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Wing v. Still Standing Stable, LLC

Court of Appeals of Utah

November 17, 2016

Hilary Wing, Tim Shea, Aspenwood Real Estate Corporation, and Elite Legacy Corporation, Appellees,
v.
Still Standing Stable LLC, Appellant.

         Second District Court, Ogden Department The Honorable Noel S. Hyde The Honorable Michael D. Lyon No. 060906802

          Robert J. Fuller, Attorney for Appellant

          Robert R. Wallace, L. Miles LeBaron, and Dallin T. Morrow, Attorneys for Appellees

          Judge J. Frederic Voros Jr. authored this Opinion, in which Judges Gregory K. Orme and Kate A. Toomey concurred.

          OPINION

          VOROS, Judge

         ¶1 In this opinion we address one of four appeals arising from a single lawsuit over a failed real estate deal.[1] The lawsuit involves a dispute over a real estate sales commission. On one hand are a real estate brokerage and related individuals (Plaintiffs); on the other, the property sellers.

         ¶2 In this appeal, Still Standing Stable LLC (Still Standing) challenges the trial court's pretrial dismissal of Still Standing's three counterclaims against real estate agent Tim Shea and related parties. Still Standing contends, first, that Shea owed and subsequently breached fiduciary duties running to Still Standing; second, that Plaintiffs' negligent conduct and misrepresentations damaged Still Standing; and third, that newly discovered evidence demonstrates that Plaintiffs lacked standing to sue and thus that the court lacked subject matter jurisdiction. The trial court rejected all of Still Standing's claims on the ground that its damages were caused by its own conduct, not Plaintiffs'. We affirm.

         BACKGROUND[2]

         ¶3 A more complete statement of the background facts common to all four related appeals is set forth in Elite Legacy Corp. v. Schvaneveldt, 2016 UT App 228. Here, we recite a few of the more salient facts from that opinion along with pertinent facts not recited in that opinion.

         ¶4 This case involves a parcel of property in Weber County, Utah (the Property). Still Standing purchased the Property from the State of Utah School and Institutional Trust Lands Administration (SITLA). At that time, SITLA informed Still Standing that "there is likely no access" to the Property and that SITLA was "not guaranteeing access."[3]

         ¶5 After Still Standing purchased the Property, Cathy Code, Chuck Schvaneveldt's wife, advertised it for sale. Tim Shea, a real estate agent, approached Still Standing through Schvaneveldt and Code about some potential buyers (Buyers).[4]Shea was employed by Aspenwood Real Estate Corporation (and later its successor, Elite Legacy Corporation). Shea and Schvaneveldt entered into a For Sale by Owner Commission and Agency Disclosure Agreement (the FSBO).[5]

         ¶6 As further explained in Elite Legacy Corp. v. Schvaneveldt, 2016 UT App 228, the FSBO contained a brokerage fee clause requiring Schvaneveldt to pay a commission if Sellers "accept[ed] an offer from [Buyers]." That brokerage fee became "immediately . . . due and payable" "[i]f the sale or exchange [was] prevented by default of the Seller." "Default" referred to default on the Real Estate Purchase Contract (the REPC) entered into between Buyers and one or more of the Sellers. Among other requirements, the REPC required Buyers to deposit $25, 000 in earnest money; required Sellers to "convey good and marketable title to Buyer at Closing by general warranty deed"; and imposed a 15-day seller-disclosure deadline, a 60-day due-diligence deadline, and a 90-day settlement deadline ahead of closing.

         ¶7 Initially, Buyers and Sellers each fulfilled their REPC obligations. Buyers deposited $25, 000 earnest money with Aspenwood and Sellers made the required disclosures. In the disclosures, Sellers admitted that the property lacked access from a public road, but stated that there was "direct access to the Property through . . . [a] Private Easement." As the closing date approached, Buyers became increasingly concerned about the lack of insurable access to the Property. But they did not object to the seller disclosures during the 60-day "due diligence" window.

         ¶8 Before closing, Sellers' attorney called Buyers' attorney to inform him that Sellers would be conveying the Property by special warranty deed, not by general warranty deed as called for in the REPC, and that Sellers' escrow and closing instructions would specify that the conveyance would be by special warranty deed. Buyers' attorney responded that a special warranty deed "might be okay if I can get a title policy that's going to guarantee [Buyers] access." But by the time of closing, no title insurance company-including the one hired by Sellers-was willing to offer a policy that guaranteed access to the Property. The deal fell through when Buyers did not appear at closing.

         ¶9 At around the same time that Shea and Schvaneveldt were dealing with the Property in Weber County, they entered into a separate agreement regarding property in Salt Lake County.[6] As part of that deal, Shea entered into a Confidential Disclosure Agreement with Still Standing and Stake Center Locating Inc., another LLC operated by Schvaneveldt. Still Standing was listed alongside Stake Center as a party in the first paragraph of the Confidential Disclosure Agreement, but only Stake Center was listed as the "Discloser" above the signature line. The Confidential Disclosure Agreement was signed only by Stake Center's Corporate Vice President; Schvaneveldt, Still Standing's sole member, did not sign the Confidential Disclosure Agreement.

         ¶10 Finally, Buyers' attorney claimed he sent principal broker Hilary Wing a copy of a letter warning Buyers that "the Seller lied about the access, " and that Sellers' actions constituted a "default" and an "outright fraud." ...


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