Ockey v. Lehmer

• Decision Date: 24 June 2008
• Docket Number: No. 20060142.,20060142.
• Citation: 2008 UT 37,189 P.3d 51
• Parties: Scott OCKEY and Catherine Condas, Plaintiffs, Appellant, and Cross-Appellee, v. John LEHMER; Iron Mountain Alliance, Inc., a Utah corporation; Iron Mountain Holding Group, L.C.; Iron Mountain Associates, L.L.C.; White Pine Associates, LTD; White Pine Associates, Inc.; George Condas; Nick J. Condas; Chris Condas; Ellen Bayas; Alexandra Ockey; John Condas; Susi Kontgis; Marina Condas; Hermione Bayas; Ellen Ockey-Johnson; Keith Kelley; Walt Brett; and Tom Guald, Defendants, Appellees, and Cross-Appellants.
• Court: Utah Supreme Court

189 P.3d 51

2008 UT 37

Scott OCKEY and Catherine Condas, Plaintiffs, Appellant, and Cross-Appellee, v. John LEHMER; Iron Mountain Alliance, Inc., a Utah corporation; Iron Mountain Holding Group, L.C.; Iron Mountain Associates, L.L.C.; White Pine Associates, LTD; White Pine Associates, Inc.; George Condas; Nick J. Condas; Chris Condas; Ellen Bayas; Alexandra Ockey; John Condas; Susi Kontgis; Marina Condas; Hermione Bayas; Ellen Ockey-Johnson; Keith Kelley; Walt Brett; and Tom Guald, Defendants, Appellees, and Cross-Appellants.

No. 20060142.

Supreme Court of Utah.

June 24, 2008.

Eric P. Lee, Salt Lake City, for appellant.

Troy L. Booher, Matthew L. Lalli, Salt Lake City, for appellee John Lehmer.

Dennis J. Conroy, Spencer C. Siebers, Salt Lake City, for appellee Iron Mountain Alliance, Inc.

PARRISH, Justice:

¶ 1 This case arises from an intrafamilial struggle over the division of profits from the development of a 2700-acre ranch situated between the Park City Mountain Resort and The Canyons Resort in Summit County. Beginning in 1976, the ranch was held in various trusts established by members of the Condas family. Scott Ockey ("Ockey"), one of the beneficiaries of the trusts, alleges that he was wrongly divested of his real property interest in the ranch. He also alleges that he was wrongfully deprived of his interest in a company, Iron Mountain Alliance, Inc. ("IMAI"), that was dedicated to developing portions of the ranch. Ockey filed suit, asserting a claim to quiet title to the ranch and a claim for declaratory relief as to his ownership therein. He also asserted claims of conversion against his cousin John Lehmer ("Lehmer") and IMAI, as well as a claim for breach of fiduciary duty against Lehmer.

¶ 2 The district court dismissed the declaratory relief and quiet title claims and ruled against Ockey as to the conversion and breach of fiduciary duty claims — decisions that Ockey appeals. We affirm.

BACKGROUND

I. FACTUAL HISTORY

¶ 3 The parties do not dispute the factual findings of the district court. We therefore recite the facts in accordance with the district court's findings.¹ The ranch property in dispute was originally owned by John Condas, a Summit County rancher, who left an undivided one-sixth interest in the ranch to each of his six children upon his death in 1969. Seven years later, the children, seeking to avoid large estate taxes, conveyed their interests in the ranch to various irrevocable trusts. The trusts named the third generation — John Condas' grandchildren — as beneficiaries.

¶ 4 Scott Ockey, one of those grandchildren, was the named beneficiary under two such trusts. The first trust, settled by his mother, Alexandra Ockey, held an undivided one-twelfth interest in the ranch. The second trust, settled by Ockey's uncle, Nick Condas ("Uncle Nick"), held an undivided one-eighteenth interest in the ranch. This left Ockey as the beneficiary of trusts collectively holding nearly fourteen percent of the ranch property.

¶ 5 Both trusts, the terms of which were nearly identical, indicated that they would terminate upon the beneficiary's twenty-first birthday. Each trust could be extended, however, at the beneficiary's election, until he turned twenty-eight. Upon termination, the corpus of the trusts would pass to the beneficiary.

¶ 6 Beginning as early as 1975, the Condas family sought to capitalize on the ranch's location by developing it. To this end, land-owning family members leased their interests to IMAI, a development company, in May 1989. Lehmer, one of the grandchildren and Ockey's cousin, represented the family in its dealing with IMAI.

¶ 7 In 1993, after defaulting on its lease payments multiple times, IMAI delivered all of its stock to Lehmer in satisfaction of the defaulted payments. At the time Lehmer received the IMAI stock, the sole asset of IMAI was a lease on adjacent state lands that were critical to the future development of the ranch (the "State Lease"). When Lehmer received the IMAI stock, the annual payment on the State Lease was past due, requiring the family to immediately raise funds in order to retain the State Lease. After discussing the issue with some — but not all — family members, Uncle Nick, the "family communicator," instructed Lehmer to cancel the received IMAI stock and reissue new shares that would be sold at $1.00 per share to representatives of each of the six families (the "1993 stock transfers"). This scheme allowed the family to raise $6,000 to make the State Lease payment. In subsequent years, similar stock sales provided a way to compensate family members who were willing to invest time or money into developing the ranch.

¶ 8 In 1994, in an effort to facilitate development of the ranch, the family consolidated ownership of the ranch by transferring their interests to a family limited liability company, Iron Mountain Alliance, Ltd., which, in turn, conveyed those interests to Iron Mountain Holding Group ("IMHG"), the entity that would eventually develop the ranch.² The transfer was accomplished through a document in which the trustees conveyed the trusts' interests in the ranch to IMHG (the "1994 conveyance"). Sometime prior to the 1994 conveyance, Ockey executed a document directing the trustees to convey his interest in the ranch property in exchange for a partnership interest in IMHG.

¶ 9 Since 1993, the ranch has become part of a successful real estate development. All family members, including Ockey, have enjoyed substantial profits due to their ownership interests in IMHG, and it is anticipated that they will receive more in the future.

II. PROCEDURAL HISTORY

¶ 10 In 1997, Ockey filed suit against fourteen family members and IMAI.³ Ockey alleged that the 1993 stock transfers were improper because the IMAI stock should have been split and issued to the legal owners of the ranch, rather than sold to family members willing to buy stock. Accordingly, he brought claims for conversion of his stock and breach of fiduciary duty, as well as other claims arising from the 1993 stock transfers.

¶ 11 Ockey also contests the 1994 conveyance, arguing that it was void because his trusts terminated on his twenty-eighth birthday, eight years before the 1994 conveyance, vesting in him individually both legal and equitable title to his percentage interest in the ranch and leaving the trustees nothing to convey. This is the basis of Ockey's quiet title and declaratory relief claims.

¶ 12 Before trial, various settlements and dismissals narrowed the pool of defendants to Lehmer and IMAI and narrowed Ockey's claims to four causes of action: (1) a declaratory relief claim that the 1994 conveyance was void because Ockey's trust had terminated, vesting ownership in Ockey and divesting the trustees of the authority to act on his behalf; (2) a quiet title claim based on Ockey's interest in the ranch; (3) a conversion claim against Lehmer and IMAI; and (4) a breach of fiduciary duty claim against Lehmer.

¶ 13 In 2000, the district court granted summary judgment against Ockey on the declaratory judgment and quiet title claims, holding that Ockey ratified the 1994 conveyance. In 2002, the district court conducted a trial to consider Ockey's two remaining claims: (1) conversion against Lehmer and IMAI and (2) breach of fiduciary duty against Lehmer. Following trial, the district court dismissed both claims, concluding that the conversion claim was barred by the statute of limitations and that the breach of fiduciary duty claim failed for lack of a remedy.

ANALYSIS

¶ 14 Although Ockey raises eight issues on appeal, three are dispositive: (1) whether the district court properly concluded that the doctrine of ratification barred Ockey's quiet title and declaratory relief claims arising from the 1994 conveyance, (2) whether the district court properly found that Ockey's conversion claim was barred by the statute of limitations, and (3) whether the district court erred in refusing to fashion an equitable remedy for Ockey's breach of fiduciary duty claim. We affirm the district court on all three issues.

I. THE 1994 CONVEYANCE WAS VOIDABLE AND RATIFIED BY OCKEY

¶ 15 The district court dismissed Ockey's declaratory relief and quiet title claims on summary judgment, reasoning that Ockey ratified the 1994 conveyance of his interest in the ranch to IMHG, the family-owned holding company created to facilitate developing the ranch property. On appeal, Ockey argues that the 1994 conveyance was void ab initio because his trusts terminated in 1986, on his twenty-eighth birthday, vesting both legal and equitable title in his name and leaving nothing for the trustees to convey in 1994. Because the 1994 conveyance was void ab initio, he argues, it could not be ratified.

¶ 16 The district court's summary dismissal of the quiet title claim presents an issue of law that we review for correctness.⁴

A. The 1994 Conveyance Was Voidable Because It Harmed Only Ockey and Did Not Violate Public Policy

¶ 17 By their terms, both of Ockey's trusts terminated, at the latest, in 1986, when Ockey turned twenty-eight. Upon termination, the trustees retained only the authority to wind up affairs of the trusts and to transfer the corpus of the trusts, the ranch property, to the beneficiary, Ockey.⁵ Ockey is therefore correct in arguing that by the time the trustees purported to convey the trust corpus to IMHG in 1994, they lacked the authority to do so. The fact that the trustees lacked the authority to execute the 1994 conveyance, however, does not resolve the dispute over ownership of the ranch, however, because it does not address whether the conveyance was void ab initio or merely voidable and therefore capable of ratification.

¶ 18 The distinction between void and voidable is important, although the terms are not always used precisely.⁶ A contract or a deed that is void cannot be ratified or accepted,⁷ and anyone can attack its validity in court.⁸ In contrast, a contract or deed...