Garth O. Green Enterprises et al v. Standard Plumbing Supply

Filing 118

ORDER denying 68 Motion for Reconsideration; finding as moot 56 Motion for Release of Lis Pendens; finding as moot 56 Motion for Bond; finding as moot 108 Motion to Stay ; finding as moot 116 Motion to Expedite. Signed by Judge David Nuffer on August 22 2016. (DN)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION

In re:
GRASS VELLEY HOLDINGS, L.P.,
Debtor.

GARTH O. GREEN ENTERPRISES, INC., a Utah
corporation; GARTH O. GREEN, an individual;
and MICHAEL GREEN, an individual,
Plaintiffs and Counterclaim Defendants,
v.
RANDALL HARWARD, an individual;
RICHARD HARWARD, an individual;
HARWARD IRRIGATION SYSTEMS, INC., a
Utah corporation; GRASS VALLEY HOLDINGS,
L.P.; RICHARD N. REESE, an individual;
STANDARD PLUMBING SUPPLY COMPANY,
INC., a Utah corporation; DOES 1-10; and ROE
CORPORATIONS I-X,
Defendants and Counterclaim Plaintiffs.
RICHARD N. REESE, an individual and
STANDARD PLUMBING SUPPLY COMPANY,
INC., a Utah corporation,
Third-Party Plaintiffs,
v.
GW GREEN FAMILY LIMITED PARTNERSHIP,
a Utah limited partnership and WENDY GREEN,
an individual,
Third-Party Defendants.

Bankruptcy Case No. 2:15-bk-24513
Chapter 11
Judge R. Kimball Mosier
Adversary Proceeding No. 2:15-ap-2141
(terminated)

MEMORANDUM DECISION AND
ORDER DENYING STANDARD
PLUMBING SUPPLY COMPANY,
INC. AND RICHARD N. REESE’S
MOTION FOR RECONSIDERATION
AND/OR CLARIFICATION OF THE
STATE COURT’S MARCH 6, 2015
ORAL RULING REGARDING
MOTION FOR RELEASE OF
NOTICE OF LIS PENDENS
Case No. 2:15-cv-00556-DN
District Judge David Nuffer
Removed State Court Case:
Fourth Judicial District Court, for the
State of Utah, Utah County
Case No. 130400184

BACKGROUND
On October 2, 2014, Richard N. Reese and Standard Plumbing Supply Company, Inc.
(collectively “Standard Parties”) filed a motion to remove five notices of lis pendens that were
recorded by Plaintiffs (“Greens”) against property leased by Standard Plumbing. 1 The notices of
lis pendens were filed pursuant to Utah Code § 78B-6-1304.
On March 6, 2015, the Fourth Judicial District Court for Utah County, State of Utah, held
a hearing on the motion and heard argument from the Standard Parties and from the Greens
about whether the notices of lis pendens should be removed. 2 Judge Laycock indicated that she
and her clerk had read through all the briefing, was familiar with the cases cited by the parties,
and had carefully considered the arguments made in the briefing and at the hearing. 3 For two and
a half pages, Judge Laycock explains why she rejects the arguments of the Standard Parties and
would not remove the five notices of lis pendens on the subject properties. 4
Judge Laycock also indicated, however, that additional briefing on the bond issue would
be required. 5 During the hearing, the Standard Parties indicated that if Judge Laycock denied the
request to remove the notices, the Greens should be required to post a bond “from $108,000
up.” 6 Judge Laycock did not rule on the bond issue. 7

1

Motion for Release of Notice of Lis Pendens (“Motion”) at 2, docket no. 56, filed Apr. 29, 2016.

2

March 6, 2015 Hearing Transcript (“Tr.”), docket no. 59, filed Apr. 29, 2016.

3

Tr. at 52:1-8, 54:3-8.

4

Tr. at 52:1-54:16.

5

Tr. at 54:18-19.

6

Tr. at 26:16-17.

7

Tr. at 54:17-18.

2

On March 24, 2015, the Standard Parties submitted supplemental briefing with respect to
their request for a bond. 8 The Standard Parties explained that they had retained a real estate
expert by the name of Russell K. Booth to determine the extent of the harm suffered by the
Standard Parties and the Harward Parties (Randall Harward, Richard Harward, Harward
Irrigaiton Systems, Inc., and Grass Valley Holdings, LP together are the “Harward Parties”) as a
result of the recording of the five notices of lis pendens. 9 The Standard Parties’ brief indicated
that “the total harm to all defendants as a result of the lis pendens is calculated in Mr. Booth’s
report to total $17,051,932.51.” 10 The Greens opposed the Standard Parties’ positions, and
argued that a bond should not be required. 11 Judge Laycock never ruled on the bond issue
because the case was removed to federal court shortly after the supplemental filings were made.
The Standard Parties now move for reconsideration of the state court’s ruling (“Motion
for Reconsideration”). 12 The Standard Parties make many of the same arguments they made to
the state court: that specific performance is impossible; 13 that the lis pendens notices are invalid
against a prior conveyance; 14 that the lis pendens notices are overbroad; 15 and that the lis
pendens notices were used for an improper purpose. 16 But those arguments were addressed and

8

Defendants’ Joint Supplemental Briefing on the Issue of a Lis Pendens Guarantee, docket no. 63, filed Apr. 29,
2016.
9

Defendants’ Joint Supplemental Briefing on the Issue of a Lis Pendens Guarantee at 3, docket no. 63, filed Apr. 29,
2016.
10

Defendants’ Joint Supplemental Briefing on the Issue of a Lis Pendens Guarantee at 3, docket no. 63, filed Apr.
29, 2016.
11

Supplemental Brief in Further Opposition to a Lis Pendens Bond, docket no. 63-1, filed Apr. 29, 2016.

12

Defendants, Counterclaim Plaintiffs, and Third-Party Plaitniffs Standard Plumbing Supply Company, Inc. and
Richard N. Reese’s Motion for Reconsideration of the State Court’s March 6, 2015 Oral Ruling Regarding Motion
for Release of Notice of Lis Pendens (“Motion for Reconsideration”), docket no. 68, filed May 13, 2016.
13

Motion for Reconsideration at 1.

14

Motion for Reconsideration at 3.

15

Motion for Reconsideration at 4.

16

Motion for Reconsideration at 8.

3

rejected by the state court in its oral ruling on March 6, 2015. The state court ruled that specific
performance was not “totally impossible at this point;” 17 that the timing of the lis pendens
notices was not material; 18 and that the notices of lis pendens were “serving the purpose for
which the law allows in the State of Utah.” 19 The state court found it significant that “the
properties here were not deeded away,” so this case could be distinguished from the cases from
other jurisdictions cited by the Standard Parties in which property was deeded away before the
filing of a lis pendens notice. 20
STANDARD FOR RECONSIDERATION
Motions to reconsider, to the extent such motions are recognized, are disfavored. 21 A
court may reconsider a prior ruling based on “(1) an intervening change in the controlling law,
(2) new evidence previously unavailable, [or] (3) the need to correct clear error or prevent
manifest injustice.” 22 Under this standard, the Motion for Reconsideration is DENIED.
DISCUSSION
An initial issue created by the Motion for Reconsideration is whether a federal court may
“reconsider” a ruling by a state court. The state court ruling was not issued by this federal court,
so there is nothing for the federal court to “reconsider.” However, Rule 54 of the Federal Rules
of Civil Procedure explains that
17

Tr. at 53:24-25.

18

Tr. at 54:7-16.

19

Tr. at 53:19-20.

20
Tr. at 54:13-14; see Tr. at 17:16-22 (“It seems totally logical that if I have already given my property away
through a deed, there’s nothing for a li[s] pendens to be filed upon anymore because it’s gone. . . . But if I still have
my property and I’ve rented it out, isn’t that a different story?”).
21
Whittington v. Taco Bell of Am., Inc., No. 10-1884, 2012 WL 3705046, at *2 (D. Colo. Aug. 27, 2012) (citing
Bank of Waunakee v. Rochester Cheese Sales, Inc., 906 F.2d 1185, 1191 (7th Cir.1990)); see Warren v. Am. Bankers
Ins. of Fl., 507 F.3d 1239, 1243 (10th Cir. 2007) (stating that for twenty years, the Tenth Circuit has “admonished
counsel that the Federal Rules of Civil Procedure do not recognize that creature known all too well as the ‘motion to
reconsider’ or ‘motion for reconsideration.’).
22

Servants of the Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000).

4

any order or other decision, however designated, that adjudicates fewer than all
the claims or the rights and liabilities of fewer than all the parties does not end the
action as to any of the claims or parties and may be revised at any time before the
entry of a judgment . . . . 23
The state court’s ruling on the lis pendens notices is an “order or other decision . . . that
adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties” and
therefore it can be revised by this court if necessary. However, as explained above, motions for
reconsideration are disfavored and will only be granted if the standard for reconsideration, noted
above, is met. That standard is not met here for the following reasons.
Changes to the Utah Lis Pendens Statute Do Not Warrant Reconsideration of the Ruling
The change to existing law that is cited by the Standard Parties—an amendment to the
“Utah lis pendens statute” 24—does not establish that the state court ruling should be revisited or
that the lis pendens notices should be removed. The Standard Parties do not show that the notices
fail to provide a “specific” legal description of “only” the property affected. The Standard Parties
state that the lis pendens notices are overbroad because they claim the entire acreage of the
properties, but fail to explain why this would fail the “specific” description language in the
statute. As long as the notice describes the property that is affected by the lawsuit, it would seem
to have a sufficient description. The Standard Parties cite no authority holding to the contrary.
Further, the Standard Parties’ argument that the Utah lis pendens statute added a treble damages
clause, thus “recognize[ing] that lis pendens are subject to potential abuse, which can greatly
harm the owners and lessees of real property,” 25 does not show that the state court ruling should
be revised or that the lis pendens notices should be removed. According to the portions of the
statute quoted by the Standard Parties, treble damages only apply if the lis pendens is
23

Fed. R. Civ. P. 54(b).

24

Motion for Reconsideration at 9.

25

Motion for Reconsideration at 9.

5

“groundless” or “contains an intentional material misstatement or false claim.” 26 The Standard
Parties do not show that the notices of lis pendens are “groundless” or contain an “intentional
material misstatement or false claim.” 27 Thus, the changes to the lis pendens statute cited by the
Standard Parties do not warrant reconsideration of the state court ruling.
There Is No New Evidence
Second, the Standard Parties argue that “Sprinkler World has continued to change, further
exacerbating the impossibility of specific performance as a remedy.” 28 Changes over the last
nineteen months, the Standard Parties argue, are “new evidence” that mandates reconsideration.
This is incorrect. The Standard Parties raised the “changed business” argument to the state court,
and the court rejected the argument. More changes to the business do not constitute new
evidence; they constitute the same evidence—changed circumstances. The Standard Parties’
argument would legitimize delay of proceedings involving sales of business as a specific
performance avoidance tactic. Thus, the Standard Parties have not shown new evidence or other
equitable considerations which warrant reconsideration.
The State Court Ruling is Not Clearly Erroneous
Finally, the state court’s March 6, 2015 ruling denying the Standard Parties’ request to
remove the notices of lis pendens was not clearly erroneous. The ruling is supported by the
finding that specific performance was still an available remedy. Specific performance may be
complicated, but the state court explained that it could still be an available remedy. The Standard
Parties take issue that the state court did not specifically describe how specific performance

26

Motion for Reconsideration at 9.

27

Motion for Reconsideration at 9.

28

Motion for Reconsideration at 9.

6

could work, 29 but do not cite any authority holding that a detailed explanation of specific
performance is required. Instead, the Standard Parties state that “under any analysis,” specific
performance is “impossible owing to myriad changes to Sprinkler World between January 2013
and the present.” 30 The Standard Parties do not explain any of the analyses to which they refer,
and cite only to their own version of the facts for support. Although it may be difficult to sort out
and not a preferred solution or remedy, specific performance could still be ordered in this case. 31
As an equitable remedy, specific performance is left to the court’s discretion. 32 Thus, the state
court ruling is not clearly erroneous. The other arguments raised by the Standard Parties have
been addressed by this memorandum decision and order or by the state court ruling, and have
been rejected. Thus, the state court ruling is not clearly erroneous and the Motion for
Reconsideration is DENIED.
The Notices of Lis Pendens Will Be Released By Settlement Agreement
The relief requested by the Standard Parties—release of the notices of lis pendens—may
be accomplished by a recent settlement agreement between the Harward Parties, who own the
subject properties, and the Greens. 33 Under the settlement agreement, the Greens “must deliver
releases of lis pendens” to an escrow officer, which will leave the properties free from the
29

Motion for Reconsideration at 6.

30

Motion for Reconsideration at 6.

31

See 71 Am. Jur. 2d Specific Performance § 107 (“Specific performance has been decreed in a number of cases
notwithstanding the fact that the vendor had made improvements after executing the contract or option for sale of
the property, the decree in some instances being conditioned upon reimbursement to the vendor of the value of such
improvements, while under the particular circumstances of other cases, reimbursement was not required. Also, a
vendee has been granted specific performance as against the vendor's subsequent grantee who had improved the
property because the subsequent grantee made the purchase and added the improvements with constructive
knowledge of the original vendee’s contract.” (emphasis added)).

32
El Paso Natural Gas Co. v. Western Bldg. Assoc., 675 F.2d 1135, 1142 (10th Cir. 1982) (“Specific performance
rests in the discretion of the trial court, to be exercised in accordance with general principles of equity jurisprudence.
A party seeking equitable relief must be prepared to give in return that which is just and equitable.”).
33
Opposition Memorandum to Defendants, Counterclaim Plaintiffs, and Third-Party Plaintiffs Standard Plubming
[sic] Supply Company, Inc. and Richard N. Reese’s Motion for Reconsideration of the State Court’s March 6, 2015
Oral Ruling Regarding Motion for Release of Notice of Lis Pendens, ¶¶ 3-8, docket no. 97, filed July 29, 2016.

7

notices of lis pendens. 34 Thus, the relief the Standard Parties seek will be provided through a
separate avenue and there is no need for a ruling ordering release of the notices. This is an
independent ground on which the Motion for Reconsideration is denied.
The Standard Parties argue that this is the incorrect conclusion because they are not a
party to the settlement agreement. 35 The Standard Parties argue that they have been damaged by
the Greens’ invalid lis pendens filings, and that a guarantee should be posted to protect against
those damages. 36 The Standard Parties cite to the following statute:
Upon a motion by any person with an interest in the real property that is the
subject of a notice of pendency, a court may, at any time after the notice has been
recorded, require, as a condition of maintaining the notice, that the claimant
provide security to the moving party in the amount and form directed by the court,
regardless of whether the court has received an application to release [the
notice]. 37
While the Standard Parties are correct that “any person with an interest in the real
property” may move the court for the posting of a bond, the decision is left to the court’s
discretion. Throughout the Standard Parties’ briefing, the Standard Parties seem to suggest that a
notice of lis pendens must be accompanied by a bond. 38 The plain language of the statute
contradicts that suggestion.

34

Id. ¶ 6.

35

Defendants Standard Plumbing Supply Company, Inc. And Richard N. Reese’s Reply Memorandum In Support
Of Motion For Reconsideration Of The State Court’s March 6, 2015 Oral Ruling Regarding Motion For Release Of
Notice Of Lis Pendens at 3, docket no. 113, filed Aug. 15, 2016.
36

Defendants Standard Plumbing Supply Company, Inc. And Richard N. Reese’s Reply Memorandum In Support
Of Motion For Reconsideration Of The State Court’s March 6, 2015 Oral Ruling Regarding Motion For Release Of
Notice Of Lis Pendens at 9, docket no. 113, filed Aug. 15, 2016.
37

Utah Code § 78B-6-1304(5) (formerly 78B-6-1304(4)).

38
E.g., Reply at 10 (“Simply stated, the Greens have no received the significant benefit of the lis pendens for more
than three-and-a-half (3 ½) years without ever having to bear the commensurate burden under the Utah lis pendens
statute of posting a guarantee.”).

8

Further, the Standard Parties are incorrect that a bond should be posted “irrespective of
whether the lis pendens are released.” 39 This argument runs directly contrary to the language of
the statute, which provides that the bond is meant “as a condition of maintaining the notice[.]” 40
If there is no notice, the bond loses its purpose because the notice is no longer being maintained.
Therefore, the Standard Parties are incorrect that a bond should be posted regardless of whether
the notices of lis pendens still stand.
The Standard Parties are correct that they may be entitled to recover damages they have
suffered as the result of the filing of an improper lis pendens notice. Specifically, Utah law
provides that:
A person is liable to the record owner of real property, or to a person with a
leasehold interest in the real property that is damaged by the maintenance of a
notice of pendency, for $10,000 or for treble actual damages, whichever is
greater, and for reasonable attorney fees and costs, if the person records or causes
to be recorded a notice of pendency against the real property [that is improper]. 41
Thus, the Standard Parties, as a party with a leasehold interest in the real property at issue, may
be entitled to “treble actual damages” if they can show the lis pendens notice was filed contrary
to the law. But such a showing may be made later, and there is nothing in the statute that
requires the posting of a bond in a situation where the lis pendens notice is not presently of
record against the property. Again, the bond, according to the plain language of the statute, is
required only “as a condition of maintaining the notice,” not to secure future payment of a
damages claim.
The court recognizes that the Standard Parties face a significant risk that they may be left
without a guarantee for payment with respect to any damages they may have suffered as a result

39

Reply at 11.

40

Utah Code § 78B-6-1304(5) (formerly 78B-6-1304(4)).

41

Utah Code § 78B-6-1304.5.

9

of an improper lis pendens notice. But the purpose of the lis pendens statute bond requirement is
not to secure payment for damages as the Standard Parties suggest; it is to provide surety for a
party which maintains a notice. Now that the notices of lis pendens are being released, surety is
not required to maintain them.
This memorandum decision and order is not meant to suggest that the Standard Parties
have not suffered damages or that the Greens have acted with propriety or are free from liability.
The Greens may be facing a significant damages claim for their behavior. Indeed, it may be
significant that the Greens purchased the Springville property in a foreclosure sale after
recording a notice of lis pendens on the property and indicating an intention to foreclose. It is
also significant that the notices of lis pendens appear to have negatively impacted the ability of
the Harwards and the Standard Parties to market or sublease the properties. But those actions,
and any potential damages flowing therefrom, are not currently at issue. The issues currently
before the court are whether the state court’s ruling should be reconsidered and whether a bond
should be posted to maintain the notices of lis pendens. For the reasons stated above, the answer
to each of those questions is “no.”
ORDER
IT IS HEREBY ORDERED that the Motion for Reconsideration 42 is DENIED.
IT IS FURTHER ORDERED that, due to the ruling on the Motion for Reconsideration,
the Motion to Stay Consideration of Standard Plumbing Supply Company, Inc. and Richard

42
Defendants, Counterclaim Plaintiffs, and Third-Party Plaitniffs Standard Plumbing Supply Company, Inc. and
Richard N. Reese’s Motion for Reconsideration of the State Court’s March 6, 2015 Oral Ruling Regarding Motion
for Release of Notice of Lis Pendens (“Motion for Reconsideration”), docket no. 68, filed May 13, 2016.

10

Reese’s Motion for Reconsideration of the State Court’s March 6, 2015 Oral Ruling Regarding
Motion for Release of Notice of Lis Pendens [Doc. 68] 43 is MOOT.
IT IS FURTHER ORDERED that Defendants Standard Plumbing Supply Company, Inc.
and Richard N. Reese’s Motion (1) to Expedite Briefing and (2) for Oral Argument on Pending
Motions, 44 which seeks expedited briefing on the Motion to Stay and asks for a hearing
regarding the lis pendens issues, is MOOT.
IT IS FURTHER ORDERED that the Motion for Release of Notice of Lis Pendens 45 is
MOOT, as it has already been ruled on by the state court by its March 6, 2015 oral ruling.
IT IS FURTHER ORDERED that the Supplemental Briefing to the Motion for Release of
Notice of Lis Pendens, 46 which is docketed as a pending motion, should be terminated. The
issues addressed in that Supplemental Briefing involving the requirement of a lis pendens
guarantee, bond, or surety, were addressed in the Motion for Reconsideration and denied.
Signed August 22, 2016.
BY THE COURT

________________________________________
District Judge David Nuffer

43

Motion to Stay Consideration of Standard Plumbing Supply Company, Inc. and Richard Reese’s Motion for
Reconsideration of the State Court’s March 6, 2015 Oral Ruling Regarding Motion for Release of Notice of Lis
Pendens [Doc. 68], docket no. 108, filed Aug. 5, 2016.
44

Defendants Standard Plumbing Supply Company, Inc. and Richard N. Reese’s Motion (1) to Expedite Briefing
and (2) for Oral Argument on Pending Motions, docket no. 116, filed Aug. 15, 2016.
45

Motion for Release of Notice of Lis Pendens, docket no. 56, filed Apr. 29, 2016.

46

Defendants’ Joint Supplemental Briefing on the Issue of a Lis Pendens Guarantee, docket no. 63, filed Apr. 29,
2016.

11