High Desert Estates LLC v. Arnett
357 P.3d 7
Utah Ct. App.2015Background
- Catherine Arnett sold a parcel in Veyo, Utah to Brett Folkman (who is a managing member of High Desert Estates LLC). High Desert sought access for development and either an easement or purchase of the parcel to build a road to the public highway.
- Folkman executed a real estate purchase contract (REPC) in June 2007 and an easement in October 2007; the REPC made no warranties about buildability.
- In 2009 the Developers discovered the parcel had been subdivided previously without a recorded plat amendment, violating county ordinances and preventing building homes without replatting or rezoning.
- Developers sought rescission of the REPC based on mutual mistake (that the parties shared an erroneous assumption the parcel was buildable "as is"). The trial court denied rescission, finding Developers failed to prove mutual mistake by clear and convincing evidence.
- The trial court concluded (1) parties (being sophisticated) had constructive knowledge of recorded plats and zoning restrictions, and (2) even if mistaken, buildability "as is" was not a basic assumption or material feature of the bargain because Developers primarily sought access and could have planned replatting/rezoning.
- The Developers appealed; the appellate court held the trial court’s order was final (trial court implicitly overruled objections by entering the proposed order), affirmed the denial of rescission, and remanded to award appellees appellate attorney fees under the REPC.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the trial court's order final and appealable? | Entry is not final because trial court never explicitly ruled on Developers' objection to proposed order. | Signing and entry of proposed order implicitly overruled objections; order is final. | Entry implicitly overruled objection; order is final and appealable. |
| Did Developers prove mutual mistake justifying rescission of the REPC? | Parties mutually assumed property was buildable "as is"; that assumption was material to the bargain. | Parties (sophisticated) had constructive notice of recorded plat/zoning; buildability "as is" was not a basic assumption or material term. | Developers failed to prove mutual mistake by clear and convincing evidence; rescission denied. |
| Was ability to build "as is" a material term of the agreement? | Developers: yes—ability to build homes was crucial to the purchase. | Arnetts: no—primary purpose was access; building was a bonus and could require replat/rezoning. | Trial court’s finding that buildability "as is" was not material is supported by evidence; affirmed. |
| Are appellees entitled to appellate attorney fees? | N/A (Arnetts sought fees) | N/A | Because trial court awarded fees below under the REPC and Arnetts prevailed on appeal, they are entitled to reasonable appellate fees. |
Key Cases Cited
- Powell v. Cannon, 179 P.3d 799 (Utah 2008) (final-judgment requirement and jurisdictional rule)
- Western States Dev., Inc. v. Prestige Cleaners, Inc., 254 P.3d 773 (Utah Ct. App. 2011) (entry of proposed order implicitly overrules objections)
- GeoNan Props., LLC v. Park-Ro-She, Inc., 263 P.3d 1169 (Utah Ct. App. 2011) (elements for rescission for mutual mistake)
- Vandermeide v. Young, 296 P.3d 787 (Utah Ct. App. 2013) (clear-and-convincing standard for mutual-mistake claims)
- Dillon v. Southern Mgmt. Corp. Ret. Trust, 326 P.3d 656 (Utah 2014) (prevailing party entitled to appellate fees when entitled below)
- State v. Walker, 743 P.2d 191 (Utah 1987) (standard for reviewing whether trial court findings are clearly erroneous)