Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Marcantel v. Michael And Sonja Saltman Family Trust

United States District Court, D. Utah

March 19, 2019



          Dustin B. Pead, United States Magistrate Judge.

         This 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.[1] The parties consented to United States Magistrate Judge Dustin B. Pead conducting all proceedings, including entry of final judgment.[2] On February 25, 2019, the court held oral argument on the cross motions.[3] 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.


         A 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”).[5] 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”).

         (Image Omitted)

         However, 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 Property.

         After 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.

         The 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:

         (Image Omitted)

         The 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.[6] 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.

         Between 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.[7] 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.[8]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.[9] The Trust did not submit pre-development applications to Park City for any of these alternate concepts.

         In or 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.”

         The 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 Closing.”

         Mr. 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 following instructions:

         (Image Omitted)

         Further, 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.

         According 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 representations.

         Further, 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 Easement.

         Mr. 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.

         At that 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.

         Approximately 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.

         Mr. 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.


         Summary 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.

         The 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).


         Mr. 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.

         I. The Trust is entitled to judgment on Mr. Marcantel's nondisclosure and fraud claims.

         Mr. 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.

         A. Mr. Marcantel is the real party in interest on his fraudulent nondisclosure or fraudulent misrepresentation claims.

         Lakeland assigned the REPC to Mr. Marcantel on March 12, 2015.[10] 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. 17(a).

         B. Mr. Marcantel's nondisclosure claim fails on the merits.

         The thrust of the nondisclosure claim is that the Trust fraudulenly failed to disclose the sewer easement.[11] 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.

         1. 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.

         Mr. 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.

         a. Duty to Disclose

         A 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).[12] 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 disclosure….”).

         The 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.” Id.

         In this 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 disclosure.

         b. Intent to Deceive

         Even if 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.

         Nonetheless, 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).

         The 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.

         Mr. 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.[13] On either of these two elements-duty to disclose or intent to deceive-Mr. Marcantel's claim fails.

         2. Trust did not have a duty to disclose the easement because Mr. Marcantel already had constructive notice of it as a matter of law.

         Mr. 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.

         In 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 §57-3-105(2).

         Mr. 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….”[14]-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.

         Further, 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.[15]

         Mr. 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.”[16]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).

         Here there is no dispute that the legal description of the easement was correct.[17] 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).

         Mr. 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 case.

         3. Mr. Marcantel has not shown the Trust fraudulently failed to disclose the survey.

         Mr. 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”).[18] 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.

         a. Mr. Marcantel has not supplied clear and convincing proof that the Trust intended to deceive him by not disclosing the OTP survey.

         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.[19] Without such knowledge, Mr. Saltman could not have intended to deceive Mr. Marcantel about the existence of the survey.

         Mr. 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.

         This is 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 claim.

         (i) Materiality

         It was 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 duties.

         In 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.[20] 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.[21]

         Moreover, 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.[22] 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.[23]

         (ii) Intent to Deceive

         Wardley 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.

         The 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. Id.

         Citing 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.

         When 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.

         C. Mr. Marcantel's fraudulent misrepresentation claim fails on the merits.

         In 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 must establish:

(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.

         1. The MLS listing

          The 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.”[24]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.'”[25] 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 misrepresentation.

         a. No false representation.

         First, 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 non-feasibility.”[26]

         Neither 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.[27] 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?”[28] 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.

         This 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.[29] Mr. Marcantel's reference to Mr. Elliott's 2010 email does not show that the 2015 statement was false.

         Mr. 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.”[30] But this misconstrues the record. As noted, it's undisputed that EWA proposed a five-townhouse plan for the Property in November 2012.[31] 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.[32] There is no evidence that Park City ever provided input-discouraging or not- concerning the November 2012 design.[33] 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.[34] This is not the clear and convincing evidence required to establish that the MLS listing was false.

         b. No fraudulent intent.

         Even if 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 development opportunity….”[35]

         In 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 evidence.

         c. No reliance.

         Finally, 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.”[36]

         The MLS 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.”[37] And the very next sentence advises prospective buyers to “consult with your architect” about developing the Property.[38] 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 ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.