Marcantel v. Michael & Sonja Saltman Family Trust

• Decision Date: 19 March 2019
• Docket Number: Civil No. 2:16-cv-250-DBP
• Parties: CURT A. MARCANTEL, Plaintiff, v. MICHAEL AND SONJA SALTMAN FAMILY TRUST, MICHAEL A. SALTMAN and SONJA SALTMAN, Defendants.
• Court: U.S. District Court — District of Utah

CURT A. MARCANTEL, Plaintiff, v. MICHAEL AND SONJA SALTMAN FAMILY TRUST,MICHAEL A. SALTMAN and SONJA SALTMAN, Defendants.

Civil No. 2:16-cv-250-DBP

UNITED STATES DISTRICT COURT DISTRICT OF UTAH, CENTRAL DIVISION

March 19, 2019

MEMORANDUM DECISION & ORDER

Magistrate Judge Dustin B. Pead

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.

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").

Image materials not available for display.

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 pre-development 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 theTrust'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:

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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 thatdensity 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:

INSTRUCTIONS TO SELLER

SELLER IS OBLIGATED UNDER LAW TO DISCLOSE TO BUYERS DEFECTS IN THE PROPERTY KNOWN TO SELLER THAT MATERIALLY AND ADVERSELY 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. Please thoroughly disclose your actual knowledge regarding the condition of the Property. The Company, other real estate agents, and buyers will rely on this disclosure form.

? Complete the remainder of this form.

? Please be specific when describing any past or present issues or defects (location, nature of problem, etc.). Use additional addendum if necessary.

? If a question does not apply to your Property, WRITE "N/A" NEXT TO THE QUESTION.

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.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 single-family 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 three-lot 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...