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Young Resources Limited Partnership v. Promontory Landfill LLC

Court of Appeals of Utah

June 1, 2018

Young Resources Limited Partnership, Appellant,
v.
Promontory Landfill LLC and Promontory Point Land Resources LLC, Appellees.

          First District Court, Brigham City Department The Honorable Brandon J. Maynard No. 160100006

          R. Stephen Marshall and Jason R. Hull, Attorneys for Appellant

          Jason D. Boren and David P. Mooers-Putzer, 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 PPLR[1] 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 Claim1, 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 ...


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