Americanwest Bank v. Real Estate Investor Education et al

Filing 198

MEMORANDUM DECISION AND ORDER-denying 120 Motion for Summary Judgment. See Order for details. Signed by Judge Clark Waddoups on 3/28/17. (jmr)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
BANNER BANK,

MEMORANDUM DECISION AND
ORDER

Plaintiff,
v.
REAL ESTATE INVESTOR EDUCATION
et al,
Defendants.

Case No. 2:12-cv-763-CW
District Judge Clark Waddoups

INTRODUCTION
Before the court is Plaintiff Banner Bank’s Motion for Summary Judgment of Defendant
Loree Smith’s counterclaim for breach of contract. (Dkt. No. 120.) The court held oral argument
on Banner Bank’s multiple motions for summary judgment on July 29, 2016 and again on
February 17, 2017. (Dkt. Nos. 185 & 195.) After considering the parties’ briefs and oral
arguments, the court orally granted in part and denied in part both motions for summary
judgment during the second hearing. (Dkt. Nos. 195 & 196.) The court reserved the issue of
whether summary judgment should be granted in Banner Bank’s favor as to Loree Smith’s
counterclaim for breach of contract. (Dkt. No. 120.) The court now DENIES Banner Bank’s
motion for summary judgment.
BACKGROUND
Banner Bank claims in its Complaint that it is entitled to declaratory judgment against
Loree Smith. (Dkt. No. 2.) In her Answer, Loree Smith raised a counterclaim in which she
alleges Banner Bank breached its duty to her as a third-party beneficiary of the Consent, Waiver

& Release Agreement (“the Release”). (Dkt. No. 75.) Banner Bank now asks the court to grant it
summary judgment on that counterclaim. (Dkt. No. 120.)
On December 31, 2010, Banner Bank entered the Release with two companies. (Dkt. No.
140, Exhibit F.) Loree Smith held an interest in one of the companies subject to the Release (“the
assignor”). Through the Release, Banner Bank consented to the assignment of liability from the
assignor to a second company and to the dissolution of the assignor. It also released its interest in
certain collateral, including any claims it might have against Loree Smith. Specifically, Banner
Bank agreed to release Loree Smith from all future “claims, controversies, disputes liabilities,
obligations, demands, damages, debts, liens, actions and causes of action of any and every nature
whatsoever relating to the Loan.”
Despite the Release, Banner Bank recorded the Trust Deed, which encumbered a
condominium that Loree Smith owned with her husband, on July 11, 2011. 1 (Dkt. Nos. 120 &
140, Exhibit A, p. 3.) Then, approximately one year later, Banner Bank named Loree Smith in
the instant lawsuit, seeking declaratory judgment that Loree Smith holds no interest in the
parcels subject to the Trust Deed other than one-half interest in the condominium. (Dkt. No. 2, p.
12.) Loree Smith claims Banner Bank breached the Release both by recording the Trust Deed
and naming her in this suit. (Dkt. No. 75, p. 18.)
ANALYSIS
Banner Bank now moves for summary judgment, claiming Loree Smith’s breach of
contract claim can be denied as a matter of law. Summary judgment is appropriate “if the movant
shows that there is no genuine dispute as to any material fact and the movant is entitled to
1

Loree Smith later received her husband’s interest in the condominium when their divorce was finalized in 2014.
(Dkt. No. 139, p. 31.)

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judgment as a matter of law.” Fed. R. Civ. P. 56(a). “When applying this standard, we view the
evidence and draw reasonable inferences therefrom in the light most favorable to the nonmoving
party.” Gutierrez v. Cobos, 841 F. 3d 895, 900 (10th Cir. 2016).
Banner Bank argues it is entitled to summary judgment because Loree Smith has failed to
cite an agreement between herself and Banner Bank and therefore cannot prove the first element
of a breach of contract claim—that a contract exists. (Dkt. No. 120, p. 44.) It next argues that,
assuming a contract exists, Loree Smith has not identified a breach of that contract. (Dkt. Nos.
120, pp. 44–45 & 164, p. 46.) But Loree Smith has alleged sufficient facts to satisfy each of the
elements of breach of contract: the “existence of a contract, . . . nonperformance by [Banner
Bank], and damages.” Mackay v. Cannon, 996 P.2d 1081, 1085 (Utah Ct. App. 2000).
First, Loree Smith has alleged a contract to which she has sufficient interest to bring a
claim. Under Utah law, “a third party [has] enforceable rights under a contract” if she is “an
‘intended beneficiary’ of the contract.” Ron Case Roofing and Asphalt Paving, Inc. v. Blomquest,
773 P.2d 1382, 1386 (Utah 1989). To determine whether Loree Smith is an intended beneficiary
of the Release, the court must look to “the terms of the contract as well as the surrounding facts
and circumstances.” Id. The Release expressly names Loree Smith, and in it Banner Bank agreed
to release its interest in claims against her as consideration for accelerated payments it was to
receive under the Release. (Dkt. No. 140, Exhibit F.) Thus, the terms of the contract support that
Loree Smith was an intended beneficiary, and therefore she has a claim to enforce the contract.
Second, Loree Smith’s counterclaim identifies multiple acts of breach by Banner Bank
that the Release prohibited. Those acts include Banner Bank’s having recorded the Trust Deed
less than one year after entering the Release, therefore encumbering Loree Smith’s title to the

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condominium, and Banner Bank’s having named Loree Smith in this lawsuit less than two years
after entering the Release. The Release was drafted broadly, contemplating that Loree Smith was
released from any lien and/or cause of action. It “RELEASE[D] and FOREVER
DISCHARGE[D] Loree Smith of . . . any liens [and] actions and causes of action of any and
every nature whatsoever relating to the Loan.” The Loan was a loan for $2.3 million between
Banner Bank and the assignor. The recorded Trust Deed was intended to secure the Loan. And
this lawsuit is Banner Bank’s attempt to recover on a judgment for the value of the Loan. (Dkt.
No. 2.) Therefore, the recorded Trust Deed constituted a lien, which clouded Loree Smith’s title,
pertaining to the Loan. And the claim for declaratory judgment in this suit is a cause of action
relating to the Loan. 2 Both were prohibited by the Release, and Loree Smith’s allegation of them
demonstrates a potential breach.
Finally, Loree Smith’s counterclaim sufficiently pleads damages, and Banner Bank does
not dispute that this element is met. (Dkt. Nos. 75, 120, & 164.)
Thus, Banner Bank is not entitled to judgment as a matter of law on Loree Smith’s
counterclaim for breach of contract, and the court DENIES summary judgment.
So ordered.

2

Banner Bank claims naming Loree Smith to the suit was not a breach of the Release because Banner Bank does not
seek monetary damages from her and because the court previously declined to dismiss Loree Smith. Banner Bank
provides no authority or record citations for its suggestion that a claim for monetary damages should be viewed
differently from a claim for declaratory judgment under the Release. And the court’s decision not to dismiss Loree
Smith has no bearing on whether Banner Bank violated an agreement by naming her in a suit.

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DATED this 28th day of March, 2017.
BY THE COURT:

Clark Waddoups
United States District Judge

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