Kelly v. Hard Money Funding, Inc.
| Decision Date | 04 March 2004 |
| Docket Number | Case No. 20020854-CA. |
| Parties | Barry Kelly, individually and in the right of Wapiti Heights, L.L.C., a Utah limited liability company, Plaintiff and Appellant, v. Hard Money Funding, Inc., a Utah corporation; each assignee of a beneficial interest of a certain trust deed; Gary A. Weston, as trustee under a certain trust deed; M.V.I.; JJ Associates; and V.C.I., Defendants and Appellees. |
| Court | Utah Court of Appeals |
Blake S. Atkin and Lonn Litchfield, Salt Lake City, for Appellant.
Angela Oakes and Gary A. Weston, Salt Lake City, for Appellees.
Before Judges Bench, Davis, and Jackson.
¶1 Barry Kelly (Kelly) appeals the orders of the trial court denying his motion to amend his complaint and granting summary judgment to Hard Money Funding, Inc. (Hard Money). We affirm in part and reverse and remand in part.
¶2 Wapiti Heights, L.L.C. (Wapiti) was a Utah limited liability company with Barry Kelly (Kelly), Richard McDonald (McDonald), and Inger Winsor (Winsor) as its members. Wapiti owned nineteen parcels of real property in southwest Salt Lake County, which it intended to develop. In April 1997, Wapiti obtained a loan for $450,000. To secure payment of the loan, Wapiti executed a deed of trust against twelve of the parcels.
¶3 In June 1997, McDonald and Winsor formed PCO Holding Company, Inc., a Utah corporation. McDonald and Winsor were also owners of PCO, Inc., a separate company that managed the Green Street Social Club in Salt Lake City.
¶4 On April 6, 1999, the trustee overseeing Wapiti's $450,000 loan commenced foreclosure on the twelve properties by recording a notice of default. The trustee then scheduled a trustee's foreclosure sale for August 4, 1999. In an effort to head off foreclosure on the twelve parcels of property, Winsor approached Hard Money and sought a loan for Wapiti. After investigating Wapiti's organizational structure and finances, which included a review of a copy of Wapiti's Amended Operating Agreement, Hard Money refused to loan the money to Wapiti. In the course of these negotiations, however, Winsor also provided Hard Money with organizational and financial documents relating to the finances of PCO Holding Company, Inc., PCO, Inc., and the Green Street Social Club. After reviewing those documents, Hard Money agreed to loan money to PCO Holding Company, Inc. In order to provide collateral for the loan, McDonald and Winsor, acting as members of Wapiti, executed a warranty deed (the Warranty Deed) dated July 27, 1999. This deed conveyed from Wapiti to "PCO Holdings, Inc." the seven parcels of Wapiti-owned land that had not been used as security for the $450,000 loan. McDonald and Winsor then agreed to pledge the seven parcels to Hard Money as collateral for the loan.
¶5 Thus, after Hard Money had loaned $643,000 to "PCO Holdings, Inc.," McDonald and Winsor used the $643,000 loan from Hard Money, secured by the seven recently transferred parcels of land, to purchase the twelve parcels of property that were the subject of the foreclosure sale (the Wapiti Trust Deed). At the sale, the purchaser of the property was identified as "PCO Holdings, Inc." As further security for the loan, McDonald and Winsor then provided Hard Money with a trust deed lien against the twelve parcels of property that had just been purchased (the Hard Money Trust Deed). Accordingly, after the various transactions had been completed, McDonald and Winsor owned legal title to all nineteen of Wapiti's former properties, and all nineteen of these properties were in turn security for McDonald and Winsor's debt to Hard Money.1
¶6 On September 12, 2001, Kelly commenced suit against Hard Money.2 In his complaint, Kelly, acting both individually and on behalf of Wapiti, sought relief on three grounds. First, Kelly petitioned the court to quiet title in the nineteen properties. In this cause of action, Kelly noted that, while PCO Holding Company, Inc. and PCO, Inc. are both legally existing entities, there is no legally existing entity known as "PCO Holdings, Inc." Accordingly, insofar as the Warranty Deed (conveying the seven parcels of property from Wapiti), the Wapiti Trust Deed (in which the twelve parcels of property were bought from Wapiti at the August foreclosure sale), and the Hard Money Trust Deed (securing the nineteen parcels of property to the $643,000 loan) all referred to "PCO Holdings, Inc.," Kelly asked the court to declare those various transactions void on the grounds that they involved a nonexistent entity. Kelly also alleged that a quiet title order was appropriate due to McDonald and Winsor's breach of fiduciary duties that occurred when they acted to transfer Wapiti's properties to a separately-owned company. Finally, Kelly alleged that a quiet title order was appropriate insofar as "Defendant Hard Money enabled McDonald and Winsor to defraud Kelly."
¶7 Second, Kelly sought declaratory judgment, alleging that Hard Money's interests in the properties should be declared subordinate to Kelly's separately litigated claims against McDonald and Winsor. Third, Kelly sought injunctive relief in order to enjoin the foreclosure sale that was to occur as a result of McDonald and Winsor's own default on their loan from Hard Money.
¶8 On January 28, 2002, in response to Kelly's complaint, Hard Money filed a motion for summary judgment. Hard Money asserted that Kelly's complaint was not well-grounded, insofar as Kelly had failed to allege any damage that directly arose from Hard Money's actions. Hard Money further alleged that Kelly had no standing to file a quiet title action to the subject land, and that, in spite of Kelly's claims to the contrary, Hard Money owed no duty to Kelly or Wapiti.
¶9 On February 26, 2002, Kelly filed a memorandum in opposition to Hard Money's motion for summary judgment. In his memorandum in opposition, Kelly alleged that Hard Money had intentionally interfered with Kelly's contractual relations with McDonald and Winsor and had participated in their fraud against Kelly and Wapiti. Hard Money responded to this memorandum in opposition on March 4, 2002, by filing a reply memorandum that stated it would be improper to raise these new claims of law in a memorandum in opposition to a motion for summary judgment.
¶10 The trial court scheduled oral argument on the motion for summary judgment for April 8, 2002. On April 2, 2002, Kelly filed a motion to amend his complaint. In the proposed amended complaint, Kelly sought to add two new causes of action. First, Kelly sought to add a claim for interference with contractual relations. Second, Kelly sought to add a claim against Hard Money for breach of fiduciary duty.
¶11 On April 5, 2002, the trial judge assigned to the case, Judge J. Dennis Frederick, recused himself from the case. The case was reassigned to Judge William B. Bohling and oral arguments were postponed. On July 1, 2002, Judge Bohling heard oral argument on the motion for summary judgment and on the motion to amend the complaint.
¶12 On September 9, 2002, Judge Bohling entered an order granting Hard Money's motion for summary judgment and denying Kelly's motion to amend his complaint. Kelly appeals.
¶13 Kelly first argues that the trial court erred in granting summary judgment to Hard Money on Kelly's quiet title action, his request for a declaratory judgment, and his request for injunctive relief. In reviewing a trial court's "grant of summary judgment, we view the facts and all inferences reasonably drawn from those facts in a light most favorable to the nonmoving party." Hodges v. Howell, 2000 UT App 171,¶2, 4 P.3d 803. However, Dikeou v. Osborn, 881 P.2d 943, 945 (Utah Ct. App. 1994) (internal quotations and citation omitted).
¶14 Kelly next argues that the trial court erred in denying his motion to amend his complaint. We overturn a trial court's denial of a motion to amend a complaint only when we find an abuse of discretion. See Fishbaugh v. Utah Power & Light, 969 P.2d 403, 405 (Utah 1998).
¶15 We first consider Kelly's challenge to the trial court's grant of summary judgment. In its order granting summary judgment, the trial court treated the legal questions surrounding the disposition of the twelve parcels of property obtained by McDonald and Winsor at the Wapiti foreclosure sale as being analytically distinct from the legal questions surrounding the seven parcels of Wapiti property allegedly conveyed by McDonald and Winsor to "PCO Holdings, Inc."
¶16 With respect to the twelve parcels of property, the trial court ruled that Kelly lacked standing to pursue a quiet title action. According to the trial court, it was "undisputed that Hard Money . . . had no involvement with either Wapiti or McDonald or Winsor prior to defaulting on its loan." Thus, "[b]ecause the undisputed facts demonstrate that Wapiti lost the twelve parcels through its default and the subsequent foreclosure, [Kelly] lacks standing to maintain this action for quiet title and for declaratory relief with respect to these twelve parcels."
¶17 With respect to the seven parcels of property, the trial court rejected Kelly's argument that the conveyance was invalid due to its incorrect reference to "PCO Holdings, Inc." as the assignee.3 The trial court reasoned that though the deed contained an ostensibly erroneous reference to the designation of the actual assignee, the intention of the parties to convey the properties to PCO Holding Company, Inc. was reasonably ascertainable by the surrounding facts.4 We address each ruling in turn.
To continue reading
Request your trial
-
Dahl v. Dahl
...We have consistently refused to establish a bright-line rule for when a motion to amend under rule 15 is untimely. See Kelly v. Hard Money Funding, Inc. , 2004 UT App. 44, ¶ 29, 87 P.3d 734 (collecting cases). But we have recognized that timeliness is intricately tied to the potential for p......
-
Dahl v. Dahl
...We have consistently refused to establish a bright-line rule for when a motion to amend under rule 15 is untimely. See Kelly v. Hard Money Funding, Inc., 2004 UT App 44, ¶ 29, 87 P.3d 734 (collecting cases). But we have recognized that timeliness is intricately tied to the potential for pre......
-
Bresee v. Barton
...court, and we will not disturb [the district court's decision] absent a showing of an abuse of that discretion.’ " Kelly v. Hard Money Funding, Inc ., 2004 UT App 44, ¶ 41, 87 P.3d 734 (quoting Smith v. Grand Canyon Expeditions Co. , 2003 UT 57, ¶ 31, 84 P.3d 1154 ). ¶15 Finally, the Bresee......
-
Gillmor v. Blue Ledge Corp.
...the strength of his own claim to title and not on the weakness of a defendant's title or even its total lack of title." Kelly v. Hard Money Funding, Inc., 2004 UT App 44, ¶ 19, 87 P.3d 734 (internal quotation marks omitted). "[A]ll [a party] need do is prove prima facie that he has title wh......