Fed. Nat'l Mortg. Ass'n v. Waters

Full title: Federal National Mortgage Association, Plaintiff-Appellee, v. Anthony…

Court: Colorado Court of Appeals

Date published: Jul 16, 2015

Court of Appeals No. 14CA0747 (Colo. App. Jul. 16, 2015)

Opinion

Court of Appeals No. 14CA0747

07-16-2015

Federal National Mortgage Association, Plaintiff-Appellee, v. Anthony Patton Waters, Yuliya Waters, Anthony Todd Waters, and Traci Lynea Waters, Defendants-Appellants.

Snell & Wilmer, L.L.P., Michael E. Lindsay, Jessica E. Yates, and Virginia L. Olmstead, Denver, Colorado, for Plaintiff-Appellee Rufus Wilderson, LLC, Rufus O. Wilderson, Gunnison, Colorado, for Defendants-Appellants

Opinion by JUDGE ASHBY

Saguache County District Court No. 12CV5
Honorable Martin A. Gonzales, Judge JUDGMENT AFFIRMED Division VI
Opinion by JUDGE ASHBY
Furman and Booras, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(f)

Snell & Wilmer, L.L.P., Michael E. Lindsay, Jessica E. Yates, and Virginia L. Olmstead, Denver, Colorado, for Plaintiff-Appellee Rufus Wilderson, LLC, Rufus O. Wilderson, Gunnison, Colorado, for Defendants-Appellants ¶ 1 Defendants, Anthony Patton Waters (Anthony P.), Yuliya Waters, Anthony Todd Waters, and Traci Lynea Waters, appeal from the trial court's entry of judgment quieting title in favor of plaintiff, Federal National Mortgage Association (FNMA). We affirm.

I. Background

¶ 2 The following facts are taken primarily from the trial court's findings. ¶ 3 Anthony P. Waters and Teresa Waters (the Waters parents) purchased the subject property in December 1979. The property contained two parcels, which the trial court and the parties describe as the North Parcel and the South Parcel. The sellers of the parcels executed a Warranty Deed (the Waters' Deed) in favor of the Waters parents, but it was not recorded at that time. The Waters parents used the South Parcel as their personal residence thereafter. ¶ 4 In January 1985, the Waters parents created a trust (Trust) for the benefit of their children, Anthony Todd and Traci (beneficiaries). The Waters parents then transferred the South Parcel to the Trust via a Warranty Deed (the Trust Deed). The Trust Deed was recorded in the Saguache County real property records in April 1985. Over one year later, in June 1986, the Waters parents recorded the Waters' Deed. ¶ 5 The Waters parents later divorced and transferred the South Parcel to Anthony P. by quitclaim deed in 1988. Anthony P. promptly recorded that deed. Yuliya, Anthony P.'s second wife, subsequently moved in and lived with Anthony P. on the South Parcel. Then there were several transactions involving the South Parcel:

• In 1994, there was a tax lien sale of the South Parcel. Anthony P. redeemed as its owner, thereafter recording the Redemption Certificate in May 1995.

• In June 2000, Anthony P., as owner of the property, granted a utility easement to the Gunnison County Electric Association, Inc. The easement was recorded in April 2001.

• In February 2007, Anthony P.'s company, My Brother's Keeper, transferred any interest it had in the South Parcel to Anthony P. via quitclaim deed, which was promptly recorded.

• Also in February 2007, Anthony P. took out a loan from Woodland Escrow & Financial and executed a deed of trust in

Woodland's favor, encumbering both the North and South Parcels. The Woodland Deed of Trust was promptly recorded.

• In 2009, Anthony P. and Yuliya applied for a loan from Bank of America, N.A. (BANA), certifying in their application that they were 100% owners of the property. That July, Anthony P. and Yuliya executed a promissory note and a deed of trust in favor of BANA, encumbering both the North and South Parcels. The BANA deed was recorded in September 2009. Anthony P. and Yuliya later defaulted on the BANA loan.

BANA foreclosed on the property and was the successful bidder at the public trustee foreclosure auction. Around this same time, BANA transferred the property to FNMA via special warranty deed, which was promptly recorded. FNMA then served Anthony P. and Yuliya with a demand for possession. ¶ 6 Anthony P. and Yuliya asserted that the South Parcel was owned by the Trust and ultimately disclaimed any interest in the property. Teresa Waters and the trustees also disclaimed their interests in the property. Only the beneficiaries continued to assert any interest in the South Parcel. The North Parcel undisputedly belonged to BANA. ¶ 7 The trial court concluded that (1) the Trust Deed was a wild deed, recorded outside the chain of title; (2) the transfer of the South Parcel to the Trust was a sham transaction and, therefore, FNMA was entitled to a decree quieting title in it as the owner; and (3) the Trust had disclaimed any interest in the property, entitling FNMA to judgment in its favor. The court also determined that because FNMA was the prevailing party, it was entitled to its reasonable costs against the beneficiaries. This appeal followed.

II. Validity of Trust Deed

¶ 8 Defendants contend that the trial court erred by finding that the conveyance to the Trust was a sham transaction because the issue was not raised in FNMA's pleadings, no relevant evidence was presented at trial, and the issue is not one for which relief could be granted. We disagree. ¶ 9 We review a court's determination of the validity of a transaction for an abuse of discretion. See DSCO, Inc. v. Warren, 829 P.2d 438, 440 (Colo. App. 1991) (determining if a transaction created a security interest depends on the intent of the parties, which is a question of fact). Thus, we will not disturb the trial court's ruling unless it is clearly erroneous and not supported by the record. See id. And, to the extent resolution of this issue required the court to interpret various rules or statutes, we review such interpretation de novo. See Pierce v. Francis, 194 P.3d 505, 508 (Colo. App. 2008). ¶ 10 We initially reject defendants' contention that the trial court erred by finding that the conveyance of the property to the Trust was a sham transaction because the issue was not raised in the pleadings or argued at trial. First, the parties clearly knew that a key disputed issue was whether the Waters parents or the beneficiaries were the owners of the South Parcel. In its motion for summary judgment, FNMA raised the issue as to whether Anthony P. was simply the alter ego of or held an equitable interest in the Trust. ¶ 11 In addition, C.R.C.P. 105(a) provides:

An action may be brought for the purpose of obtaining a complete adjudication of the rights of all parties thereto, with respect to any real property and for damages, if any, for the withholding of possession. The court in its decree shall grant full and adequate relief so as to completely determine the controversy and enforce the rights of the parties. The court may at any time after the entry of the decree make such additional orders as may be required in aid of such decree.

And, as stated in Keith v. Kinney, 961 P.2d 516, 519 (Colo. App. 1997):

[A] C.R.C.P. 105 proceeding should completely adjudicate the rights of all parties to the action claiming interests in the property. Even if a counterclaim is not pled, or an issue is not raised in the pleadings but is apparent from the evidence, the court should reach the issue to give full relief.

(Citations omitted.) Thus, a trial court is permitted to address any issues that are relevant to a complete adjudication of the parties' rights to the property. See also Maitland v. Bd. of Cnty. Comm'rs, 701 P.2d 617, 619 (Colo. App. 1984). ¶ 12 Here, the trial court found that the conveyance was a "sham transaction" because the Waters parents (and, later, Anthony P. alone) continued to treat the property as their own after the conveyance. The use of the term "sham transaction" when read in context was a means of stating that there was no intent to create a trust. The trial court based its finding of a lack of intent on several facts, including that Anthony P., Teresa, and (later) Yuliya, lived on the property and used it as their primary residence. Also, as described above, Anthony P. and Yuliya transferred the property several times and used it as collateral to obtain loans by representing that they were 100% owners. ¶ 13 Thus, we conclude that there was competent evidence presented to support the trial court's finding that the Waters parents never really intended to convey the property to the Trust and that the Trust Deed, therefore, did not represent a valid conveyance. See Page v. Clark, 197 Colo. 306, 313, 592 P.2d 792, 796 (1979) (it is the trial court's duty to weigh conflicting evidence); Gardner v. Glasnapp, 108 Colo. 282, 284-85, 115 P.2d 646, 646-47 (1941); LR Smith Invs., LLC v. Butler, 2014 COA 170, ¶ 25. Further, the Waters parents and Yuliya Waters disclaimed any interest in the property. Therefore, the only parties asserting an interest in the property were the beneficiaries. And because we have concluded that the Trust Deed did not actually convey an interest in the property to the Trust, the beneficiaries did not have a defendable interest. Accordingly, the trial court properly quieted title to the property in favor of FNMA. ¶ 14 Because of our resolution of this contention, we need not address whether the Trust Deed was a wild deed. See Page, 197 Colo. at 314, 592 P.2d at 797. Even if we were to conclude that the Trust Deed was in the chain of title and, therefore, not a wild deed, the outcome would be the same because we have concluded that the conveyance was not valid and did not transfer ownership. ¶ 15 For this same reason, the trial court's finding that the beneficiaries had no interest in the property is affirmed. The trial court found that the Trust's disclaimer of interest divested the beneficiaries of any rights they may have had in the property. We conclude that because there was never a valid conveyance of the property to the Trust, the beneficiaries never had any ownership interest in the property. See Shepler v. Whalen, 119 P.3d 1084, 1088 (Colo. 2005). Accordingly, we conclude that the trial court properly quieted title in favor of FNMA.

III. Attorney Fees

¶ 16 Anthony P. and Yuliya contend that they are entitled to attorney fees under section 13-40-123, C.R.S. 2014. We disagree. ¶ 17 "Whether a statute mandates an award of costs or attorney fees is a question of statutory interpretation and is thus a question of law we review de novo." Crandall v. City of Denver, 238 P.3d 659, 661 (Colo. 2010). ¶ 18 Section 13-40-123 provides that the prevailing party in a Forcible Entry and Detainer (FED) action "is entitled to recover damages, reasonable attorney fees, and costs of suit . . . ." Divisions of this court that have interpreted that statute have held that the prevailing party "is the party adjudged to have the right to possession," and we agree. Integra Fin., Inc. v. Grynberg Petroleum Co., 74 P.3d 347, 348 (Colo. App. 2002); see Schuler v. Oldervik, 143 P.3d 1197, 1204 (Colo. App. 2006) ("'[C]laims that do not bear on the right to possession are not part of an FED action for purposes of awarding attorney fees.'" (quoting Integra Fin., 74 P.3d at 349)). ¶ 19 Here, the trial court stated in its findings of fact and conclusions of law that the FED action was dismissed because Anthony P. and Yuliya disclaimed any interest therein. However, because they were not awarded the right to possession, they were not the prevailing party in the FED action. And FNMA had necessarily included them as parties to the initial FED and quiet title action. Accordingly, they are not entitled to attorney fees under section 13-40-123.

IV. Conclusion

¶ 20 The trial court's judgment is affirmed.

JUDEG FURMAN and JUDGE BOORAS concur.