Machock v. Fink

2006 UT 30
This opinion is subject to revision before final
publication in the Pacific Reporter.
IN THE SUPREME COURT OF THE STATE OF UTAH
----oo0oo----
Joseph Machock, No. 20041014
Plaintiff and Respondent,
v.
Carl William Fink,
Defendant and Petitioner,
v.
F I L E D
John Harmer,
Third-Party Defendant. May 16, 2006
---
Second District, Farmington
The Honorable Darwin C. Hansen
No. 990700380
Attorneys: Paul D. Veasy, Angie Nelson, Salt Lake City, for
plaintiff
R. Stephen Marshall, David W. Tufts, Salt Lake City,
for defendant
---
On Certiorari to the Utah Court of Appeals
DURRANT, Justice:
INTRODUCTION
¶1 In this case, we consider a provision of the Utah Trust
Deed Act (“UTDA”) that gives a creditor three months to file a
deficiency action after foreclosure of a trust deed. Respondent
Joseph Machock made a loan to John Harmer that was secured by a
junior trust deed to Harmer’s home. Petitioner Carl Fink
guaranteed payment on the loan. When Harmer defaulted, Machock
sued Fink on the guaranty, later foreclosed the trust deed, then
continued to pursue Fink for the amount due without filing a
deficiency action. We must determine whether Machock’s breach-
of-guaranty complaint satisfied the UTDA’s requirement that a
creditor file a deficiency action within three months of
foreclosure. We conclude that it did because Fink had notice

No. 20041014 2
that Machock was pursuing the deficiency, and Machock’s recovery
is limited by the UTDA’s fair-market-value offset.
BACKGROUND
¶2 This action arises out of a $125,000 loan that Machock
made to Harmer, and for which Fink guaranteed payment. In return
for the loan, Harmer executed both a note promising to pay
Machock $150,000 on demand and a junior trust deed to his
Bountiful home. As an additional condition to extending the
loan, Machock required Harmer to “obtain a guarantee from [Fink]
of the full and timely payment and performance of all of
[Harmer’s] obligations under the Note.” Fink signed an agreement
to “unconditionally guarantee” Harmer’s “full and timely payment
and performance.” Harmer made efforts to repay the note but,
when Machock demanded payment in September 1999, informed Machock
that he would not be able to make any more payments. After
unsuccessfully demanding that Fink pay Harmer’s obligations under
the note, Machock sued Fink in October 1999 “for damages equal to
the full amount due and owning [sic] under the Note, but in no
event less than $150,000.”
¶3 In Fink’s answer and counterclaim, he claims he
understood that Machock would not enforce the guaranty agreement
if Harmer defaulted on the note, but instead would foreclose the
trust deed to the Harmer property to recover the balance due on
the obligation. Accordingly, after Harmer defaulted, Fink
“demanded that Machock seek foreclosure of the [trust deed].”
Machock subsequently did so. Although Fink had notice of the
trustee’s sale, he chose not to bid. Indeed, at the February 29,
2000 trustee’s sale, Machock made the only bid and took title to
the property subject to Brighton Bank’s first priority trust
deed.
¶4 After taking title to the property, Machock encouraged
Fink to undertake the obligations under the Brighton Bank trust
deed, but he also clearly stated that he would continue pursuing
recovery from Fink under the guaranty agreement. Machock’s
counsel informed Fink’s counsel in a letter that “[i]n the event
the first trust deed is foreclosed, Mr. Machock will continue to
seek recovery under Mr. Fink’s guaranty for the entire amount of
the deficiency represented by Mr. Harmer’s note.” (Emphasis
added.) Fink declined to assume the obligations under the
Brighton Bank trust deed, and Brighton Bank’s successor in
interest foreclosed, leaving Machock with no benefit from the
Harmer property.

3 No. 20041014
¶5 No later than April 18, 2000, Fink knew that Machock’s
trustee’s sale had left a deficiency. In October 2000, almost
eight months after the trustee’s sale, Fink filed an amended
answer, amended counterclaim, and third-party complaint. In
these pleadings, Fink did not assert a statute of limitations
defense, either generally or under Utah Code section 57-1-32
(Supp. 2005), but he did argue that “Fink’s obligation under the
Guarantee . . . should be reduced by the fair market value of the
real property upon which Machock foreclosed.” Fink further
asserted that he was entitled to a declaration that Machock’s
only recourse was to foreclose the trust deed to the Harmer
property and pursue Harmer himself. Machock responded that “this
issue has been mooted by the completion of foreclosure
proceedings against the Harmer residence, which failed to yield
any funds to satisfy Machock’s lien when Machock was unable to
sell the Harmer residence before the foreclosure of the prior
first trust deed.”
¶6 Fink subsequently filed a motion for summary judgment
arguing that Machock’s breach-of-guaranty complaint had failed to
state a claim for relief. Specifically, Fink argued that,
pursuant to the UTDA, a deficiency complaint is the exclusive
method for recovering a deficiency on an obligation after a
lender forecloses on a trust deed, and because Machock had not
filed a deficiency complaint meeting the statutory requirements
within the three months following foreclosure, he was barred from
recovering from Fink. The district court agreed with Fink that
Machock’s foreclosure on the Harmer property had “activated” the
UTDA’s statutory limitations on recovery but concluded that
Machock’s breach-of-guaranty complaint satisfied the requirements
of the UTDA by giving Fink notice that Machock intended to pursue
any deficiency. Fink requested and received permission to pursue
an interlocutory appeal.
¶7 The court of appeals affirmed. Machock v. Fink, 2004
UT App 376, 101 P.3d 404. It ruled that Utah law permitted
Machock to pursue Fink under the guaranty agreement without first
foreclosing the trust deed. Id. ¶ 10. The court further ruled
that the UTDA governed Machock’s guaranty action from its
inception because Machock was seeking “‘to recover the balance
due on the indebtedness secured by [a] trust deed.’” Id.
¶¶ 11-12 (quoting Surety Life Ins. Co. v. Smith, 892 P.2d 1, 3
(Utah 1995)) (alteration in original). The court of appeals then
concluded that, although the UTDA applied to Machock’s suit
against Fink, Machock did not need to file a “cumulative”
complaint labeled “deficiency.” Id. ¶ 13. Finally, the court of
appeals noted that its ruling is consistent with the two purposes
of the statute: (a) “to prevent creditors from reaping a windfall

No. 20041014 4
by obtaining valuable trust deed property at a fraction of its
fair market value while pursuing the debtor (or guarantor) for
the full amount due on the underlying note”; and (b) to provide
notice to the debtor (or guarantor) “that a deficiency will be
sought by filing the action.” Id. ¶ 14 (citations omitted). The
court concluded that these purposes were satisfied because
Machock was not in a position to extract more out of the note
than was promised, and Fink had notice that Machock was pursuing
any deficiency by enforcing the guaranty agreement. Id. ¶ 15.
We granted certiorari to review the decision of the court of
appeals. We have jurisdiction pursuant to Utah Code section 78-
2-2(5) (2002).
STANDARD OF REVIEW
¶8 On certiorari, “‘we review the decision of the court of
appeals, not of the trial court.’” Salt Lake County v. Metro W.
Ready Mix, Inc., 2004 UT 23, ¶ 11, 89 P.3d 155 (quoting Mitchell
v. Christensen, 2001 UT 80, ¶ 8, 31 P.3d 572). In this case, the
court of appeals reviewed the trial court’s denial of a motion
for summary judgment. Machock v. Fink, 2004 UT App 376, ¶ 8, 101
P.3d 404. “Because a summary judgment presents questions of law,
we accord no particular deference to the court of appeals’ ruling
and review it for correctness.” Metro W. Ready Mix, Inc., 2004
UT 23, ¶ 11 (citation and internal quotation marks omitted).
ANALYSIS
¶9 The issue before us is whether a preforeclosure
complaint against a guarantor satisfies the UTDA’s requirement
that a deficiency complaint be filed within three months after a
trustee’s sale. Fink argues that the court of appeals erred by
allowing Machock to proceed against him without filing a new
deficiency complaint. Specifically, Fink first contends that
Machock’s complaint was invalid from its inception because, where
an obligation is secured by a trust deed, a creditor must
foreclose the trust deed before filing any action against either
the debtor or the guarantor. He then argues that Machock’s
breach-of-guaranty complaint does not satisfy the pleading
requirements for a deficiency action under Utah Code section
57-1-32 (Supp. 2005).
¶10 We conclude that a creditor need not foreclose a trust
deed prior to seeking recovery from a guarantor of payment. Once
a creditor elects to foreclose a trust deed, however, section
57-1-32 provides the only procedure for obtaining recovery of the
remaining balance due. Finally, we conclude that section 57-1-32
does not bar Machock from pursuing a deficiency judgment because

5 No. 20041014
Fink had timely notice that Machock was seeking recovery of the
deficiency and any recovery will, under the UTDA, necessarily be
offset by the fair market value of the property.
I. A CREDITOR MAY PROCEED DIRECTLY AGAINST A GUARANTOR
OF PAYMENT WITHOUT FORECLOSING A TRUST DEED
¶11 Fink first contends that the one-action rule required
Machock to foreclose the trust deed to Harmer’s Bountiful home
before bringing a claim based on the guaranty. We disagree.
¶12 The one-action rule is established by statute. It
provides that “[t]here can be but one action for the recovery of
any debt or the enforcement of any right secured solely by
mortgage upon real estate which action must be in accordance with
the provisions of this chapter.” Utah Code Ann. § 78-37-1
(2002). We have interpreted this statute as preventing a
creditor from “suing the debtor personally on the note until it
first forecloses against the real property.” City Consumer
Servs., Inc. v. Peters, 815 P.2d 234, 236 (Utah 1991). We have
also recognized the statute’s applicability to trust deeds. Id.
We have not directly addressed, however, whether the one-action
rule applies to actions against guarantors. We take this
opportunity to do so.
¶13 We have held that “a guarantee of payment is absolute,
and the guaranteed party need not fix its losses by pursuing its
remedies against the debtor or the security before proceeding
directly against the guarantor.” Strevell-Paterson Co. v.
Francis, 646 P.2d 741, 743 (Utah 1982). But Fink argues that
this rule does not apply where the collateral is real property.
The sole support he offers for this argument is Surety Life
Insurance Co. v. Smith, 892 P.2d 1 (Utah 1995), in which we held
that the protections of Utah Code section 57-1-32 (Supp. 2005)
apply to deficiency actions against guarantors. In essence,
Fink contends that, because Surety Life applied one foreclosure
rule to guarantors, all foreclosure rules apply to guarantors,
including the one-action rule. We disagree.
¶14 The one-action rule does not apply to suits against
guarantors of payment because (1) the holding in Surety Life is
based on the language of section 57-1-32, not principles of
foreclosure law generally, (2) the purpose of the one-action rule
is not furthered by extending its application to guarantors, and
(3) applying the one-action rule to guarantors unnecessarily
limits parties’ ability to allocate risk. We will address these
points in turn.

No. 20041014 6
¶15 First, our holding in Surety Life was based
specifically on section 57-1-32’s broad language. In Surety
Life, the creditor foreclosed a trust deed, purchased the
property for much less than market value, and brought an action
against the guarantor more than three months after the trustee’s
sale. 892 P.2d at 2, 3 n.2. The creditor argued that the
guaranty was independent of any security for the trust deed note
and, thus, section 57-1-32 did not apply. Id. at 3. We
concluded that the type of instrument on which the action was
founded was irrelevant because, by its plain language, section
57-1-32 applies “to any action to recover the balance due on the
obligation secured by a trust deed, following a nonjudicial
foreclosure sale,” regardless of whether the creditor is suing
the debtor or the guarantor. Id. Thus, in Surety Life, we
concluded only that section 57-1-32 applies to guarantors and did
not address the applicability of other foreclosure rules to suits
against guarantors.
¶16 Second, the plain language of the one-action rule
statute does not mandate its application to guarantors, and
construing the statute to do so would not further the purpose the
rule was intended to serve. We interpret a statute according to
its plain meaning and seek to effectuate the intent of the
legislature. See State v. Ireland, 2006 UT 17, ¶ 11, __ P.3d __.
The text of the one-action rule contains no direct reference to
actions against guarantors, but instead speaks in terms of
“action[s] for the recovery of any debt . . . secured solely by
mortgage upon real estate.” Utah Code Ann. § 78-37-1 (2002)
(emphasis added). Although we could arguably interpret this
language broadly enough to apply to actions against guarantors,
it is more readily interpreted as protecting only debtors.
¶17 Furthermore, construing the one-action rule broadly
would do nothing to serve the purposes for which the Legislature
passed the rule. The Legislature passed the one-action rule to
“eliminate harassment of debtors and multiple litigation which
sometimes occurred under the common-law rule which allowed a
creditor to foreclose and sell the land, and to sue on the note.”
Utah Mortgage & Loan Co. v. Black, 618 P.2d 43, 45 (Utah 1980).
As application of the one-action rule to guarantors would not
lessen harassment of debtors or eliminate multiple litigation
against debtors, the purpose of the rule is not served by
applying it to actions against guarantors. Furthermore, to the
extent that the one-action rule has the purpose of preventing
double recovery, that purpose is already served by section
57-1-32. Applying the one-action rule to actions against
guarantors would not further that purpose.

7 No. 20041014
¶18 Finally, applying the one-action rule to actions
against guarantors would undermine the primary purpose of
guaranties of payment. Guaranties are meant to protect the
creditor. See Strevell-Paterson Co. v. Francis, 646 P.2d 741,
743 (Utah 1982). While a creditor may choose to accept a more
limited guaranty of collection (where recovery is conditioned on
the creditor’s exhaustion of remedies against the debtor), the
law allows a creditor to bargain for the additional protection
offered by an absolute guaranty of payment. See id.; 38 Am. Jur.
2d Guaranty § 19 (1999). Under a guaranty of payment, the
creditor may proceed directly against the guarantor. Strevell-
Paterson, 646 P.2d at 743. Extending the one-action rule to
guarantors would severely limit the effectiveness of guaranties
of payment by eliminating the distinction between the two types
of guaranties for notes secured by real property. This would be
an undesirable result.
¶19 A guaranty of payment shifts much of the risk of delay
or loss from the creditor to the guarantor by allowing the
creditor to recover directly from the guarantor without
exhausting the collateral or seeking recovery from the debtor.
Without a guaranty of payment, a creditor may experience
significant delay in waiting for a buyer willing to pay fair
market value for a trust property. Furthermore, given our
holding in Surety Life, creditors that, in the interest of
expediency, choose to accept less than fair market value would
suffer a loss of the difference between the sale price and the
fair market value of the property. See 892 P.2d at 3. In
effect, a guaranty of payment shifts to the guarantor the burden
of exhausting the collateral and seeking a deficiency because,
under the equitable doctrine of subrogation, the guarantor may
step into the position of the creditor, foreclose the trust deed,
and seek a deficiency from the debtor. See Martin v.
Hickenlooper, 59 P.2d 1139, 1140–42 (Utah 1936); 38 Am. Jur. 2d
Guaranty § 120 (1999). But application of the one-action rule
would undermine the risk- and burden-shifting purpose of
guaranties of payment because the creditor would be forced to
foreclose the trust deed before bringing any action based on the
guaranty agreement. In essence, application of the one-action
rule to guarantors would transform all guaranties, regardless of
the parties’ intent, into guaranties of collection.
¶20 In sum, to abolish guaranties of payment in the context
of debts secured by real property would unnecessarily limit
parties’ ability to allocate risk as they see fit. We therefore
conclude that the one-action rule does not prevent creditors from
bringing suit against a guarantor of payment prior to

1 Utah Code section 57-1-32 (Supp. 2005) provides as
follows:
At any time within three months after any
sale of property under a trust deed as
provided in Sections 57-1-23, 57-1-24, and
57-1-27, an action may be commenced to
recover the balance due upon the obligation
for which the trust deed was given as
security, and in that action the complaint
shall set forth 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. Before
rendering judgment, the court shall find the
fair market value of the property at the date
of sale. The court may not render judgment
(continued...)
No. 20041014 8
foreclosure. Thus, Machock’s breach-of-guaranty complaint was
not, as Fink argues, invalid from its inception under the one-
action rule.
¶21 Having established that Machock’s initial complaint
based on the guaranty was allowable even though he had not
foreclosed the trust deed, we next turn to the question of
whether his decision to foreclose the trust deed activated
section 57-1-32.
II. IF A CREDITOR ELECTS TO FORECLOSE A TRUST DEED, UTAH CODE
SECTION 57-1-32 PROVIDES THE ONLY POST-FORECLOSURE REMEDY
¶22 As discussed in Part I, a creditor may proceed directly
against a guarantor of payment without first foreclosing the
trust deed. If a creditor elects to seek foreclosure of the
trust deed, however, it must do so in accordance with the
procedure set forth in the UTDA, Utah Code Ann. §§ 57-1-19 to -44
(2000 & Supp. 2005). Following foreclosure, if the creditor
wishes to seek additional recovery, Utah Code section 57-1-32
provides the exclusive procedure for obtaining such recovery.
Cox v. Green, 696 P.2d 1207, 1208 (Utah 1985). In Surety Life v.
Smith, we concluded that section 57-1-32 also provides the
exclusive procedure to recover from a guarantor the balance due
on a trust deed note following foreclosure. 892 P.2d. 1, 3 (Utah
1995). Section 57-1-32 requires a creditor to bring a deficiency
action within three months of a trustee’s sale and limits
recovery to the amount of indebtedness and costs, offset by the
fair market value of the property sold.1 Thus, upon conclusion

1 (...continued)
for more than the amount by which the amount
of the indebtedness with interest, costs, and
expense of sale, including trustee’s and
attorney’s fees, exceeds the fair market
value of the property as of the date of the
sale. In any action brought under this
section, the prevailing party shall be
entitled to collect its costs and reasonable
attorney fees incurred.
Although this section was amended in 2001, the changes are
stylistic and do not affect the issues on appeal. We therefore
cite to the current version.
9 No. 20041014
of a trustee’s sale, a creditor may not recover any balance from
either the guarantor or the debtor unless it satisfactorily
complies with section 57-1-32. In other words, completion of a
trustee’s sale activates the requirements of section 57-1-32 as
to both guarantors and creditors.
¶23 In this case, Machock initially chose to seek recovery
by suing Fink based on their guaranty agreement. But Machock
subsequently opted to liquidate the collateral by seeking
foreclosure of the Harmer Trust Deed. Therefore, after the
trustee’s sale in February 2000, Machock could recover the
balance due only by satisfying the provisions of section 57-1-32.
Having determined that Machock’s decision to foreclose the trust
deed to Harmer’s property activated the provisions of section
57-1-32, we next turn to the question of whether his breach-of-
guaranty complaint satisfied that section’s requirements.
III. BECAUSE FINK HAD ADEQUATE NOTICE OF THE DEFICIENCY ACTION
AND MACHOCK IS PRECLUDED FROM OBTAINING DOUBLE RECOVERY, SECTION
57-1-32 DOES NOT BAR MACHOCK’S DEFICIENCY ACTION
¶24 Fink next argues that, under section 57-1-32, Machock’s
failure to file a new deficiency complaint within three months of
the trustee’s sale releases Fink from any promise to guarantee
payment of the note. We disagree.
¶25 Utah Code section 57-1-32 (Supp. 2005) provides a
three-month limitation for filing a deficiency action and
includes specific pleading requirements. It states as follows:
At any time within three months after the
sale of property under a trust deed . . . ,
an action may be commenced to recover the
balance due upon the obligation for which the

2 Utah Code section 57-1-32 requires that the debt be
(continued...)
No. 20041014 10
trust deed was given as security, and in that
action the complaint shall set forth 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.
Id. In Standard Federal Savings & Loan Ass’n v. Kirkbride, we
recognized that section 57-1-32’s requirement that a creditor
file a deficiency action within three months is a “procedural
hurdle,” not an absolute bar to suit. 821 P.2d 1136, 1138 (Utah
1991). In Kirkbride, the creditor did not strictly comply with
the three-month deadline because its initial deficiency complaint
was dismissed without prejudice for failure to serve summons and
the creditor did not refile until after the three-month period
had run. Id. at 1137-38. We held that “the three-month
limitation period[’s] . . . primary purpose is satisfied when the
foreclosing party provides notice to the debtor [or guarantor]
that a deficiency will be sought by filing the action,” and
concluded that the creditor’s initial filing gave the debtor
sufficient notice of that fact. Id. at 1138.
¶26 As a logical extension of our rationale in Kirkbride,
we now determine that as long as the primary purposes of the
statute are satisfied, an action will not be barred for failure
to initially meet certain procedural requirements of section 57-
1-32. The primary purposes of section 57-1-32 are (1) to prevent
the creditor from purchasing the property for below market value
at the trustee’s sale and then suing the debtor or guarantor for
a large deficiency, see City Consumer Servs., Inc. v. Peters, 815
P.2d 234, 238 (Utah 1991) (discussing the purpose of the
statute’s fair market value provisions), and (2) to provide a
debtor or guarantor with prompt notice that the creditor intends
to pursue a deficiency so as to allow the debtor or guarantor to
plan its finances, Kirkbride, 821 P.2d at 1138. The record in
this case shows that these purposes were met and that Machock’s
failure to file a complaint strictly compliant with the statutory
requirements of section 57-1-32 was a procedural defect that
should not bar his deficiency action.
¶27 First, the purpose of preventing double recovery has
been met in this case because Machock’s recovery, if any, will,
pursuant to the UTDA, be offset by the fair market value of the
property at the time of the trustee’s sale.2 Second, the

2 (...continued)
offset by “the fair market value of the property as of the date
of the sale.” The property in this case is the Harmer property
as encumbered by the Brighton Bank trust deed. Thus, although an
unencumbered Harmer property may have had a substantial market
value, the encumbered Harmer property at issue necessarily had a
lower fair market value.
3 We note that not every breach-of-guaranty action will
give the guarantor adequate notice under section 57-1-32. But in
this case, the notice was clearly adequate to allow Fink to plan
his finances.
11 No. 20041014
statute’s purpose of requiring a creditor to notify a debtor or
guarantor within three months of foreclosure that it will seek a
deficiency is satisfied in this case because the record shows
that Fink had sufficient notice before, during, and after the
foreclosure that Machock was seeking a deficiency. The record
shows that Fink knew (1) that Machock was seeking the full amount
due on the note, (2) that Machock foreclosed the Harmer Trust
Deed, and (3) that a deficiency remained after the trustee’s
sale. Machock’s breach-of-guaranty complaint sought payment of
the full amount due and owing on the note. When Machock held a
trustee’s sale, Fink had notice but chose not to bid. After the
sale, Machock informed Fink that the first trust deed was in
danger of foreclosure and, if Machock was not able to sell the
property, that he would “continue to seek recovery under
Mr. Fink’s guarantee for the entire amount of the deficiency
represented by Mr. Harmer’s note.” Based on these facts, we
conclude that Fink had adequate notice that Machock was seeking a
deficiency.3 Thus, because the purposes of section 57-1-32 have
been satisfied, the procedural defects in Machock’s complaint do
not act as a bar to his pursuing a deficiency action.
¶28 While we conclude that the procedural defects in
Machock’s complaint do not bar suit, we also conclude that he has
the burden of correcting those defects to the extent possible.
The complaint is defective in that it fails to plead certain
required facts. Utah Code section 57-1-32 requires that a
creditor specifically plead “[1] the entire amount of the
indebtedness that was secured . . . , [2] the amount for which
the property was sold, and [3] the fair market value of the
property at the date of sale.” Fink knew the first two facts and
could easily discover the third. Thus, Fink does not appear to
be, nor has he argued that he was, prejudiced by the lack of a
separate deficiency pleading in this case. Nevertheless, the
statute contains these pleading requirements for good reason.
Having notice of these facts gives a debtor or guarantor specific

4 Both Machock and Fink requested attorney fees should they
prevail on this petition, and both the guaranty agreement and
Utah Code section 57-1-32 arguably mandate such an award. As
Fink did not dispute in his reply brief that Machock would be
entitled to attorney fees if he prevailed, Fink impliedly
stipulated that an award is appropriate.
No. 20041014 12
information about what is at stake in the lawsuit. To require
Fink to serve discovery documents on Machock to learn what
Machock should have disclosed in the pleadings would be
inappropriate under the statute. We conclude, therefore, that
Machock must amend his complaint to plead the required facts.
Accordingly, the district court should grant Machock leave to do
so.
CONCLUSION
¶29 The court of appeals correctly concluded that Machock’s
failure to strictly comply with the procedures of Utah Code
section 57-1-32 does not bar his continued pursuit of a
deficiency judgment against Fink. The statutory one-action rule
does not apply to actions against guarantors, so it did not
prohibit Machock from bringing a breach-of-guaranty action prior
to foreclosure of the trust deed. Once Machock foreclosed the
junior trust deed, however, section 57-1-32 governed Machock’s
rights of recovery and limited him to a deficiency judgment. The
litigation pending against Fink gave him sufficient notice under
section 57-1-32 that Machock intended to pursue a deficiency, and
the court of appeals’ decision correctly limited Machock’s
recovery by imposing the fair-market-value offset required by
that section. Because the breach-of-guaranty complaint satisfied
the notice and prevention-of-double-recovery purposes of section
57-1-32, that section does not bar Machock’s deficiency action.
Nevertheless, Machock must amend his complaint to plead the
required facts under section 57-1-32. We therefore affirm the
decision of the court of appeals. We also order the district
court to (1) award Machock costs and reasonable attorney fees for
this appeal in accordance with the guaranty agreement4 and
(2) grant Machock leave to amend his complaint.
---
¶30 Chief Justice Durham, Justice Parrish, Justice Nehring,
and Judge Barrett concur in Justice Durrant’s opinion.
¶31 Having disqualified himself, Associate Chief Justice
Wilkins did not participate herein; District Court Judge William
W. Barrett sat.