Lilley v. JP Morgan Chase
317 P.3d 470
Utah Ct. App.2013Background
- Plaintiffs Keith and Sharon Lilley purchased undeveloped Park City land to build a home.
- Lender JP Morgan Chase approved a construction-to-permanent loan and in Oct 2005, Ingram prepared an appraisal for funding purposes.
- Plaintiffs later defaulted on the loan after construction.
- In July 2011, Plaintiffs alleged Ingram breached the appraisal contract and negligently inflated the appraisal.
- District court dismissed the breach claim as not showing third-party beneficiary status and dismissed the negligence claim as barred by a four-year statute of limitations.
- Plaintiffs appeal, arguing third-party beneficiary status and alternative six-year limitation grounds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lilleys are third-party beneficiaries of the appraisal contract | Lilleys rely on the appraisal to obtain financing and claim benefit from it. | Appraisal was for Lender's use only; no clear intent to benefit Lilleys. | No third-party beneficiary; dismissal affirmed. |
| Whether the negligence claim is timely under the four-year statute | Ingram owed a duty to the Lilleys as third parties and/or related to the loan. | Liability arose on Dec. 16, 2005; action needed by Dec. 16, 2009. | Barred by four-year statute of limitations. |
| Whether Six-year statute for written instruments applies to Ingram's liability | Liability arose from a written instrument, so six-year limit applies. | Appraisal does not impose immediate liability or a written obligation. | Not applicable; six-year limit does not apply. |
Key Cases Cited
- Wagner v. Clifton, 62 P.3d 440 ((Utah 2002)) (third-party beneficiary status requires a clear intent in the contract)
- SME Indus., Inc. v. Thompson, Ventureulte, Stainback & Assocs., 28 P.3d 669 ((Utah 2001)) (beneficiary must be direct and explicit in the contract)
- West v. Inter-Financial, Inc., 139 P.3d 1059 ((Utah Ct. App. 2006)) (appraisers owe independent duty of care to third parties)
- Bracklein v. Realty Ins. Co., 80 P.2d 471 ((Utah 1938)) (test for six-year LIMITATION on written instruments)
- Paulsen Construction Co. v. Brigham Young Univ., 744 P.2d 1370 ((Utah 1987)) (explains Bracklein six-year test applying to instruments)
- Ellis v. Estate of Ellis, 169 P.3d 441 ((Utah 2007)) (negligence claims fall under catch-all four-year limit)
- Ladd v. Bowers Trucking, Inc., 264 P.3d 752 ((Utah Ct. App. 2011)) (negligence actions governed by four-year statute)
- Clark v. Deloitte & Touche LLP, 34 P.3d 209 ((Utah 2001)) (limitations start when injury occurs from appraisal)