United States District Court, D. Utah
CURT A. MARCANTEL, Plaintiff,
MICHAEL AND SONJA SALTMAN FAMILY TRUST, MICHAEL A. SALTMAN and SONJA SALTMAN, Defendants.
MEMORANDUM DECISION & ORDER
B. Pead, United States Magistrate Judge.
matter comes before the court on Plaintiff Curt A. Marcantel
(“Mr. Marcantel”) and Defendants Michael and
Sonja Saltman Family Trust, Michael A. Saltman and Sonja
Saltman's (collectively the “Trust”) cross
motions for summary judgment. The parties consented to United
States Magistrate Judge Dustin B. Pead conducting all
proceedings, including entry of final judgment. On February 25,
2019, the court held oral argument on the cross
motions. The court, having carefully considered the
parties' submissions, relevant legal authorities and oral
argument of counsel, grants the Trust's motion for
summary judgment and denies Mr. Marcantel's cross motion
for partial summary judgment.
OF UNDISPUTED FACTS
document titled “Grant of Easement” naming Verna
Thorn as Grantor and the Snyderville Basin Sewer Improvement
District as Grantee was recorded with the Summit County
Recorder's Office in May 1989 (the “Sewer
Easement”). In early 2007, the Trust purchased the
subject property located at 1064 Park Avenue (the
“Property”) for $1, 700, 000. During the
Trust's purchase of the Property, the prior owner, Old
Town Partners, LLC (“OTP”), disclosed that the
Property was encumbered by the Sewer Easement. While the
Property was under contract to be sold to the Trust, OTP
commissioned an existing conditions survey showing the Sewer
Easement (the “Survey”).
there is no evidence showing the Survey was provided to the
Trust. Instead, the evidence supports the Survey was sent to
Elliott Workgroup Architects (“EWA”), an
architectural firm that was working with OTP's (and then
the Trust) to create design concepts for the Property. For
Mr. Saltman's transaction, the Sewer Easement was not
identified as an encumbrance of record or exception to
coverage in the Trust's title insurance policy on the
purchasing the Property, the Saltmans worked with EWA to
design concepts for a three-lot subdivision on the Property,
a single-family home to be constructed on each lot. EWA used
the Survey in creating its design concepts. The Trust, in
2007, submitted several pre-development applications to the
Park City Planning Department for the three-lot subdivision
and the concepts designed by EWA. The applications to Park
City included the Survey and the Trust's title policy.
The Saltmans also submitted an application to the sewer
district to relocate the Sewer Easement, signed by Mr.
Saltman on behalf of the Trust.
three-lot subdivision proposed in the applications was not
feasible without relocating the Sewer Easement from its
existing location (running through the center of the proposed
third lot) to the perimeter of the Property:
files of the Park City Planning Department identify that the
Trust's applications for the proposed three-lot
subdivision and pre-development approval for three homes were
closed on October 1, 2007. However, the Trust's application to
determine that the existing structure on the Property was
“non-historic” was approved, and the building was
subsequently demolished, leaving the Property a vacant lot.
At no time did the Trust relocate the Sewer Easement.
Furthermore, the Trust contends it stopped the
pre-development process in 2007 because the real estate
market crashed, making any development unfeasible.
2010 and 2014, EWA created at least three alternate concepts
for the Trust that would not require relocating the Sewer
Easement. The Sewer Easement is illustrated on each
concept. One concept proposed subdividing the
Property into two lots, with a duplex on one lot and a home
and accessory apartment on the other. EWA's architect
advised the Saltmans that density higher than two units on a
lot was not “feasible” without a code change and
was penalized under the code with requirements for 60% open
space and due to height restrictions.The other designs were for
either four or five multi-dwelling units (townhouses or
condos) on the Property as a single lot. The designs did not
comply with various provisions of the development code,
including open space. The Trust did not submit pre-development
applications to Park City for any of these alternate
around early 2015, the Trust listed the Property 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.”
Trust and Lakeland Homes, Inc. entered a form Real Estate
Purchase Contract (“REPC”) on February 2, 2015.
Paragraph 7 of the REPC provides that the seller would
provide “a written Seller Property Condition Disclosure
(Land) for the Property, completed, signed and dated by
Seller”; a commitment for title insurance; and the term
inserted by the buyer a “Survey, if one has been done,
” amongst other disclosure items. Furthermore, in
Paragraph 10.2 the Trust agreed to: “(a) disclose in
writing to Buyer defects in the Property known to Seller that
materially affect the value of the Property that cannot be
discovered by a reasonable inspection by an ordinary prudent
Buyer; (b) carefully review, complete, and provide to Buyer a
written Seller Property Condition Disclosure (Land) …
The provisions of Section 10.1 and 10.2 shall survive
Saltman, on behalf of the Trust, completed the Seller's
Property Condition Disclosure (Land) form
(“Seller's Disclosures”) on or around
February 8, 2015. The Seller's Disclosures provide the
Section 6 of the Seller's Disclosure, paragraph D,
required a “yes” or “no” response to
the following question: “Are you aware of any survey(s)
that have been prepared for the Property or any adjoining
property or properties? If ‘Yes,' please provide a
copy of any such survey(s) in your possession.” The
Trust checked the box for the response “No.”
Paragraph E of Section 6 required a “yes” or
“no” response, and provides a space for the
seller to insert additional responsive information, to the
following question: “Are you aware of any unrecorded
easements, or claims for easements, affecting the Property?
If ‘Yes,' please describe, to your knowledge, the
nature and location of any such easement(s).” The Trust
checked the box for the response “No.” Even
though the Trust had actual knowledge of the Sewer Easement,
the Trust did not disclose it in response to instructions or
any questions contained in the Seller's Disclosures.
to Mr. Marcantel, he had no specific plans to develop the
property at the time of the purchase. However, Mr.
Marcantel's realtors had seen the 2007 EWA site plan
subdividing the Property into three lots. And they saw a
Multiple Listing Service (“MLS”) listing
suggesting the Property “may be able to accommodate up
to 5 residential units.” Furthermore, Mr.
Marcantel's realtors also met with the Park City Planning
Department to discuss potential development options. Mr.
Marcantel's realtors relayed this information to him,
though Mr. Marcantel did “not necessarily”
believe what his realtors told him or rely on their
the Trust's agent, Matt Magnotta, and Marcantel's
agent, Tisha Digman, discussed the Property over the phone.
Magnotta told Digman that he believed that three
single-family homes could be built on the Property. Magnotta
forwarded Digman an email with a Dropbox link. The link
included some of the design materials from the Trust's
proposed three-lot subdivision application submitted to Park
City in 2007. The materials included illustrated three homes
and their placement on the Property pursuant to the
application for the three-lot subdivision submitted to the
City back in October 2007. It is undisputed that the link
provided to Digman did not include the Survey or the proposed
subdivision plat depicting the location of the Sewer
Marcantel commissioned a title search through Coalition Title
and Stewart Title. After conducting the search, Coalition
Title and Stewart Title represented to Mr. Marcantel that
there was no sewer easement on the Property, and issued a
Title Insurance Policy in favor of Mr. Marcantel for the
Property (“the Policy”) insuring Mr. Marcantel
for up to $1, 775, 000 in loss related to any undiscovered
encumbrance. Relying on the Policy and prior to closing, the
REPC was assigned from Lakeland Homes, Inc., to Mr.
Marcantel. Thereafter, Marcantel closed on the purchase of
the Property for $1, 775, 000 without knowing his title
insurance policy did not identify the Sewer Easement.
time, Mr. Marcantel/Lakeland apparently had no actual
knowledge of the Sewer Easement. Mr. Marcantel-an
experienced, sophisticated real estate investor who owns four
or five homes in Louisiana, cattle ranches in Texas and
Louisianna, and homes in Park City and Salt Lake-was
purchasing the Property as an investment.
six months later, Marcantel entered a contract to sell the
Property to Joe Kelly for $1, 995, 000. While under contract,
Kelly and his agent discovered the Sewer Easement. The Sewer
Easement was not identified in the title commitment issued by
U.S. Title for Kelly's intended purchase. Kelly's
agent obtained a copy of the Survey from EWA, confirming the
location of the Sewer Easement. Kelly cancelled the contract.
Kelly offered reduced amounts to purchase the Property, up to
$1, 400, 000, but Mr. Marcantel rejected the offers.
Marcantel sold the Property in March 2018 for $1, 450, 000.
Mr. Marcantel's expert appraiser values Marcantel's
damages due to the discovery of the Sewer Easement at $450,
000. The Saltmans' expert appraiser values that the
difference between the Property as encumbered and
unencumbered by the Sewer Easement resulting in a loss of
$65, 000. Further, Marcantel submitted a claim under the
Policy, and Stewart Title accepted the claim, eventually
paying Mr. Marcantel $272, 500 to settle the claim.
judgment is appropriate when the moving party “shows
that there is no genuine dispute as to any material fact and
the movant is entitled to a judgment as a matter of
law.” Fed.R.Civ.P. 56(a); McGeshick v.
Prinicipi, 357 F.3d 1146, 1149 (10th Cir. 2004). One of
the principal purposes of summary judgment is to identify and
dispose of factually unsupported claims. See Celotex
Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). Thus,
summary judgment is appropriate where a party “fails to
make a showing sufficient to establish the existence of an
element essential to that party's case, and on which that
party will bear the burden of proof at trial.”
Id. at 322. Once the moving party has demonstrated
the absence of material fact disputes, the burden shifts to
the non-moving party to go beyond the pleadings and designate
“specific facts showing that there is a genuine issue
for trial.” Id. at 324; see also Adler v.
Wal-Mart Stores, Inc., 144 F.3d 664, 671 (10th Cir.
1998). To meet this burden, the nonmoving party must come
forward with admissible evidence. Fed.R.Civ.P. 56(c);
Alder, 144 F.3d at 671.
Court views the evidence “through the prism of the
substantive evidentiary burden.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 254, (1986)). Thus,
on his fraud-based claims, Mr. Marcantel's substantive
burden is to show evidence in the record that clearly and
convincingly establishes each element of the claims. See
Giusti v. Sterling Wentworth Corp., 2009 UT 2, ¶
62, 201 P.3d 966 (“Summary judgment is warranted if a
plaintiff fails to supply evidence, which, if accepted as
true, would clearly and convincingly support each element of
a fraud claim.”) (internal quotation marks omitted).
Marcantel has asserted four claims against the Trust:
fraudulent nondisclosure, fraud, breach of contract, and
breach of the covenant of good faith and fair dealing. As
explained below, Mr. Marcantel has not met his burden on any
of these claims.
The Trust is entitled to judgment on Mr. Marcantel's
nondisclosure and fraud claims.
Marcantel first asserts claims for fraudulent nondisclosure
and misrepresentation. The Trust argues Mr. Marcantel is not
the real party in interest for either of these claims and, in
any event, they fail on the merits. Mr. Marcantel argues that
he is the proper plaintiff because he, and not Lakeland, was
damaged as a result of reliance on the Trust's
representations. In addition, Mr. Marcantel counters the
Trust's arguments on the merits and seeks summary
judgment on his fraudulent nondisclosure claim.
Mr. Marcantel is the real party in interest on his fraudulent
nondisclosure or fraudulent misrepresentation
assigned the REPC to Mr. Marcantel on March 12,
2015. Under Utah law, that assignment included
the right to sue for fraud and fraudulent nondisclosure.
See Russell/Packard Dev., Inc. v. Carson,
2003 UT App 316, ¶ 31, 78 P.3d 616, aff'd sub
nom. Russell Packard Dev., Inc. v. Carson, 2005
UT 14, ¶ 31, 108 P.3d 741 (citing Mayer v.
Rankin, 91 Utah 193, 63 P.2d 611 (1936)). Accordingly,
the “person entitled under the substantive law to
enforce [their] right[s]” is Mr. Marcantel not
Lakewood, U.S. ex rel. Eisenstein v. City of New York,
New York, 556 U.S. 928, 935 (2009) (quoting
Black's Law Dictionary 1154 (8th ed. 2004)), and
Mr. Marcantel is real party in interest. Fed R. Civ. P.
Mr. Marcantel's nondisclosure claim fails on the
thrust of the nondisclosure claim is that the Trust
fraudulenly failed to disclose the sewer
easement. To succeed on this claim, Mr. Marcantel
must demonstrate by “clear and convincing
evidence” that: (1) the Trust “had a legal
duty to communicate information”; (2) the
Trust “knew of the information [it] failed to
disclose”; and (3) “the nondisclosed information
was material.” Hess v. Canberra Dev.
Co., 2011 UT 22, ¶ 29, 254 P.3d 161 (emphasis in
original). Mr. Marcantel must also show clear and convincing
proof of intent to deceive. See Anderson v. Kriser,
2011 UT 66, ¶ 26, 266 P.3d 819. As explained below, this
claim fails on the merits because the Trust did not know Mr.
Marcantel was unaware of the easement, and in any event, Mr.
Marcantel already had constructive knowledge of the easement.
The fact that the Trust did not know Mr. Marcantel was
unaware of the easement effectively precludes proof on two
elements: duty to disclose and intent to deceive.
Marcantel must demonstrate both a duty to disclose and intent
to deceive. It is undisputed, however, that the Trust did not
know Mr. Marcantel was unaware of the easement. This alone
negates any duty to disclose or intent to deceive on the part
of the Trust.
Duty to Disclose
failure to disclose may be actionable as fraudulent
nondisclosure only where the defendant has a duty to
disclose. See Hess, 2011 UT 22, ¶ 29. The
question, then, is how that duty arises. The Restatement
(Second) of Torts-cited as authoritative by the Utah Supreme
Court in Mitchell v. Christensen, 2001 UT 80, 31
P.3d 572-answers the question this way: a duty to disclose a
defect exists where “A knows that B is not aware of
[the defect], that he could not discover it by an ordinary
inspection, and that he would not make the purchase if he
knew it.” Restatement (Second) of Torts § 551 cmt.
l, illus. 9 (1977). Indeed, “a disclosure duty ripens
only when it becomes apparent to the non-disclosing party
that another party is operating under a mistaken perception
of a material fact.” Remington Rand Corp. v.
Amsterdam-Rotterdam Bank, N.V., 68 F.3d 1478, 1484 (2d
Cir. 1995) (citing Restatement (Second) of Torts § 551
cmt. k (1977) (no liability for nondisclosure where defendant
has no reason to believe plaintiff is acting under a
misapprehension)). In other words, the “speaker must
actually know that the other person is about to enter into
the business transaction under a mistaken impression of basic
facts and that the other would reasonably expect disclosure
of the truth in order to correct the erroneous
impression.” Patrick J. McNulty & Daniel J. Hanson,
Liability for Aiding and Abetting by Silence or Inaction:
An Unfounded Doctrine, 29 Tort & Ins. L.J. 14, 36
(1993); see also Gresh v. Waste Servs. of Am., Inc.,
311 Fed.Appx. 766, 772 (6th Cir. 2009) (describing it as a
“superior-knowledge duty of
purpose of the disclosure duty, then, is to stop one party
from intentionally taking advantage of the ignorance of the
other. This presupposes knowledge that the other party is
acting in ignorance of the undisclosed matter. For that
reason, where “the defendant has no reason to think
that the plaintiff is acting under a misapprehension, there
is no obligation to give aid to a bargaining antagonist by
disclosing what the defendant has himself discovered.”
case, the Trust had no reason to think that Mr. Marcantel was
unaware of the easement. Mr. Marcantel has not met his burden
of establishing by clear and convincing evidence that the
Trust knew he was “acting under a
misapprehension” concerning the easement, and as such,
he has failed to establish that the Trust had a duty of
Intent to Deceive
Mr. Marcantel could establish the Trust had a duty of
disclosure, his fraudulent nondisclosure claim would still
fail because he cannot establish another element of that
claim- that the Trust had an intent to deceive. Indeed,
“intent is the hallmark of an intentional tort”
and the intentional tort of fraudulent nondisclosure, like
any fraud claim, requires proof by clear and convincing
evidence of the defendant's intent to deceive.
Anderson, 2011 UT 66, ¶ 26. Because the Trust
did not know or have reason to believe that Mr. Marcantel was
unaware of the easement, it could not, as a matter of law,
have intended to deceive him on that point.
Mr. Marcantel argues that intent to deceive may be inferred
in this case by showing “that [the Trust] had actual
knowledge of a material fact” and failed to disclose
that fact. Id. This may be true in certain cases,
but in this case, that the Trust knew of the easement and did
not disclose it is, by itself, not enough to draw the
inference that the Trust intended to defraud Mr. Marcantel.
The Federal Circuit Court of Appeals, for example, in a
slightly different context made clear that inferring
deceptive intent is appropriate only where it is the
“single most reasonable inference” that may be
drawn from any nondisclosure:
While deceptive intent can be inferred from indirect and
circumstantial evidence, that inference must not only be
based on sufficient evidence and be reasonable in light of
that evidence, but it must also be the single most reasonable
inference able to be drawn from the evidence to meet the
clear and convincing standard. In a case involving
nondisclosure of information, clear and convincing evidence
must show that the applicant made a deliberate decision
to withhold a known material reference.
Am. Calcar, Inc. v. Am. Honda Motor Co., 651 F.3d
1318, 1334 (Fed. Cir. 2011) (internal citations and quotation
marks omitted) (emphasis in original).
court is not persuaded that the Trust deliberately decided to
withhold information about the easement for the specific
purpose of deceiving Mr. Marcantel. Nor is the court
convinced that an intent to defraud is the single most
reasonable inference to be drawn from this circumstantial
evidence. Rather, the most reasonable deduction from all of
the undisputed evidence, including the fact that the Trust
did not know Mr. Marcantel was unaware of the easement, is
that the Trust had no intent to defraud Mr. Marcantel.
Marcantel's argument that the court should infer
fraudulent intent based simply on the fact that the Trust
knew about the easement and did not disclose it ignores the
well-defined boundary between negligent and fraudulent
nondisclosure. As Anderson explained:
The essential difference between a claim for negligence, or
negligent nondisclosure, and a claim for fraud, or fraudulent
nondisclosure, is the mental state of the defendant that the
plaintiff must establish in order to prevail. This is because
fraud is an intentional tort involving a malfeasance, a
positive act resulting ordinarily from a willful intent to
deceive; while negligence is an unintentional tort involving
strictly nonfeasance, a wrongful act resulting from
inattention, but not from design.
Anderson, 2011 UT 66, ¶ 25 (internal citations
and quotation marks omitted). That the Trust knew about the
easement but did not disclose it could reflect any number of
things, including inattention, or simply that the Trust
didn't know Mr. Marcantel was unaware of the easement.
Thus, the circumstantial evidence that the Trust knew about
the easement but did not disclose it is insufficient to
support the inference that the Trust operated with willful
intent to deceive Mr. Marcantel. On either of these two
elements-duty to disclose or intent to deceive-Mr.
Marcantel's claim fails.
Trust did not have a duty to disclose the easement because
Mr. Marcantel already had constructive notice of it as a
matter of law.
Marcantel's nondisclosure claim fails, as discussed,
because Mr. Marcantel has not established by clear and
convincing evidence that the Trust had a duty to disclose or
intent to deceive. The nondisclosure claim alternatively
fails for a more fundamental reason: Mr. Marcantel already
had constructive notice of the easement.
Utah, any recorded document “shall, from the time of
recording with the appropriate county recorder, impart notice
to all persons of [its] contents.” Utah Code
§57-3-102(1). Mr. Marcantel does not dispute that the
easement has been recorded since 1989. Rather, he argues it
was difficult to find because it had a metes and bounds legal
description, rather than a description that refers to parcel
or tax serial numbers. Application of the Utah recording
statute, however, is not dependent on how easily the recorded
document is located. Further, it does not require parcel or
tax serial numbers for recording. Rather, it requires only
“a legal description of the real property, ”
which the recording in this case satisfies. Id. at
Marcantel raises two other points regarding section
57-3-102(1). First, citing Pierucci v. Pierucci,
2014 UT App 163, ¶ 20, 331 P.3d 7, he argues the general
purpose of the recording statutes-“to protect the
purchaser by enabling him to avoid unrecorded competing
claims to the property he purchased in good
faith….”-should govern interpretation of
section 57-3-102(1). But the law is clear that “we look
first to the plain language of the statute” for
evidence of the legislature's intent. Savely v. Utah
Highway Patrol, 2018 UT 44, ¶ 25, 427 P.3d 1174.
“Where statutory language is plain and unambiguous,
this Court will not look beyond the same to divine
legislative intent.” Id. The language of
section 57-3-102(1) is plain and unambiguous.
even if legislative purpose were relevant, Mr. Marcantel
misconstrues the purposes behind Utah's recording
statutes. As explained by Pierucci, those purposes
are to “impede fraud, to foster the alienability of
real property, and to provide predictability and integrity in
real estate transactions.” Pierucci, 2014 UT
App 163, ¶ 20, (quoting Federal Deposit Ins.
Corp., 2011 UT App 416, ¶ 23, 267 P.3d 949). None
of these purposes are offended by applying section
57-3-102(1) as written to conclude Mr. Marcantel had notice
of the recorded easement.
Marcantel also argues the easement was not
“properly” recorded because, according to Mr.
Marcantel, “it was posted to the wrong block by the
Summit County Recorder's Office.”This
statement, however, is merely an explanation from Coalition
Title about why it missed the easement, and says nothing
about whether it was “properly” recorded. More
importantly, even if this was an indication the easement was
not properly recorded, the outcome mandated by law does not
change. Though the Supreme Court in dicta has stated that
“the recording statute provides that constructive
notice is imparted when documents are properly recorded,
” Johnson v. Higley, 1999 UT App 278, ¶
24, 989 P.2d 61, the court in that case did not address what
is “proper, ” and the statue requires only a
correct “legal description of the real property.”
Utah Code §57-3-105(2).
there is no dispute that the legal description of the
easement was correct. And, as noted, a correct “legal
description of the real property” is the only document
recording requirement under the statute. Utah Code
§57-3-105(2). Accordingly, regardless of whether the
easement was “posted” where it belongs, it was
recorded with the correct legal description of the real
property covered by the easement. The law is clear: unless
forged, a recorded document with a correct legal
description-like the easement here-imparts constructive
notice as a matter of law. And because Mr. Marcantel had
notice of the easement, it cannot be deemed
“latent” or “undiscoverable, ” as
required to trigger a duty to separately disclose it to him.
See, generally, Salzman v. Bowen, No. 2:07-CV-854
CW, 2010 WL 129798, at *6 (D. Utah Jan. 8, 2010) (noting that
the plaintiff must “submit evidence to allow a
reasonable jury to find that each of the alleged defects were
latent” before a duty to disclose can arise).
Marcantel does not dispute this conclusion. But he does argue
for a blanket exception for fraudulent nondisclosure claims.
The cases on which Mr. Marcantel relies are inapposite.
Specifically, these cases suggest that constructive notice
provided by a recording statute will not defeat a claim for
fraud or affirmative misrepresentation. See
Helfrich v. Adams, 2013 UT App 37, ¶ 11, 299 P.3d
2; Christenson v. Commonwealth Land Title Ins. Co.,
666 P.2d 302, 307 (Utah 1983). The cases, however, say
nothing of fraudulent nondisclosure. Because
fraudulent nondisclosure (unlike affirmative fraud) requires
a duty to disclose, and because a duty to disclose is
premised on unawareness by the receiving party, whether the
receiving party had constructive knowledge is indeed
relevant, and defeats Mr. Marcantel's claims in this
Mr. Marcantel has not shown the Trust fraudulently failed to
disclose the survey.
Marcantel asserts that the Trust fraudulently failed to
disclose the survey “that shows the Sewer
Easement”-the survey commissioned by the Trust's
predecessor, Old Town Partners (“the OTP
Survey”). This part of the fraudulent
nondisclosure claim focuses on a different source of
information regarding the easement. But the material fact Mr.
Marcantel claims was withheld when the survey was not
disclosed is not the existence of the survey but the
existence of the easement. For this reason, the court's
conclusions regarding nondisclosure of the easement detailed
above apply to the OTP survey as well.
Mr. Marcantel has not supplied clear and convincing proof
that the Trust intended to deceive him by not disclosing the
fraudulent nondisclosure claim based on the OTP survey fails
for another reason. It is undisputed that the trustee who
handled the transaction for the Trust, Mr. Saltman, had no
knowledge of the survey. Without such knowledge, Mr. Saltman
could not have intended to deceive Mr. Marcantel about the
existence of the survey.
Marcantel argues that other agents of the Trust- particularly
Jeff Werbelow-had knowledge of the survey and that knowledge
should be imputed to the Trust based on the rule that a
“principal is affected with constructive knowledge,
regardless of actual knowledge or notice, of material facts
acquired by the agent, even if the agent does not in fact
inform the principal of the facts.” ECF No. 111 at 25.
an incomplete statement of the law. Materiality is required
at two levels: only a material fact is imputed, as Mr.
Marcantel acknowledges, and the fact is imputed only if
it's material to the agent's duties to the principal.
See Restatement (Third) of Agency § 5.03 (2006)
(agent's knowledge of a fact “is imputed to the
principal if knowledge of the fact is material to the
agent's duties to the principal....”) (cited in
Lane v. Provo Rehabilitation and Nursing, 2018 UT
App 10, ¶ 27, 414 P.3d 991). In addition, Mr.
Werbelow's awareness of the survey, even if imputed to
the Trust, is insufficient as a matter of law to satisfy the
intent to deceive element of the fraudulent nondisclosure
Mr. Marcantel's burden to prove his imputed knowledge
theory and he offered no evidence on either materiality
requirement. He's offered no evidence that the existence
of the survey was a material fact when Mr. Werbelow
functioned as an agent in 2007. And he has not shown that the
survey's existence was material to Mr. Werbelow's
contrast, the Trust submitted the Declaration of Jeff
Werbelow, which shows the OTP survey was not important or
meaningful to the Trust's plans for the Property or Mr.
Werbelow's efforts to advance those plans. Mr. Werbelow
never had a copy of the OTP survey, did not use it in helping
the Trust with the Property, and has no personal knowledge of
the survey playing any role in the Trust's predevelopment
planning concerning the Property.
Mr. Marcantel's concern, as framed by his claims in the
case, is not that the Trust failed to disclose the OTP survey
but that it failed to disclose the easement shown on the
survey. The question, then, is not whether Mr. Werbelow saw
the OTP survey but whether he learned that the survey showed
the easement. At his deposition, Mr. Werbelow was not asked
and did not testify about whether he recognized the survey
showed the easement while he was working for the
Trust. And the Trust established through his
declaration that Mr. Werbelow did not know what is shown on
the survey before Mr. Marcantel's counsel handed it to
him at his deposition.
Intent to Deceive
Better Homes & Gardens v. Cannon, 2002 UT 99, 61
P.3d 1009, teaches that the “malice, intent, or bad
faith” of a legal entity (like the Trust)
“consists of the motives which prompt the action of its
representatives; the requisite state of mind must necessarily
be that of its employee or agent.” Id. at
¶ 22 (quoting 18B Am.Jur.2d
Corporations § 2129 (1985). The only agent of
the Trust whose “motives” prompted the alleged
fraudulent nondisclosure, Mr. Saltman, had no knowledge of
the OTP survey. Id. Without that knowledge, Mr.
Saltman could not have intended to deceive Mr. Marcantel
about the survey. And if Mr. Saltman had no intent to
deceive, the Trust could not have intended to deceive.
fact that Mr. Werbelow saw the OTP survey is irrelevant
because even if that knowledge is imputed to the Trust,
it's not imputed to Mr. Saltman, the only agent of the
Trust whose intent and motives matter. “[T]he requisite
state of mind” was that of Mr. Saltman, the only agent
of the Trust who allegedly misrepresented or fraudulently
concealed the existence of the survey, and without knowledge
of the survey, “the motives which prompt[ed] the action
of” Mr. Saltman could not have been deceptive.
Wardley, Mr. Marcantel argues that the
“Trust's knowledge is the sum of the knowledge of
its agents and principals, ” presumably suggesting that
the collective knowledge of Mr. Werbelow, Mr. Saltman and
others doing work for the Trust at various times should be
combined to support the conclusion that the Trust intended to
deceive by not disclosing the existence of the survey. Mr.
Marcantel's “sum of the knowledge” argument
was rejected by the Utah Supreme Court in Helf v. Chevron
U.S.A. Inc., 2015 UT 81, 361 P.3d 63:
Although it may be possible that the collective knowledge of
the agents of a corporation may be relevant in other legal
contexts, see Restatement (Third) of Agency §
5.03 cmt.c (2006), we agree that for the purposes of proving
that a corporation is liable for an intentional tort, a
plaintiff must prove that at least one agent of the
corporation had all of the requisite knowledge to support the
claim. Inventing a corporate consciousness with the capacity
to possess the state of mind necessary for an intentional
tort is inconsistent with the principles of tort law. See
Adams, 508 N.W.2d at 480. Therefore, the district court
correctly concluded that at least one Chevron agent must have
all of the knowledge necessary to support liability under an
intentional tort theory.
Id. at ¶ 28. In short, Mr. Marcantel does not
establish fraudulent intent by demonstrating that various
Trust agents were aware of the OTP survey.
all undisputed facts are considered, it's plain that Mr.
Marcantel has not demonstrated by clear and convincing
evidence that the Trust had the fraudulent mental state
needed to support a fraudulent nondisclosure claim.
Mr. Marcantel's fraudulent misrepresentation claim fails
on the merits.
addition to his claim for fraudulent omission, Mr. Marcantel
also asserts that the Trust made several fraudulent
misrepresentations. To succeed on this claim, Mr. Marcantel
(1) that a representation was made (2) concerning a presently
existing material fact (3) which was false and (4) which the
representor either (a) knew to be false or (b) made
recklessly, knowing that there was insufficient knowledge
upon which to base such a representation, (5) for the purpose
of inducing the other party to act upon it and (6) that the
other party, acting reasonably and in ignorance of its
falsity, (7) did in fact rely upon it (8) and was thereby
induced to act (9) to that party's injury and damage.
Cardon v. Jean Brown Research, 2014 UT App 35,
¶ 6, 327 P.3d 22. According to Mr. Marcantel, the
Trust's misrepresentations are contained in three
documents: the MLS listing for the Property, a
“Potential Site Plan” EWA prepared in 2007, and
the Seller's Property Disclosure form (“the
Disclosure Form”) provided by the Trust. Mr. Marcantel
has not, however, shown that representations in any of these
three documents amount to fraudulent misrepresentations.
The MLS listing
first alleged misrepresentation is in the MLS listing, which
Mr. Marcantel describes as “advertis[ing] the Property
as having development potential for up to five residential
units.”Mr. Marcantel argues this representation
was false because “the Saltmans' architect informed
them that without a code change and the approval of the Sewer
District, that density simply wasn't
‘feasible.'” This part of Mr.
Marcantel's fraud claim fails because the alleged
misrepresentation is not of a presently existing material
fact, it's not false, there is no evidence of intent to
deceive, and Mr. Marcantel did not rely on the alleged
No false representation.
Mr. Marcantel has not established that the MSL listing
contained a false representation. The listing stated that the
Property “may be able to accommodate up to 5
residential units, ” and Mr. Marcantel contends that
statement is false for two reasons: (a) that EWA had
previously informed the Trust “that any more than two
units on a single property is penalized under Park City's
development code (60% open space, set backs, parking) and
buildings are restricted to two stories (27' height) and
is not feasible”; and that (b)
“when Sara Werbelow and EWA met with Park City Planners
to discuss high-density development for four to five
townhomes, the City's feedback was discouraging and in
line with EWA's opinion of
of these points negates or even concerns the MLS listing.
EWA's advice that the City's development code may
penalize more than two units on a single property had nothing
to do with accommodating five residential units. Rather, this
statement came in an email exchange in 2010, five years
before the MLS listing, and concerned a concept plan for two
lots with a duplex on one and a single-family residence on
the other. In response to that concept plan, the
Trust asked: “And, if we went for a variance and more
density as an elderly care facility…. In that case,
overall gross building square footage
potential?” It was in response to that question, not
a query regarding "five residential units, ” that
Mr. Elliott responded: “Currently, there is no way
supported in the code to gain a significant amount of
density. All sections give lip service to the idea, but in
reality are not feasible.” Id.
2010 response to the Trust's question about density
potential does not prove false the 2015 statement that the
Property “may be able to accommodate up to 5
residential units.” In fact, more than two years after
that 2010 response, EWA proposed a 5 residential unit plan
for the Property with the sewer line in place. Mr.
Marcantel's reference to Mr. Elliott's 2010 email
does not show that the 2015 statement was false.
Marcantel also asserts that the statement in the MLS listing
was false because “when Sara Werbelow and EWA met with
Park City Planners to discuss high-density development for
four to five townhomes, the City's feedback was
discouraging and in line with EWA's opinion of
non-feasibility.” But this misconstrues the record. As
noted, it's undisputed that EWA proposed a five-townhouse
plan for the Property in November 2012. The email
cited by Mr. Marcantel, in which EWA's Roger Durst and
Ms. Werbelow discussed input from Park City, was exchanged in
September and October 2012, before EWA proposed its
five-townhouse plan. There is no evidence that Park City ever
provided input-discouraging or not- concerning the November
2012 design. Finally, Mr. Marcantel's conclusion
that Park City's input involved “non-compliance
with the code” is also not supported by the email,
which mentions only that Park City identified
“issues” with setbacks and height. This is not
the clear and convincing evidence required to establish that
the MLS listing was false.
No fraudulent intent.
Mr. Marcantel could show the MLS listing was false, he has
not demonstrated it was made with intent to deceive. As noted
in connection with the nondisclosure claim, “intent is
the hallmark of an intentional tort” and the
intentional tort of fraud requires proof by clear and
convincing evidence of the defendant's intent to deceive.
Anderson, 2011 UT 66, ¶ 26. Mr. Marcantel does
not directly address this requirement in connection with the
MLS listing, but instead argues generally that the Trust
could have “listed the Property for sale without making
any representations concerning how it could be developed,
” and speculates that the Trust instead
“intentionally crafted” an “illusion”
regarding the Property being “a high density
short, Mr. Marcantel asks the court to infer fraudulent
intent. “While the intent to deceive may be inferred,
it must be established by more than doubtful, vague,
speculative or inconclusive evidence.” Andalex
Res., Inc. v. Myers, 871 P.2d 1041, 1047 (Utah Ct. App.
1994)(internal citation omitted). Mr. Marcantel's
speculation about the Trust's motives does not meet his
burden of proving fraudulent intent by clear and convincing
even assuming the MLS listing was otherwise false and done
with fraudulent intent, Mr. Marcantel failed to demonstrate
he relied on it, and in fact suggested the opposite. During
his deposition, for example, Mr. Marcantel stated that he
didn't “necessarily” believe the reference to
five residential units in the MLS listing. As he put it,
“that's just somebody saying you could put five
units in there.”
listing, however, did not state that a buyer “could put
five units in there.” Instead, it stated that the
Property “may be able to accommodate up to 5
residential units.” And the very next sentence
advises prospective buyers to “consult with your
architect” about developing the Property. Finally, the
MLS listing includes this express disclaimer:
Seller and Seller's agent have done limited investigation
into what is allowed or can feasibly be done on this parcel.
Buyer and Buyer's agent are encouraged to consult
qualified professionals and the Town of Park City prior to
making any assumptions ...