court is these concealments and alterations were intended to take unconscionable advantage.

[00:28:02] Speaker 00:
How about without color?

[00:28:05] Speaker 02:
Well, Judge, that was my initial argument.

[00:28:07] Speaker 02:
Perhaps I should have used the word color instead of merit.

[00:28:10] Speaker 02:
I used merit to say, and I said merit cannot be created through alteration and concealment.

[00:28:16] Speaker 02:
Perhaps I should have said color cannot be created through alteration and concealment.

[00:28:22] Speaker 00:
So those findings suggest without color or satisfy without color as well, the concealment

[00:28:31] Speaker 00:
covers both?

[00:28:32] Speaker 00:
Is that what you're saying?

[00:28:33] Speaker 02:
Yes, Your Honor.

[00:28:35] Speaker 02:
I think the district court was very clear.

[00:28:37] Speaker 02:
There is merit in bringing a deck action to say, what is a person's interest?

[00:28:44] Speaker 02:
And if the bank had said, yeah, we altered the deed, we did this, we're bringing this action, but that's not what happened.

[00:28:50] Speaker 02:
The bank altered the deed, brought this action, and didn't disclose that they had altered the deed.

[00:28:56] Speaker 02:
Therefore, from the get-go, because they altered a deed to create a legal interest,

[00:29:02] Speaker 02:
There was no colorable claim that otherwise, and I want to be a little careful about what I say this, maybe this is why the bank did not disclose that they altered a deed and we're trying to foreclose on it, because that would invoke perhaps far more serious consequences than simply attorney fees under a bad faith exception.

[00:29:23] Speaker 03:
Can you?

[00:29:25] Speaker 03:
Explan, Mr. Call said there's no Utah law that would support the alternative finding of attorney's fees.

[00:29:31] Speaker 03:
What cases are you relying on for?

[00:29:34] Speaker 02:
The Fleetwood case is the exact case that this court even recognized it in its opinion.

[00:29:42] Speaker 02:
when it directed the remand, there is, Utah law is very clear, as the court already cited the case, that where attorney fees are the direct result from the action, from the breach, then they're allowed.

[00:30:00] Speaker 03:
Does the court cite to Fleetwood?

[00:30:03] Speaker 02:
I think initially in the, I'm not sure in this opinion, Judge, I believe the court specifically in nine seconds, we'll see how quickly I can do it.

[00:30:17] Speaker 02:
But Judge, under Utah law, damages recoverable for breach of contract include general, those falling directly from the natural breach and reasonably contemplated in the court sites, several Utah provisions.

[00:30:33] Speaker 02:
And judge, I'm out of my time.

[00:30:35] Speaker 02:
I'm past.

[00:30:35] Speaker 03:
I appreciate the arguments.

[00:30:37] Speaker 03:
The case, the council are excused and the case is submitted.