Marcantel v. Saltman Family Tr.

CURT A. MARCANTEL, Plaintiff, v. MICHAEL AND SONJA SALTMAN FAMILY TRUST,MICHAEL A. SALTMAN AND SONJA SALTMAN, Defendant.

Case No. 2:16-cv-250 DBP

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH, CENTRAL DIVISION

March 24, 2020

MEMORANDUM DECISION AND ORDER GRANTING IN PART MOTION FOR ATTORNEYS FEES AND EXPENSES

Magistrate Judge Dustin B. Pead

This matter is before the court on Defendants', Michael and Sonja Saltman Family Trust's, Michael A. Saltman's and Sonja Saltman's, motion for attorney's fees in in the amount of $247,164 and nontaxable expenses in the amount of $15,966.26.¹ (ECF No. 134.) The court has carefully reviewed the parties' submissions, relevant case law and supporting documentation. After doing so, the court elects to decide the motion on the basis of the written memoranda of the parties. DUCivR 7-1(f). As set forth herein, the court grants the motion in part.

BACKGROUND

The facts in this case are set forth more fully in the court's Memorandum Decision and Order granting Defendants' Motion for Summary Judgment and denying Plaintiff's Motion for Partial Summary Judgment. (ECF No. 132.) This case involves a dispute over property purchased in Park City, Utah by the Michael and Sonja Saltman Family Trust (Trust). After purchasing the property, Michael Saltman and Sonja Saltman (Saltmans) worked with Elliott Workgroup Architects (EWA), an architectural firm, to design a three-lot subdivision on theproperty. A sewer easement, however, prevented the initial proposed development without some changes. The existing structure on the property was demolished leaving the property vacant and Defendants stopped the pre-development process in 2007 because the real estate market took a severe downturn.

Between 2010 and 2014 EWA created at least three alternative concepts for the property that would not require moving the sewer easement. These alternative concepts were not submitted to the city for approval. Around early 2015 the property was listed for sale. The MLS listing for the property stated, in part: "Most development opportunities in old town come with major constraints, but this parcel is vacant and ready for your ideas... at 6900 SF this parcel may be able to accommodate up to 5 residential units." The Trust and Lakeland Homes, Inc. entered into a Real Estate Purchase Contract (REPC) on February 2, 2015. Mr. Saltman, on behalf of the Trust, completed certain disclosures. A title search was done and a title insurance policy for the property in favor of Plaintiff, Curt Marcantel, was issued. Relying on the policy and prior to closing, the REPC was assigned from Lakeland Homes, Inc., to Mr. Marcantel. Thereafter, Mr. Marcantel closed on the purchase of the Property for $1,775,000 without knowing his title insurance policy did not identify the sewer easement. Mr. Marcantel stated that he did not have specific plans to develop the property at the time of purchase.

Approximately six months after purchasing the property, Mr. Marcantel entered into a contract to sell the property for $1,995,000 to Joe Kelly. While under contract, Mr. Kelly and his agent discovered the sewer easement that was previously unknown to Mr. Marcantel. Mr. Marcantel eventually sold the property in March 2016 for $1,450,000, at what he asserts was a deflated price due to the sewer easement.

This suit followed in March 2016. On April 5, 2018, Plaintiff filed his Third Amended Complaint. (ECF No. 89.) Plaintiff brought six causes of action, two of which, were brought against Stewart Title and those are not pertinent to the current dispute. The remaining claims are as follows: fraudulent non-disclosure and fraudulent misrepresentation brought against the Saltmans in their individual capacities; and breach of the REPC (damages) and breach of the implied covenant of good faith and fair dealing asserted against the Trust as the contracted party. On March 19, 2019, the court granted the Saltman's and the Trust's combined Motion for Summary Judgment. In doing so, the court found in part, that Mr. Marcantel had notice of the sewer easement as a matter of law. (ECF No. 132.) Mr. Marcentel's Motion for Partial Summary Judgment was denied.

Defendants now seek an award of attorney's fees and expenses under the terms of the REPC and under Rule 54(d)(2) of the Federal Rules of Civil Procedure and Local Rule 54-2(e). Both rules allow for attorney's fees by motion and order of the court.

DISCUSSION

Federal jurisdiction in this case is based on diversity of citizenship. (ECF No. 89 at ¶6.) "A federal court sitting in diversity applies the substantive law, including choice of law rules, of the forum state." O'Toole v. Northrop Grumman Corp., 305 F.3d 1222, 1225 (10th Cir. 2002) (citing Barrett v. Tallon, 30 F.3d 1296, 1300 (10th Cir. 1994)). Utah is the forum in this case, and Utah's choice-of-law rules uphold contractual provisions that select a particular state's laws to govern contracts. Jacobson Const. Co. v. Teton Builders, 2005 UT 4, ¶ 12, 106 P.3d 719; Federated Capital Corp v. Libby, 2016 UT 41, ¶13, 284 P.3d 221. The REPC provides: "This contract shall be governed by and construed in accordance with the laws of the State of Utah." (ECF No. 89-4 at ¶17.) Accordingly, Utah law governs these proceedings.

I. The Trust is entitled to attorney's fees

"Attorney fees are generally recoverable in Utah only when authorized by statute or contract." Prince v. bear River Mutl Ins. Co., 2002 UT 68, ¶52, 56 P.3d 524. "Fees provided for by contract, moreover, are allowed only in strict accordance with the terms of the contract." Foote v. Clark, 962 P.2d 52, 54 (Utah 1998) (citing Dixie State Bank v. Bracken, 764 P.2d 985, 988 (Utah 1988)). The REPC's section on attorney fees provides, "In the event of litigation or binding arbitration to enforce the REPC, the prevailing party shall be entitled to costs and reasonable attorney fees." (ECF No. 89-4 at ¶17.) Defendants maintain that they are entitled to an award of attorney's fees and costs because they prevailed in their defense when this court granted summary judgment in their favor.

The REPC provides for "costs and reasonable attorney fees" to the "prevailing party." Determining the prevailing party here is not difficult. "Where a plaintiff sues for money damages, and plaintiff wins, plaintiff is the prevailing party; if defendant successfully defends and avoids adverse judgment, defendant has prevailed." R.T. Nielson Co. v. Cook, 2002 UT 11, ¶ 23, 40 P.3d 1119 (citing Mountain States Broadcasting Co. v. Neale, 783 P.2d 551, 555 (Utah Ct.App.1989)). Defendants prevailed on their claims when the court granted summary judgment. Thus they are the prevailing party. The questions that remain, however, are how to measure the fee award and does it apply to all Defendants or is it defined more narrowly by the terms of the causes of action and the contract?

The REPC contains four addendums. Each one specifically refers to the Michael A & Sonja Saltman Living Trust as seller. (ECF No. 89-4.) In contrast, the first page of the REPC provides that the seller is "Michael & Sonja Saltman." This exact language, "Michael & Sonja Saltman" is also used on the Confirmation of Receipt of Earnest Money. Despite thesedifferences, the court finds it was the Trust that entered into the agreement. The facts show that in early 2007, the Trust purchased the property at issue. It was the Trust therefore that could sell the property and it is the Trust that entered into an agreement with Lakeland Homes, Inc., which was assigned to Mr. Marcantel. The Trust is a separate and distinct legal entity from the Saltmans. See, In re Malualani B. Hoopiiaina Trusts, 2005 UT App 272, ¶ 13, 118 P.3d 861, 864, aff'd as modified and remanded sub nom. In re Hoopiiaina Tr., 2006 UT 53, ¶ 13, 144 P.3d 1129 ("'It is well settled that [a] trust is a form of ownership in which the legal title to property is vested in a trustee, who has equitable duties to hold and manage it for the benefit of the beneficiaries. Once the settlor has created the trust he is no longer the owner of the trust property and has only such ability to deal with it as is expressly reserved to him in the trust instrument.'") (citation omitted); see also, Dao Trang Phap Hoa v. Vietnamese Unified Buddhist Ass'n of Utah, 2015 UT App 125, ¶ 15, 351 P.3d 106 ("Two corporate entities 'are separate and distinct legal entities' even if they have identical memberships and ownerships.") (citation omitted).

The distinction between the Saltmans and the Trust is also found in the Complaint. Plaintiff asserted four causes of action that are relevant here: fraudulent non-disclosure and fraudulent misrepresentation against the Saltmans; and, breach of the REPC (damages) and breach of the implied covenant of good faith and fair dealing against the Trust. When the court granted summary judgment, the Saltmans prevailed on the respective claims brought against them and the Trust prevailed against the claims asserted against it. The REPC provides the only basis for awarding attorney fees and limits those fees to litigation or binding arbitration "to enforce the REPC." Therefore, Defendants "can recover only those attorney fees incurred in [defending] the contract action." Reighard v. Yates, 2012 UT 45, ¶41, 285 P.3d 1168. As noted previously, "Attorney fees are generally recoverable in Utah only when authorized by statue orcontract." Id. Under the "strict terms" of the contract that was entered into by the Trust, it is the Trust that is entitled to attorney's fees and not the Saltmans. The Saltmans urge a much broader view of attorney's fees and costs arguing that because this case involves "the same nucleus of facts"hiolk. they are also entitled to fees and costs. In support the Saltmans cite to First Am. Title Ins. Co., 906 F.3d 884 (10th Cir. 2018).

First American involved an appeal from a large jury award based upon breaches of contract and fiduciary duties by employees of a title company who left...