Shree Ganesh, LLC v. Weston Logan, Inc.

• Decision Date: 17 June 2021
• Docket Number: No. 20190475,20190475
• Citation: 491 P.3d 885
• Court: Utah Supreme Court
• Parties: SHREE GANESH, LLC, Appellant, v. WESTON LOGAN, INC. and Matthew M. Weston, Appellees.

491 P.3d 885

SHREE GANESH, LLC, Appellant,

v.WESTON LOGAN, INC. and Matthew M. Weston, Appellees.

No. 20190475

Supreme Court of Utah.

Heard March 10, 2021

Filed June 17, 2021

Troy L. Booher, J. Frederic Voros, Jr., Alexandra Mareschal, Robert G. Crockett, Sarah C. Vaughn, Salt Lake City, for appellant

Brandon J. Baxter, Shawn P. Bailey, Matthew D. Lorz, Logan, for appellees

Chief Justice Durrant authored the opinion of the Court, in which Associate Chief Justice Lee, Justice Himonas, Justice Pearce, and Justice Petersen joined.

Chief Justice Durrant, opinion of the Court:

Introduction

¶1 In this dispute arising out of the sale of hotel property (the Property), Shree Ganesh, a limited liability corporation, brought a number of contract and tort claims against Weston Logan, a corporation, and Mathew Weston, an individual. Each claim stems from Weston Logan's failure to inform Shree Ganesh about Weston Logan's plans to develop a competing hotel across the street from the Property. On summary judgment the district court dismissed these claims because it concluded that, as a matter of law, Weston Logan did not owe Shree Ganesh any contractual or common-law duties to disclose the information at issue. Because we conclude that the contract between the parties is ambiguous as to Weston Logan's disclosure obligations and because there remains a genuine dispute as to material facts, we reverse the district court's dismissal of Shree Ganesh's contract and tort claims against Weston Logan.

Background¹

¶2 In January of 2016, Shree Ganesh, LLC entered into a contract (the Purchase Agreement) with Weston Logan Inc. to purchase Weston Logan's Best Western Inn (the Property) in Logan, Utah. The Purchase Agreement described the Property to be sold as "certain real property ... located in the City of Logan ... and more particularly described as ... [t]he 89 Unit Best Western Plus Weston Inn located at 250 N. Main St."

¶3 Specifically included in the purchase price were all of Weston Logan's "leases, contracts, signage, billboards, all transferable licenses or permits and all hotel inventory (consisting of linens, paper goods, cleaning and operating supplies)" that were "used in the operation of the Property." Additionally, as part of the Purchase Agreement, Weston Logan agreed to "execute any documents required to transfer to [Shree Ganesh] the telephone numbers presently in use by the Hotel, the Best Western Plus Franchise, along with any other business-related services."

¶4 The purchase agreement also contained a provision—Section 8.1—governing Weston Logan's required disclosures. Under Section 8.1, which is titled "Books and Records," Weston Logan was required to disclose, in relevant part, "[a]ll rental agreements, leases, service contracts, insurance policies, latest tax bill(s) and other written agreements, written code violations or other notices which affect the property" and "[t]he operating statements and Federal Tax Returns of the Property."

¶5 Additionally, Section 12 of the Purchase Agreement required Weston Logan to obtain Shree Ganesh's consent before entering into new service or tenant contracts, making "any material changes to the Property, do[ing] any act, or enter[ing] into any agreements of any kind that materially changes the value of the Property."²

¶6 At some point after the purchase agreement was signed, Dharmesh Ahir, Shree Ganesh's owner, sent an email to Wesley Christensen, Weston Logan's real estate agent, requesting a price reduction on the sale of the Property based on the fact that three new hotels would soon enter the Logan hotel market. Mr. Christensen responded by attaching a document entitled "STR Supply Pipeline for Utah" and stating, presumably in reference to the attached document, that there was not a "single property, not even in the preplanning stage, ever mentioned in Logan." Mr. Christensen then stated that the requested price reduction was "ridiculous" based on Mr. Ahir's "supply claim."

¶7 But during the time in which Weston Logan was in the process of selling the Property to Shree Ganesh, it was also developing another hotel in the Logan hotel market with MMR Investments, LLC. Matthew Weston, a shareholder in both MMR and Weston Logan, represented both companies in this development and also represented Weston Logan in the sale of the Property to Shree Ganesh.

¶8 As part of this development effort—in the same month the parties entered into the Purchase Agreement—Weston Logan purchased an existing Hampton Inn in North Logan with the intent of potentially relocating the Hampton Inn to a new building somewhere in the Logan area. Initially, Weston Logan intended to build the new Hampton Inn with MMR at a site approximately 2.5 miles away from the Property. Shree Ganesh was aware of these plans. But a few months after the purchase agreement was signed, the City of Logan approached Mr. Weston with a proposal to build the new hotel at a site directly across the street from the Property. And before Weston Logan closed with Shree Ganesh, MMR entered into an agreement with the City to purchase the land. Weston Logan never disclosed any plans to build a competing hotel in this new location.

¶9 After the sale of the Property closed, MMR and Weston Logan merged, and Shree Ganesh learned about Weston Logan's plans to build a competing hotel across the street. Because, according to Shree Ganesh, the construction of a competing hotel across the street significantly reduced the market value of the Property, Shree Ganesh sued Weston Logan for its failure to disclose its plans to develop the competing hotel.

¶10 In response, Weston Logan filed a motion for summary judgment. In its motion, Weston Logan argued that it never discussed partnering with MMR on the site across the street until after Shree Ganesh and Weston Logan closed on the Property. Weston Logan further argued that even if it had, it was not required to disclose its plans to develop the competing hotel under the terms of the Purchase Agreement or under the common law. The district court agreed and granted summary judgment in favor of Weston Logan on all Shree Ganesh's claims. Shree Ganesh appealed. We have jurisdiction under Utah Code section 78A-3-102(3)(j).

Standard of Review

¶11 Shree Ganesh argues that the district court erred in granting Weston Logan's motions for summary judgment on Shree Ganesh's contract and tort claims. "We review a grant of summary judgment for correctness."³ "We give no deference to the district court's legal conclusions and consider whether the court correctly decided ‘that no genuine issue of material fact existed.’ "⁴ And we "review the facts in a light most favorable to the party against whom summary judgment was granted."⁵

Analysis

¶12 While selling hotel property to Shree Ganesh, Weston Logan failed to disclose any involvement it had in building a competing hotel across the street. Based on this failure, Shree Ganesh brought a number of contract and tort claims against Weston Logan. But, on summary judgment, the district court dismissed all its claims. We reverse.

¶13 Under rule 56 of the Utah Rules of Civil Procedure, "[s]ummary judgment is appropriate [only] where ‘the moving party shows that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law.’ "⁶ So we must review the district court's decision to ensure its legal conclusions were correct, and we must review the record to ensure no genuine and material factual disputes exist.

¶14 The court dismissed Shree Ganesh's contract claims because the court interpreted the Purchase Agreement to not create a contractual duty to disclose the information at issue. Similarly, the court dismissed Shree Ganesh's tort claims because, based on the court's view of the relevant facts in this case, Weston Logan did not breach a common law duty when it failed to disclose the information at issue. We reverse the district court on both counts.

¶15 First, we reverse the district court's dismissal of Shree Ganesh's contract claims because the Purchase Agreement is ambiguous as to whether Weston Logan owed Shree Ganesh a duty to disclose.⁷ For this reason, the interpretation of the Purchase Agreement is a question of fact for the fact-finder. Accordingly, the district court erred in granting summary judgment on this issue.

¶16 Second, we reverse the district court's dismissal of Shree Ganesh's tort claims because there remain genuine disputes of material fact as to whether Weston Logan breached a common-law duty owed to Shree Ganesh when Weston Logan failed to disclose the information at issue.

I. We Reverse the District court's Dismissal of Shree Ganesh's Breach-of-Contract Claims Because the Purchase Agreement is Ambiguous

¶17 Shree Ganesh argues that Weston Logan breached two provisions of the Purchase Agreement by failing to disclose its plans to build a competing hotel across the street from the Property. The first provision it points to is Section 8.1. Section 8.1, entitled "Books and Records," requires Weston Logan, in relevant part, to disclose "[a]ll rental agreements, leases, service contracts, insurance policies, latest tax bill(s) and other written agreements , written code violations or other notices which affect the Property ."⁸ Shree Ganesh argues that the language "other written agreements ... which affect the Property" obligated Weston Logan to disclose any written agreements related to the development of the hotel property across the street because those written agreements affected the market value of the Property.

¶18 In contrast, the district court found that this provision required disclosure only of "agreements that involved, concerned, or bound th[e] real property" being sold. Under this interpretation, the Purchase Agreement did not require disclosure of documents having an "indirect impact on hotel market conditions or the future profitability of the Best Western hotel business."

¶19 This interpretation is...