Regal Realsource v. Enlaw

• Docket Number: 20230368-CA
• Decision Date: 11 July 2024
• Citation: 554 P.3d 1112
• Parties: REGAL REALSOURCE LLC, Appellant, v. ENLAW LLC, Appellee.
• Court: Utah Court of Appeals

554 P.3d 1112

2024 UT App 95

REGAL REALSOURCE LLC, Appellant,

v.ENLAW LLC, Appellee.

No. 20230368-CA

Court of Appeals of Utah.

Filed July 11, 2024

Fifth District Court, St. George Department, The Honorable Eric A. Ludlow, No. 220500134

Troy L. Booher, Salt Lake City, LaShel Shaw, Reid W. Lambert, and Ellen H. Welch, Salt Lake City, Attorneys for Appellant

Jeremy C. Reutzel and Ryan M. Merriman, Salt Lake City, Attorneys for Appellee

Judge Ryan M. Harris authored this Opinion, in which Judges John D. Luthy and Amy J. Oliver concurred.

Opinion

HARRIS, Judge:

¶1 Enlaw LLC(Enlaw) and Regal Real-Source LLC(Regal) entered into a real estate purchase contract (the REPC) in which Enlaw agreed to sell Regal 19.46 acres of undeveloped land (the Property).Some time later, however, Enlaw came to believe that the REPC was unenforceable, and it informed Regal that it would not sell the Property to Regal.In response, Regal filed this lawsuit, seeking specific performance of the REPC, and recorded a lis pendens on the Property.

¶2The district court eventually entered a series of rulings unfavorable to Regal.Chiefly, the court determined—on summary judgment—that the REPC is unenforceable, and on the basis of that determination ordered Regal to remove the lis pendens.Regal now appeals those rulings, asserting that the district court erred in determining, as a matter of law, that the REPC is unenforceable, and that it erred in ordering the lis pendens removed.We find merit in some of Regal’s arguments, and we therefore reverse some of the court’s rulings and remand the case for further proceedings.

BACKGROUND¹

[1]¶3 Enlaw is a real estate development company that owns approximately 570 acres of land in Washington County, and it is currently in the process of developing this land into a community known as Black Desert.About 300 of these acres—including the Property—are located within the boundaries of Santa Clara, Utah (the City).The Black Desert; community is planned to include "a golf course, a luxury hotel, spa, retail, restaurants, outdoor recreational space, and medium density residential units."Part of Enlaw’s development plan is to "sell portions of the [land] to other developers," who would then become partners with Enlaw in developing Black Desert.

¶4 Regal is one of these other developers.In 2019, Regal informed Enlaw that it was interested in purchasing a portion of the Black Desert land and that it wanted to build "about 200 single-family homes" that it would "own and rent to the public."It specifically explained to Enlaw that being allowed to build approximately 200 units was essential to its project, even if that might require seeking approval from the City for "an increased density allowance."After negotiation, Regal and Enlaw entered into the REPC in July 2019.Under the terms of the REPC, Regal was to purchase "approximately 19.46 acres" of Enlaw’s undeveloped Black Desert land—the Property—for $4,378,500.

¶5 But the parties also agreed, in an addendum (Addendum 1) signed the same day as the REPC, that Enlaw—which was otherwise responsible for developing the roads inside Black Desert—would shift the responsibility for development of part of one of the roads to Regal, in exchange for a reduction in the purchase price of the Property.In relevant part, Addendum 1 provides as follows:

[Regal] will obtain multiple bids for the installation of the road and other improvements including utilities required by local government, utility companies, and otherservices agencies (Santa Clara City, etc.) to the Property line at the locations and capacities determined by the engineer and the city approved plan.The Purchase Price will be reduced by the cost to complete these improvements.The selection of contractor, the bid amount and the reduction in Purchase Price will be mutually agreed upon by both [Regal] and [Enlaw] prior to the end of the due diligence period.[Regal] will be responsible for these improvements after closing.

¶6 The REPC also contained provisions allowing Regal to undertake "due diligence" regarding the Property.Not only was Enlaw required to make "seller disclosures," but Regal was also given time, at its option and among other things, to obtain surveys and geotechnical reports regarding the Property.The parties also agreed, in Addendum 1, that Enlaw would "assist [Regal] to … receive any and all necessary entitlement approvals, including but not limited to a recordable plat and development agreement, for the Property."And they agreed that Regal’s due diligence period "shall be extended as needed to obtain these things," but that the period could not "exceed 12 months from the date on which" Enlaw provided its seller disclosures.

¶7 Following execution of the REPC and Addendum 1, Enlaw provided its seller disclosures, completing delivery of those documents by November 2019.And Regal set about attempting to obtain the "necessary entitlement approvals" for the Property, including approval for the 200-unit density it claimed it needed for its project to make financial sense.At the time the REPC was signed, Enlaw did not yet have approval from the City for the overarching Black Desert development.City officials apparently informed Regal that it would not be able to obtain approval for any specific project on the Property until there was an agreement in place governing the larger Black Desert development.

¶8 In September 2020, with the one-year-after-seller-disclosure deadline approaching and Regal still unable to obtain the approvals it needed, the parties decided to extend the deadline for closing their transaction.Specifically, they agreed—in another addendum (Addendum 2)—to "extend the Seller Disclosure Deadline Date to that certain date on which [the City] gives final approval of Buyer’s development project including, without limitation, an executed development agreement for the Property (the ‘Entitlements’)."(Emphasis added.)In Addendum 2, the parties defined the term "Buyer" as Regal.And they agreed that the new closing date would be "45 days after the receipt of the Entitlements."

¶9 About a year later, in September 2021, Enlaw finally obtained approval from the City for a master development agreement (the MDA) covering the entire Black Desert development.One provision of the MDA specifically discusses the Property: it states that the Property is "designated for medium density residential" and "can be developed to a density of eight (8) dwelling units per acre, for a total of approximately 133 units."However, the provision also stated that a developer "may seek approval of a density bonus of up to fifty percent … for a maximum of approximately two hundred (200) dwelling units," with approval of any such "bonus" being "subject to the conditions set forth in" the City’s ordinances.

¶10 Regal learned of the City’s approval of the Black Desert MDA in October 2021.At that point, Regal "resubmitted its site plans" for the Property to the City and began the process of asking the City to approve a development on the Property with a higher density.In January 2022, Regal was eventually able to obtain conditional approval for construction of 199 units on the Property.But this "density bonus" was subject to one final condition: the City’s approval of a "1-lot subdivision" plat.

¶11 By this time, however, Enlaw had already informed Regal—in November 2021—that it would not sell the Property to Regal.In Enlaw’s view, the City’s approval of the MDA in September had triggered the 45-day closing deadline set forth in Addendum 2, and Regal had not been in a position to close on the transaction within 45 days of the MDA’s approval.As a result, Enlaw told Regal that it considered Regal to be in breach of the REPC’s terms, and that it would be "re-listing the Property immediately and seeking other alternatives."In keeping with this position, Enlaw refused to assist Regal in obtaining the City’s approval of a 1-lot subdivision plat, and it specifically refused to provide a landowner signature that the City apparently requires as a prerequisite for any such approval.

¶12 In February 2022, Regal initiated the instant lawsuit, suing Enlaw for declaratory relief and specific performance of the REPC.In Regal’s view, the start of the 45-day closing period set forth in Addendum 2 was to be triggered not by approval of Enlaw’s overarching MDA but, instead, by the City’s approval of Regal’s specific development project, an eventuality that, as Regal sees it, has not happened yet.Under this interpretation, Regal is not yet under any obligation to close on the transaction, and it will not be under any such obligation until the City makes a final decision on its density bonus request.Accordingly, in its complaint Regal sought "[d]eclaratory judgment that the REPC remains in full force and effect, and that Enlaw’s purported termination of the REPC based on a closing deadline of November 15, 2021, is invalid under the terms of the REPC."Furthermore, Regal alleged that Enlaw had materially breached the REPC and, because an "award of damages would be an inadequate remedy," Regal asked for "a judgment ordering specific performance" that would require Enlaw to "complete the sale of the Property to Regal on the terms set forth in the REPC and its addenda."The day after it filed its complaint, Regal recorded a notice of lis pendens against the Property.

¶13 Enlaw responded with an answer and counterclaim, seeking declaratory relief and removal of the lis pendens, and seeking damages and attorney fees based on its view that Regal’s lis pendens was "groundless."Enlaw further maintained that the REPC was unenforceable, but in the event that the court found it to be an enforceable agreement, it asserted alternative claims against Regal for breach of contract.

¶14 Following the filing of Enlaw’s answer and counterclaim, the parties exchanged initial disclosures and some limited written discovery.But before...