Marcantel v. Michael & Sonja Saltman Family Trust

• Decision Date: 06 April 2021
• Docket Number: No. 19-4055,19-4055
• Parties: Curt A. MARCANTEL, an individual, Plaintiff - Appellant, v. MICHAEL AND SONJA SALTMAN FAMILY TRUST; Michael A. Saltman, an individual; Sonja Saltman, an individual, Defendants - Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

993 F.3d 1212

Curt A. MARCANTEL, an individual, Plaintiff - Appellant,

v.MICHAEL AND SONJA SALTMAN FAMILY TRUST; Michael A. Saltman, an individual; Sonja Saltman, an individual, Defendants - Appellees.

No. 19-4055

United States Court of Appeals, Tenth Circuit.

FILED April 6, 2021

Paxton R. Guymon (Lauren Parry Johnson with him on the briefs), of York Howell & Guymon, South Jordan, Utah, for Plaintiff-Appellant.

Eric P. Lee (Justin J. Keys with him on the briefs), of Hoggan Lee Hutchinson, Park City, Utah, for Defendants-Appellees.

Before HARTZ, PHILLIPS, and EID, Circuit Judges.

PHILLIPS, Circuit Judge.

In 2015, Michael and Sonja Saltman sold a vacant lot in Park City, Utah, to Curt Marcantel. Eager to develop the property or otherwise turn a profit, Marcantel pushed to close the deal quickly. But at the time of the sale, the Saltmans knew something that Marcantel didn't: a ten-foot-wide sewer easement (including a sewer pipe within it) ran under a portion of the property, rendering infeasible the most lucrative development designs. Worse still, the Saltmans and the owner before them had both lobbied the city to relocate the sewer easement, all to no avail.

The Saltmans told Marcantel none of this. Nor did the title company that Marcantel hired discover the easement. And that title company wasn't the first or the last to miss the easement. Because of an indexing error by the county recorder, at least three different title companies on four separate occasions failed to find and note the sewer easement on the property. Marcantel first heard about the easement when his prospective buyer alerted him to it; that buyer fortuitously learned of the easement from a neighboring property owner. The prospective buyer then balked at Marcantel's asking price. Marcantel eventually sold the lot at a significant loss.

Marcantel sued the Saltmans for, among other things, fraudulent nondisclosure and breach of the parties’ real estate purchase contract. He argued that the Saltmans’ mum's-the-word approach breached their contractual and common-law duties to disclose the easement. For their part, the Saltmans claimed they had assumed Marcantel knew about the easement, and in any event, Marcantel had constructive notice of the easement because it was publicly recorded. Adopting almost verbatim the Saltmans’ proposed order, the district court granted the Saltmans summary judgment on all Marcantel's claims.

On appeal, Marcantel argues that the district court repeatedly misapplied Utah law and disregarded summary-judgment procedure that required it to draw inferences in Marcantel's favor. We agree. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm in part, reverse in part, and remand for further consideration consistent with this opinion.

BACKGROUND

I. Factual Background

In early 2007, Michael and Sonja Saltman purchased a mostly vacant lot (the "Property") in Park City, Utah, hoping to develop it.¹ They bought the Property from Old Town Partners, LLC ("Old Town") through the Michael and Sonja Saltman Family Trust (the "Trust") for $1,700,000. Though the Saltmans’ title commitment and title policy hadn't identified any encumbrances, Old Town informed them prior to closing that it had been working with Park City officials to try to relocate a ten-foot wide sewer line easement (the "Easement") that crossed under the Property.

In May 1989, the Summit County Recorder's Office recorded a document titled "Grant of Easement," naming Verna Thorn as Grantor and the Snyderville Basin Sewer Improvement District as Grantee. The Grant of Easement contained a metes-and-bounds legal description, rather than a reference to the parcel or tax serial number.² Unfortunately, the county recorder indexed the recorded Easement incorrectly.³ The abstracts mistakenly recorded the Easement on the wrong section of the relevant city block.⁴

As part of Old Town's efforts to relocate the Easement, it commissioned an existing-conditions survey (the "Survey") of the Property (depicted below with the Easement highlighted in yellow):

App. vol. 8 at 2221–22.

Like Old Town before them, the Saltmans wanted to develop the Property. So they engaged Elliot Workgroup Associates ("Elliot Workgroup") to prepare needed predevelopment applications to submit to Park City. Specifically, they hoped to subdivide the Property into three lots to build a residential property on each as shown below (the Easement is again highlighted in yellow).

Id. at 2223.

Elliot Workgroup submitted those applications to Park City on April 30, 2007. At some point, Elliot Workgroup had acquired the Survey from Old Town and included it in the applications. The Saltmans contemporaneously applied to the sewer district to have the Easement relocated.

Mr. Saltman signed the applications, each of which included the Survey. The applications to Park City also contained an "Acknowledgement of Responsibility" by which Mr. Saltman verified that he understood the application instructions and that the documents submitted were "true and correct." Id. vol. 4 at 1056, 1081, 1108, 1134. The sewer district never approved the Saltmans’ plan to relocate the Easement. Ultimately, the Saltmans didn't pursue the development plans contemplated in their applications and abandoned all plans to develop the Property after the 2007 financial crisis and ensuing recession.

In 2014, under what his daughter described as "financial distress," Mr. Saltman decided to sell the Property to pay off a $1,461,000 loan. Id. vol. 2 at 539:18–540:2; id. vol. 4 at 890–91. In early 2015, the Saltmans listed the Property for sale. Soon after, the Saltmans entered into a Real Estate Purchase Contract ("REPC") for the Property's sale with Lakeland Homes, Inc. (through Marcantel, its president). Marcantel agreed to buy the Property for $1,775,000.

Three provisions of the REPC are relevant here. First, REPC Section 10.2 provided:

Seller agrees 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[.]

Id. vol. 2 at 407. Second, REPC Section 7 ("Seller Disclosures") stated:

No later than the Seller Disclosure Deadline ..., Seller shall provide to Buyer the following documents in hard copy or electronic format which are collectively referred to as the "Seller Disclosures": ... (h) Other (specify): Survey if one has been done.

Id. at 405–06. Third, Section 6(D) of the "Seller's Property Condition Disclosure" (incorporated into the REPC by Sections 7(a) and 10.2) included the following:

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.

Id. vol. 4 at 877. The Saltmans marked "no," and they never provided Marcantel with a copy of the Survey. Id. at 877, 897.

At no time did the Saltmans tell Marcantel about the Easement or their efforts to relocate it. Although Marcantel commissioned a title search through Coalition Title and Stewart Title, neither company identified the Easement. So when Marcantel closed on the Property, he didn't know about the Easement.

In fall 2015, Marcantel contracted to sell the Property to Joe Kelly for $1,995,000—what would have been a profit of over $200,000. U.S. Title prepared the title commitment for Kelly, and it too failed to identify the Easement. But while at the Property one day, Kelly learned of the Easement when a "purported neighbor" commented to him about it.⁵ Id. at 898. Kelly cancelled the purchase contract and made two reduced offers of $1,250,000 and $1,400,000, both of which Marcantel rejected. In March 2018, Marcantel finally sold the Property to a different buyer for $1,450,000, suffering a loss of over $300,000.

II. Procedural History

In March 2016, Marcantel sued Stewart Title Guaranty Co., Coalition Title, Michael Saltman, Sonja Saltman, and the Trust in the United States District Court for the District of Utah. The case was assigned to a magistrate judge and all parties consented.

In March 2018, the district court granted summary judgment to Coalition Title and dismissed it from the case. A few months later, Marcantel stipulated to dismissing Stewart Title from the case after it settled with him for $272,500.

That left three defendants—the Trust and Michael and Sonja Saltman. Marcantel asserted claims for fraudulent nondisclosure and fraudulent misrepresentation against the Saltmans, claiming they had breached their duty to disclose the Easement and Survey and had misrepresented the Property's development potential. He also brought claims for breach of contract and breach of the implied covenant of good faith and fair dealing against the Trust, claiming it had similarly breached its obligations under the REPC by failing to disclose the Easement and to produce the Survey.

At the close of discovery, the Saltmans and the Trust jointly moved for summary judgment on all Marcantel's claims. Because the Easement was recorded, the Saltmans argued that Marcantel had constructive notice of it, barring his claim for fraudulent nondisclosure. They also maintained that they didn't know that Marcantel was unaware of the Easement and didn't possess the Survey (or even know that it existed until this litigation). Marcantel moved for partial summary judgment on his claims for breach of contract and fraudulent nondisclosure. Marcantel argued that the Trust and the Saltmans "concealed and failed to disclose the Sewer Easement" and did not provide him a copy of the Survey as required by the REPC. Id. at 882. He maintained that he wouldn't have purchased the Property had he known about the Easement and that he learned of it only when the sale to Kelly fell through.

In February 2019, the district court held a hearing on the parties’ cross-motions for summary judgment during which it asked the parties numerous questions regarding the fraud and contract claims. At the...