Sachs v. Lesser

Decision Date17 May 2007
Docket NumberNo. 20060257-CA.,20060257-CA.
Citation163 P.3d 662,2007 UT App 169
PartiesIra SACHS, Plaintiff and Appellant, v. Joseph S. LESSER, Loeb Investors Co. XL, United Park City Mines Company, Capital Growth Partners, and John Does 1-10, Defendants and Appellees.
CourtUtah Court of Appeals

Kathryn Collard, Salt Lake City, for Appellant.

Laura S. Scott, Shane D. Hillman, Jason D. Boren, and Anthony C. Kaye, Salt Lake City, for Appellees.

Before BENCH, P.J., McHUGH and THORNE, JJ.

OPINION

McHUGH, Judge:

¶ 1 Plaintiff Ira Sachs appeals the district court's order granting summary judgment to Defendants Joseph S. Lesser, Loeb Investors Co. XL, and United Park City Mines Company on Sachs's claims to recover a finder's fee. We affirm in part and reverse and remand in part.

BACKGROUND1

¶ 2 This appeal arises from a dispute over Sachs's claim to a finder's fee for a transaction culminating in the purchase of all the outstanding stock of United Park City Mines (UPCM) by Capital Growth Partners, L.L.C. (Capital). At the time these events began in 1999, UPCM was a publicly held corporation involved in the leasing, development, and sale of real property located in and around Park City, Utah. Loeb Investors Co. XL (Loeb) was the controlling shareholder of UPCM, and Defendant Joseph S. Lesser served as both the Chairman of the Board of Directors of UPCM and President of Loeb. Hank Rothwell was the President of UPCM. Sachs was a shareholder in UPCM and worked as a business consultant in Park City.

¶ 3 In 1999, UPCM, acting under Rothwell's direction, entered into a letter of understanding with DMB Associates, Inc. (DMB), to form a joint venture to develop resort projects in Park City on a portion of UPCM's property.2 The joint venture formed in June 2000. After attempts to agree on a business plan failed, the joint venture dissolved in January 2001, leaving UPCM obligated to pay DMB approximately $2.5 million in development costs and accrued interest.

¶ 4 Upon learning that the joint venture between UPCM and DMB had failed, Sachs contacted one of his clients, Granite Land Company (Granite), and introduced Granite to UPCM as a potential joint venturer to take the place of DMB in developing the resort projects. Around March 2001, Granite and UPCM signed a confidentiality agreement allowing them to exchange information related to a possible joint venture.

¶ 5 On May 2, 2001, Sachs traveled to New York to meet with Lesser, the chairman of UPCM's board of directors. At the meeting, Lesser expressed his displeasure regarding Rothwell's handling of the failed UPCM joint venture with DMB. Lesser indicated that he represented eighty-five percent of UPCM's shareholders, and that those shareholders had lost faith in Rothwell and did not want to invest any more money in UPCM. Lesser then asked Sachs to locate a joint venturer or purchaser for UPCM as quickly as possible, regardless of whether it was Granite, another party, or a combination. Although no specific amount of a finder's fee was discussed at the meeting, Lesser told Sachs that UPCM intended to engage Dresdner Kleinwort Wasserstein, Inc. (Dresdner) as a broker and that Sachs would not be entitled to a commission if Dresdner found a buyer for UPCM. During the conversation, Lesser did not mention or exclude any other persons or entities that could be approached as potential joint venturers or purchasers for UPCM aside from Dresdner and its contacts.

¶ 6 Following his meeting with Lesser, Sachs sent a letter to Rothwell on May 17, 2001, memorializing aspects of the New York meeting. The letter included a reference to Sachs's expectation of a finder's fee for his services in locating a joint venturer for UPCM. The letter stated:

I am delighted that my introducing [UPCM] to Granite . . . appears to be headed in the right direction and I am pleased that the confidentiality letter has been signed. I certainly will continue to do everything in my power to bring together a mutually satisfactory agreement between these two parties. I took the opportunity to express this commitment to your chairman, [Lesser], . . . in early May.

. . . .

In that lunch with [Lesser], I was delighted to find that he seems to share our enthusiasm for this joint venture. I hope that this feeling is generally shared by the rest of your board. . . . [Lesser] gave me his encouragement to "get the job done."

I write this letter to remind you that I will expect a modest finder's fee if an agreement comes to fruition. This could be cash, a couple of prime developed lots in the new project, or some other consideration acceptable to both of us. While I believe we have an understanding as to this finder's fee, I do think that matters of this sort ought to be out on the table early on, and I hope you feel the same.

Please let me know if you have any questions concerning such finder's fee.

Later that same day, Rothwell transmitted the letter to Lesser. Lesser telephoned and informed Sachs that he did not want a joint venture partner for UPCM but was, instead, only interested in a purchaser.

¶ 7 The next day, Sachs followed up on this telephone conversation by sending a second letter to Rothwell clarifying Lesser's preference for a purchaser. The second letter stated:

I understand, after a conversation yesterday with [Lesser], that his preference would be to sell the company rather than enter into a joint venture. . . .

Happily, if your company's preference is sale, Granite, as I suggested in yesterday's letter is still an excellent prospect. Another investor, together with Granite, would make an excellent purchaser. I am happy to re-direct my focus to obtaining such a joint venture purchaser.

Obviously, I will keep you apprised of all proposals, whether for sale or for a joint venturing of the project.

¶ 8 During this time, Sachs was also contacting several individuals regarding the purchase of UPCM. One of those people was Gerald Jackson, a real estate developer who had previously worked in Park City. During their initial conversation, Sachs conveyed to Jackson what he had learned from Lesser in New York, including Lesser's disappointment with Rothwell and Lesser's strong desire to sell UPCM instead of enter into a joint venture. Jackson thanked Sachs for the information and expressed interest in buying UPCM. Jackson told Sachs that he would like to "take [the UPCM] deal down with some institutional and other investors." Because Lesser had told Sachs that all interested parties should be referred to Rothwell, Sachs asked Jackson to contact Rothwell. Sachs also suggested that Jackson sign a confidentiality agreement so that Jackson could obtain information relevant to the purchase of UPCM and would be registered as one of Sachs's contacts. In addition, Sachs invited Jackson to contact Granite and offered to inquire whether Granite was interested in joining Jackson in a bid to purchase UPCM. During this initial conversation, Jackson never informed Sachs that he was already acquainted with Rothwell through prior business and social relationships or that he was already pursuing a purchase of UPCM directly with Rothwell. Rather, Jackson told Sachs that he would contact Rothwell and sign a confidentiality agreement.

¶ 9 Shortly thereafter, Sachs contacted Rothwell and informed him of Jackson's interest in putting together a group of investors to purchase UPCM. Sachs told Rothwell that Jackson became interested in purchasing UPCM upon learning from Sachs that Lesser was eager to sell. During this conversation, Rothwell never mentioned that he and Jackson were already engaged in negotiations concerning the sale of UPCM. As promised, Sachs also contacted Granite about the possibility of affiliating with Jackson to purchase UPCM. And Jackson, acting on Sachs's suggestion, also contacted Granite.

¶ 10 On June 4, 2001, Sachs wrote to Jackson asking to be updated when Jackson contacted Rothwell or entered into a confidentiality agreement with UPCM. Jackson responded by telephoning and informing Sachs that he had already contacted Rothwell. On July 9, 2001, Jackson, acting through Aspen Ranch Corp., entered into a confidentiality agreement with Dresdner, who by that time was UPCM's investment banking firm. On July 31, 2001, Jackson helped form Capital, a Utah limited liability company, for the express purpose of purchasing UPCM.

¶ 11 From late July 2001, through the end of the year, Sachs frequently inquired about Jackson's progress in purchasing UPCM; however, Sachs was not personally involved in negotiating the deal. In late October 2001, Capital entered into a non-disclosure agreement with Dresdner to pursue a proposed acquisition of all the outstanding shares of UPCM. Four months later, Capital formally offered to purchase UPCM from its current shareholders. After reading a newspaper article about the offer, Sachs sent a facsimile to Rothwell which stated "completion of task."

¶ 12 About this time, in February 2002, Jackson telephoned Sachs and discussed Sachs's role in soliciting Jackson as a purchaser for UPCM. Jackson confirmed that Sachs was responsible for introducing Jackson to the deal and also stated that he had no problem with Sachs receiving a finder's fee on the transaction. Following this conversation with Jackson, Sachs began contacting Rothwell and Craig Terry, an attorney for UPCM, in an attempt to secure payment of a finder's fee for the transaction.

¶ 13 In June 2003, Capital purchased all the outstanding common stock of UPCM, by way of merger with its wholly owned subsidiary, CGP Acquisition, Inc. In the merger, UPCM, the surviving corporation, became a wholly owned subsidiary of Capital and retained all of its assets and liabilities, including its real estate assets. Following the completion of the transaction, Sachs continued to seek a finder's fee from UPCM. On August 11, 2003, Sachs again spoke with Jackson who expressed surprise that Dresdner received a finder's fee for the transaction instead...

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