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Pyper v. Reil

Court of Appeals of Utah

October 18, 2018

Robert Reed Pyper, Appellant,
v.
John Reil and Meridian Title Company, Appellees.

          Third District Court, Salt Lake Department The Honorable Andrew H. Stone No. 130906816

          Thor B. Roundy and Cory B. Mattson, Attorneys for Appellant

          D. Joseph Cartwright, Attorney for Appellee John Reil

          Rachael L. Ortiz and Garreth Long, Attorneys for Appellee Meridian Title Company

          Judge Jill M. Pohlman authored this Opinion, in which Judges Michele M. Christiansen Forster and David N. Mortensen concurred.

          POHLMAN, JUDGE

         ¶1 This dispute arises out of a failed financial transaction in which Plaintiff Robert Reed Pyper executed a promissory note and a trust deed securing that note. Pyper brought various claims against Defendants Uriah Kennedy and John Reil, who were both present when Pyper signed the documents, alleging that they defrauded him. Pyper also brought a negligence claim against Defendant Meridian Title Company, who acted as the escrow agent for the transaction. The district court granted summary judgment to Meridian and dismissed Pyper's claim against it. After a bench trial on the remaining claims, the district court entered judgment against Kennedy but dismissed Pyper's claims against Reil.

         ¶2 Pyper raises two issues on appeal. First, he contends that the district court erred in concluding that he had not proven his claim for civil conspiracy against Reil. Second, he contends that the district court erred in granting summary judgment to Meridian on the ground that Meridian, as the escrow agent, had no duty to stop Pyper from entering the deal even if it knew or suspected fraud was occurring. We affirm.

         BACKGROUND

         ¶3 In October 2012, Plaintiff Pyper pledged real property as collateral for a loan to another entity in the amount of $445, 401.50. Defendant Kennedy promised Pyper that in exchange for his pledge of collateral, Pyper would be paid $5, 000 monthly until the loan was fully repaid to the lender. Kennedy also promised Pyper that he would receive $250, 000 after the loan's repayment. The purported purpose of the loan was to fund the acquisition of a company called Seaich Corporation, and Pyper understood that the loan proceeds would be invested in that company.

         ¶4 Defendant Reil cosigned the loan as a borrower with Pyper. Reil also believed that he was helping to obtain a loan to fund the acquisition of Seaich. Pyper and Reil never met or communicated before or after meeting on October 19, 2012, to close the loan transaction. Reil's representations to Pyper at the October 19 closing were limited to general assurances that "[e]verything will be ok" and that "[t]his will work out."

         ¶5 Defendant Meridian Title Company was the escrow agent for the transaction. A representative of Meridian was present at the October 19 closing, along with Pyper, Kennedy, and Reil. At the closing, Pyper executed a note in the amount of $445, 401.50 and a trust deed conveying his property securing the note. Following the lender's instructions, Meridian wired $400, 000 to the specified account. The recipient of the funds was an unrelated company called Agro Chem Tech.

         ¶6 The principal amount of the loan was never repaid and Pyper received no repayment bonus. Similarly, Pyper never received the promised monthly payments.

         ¶7 Pyper filed a lawsuit arising out of the failed transaction, contending that he was the victim of breach of contract, undue influence, civil conspiracy, and securities fraud by Kennedy and Reil. He also brought a negligence action against Meridian. Pyper did not challenge the loan itself but rather alleged that the funds were invested inappropriately in another company, and that Kennedy and Reil promised to repay him for the loan. He also alleged that Meridian acted negligently in closing the loan transaction and disbursing the funds to another company when, based on what Pyper alleges the Meridian representative observed, Meridian should have recognized that a fraud was occurring. As a basis for his claim against Meridian, Pyper asserted that Meridian owed him two specific duties: (1) the duty "to safeguard and preserve the loan proceeds and assure that those funds were transferred according to a lawful contract and for a lawful purpose," and (2) ...


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