556 P.3d 669
Utah Ct. App.2024Background
- David R. Harman and 105 Partners, LLC were competing developers who both entered into contracts to purchase the same property in Provo, Utah, from the same seller (the "Trust Defendants").
- 105 Partners' interest originated from a series of contribution and partnership agreements dating back to 2014, which were amended over several years but did not result in title transfer.
- Harman later negotiated his own Real Estate Purchase Contract (REPC) with the Trust Defendants in August 2020, offering $500,000 for the property, but never tendered payment after learning of a settlement between the seller and 105 Partners that transferred title to 105 Partners for $375,000.
- Harman sued both 105 Partners and the Trust Defendants, asserting seven claims: four seeking to invalidate the earlier partnership/agreements and three seeking to enforce his own purchase contract (including specific performance and quiet title).
- The district court dismissed all of Harman’s claims with prejudice on standing and other grounds, and awarded attorney fees to 105 Partners and the Trust Defendants; Harman appealed these decisions.
- During the pendency of the appeal, the buildings on the property were demolished, raising a mootness challenge.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Mootness post-demolition | Claims are not moot; specific performance still possible with abatement | Demolition of buildings moots any potential relief | Claims not moot; relief (partial performance with abatement) still possible |
| Standing to challenge partnership | Harman has an interest via his purchase contract | Harman is not a party/beneficiary to the 105 Partners–Trust Defendant agreements | No standing; Harman cannot assert rights of others |
| Right to specific performance under REPC | Entitled despite not tendering payment due to futility; Trust would not have conveyed | Harman failed to tender payment, making performance claim void | Reverse dismissal; futility excuse must be considered |
| Specific performance/Recording Act | Acts as a good faith purchaser, entitled to prevail | Knew of unrecorded interest (105 Partners); not a bona fide purchaser | Dismissal affirmed; not a subsequent purchaser w/title |
| Quiet title | Should get quiet title if specific performance claim prevails | No present title/right by Harman | Reverse dismissal; quiet title claim depends on outcome of performance claim |
| Attorney fees | Should not be awarded if he prevails on appeal | Prevailing parties on all claims | Vacated; dismissal of key claims reversed |
Key Cases Cited
- Kelley v. Leucadia Fin. Corp., 846 P.2d 1238 (Utah 1992) (specific performance may be ordered with abatement in purchase price if part of property subject-matter is lost after contract formation)
- Castagno v. Church, 552 P.2d 1282 (Utah 1976) (partial specific performance with abatement is a proper equitable remedy when part of a real estate contract can't be delivered)
- D.U. Co. v. Jenkins, 216 P.3d 360 (Utah Ct. App. 2009) (lack of standing where plaintiff tries to assert rights of non-party to suit)
- Pioneer Builders Co. of Nevada v. KDA Corp., 292 P.3d 672 (Utah 2012) (Recording Act protection does not apply where purchaser had notice of prior unrecorded interest)
- WDIS, LLC v. Hi-Country Estates Homeowners Ass’n, 449 P.3d 171 (Utah 2019) (quiet title claim requires showing of valid, existing property right)