District Court, Provo Department The Honorable James R.
Taylor No. 120401312
E. Magleby and Kennedy D. Nate, Attorneys for Appellants
T. Waterman and Nathan S. Seim, Attorneys for Appellee.
David N. Mortensen authored this Opinion, in which Judges J.
Frederic Voros Jr. and Kate A. Toomey concurred. 
Highland Marketplace LC, High Noon LC, Solana Beach Holdings
LC, Thomas A. Hulbert, and Bret B. Fox (collectively,
Highland) invested in a land-development project that ran up
against the economic recession of 2008. Highland defaulted on
its multimillion-dollar loan, and SA Group Properties Inc.
(SA Group) foreclosed on Highland's investment property,
an incomplete commercial development in Highland, Utah, just
east of an area known as Silicon Slopes (the Property). The
foreclosure sale price was less than the loan balance,
leading to this deficiency action. After a bench trial, a
judgment of almost $5, 000, 000 was entered against Highland.
On appeal, Highland contends that the trial court erroneously
denied its motion to amend its answer. Highland also contends
that the court erred when it concluded that the fair market
value of the Property was $10, 568, 000, essentially
rejecting Highland's expert's opinion on the market
value of the Property at the time of the foreclosure sale. We
Highland obtained a $28, 000, 000 loan, secured by the
Property, from First Community Bank in September 2007. It
used the loan to develop the Property, including connecting
utilities, building roads and sidewalks, and constructing
commercial buildings on several lots. Development eventually
stalled and Highland defaulted on the loan. SA Group, as
successor to First Community Bank, foreclosed on the
At the time of foreclosure, Highland owed $14, 685, 370 on
the loan. The foreclosure sale yielded $8, 565, 000. SA Group
commenced this deficiency action against Highland in August
In March 2014, Highland filed its second motion to amend
seeking to extend fact discovery and to assert counterclaims
against SA Group based on First Community Bank's alleged
failure to fund a draw request. By this time, fact discovery had
concluded and a motion for summary judgment filed by SA Group
had been decided. However, no trial date had been set.
Although SA Group provided 29, 000 pages of discovery in nine
separate disclosures between April 2013 and February 2014,
the proposed amended answer was purportedly based on five
documents produced between April and September 2013. Other
documents long in Highland's possession-the draw request,
loan forms, and a 2010 email chain-show that Highland was aware
of the unfunded draw request prior to the commencement of the
The trial court denied the motion to amend, concluding that
the motion to amend was "untimely based on
[Highland's] previous knowledge of the failed draw
requests and the completion of significant procedural stages
in the case." The court also concluded that the delay in
filing the motion to amend was not justified, due to
Highland's long-held knowledge of the operative facts.
The trial court held a three-day bench trial in May and
August 2015. The only issue at trial was the fair market
value of the Property as of the foreclosure date. Three
experts testified; Kerry Jorgensen and Darrin Liddell
testified for SA Group and Philip Cook testified for
Highland. Jorgensen valued the Property at $10, 568, 000.
Liddell valued the Property at $9, 240, 000. Cook valued the
Property at $14, 710, 000. The trial court ultimately adopted
Jorgensen's opinion and rejected the valuations of the
other experts. The court entered a judgment against Highland
for $4, 747, 891 plus attorney fees and costs.
The trial court referenced several reasons for its decision
to reject Cook's valuation of the Property. First, it
found that Cook ascribed too much value-$475, 000-to a letter
of intent from a restaurant chain, Jack in the Box (the
Letter of Intent). The court noted that the Letter of Intent
was "dated days prior to the foreclosure sale and was
signed by Highland as the Landlord, " even though
Highland no longer owned the Property at the
The trial court also found that Cook used unreliable facts
and data in valuing one of the lots on the Property known as
the Anchor Pad. The trial court based this conclusion on
Cook's testimony that he valued the Anchor Pad as
multi-unit housing because Highland "said [it was] going
to do multi-family, and so [he] started down that road . . .
[and] just sort of finished it on that basis." However,
Cook also opined in a report that the multi-unit housing
appraisal is in effect the same as a commercial property
appraisal because "the value of the underlying land for
commercial use is roughly the same as the value of the
underlying land for multifamily use." Cook testified at
trial that he valued the Anchor Pad as commercial property,
and Jorgensen testified that Cook "did it correctly for
the anchors." The trial court determined that Cook's
valuation was unreliable because he
valued the "Anchor Pad" of [the Property] using the
condition that the Anchor Pad would function as multi-family
housing, even though, (1) [the Property] was not zoned for
multi-family housing; (2) [the Property] was not equipped
with a sewer system or other necessary infrastructure to
handle multi-family housing; [(3)] Highland City has stated
that it is against re-zoning the property; and (4) there is
no indication, other than [Highland's] own statements to
Mr. Cook, that Highland City was ever willing to [re-zone]
the Highland Property for multi-family use.
In addition to Cook's valuation of the Anchor Pad, the
trial court criticized Cook's appraisal of these and
other lots for his use of assumed conditions. Those assumed
(1) the relied-upon letter of intent would be executed and
that a "Jack in the Box" would be constructed; (2)
the zoning of the anchor pads would be changed; (3) a
Walgreens would be timely constructed; (4) Pad I would be
subdivided into two parcels; (5) the fitness club lease would
be terminated; (6) the fitness space lease would be converted
to retail space; and (7) the entire project would be leased
to stabilized occupancy.
trial court made these findings despite Jorgensen's
testimony that he and Cook each assumed that Walgreens would
be constructed and deducted costs to determine the actual
value of the lease, the subdivision of Pad I was irrelevant
to the valuation,  and each expert performed a stabilized
estimate to arrive at an "as is" appraisal value.
There was some discussion at trial about the methods the
experts used to reach their valuations, especially whether
Cook used the "land residual method." Jorgensen
conceded that Cook used "a slightly different
technique" than the land residual method but explained
that "what [Cook] used was still a land residual
technique" and that "all land residual techniques .
. . have that same problem." Jorgensen also conceded
that this same critique of Cook's approach could be
applied to his "incremental value enhancement" in
the Walgreens lot.
Based on the above findings, the trial court determined that
Cook's valuation was less reliable than the other
experts' valuations. Specifically, the court found that
Cook based his appraisal on unsupported and unreliable facts
and data, used unestablished and unreliable methods to reach
his valuation, and did not value the Property "as
is." Accordingly, the trial court adopted
AND STANDARDS OF REVIEW
Highland presents two issues for our review. First, Highland
contends that the trial court erred in denying its motion to
amend its answer. We review a trial court's denial of
leave to amend for an abuse of discretion. Estrada v.
Mendoza, 2012 UT App 82, ¶ 19, 275 P.3d 1024. A
trial court abuses its discretion if there is "no
reasonable basis for the decision." Tschaggeny v.