Blackmore v. L & D Dev. Inc.

• Citation: 382 P.3d 655,2016 UT App 198
• Decision Date: 15 September 2016
• Docket Number: No. 20131177–CA,20131177–CA
• Court: Court of Appeals of Utah
• Parties: L. Lane Blackmore, Blackmore Cannon Development Company LLC, and The Home Company, Appellants and Cross-appellees, v. L & D Development Inc., Shadow Canyon Land Company LLC, Shadow Glen 420 Inc., Gemstone Homes Inc., Gemstone Properties Inc., and Frank Lindhardt, Appellees and Cross-appellants.

382 P.3d 655

2016 UT App 198

L. Lane Blackmore, Blackmore Cannon Development Company LLC, and The Home Company, Appellants and Cross-appellees,

v.L & D Development Inc., Shadow Canyon Land Company LLC, Shadow Glen 420 Inc., Gemstone Homes Inc., Gemstone Properties Inc., and Frank Lindhardt, Appellees and Cross-appellants.

No. 20131177–CA

Court of Appeals of Utah.

Filed September 15, 2016

Justin D. Heideman and Justin R. Elswick, Attorneys for Appellants.

Jerome Romero, M. Eric Olmstead, and David L. Elmont, St. George, Attorneys for Appellees.

Senior Judge Russell W. Bench authored this Opinion, in which Judges Gregory K. Orme and Kate A. Toomey concurred.²

Amended Opinion¹

BENCH

, Senior Judge:

¶1 Plaintiffs L. Lane Blackmore, Blackmore Cannon Development Company LLC (BCDC), and The Home Company (collectively, Blackmore) appeal a jury verdict in favor of Defendants L & D Development Inc., Shadow Canyon Land Company LLC, Shadow Glen 420 Inc., Gemstone Homes Inc., Gemstone Properties Inc., and Frank Lindhardt (collectively, Defendants). We affirm in most respects, but we vacate the award of attorney fees.

BACKGROUND³

¶2 On August 21, 2002, Mr. Blackmore and BCDC signed a Development Agreement with L & D Development and Shadow Canyon Land Company (collectively, Shadow Canyon). The Development Agreement concerned the proposed development of real property owned by Shadow Canyon in Washington County, Utah (the Property).

¶3 The Property was already partially developed, and it secured debts owed to U.S. Bank and State Bank of Southern Utah. The Development Agreement contemplated that Blackmore and Shadow Canyon would become co-owners of BCDC, which would then own the Property and manage its development. The Home Company, managed by Mr. Blackmore, contracted with BCDC to perform construction on the project.

¶4 Under the terms of the Development Agreement, Mr. Blackmore promised to (1) bring current accrued interest owed to U.S. Bank in the amount of approximately $70,000, (2) bring current all property taxes on the Property, (3) “[t]ake such reasonable steps as necessary to obtain an extension on the [U.S.] Bank loan,” and (4) pay Shadow Canyon $50,000 “at closing.” Mr. Blackmore also promised that he would market and sell three existing homes on the Property and that he would build and sell additional homes at his own expense. In exchange, Shadow Canyon would transfer the Property to BCDC via special warranty deed. Although the Development Agreement did not include a specific date for closing, the property taxes were due on November 30, 2002.

¶5 Mr. Blackmore performed some, but not all, of his obligations under the Development Agreement. He sold the three existing homes on the Property and began construction on two more. He also paid off the debt owed to State Bank of Southern Utah. But Mr. Blackmore never tendered the $50,000 payment to Shadow Canyon, nor did he pay the property taxes or the U.S. Bank interest. And although he was engaged in discussions with U.S. Bank throughout the autumn of 2002, he did not succeed in renegotiating the loan with U.S. Bank.

¶6 For its part, Shadow Canyon never transferred title to the Property to BCDC. Instead, Shadow Canyon ultimately sold the Property to Shadow Glen 420. This transaction closed on January 31, 2003.

¶7 In July 2003, Blackmore sued Shadow Canyon; Shadow Glen 420 and its registered agent, Frank Lindhardt; and Gemstone Homes and Gemstone Properties, both of which Mr. Lindhardt either owned or represented. For simplicity, we will refer to Mr. Lindhardt, Shadow Glen 420, Gemstone Homes, and Gemstone Properties collectively as Lindhardt.

¶8 Blackmore's complaint stated claims against Shadow Canyon for breach of the Development Agreement, breach of the covenant of good faith and fair dealing, and unjust enrichment. It also stated a claim against Lindhardt for intentional interference with economic relations. Blackmore sought to void the January 31, 2003 transfer of the Property and raised a claim for specific performance, asking the court to order Shadow Canyon to transfer the Property to BCDC. In its prayer for relief, Blackmore also requested damages.

¶9 Both sides moved for summary judgment, each arguing that the other had materially breached the Development Agreement first. On July 10, 2008, the trial court entered an order granting Blackmore's motion and denying Shadow Canyon's motion (the 2008 Summary Judgment Order). The court reasoned that Shadow Canyon's “obligation to convey the property ... was a matter of ‘prime importance’ ” and that its “failure of performance ... went to ‘the very object’ of the contract.” (Quoting Coalville City v. Lundgren , 930 P.2d 1206, 1210 (Utah Ct. App. 1997)

.) Because the conveyance was the “most significant duty required of Shadow Canyon,” the court further reasoned that Shadow Canyon's “failure to convey the property as called for in the [Development Agreement]” was a material breach that “predated” Blackmore's failure to pay taxes by November 30, 2002, and “any associated breach.” The court also explained that “no identifiable ‘closing’ occurred ... that would have triggered Blackmore's duty to make the $50,000 payment.” Accordingly, the court granted summary judgment to Blackmore “on the issue of whether Defendants breached material terms of the [Development Agreement].” Lindhardt moved the court to reconsider this ruling, but the trial court declined.

¶10 Following the trial court's grant of a writ of attachment to Blackmore, Defendants sought, and this court granted, interlocutory review. In 2012, this court “affirm[ed] the trial court's grant of a writ of attachment but vacate[d] the remedy ordered to the extent that it exceed[ed] the scope of a prejudgment writ of attachment.” Blackmore v. L & D Dev., Inc. , 2012 UT App 43, ¶ 1, 274 P.3d 316

.

¶11 At the first hearing after this court's decision, Shadow Canyon's counsel stated that Judge James Shumate, who was presiding over the case, had mentioned once in court that “when a matter was appealed from [his] court, and ... when [he was] ... reversed, upon suggestion of a party, [he] frequently would recuse [himself].” Counsel then asked Judge Shumate if he would consider recusing himself based on the fact that the court of appeals had reversed an aspect of his order regarding the prejudgment writ. Judge Shumate responded, “When I am reversed, I think it is at least an issue that should be addressed to the parties so that they will not feel as though there is some sort of backlash in further proceedings.” Judge Shumate then noted his desire for the parties to feel that they were in front of a fair tribunal and also disclosed that he had recently formed an acquaintance outside of work with one of the attorneys involved in the case. Because of these concerns, Judge Shumate elected to recuse himself from the matter. Blackmore objected, but Judge Shumate reaffirmed his decision to recuse.

¶12 Senior Judge Gary Stott was subsequently assigned to the case. Shortly thereafter, Lindhardt filed a second motion to reconsider, requesting that the court set aside the 2008 Summary Judgment Order. Lindhardt argued that the Development Agreement was ambiguous as to whether the parties were required to perform simultaneously. Lindhardt also contended that Judge Shumate erred in ruling as a matter of law that Shadow Canyon's breach was material, because the issue of materiality was a question of fact for the jury. Judge Stott agreed with Lindhardt. The court explained that the 2008 Summary Judgment Order “took away from the jury the very factual issues that the jury should have been deciding,” namely, “the ultimate question of the material breach” and “what was to take place as contemplated under” the Development Agreement. Accordingly, Judge Stott set aside the 2008 Summary Judgment Order.

¶13 At a pretrial hearing, the trial court granted Blackmore's motion for summary judgment on the issue of whether Lindhardt was a bona fide purchaser for value. Specifically, the court ruled as a matter of law that Mr. Lindhardt was not a bona fide purchaser for value, because he had either actual or constructive notice of Blackmore's prior interest in the Property. The court also ruled that the proper measure of Blackmore's possible damages at trial would be the market value of the Property at the time of the breach less the contract price.

¶14 At trial, Blackmore contended that Shadow Canyon breached the Development Agreement by failing to transfer title to the Property to BCDC and by selling the Property to Lindhardt. Defendants countered that Blackmore breached the Development Agreement first and thereby excused Shadow Canyon from further contract performance. Defendants also argued that even if Shadow Canyon was in breach of contract, Blackmore had abandoned its rights under the Development Agreement.

¶15 The parties introduced into evidence various letters exchanged between the parties and their attorneys to shed light on the breakdown of their relationship and the Development Agreement. On November 21, 2002, Shadow Canyon's attorneys, Thomas Bayles and V. Lowry Snow, wrote to Mr. Blackmore, asking him to contact them soon regarding his ability to obtain financing for the project and his intentions with respect to the Development Agreement.

¶16 Sometime during the following week and around the Thanksgiving holiday, Mr. Blackmore called Mr. Snow (the Thanksgiving Conversation). Mr. Snow testified at trial that during the Thanksgiving Conversation, Mr. Blackmore had expressed that he “simply [could not] do the deal.” According to Mr. Snow, Mr. Blackmore had indicated that he had tried to find investors and had tried to complete the deal but wanted to let Mr. Snow and Shadow Canyon know that he was unable to follow through on his obligations. Although Mr. Snow acknowledged that Mr. Blackmore may have been referring to only the U.S. Bank transaction, Mr. Snow came away from the Thanksgiving Conversation with the ...