Breuer-Harrison, Inc. v. Combe

Decision Date24 September 1990
Docket NumberINC,BREUER-HARRISO,No. 880353-CA,880353-CA
Citation799 P.2d 716
Parties, Casper J. Breuer and William Harrison, Plaintiffs and Appellees, v. Keith and Evelyn COMBE, Defendants and Appellants and Robert E. Froerer, Attorneys' Title Guaranty Fund, Inc., Clair C. Combe as Trustee for Philip Combe, Defendants and Appellees. Keith and Evelyn COMBE, Clair C. Combe as Trustee for Philip Combe, Plaintiffs and Appellants, v. Casper J. BREUER and William M. Harrison, Plaintiffs and Appellees.
CourtUtah Court of Appeals



Appellants Keith and Evelyn Combe appeal the trial court's summary judgment for appellees, Breuer-Harrison, Inc. (B-H), Casper J. Breuer, and William Harrison, against the Combes for anticipatory repudiation of a real estate contract entered into by the parties. The Combes also appeal the trial court's summary judgment dismissing the Combes' cross claims against appellees Attorneys' Title Guaranty Fund, Inc. (ATGF) and Robert Froerer. We affirm in part and reverse and remand in part.

The property in question is an undeveloped parcel of approximately twenty acres located in south Ogden, Utah. It was originally part of a farm developed by Keith Combe's grandfather. In the early 1960s, the Weber Basin Water Conservancy District (Weber Basin), by condemnation proceedings, obtained a thirty-foot wide easement on the property and constructed a water pipeline within the confines of the easement. Sometime in the 1970s, Keith Combe's mother divided the property into four parcels, conveying a parcel each to Keith Combe and his three siblings. One of the parcels distributed to Keith Combe's siblings was held in a trust managed by First Security Bank (Bank).

In 1979, Breuer and Harrison, the sole stockholders in B-H, a California corporation, became interested in purchasing property in Utah for development projects. They contacted Steve Keil, an Ogden real estate agent, who showed them several large parcels of property in the Ogden area. One of the properties they examined was the property owned by Combe and his siblings. Keil, Breuer, and Harrison walked across the Combe property and examined the county plat maps and available demographic and economic data.

Sometime in August 1979, Breuer and Harrison entered into an oral agreement with Keil, Bruce Nielson, who owned the real estate firm where Keil worked, and Duane Bruce, another agent for the firm. They agreed that Keil, Nielson, and Bruce would have a twenty-five percent equity interest in the Combe property after a proposed purchase. The three were to share with B-H the costs, expenses, and all required payments under the Combe contract. A "memorandum of understanding" outlining the terms of the agreement was drafted and signed by all five individuals sometime in December 1979.

In August 1979, Keil contacted Jay Anderson, owner of an engineering firm, Great Basin Engineering (GBE), and asked Anderson to sketch some subdivision layouts of the Combe property. To assist B-H in determining the suitability of the Combe property as a residential subdivision, GBE subsequently performed, prior to B-H's purchase of the property, a variety of engineering tasks, including extensive soil testing, on-site ground water analysis, runoff flow analysis, and placement of road alignment.

Anderson assigned the actual design sketch work to Charles Olsen, an engineer at GBE. Olsen first prepared a base sheet by tracing information from a Weber County topography map. The base sheet showed the property boundaries, surrounding subdivisions, streets, and a dotted line marked "Aqueduct," 1 crossing the property diagonally in a northwest direction. By placing tracing paper over the base sheet, Olsen prepared several different sketches.

Because of the aqueduct marking, Olsen assumed there was an easement and asked Anderson the size of the easement, since Olsen typically included such information on a drawing. Olsen testified in deposition that Anderson told him the information was not available, to just go ahead and prepare the sketches. Olsen made no further attempt to determine the size of the easement. He did, however, make allowance for the aqueduct or pipeline, by putting a roadway over the top of it on the plat maps. He also testified that had he known of the thirty-foot easement, he would have plotted it on the base sheet.

Anderson was aware of the pipeline since its installation on the Combe property in the early 1960s. He testified in deposition that the aqueduct marking was originally put on Weber County aerial surveys in 1963. At the time Keil contacted him in 1979, Anderson believed there was probably a twenty to thirty-foot easement that belonged to Weber Basin, but was unaware of the exact width. Anderson understood that a house could not be built on the pipeline but assumed that either a roadway or back lot line could be put on the pipeline. Prior to B-H's purchase of the Combe property, Anderson worked primarily with Keil.

From exhaustive testimony, it is clear that in September 1979, Keil was aware of what he considered a small waterline which traversed the Combe property. It is also clear that Keil did not learn of the pipeline easement until 1983. Keil testified in deposition that his recollection of what he knew of the waterline in September 1979 was hazy due to it being a "nonissue." He testified that the biggest concerns in his discussions with Anderson in the fall of 1979 regarding the Combe property involved sewage and drainage problems. Although the exact time is uncertain, sometime in September 1979, Anderson apparently talked with Keil about the waterline or pipeline and putting a roadway over it. Keil viewed the waterline as a minor problem in the development plans, one that could easily be accomodated by building a road over it to insure profitability. According to Keil, in 1983 he first learned of an easement and aqueduct, which he did not relate to the waterline because in his mind there was a significant size difference between the two. Anderson testified in deposition that he told Keil that the pipeline was relatively small compared to usual Weber Basin standards. He also testified that there was no way Keil would have known of the thirty-foot easement in 1979.

On September 19, 1979, a meeting was held with Breuer, Harrison, Keil, and Olsen in attendance. This was Breuer's and Harrison's first contact with GBE. The group reviewed Olsen's rough sketches and discussed the number of lots, location of road alignment, and water treatment, sewage, and drainage problems. None of those in attendance at the meeting recall which sketches were analyzed. There is no evidence that the base sheet showing "Aqueduct" was shown to Breuer, Harrison, or Keil. Breuer and Harrison testified in deposition that an easement was not discussed at the meeting and that the first they heard of the pipeline and easement was in 1983. Olsen had no recollection of what was discussed at the meeting. Keil testified to having no independent recollection of ever talking with either Breuer or Harrison regarding a waterline or pipeline either at this meeting or at any time prior to 1983, but only conjectured that a waterline was probably a topic of conversation at some time. He specifically testified that he did not discuss with Breuer or Harrison an easement at any time prior to 1983.

Sometime in the fall of 1979, Keil contacted Robert E. Froerer, an Ogden attorney, and asked him to do certain legal work in connection with a real estate transaction involving property in Ogden. Froerer prepared the necessary legal documents, deeds, and exchange agreements, that enabled a series of property trades between Keith Combe and his siblings so that Keith Combe and the Bank would end up with the entire property. Froerer also drafted a preliminary purchase agreement which was executed by B-H on approximately November 1, 1979. Froerer then prepared a real estate contract for the Combe property which established a sales price of $410,880 and required a down payment of $75,000. Beginning on December 31, 1980, and continuing for the next three years, B-H was to make annual interest-only payments. The balance of the purchase price was due in full on December 31, 1983.

Paragraph eight of the real estate contract required the Combes and the Bank to warrant title to the property, to furnish a title policy, and to convey the property by warranty deeds. The paragraph was nearly identical to paragraph fourteen in the preliminary purchase agreement. Paragraph eight of the contract reads as follows:

Seller warrants that there are no liens or encumbrances on the property herein-above described and agrees to furnish to Buyer at Seller's expense a title policy showing good and marketable title in said property (said title policy to be furnished at the time of the receipt of down payment from Buyer). Further, Seller agrees to execute and deliver to Buyer, or assigns, good and sufficient warranty deeds covering title to the above-described property when subdivided and as paid for in accordance with the terms hereinabove set out.

Paragraph four required that an escrow account be set up, that the Combes convey title by warranty deed to an escrow agent to be named later, and that this agent convey title to B-H by special warranty deed as payments were made. Paragraph five, which disclaimed warranties, stated: "The...

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