Eldridge v. Farnsworth

166 P.3d 639

2007 UT App 243

Ty ELDRIDGE and Marina Eldridge, Plaintiffs, Appellants, and Cross-appellees, v. James L. FARNSWORTH, David Farnsworth, and Gregory Farnsworth, Defendants, Appellees, and Cross-appellants.

No. 20060333-CA.

Court of Appeals of Utah.

July 12, 2007.

Rehearing Denied August 14, 2007.

Alvin R. Lundgren, Mt. Green, for Appellants and Cross-Appellees.

Clark B. Allred and Bradley D. Brotherson, Vernal, for Appellees and Cross-appellants.

Before Judges DAVIS, McHUGH, and ORME.

OPINION

McHUGH, Judge:

¶ 1 Plaintiffs Ty and Marina Eldridge (the Eldridges) appeal the trial court's grant of summary judgment to Defendants James L. Farnsworth, David Farnsworth, and Gregory Farnsworth (the Farnsworths). The Eldridges also assert that the trial court erred both when it denied their motion to amend the complaint and when it ordered them to release a lis pendens. The Farnsworths cross-appeal challenging the trial court's ruling that the lis pendens did not amount to a wrongful lien entitling them to treble damages, attorney fees, and costs. Additionally, both parties appeal the trial court's denial of attorney fees. We affirm.

BACKGROUND

¶ 2 In the summer of 2004, Plaintiff Ty Eldridge (Ty) became aware of real property for sale in Neola, Utah (the Ranch). The Ranch, owned by the Farnsworths, consisted of a homestead on 280 acres with 120 shares of water. In early August 2004, Ty contacted James Farnsworth (James). The two began negotiations regarding the Eldridges' purchase of the Ranch and arranged several tours. Ty also asked James about a realtor sign on the property, but James stated that the broker's contract had lapsed. Eventually, the parties agreed on terms and executed a Real Estate Purchase Contract (the REPC) on August 24, 2004.

¶ 3 Under the REPC, the Eldridges agreed to purchase the Ranch and some personal property for $339,000, with a $1000 earnest money deposit and the remaining $338,000 to be paid through conventional financing. The Eldridges' obligation to purchase the Ranch was conditioned upon both their ability to obtain financing and the property's appraisal value exceeding the contract price. The REPC also included a "time is of the essence" clause and an express requirement that the parties close the transaction by October 24, 2004.

¶ 4 The Eldridges contacted Washington Mutual, on August 23, 2004, to arrange financing. Subsequently, Washington Mutual informed the Eldridges that it would only consider financing the purchase of the house and one acre. Ty notified James that Washington Mutual would not lend on the Ranch. Ty contacted several alternate lenders; however, the Eldridges were reluctant to finance through any of them because they required a much larger down payment and a proposal showing how positive income would be derived from ranching operations.

¶ 5 Due to these financing issues, Ty proposed leasing the Ranch with an option to purchase in the future (the Lease Option). Although James was initially reluctant to consider the Lease Option, he contacted Ty on September 19, 2004, to discuss the details of Ty's proposal. The next day, the Eldridges contacted Washington Mutual and canceled their conventional loan application. Additionally, sometime in September, James canceled the closing on the REPC that had been scheduled for October 24, 2004.

¶ 6 The parties continued discussing the Lease Option throughout September, and on October 9, 2004, Ty provided James with a rough draft. Because James was not satisfied with some of the terms, the parties continued negotiations. On October 12, Ty left a message for James asking when they could execute¹ the Lease Option. James returned Ty's call on October 16, and they discussed several topics. Ty asked for a key so that he could show his parents the Ranch, James offered to provide a title abstract if he could locate one, and James suggested that Ty contact an escrow company to handle the payments under the proposed Lease Option. The day following this conversation, the Eldridges contacted an escrow company to handle the Lease Option payments, and during that week, the Eldridges left several messages for James.

¶ 7 On October 26, 2004, James and Ty discussed some of the changes to what they hoped would be the final draft of the Lease Option and agreed to execute the agreement on October 28. The afternoon of the twenty-eighth, Ty tried to contact James for details on the time and place to meet. James finally returned Ty's calls in the late evening, informing Ty that the Farnsworths had just learned that the real estate listing on the Ranch had not expired. Therefore, James requested additional time to resolve the issue of realtor commissions before executing the Lease Option.

¶ 8 The next day, after verifying that the Ranch was an active listing, the Eldridges offered to pay the full realtor commission if they could sign the Lease Option that day. James refused to execute the Lease Option until the issue was resolved to his satisfaction. Ty informed James that the Eldridges had planned to spend the weekend at the Ranch. James gave his permission, but cautioned them against doing any additional work on the property.² Ty asked if there were any problems with the deal, other than the realtor issue, and James said there were not. That same day, October 29, Byron Gibson submitted a written offer to purchase the Ranch for $400,000; approximately $61,000 more than the price contemplated under either the REPC or the Lease Option.

¶ 9 As of November 1, 2004, the Farnsworths had not executed the Lease Option. On November 8, James informed the Eldridges of the $400,000 offer. The next day, the Eldridges' attorney sent a letter to the Farnsworths, stating that the "Eldridges represent that they are ready, willing and able to consummate" the REPC dated August 24, 2004.

¶ 10 On November 12, the Farnsworths executed a real estate purchase contract with Gibson to sell the Ranch for $400,000, and the Eldridges filed a complaint, alleging a single cause of action for breach of the August 24, 2004 REPC. Simultaneously, the Eldridges sought, and were granted, an ex parte temporary restraining order (TRO) to prevent the Farnsworths from selling the Ranch to Gibson. Additionally, the Eldridges filed and recorded a lis pendens against the Ranch.

¶ 11 The Farnsworths moved to strike the TRO and opposed the Eldridges' motion for a preliminary injunction. At the hearing on the motions, Ty testified that the Eldridges had not tendered any money or documents to the title company on or before the REPC closing date of October 24, 2004. In granting the motion to dissolve the temporary restraining order, the court noted that the terms of the REPC were specific and "required the [Eldridges] to obtain a loan, to provide documents and to tender the purchase price on or before the closing date of October 24, 2004." The trial court therefore reasoned that the Eldridges could not show a reasonable likelihood of success on the merits because they "did none of the things required by the contract," and because the parties "did not agree to any written extension."

¶ 12 Following that ruling, the Eldridges filed a First Amended Complaint that no longer directly pleaded a cause of action for breach of the REPC. Instead, the Eldridges sought specific performance of the REPC or the Lease Option under theories of fraud, waiver, and promissory estoppel. The First Amended Complaint also sought "alternate recovery" in the form of damages for the value of the bargain lost by the Eldridges. The Farnsworths answered and counterclaimed for damages on the ground that the lis pendens was a wrongful lien.

¶ 13 The trial court ordered that fact discovery be completed no later than May 2, 2005, and that the case be ready for trial by September 2005. In late August 2005, the Farnsworths moved for summary judgment on the First Amended Complaint. The trial court held a pretrial conference on August 29, 2005 and scheduled trial for late January 2006. On November 1, 2005, the Eldridges filed their memorandum in opposition to the Farnsworths' summary judgment motion. A few days later, the Eldridges also sought to amend the complaint, for the second time, in an effort to allege more specifically the elements of their fraud claim. The Farnsworths opposed the motion to amend. On December 19, 2005, the trial court heard oral arguments on the Farnsworths' summary judgment motion and the Eldridges' motion to amend the complaint. Ruling from the bench, the trial court granted the motion to amend, allowing the Eldridges to file their Second Amended Complaint, but took the summary judgment motion under advisement.

¶ 14 On January 11, 2006, the court issued a Ruling and Order granting the Farnsworths' summary judgment motion. Although the order allowing the Second Amended Complaint was issued after the Farnsworths' had moved for summary judgment, the court referenced the claims in that complaint when it granted summary judgment. On January 12, 2006, the Farnsworths prepared a proposed summary judgment order for the court's consideration.³ Following the filing of the proposed order, both parties made several motions. First, the Eldridges opposed the proposed summary judgment order submitted by the Farnsworths on the ground that it incorporated matters beyond the scope of the motion. Second, the Eldridges submitted a motion to reconsider arguing that summary judgment had only been granted with respect to the First Amended Complaint and requesting that the trial court clarify that the claims in the Second Amended Complaint remained viable. The Eldridges argued in both these motions that the issue of whether the lis pendens constituted a wrongful lien had yet to be decided. Third, relying on the provisions in the REPC,⁴ the wrongful lien statute, and rule 56 of the Utah Rules of Civil Procedure relating to temporary restraining orders, the Farnsworths moved for an award of attorney...