International Fidelity Insurance Company v. La Porte Construction et al

Filing 136

MEMORANDUM DECISION AND ORDER granting 95 Motion for Partial Summary Judgment. Signed by Judge Jill N. Parrish on 2/12/2019. (jds)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
INTERNATIONAL FIDELITY
INSURANCE COMPANY, a New Jersey
corporation,
Plaintiff,

MEMORANDUM DECISION AND
ORDER GRANTING MOTION FOR
PARTIAL SUMMARY JUDGMENT

v.
LA PORTE CONSTRUCTION, INC., et al.,

Case No. 2:16-cv-00032-JNP-EJF
District Judge Jill N. Parrish

Defendants.

Before the Court is Plaintiff International Fidelity Insurance Company’s (“IFIC”) Motion
for Partial Summary Judgment (the “Motion”) (ECF No. 95). IFIC moves the court for summary
judgment against defendants Benjamin Logue (“Mr. Logue”), Lisa Marie Logue (“Mrs. Logue”),
La Porte Construction, Inc. (“La Porte Construction”), and La Porte Management, Inc. (“La Porte
Management”) (collectively “Defendants”) on its First Claim for Relief for Breach of Contract.
Only Mrs. Logue opposed IFIC’s Motion. See Affidavit/Declaration in Opposition to Motion (the
“Opposition”), ECF No. 97.
The court heard oral argument on the motion on January 11, 2019. At the hearing,
defendants Mr. Logue, La Porte Construction, and La Porte Management represented that they
intended to stipulate to an entry of judgment against them. On February 4, 2019, IFIC filed a
Verified Statement in Support of Judgment by Confession (“Verified Statement”) (ECF No. 127)
signed by Mr. Logue on behalf of Mr. Logue, La Porte Construction, and La Porte Management
(“Confessing Defendants”). Pursuant to the Verified Statement, the court hereby GRANTS the
Motion for Partial Summary Judgment as to the Confessing Defendants. The court now evaluates
the Motion on the merits as to Mrs. Logue.

BACKGROUND
This case arises out of the development and construction of a high-density mixed-use
residential and commercial project in downtown Salt Lake City known as the Plaza at State Street
(the “Plaza”). Defendant Tannach Properties, record owners of certain properties, hired La Porte
Construction as the general contractor for the Plaza. Mr. Logue is the president and principal of
La Porte Construction. Tannach and La Porte entered into three separate construction contracts
regarding the Plaza. Each contract required La Porte to acquire construction bonds to guarantee
the project.
La Porte applied to IFIC to furnish both contractor performance and payment bonds for the
Plaza. IFIC agreed to execute performance and payment bonds for each project (collectively the
“Bonds,” separately “Performance Bonds” or “Payment Bonds”). As a condition of procuring the
Bonds, IFIC presented La Porte with an “Indemnity Agreement.” The Indemnity Agreement lists
International Fidelity Insurance Company and/or Allegheny Casualty Company as “Surety,” La
Porte Construction as “Contractor,” and the remaining 63 named defendants as “Indemnitors.” On
March 30, 2012, Mr. Logue and his wife, Mrs. Logue, executed the Indemnity Agreement in their
individual capacities. Mr. Logue also executed the Indemnity Agreement on behalf of the other
Indemnitors, purportedly as President of La Porte Construction and La Porte Management, and as
Managing Member of the other 60 Indemnitors. Accompanying each signature is an
acknowledgment by a notary public that Mr. Logue signed on behalf of each of the Indemnitors.
But Mr. Logue was not the managing member of the Indemnitors, nor had he been authorized to

2

represent them. On March 3, 2017, the court dismissed 16 indemnitors due to Mr. Logue’s lack of
authority, apparent or actual, to bind them. 1
The Indemnity Agreement required all the Indemnitors to indemnify IFIC “against all
losses, costs, expenses, and exposure” related to the Bonds and the construction of the Plaza
Development by La Porte. The Indemnity Agreement also contained the following provision under
the heading “Representations”:
The undersigned represent to [IFIC] that they have carefully read
the entire [Indemnity] Agreement and that there are no other
agreements or understandings which in any way lessen or modify
the obligations set forth herein. The undersigned further warrant and
represent to [Fidelity] that all necessary action has been taken by
them to authorize the execution and delivery of this [Indemnity]
Agreement.
Along with the Indemnity Agreement, IFIC also required Mr. Logue to sign Resolutions
Authorizing Execution of Indemnity Agreement (the “Resolutions”). The Resolutions, which were
prepared by IFIC, each contained the following provision:
At a Special meeting of the Members of the [e.g., Amberley
Properties II, LLC] . . . duly called and held on the 30 day of March,
2012 a quorum being present, the following Preamble and
Resolution were adopted: WHEREAS this LLC has a financial
material and beneficial interest in transactions in which LaPorte
Contruction, Inc. [is involved] . . . RESOLVED, that the Managing
Member(s) authorized to execute documents on behalf of the LLC,
be and they are hereby authorized and empowered to execute any
indemnity agreement or agreements required by [Fidelity] . . .
RESOLVED FURTHER, that the Member be and they are hereby
authorized and empowered to execute such indemnity agreement or
1

The defendants that were dismissed pursuant to the court’s March 2, 2017 Memorandum Decision
and Order (ECF No. 69) are: Amberley Properties I, LLC; Amberley Properties II, LLC; Andalucia
Properties, L.L.C.; Barcelona Properties, LLC; Bracken Properties, L.L.C.; Dundee Properties,
L.L.C.; Edinburgh Properties, L.L.C.; Farquhar Properties, L.L.C.; Glenfinnan Properties, L.L.C.;
Inverness Properties, L.L.C.; Jameson Commercial Properties, L.L.C.; Jameson Properties,
L.L.C.; Kilmarnock Properties, L.L.C.; McGregor Properties, L.L.C.; Oban Properties, L.L.C.;
Portree Properties, L.L.C.; and Raasay Properties, L.L.C. IFIC voluntarily dismissed Cardiff
Properties, L.L.C. on April 5, 2017.
3

agreements and to any and all amendments to said indemnity
agreement or agreements and to any other or further agreements.
The Resolutions concluded with a provision intended to identify by name the “Managing
Members” authorized to execute the Indemnity Agreement, but no names or entities were listed.
Each of the Resolutions bears the sole signature of “Benjamin Logue, Managing Member.”
After the execution of the agreements, the project got underway. But the project faced
severe hardships. As a result, work on the Plaza was suspended indefinitely. In June 2015,
Citibank, one of the obligees under the Bonds, made demand on IFIC under the Performance
Bonds. Citibank filed suit in the United States District Court, District of Utah. The suit was
dismissed. Citibank refiled in the Third District Court for Salt Lake County, State of Utah. Citibank
also filed an action to judicially foreclose Citibank’s trust deed on the property (the “Foreclosure
Action”). Meanwhile, La Porte Construction’s subcontractors and suppliers made claims on the
Payment Bonds. These actions were all brought in the Third District Court for Salt Lake County,
Utah. IFIC has paid damages on all of the claims except for Citibank’s claim under the
Performance Bonds and one action pending under the Payment Bonds.
IFIC brought this suit against La Porte Construction and the Indemnitors on January 12,
2016. In 2017, the court dismissed the seventeen above-named indemnitors and in October of 2017
entered final judgment in their favor. IFIC now moves for partial summary judgment against Mr.
Logue, Mrs. Logue, La Porte Construction, and La Porte Management (“Defendants”) seeking
damages for breach of contract and specific performance. The Confessing Defendants did not
oppose the Motion and signed the Confession of Judgment on February 4, 2019. Thus, of the four
Defendants, only Mrs. Logue opposes the motion.

4

ANALYSIS
A. LEGAL STANDARD
“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.” Fed. R.
Civ. P. 56(a). “[T]he plain language of [Fed. R. Civ. P. 56] mandates the entry of summary
judgment . . . upon motion, 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 Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party “bears the
initial responsibility of informing the district court of the basis for its motion,” and the nonmoving
party must “go beyond the pleadings and by [their] own affidavits . . . depositions, answers to
interrogatories, and admissions on file, designate specific facts showing that there is a genuine
issue for trial.” Id. at 323–24 (internal citation and quotation marks removed).
When considering a motion for summary judgment, the court must examine all of the
evidence in the light most favorable to the nonmoving party. Jones v. Unisys Corp., 54 F.3d 624,
628 (10th Cir. 1995). This requires that all reasonable inferences be drawn in favor of the
nonmoving party. Sports Unltd., Inc. v. Lankford Enters., Inc., 275 F.3d 996, 999 (10th Cir. 2002).
A dispute of fact is genuine only if “a reasonable [trier of fact] could find in favor of the nonmoving
party on the issue.” Macon v. United Parcel Serv., Inc., 743 F.3d 708, 712 (10th Cir. 2014).
“‘Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving
party,’ summary judgment in favor of the moving party is proper.” Concrete Works of Colo., Inc.
v. City & Cty. of Denver, 36 F.3d 1513, 1518 (10th Cir. 1994) (quoting Matsushita Elec. Indus.
Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).

5

IFIC has moved for summary judgment on its breach of contract claim against Defendants
seeking damages in the amount of $1,320,176.66 2 for breach of contract and a decree of specific
performance requiring the Defendants to post money or collateral in the amount of $16,300,00.00
due to the parties’ alleged breach of the Indemnity Agreement. Confessing Defendants admit that
the amount of damages and the amount sought as collateral are correct. Mrs. Logue does not
contest the essential facts on which IFIC relies, or the amount of damages sought, but rather
contests her liability under the contract due to her lack of understanding, lack of legal
representation, and her signing under duress. The court will first address whether the contract was
breached and then turn to Mrs. Logue’s defenses.
B. BREACH OF CONTRACT
IFIC alleges that the Defendants should be held liable for breaching the Indemnity
Agreement. Under Utah law, 3 “[t]he elements of a prima facie case for breach of contract are (1)
a contract, (2) performance by the party seeking recovery, (3) breach of the contract by the other
party, and (4) damages.” Am. W. Bank Members, L.C. v. State, 342 P.3d 224, 230–31 (Utah 2014)
(internal citation omitted).
2

In IFIC’s initial Motion, IFIC sought $1,100,690.95 in damages. At the hearing, counsel
represented that this amount should be amended to reflect the costs and expenses incurred in the
intervening months. In the Verified Statement, IFIC provides an updated amount of $1,320,176.66.
3

The parties have not discussed which state’s law should apply to the interpretation of the
Indemnity Agreement, nor does the Indemnity Agreement include a choice of law provision. A
federal district court, sitting in diversity, applies Utah choice of law rules. Klaxon Co. v. Stentor
Elec. Mfg. Co., 313 U.S. 487, 496 (1941). Utah follows the Restatement (Second) of Conflict of
Laws and applies the law of the most significant relationship to contract cases. Records v. Briggs,
887 P.2d 864, 867-68 (Utah Ct. App. 1994). Under the most significant relationship analysis, the
court looks to “(a) the place of contracting, (b) the place of negotiation of the contract, (c) the place
of performance, (d) the location of the subject matter of the contract, and (e) the domicil, residence,
nationality, place of business of the parties.” Id. at 869 (quoting Restatement (Second) of Conflict
of Laws § 188(2)). All 64 original defendants are domiciled in Utah, the subject matter of the
contract is in Utah, and the place of performance is in Utah. The place of contracting also appears
to be Utah. Accordingly, the court will apply Utah law.
6

1. Contract
In this case, the Indemnity Agreement is a contract, enforceable under Utah law, against
those persons who are a party to the agreement. “A contract is a promise or a set of promises for
the breach of which the law gives a remedy, or the performance of which the law in some way
recognizes as a duty.” Restatement (Second) of Contracts § 1 (1981). A contract is formed when
there is a “manifestation of mutual asset” between “at least two parties” creating a bargained for
“exchange” and “consideration.” Id. §§ 9, 17. “A condition precedent to the enforcement of any
contract is that there be a meeting of the minds of the parties, which must be spelled out, either
expressly or impliedly, with sufficient definiteness to be enforced.” Valcarce v. Bitters, 362 P.2d
427, 428 (Utah 1961). In this case, there was a meeting of the minds and a bargained for exchange.
IFIC entered into the Indemnity Agreement with the Defendants in exchange for IFIC becoming
surety in the underlying surety transactions. 4 Indemnity Agreements are often used to guarantee
the rights of the surety against the obligor. “[I]n cases of suretyship and guaranty, there is, if not
an express contract, as in the instant case, an implied contract that the principal should indemnify
4

The underlying surety agreements are the Bonds. Under Utah law, which follows the Restatement
(Third) of Suretyship and Guaranty, see PC Riverview, LLC v. Xiao-Yan Cao, 424 P.3d 162, 167
(Utah 2017), a suretyship exists when:
(a) pursuant to contract (the “secondary obligation”), an obligee has
recourse against a person (the “secondary obligor”) or that person's
property with respect to the obligation (the “underlying obligation”)
of another person (the “principal obligor”) to that obligee; and
(b) to the extent that the underlying obligation or the secondary
obligation is performed the obligee is not entitled to performance of
the other obligation; and
(c) as between the principal obligor and the secondary obligor, it is
the principal obligor who ought to perform the underlying obligation
or bear the cost of performance.
Restatement (Third) of Suretyship & Guaranty § 1 (1996). In the underlying suretyship
agreements, Tannach and Citibank, the obligees, have recourse against IFIC as the secondary
obligor or “surety” with respect to the obligation of La Porte Construction (the “principal obligor”).
7

the surety if the latter is compelled to pay the creditor.” Beaver Cty. v. Home Indem. Co., 88 Utah
1, 52 P.2d 435, 450 (1935). The Indemnity Agreement is enforceable against the parties that
properly executed the agreement. The Confessing Defendants admit that the Indemnity Agreement
is valid and enforceable. Verified Statement at ¶ 2.
2. Performance
IFIC performed its obligation under the Agreement. IFIC is obligated by the Indemnity
Agreement to execute or procure bonds for the construction project. 5 IFIC procured three
Performance and Payment Bonds dated April 5, 2012. The Bonds are: 6
Payment Bond No.
SAIFSU0539632
SAIFSU0539633
SAIFSU0539634

Date
April 5, 2012
April 5, 2012
April 5, 2012

Bond Amount
$16,916.641.00
$1,508,636.00
$426,983.00

Performance Bond No.
SAIFSU0539632
SAIFSU0539633
SAIFSU0539634

Date
April 5, 2012
April 5, 2012
April 5, 2012

Bond Amount
$16,916,641.00
$1,508.636.00
$426,983.00

3. Breach
The Defendants have breached the Indemnity Agreement. “To establish a breach of
contract claim, a party must identify a contracted duty that the other party has breached.” Tooele
Assocs. Ltd. P'ship v. Tooele City, 251 P.3d 835, 835–36 (Utah Ct. App. 2011) (citing ELM, Inc.
v. M.T. Enters., Inc., 968 P.2d 861, 863–64 (Utah Ct. App. 1998), cert. denied, 982 P.2d 89 (Utah

5

“WHEREAS, . . . The Surety has executed or procured to be executed, and may from time to
time hereafter execute or procure to be executed, said Bonds on behalf of the Contractor or the
Surety may have already issued such Bonds in reliance upon this Agreement . . . .” Indemnity
Agreement at 3.
6

See Verified Statement at ¶ 3. Confessing Defendants admit that IFIC performed its obligations.
8

1999)). The Contractor and Indemnitors’ obligations under the Indemnity Agreement include the
obligations to:
1) Exonerate, indemnify, and keep indemnified the Surety from
and against any and all liability for losses and/or expenses of
whatsoever kind or nature (. . . ) and from and against any and
all such losses and/or expenses which [IFIC has] sustain[ed] and
incur[ed]: (1) By reason of having executed . . . the Bonds, (2)
By reason of the failure of [Logues et al.] to perform or comply
with the covenants and conditions of [the Indemnity] agreement
or (3) In enforcing any of the covenants and conditions of the
[Indemnity] Agreement;
2) Deposit with the Surety on demand an amount of money or other
collateral security . . . , as soon as liability exists or is asserted
against the Surety. . . ;
3) Upon the written request of the Surety, promptly procure the full
and complete discharge of the Surety from any Bonds specified
in such request and all potential liability by reason of such
Bonds; [and]
4) If such full and complete discharge is unattainable, [and] if
requested by the Surety, within five business days, place the
Surety in funds that are immediately available and sufficient to
meet all of the Surety’s liabilities that are in force prior to the
date of the Surety’s demand.
IFIC alleges that the Defendants have failed to perform any of their obligations under the contract.
In 2014 the Plaza project began to struggle and Citibank, an obligee under the Bonds,
provided notice to IFIC that it was considering a declaration of default. After performing an
investigation of Citibank’s claims, in February 2015, IFIC demanded that the Indemnitors “procure
IFIC’s full and complete discharge of the Bonds” or “place with IFIC a total of Five Million
Dollars . . . .” Motion at ¶ 14. The Indemnitors failed to comply, breaching their obligations under
the Indemnity Agreement.
On June 17, 2015, Citibank delivered a “Notice of Default and Termination,” terminating
LaPorte Construction as general contractor on the Plaza. On June 30, 2015, Citibank made demand
on IFIC to perform and complete the Plaza. But construction did not continue. Subsequently,

9

Citibank filed suit against IFIC on the Performance Bonds in the Third District Court for Salt Lake
County, State of Utah (“Citibank Action”) (Case No. 160902663). Citbank also filed an action to
judicially foreclose its trust deed on the property (“Foreclosure Action”) (Case No. 160907463).
Following Citibank’s suit, numerous subcontractors and suppliers have asserted claims against
Citibank in the Third District Court for Salt Lake County, Utah on the Payment Bonds. Of the
contractor claims, one action, brought by Bragg Crane Service (“the Brag Action”) (Case No.
160904355), is still pending.
IFIC alleges that the Defendants breached the Agreement by failing to procure IFIC’s
discharge from the Bonds, failing to place money in trust, and in failing to exonerate IFIC from
the claims brought under the Bonds. Confessing Defendants admit they have breached the contract
and the court finds that the Defendants, including Mrs. Logue, have breached the Indemnity
Agreement as alleged.
4. Damages 7
As of January 22, 2019, IFIC has paid $389,247.10 in claims related to the Payment Bonds.
By the terms of the Indemnity Agreement, the Indemnitors are required to exonerate and indemnify
IFIC for these damages. IFIC also seeks the attorneys’ fees and costs paid and incurred. As of
January 22, 2019, IFIC has paid and incurred attorneys’ fees and costs in the amount of
$1,230,929.56. IFIC seeks a judgment in the amount of $1,320,176.66 for total breach of contract
damages. The court finds that these damages are correctly calculated.

7

IFIC provides an updated damage calculation as of January 22, 2019 in the Verified Statement at
¶ 9.
10

C. SPECIFIC PERFORMANCE
In addition to seeking recovery for the costs and expenses that IFIC has already paid, IFIC
seeks specific performance of certain provisions of the Indemnity Agreement to cover its
additional potential liability of $16,300,000.00 under the Bonds. 8 The potential liability stems
from the pending lawsuits under the Bonds including the Citibank Action under the Performance
Bonds and the Bragg Action under the Payment Bonds. First, IFIC alleges that its potential liability
for the Citibank Action may exceed the total sum of the Performance Bonds, which is
$18,852,260. 9 Second, in the Bragg Action, the court awarded Bragg Crane a judgment of
$300,241.61 ($147,186.95 plus attorney’s fees, costs, and interest) against IFIC. Verified
Statement at ¶ 8.b. IFIC contests its liability for the judgment amounts in the above-mentioned
actions. Because IFIC contests the pending actions, the final damages are uncertain and
incalculable at this time. Therefore, IFIC asks for specific performance of the Indemnity
Agreement to protect IFIC against liability in these pending actions. To merit specific performance
under Utah law, the contract must be certain 10 and there must be no adequate remedy available at
law. 11
8

Confessing Defendants “acknowledge and agree that IFIC deems $16,300,00 to be the amount
of money or collateral sufficient to protect IFIC from loss.”
9

IFIC calculates its potential liability under the Citibank Action as the amount awarded Citibank
in the Foreclosure Action, which was a judgment of $12,144.190.69, plus post judgment interest
at the contract rate of 7.75% per annum starting on June 22, 2018 ($941,174.78 for year one), and
estimated attorney fees and costs of $2,000,000.00. See Motion at Exhibit 6 (Decl. of Frank J.
Tanzola); and Verified Statement at ¶ 8.a.
10

“[T]he contract must be free from doubt, vagueness, and ambiguity . . . . It must be sufficiently
certain and definite in its terms to leave no reasonable doubt as to what the parties intended, and
no reasonable doubt of the specific thing equity is called upon to have performed . . . . ” Tooele
Assocs. Ltd. P'ship v. Tooele City, 251 P.3d 835, 835–36 (Utah Ct. App. 2011) (quoting Pitcher v.
Lauritzen, 423 P.2d 491, 493 (Utah 1967)).
11

Last Chance Ranch Co. v. Erickson, 25 P.2d 952, 962 (Utah 1933).
11

1. The Indemnity Agreement is Certain
The Indemnity Agreement provisions at issue require the Indemnitors to 1) “Deposit with
the Surety on demand an amount of money or other collateral security . . . , as soon as liability
exists or is asserted against the Surety,” and 2) when IFIC demands complete discharge from the
bonds but “such full and complete discharge is unattainable, [and] if requested by the Surety . . .
place the Surety in funds [sic] that are immediately available and sufficient to meet all of the
Surety’s liabilities that are in force prior to the date of the Surety’s demand.” These provisions are
certain and undisputed. In their Answer to the Complaint, Defendants admitted they have not
complied with these provisions and Confessing Defendants admit that IFIC is entitled to collateral
security under the agreement.
2. No Adequate Remedy at Law
IFIC alleges that specific performance is the appropriate remedy for the outstanding
liabilities because, until the judgments are final, the damages from those actions are uncertain.
Although, the damages will be certain when the lawsuits are fully adjudicated, IFIC alleges that
the Indemnity Agreement requires that the Defendants place $16,300,000 in trust. 12
In this case, under the clear terms of the Indemnity Agreement, specific performance is the
most appropriate remedy. IFIC, in agreeing to secure the Performance and Payment Bonds,
bargained for immediate security in case of suit rather than damages after the fact. “Sureties are
ordinarily entitled to specific performance of collateral security clauses. If a creditor is to have the
security position for which he bargained, the promise to maintain the security must be specifically

12

This amount includes the amount “required to discharge, or exonerate, IFIC from (a) potential
liability and losses on the Bonds and (b) expenses, including attorneys’ fees and consultants’ fees
. . . .” IFIC alleges that its potential liability on the Citibank Action is $15,085,365.46 and
$409,982.09 on the Bragg Action. IFIC estimates that is expenses to date are $800,000.00.
12

enforced.” Travelers Cas. & Sur. Co. of Am. v. CraCar Constr. Co., 2018 WL 3873678, at *4 (D.
Utah 2018) (internal quotation marks removed) (quoting Safeco Ins. Co. of Am. v. Schwab, 739
F.2d 431, 433 (9th Cir. 1984)). “Although [the Surety’s] past Losses can be remedied with contract
damages, . . . [its] additional and substantial anticipated Losses cannot.” Id. Thus, the court grants
summary judgment in favor of IFIC on the claim for specific performance.
D. MRS. LOGUE
Of the four Defendants, only Mrs. Logue opposed the motion for summary judgment.
Acting pro se, Mrs. Logue argues that she should not be held liable under the Bonds because she
did not read the contract nor would she have understood the contract had she read it and because
she signed the contract under duress and without legal representation.
1. Not Reading or Understanding
Under Utah law, a party’s failure to read and/or understand a contract is not a defense
against its enforcement. So long as the person signing a contract has “the capacity and an
opportunity to read a contract” and “is not misled as to its contents,” he or she “cannot avoid the
contract on the ground of mistake if he [or she] signs it without reading it.” John Call Eng'g, Inc.
v. Manti City Corp., 743 P.2d 1205, 1208 (Utah 1987) (quoting Garff Realty Co. v. Better Bldgs.,
Inc., 234 P.2d 842, 844 (Utah 1951)). And “each party has the burden to read and understand the
terms of a contract before he or she affixes his or her signature to it. A party may not sign a contract
and thereafter assert ignorance or failure to read the contract as a defense.” Id. Mrs. Logue had the
capacity and opportunity to read the contract and she signed it, attesting that she had read it. Mrs.
Logue cannot avoid liability on these grounds.
2. Duress
Mrs. Logue testifies that she was forced to sign the contract under duress. To support her
claim, Mrs. Logue alleges that she “had no intention of signing the bonds,” she “did not have an
13

attorney representing” her, and that she “received a telephone call shortly before the project at
issue was to close.” Mrs. Logue testifies she “was told that if [she] did not sign the bonds, then the
project would not close.” Mrs. Logue alleges that she and her husband would have lost hundreds
of thousands of dollars and thus she “had no choice but to sign the bonds.” For these reasons, Mrs.
Logue alleges she signed the Bonds under duress and the Bonds should not be enforced against
her.
To establish duress under Utah law, “[f]irst, there must be some improper threat made by
the defendant. Second, that threat must leave the victim/plaintiff with no reasonable alternative but
to consent to the contract.” Boud v. SDNCO, Inc., 54 P.3d 1131, 1137 (Utah 2002) (citing
Restatement (Second) of Contracts § 175(1) (1979)). 13 The burden is on Mrs. Logue to establish
duress by clear and convincing evidence. In re Adoption of B.T.D., 68 P.3d 1021, 1026–27 (Utah
Ct. App. 2003) (citing Reliable Furniture Co. v. American Home Assurance Co., 466 P.2d 368,
370 (Utah 1970)) (“Utah case law requires clear and convincing evidence to prove duress, undue
influence, fraud, and mistake.”). A contract is voidable due to duress by the victim “[i]f ... assent
is induced [(1)] by an improper threat [(2)] by the other party [(3)] that leaves the victim no
reasonable alternative.” Id. at 1026 (quoting Restatement (Second) of Contracts § 175 (1981)).
a. Improper Threat
“A threat is improper if the resulting exchange is not on fair terms” and:
(a) the threatened act would harm the recipient and would not
significantly benefit the party making the threat,
(b) the effectiveness of the threat in inducing the manifestation of
assent is significantly increased by prior unfair dealing by the party
making the threat, or
13

Utah Law follows the Restatement (Second) of Contracts § 175. See Boud v. SDNCO, Inc., 54
P.3d 1131, 1137 (Utah 2002) (“[D]uress exists when ‘a party’s manifestation of assent is induced
by an improper threat by the other party that leaves the victim no reasonable alternative.’”)
(quoting Andreini v. Hultgren, 860 P.2d 916, 921 (Utah 1993)).
14

(c) what is threatened is otherwise a use of power for illegitimate
ends.
Restatement (Second) of Contracts § 176 (1981). A party’s assent is induced by an improper threat
if the threat “substantially contributes to his [or her] decision to manifest his [or her] assent.” Id.
§ 175 (1981), cmt c. In considering whether there was duress, “[a]ll attendant circumstances must
be considered, including such matters as the age, background and relationship of the parties.” Id.
Other factors include “the availability of disinterested advice and the length of time that elapses
between the making of the threat and the assent.” Id.
Based on Mrs. Logue’s testimony, she was subjected to an improper threat. First, the
Indemnity Agreement is unfair to Mrs. Logue because it entitles IFIC to hold Mrs. Logue, a selfproclaimed stay-at-home house wife, jointly and severally liable for the total potential penal
amount of the Bonds on a sixteen-million-dollar construction project. Second, Mrs. Logue was
pressured into the deal. The timing of the situation was unfair as she was notified about the deal
immediately before it was scheduled to close, giving her little time to try and understand the
contract. Finally, she lacked counsel throughout the process.
In order to determine whether lack of counsel constitutes duress, the court must look to the
circumstances of the parties to determine whether there was a great disparity in bargaining power.
In Boyd v. U.S. Bank Nat. Ass’n, No. 06-2115-KGS, 2007 WL 2822518, at *19 (D. Kan. 2007),
the court found that the disparity in bargaining power between “a commercial party and an
individual” was not “gross” because the individual who went unrepresented had a business degree
and worked in finance. But in Too Tall Inc. v. Sara Lee Bakery Grp., Inc., No. CV 08-191 JP/WDS,
2009 WL 10665806, at *4 (D.N.M. 2009), the court found that an individual without “business
education or significant business experience,” who “was not represented by counsel,” was in a
position of grossly unequal bargaining power with a corporation. Mrs. Logue’s case is more
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analogous to Too Tall Inc. Mrs. Logue is a self-proclaimed “house wife and stay at home mother.”
She has no degree or training in finance or engineering. Nor was she actually involved in the
construction project. The court therefore finds that she was subjected to an improper threat that
induced her assent to sign the Indemnity Agreement.
b. No Reasonable Alternative
Although Mrs. Logue was subjected to an improper threat, she was not without reasonable
alternatives to avoid the contract and thus she was not subject to duress. “A threat, even if
improper, does not amount to duress if the victim has a reasonable alternative to succumbing and
fails to take advantage of it.” Restatement (Second) of Contracts § 175 (1981), cmt b. In this case,
Mrs. Logue alleges that her only option was to sign the contracts or her livelihood would be
threatened. Specifically, she alleges that she and her husband would lose hundreds of thousands of
dollars if the project did not move forward. Although financial loss is a significant pressure, “the
mere loss of a potential bargain does not leave a plaintiff with ‘no reasonable alternative.’” Boud
v. SDNCO, Inc., 54 P.3d 1131, 1138 (Utah 2002) (citing Heglar Ranch, Inc. v. Stillman, 619 P.2d
1390 (Utah 1980)). 14 Because Mrs. Logue had reasonable alternatives, specifically, to refuse to
sign the Indemnity Agreement, she was not subject to duress.

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“To label as ‘duress’ such incentive to complete the transaction would have the effect of
permitting any party to avoid a contractual obligation on the ground that performance was agreed
to only because, in the absence of such a promise, the party would be denied the benefit of a
bargain. Such a defense is entirely foreign to the established law of contracts.” Heglar Ranch, Inc.
v. Stillman, 619 P.2d 1390, 1392 (Utah 1980).
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ORDER
The court HEREBY GRANTS SUMMARY JUDGMENT for International Fidelity
Insurance Company against Benjamin Logue, Lisa Marie Swasey Logue, La Porte Construction,
and La Porte Management (“Defendants”) on IFIC’s First Claim for Relief for Breach of
Contract. Based upon the matters set forth in the Motion for Partial Summary Judgment, the
arguments of counsel, and the Verified Statement, the Court rules, adjudges, and decrees as
follows:
1.

Judgment is hereby entered in favor of International Fidelity Insurance Company

(“IFIC”) and against Defendants, jointly and severally, in the amount of $1,320,176.66, together
with post-judgment interest thereon pursuant to 28 U.S.C. § 1961 (the “Judgment Amount”).
2.

The Judgment Amount shall be augmented by the amount of additional losses and

expenses IFIC incurs after the date of this Judgment by reason of having executed the Bonds and
in enforcing or collecting on this Judgment. The Judgment Amount shall be reduced by amounts,
if any, paid to IFIC by Defendants or others or obtained by IFIC from enforcing this Judgment;
but amounts obtained by IFIC from enforcing the Lien described in paragraph 3 of this Judgment
shall not reduce the Judgment Amount. The amount of such additional losses and expenses as well
as the amounts, if any, obtained by IFIC from enforcing this Judgment shall be established by the
declaration of an officer of IFIC filed with the Court.
3.

IFIC is hereby granted a lien (“Lien”) on all real and personal property of

Defendants, or any of them, of whatever kind or nature and wherever located, to the extent of
$16,300,000.00 in value of said real and personal property (“Lien Amount”). The Lien Amount
shall be increased if it appears, from facts established by the declaration of an officer of IFIC filed

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with the Court, that IFIC’s losses and expenses on the Bonds will exceed $16,300,000. The Lien
Amount shall be reduced by any amounts augmenting the Judgment Amount.
4.

IFIC has the following rights with regard to any collateral security provided by

Defendants or any of them, the Lien, and the real and personal property subject to the Lien: (a) to
use said collateral security, the Lien, and said real and personal property in payment or settlement
of any liability, loss, or expense incurred by IFIC after the date of this Judgment by reason of
having executed the Bonds or in enforcing this Judgment; (b) IFIC shall have no obligation to
invest or provide a return on any such collateral or on the value of any such real or personal
property; (c) to sell or realize upon any such collateral or real or personal property at public or
private sale, with or without notice to Defendants, or by any other method permitted or applicable
by law; (d) to charge for any disbursements made by IFIC in good faith under the belief that it is
or was liable for the sums and amounts so disbursed, or that it was necessary or expedient to make
such disbursements, whether or not such liability, necessity, or expediency existed; (e) the vouchers
or other evidence of such disbursements or payments made by IFIC, including the declaration of
an officer of IFIC, shall be prima facie evidence of the fact and amount of the liability of IFIC and
of IFIC’s good faith in making the disbursements or payments; and (f) “good faith” as used in this
paragraph shall mean honesty in fact and the absence of willful misfeasance or malfeasance, and
neither negligence nor gross negligence shall be deemed the absence of good faith.
5.

IFIC shall release the Lien only on the condition that IFIC has been released from

all liability on the Bonds and reimbursed for all losses and expenses it sustains or incurs by reason
of executing the Bonds and in enforcing or collecting on this Judgment. The fact that such
condition has been satisfied shall be established by the declaration of an officer of IFIC filed with
the Court.

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6.

IFIC is hereby granted all rights necessary or appropriate to receive the benefits of

this Judgment, including the rights to record this Judgment, file a UCC-1 financing statement to
perfect the Lien, and take any other action necessary to perfect the Lien.

Dated February 12, 2019.
BY THE COURT:

_______________________________________
The Honorable Jill N. Parrish
United States District Court Judge

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