Marcantel v. Stewart Title Guaranty Company et al
Filing
132
MEMORANDUM DECISION AND ORDER - granting 105 Motion for Summary Judgment ; denying 109 Motion for Partial Summary Judgment. Signed by Magistrate Judge Dustin B. Pead on 3/19/2019. (las)
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION
CURT A. MARCANTEL,
MEMORANDUM DECISION & ORDER
Plaintiff,
vs.
Civil No. 2:16-cv-250-DBP
MICHAEL AND SONJA SALTMAN
FAMILY TRUST, MICHAEL A.
SALTMAN and SONJA SALTMAN,
Magistrate Judge Dustin B. Pead
Defendants.
This matter comes before the court on Plaintiff Curt A. Marcantel (“Mr. Marcantel”) and
Defendants Michael and Sonja Saltman Family Trust, Michael A. Saltman and Sonja Saltman's
(collectively the “Trust”) cross motions for summary judgment.1 The parties consented to
United States Magistrate Judge Dustin B. Pead conducting all proceedings, including entry of
final judgment.2 On February 25, 2019, the court held oral argument on the cross motions.3 The
court, having carefully considered the parties’ submissions, relevant legal authorities and oral
argument of counsel, grants the Trust’s motion for summary judgment and denies Mr.
Marcantel’s cross motion for partial summary judgment.
1
ECF No. 105, ECF No. 109.
ECF No. 14, ECF No. 16; see 28 U.S.C. § 636(c), Fed. R. Civ. P. 73.
3 Mr. Marcantel objected to the Trust’s proposed memorandum decision. See ECF No. 130.
The court has considered the parties’ objection and response and therefore determines the
Trust’s proposed memorandum decision accurately reflects the decision of the court.
2
SUMMARY OF UNDISPUTED FACTS4
A document titled “Grant of Easement” naming Verna Thorn as Grantor and the
Snyderville Basin Sewer Improvement District as Grantee was recorded with the Summit County
Recorder’s Office in May 1989 (the “Sewer Easement”).5 In early 2007, the Trust purchased the
subject property located at 1064 Park Avenue (the “Property”) for $1,700,000. During the
Trust’s purchase of the Property, the prior owner, Old Town Partners, LLC (“OTP”), disclosed
that the Property was encumbered by the Sewer Easement. While the Property was under
contract to be sold to the Trust, OTP commissioned an existing conditions survey showing the
Sewer Easement (the “Survey”).
4
The following facts are taken from the Trust’s motion, ECF No. 105, and Mr. Marcantel’s
motion, ECF No. 109. During oral argument, the parties’ represented the facts as stated herein
were undisputed. Furthermore, these facts are generally undisputed based on Mr. Marcantel’s
admissions. The court’s consideration of the facts Mr. Marcantel purports to dispute, viewed in a
light most favorable to Mr. Marcantel, reveals either no admissible evidence to dispute those
facts or the dispute is not material. See Fed. R. Civ. P. 56(e)(2) (“If a party... fails to properly
address another party’s assertion of fact as required by Rule 56(c), the court may... consider the
fact undisputed for purposes of the motion [.]”).
5 ECF No. 105-2.
2
However, there is no evidence showing the Survey was provided to the Trust. Instead,
the evidence supports the Survey was sent to Elliott Workgroup Architects (“EWA”), an
architectural firm that was working with OTP’s (and then the Trust) to create design concepts for
the Property. For Mr. Saltman’s transaction, the Sewer Easement was not identified as an
encumbrance of record or exception to coverage in the Trust’s title insurance policy on the
Property.
After purchasing the Property, the Saltmans worked with EWA to design concepts for a
three-lot subdivision on the Property, a single-family home to be constructed on each lot. EWA
used the Survey in creating its design concepts. The Trust, in 2007, submitted several predevelopment applications to the Park City Planning Department for the three-lot subdivision and
the concepts designed by EWA. The applications to Park City included the Survey and the
3
Trust’s title policy. The Saltmans also submitted an application to the sewer district to relocate
the Sewer Easement, signed by Mr. Saltman on behalf of the Trust.
The three-lot subdivision proposed in the applications was not feasible without relocating
the Sewer Easement from its existing location (running through the center of the proposed third
lot) to the perimeter of the Property:
The files of the Park City Planning Department identify that the Trust’s applications for
the proposed three-lot subdivision and pre-development approval for three homes were closed on
October 1, 2007.6 However, the Trust’s application to determine that the existing structure on
the Property was “non-historic” was approved, and the building was subsequently demolished,
leaving the Property a vacant lot. At no time did the Trust relocate the Sewer Easement.
Furthermore, the Trust contends it stopped the pre-development process in 2007 because the real
estate market crashed, making any development unfeasible.
Between 2010 and 2014, EWA created at least three alternate concepts for the Trust that
would not require relocating the Sewer Easement. The Sewer Easement is illustrated on each
concept.7 One concept proposed subdividing the Property into two lots, with a duplex on one lot
and a home and accessory apartment on the other. EWA’s architect advised the Saltmans that
6
7
ECF No. 109-8.
ECF No. 105, pp. 4-6, ECF No. 109.
4
density higher than two units on a lot was not “feasible” without a code change and was
penalized under the code with requirements for 60% open space and due to height restrictions.8
The other designs were for either four or five multi-dwelling units (townhouses or condos) on the
Property as a single lot. The designs did not comply with various provisions of the development
code, including open space.9 The Trust did not submit pre-development applications to Park
City for any of these alternate concepts.
In or around early 2015, the Trust listed the Property for sale. The MLS listing for the
Property stated, in part: “Most development opportunities in old town come with major
constraints, but this parcel is vacant and ready for your ideas… at 6900 SF this parcel may be
able to accommodate up to 5 residential units.”
The Trust and Lakeland Homes, Inc. entered a form Real Estate Purchase Contract
(“REPC”) on February 2, 2015. Paragraph 7 of the REPC provides that the seller would provide
“a written Seller Property Condition Disclosure (Land) for the Property, completed, signed and
dated by Seller”; a commitment for title insurance; and the term inserted by the buyer a “Survey,
if one has been done,” amongst other disclosure items. Furthermore, in Paragraph 10.2 the Trust
agreed to: “(a) disclose in writing to Buyer defects in the Property known to Seller that
materially affect the value of the Property that cannot be discovered by a reasonable inspection
by an ordinary prudent Buyer; (b) carefully review, complete, and provide to Buyer a written
Seller Property Condition Disclosure (Land) … The provisions of Section 10.1 and 10.2 shall
survive Closing.”
Mr. Saltman, on behalf of the Trust, completed the Seller’s Property Condition
Disclosure (Land) form (“Seller’s Disclosures”) on or around February 8, 2015. The Seller’s
Disclosures provide the following instructions:
8
9
ECF No. 109-10, Ex. 25-001.
ECF No. 109-9, Ex. 25-004.
5
Further, Section 6 of the Seller’s Disclosure, paragraph D, required a “yes” or “no”
response to the following question: “Are you aware of any survey(s) that have been prepared for
the Property or any adjoining property or properties? If ‘Yes,’ please provide a copy of any such
survey(s) in your possession.” The Trust checked the box for the response “No.” Paragraph E of
Section 6 required a “yes” or “no” response, and provides a space for the seller to insert
additional responsive information, to the following question: “Are you aware of any unrecorded
easements, or claims for easements, affecting the Property? If ‘Yes,’ please describe, to your
knowledge, the nature and location of any such easement(s).” The Trust checked the box for the
response “No.” Even though the Trust had actual knowledge of the Sewer Easement, the Trust
did not disclose it in response to instructions or any questions contained in the Seller’s
Disclosures.
According to Mr. Marcantel, he had no specific plans to develop the property at the time
of the purchase. However, Mr. Marcantel’s realtors had seen the 2007 EWA site plan
subdividing the Property into three lots. And they saw a Multiple Listing Service (“MLS”) listing
suggesting the Property “may be able to accommodate up to 5 residential units.” Furthermore,
Mr. Marcantel’s realtors also met with the Park City Planning Department to discuss potential
development options. Mr. Marcantel’s realtors relayed this information to him, though Mr.
6
Marcantel did “not necessarily” believe what his realtors told him or rely on their
representations.
Further, the Trust’s agent, Matt Magnotta, and Marcantel’s agent, Tisha Digman,
discussed the Property over the phone. Magnotta told Digman that he believed that three singlefamily homes could be built on the Property. Magnotta forwarded Digman an email with a
Dropbox link. The link included some of the design materials from the Trust’s proposed threelot subdivision application submitted to Park City in 2007. The materials included illustrated
three homes and their placement on the Property pursuant to the application for the three-lot
subdivision submitted to the City back in October 2007. It is undisputed that the link provided to
Digman did not include the Survey or the proposed subdivision plat depicting the location of the
Sewer Easement.
Mr. Marcantel commissioned a title search through Coalition Title and Stewart Title. After
conducting the search, Coalition Title and Stewart Title represented to Mr. Marcantel that there
was no sewer easement on the Property, and issued a Title Insurance Policy in favor of Mr.
Marcantel for the Property (“the Policy”) insuring Mr. Marcantel for up to $1,775,000 in loss
related to any undiscovered encumbrance. Relying on the Policy and prior to closing, the REPC
was assigned from Lakeland Homes, Inc., to Mr. Marcantel. Thereafter, Marcantel closed on the
purchase of the Property for $1,775,000 without knowing his title insurance policy did not
identify the Sewer Easement.
At that time, Mr. Marcantel/Lakeland apparently had no actual knowledge of the Sewer
Easement. Mr. Marcantel—an experienced, sophisticated real estate investor who owns four or
five homes in Louisiana, cattle ranches in Texas and Louisianna, and homes in Park City and
Salt Lake—was purchasing the Property as an investment.
Approximately six months later, Marcantel entered a contract to sell the Property to Joe
Kelly for $1,995,000. While under contract, Kelly and his agent discovered the Sewer
7
Easement. The Sewer Easement was not identified in the title commitment issued by U.S. Title
for Kelly’s intended purchase. Kelly’s agent obtained a copy of the Survey from EWA,
confirming the location of the Sewer Easement. Kelly cancelled the contract. Kelly offered
reduced amounts to purchase the Property, up to $1,400,000, but Mr. Marcantel rejected the
offers.
Mr. Marcantel sold the Property in March 2018 for $1,450,000. Mr. Marcantel’s expert
appraiser values Marcantel’s damages due to the discovery of the Sewer Easement at $450,000.
The Saltmans’ expert appraiser values that the difference between the Property as encumbered
and unencumbered by the Sewer Easement resulting in a loss of $65,000. Further, Marcantel
submitted a claim under the Policy, and Stewart Title accepted the claim, eventually paying Mr.
Marcantel $272,500 to settle the claim.
STANDARD OF REVIEW
Summary judgment is appropriate when the moving party “shows that there is no genuine
dispute as to any material fact and the movant is entitled to a judgment as a matter of law.”
Fed. R. Civ. P. 56(a); McGeshick v. Prinicipi, 357 F.3d 1146, 1149 (10th Cir. 2004). One of the
principal purposes of summary judgment is to identify and dispose of factually unsupported
claims. See Celotex Corp. v. Catrett, 477 U.S. 317, 323–24 (1986). Thus, summary judgment
is appropriate where a party “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.” Id. at 322. Once the moving party has demonstrated the absence of material fact disputes,
the burden shifts to the non-moving party to go beyond the pleadings and designate “specific
facts showing that there is a genuine issue for trial.” Id. at 324; see also Adler v. Wal–Mart
Stores, Inc., 144 F.3d 664, 671 (10th Cir. 1998). To meet this burden, the nonmoving party must
come forward with admissible evidence. Fed. R. Civ. P. 56(c); Alder, 144 F.3d at 671.
8
The Court views the evidence “through the prism of the substantive evidentiary burden.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254, (1986)). Thus, on his fraud-based claims,
Mr. Marcantel's substantive burden is to show evidence in the record that clearly and
convincingly establishes each element of the claims. See Giusti v. Sterling Wentworth
Corp., 2009 UT 2, ¶ 62, 201 P.3d 966 (“Summary judgment is warranted if a plaintiff fails to
supply evidence, which, if accepted as true, would clearly and convincingly support each
element of a fraud claim.”) (internal quotation marks omitted).
ANALYSIS
Mr. Marcantel has asserted four claims against the Trust: fraudulent nondisclosure, fraud,
breach of contract, and breach of the covenant of good faith and fair dealing. As explained
below, Mr. Marcantel has not met his burden on any of these claims.
I. The Trust is entitled to judgment on Mr. Marcantel’s nondisclosure and fraud claims.
Mr. Marcantel first asserts claims for fraudulent nondisclosure and misrepresentation. The
Trust argues Mr. Marcantel is not the real party in interest for either of these claims and, in any
event, they fail on the merits. Mr. Marcantel argues that he is the proper plaintiff because he,
and not Lakeland, was damaged as a result of reliance on the Trust’s representations. In addition,
Mr. Marcantel counters the Trust’s arguments on the merits and seeks summary judgment on his
fraudulent nondisclosure claim.
A. Mr. Marcantel is the real party in interest on his fraudulent nondisclosure or
fraudulent misrepresentation claims.
Lakeland assigned the REPC to Mr. Marcantel on March 12, 2015.10 Under Utah law, that
assignment included the right to sue for fraud and fraudulent nondisclosure. See Russell/Packard
Dev., Inc. v. Carson, 2003 UT App 316, ¶ 31, 78 P.3d 616, aff'd sub nom. Russell Packard Dev.,
Inc. v. Carson, 2005 UT 14, ¶ 31, 108 P.3d 741 (citing Mayer v. Rankin, 91 Utah 193, 63 P.2d
10
ECF No. 109, Ex. 41.
9
611 (1936)). Accordingly, the “person entitled under the substantive law to enforce [their]
right[s]” is Mr. Marcantel not Lakewood, U.S. ex rel. Eisenstein v. City of New York, New York,
556 U.S. 928, 935 (2009) (quoting Black's Law Dictionary 1154 (8th ed. 2004)), and Mr.
Marcantel is real party in interest. Fed R. Civ. P. 17(a).
B. Mr. Marcantel’s nondisclosure claim fails on the merits.
The thrust of the nondisclosure claim is that the Trust fraudulenly failed to disclose the
sewer easement.11 To succeed on this claim, Mr. Marcantel must demonstrate by “clear and
convincing evidence” that: (1) the Trust “had a legal duty to communicate information”;
(2) the Trust “knew of the information [it] failed to disclose”; and (3) “the nondisclosed
information was material.” Hess v. Canberra Dev. Co., 2011 UT 22, ¶ 29, 254 P.3d 161
(emphasis in original). Mr. Marcantel must also show clear and convincing proof of intent
to deceive. See Anderson v. Kriser, 2011 UT 66, ¶ 26, 266 P.3d 819. As explained below, this
claim fails on the merits because the Trust did not know Mr. Marcantel was unaware of the
easement, and in any event, Mr. Marcantel already had constructive knowledge of the easement.
1. The fact that the Trust did not know Mr. Marcantel was unaware of the easement
effectively precludes proof on two elements: duty to disclose and intent to deceive.
Mr. Marcantel must demonstrate both a duty to disclose and intent to deceive. It is
undisputed, however, that the Trust did not know Mr. Marcantel was unaware of the easement.
This alone negates any duty to disclose or intent to deceive on the part of the Trust.
a. Duty to Disclose
A failure to disclose may be actionable as fraudulent nondisclosure only where the defendant
has a duty to disclose. See Hess, 2011 UT 22, ¶ 29. The question, then, is how that duty arises.
The Restatement (Second) of Torts—cited as authoritative by the Utah Supreme Court in
11
ECF No. 109, Plaintiff’s Motion for Partial Summary Judgment, at 31; ECF No. 89, Third
Amended Complaint & Jury Demand, at ¶ 133.
10
Mitchell v. Christensen, 2001 UT 80, 31 P.3d 572—answers the question this way: a duty to
disclose a defect exists where “A knows that B is not aware of [the defect], that he could not
discover it by an ordinary inspection, and that he would not make the purchase if he knew it.”
Restatement (Second) of Torts § 551 cmt. l, illus. 9 (1977).12 Indeed, “a disclosure duty ripens
only when it becomes apparent to the non-disclosing party that another party is operating under
a mistaken perception of a material fact.” Remington Rand Corp. v. Amsterdam-Rotterdam Bank,
N.V., 68 F.3d 1478, 1484 (2d Cir. 1995) (citing Restatement (Second) of Torts § 551 cmt. k
(1977) (no liability for nondisclosure where defendant has no reason to believe plaintiff is acting
under a misapprehension)). In other words, the “speaker must actually know that the other
person is about to enter into the business transaction under a mistaken impression of basic
facts and that the other would reasonably expect disclosure of the truth in order to correct the
erroneous impression.” Patrick J. McNulty & Daniel J. Hanson, Liability for Aiding and Abetting
by Silence or Inaction: An Unfounded Doctrine, 29 Tort & Ins. L.J. 14, 36 (1993); see also
Gresh v. Waste Servs. of Am., Inc., 311 F. App'x 766, 772 (6th Cir. 2009) (describing it as a
“superior-knowledge duty of disclosure….”).
The purpose of the disclosure duty, then, is to stop one party from intentionally taking
advantage of the ignorance of the other. This presupposes knowledge that the other party is
acting in ignorance of the undisclosed matter. For that reason, where “the defendant has no
reason to think that the plaintiff is acting under a misapprehension, there is no obligation to
give aid to a bargaining antagonist by disclosing what the defendant has himself discovered.” Id.
12
See Mitchell v. Christensen, 2001 UT 80, ¶ 12, 31 P.3d 572. Mr. Marcantel argues that
the “buyer in Mitchell was not required to prove that the seller knew that the buyer had not
discovered the leaks in the swimming pool….”12 Actually, the Mitchell decision is silent on
the matter. The seller may have conceded the point given the nature of the defect—an
underground leak. Or the issue may have been resolved at the trial court level and never raised
on appeal. In any event, the absence of analysis on the issue in Mitchell tells this court nothing.
11
In this case, the Trust had no reason to think that Mr. Marcantel was unaware of the
easement. Mr. Marcantel has not met his burden of establishing by clear and convincing
evidence that the Trust knew he was “acting under a misapprehension” concerning the
easement, and as such, he has failed to establish that the Trust had a duty of disclosure.
b. Intent to Deceive
Even if Mr. Marcantel could establish the Trust had a duty of disclosure, his fraudulent
nondisclosure claim would still fail because he cannot establish another element of that claim—
that the Trust had an intent to deceive. Indeed, “intent is the hallmark of an intentional tort”
and the intentional tort of fraudulent nondisclosure, like any fraud claim, requires proof by clear
and convincing evidence of the defendant’s intent to deceive. Anderson, 2011 UT 66, ¶ 26.
Because the Trust did not know or have reason to believe that Mr. Marcantel was unaware of
the easement, it could not, as a matter of law, have intended to deceive him on that point.
Nonetheless, Mr. Marcantel argues that intent to deceive may be inferred in this case by
showing “that [the Trust] had actual knowledge of a material fact” and failed to disclose that
fact. Id. This may be true in certain cases, but in this case, that the Trust knew of the easement
and did not disclose it is, by itself, not enough to draw the inference that the Trust intended to
defraud Mr. Marcantel. The Federal Circuit Court of Appeals, for example, in a slightly different
context made clear that inferring deceptive intent is appropriate only where it is the “single most
reasonable inference” that may be drawn from any nondisclosure:
While deceptive intent can be inferred from indirect and circumstantial
evidence, that inference must not only be based on sufficient evidence
and be reasonable in light of that evidence, but it must also be the single
most reasonable inference able to be drawn from the evidence to meet
the clear and convincing standard. In a case involving nondisclosure of
information, clear and convincing evidence must show that the applicant
made a deliberate decision to withhold a known material reference.
Am. Calcar, Inc. v. Am. Honda Motor Co., 651 F.3d 1318, 1334 (Fed. Cir. 2011) (internal
citations and quotation marks omitted) (emphasis in original).
12
The court is not persuaded that the Trust deliberately decided to withhold information about
the easement for the specific purpose of deceiving Mr. Marcantel. Nor is the court convinced that
an intent to defraud is the single most reasonable inference to be drawn from this circumstantial
evidence. Rather, the most reasonable deduction from all of the undisputed evidence, including
the fact that the Trust did not know Mr. Marcantel was unaware of the easement, is that the Trust
had no intent to defraud Mr. Marcantel.
Mr. Marcantel’s argument that the court should infer fraudulent intent based simply on the
fact that the Trust knew about the easement and did not disclose it ignores the well-defined
boundary between negligent and fraudulent nondisclosure. As Anderson explained:
The essential difference between a claim for negligence, or negligent nondisclosure,
and a claim for fraud, or fraudulent nondisclosure, is the mental state of the
defendant that the plaintiff must establish in order to prevail. This is because fraud
is an intentional tort involving a malfeasance, a positive act resulting ordinarily
from a willful intent to deceive; while negligence is an unintentional tort involving
strictly nonfeasance, a wrongful act resulting from inattention, but not from design.
Anderson, 2011 UT 66, ¶ 25 (internal citations and quotation marks omitted). That the Trust
knew about the easement but did not disclose it could reflect any number of things, including
inattention, or simply that the Trust didn’t know Mr. Marcantel was unaware of the easement.
Thus, the circumstantial evidence that the Trust knew about the easement but did not disclose
it is insufficient to support the inference that the Trust operated with willful intent to deceive
Mr. Marcantel.13 On either of these two elements—duty to disclose or intent to deceive—Mr.
Marcantel’s claim fails.
13
Mr. Marcantel asserts that other circumstantial evidence supports an inference that the Trust
intended to deceive him. But what Mr. Marcantel refers to as evidence amounts to argument and
unsupported allegations. For example:
Mr. Marcantel asserts that "the Trust was not able to come up with a development option that
would allow [it] to recoup its financial investment in the Property…." ECF No. 109 at 37.
This assertion is not found in Mr. Marcantel’s statement of “Undisputed Material Facts” or
otherwise supported by reference to admissible evidence in the record.
13
Mr. Marcantel states that “Saltman did not disclose the Sewer Easement (or the Survey
showing the Sewer Easement) because he needed to market the Property as a high density
development opportunity in order to sell it for more than $1.5 million.” Id. This statement is
likewise not supported by any reference to factual material in the record.
Mr. Marcantel argues that the “Trust knew that its application to subdivide the Property had
been denied by Park City and that it had no basis to believe or represent that three homes
could be constructed on the Property.” Id. The undisputed evidence is that the Trust stopped
pursuing its subdivision application not because it was denied by Park City but because the
recession made development of the Property infeasible. See ECF No. 113 at 8-9. Further, the
Trust had a basis to believe that three homes could be built on the Property. It is undisputed
that EWA proposed just such a design concept in March 2010. ECF No. 105 at 5. Finally,
the Trust did not “represent that three homes could be constructed on the Property.” Mr.
Marcantel is referring to the “Potential Site Plan” and Matt Magnotta’s representation to Tisha
Digman. The Potential Site Plan makes no representation of any kind. Id. at 20-21. And the
record demonstrates that Mr. Magnotta simply offered his personal view regarding what he
“thought could be built” on the Property. ECF No. 112 at 20, n. 23. Mr. Magnotta’s personal
view, even if considered a representation of fact, is not evidence of the Trust’s intent to
deceive. See Helf v. Chevron U.S.A. Inc., 2015 UT 81, ¶ 28, 361 P.3d 63 (“[F]or the purposes
of proving that a corporation is liable for an intentional tort, a plaintiff must prove that at least
one agent of the corporation had all of the requisite knowledge to support the claim.”).
Mr. Marcantel points out that the Trust’s real estate agents received a copy of Mr. Marcantel's
title commitment, which did not identify the sewer easement. Mr. Marcantel has not shown,
however, that the Trust’s agents reviewed the title commitment and recognized that it omitted
the easement. ECF No. 112 at 4. Mr. Marcantel notes that the Trust’s title policy also did not
identify the sewer easement. It is undisputed, however, that the Trust did not know its 2007
policy omitted the easement. Id. Citing McBroom v. Child, 2016 UT 38, 392 P.3d 835, Mr.
Marcantel argues that the “title policy is a contract which the Trust is a party to, and the Trust
is charged with knowledge of the contents therein.” ECF No. 109 at 38. McBroom did not
concern a title policy and, in any event, a party must sign an agreement before she is charged
with knowledge of its contents. McBroom, 2016 UT 38, ¶ 24 (“Ms. Immelt signed the 1973
Agreement. Therefore, she is charged with knowledge of its contents under the law….”)
Mr. Marcantel offered no evidence that the Trust signed the title policy.
Mr. Marcantel asserts that the “Trust chose not to identify its actual knowledge of the Sewer
Easement, or to disclose the existence of or produce the Survey….” ECF No. 109 at 39. The
undisputed evidence is that the Trust made no such choice; it simply did not occur to the
Trust to disclose the easement, in part because the Trust did not know that Mr. Marcantel
was unaware of the easement. ECF No. 105 at 7 & 17; ECF No. 113 at 14-15. Regarding the
survey commissioned by the Trust’s predecessor, Old Town Partners (“the OTP Survey”)
the undisputed facts are that the Trust did not have a copy to produce. ECF No. 113 at 17-18.
Further, the Trust had no actual knowledge of its existence—a required element of Mr.
Marcantel's fraudulent nondisclosure claim. Id.; see Anderson v. Kriser, 2011 UT 66, ¶ 29,
266 P.3d 819 (holding Utah law requires proof “by clear and convincing evidence that the
defendant had actual knowledge of the information that the defendant failed to disclose.”).
The fact that an agent of the Trust saw the OTP survey eight years ealier is not sufficient as
a matter of law to establish that the Trust had intent to deceive. See Helf, 2015 UT 81, ¶ 28
(“[F]or the purposes of proving that a corporation is liable for an intentional tort, a plaintiff
must prove that at least one agent of the corporation had all of the requisite knowledge to
support the claim.”)
14
2. Trust did not have a duty to disclose the easement because Mr. Marcantel already
had constructive notice of it as a matter of law.
Mr. Marcantel’s nondisclosure claim fails, as discussed, because Mr. Marcantel has not
established by clear and convincing evidence that the Trust had a duty to disclose or intent
to deceive. The nondisclosure claim alternatively fails for a more fundamental reason: Mr.
Marcantel already had constructive notice of the easement.
In Utah, any recorded document “shall, from the time of recording with the appropriate
county recorder, impart notice to all persons of [its] contents.” Utah Code §57-3-102(1). Mr.
Marcantel does not dispute that the easement has been recorded since 1989. Rather, he argues
it was difficult to find because it had a metes and bounds legal description, rather than a
description that refers to parcel or tax serial numbers. Application of the Utah recording statute,
however, is not dependent on how easily the recorded document is located. Further, it does not
require parcel or tax serial numbers for recording. Rather, it requires only “a legal description
of the real property,” which the recording in this case satisfies. Id. at §57-3-105(2).
Mr. Marcantel raises two other points regarding section 57-3-102(1). First, citing Pierucci
v. Pierucci, 2014 UT App 163, ¶ 20, 331 P.3d 7, he argues the general purpose of the recording
statutes—“to protect the purchaser by enabling him to avoid unrecorded competing claims to the
property he purchased in good faith….”14—should govern interpretation of section 57-3-102(1).
But the law is clear that “we look first to the plain language of the statute” for evidence of the
legislature’s intent. Savely v. Utah Highway Patrol, 2018 UT 44, ¶ 25, 427 P.3d 1174. “Where
statutory language is plain and unambiguous, this Court will not look beyond the same to divine
legislative intent.” Id. The language of section 57-3-102(1) is plain and unambiguous.
Further, even if legislative purpose were relevant, Mr. Marcantel misconstrues the purposes
behind Utah’s recording statutes. As explained by Pierucci, those purposes are to “impede fraud,
14
ECF No. 111 at 18.
15
to foster the alienability of real property, and to provide predictability and integrity in real estate
transactions.” Pierucci, 2014 UT App 163, ¶ 20, (quoting Federal Deposit Ins. Corp., 2011 UT
App 416, ¶ 23, 267 P.3d 949). None of these purposes are offended by applying section 57-3102(1) as written to conclude Mr. Marcantel had notice of the recorded easement.15
Mr. Marcantel also argues the easement was not “properly” recorded because, according to
Mr. Marcantel, “it was posted to the wrong block by the Summit County Recorder's Office.”16
This statement, however, is merely an explanation from Coalition Title about why it missed the
easement, and says nothing about whether it was “properly” recorded. More importantly, even
if this was an indication the easement was not properly recorded, the outcome mandated by law
does not change. Though the Supreme Court in dicta has stated that “the recording statute
provides that constructive notice is imparted when documents are properly recorded,” Johnson
v. Higley, 1999 UT App 278, ¶ 24, 989 P.2d 61, the court in that case did not address what is
“proper,” and the statue requires only a correct “legal description of the real property.” Utah
Code §57-3-105(2).
Here there is no dispute that the legal description of the easement was correct.17 And,
as noted, a correct “legal description of the real property” is the only document recording
requirement under the statute. Utah Code §57-3-105(2). Accordingly, regardless of whether the
easement was “posted” where it belongs, it was recorded with the correct legal description of the
15
Moreover, Pierucci is not on point. There, the court noted the specific rule that “[t]he
recording of a forged deed gives no notice to the world or to anybody within it of the contents
thereof” because “[s]uch a deed is void.” Id. at ¶ 19 (quoting Rasmussen v. Olsen, 583 P.2d 50,
52-53 (Utah 1978)). There is no claim in this case that the recorded document creating the
easement was forged or is otherwise void.
16
ECF No. 111 at 20.
17
For this reason, Mr. Marcantel’s reliance on In re Hiseman is also misplaced. 440 B.R.
251 (Bankr. D. Utah 2005). The deed in that case “contained an incorrect description of the
property.” Id. at 254. “While the street address and the tax serial number of the property
were correctly identified on the Trust Deed, both the Township and the metes and bounds
descriptions were incorrect.” Id.
16
real property covered by the easement. The law is clear: unless forged, a recorded document with
a correct legal description—like the easement here—imparts constructive notice as a matter of
law. And because Mr. Marcantel had notice of the easement, it cannot be deemed “latent” or
“undiscoverable,” as required to trigger a duty to separately disclose it to him. See, generally,
Salzman v. Bowen, No. 2:07-CV-854 CW, 2010 WL 129798, at *6 (D. Utah Jan. 8, 2010)
(noting that the plaintiff must “submit evidence to allow a reasonable jury to find that each of
the alleged defects were latent” before a duty to disclose can arise).
Mr. Marcantel does not dispute this conclusion. But he does argue for a blanket exception
for fraudulent nondisclosure claims. The cases on which Mr. Marcantel relies are inapposite.
Specifically, these cases suggest that constructive notice provided by a recording statute will not
defeat a claim for fraud or affirmative misrepresentation. See Helfrich v. Adams, 2013 UT App
37, ¶ 11, 299 P.3d 2; Christenson v. Commonwealth Land Title Ins. Co., 666 P.2d 302, 307
(Utah 1983). The cases, however, say nothing of fraudulent nondisclosure. Because fraudulent
nondisclosure (unlike affirmative fraud) requires a duty to disclose, and because a duty to
disclose is premised on unawareness by the receiving party, whether the receiving party had
constructive knowledge is indeed relevant, and defeats Mr. Marcantel’s claims in this case.
3. Mr. Marcantel has not shown the Trust fraudulently failed to disclose the survey.
Mr. Marcantel asserts that the Trust fraudulently failed to disclose the survey “that shows
the Sewer Easement”—the survey commissioned by the Trust’s predecessor, Old Town Partners
(“the OTP Survey”).18 This part of the fraudulent nondisclosure claim focuses on a different
source of information regarding the easement. But the material fact Mr. Marcantel claims was
withheld when the survey was not disclosed is not the existence of the survey but the existence
18
ECF No. 109 at 36; see ECF No. 89, Third Amended Complaint, at ¶ 133.
17
of the easement. For this reason, the court's conclusions regarding nondisclosure of the easement
detailed above apply to the OTP survey as well.
a. Mr. Marcantel has not supplied clear and convincing proof that the Trust intended
to deceive him by not disclosing the OTP survey.
The fraudulent nondisclosure claim based on the OTP survey fails for another reason. It
is undisputed that the trustee who handled the transaction for the Trust, Mr. Saltman, had no
knowledge of the survey.19 Without such knowledge, Mr. Saltman could not have intended to
deceive Mr. Marcantel about the existence of the survey.
Mr. Marcantel argues that other agents of the Trust— particularly Jeff Werbelow—had
knowledge of the survey and that knowledge should be imputed to the Trust based on the rule
that a “principal is affected with constructive knowledge, regardless of actual knowledge or
notice, of material facts acquired by the agent, even if the agent does not in fact inform the
principal of the facts.” ECF No. 111 at 25.
This is an incomplete statement of the law. Materiality is required at two levels: only a
material fact is imputed, as Mr. Marcantel acknowledges, and the fact is imputed only if it’s
material to the agent’s duties to the principal. See Restatement (Third) of Agency § 5.03 (2006)
(agent’s knowledge of a fact “is imputed to the principal if knowledge of the fact is material to
the agent's duties to the principal....”) (cited in Lane v. Provo Rehabilitation and Nursing, 2018
UT App 10, ¶ 27, 414 P.3d 991). In addition, Mr. Werbelow’s awareness of the survey, even if
19
ECF No. 105 at 13. Mr. Marcantel quotes testimony from Craig Elliott’s deposition that,
according to Mr. Marcantel, supports an inference that Mr. Saltman had the survey when the
Trust purchased the property. See ECF No. 111 at 12-13. The Trust objected to the cited
testimony because it lacks foundation. ECF No. 112 at 10-11. The court agrees that there is
no evidence Mr. Elliott knows whether Mr. Saltman was aware of the OTP survey, or had a
copy at any time. Mr. Elliott appears to be assuming certain matter in the cited testimony.
Those assumptions are inadmissible and do not create an issue of fact impacting the court’s
summary judgment analysis. See Fed. R. Civ. P. 56(c)(2).
18
imputed to the Trust, is insufficient as a matter of law to satisfy the intent to deceive element of
the fraudulent nondisclosure claim.
(i) Materiality
It was Mr. Marcantel’s burden to prove his imputed knowledge theory and he offered no
evidence on either materiality requirement. He’s offered no evidence that the existence of the
survey was a material fact when Mr. Werbelow functioned as an agent in 2007. And he has not
shown that the survey’s existence was material to Mr. Werbelow’s duties.
In contrast, the Trust submitted the Declaration of Jeff Werbelow, which shows the OTP
survey was not important or meaningful to the Trust’s plans for the Property or Mr. Werbelow's
efforts to advance those plans.20 Mr. Werbelow never had a copy of the OTP survey, did not use
it in helping the Trust with the Property, and has no personal knowledge of the survey playing
any role in the Trust's predevelopment planning concerning the Property.21
Moreover, Mr. Marcantel’s concern, as framed by his claims in the case, is not that the Trust
failed to disclose the OTP survey but that it failed to disclose the easement shown on the survey.
The question, then, is not whether Mr. Werbelow saw the OTP survey but whether he learned
that the survey showed the easement. At his deposition, Mr. Werbelow was not asked and did not
testify about whether he recognized the survey showed the easement while he was working for
20
See ECF No. 113. Mr. Marcantel objected to Mr. Werbelow's declaration, arguing he “lacks
personal knowledge and competency to testify” on materiality. ECF No. 115 at 8. The court
overrules the objection. The declaration establishes Mr. Werbelow’s personal knowledge and
competency, and it is not inconsistent with Mr. Werbelow's deposition testimony regarding the
survey. The declaration notes that the survey was not important or meaningful to the Trust’s
plans for the Property or Mr. Werbelow's efforts to advance those plans, that Mr. Werbelow
never had a copy of the survey, and that he didn't use it in helping the Trust with the property.
See ECF No. 113 at ¶¶ 4-6. Mr. Marcantel's counsel did not ask any questions on these topics
during Mr. Werbelow's deposition. See ECF No. 105, Ex. 7 at 20:25 – 22:21.
21
Id. at ¶ 5.
19
the Trust.22 And the Trust established through his declaration that Mr. Werbelow did not know
what is shown on the survey before Mr. Marcantel's counsel handed it to him at his deposition.23
(ii) Intent to Deceive
Wardley Better Homes & Gardens v. Cannon, 2002 UT 99, 61 P.3d 1009, teaches that the
“malice, intent, or bad faith” of a legal entity (like the Trust) “consists of the motives which
prompt the action of its representatives; the requisite state of mind must necessarily be that of
its employee or agent.” Id. at ¶ 22 (quoting 18B Am.Jur.2d Corporations § 2129 (1985). The
only agent of the Trust whose “motives” prompted the alleged fraudulent nondisclosure, Mr.
Saltman, had no knowledge of the OTP survey. Id. Without that knowledge, Mr. Saltman could
not have intended to deceive Mr. Marcantel about the survey. And if Mr. Saltman had no intent
to deceive, the Trust could not have intended to deceive.
The fact that Mr. Werbelow saw the OTP survey is irrelevant because even if that knowledge
is imputed to the Trust, it’s not imputed to Mr. Saltman, the only agent of the Trust whose intent
and motives matter. “[T]he requisite state of mind” was that of Mr. Saltman, the only agent of
the Trust who allegedly misrepresented or fraudulently concealed the existence of the survey,
and without knowledge of the survey, “the motives which prompt[ed] the action of” Mr. Saltman
could not have been deceptive. Id.
Citing Wardley, Mr. Marcantel argues that the “Trust’s knowledge is the sum of the
knowledge of its agents and principals,” presumably suggesting that the collective knowledge
of Mr. Werbelow, Mr. Saltman and others doing work for the Trust at various times should be
combined to support the conclusion that the Trust intended to deceive by not disclosing the
existence of the survey. Mr. Marcantel’s “sum of the knowledge” argument was rejected by
the Utah Supreme Court in Helf v. Chevron U.S.A. Inc., 2015 UT 81, 361 P.3d 63:
22
23
ECF No. 112 at 12.
ECF No. 113 at ¶ 6.
20
Although it may be possible that the collective knowledge of the agents of a
corporation may be relevant in other legal contexts, see Restatement (Third)
of Agency § 5.03 cmt.c (2006), we agree that for the purposes of proving that
a corporation is liable for an intentional tort, a plaintiff must prove that at least
one agent of the corporation had all of the requisite knowledge to support the
claim. Inventing a corporate consciousness with the capacity to possess the
state of mind necessary for an intentional tort is inconsistent with the principles
of tort law. See Adams, 508 N.W.2d at 480. Therefore, the district court
correctly concluded that at least one Chevron agent must have all of the
knowledge necessary to support liability under an intentional tort theory.
Id. at ¶ 28. In short, Mr. Marcantel does not establish fraudulent intent by demonstrating that
various Trust agents were aware of the OTP survey.
When all undisputed facts are considered, it’s plain that Mr. Marcantel has not demonstrated
by clear and convincing evidence that the Trust had the fraudulent mental state needed to support
a fraudulent nondisclosure claim.
C. Mr. Marcantel’s fraudulent misrepresentation claim fails on the merits.
In addition to his claim for fraudulent omission, Mr. Marcantel also asserts that the Trust
made several fraudulent misrepresentations. To succeed on this claim, Mr. Marcantel must
establish:
(1) that a representation was made (2) concerning a presently existing material
fact (3) which was false and (4) which the representor either (a) knew to be
false or (b) made recklessly, knowing that there was insufficient knowledge
upon which to base such a representation, (5) for the purpose of inducing the
other party to act upon it and (6) that the other party, acting reasonably and in
ignorance of its falsity, (7) did in fact rely upon it (8) and was thereby induced
to act (9) to that party's injury and damage.
Cardon v. Jean Brown Research, 2014 UT App 35, ¶ 6, 327 P.3d 22. According to Mr.
Marcantel, the Trust’s misrepresentations are contained in three documents: the MLS listing
for the Property, a “Potential Site Plan” EWA prepared in 2007, and the Seller’s Property
Disclosure form (“the Disclosure Form”) provided by the Trust. Mr. Marcantel has not,
however, shown that representations in any of these three documents amount to fraudulent
misrepresentations.
21
1. The MLS listing
The first alleged misrepresentation is in the MLS listing, which Mr. Marcantel describes as
“advertis[ing] the Property as having development potential for up to five residential units.”24
Mr. Marcantel argues this representation was false because “the Saltmans’ architect informed
them that without a code change and the approval of the Sewer District, that density simply
wasn't ‘feasible.’”25 This part of Mr. Marcantel’s fraud claim fails because the alleged
misrepresentation is not of a presently existing material fact, it’s not false, there is no evidence
of intent to deceive, and Mr. Marcantel did not rely on the alleged misrepresentation.
a. No false representation.
First, Mr. Marcantel has not established that the MSL listing contained a false representation.
The listing stated that the Property “may be able to accommodate up to 5 residential units,” and
Mr. Marcantel contends that statement is false for two reasons: (a) that EWA had previously
informed the Trust “that any more than two units on a single property is penalized under Park
City’s development code (60% open space, set backs, parking) and buildings are restricted to two
stories (27’ height) and is not feasible”; and that (b) “when Sara Werbelow and EWA met with
Park City Planners to discuss high-density development for four to five townhomes, the City’s
feedback was discouraging and in line with EWA’s opinion of non-feasibility.”26
Neither of these points negates or even concerns the MLS listing. EWA’s advice that the
City’s development code may penalize more than two units on a single property had nothing to
do with accommodating five residential units. Rather, this statement came in an email exchange
in 2010, five years before the MLS listing, and concerned a concept plan for two lots with a
24
ECF No. 89 at ¶ 149.
Id. at 150.
26
ECF No. 111 at 35-36 (emphasis Marcantel’s).
22
25
duplex on one and a single-family residence on the other.27 In response to that concept plan, the
Trust asked: “And, if we went for a variance and more density as an elderly care facility…. In
that case, overall gross building square footage potential?”28 It was in response to that question,
not a query regarding "five residential units,” that Mr. Elliott responded: “Currently, there is no
way supported in the code to gain a significant amount of density. All sections give lip service to
the idea, but in reality are not feasible.” Id.
This 2010 response to the Trust’s question about density potential does not prove false the
2015 statement that the Property “may be able to accommodate up to 5 residential units.” In fact,
more than two years after that 2010 response, EWA proposed a 5 residential unit plan for the
Property with the sewer line in place.29 Mr. Marcantel's reference to Mr. Elliott's 2010 email
does not show that the 2015 statement was false.
Mr. Marcantel also asserts that the statement in the MLS listing was false because “when
Sara Werbelow and EWA met with Park City Planners to discuss high-density development for
four to five townhomes, the City's feedback was discouraging and in line with EWA's opinion
of non-feasibility.”30 But this misconstrues the record. As noted, it’s undisputed that EWA
proposed a five-townhouse plan for the Property in November 2012.31 The email cited by Mr.
Marcantel, in which EWA’s Roger Durst and Ms. Werbelow discussed input from Park City,
was exchanged in September and October 2012, before EWA proposed its five-townhouse
plan.32 There is no evidence that Park City ever provided input—discouraging or not—
concerning the November 2012 design.33 Finally, Mr. Marcantel's conclusion that Park City's
27
See ECF No. 109, Ex.25-001 to 003.
Ex.25-001.
29
See ECF No. 105 at 6; see ECF No. 105, Appendix Ex. 4, Elliott Depo., at 90-92.
30
ECF No. 111 at 36.
31
Id.
32
See ECF No. 112 at 3.
33
Id.
23
28
input involved “non-compliance with the code” is also not supported by the email, which
mentions only that Park City identified “issues” with setbacks and height.34 This is not the
clear and convincing evidence required to establish that the MLS listing was false.
b. No fraudulent intent.
Even if Mr. Marcantel could show the MLS listing was false, he has not demonstrated it
was made with intent to deceive. As noted in connection with the nondisclosure claim, “intent
is the hallmark of an intentional tort” and the intentional tort of fraud requires proof by clear
and convincing evidence of the defendant’s intent to deceive. Anderson, 2011 UT 66, ¶ 26. Mr.
Marcantel does not directly address this requirement in connection with the MLS listing, but
instead argues generally that the Trust could have “listed the Property for sale without making
any representations concerning how it could be developed,” and speculates that the Trust instead
“intentionally crafted” an “illusion” regarding the Property being “a high density development
opportunity….”35
In short, Mr. Marcantel asks the court to infer fraudulent intent. “While the intent to deceive
may be inferred, it must be established by more than doubtful, vague, speculative or inconclusive
evidence.” Andalex Res., Inc. v. Myers, 871 P.2d 1041, 1047 (Utah Ct. App. 1994)(internal
citation omitted). Mr. Marcantel’s speculation about the Trust’s motives does not meet his
burden of proving fraudulent intent by clear and convincing evidence.
c.
No reliance.
Finally, even assuming the MLS listing was otherwise false and done with fraudulent intent,
Mr. Marcantel failed to demonstrate he relied on it, and in fact suggested the opposite. During his
deposition, for example, Mr. Marcantel stated that he didn't “necessarily” believe the reference to
five residential units in the MLS listing. As he put it, “that’s just somebody saying you could put
34
35
Id.; see ECF No. 109, Ex. 25-017.
Marcantel's Opposition at 37.
24
five units in there.”36
The MLS listing, however, did not state that a buyer “could put five units in there.” Instead,
it stated that the Property “may be able to accommodate up to 5 residential units.”37 And the very
next sentence advises prospective buyers to “consult with your architect” about developing the
Property.38 Finally, the MLS listing includes this express disclaimer:
Seller and Seller's agent have done limited investigation into what is allowed
or can feasibly be done on this parcel. Buyer and Buyer's agent are encouraged
to consult qualified professionals and the Town of Park City prior to making
any assumptions [about] value or development opportunities on this parcel.39
Mr. Marcantel does not directly address this evidence. He generally asserts that he “relied on the
Trust's representations and decided to purchase the Property,” but offers no evidence or argument
demonstrating reliance on the MLS listing.40
The undisputed facts show Mr. Marcantel did not rely on the MLS listing, nor could he have
given its express disclaimers. Accordingly, Mr. Marcantel has not met his burden to establish
reliance by clear and convincing evidence and this part of his fraud claim fails as a matter of law.
2. The “Potential Site Plan”
Mr. Marcantel also contends that the Trust made affirmative misrepresentations in a
“Potential Site Plan” contained in a digital Dropbox file the Trust’s realtor offered Mr.
Marcantel's realtors. According to Mr. Marcantel, the Potential Site Plan “represented that
the Property could be subdivided into three buildable lots,” and Mr. Marcantel contends this
representation was false because the Trust “had attempted to subdivide and develop the Property
in accordance with the Potential Site Plan but found it impossible due to the presence of the
36
ECF No. 105, Appendix Ex. 9, Marcantel Depo., at 42-43.
ECF No. 105, Appendix Ex. 12.
38
Id.
39
Id.
40
ECF No. 111 at 37.
25
37
Sewer Easement.”41 This claim fails because the Potential Site Plan makes no representation as
such; it makes no representation of an existing fact; it contains no false representation; it was not
offered with intent to deceive; and, in any event, Mr. Marcantel did not rely on anything stated in
the Potential Site Plan.
First, the Potential Site Plan makes no representation that the Property could be subdivided
into three buildable lots. It is a series drawings created by EWA, each of which is dated April 30,
2007 and labelled “HDDR Review,” which, Mr. Marcantel knew, meant that they were created
eight years earlier for Park City’s Historic District Design Review (“HDDR”) process, one step
in a multistep process for plan approval. The Potential Site Plan says nothing about whether the
Trust completed the HDDR process or, if so, the end result. It does not state or even imply that
Park City would approve subdivision and development of the Property in the manner depicted.
And it makes no other representation about the Property’s development potential, particularly
not the development potential in 2015.
Second, the Potential Site Plan makes no representation of an existing fact. By definition,
a “potential” site plan is not a representation of existing fact but an opinion regarding the
possibility of future development approval consistent with that plan. Opinions are not actionable
as fraud and, even if factual, the site plan referred to what a third-party—Park City—might do
in the future. See Nielson v. Leamington Mines & Expl. Corp., 87 Utah 69, 48 P.2d 439 (1935)
(holding a statement that third parties would supply money to develop property was in the nature
of an opinion predicting future conduct and, therefore, not fraudulent).
Third, even if the Potential Site Plan made a representation of an existing fact, it was not a
false representation. Mr. Marcantel’s counter is based on the following argument:
The Trust …had no reason to believe that the Property could lawfully be
subdivided and developed as three homes, specifically as depicted in the
41
ECF No. 89 at ¶¶ 151-152. Appendix Ex. 1.
26
Potential Site Plan, due to the undisclosed Sewer Easement. The “best” that EWA
could come up with as far as subdividing the Property in a manner that would not
require relocating the Sewer Easement was for two lots….42
The Trust acknowledges that it applied to subdivide the Property consistent with the Potential
Site Plan, and stopped pursuing that application in late 2007. But the undisputed evidence shows
the reason the Trust didn’t complete the application process was the recession that started about
that time, which made development of the Property infeasible.43 In other words, the recession,
not the sewer easement, stopped the Trust’s development work.
Moreover, Mr. Marcantel has not shown that relocating the easement was a prerequisite to
building three homes on the Property. In contrast, the Trust offered undisputed evidence that in
2010, Mr. Elliott produced a design concept that has three homes on three lots and he explained
how that concept could work with the easement in place.44 Even if relocating the easement was
required, Mr. Marcantel has not shown that doing so was impossible. The Potential Site Plan
contemplated moving the easement to the rear of the property and an effort to do just that was
underway in 2007. The recession stopped that effort but Mr. Marcantel has not shown that it
would have failed had it continued. Without that proof, Mr. Marcantel’s argument regarding the
false nature of the Potential Site Plan fails for lack of factual support.
Fourth, Mr. Marcantel has not demonstrated any representation in the Potential Site Plan
was made with fraudulent intent. As is true of the MLS listing, Mr. Marcantel does not directly
address the fraudulent intent requirement in connection with the Potential Site Plan. Again, he
argues generally that the Trust’s fraudulent intent should be inferred from what he refers to as the
“illusion” of a “high density development opportunity” created by the Trust.45 At best, however,
the evidence Mr. Marcantel offers to support his “illusion” theory is speculative and inconclusive
42
ECF No. 111 at 35.
ECF No. 105, Appendix Ex. 3, Saltman Depo, at 45 & 51.
44
See ECF No. 112 at 4; see ECF No. 105, App. Ex. 4, Elliott Depo., at 69:16-71:17.
45
See ECF No. 111 at 37.
27
43
and insufficient to allow the court to draw an inference of intent to deceive. See Andalex Res.,
Inc., 871 P.2d at 1047. Mr. Marcantel’s speculation about the Trust’s motives does not meet his
burden to demonstrate fraudulent intent by clear and convincing evidence.
Finally, the undisputed facts show Mr. Marcantel did not in fact rely on the Potential Site
Plan. When questioned about it at his deposition, Mr. Marcantel said it was not important to
him because he had no plans for developing the Property.46 Mr. Marcantel did explain that the
Property’s development potential was important to him. But he understood that potential was a
function of what Park City might approve in 2015, not what was shown on an eight year old
Potential Site Plan.47 That is, Mr. Marcantel understood he had to independently verify the
Property’s development potential. Mr. Marcantel had his realtors meet with Park City for that
purpose.48 One result of that meeting was confirmation that the 2015 Park City development
codes may not allow what was depicted on the 2007 potential site plan.49
Mr. Marcantel had the burden to establish these elements by clear and convincing evidence.
He failed to do so, and this portion of his fraud claim fails on that basis.
3. The Disclosure Form.
The final part of Mr. Marcantel’s fraud claim concerns three alleged misrepresentations in
the Disclosure Form the Trust provided. Specifically, Mr. Marcantel alleges:
46
The Trust falsely stated that it was “unaware of any easements or claims of easement….”50
The Trust falsely stated that it was not aware of any survey of the Property.51
See ECF No. 105 at 9; Marcantel Depo. at 35-37, Appendix Ex. 9.
See ECF No. 105 at 9; Appendix Ex. 9 at 39, 45-46 & 50; Appendix Ex. 11 at 81-82 & 95-100.
Mr. Marcantel’ realtor Cam Schiedel echoed the point, testifying that Park City’s development
codes changed between 2007 and 2015 and that, as a result, there was no way to know whether
the 2007 Potential Site Plan could be built in 2015. See ECF. No. 105, App. Ex. 10 at 76:17-25.
48
ECF No. 105, Appendix Ex. 11, Digman Depo., at 81-82 & 95-100; Appendix Ex. 9,
Marcantel Depo., at 39, 45-46 & 50,.
49
ECF No. 105, Appendix Ex. 11, Digman Depo., at 20-22; Appendix Ex. 10, Schiedel Depo., at
18-19 & 27-28.
50
ECF No. 89 at ¶ 156, Appendix Ex. 1.
51
Id. at ¶ 158, Appendix Ex. 1.
28
47
The Trust falsely stated that the information in the Disclosure Form was “accurate and
complete to the best of Seller's actual knowledge….”52
As explained below, Mr. Marcantel lacks evidence sufficient to establish one or more of the
elements required for each of these alleged misrepresentations.
a. Easements or claims of easements.
According to Mr. Marcantel, the Trust falsely stated it was “unaware of any easements or
claims of easement.”53 The actual question in the Disclosure Form, however, is whether the Trust
was “aware of any unrecorded easements, or claims for easements, affecting the Property.”54 The
undisputed evidence shows that the Trust's “no” answer to this question was true—the Trust was
not aware of any unrecorded easements.55
Mr. Marcantel also argues the phrase “claims for easements” means a claimed “right to an
easement….”56 Even taking this definition as correct, there is no evidence that any “claims for
easements” were asserted or pending at the time and, even if they were, the Trust was not aware
of them.57 Mr. Marcantel offered no evidence to the contrary. Accordingly, Mr. Marcantel has
not shown that the Trust’s “no” answer to this part of the Disclosure Form was false.
Finally, even if the Trust’s “no” answer was false, Mr. Marcantel has not shown fraudulent
intent in connection with the answer. In fact, Mr. Marcantel fails to address this essential element
of his fraud claim. For any of these reasons, this part of the claim fails as a matter of law.
b. Survey.
Mr. Marcantel next contends that the Trust falsely stated in the Disclosure Form that it
was not “aware of any survey(s) that [had] been prepared for the Property….”58 This claim
52
Id. at ¶ 160, Appendix Ex. 1.
ECF No. 89 at ¶ 156, Appendix Ex. 1.
54
ECF No. 105, Appendix Ex. 17, Disclosure Form at § 6.E. (emphasis added).
55
ECF No. 105, Appendix Ex. 3, Saltman Depo. at 80; Appendix Ex. 6, Saltman Dec. at ¶ 9.
56
ECF No. 111 at 24.
57
ECF No. 105, Appendix Ex. 6, Saltman Dec. at ¶ 9.
58
ECF No. 105, Appendix Ex. 17, Disclosure Form at § 6.D.
29
53
fails because Mr. Marcantel has not demonstrated: (a) the representation was false; (b) it was
material; (c) it was done with intent to deceive; or (d) it caused him any harm.
(i) The representation was not false.
First, Mr. Marcantel has not demonstrated the representation in the Disclosure Form that
the Trust was not aware of any surveys was false. The survey at issue was commissioned by
Old Town Partners (“OTP”), the prior owner of the Property.59 OTP had been working with
EWA to prepare development concepts for the Property and, in that context, OTP engaged
Alliance Engineering to prepare the survey in November 2006.60 OTP sold the Property to the
Trust in February 2007.61
Mr. Marcantel’s argument that the representation in the Disclosure Form was false is based
on the fact that the OTP survey eventually ended up in the files of the Park City Planning
Department in connection with a 2007 HDDR process requested by the Trust, along with Mr.
Marcantel’s assumption that the Trust supplied that survey, or was otherwise aware of its
existence.62 But there is no evidence supporting either assumption. The only evidence in the
record addressing the matter establishes that EWA submitted the OTP survey to Park City on
April 30, 2007, with other HDDR materials.63
Indeed, the evidence demonstrates that Mr. Saltman, the trustee handling the sale for the
Trust, had no knowledge of any survey of the Property when he signed the Disclosure Form on
February 8, 2015, verifying that the information contained in the document was “accurate and
complete to the best of Seller's actual knowledge as of the date signed by Seller below.” ECF
59
ECF No. 105, a copy of the Survey is included in the Appendix at Ex. 15.
Id.; Elliott Depo. at 18-20, Appendix Ex. 4; S. Werbelow Depo. at 38-39, Appendix Ex. 8.
61
ECF No. 89 at ¶¶ 10 & 13, Appendix Ex. 1.
62
Id. at ¶ 21, Appendix Ex. 1.
63
ECF No. 105, Appendix Ex. 4, Elliott Depo. at 62-64; see April 30, 2007 transmittal letter
from Elliott Workgroup to the Park City Planning Department, copy of which is included in the
Appendix at Ex. 16.
30
60
No. 105, Disclosure Form at 4, Appendix Ex. 17.64 In fact, just one day earlier, on February 7,
2015, the Trust's realtor Matt Magnotta emailed Mr. Saltman noting that the “Buyer is asking for
a survey if one has been done.” Mr. Saltman responded:
No survey in my files.
Please check with Steve Bruemmer—Elliott Workgroup Architects—to see if
he or they have one. I don't think so but worth inquiring as we have worked on
various preliminary development ideas from time to time.
Saltman Dec. at Exhibit A, Appendix Ex. 6.65 Mr. Magnotta contacted EWA and learned that
everything it had was accessible through a Dropbox link forwarded to Mr. Magnotta a week or
so earlier.66 The materials accessible through that Dropbox link did not include a survey.67
64
ECF No. 105, Saltman Depo at 70 and 77-79, Appendix Ex. 3
The court notes that Mr. Saltman copied both of Mr. Marcantel's realtors (through whom Mr.
Marcantel had all communications with the Trust) on this email to Mr. Magnotta. It is reasonable
to conclude that if Mr. Saltman had intended to conceal the existence of the OTP survey, he
would not have provided Mr. Marcantel's realtors with information regarding a possible source
of the survey. See ECF No. 105 at 23-25.
66
See ECF No. 113, Ex. 65 at ¶¶ 5-6.
67
Id. Mr. Marcantel objected to Mr. Magnotta's declaration, arguing that paragraph 5 of the
declaration is inadmissible because it contains hearsay and “does not satisfy the standard
of personal knowledge required by Rule 56(c)(4).” ECF No. 115 at 11. The court overrules the
objection. Paragraph 5 of the declaration states: “To the best of my recollection, I contacted Mr.
Bruemmer and asked whether he or [EWA] had a survey of the Property, and he stated that he
had given us everything they had via a Dropbox link sent by email on January 30, 2015." Mr.
Bruemmer’s statement is not hearsay because the Trust is not offering it for the truth of the
matter stated. Establishing that EWA in fact supplied everything it had via the Dropbox link is
not the purpose of paragraph 5. Instead, the purpose is to demonstrate the effect the statement
had on the Trust, which checked the Dropbox link and did not find a survey of the Property.
Mr. Marcantel's argument regarding the personal knowledge standard is based on the fact that
Mr. Magnotta starts paragraph 5 with the statement “to the best of my recollection.” Citing Pace
v. Capobianco, 283 F.3d 1275 (11th Cir. 2002), Mr. Marcantel argues this statement “implies
that Magnotta is not willing to testify that the communication actually occurred….” Pace is not
on point. It dealt with an affiant who referred to what he “believe[d],” not one who referred to
his “best recollection.” Id. at 1278-1279. The only arguably on point authority Mr. Marcantel
cites is a footnote in an order from the Northern District of Florida, Wills v. Potter, No.
4:05CV381-WS, 2008 WL 821921, at *11 (N.D. Fla. Mar. 27, 2008), aff'd sub nom. Wills v.
Postmaster Gen., 300 F. App'x 748 (11th Cir. 2008). The footnote does not cite authority for the
judge’s conclusion.
31
65
As he did in connection with his fraudulent nondisclosure claim, Mr. Marcantel argues
that Jeff Werbelow had knowledge of the survey and, as an agent, his knowledge should be
imputed to the Trust based on the rule that a “principal is affected with constructive knowledge,
regardless of actual knowledge or notice, of material facts acquired by the agent, even if the
agent does not in fact inform the principal of the facts.”68 But as explained in connection with
that claim, only material facts are imputed, and then only if the facts are material to the agent’s
duties to the principal. See Restatement (Third) of Agency § 5.03 (2006) (agent’s knowledge of
a fact “is imputed to the principal if knowledge of the fact is material to the agent's duties to the
principal....”) (cited in Lane v. Provo Rehabilitation and Nursing, 2018 UT App 10, ¶ 27, 414
P.3d 991). It was Mr. Marcantel’s burden to prove his imputed knowledge theory, and he offered
no evidence on either materiality requirement.
In contrast, the Trust submitted the Declaration of Jeff Werbelow, which demonstrates
the OTP survey was not important or meaningful to the Trust’s plans for the Property or Mr.
Werbelow's efforts to advance those plans.69 Mr. Werbelow never had a copy of the OTP survey,
did not use it in helping the Trust with the Property, and has no personal knowledge of the
survey playing any role in the Trust's predevelopment planning concerning the Property.70
Moreover, Mr. Marcantel’s concern, as framed by his claims in the case, is not that the Trust
failed to disclose the OTP survey but that it failed to disclose the easement shown on the survey.
The question, then, is not whether Mr. Werbelow saw the OTP survey but whether he learned
that the survey showed the easement. The only evidence in the record addressing that question
establishes that Mr. Werbelow did not know what the survey showed until it was handed to him
at his deposition.71
68
ECF No. 111 at 25.
ECF No. 113 at ¶ 4.
70
Id. at ¶ 5.
71
Id. at ¶ 6.
69
32
In short, the Trust’s statement that it was not “aware of any survey(s) that [had] been
prepared for the Property” was true.72 Mr. Marcantel speculates otherwise, but speculation
doesn’t meet the heavy evidentiary burden he faces.
(ii) The representation was not material.
Even if the representation in the Disclosure Form was false, Mr. Marcantel has not
demonstrated it is material. Only material facts can be the subject of a fraud claim. See Cardon,
2014 UT App 35, ¶ 6. The existence of a survey, however, was not material in the context of
this transaction.
Mr. Marcantel notes that the OTP survey showed the easement but, of course, he didn't know
that when he purchased the Property. The issue is whether the “existence or nonexistence” of a
survey is something a reasonable person would attach importance to “in determining his choice
of action in the transaction in question.” Restatement (Second) of Torts § 538 (1977); see Walter
v. Stewart, 2003 UT App 86, ¶ 23, 67 P.3d 1042 (“A material fact is any fact, the knowledge or
ignorance of which would naturally influence [a party’s] judgment ...in estimating the degree and
character of the risk” involved in a transaction.) (internal quotation marks omitted). Because Mr.
Marcantel did not know what the OTP survey revealed, its existence or nonexistence could not
have been a factor in his decision to purchase the Property and, therefore, was not material to Mr.
Marcantel at the time.
(iii) No intent to deceive.
Further, Mr. Marcantel has not demonstrated any intent to deceive. It is undisputed that
the trustee who handled the transaction for the Trust, Mr. Saltman, had no knowledge of the
survey.73 And without such knowledge, Mr. Saltman could not have intended to deceive Mr.
Marcantel about the existence of the OTP survey.
72
73
ECF No. 105, Appendix Ex. 17, Disclosure Form at § 6.D.
ECF No. 105 at 13.
33
Mr. Marcantel argues that the Trust had Jeff Werbelow’s imputed knowledge of the OTP
survey and that, with this knowledge, the intent to deceive may by inferred from the Trust’s
Disclosure Form statement that it was not aware of any survey. But as explained in connection
with the nondisclosure claim, this imputed knowledge theory fails. Mr. Werbelow’s awareness
of the OTP survey, even if imputed to the Trust, is insufficient as a matter of law to satisfy the
intent to deceive element. As explained by the Restatement (Third) Of Agency § 5.03 (2006):
Particular legal consequences may depend on a combination of knowledge or reason
to know a fact, plus a specific intention. For example, a claim of fraud may require
that a person who misstated a material fact has made the misstatement intending to
defraud the person to whom the statement was made. If so, a principal may not be
subject to liability for fraud if one agent makes a statement, believing it to be true,
while another agent knows facts that falsify the other agent's statement. Although
notice is imputed to the principal of the facts known by the knowledgeable agent, the
agent who made the false statement did not do so intending to defraud the person to
whom the statement was made.
See also Helf v. Chevron U.S.A. Inc., 2015 UT 81, ¶ 28, 361 P.3d 63 (“Although it may be
possible that the collective knowledge of the agents of a corporation may be relevant in
other legal contexts, see Restatement (Third) of Agency § 5.03 cmt.c (2006), we agree that
for the purposes of proving that a corporation is liable for an intentional tort, a plaintiff
must prove that at least one agent of the corporation had all of the requisite knowledge to
support the claim.”).
In short, Mr. Marcantel does not establish fraudulent intent by demonstrating that various
Trust agents were aware of the OTP survey. He must show that the agent who allegedly
made the false statement, Mr. Saltman, did so intending to defraud him. And he must make
the showing by clear and convincing evidence. Mr. Marcantel has not met this burden.
(iv) The alleged misrepresentation was not the cause of any loss.
Finally, Mr. Marcantel has not demonstrated the representation caused him any loss. The
causation element of a fraud claim has two components: causation in fact and legal causation.
See Restatement (Second) of Torts §§ 546 and 548A (1977); see also United States v. Johnson,
34
No. 2:09-CR-00133-003-CW, 2014 WL 11461054, at *8 (D. Utah Mar. 31, 2014). Concerning
causation in fact, the Restatement notes:
The maker of a fraudulent misrepresentation is subject to liability for
pecuniary loss suffered by one who justifiably relies upon the truth of the
matter misrepresented, if his reliance is a substantial factor in determining
the course of conduct that results in his loss.
Restatement (Second) of Torts § 546. Focusing on the second part of this standard, Mr.
Marcantel has not established that his alleged reliance on the Trust's “no” answer to the
survey question in the Disclosure Form was “a substantial factor” in his decision to purchase
the Property. Indeed, as explained in connection with the materiality element, the existence
of a survey was inconsequential. Mr. Marcantel did not know what the OTP survey revealed.
For that reason alone, its existence or nonexistence could not have been a factor, and certainly
not a substantial factor, in his purchase decision.
In sum, when the Trust verified to the best of its actual knowledge that it was not aware
of any survey of the Property, its answer was true. To the extent Mr. Marcantel’s arguments to
the contrary have any support in the record, they are not supported by the clear and convincing
evidence required of Mr. Marcantel. Even if they were, however, this part of Marcantel's fraud
claim fails for lack of materiality, fraudulent intent and causation in fact.
c. Other answers in the Disclosure Form
Mr. Marcantel’s final grievance regarding the Disclosure Form is that the Trust “did not
accurately or completely represent [its] knowledge of the Property” because it did not disclose
the “existence, nature, or approximate location of the Sewer Easement.”74 By signing the form,
however, the Trust did not verify it had completely represented its knowledge of the Property.
Rather, it verified “that the information contained [in the form] is accurate and complete to the
74
ECF No. 89 at ¶¶ 161 and 162, Appendix Ex. 1.
35
best of [the Trust's] actual knowledge as of the date signed by [the Trust] below.”75 Indeed, the
Trust had no duty under the Disclosure Form to explain to Mr. Marcantel everything it knew of
the Property. Specifically, regarding easements, the Trust's only obligation was to answer this
question: “Are you aware of any unrecorded easements, or claims for easements, affecting the
Property?”76 The Trust satisfied its obligation by answering the question, and its “no” answer as
both accurate and complete. This final part of Marcantel's fraud claim fails as a matter of law.77
II. The Trust did not breach the REPC.
Mr. Marcantel alleges the Trust breached the REPC “by failing to disclose the Sewer
Easement …and failing to produce surveys and other documents in [its] possession depicting
the same.” Compl. at ¶ 175, Appendix Ex. 1. Mr. Marcantel asserts that these obligations arise
from the Disclosure Form and from sections 7(h) and 10.2 of the REPC.
Mr. Marcantel misreads the Disclosure Form and REPC. The Disclosure Form creates no
contract duties other than the duty, imposed by the REPC, to answer the questions posed in the
form and return the form by the agreed deadline. Also, the REPC sections at issue impose no
obligation to disclose the easement or produce documents depicting the easement. Accordingly,
the Trust fully complied with its obligations under the REPC.
A. The Trust complied with its obligations regarding the Disclosure Form.
Mr. Marcantel argues the Disclosure Form imposed on the Trust an obligation “to disclose
its actual knowledge concerning the Sewer Easement on the Property….”78 The argument is
75
ECF No. 105, Appendix Ex. 17, Disclosure Form at 4.
Id. at § 6.E., Appendix Ex. 17.
77
Marcantel used his opposing memorandum to argue, for the first time, that the Trust’s realtor,
Matt Magnotta, fraudulently “represented to Tisha Digman that three single-family homes can
be constructed on the Property….” ECF No. 111 at 33. The Trust objected to Marcantel's effort
to amend his fraud claim post discovery. This new fraud claim is not properly before the court.
Even if the court were inclined to consider it, however, the court is persuaded by the Trust’s
arguments about why the claim fails as a matter of law. See ECF No. 112 at 20, n. 23.
78
ECF No. 109 at 23.
36
76
based on this sentence from the instructions on the first page of the Disclosure Form: “Please
thoroughly disclose your actual knowledge regarding the condition of the Property.”79 This
language does not create a contractual obligation. It merely recites Utah law on a seller's
obligation to disclose property defects, as explained in the language immediately preceding
the language Mr. Marcantel relies on:
SELLER IS OBLIGATED UNDER LAW TO DISCLOSE TO BUYERS
DEFECTS IN THE PROPERTY KNOWN TO SELLER THAT MATERIALLY
AND ADVERSLY AFFECT THE VALUE OF THE PROPERTY THAT
CANNOT BE DISCOVERED BY A REASONABLE INSPECTION BY AN
ORDINARY PRUDENT BUYER. This disclosure form is designed to assist
Seller in complying with these disclosure requirements.
ECF No. 105, Appendix Ex. 17, Disclosure Form at 1.
Regarding easements on the Property, the Trust's obligation was to answer this question at
section 6.E. of the Disclosure Form: “Are you aware of any unrecorded easements, or claims
for easements, affecting the Property?”80 It is undisputed that the Trust answered the question
and returned the completed form to Mr. Marcantel by the agreed deadline. Whether the Trust
answered the question honestly is an issue addressed in connection with Mr. Marcantel's fraudbased claims. By answering the question and returning the form, the Trust satisfied its contractbased obligations.
Mr. Marcantel also argues the Disclosure Form obligated the Trust “to disclose its existing
knowledge of the Survey.”81 Again, regarding surveys, the Trust’s contractual obligation was to
answer this Disclosure Form question: “Are you aware of any survey(s) that have been prepared
for the Property or any adjoining property or properties? If Yes, please provide a copy of any
such survey(s) in your possession.”82 There is no dispute about the fact that the Trust answered
79
ECF No. 105, Appendix Ex. 17, Disclosure Form at 1.
Id. at § 6.E.
81
ECF No. 109 at 27.
82
ECF No. 105, Appendix Ex. 17 at § 6D.
37
80
the question and timely returned the completed form to Mr. Marcantel. In doing so, the Trust
satisfied this part of its contractual obligation.
B. The Trust complied with its obligations under REPC section 7(h).
Under section 7(h), the Trust agreed to provide a “survey if one has been done.”83 Mr.
Marcantel argues REPC section 7(h) required the Trust to determine if a survey of the Property
existed and, if so, to produce that survey. But this argument misconstrues the language of section
7(h), which only required the Trust to produce a survey if it had one or, at most, if one had been
produced for it.84
1. The Trust did not have a survey.
The undisputed facts are that the Trust didn’t have a survey and didn’t know if one existed.
This part of Mr. Marcantel’s contract claim hinges on his theory that by agreeing to provide a
“survey if one has been done,” the Trust agreed to “affirmatively …determine whether the [OTP]
Survey existed.”85
The REPC imposes no such duty and Mr. Marcantel has not cited authority suggesting any
other basis for the duty. The Trust determined that the only possible source it was aware of,
EWA, did not have a survey.86 In doing so, the Trust fully satisfied its obligations under section
7(h).
This is a matter of contract interpretation and the starting point is the contract language
viewed in the overall context of the transaction. That context includes the fact that the parties
agreed to close the deal quickly. They agreed to complete the entire transaction in 21 business
83
ECF No. 105, Appendix Ex. 5.
The Trust also argued that the merger doctrine applies to render REPC section 7(h)
extinguished and unenforceable. In light of its conclusion that the Trust did not breach section
7(h), the court does not address this issue.
85
ECF No. 109 at 28.
86
See Ex. 65 at ¶¶ 5- 6.
38
84
days.87 And the Trust’s “Seller Disclosures” (including a survey if one had been done) were due
just three days after the parties reached agreement.88 The Trust had between Friday, February 6
and Monday, February 9, to collect and provide these documents to Mr. Marcantel:
a. A written Seller Property Condition Disclosure for the Property.
b. A commitment for title insurance.
c. A copy of any restrictive covenants, rules and regulations affecting the Property.
d. A copy of the most recent minutes, budget and financial statement for any homeowners
association.
e. A copy of any lease, rental or management agreement affecting the Property.
f. Evidence of any water rights and water shares for the Property.
g. Written notice of any claims and conditions known to the Trust relating to
environmental problems and any violation of CC&Rs, federal, state or local laws, and
building or zoning code violations.
h. A survey if one had been done.
ECF No. 105, Ex. 5 at § 7.
Mr. Marcantel’s interpretation is that over the weekend of February 6, in addition to
collecting and supplying all of the listed documents, the Trust had to “affirmatively …determine
whether the Survey existed,” get a copy if it found one and deliver that copy to Mr. Marcantel.89
In support of his interpretation, Mr. Marcantel argues it’s “undisputed that the Survey existed,
that it had been previously used in the Trust’s applications to Park City, [and] that Jeff Werbelow
had seen the Survey….”90
87
See ECF No. 105, Ex. 5 at p. 6.
Id.
89
Marcantel’s Motion at 28.
90
Id. Mr. Marcantel also argues it’s undisputed “that both Alliance and EWA (hired to perform
services on behalf of the Trust) had the Survey in their possession.” ECF No. 109 at 28. The
Trust responded by noting Alliance and EWA may have had a copy of the OTP survey when
asked to respond to Marcantel’s subpoenas in 2017 but there is no evidence that they had a
copy on February 9, 2015, the Trust’s seller disclosures deadline. Mr. Marcantel calls this point
“absurd,” noting that EWA found a copy of the OTP survey in response to Karin Tritt Ross’
request “in the fall of 2015.” ECF No. 115 at 20, n. 33. Mr. Marcantel forgets, however, that
on February 7, 2015, the Trust’s realtor Matt Magnotta asked EWA if it had a survey and its
response was that it had provided everything it had via the Dropbox link forwarded to Mr.
Magnotta on January 30, 2015. See ECF No. 113, Ex. 65 at ¶¶ 5-6. The materials accessible
through that Dropbox link did not include a survey. Id. Accordingly, there is no evidence in
the record that EWA had a copy of the OTP survey as of the seller disclosures deadline.
39
88
For purposes of interpreting the REPC language, the relevant question is not what’s known
now, after more than two years of discovery, but what the parties knew in February 2015, when
they agreed to the REPC terms. There is no evidence that in February 2015 either party knew
that a survey existed, that one had been used in applications to Park City submitted by EWA or
that Jeff Werbelow had seen one.91 Accordingly, it’s not reasonable to interpret the requirement
to provide a survey “if one has been done” as requiring the Trust to affirmatively determine
whether a survey ever existed. Making that determination would have required learning the
identity of every living owner of the Property, finding and making contact with those owners,
and getting a copy of any survey, all within 72 hours over a weekend. Mr. Marcantel could not
have intended his six word addition to REPC section 7 to require that of the Trust, and the Trust
did not read it that way.
Given the facts and circumstances at the time, the only reasonable interpretation is the Trust
was obligated to provide a survey if one had been done by or for the Trust. Consistent with that
interpretation, the Trust confirmed that it had no survey in its files and asked its realtor Matt
Magnotta to check with EWA, who had worked with the Trust to explore development options
in the past. Mr. Magnotta contacted EWA and was told that everything it had was accessible
through a Dropbox link forwarded to Mr. Magnotta a week or so earlier.92 The materials
accessible through that Dropbox link did not include a survey.93
91
Mr. Marcantel argues that the Trust constructively knew Mr. Werbelow had seen the OTP
survey. However, as noted in connection with the nondisclosure claim, Mr. Marcantel has
not met his burden to prove his imputed knowledge theory because he offered no evidence
establishing that the existence of the survey was a material fact when Mr. Werbelow
functioned as an agent in 2007, and he did not show that the survey’s existence was material
to Mr. Werbelow’s duties. In any event, the issue is how the Trust interpreted the language
Mr. Marcantel added to section 7(h) of the REPC and only actual, not imputed, knowledge
could have played a role in that interpretation.
92
See ECF No. 113 at ¶¶ 5-6.
93
Id.
40
In short, section 7(h) of the REPC required the Trust to produce a survey of the Property
if it had one or if it could locate one. It is undisputed that the Trust did not have a survey and
was unable to locate one despite contacting the only possible source it was aware of, EWA.
Accordingly, the Trust fully satisfied its obligations under section 7(h).
C. The Trust complied with its obligations under REPC section 10.2.
REPC section 10.2 required disclosure of “defects in the Property known to Seller that
materially affect the value of the Property that cannot be discovered by a reasonable inspection
by an ordinary prudent Buyer….”94 The court concludes that the sewer easement constitutes
a defect in the Property. The court also concludes, however, that section 10.2 did not require
the Trust to disclose the easement because the Trust had no reason to believe the easement was
undiscoverable, and Marcantel already had notice of the easement as a matter of law.
1. The easement is a defect in the Property.
The threshold requirement for disclosure under section 10.2 is a defect in the Property
known to the Trust. The court interprets the REPC according to the ordinary meaning of its
terms. See Mind & Motion Utah Investments, LLC, 2016 UT 6, ¶ 24, 367 P.3d 994.
The Trust asserts that a “defect” is an “imperfection or shortcoming….” Black’s Law
Dictionary (Rev. 7th ed. 1999). It argues that the easement was a factor that had to be addressed
in developing the Property but was not an imperfection or shortcoming in the Property itself.
The Trust points out that section 10.2 expressly limits the disclosure requirement to the “physical
condition of the property” and argues that the easement is not a physical condition but a property
right or legal condition.95
94
95
ECF No. 105, Ex. 5 at §10.2.
Id.
41
Mr. Marcantel argues that the easement constituted a defect because it had “both legal and
physical impacts” on the Property.96 He points out that “an easement cannot be built over and
must be built around, impacting building placement and possibly the density….”97 He also
notes that the easement is a “physical condition of the property” because it concerns the sewer
line buried in the Property.
Under the specific facts and circumstances of this case, the court agrees with Mr. Marcantel
that the easement is a defect. In reaching this conclusion, the court does not conclude that an
easement is always a defect in the real property subject to the easement. But in this case, for the
reasons articulated by Mr. Marcantel, the easement was a defect for purposes of section 10.2 of
the REPC.98
2. The Trust had no reason to believe the easement was undiscoverable.
Although the easement was a defect in the Property, the Trust had no reason to believe
the easement could not be discovered by a reasonable inspection—a condition precedent to
its disclosure obligation. The Trust learned about the easement when the seller, OTP, asked
for help in an effort to shift the easement toward the rear of the Property.99 The Trust had
no reason to question how the easement was recorded or whether it was, as Mr. Marcantel
claims, a “rogue” easement.100 In short, the Trust simply didn’t know Marcantel was acting
under a misapprehension concerning the existence of the easement. The section 10.2 obligation
96
ECF No. 115 at 17.
Id.
98 Citing the language of section 10.2, the Trust also argues that section 10.2 requires proof that
the Trust knew the easement was a defect in the Property, and points out that the evidence is to
the contrary. Mr. Marcantel counters that the Trust’s knowledge in this regard is irrelevant
because whether something is a defect is an objective question. The court agrees with Mr.
Marcantel.
99
ECF No. 105, Appendix Ex. 6, Saltman Dec. at ¶ 8; Appendix Ex. 7, J. Werbelow Depo.at 10;
Appendix Ex. 8, S. Werbelow Depo.at 14 & 40-44.
100
ECF No. 89 at ¶ 9, Appendix Ex. 1.
42
97
to disclose was never triggered because the Trust had no reason to believe the easement
was undiscoverable through reasonable inspection.
3. Marcantel already had notice of the easement as a matter of law.
Even if the Trust’s disclosure obligation was otherwise triggered, the Trust had no obligation
to disclose the easemnent because Mr. Marcantel already had notice of the easement as a matter
of law. As explained, “each document executed, acknowledged, and certified, in the manner
prescribed by [title 57 of the Utah Code] shall, from the time of recording with the appropriate
county recorder, impart notice to all persons of their contents.” Utah Code §57-3-102(1)(2000).
It is undisputed that the easement meets the requirements of section 57-3-102(1).
The statute makes no exceptions for matters of record that could be characterized as defects.
For that reason, Mr. Marcantel is deemed to have had notice of the easement and the Trust had
no obligation under section 10.2 to again give him notice of it.
Mr. Marcantel’s only response—that “constructive record notice is …not relevant to the
analysis of whether the Trust satisfied contractual obligations”—is unsupported by authority or
analysis.101 The court finds Mr. Marcantel’s response unpersuasive. Mr. Marcantel had notice
of the easement as a matter of law. Under these circumstances, the Trust had no obligation under
section 10.2 to disclose the easement.
III. The Trust did not breach the implied covenant of good faith and fair dealing.
Mr. Marcantel asserts that the Trust breached the implied covenant of good faith and fair
dealing “by concealing and failing to disclose the Sewer Easement….” 102 Under the covenant
of good faith and fair dealing, each party to a contract “impliedly promises that he will not
intentionally or purposely do anything which will destroy or injure the other party’s right to
101
Marcantel’s Reply at 17, n. 28. Mr. Marcantel certainly believed constructive notice was
relevant to the Trust’s contract obligations when arguing Mr. Werbelow's awareness of the
OTP survey should be imputed to the Trust. See Marcantel’s Motion at 26-27.
102
ECF No. 89 at ¶ 181.
43
receive the fruits of the contract.” Hays v. Park City Sch. Dist. 2016 U.S. Dist. LEXIS 136417
*39 (D. Utah Sept. 30, 2016) (citing St. Benedict’s Dev. Co. v. St. Benedict’s Hosp., 811 P.2d
194, 199) (Utah 1991)). To prevail, a plaintiff must show “an intentional effort to injure the other
party’s right to receive the benefits of the contract.... The covenant, however, does not establish
new rights and duties to which the parties did not agree.” Schmitt v. Stearns Lending, Inc., 2011
U.S. Dist. LEXIS 98868 * 6 (D. Utah Aug. 31, 2011) (citing Simplot v. Chevron Pipeline
Co., 563 F.3d 1102, 1113) (10th Cir. 2009).
Mr. Marcantel alleges that the Trust knew his “purpose in purchasing the Property was to
subdivide and re-sell the Property as three buildable lots” and the Trust “impaired” that purpose
by not telling him that its “prior attempts to subdivide the Property failed as a result of the
Sewer Easement.”103 However, the undisputed facts show that the Trust could not have known
Mr. Marcantel's plan “was to subdivide and re-sell the Property as three buildable lots” because
he had no such plan. Mr. Marcantel was clear in his deposition testimony that he “had no plans”
for the Property when he bought it.104 When asked specifically whether the EWA drawing
showing the Property divided into three lots was important to him, Mr. Marcantel answered:
“Not really because I had no intention of what I was going to do with the property.”105
Even if Mr. Marcantel did have a plan for the Property when he bought it, he has offered no
evidence that the Trust knew that plan. Only Mr. Marcantel’s realtors communicated with the
Trust and the only testimony from his realtors about plans for the Property concerns meetings
with the Park City Planning Department staff, where “development opportunities” were
discussed.106 If Mr. Marcantel had a purpose in purchasing the Property, he never revealed it to
the Trust.
103
Id. at ¶¶ 183-185.
ECF No. 105, Appendix Ex. 9 at 35-36.
105
Id. at 37, Appendix Ex. 9.
106
ECF No. 105, Appendix Ex.10, Schiedel Depo. at 27-28.
44
104
Mr. Marcantel’s assertion that the Trust impaired his purpose in buying the Property by
not disclosing that “prior attempts to subdivide the Property failed as a result of the Sewer
Easement” is likewise unsupported by evidence.107 As noted, Mr. Marcantel had no specific
purpose in buying the Property. And there is no evidence that the Trust’s efforts to subdivide
the Property failed. Instead, the undisputed facts show that the Trust decided to stop trying to
subdivide when the recession started.108 That decision was not the result of the Sewer Easement
but a function of the fact that the recession made development of the Property infeasible. The
Trust is entitled to summary judgment on the claim for breach of the implied covenant of good
faith and fair dealing.
ORDER
ACCORDINGLY, IT IS HEREBY ORDERED that Plaintiff Curt A. Marcantel's Motion
for Partial Summary Judgment is DENIED and Defendants Michael and Sonja Saltman Family
Trust, Michael A. Saltman and Sonja Saltman's Motion for Summary judgment is GRANTED.
Judgment shall be entered in favor of Defendants.
DATED this 19th day of March, 2019.
BY THE COURT:
_____________________________________
Dustin B. Pead
United States Magistrate Judge
107
108
ECF No. 89 at ¶ 184, Appendix Ex. 1.
ECF No. 105, Appendix Ex. 3, Saltman Depo. at 45 & 51.
45
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