SA Grp. Props. Inc. v. Highland Marketplace LC
Decision Date | 24 August 2017 |
Docket Number | No. 20151046-CA,20151046-CA |
Citation | 424 P.3d 187 |
Parties | SA GROUP PROPERTIES INC., Appellee, v. HIGHLAND MARKETPLACE LC, High Noon Lc, Solana Beach Holdings Lc, Thomas A. Hulbert, and Bret B. Fox, Appellants. |
Court | Utah Court of Appeals |
James E. Magleby and Kennedy D. Nate, Salt Lake City, Attorneys for Appellants.
Steven T. Waterman and Nathan S. Seim, Salt Lake City, Attorneys for Appellee.
1
Opinion
¶ 1 Highland Marketplace LC, High Noon LC, Solana Beach Holdings LC, Thomas A. Hulbert, and Bret B. Fox (collectively, Highland) invested in a land-development project that ran up against the economic recession of 2008. Highland defaulted on its multimillion-dollar loan, and SA Group Properties Inc. (SA Group) foreclosed on Highland's investment property, an incomplete commercial development in Highland, Utah, just east of an area known as Silicon Slopes (the Property). The foreclosure sale price was less than the loan balance, leading to this deficiency action. After a bench trial, a judgment of almost $5,000,000 was entered against Highland. On appeal, Highland contends that the trial court erroneously denied its motion to amend its answer. Highland also contends that the court erred when it concluded that the fair market value of the Property was $10,568,000, essentially rejecting Highland's expert's opinion on the market value of the Property at the time of the foreclosure sale. We affirm.
¶ 2 Highland obtained a $28,000,000 loan, secured by the Property, from First Community Bank in September 2007. It used the loan to develop the Property, including connecting utilities, building roads and sidewalks, and constructing commercial buildings on several lots. Development eventually stalled and Highland defaulted on the loan.
SA Group, as successor to First Community Bank, foreclosed on the Property.
¶ 3 At the time of foreclosure, Highland owed $14,685,370 on the loan. The foreclosure sale yielded $8,565,000. SA Group commenced this deficiency action2 against Highland in August 2012.
¶ 4 In March 2014, Highland filed its second motion to amend seeking to extend fact discovery and to assert counterclaims against SA Group based on First Community Bank's alleged failure to fund a draw request.3 By this time, fact discovery had concluded and a motion for summary judgment filed by SA Group had been decided. However, no trial date had been set.
¶ 5 Although SA Group provided 29,000 pages of discovery in nine separate disclosures between April 2013 and February 2014, the proposed amended answer was purportedly based on five documents produced between April and September 2013. Other documents long in Highland's possession—the draw request, loan forms, and a 2010 email chain4 —show that Highland was aware of the unfunded draw request prior to the commencement of the deficiency action.
¶ 6 The trial court denied the motion to amend, concluding that the motion to amend was "untimely based on [Highland's] previous knowledge of the failed draw requests and the completion of significant procedural stages in the case." The court also concluded that the delay in filing the motion to amend was not justified, due to Highland's long-held knowledge of the operative facts.
¶ 7 The trial court held a three-day bench trial in May and August 2015. The only issue at trial was the fair market value of the Property as of the foreclosure date. Three experts testified; Kerry Jorgensen and Darrin Liddell testified for SA Group and Philip Cook testified for Highland. Jorgensen valued the Property at $10,568,000. Liddell valued the Property at $9,240,000. Cook valued the Property at $14,710,000. The trial court ultimately adopted Jorgensen's opinion and rejected the valuations of the other experts. The court entered a judgment against Highland for $4,747,891 plus attorney fees and costs.
¶ 8 The trial court referenced several reasons for its decision to reject Cook's valuation of the Property. First, it found that Cook ascribed too much value—$475,000—to a letter of intent from a restaurant chain, Jack in the Box (the Letter of Intent). The court noted that the Letter of Intent was "dated days prior to the foreclosure sale and was signed by Highland as the Landlord," even though Highland no longer owned the Property at the time.5
The trial court made these findings despite Jorgensen's testimony that he and Cook each assumed that Walgreens would be constructed and deducted costs to determine the actual value of the lease, the subdivision of Pad I was irrelevant to the valuation,6 and each expert performed a stabilized estimate to arrive at an "as is" appraisal value.
¶ 11 There was some discussion at trial about the methods the experts used to reach their valuations, especially whether Cook used the "land residual method."7 Jorgensen conceded that Cook used "a slightly different technique" than the land residual method but explained that "what [Cook] used was still a land residual technique" and that "all land residual techniques ... have that same problem." Jorgensen also conceded that this same critique of Cook's approach could be applied to his "incremental value enhancement" in the Walgreens lot.
¶ 12 Based on the above findings, the trial court determined that Cook's valuation was less reliable than the other experts' valuations. Specifically, the court found that Cook based his appraisal on unsupported and unreliable facts and data, used unestablished and unreliable methods to reach his valuation, and did not value the Property "as is." Accordingly, the trial court adopted Jorgensen's valuation.
¶ 13 Highland presents two issues for our review. First, Highland contends that the trial court erred in denying its motion to amend its answer. We review a trial court's denial of leave to amend for an abuse of discretion. Estrada v. Mendoza , 2012 UT App 82, ¶ 19, 275 P.3d 1024. A trial court abuses its discretion if there is "no reasonable basis for the decision." Tschaggeny v. Milbank Ins. Co. , 2007 UT 37, ¶ 16, 163 P.3d 615 (citation and internal quotation marks omitted).
¶ 14 Second, Highland contends that the trial court erred in concluding that the fair market value of the Property on the date of the foreclosure sale was no greater than $10,568,000, where its conclusion is based on the finding that Jorgensen gave a credible appraisal while Cook did not.
Determinations regarding the weight to be given to the testimony of expert witnesses are within the province of the finder of fact, [and] we will not second guess a court's decisions about evidentiary weight and credibility if there is a reasonable basis in the record to support them. Thus, we may reverse a trial court's credibility determination if its findings in support of that determination are clearly erroneous, that is, if they are against the clear weight of the evidence, or if we otherwise reach a definite and firm conviction that a mistake has been made.
AmericanWest Bank v. Kellin , 2015 UT App 300, ¶ 25, 364 P.3d 1055 (citations and internal quotation marks omitted).
¶ 15 Highland argues that the trial court erred when it determined that the motion to amend was untimely and unjustified. Under rule 15(a) of the Utah Rules of Civil Procedure, parties may amend pleadings prior to trial. Utah R. Civ. P. 15(a). That rule exists to "allow parties to have their claims fully adjudicated." Timm v. Dewsnup , 851 P.2d 1178, 1183 (Utah 1993). Parties may amend a pleading "as a matter of course" where the amendment is filed within twenty-one days after serving it or, for pleadings to which a responsive pleading is required, within twenty-one days after service of the responsive pleading or twenty-one days after service of a motion under rule 12(b), (e), or (f), whichever is earlier....
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