Young Res. Ltd. P'ship v. Promontory Landfill LLC

• Decision Date: 01 June 2018
• Docket Number: No. 20160655-CA,20160655-CA
• Citation: 427 P.3d 457
• Parties: YOUNG RESOURCES LIMITED PARTNERSHIP, Appellant, v. PROMONTORY LANDFILL LLC and Promontory Point Land Resources LLC, Appellees.
• Court: Utah Court of Appeals

427 P.3d 457

YOUNG RESOURCES LIMITED PARTNERSHIP, Appellant,

v.PROMONTORY LANDFILL LLC and Promontory Point Land Resources LLC, Appellees.

No. 20160655-CA

Court of Appeals of Utah.

Filed June 1, 2018

R. Stephen Marshall, Salt Lake City and Jason R. Hull, Attorneys for Appellant

Jason D. Boren and David P. Mooers-Putzer, Salt Lake City, Attorneys for Appellees

Judge Diana Hagen authored this Opinion, in which Judges Jill M. Pohlman and Ryan M. Harris concurred.

Opinion

HAGEN, Judge:

¶1 In 2001, Promontory Point Land Resources LLC (PPLR) was formed to develop a landfill in Box Elder County, Utah. As part of this venture, Young Resources Limited Partnership agreed to contribute real property to PPLR to serve as the site of the landfill, subject to certain restrictions. When the property was conveyed to PPLR, however, the warranty deed failed to reflect those restrictions. PPLR then sold the unencumbered property to Promontory Landfill LLC in 2004. Nearly twelve years later, Young Resources brought this lawsuit, which the district court dismissed as barred by the statute of limitations and the merger doctrine. Because we agree with the district court that Young Resources’ claims are barred by the statute of limitations, we affirm on that basis without reaching the alternative ground for dismissal.

BACKGROUND

¶2 Young Resources, Samuel N. Chournos, and Kerry Zundel formed PPLR for the purpose of developing a landfill in Box Elder County, Utah. They agreed that Zundel would act as manager and provide the necessary capital, and that Chournos and Young Resources would contribute real property that they separately owned to serve as the site of the landfill (the Landfill Area). Under PPLR’s Operating Agreement, Zundel did not have authority to "[e]ncumber or do anything affecting the use of Company Property without prior consent of all Members."

¶3 Before conveying the real property to PPLR, Young Resources and Chournos entered into an Amended Operating Agreement with Zundel. Young Resources and Chournos agreed to contribute equal property acreage to PPLR for the Landfill Area, reserving the "appurtenant water or mineral rights." In addition, the Amended Operating Agreement provided that Young Resources and Chournos would retain a reversionary interest in the property, which entitled them to the return of their property if the Landfill Area had not been developed within five years.

¶4 To facilitate the transfer of Young Resources’ property to PPLR, Zundel provided Young Resources with a warranty deed (the First Warranty Deed). Contrary to the terms of the Amended Operating Agreement, the First Warranty Deed purported to transfer all of Young Resources’ interest in the property without any reservations or conditions. Young Resources executed the First Warranty Deed, and Zundel recorded it in April 2003.

¶5 In 2004, PPLR transferred the Landfill Area to Promontory Landfill, another company managed by Zundel. According to Young Resources, Zundel made this transfer "without notice to [PPLR’s] members and without receiving authority from all members." Like the First Warranty Deed, the deed transferring the Landfill Area to Promontory Landfill (the Second Warranty Deed) did not contain a right of reverter or the reservation of water and mineral rights. The Second Warranty Deed was recorded in April 2004.

¶6 In 2016, Young Resources sued Promontory Landfill and PPLR (collectively, Defendants), alleging that Zundel lacked authority to transfer the property and that any transfer was subject to the conditions contained in the Amended Operating Agreement. The Claims 1, 2, 3, and 7 are at issue in this appeal. In Claim 1, Young Resources seeks a declaratory judgment derivatively on behalf of PPLR¹ quieting title against Promontory Landfill on the ground that "Zundel did not have authority to convey the Young Resources Property to Promontory Landfill without the consent of Young Resources." If the court grants relief on Claim 1, Claim 2 seeks a judgment against PPLR that Young Resources is entitled to the return of the property not developed within five years, as provided by the Amended Operating Agreement. In the alternative, Claim 3 seeks a declaratory judgment that Promontory Landfill is not a bona fide purchaser but took the property from PPLR subject to the right of reverter in the Amended Operating Agreement. Claim 7, also in the alternative, seeks a declaratory judgment that PPLR’s rights and duties with respect to the Landfill Area were nonassignable and could not be transferred to Promontory Landfill.

¶7 In response to these claims, Defendants moved to dismiss the complaint or, in the alternative, for summary judgment.² The district court granted the motion to dismiss, ruling that the claims were barred by both the merger doctrine and the statute of limitations.

ISSUE AND STANDARD OF REVIEW

¶8 On appeal, Young Resources challenges the dismissal of Claims 1, 2, 3, and 7 based on the statute of limitations.³ "A Rule 12(b)(6) motion to dismiss admits the facts alleged in the complaint but challenges the plaintiff’s right to relief based on those facts." Oakwood Village LLC v. Albertsons, Inc. , 2004 UT 101, ¶ 8, 104 P.3d 1226 (quotation simplified). "Under a rule 12(b)(6) dismissal, our inquiry is concerned solely with the sufficiency of the pleadings, and not the underlying merits of the case." Id. (quotation simplified). "In reviewing the trial court’s decision, we accept the factual allegations in the complaint as true and interpret those facts and all inferences drawn from them in the light most favorable to the plaintiff as the non-moving party." Id. ¶ 9.

¶9 The grant of a motion to dismiss pursuant to rule 12(b)(6) presents a question of law that this court reviews for correctness. See Lilley v. JP Morgan Chase , 2013 UT App 285, ¶ 4, 317 P.3d 470. Similarly, the "determination that a statute of limitations has expired is also a question of law which we review for correctness, giving no particular deference to the lower court’s determination." Hansen v. Department of Fin. Insts. , 858 P.2d 184, 186 (Utah Ct. App. 1993).

ANALYSIS

¶10 A plaintiff must file a complaint before the statute of limitations expires or its claim will be barred. See Russell Packard Dev., Inc. v. Carson , 2005 UT 14, ¶ 20, 108 P.3d 741. While there are several different statutes of limitations that could arguably apply to Young Resources’ claims, the longest would be the seven-year statute of limitations for actions founded upon title to real estate.⁴ When Young Resources brought this action in 2016, nearly twelve years had elapsed since PPLR conveyed the property to Promontory Landfill, and nearly thirteen years had elapsed since Young Resources signed the First Warranty Deed that failed to reflect the intended restrictions. Thus, Young Resources’ claims would appear to be time-barred even under the most generous statute of limitations.

¶11 Young Resources presents two arguments for holding otherwise. First, Young Resources argues that no statute of limitations applies to Claims 1 and 2 because they are "true quiet title" claims. Second, Young Resources argues that the statute of limitations on Claims 3 and 7 did not begin to run until the date its declaratory judgment claims "became ripe," and that date cannot be determined from the pleadings. We examine each of these arguments in turn.

I. Claims 1 and 2

¶12 Young Resources challenges the dismissal of its first two claims, arguing that no statute of limitations applies to Claim 1 because it seeks only to quiet title in PPLR, and the specific performance sought in Claim 2 is dependent on prevailing on Claim 1. When "the action is purely one to remove a cloud or to quiet the title to real property, the statute of limitations has no application." Bangerter v. Petty , 2009 UT 67, ¶ 12, 225 P.3d 874 (quotation simplified). But this exception applies only when a "true quiet title action" is brought. In re Hoopiiaina Trust , 2006 UT 53, ¶ 26, 144 P.3d 1129. Accordingly, the court must determine "whether a claim is a true quiet title action or whether the claimant really seeks other relief." Id. "If the party’s claim for quiet title relief can be granted only if the party succeeds on another claim, then the statute of limitations applicable to the other claim will also apply to the quiet title claim." Id. ¶ 27. Courts must be cautious in applying this rule because "parties should not be able to avoid the statute of limitations on other claims by simply disguising them as claims for quiet title relief." Id. ¶ 26.

¶13 To bring a true quiet title action exempt from the limitations period, a plaintiff must already hold title or be in actual possession of the property under a claim of ownership. See id. ¶ 27 ; see also Bangerter , 2009 UT 67, ¶ 14, 225 P.3d 874. As our supreme court explained in Hoopiiaina , "a true quiet title action is a suit brought to quiet an existing title against an adverse or hostile claim of another, and the effect of a decree quieting title is not to vest title but rather is to perfect an existing title as against other claimants." 2006 UT 53, ¶ 26, 144 P.3d 1129 (quotation simplified); see also Department of Social Services v. Santiago , 590 P.2d 335, 337 (Utah 1979) ("[A] quiet title action, as its name connotes, is one to quiet an existing title against an adverse or hostile claim of another."). In other words, a party asserts a true quiet title claim when "that party merely requests that the court adjudicate the validity of an opponent’s adverse or hostile claim to property to which the party [either] already holds title," Hoopiiaina , 2006 UT 53, ¶ 27, 144 P.3d 1129, or is in "actual possession ... under a claim of ownership," Bangerter , 2009 UT 67, ¶ 14, 225 P.3d 874.⁵

¶14 Claims 1 and 2 cannot be characterized as true quiet title actions, because PPLR does not claim to hold title to the Landfill Area, nor is it in actual possession. Granting the relief sought would not quiet the exist...