Deem et al v. Baron et al

Filing 253

MEMORANDUM DECISION AND ORDER-granting in part and denying in part 230 Motion for Summary Judgment ; Motions terminated: 230 Plaintiff's MOTION for Summary Judgment and Memorandum in Support Partial Summary Judgment on issues of Tort and Statutory Violations filed by Janine Law, David G. Law, Deem Realty Funding, Deem Investment Company, DJ Property Solutions, Darrell L. Deem.See Order for details. Signed by Judge David Sam on 2/27/19. (jmr)

UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION

DARRELL L. DEEM, et. al.,

MEMORANDUM DECISION

Plaintiffs,

AND ORDER

v.
2:15-CV-00755-DS

TRACEY BARON, et. al.,
Defendants.

District Judge David Sam

INTRODUCTION
In 2009, Plaintiffs and Defendants began working together on real estate investments.
Plaintiffs provided funds and Defendants performed the ground work. The relationship began to
deteriorate in 2015 due to a number of disagreements. Plaintiffs filed suit in 2015. Defendants
filed a counterclaim in 2017. In this motion for summary judgment, Plaintiffs “seek partial
summary judgment on the tort issues of Defamation, Interference with Economic Relations and
Abuse of Process.” ECF No. 230 at 4. Although Plaintiffs allege that Defendants asserted these
three claims as counterclaims, Defendants point out that there is currently no claim before the
court for interference with economic relations. 1 Because there is no claim for relief so pleaded,
this court need not render a decision on that claim. The court also notes that Plaintiffs have not

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See ECF No. 215, at 12. “Defendants’ Counterclaim does not plead a claim for interference with
economic relations. The Counterclaim uses the phrase, or something similar to it, on more than one
occasion, but it does not purport to plead the elements of the claim as a separate cause of action. ECF No.
87, at 57, 62.

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presented any evidence or argument to support summary judgment on the abuse of process
claim, so this court’s prior denial of summary judgment on this claim stands. The only remaining
claim before the court is Defamation.
Although the plaintiffs do not seek relief on other grounds in their motion, they do brief a
number of other claims and defenses: (1) rent skimming, (2) licensing violations, (3) tax code
violations, (4) loan disclosure violations, (5) bankruptcy violations, and (6) violations of the Fair
Debt Collection Act. Defendants have withdrawn the rent skimming, bankruptcy, and Fair Debt
Collection Act claims, so the court will not address those claims. As to the remaining claims,
Defendants first argue that Plaintiffs’ motion fails to comply with the governing rules for
identifying and arguing undisputed material facts. Second, Defendants argue that Plaintiffs failed
to establish an undisputed fact record on which to base summary judgment. Finally, Defendants
argue that Plaintiffs have not adequately met the requirements and are therefore not entitled to
summary judgment as a matter of law.
LEGAL STANDARD
The moving party is entitled to summary judgment if there is no genuine issue as to any
material fact and the moving party can prove all the elements of the claim as a matter of law.
Fed.R.Civ.P. 56(a). “A fact is material for purposes of summary judgment if its determination
might affect the outcome of the suit under the governing law.” Roberts v. Jackson Hole
Mountain Resort Corp., 884 F.3d 967, 972 (10th Cir. 2018). The moving party bears the initial
burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). When considering summary judgment, the court must view all

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evidence in the light most favorable to the non-moving party. Commercial Union Ins. Co. v. Sea
Harvest Seafood Co., 251 F.3d 1294, 1298 (10th Cir. 2001).
A party is permitted to move for summary judgment on the ground that there is no
evidence of one or more essential elements of a claim or affirmative defense. Celotex Corp., 477
U.S. at 322. However, in such case, the movant cannot simply make a conclusory assertion that
the opposing party has no evidence; rather, the movant must identify specific issues and
demonstrate the absence of evidence. See McKnight v. Kimberly Clark Corp., 149 F.3d 1125,
1128 (10th Cir. 1998). The burden then lies on the non-moving party to establish the existence of
a genuine issue of material fact pertinent to each element essential to its claim. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). If there is a genuinely disputed material fact, the
case must proceed to trial. However, if there is a lack of a genuinely disputed material fact, “[t]he
plain language of Rule 56(c) mandates the entry of summary judgment . . . against a party who
fails to make a showing sufficient to establish the existence of an element essential to that party’s
case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322.
ANALYSIS
A. Defamation and Slander
Under Utah law, a statement is defamatory if it “impeach[es] an individual's honesty,
integrity, virtue, or reputation and thereby exposes the individual to public hatred, contempt, or
ridicule.” Cox v. Hatch, 761 P.2d 556, 561 (Utah 1988) (citing Utah Code Ann. § 45–2–2(1)).
The guiding principle in determining whether a statement may be considered defamatory is its
tendency to damage a reputation. Id. A plaintiff pursuing defamation must prove the following
elements: (1) the named defendant published statement(s) about the named plaintiff; (2) the
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published statements were false, defamatory, and not subject to privilege; (3) the statements were
published with the required degree of fault; and (4) the publication caused damage to the
plaintiff. West v. Thomson Newspapers, 872 P.2d 999, 1008 (Utah 1994); see also Model Utah
Jury Instruction CV1602. “Whether a statement is capable of sustaining a defamatory meaning is
a question of law.” Id.
A statement is defamation per se if the words used fit within one of the well-established
categories. Westmont Mirador, LLC v. Miller, 362 P.3d 919 (Utah App. 2014). In order to rise to
the level of defamation per se, “the defamatory words must charge criminal conduct, loathsome
disease, conduct that is incompatible with the exercise of a lawful business, trade, profession, or
office, or the unchastity of a woman.” Baum v. Gillman, 667 P.2d 41, 43 (Utah 1983). Further,
the statements “must be of such common notoriety that damage can be presumed from the words
alone.” Id. Under Utah law, damages are presumed if a statement is defamatory per se. Farm
Bureau Life Ins. Co. v. Am. Nat. Ins. Co., 505 F. Supp. 2d 1178, 1192 (D. Utah 2007). To
determine whether a statement is libelous per se courts must look to whether the language used
concerns a person (or his or her affairs) that “from its nature must, or presumably will as its
natural and proximate consequence, cause pecuniary loss to the person about whom the
statement is made.” Id. However, “if a statement is capable of two interpretations, where one is
slanderous and the other not, the statement is not slander per se.” Id.
Defendants in this case filed a counterclaim against Plaintiffs alleging defamation and
slander. In Plaintiffs’ Motion for Summary Judgment, Plaintiffs make three arguments in favor
of summary judgment on the defamation claim. First, Plaintiffs argue that “Defendants have not
offered evidence of any kind concerning the alleged defamation.” ECF No. 230 at 8. Second,
Plaintiffs argue that they have not “communicated with any of Defendants ‘important stake
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holders’ in any fashion, let alone defamatorily or slanderously.” Id. at 9. Finally, Plaintiffs argue
that truth is a complete defense and is considered privileged communication, and that even if
they have communicated with important stake holders, Defendants have failed to allege “that
such communications were not truthful.” Id.
In their opposition to the motion, Defendants dispute Plaintiffs’ allegations with exhibits
identifying specific statements and their falsity. These statements include “that one or more of
the defendants committed fraud, stole money from the plaintiffs, could not be trusted, was taking
money from others ‘under the table,’ and would be going to jail if he acted to ‘pressure’
tenants…” ECF No. 236, at 4-5. These statements considered in the light most favorable to the
nonmoving party, may fit within the boundaries of defamation per se as stated in Baum because
these words seem to charge Defendants with criminal conduct and/or conduct incompatible with
the exercise of lawful business. Defendants have sufficiently established the existence of
disputed material facts with regard to the defamation claim.
Defendants also challenge Plaintiffs’ assertion of privilege, arguing that Plaintiffs did not
invoke a privilege other than truth. They also assert that there is no applicable privilege in the
present case pursuant to MUJI 2d CV1608, comm. note (identifying privileges in Utah law).
Defendants’ Opposition is particularly persuasive in regard to the motion’s failure to
comply with governing rules. See ECF No. 236 at 7-9). Defendants dispute the accuracy of
Plaintiffs allegation regarding privilege. Privilege is an affirmative defense for which Plaintiffs
bear the burden at trial. Zoumadakis v. Uintah Basin Med. Ctr., Inc., 122 P.3d 891, 893 (Utah
App. 2005). Plaintiffs claim privilege as an assertion of undisputed fact when it is more
accurately considered an assertion of law. See MUJI 2d CV1608.

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B. Licensing
Defendants allege in their counterclaim that their contracts with Plaintiffs are void
because they were made in violation of Oregon Revised Statutes Ann. § 86A.103. Plaintiffs
suggest that they are briefing a no-evidence motion on the licensing issue. They admit that they
are not licensed mortgage brokers, and thus contend that no facts are in dispute concerning this
claim. Plaintiffs base their licensing discussion on purported assertions of fact, however, not on
“no evidence.” ECF No. 230 at 12-13. They concede they are not licensed brokers. Id. at 12.
But then they allege that they “do not have any expectation of compensation,” that they “do not
handle mortgage type loans,” that they “are not in the business of making loans secured by an
interest in real estate,” that they “do not maintain a place of business within the state of Oregon
and do not solicit borrowers in the state,” that they “used their own funds for their own
investments and are not engaged in the business of making loans secured by an interest in real
estate.” Id. at 12.
Defendants point out that this is not a “no-evidence” motion. This is a motion based on
alleged facts for which there is no support given in the Plaintiffs’ statement of facts. Also,
Plaintiffs concede facts that show an absence of an undisputed fact record: they say they were
involved in “two loans that were secured” and three instances where David Law received a small
payment for work he did incident to loan creation.” ECF No. 230 at 13. Plaintiffs have
themselves created a fact dispute and are in effect advancing trial argument.
According to Defendants, the provisions of the Oregon Revised Statutes Part 86A require
parties in the plaintiffs’ position to be licensed by the State of Oregon. See ORS §
86A.100(3)(b)(C), (5)(b)(F). The contracts plaintiffs invoke in this case were made with one or

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more Oregon residents or companies, relate to Oregon real estate, and involved funds going into
Oregon. The licensing requirement applies to residential mortgage transactions where the subject
transaction is one “in which a mortgage, deed of trust, purchase money security interest arising
under an installment sales contract, or equivalent consensual security interest is created or
retained in property upon which four or fewer residential dwelling units are planned or situated.”
ORS § 86A.100(8). Plaintiffs assert that this describes the Hilltop property deal.
Defendants’ Opposition is particularly persuasive regarding the motion’s failure to
comply with governing rules. See ECF No. 236 at 7-9. Defendants’ correctly state that the
motion fails to cite with “particularity” pursuant to DUCivR 56-1(b)(3). Plaintiffs’ statement of
undisputed material facts consists of only eight facts—four of which are unsupported by any
evidentiary citation. ECF No. 230 at 6-7. The other facts refer generally with no “particularity”
in citation as required by the rule. Moreover, at first blush the motion seems to rely on those
eight “undisputed material facts” yet Plaintiffs cite and discuss other items of evidence
throughout the discussion. It is unclear which facts Plaintiffs rely on throughout the motion. This
falls short of the summary judgment standard which requires that “the movant must identify
specific issues and demonstrate the absence of evidence.” McKnight, 149 F.3d at 1128.
Moreover, the record remains “full of fact disputes on every major point” as previously
stated in this Court’s Memorandum Decision and Order denying Plaintiffs’ previous Motion for
Summary Judgment. ECF No. 226. The motion and opposition are themselves filled with factual
disputes. Rule 56(a) states: “The court shall grant summary judgment if the movant shows that
there is no genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” The law can only be applied once the facts are found. Plaintiffs’ motion fails to
meet this standard with regards to the Licensing claim.
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C. Tax Code
Defendants allege that Plaintiffs violated 26 U.S.C. § 4975(c)(1)(D) and in doing so,
exposed Defendants to liability under 26 U.S.C. § 4975(a)-(b). Plaintiffs assert that there were
no violations of the tax code and that even if there were violations, Defendants would not share
in any culpability. Plaintiffs cite a report by a tax attorney in support of this argument. Plaintiffs
next argue that the contract itself is not illegal because it was “capable of being performed in a
legal manner” and “a lawful contract is not rendered illegal by illegal acts committed in the
performance of that contract.” (Mot. at 14). Finally, according to Plaintiffs, there are no factual
issues because enforceability is to be decided by the court.
First, Defendants argue that Plaintiffs improperly present legal conclusions to the court.
Next, Defendants maintain that they have offered evidence that Plaintiffs’ transactions violated
26 U.S.C. § 4975(c)(1)(D) exposing Defendants to liability under 26 U.S.C. § 4975(a)-(b).
Defendants’ Opposition is again persuasive in regard to the motion’s failure to comply
with governing rules. (See Opp. at 7-9). Defendants’ correctly state that the motion fails to cite
with “particularity” pursuant to DUCivR 56-1(b)(3). Plaintiffs’ statement of undisputed material
facts consists of only eight facts—four of which are unsupported by any evidentiary citation.
(Mot. at 6-7). The other facts refer generally with no “particularity” in citation as required by the
rule. Moreover, at first blush the motion seems to rely on those eight “undisputed material facts,”
yet Plaintiffs cite and discuss other items of evidence throughout the discussion. It is unclear
which facts Plaintiffs rely on throughout the motion. The motion falls short of the summary
judgment standard which requires that “the movant must identify specific issues and demonstrate
the absence of evidence.” McKnight, 149 F.3d at 1128. Further, Plaintiffs cite to the court a

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“report” prepared by “a partner in a prominent nationwide tax firm” in support of their position.
This was not laid out in the summary judgment facts; the witness was not properly identified for
trial or in connection with this summary judgment motion; and he purports to be giving the court
a legal opinion.
Moreover, the record remains “full of fact disputes on every major point” as previously
stated in this Court’s Memorandum Decision and Order denying Plaintiffs’ previous Motion for
Summary Judgment (ECF No. 226). The Motion and Opposition are themselves filled with
factual disputes. Rule 56(a) states: “The court shall grant summary judgment if the movant
shows that there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” The law can only be applied once the facts are found. Plaintiffs’
motion fails to meet this standard with regard to the tax claim.
D. Loan Disclosures

Defendants claim in their Answer and Counterclaim that the contracts were illegal
because Plaintiffs did not comply with disclosure laws such as the Truth-in-Lending Act (TILA),
15 U.S.C. § 1601 et seq., and Regulation Z, 12 C.F.R. § et. Seq. These statutes and regulations
require disclosures in connection with consumer credit transactions. “The term ‘consumer credit
transaction’ means any transaction in which credit is offered or extended to an individual for
personal, family, or household purposes.” 15 U.S.C. § 1679a(2).
Plaintiffs argue in their motion for summary judgment that these disclosure laws have no
application because they apply only to consumer loans and the loans in this case were not
consumer loans. These loans were made to businesses, not consumers. Moreover, TILA only
applies to credit transactions involving secured real estate, or those in excess of $25,000.00. 15

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U.S.C. § 1603(3). Here, the real estate was not secured (except 2) and the amounts were under
$25,000.00. Plaintiffs note that while the Hilltop property was over this amount, the Hilltop
transaction was a Joint Venture, not a consumer credit transaction. See ECF No. 230. Exhibit 11.
Plaintiffs assert that Defendants offer no proof that these are consumer loans. In fact,
Defendants attempted to discharge these loans in the Chapter 11 business bankruptcies.
In their opposition to the summary judgment motion, Defendants address only the
arguments regarding the Hilltop transaction, which leads the court to conclude that Defendants
concede that the disclosure laws do not apply to any of the other loans. And regarding the Hilltop
transaction, Defendants simply state that “the plaintiffs loaned money to defendants in
connection with a transaction for the purchase and sale of the Baron family household but did not
give disclosures in connection therewith.” Although the Joint Venture Agreement does say that
Tracey and Michelle Baron would occupy the home as their primary residence, the stated
purpose of the joint venture agreement was “facilitating a mutually beneficial venture
opportunity under which the parties will cooperate to purchase and rehabilitate/remodel
residential properties as well as subdivide land where possible for their mutual benefit.” ECF No.
230. Exhibit 11. This was clearly a joint business transaction, and not a “consumer credit
transaction,” which by definition is “any transaction in which credit is offered or extended to an
individual for personal, family, or household purposes.” 15 U.S.C. § 1679a(2).
The court grants the Motion for Summary Judgment with respect to the Loan Disclosures
claim.

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E. Unlawful Trade Practices
In their Answer and Counterclaim, Defendants claim that Plaintiffs violated the Oregon
Unlawful Trade Practices Act. Plaintiffs argue in their summary judgment motion that Oregon’s
Unlawful Practice Act does not apply because first, there was no deceptive practice and second,
the Act is directed at “consumer problems.” (ECF No. 230 at 16). Moreover, Plaintiffs allege that
the Utah statutes addressing deceptive trade practices (False Advertising, Truth in Advertising,
and Motor Vehicle Act) are likewise inapplicable because “there are no advertising or motor
vehicle violations alleged” and the “allegations are supported by neither facts or law.” (ECF No.
230 at 16).
Defendants argue that they have presented evidence that Plaintiffs violated the section of
the Oregon Unlawful Trade Practices Act that states: “[a] person engages in an unlawful trade
practice if in the course of the person’s business, vocation or occupation the person: (1) Employs
any unconscionable tactic in connection with selling, renting or disposing of real estate, goods or
services, or collecting or enforcing an obligation . . . .” ORS § 646.607(1). Defendants argue that
the plaintiffs violated this section by going to third parties and falsely alleging that the
defendants are crooks who steal money, cheat, commit fraud, and cannot be trusted. Plaintiffs
allegedly did this while attempting to collect rent monies that they believed they were owed as a
result of their agreements with Defendants. Defendants also assert that Plaintiffs’ actions violate
the Utah Truth in Advertising Act, which makes it an unfair trade practice in the course of a
person’s business, vocation or occupation to “disparage the goods, services, or business of
another by false or misleading representation of fact.” Utah Code §13-11a-3(1)(h). Viewing the
evidence in the light most favorable to the defendants, the court finds that there is a genuine issue

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of material fact pertinent to the Unlawful Practices Act claim. Therefore, summary judgment on
this claim is not appropriate.
CONCLUSION
Based on the above and for good cause appearing, the court hereby denies in part and
grants in part Plaintiff’s Motion for Partial Summary Judgment Relating to Certain Tort and
Statutory Violation Issues (ECF No. 230). The court denies Plaintiffs’ claims for defamation,
licensing violations, tax code violations, and Unlawful Practices Act. The court grants only
Plaintiffs’ claim with respect to loan disclosure violations. So ordered.
DATED this 27th day of February, 2019.
BY THE COURT:

DAVID SAM
Senior Judge
United States District Court

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