Mind & Motion Utah Investments, LLC v. Celtic Bank Corp.
2016 UT 6
| Utah | 2016Background
- Celtic Bank sold ~14 acres to Mind & Motion under a REPC; the Phase 1 plat for condominium development had not been recorded when the contract was signed.
- The REPC required Celtic Bank to "shall record Phase 1" by a set date, and also stated Celtic Bank "agrees to record"; Mind & Motion had sole discretion to extend the recording deadline and any extension automatically extended settlement and inspection deadlines.
- Mind & Motion deposited $100,000 earnest money refundable under certain conditions; the contract included a "time is of the essence" clause and liquidated-damages provisions ($100,000) if Celtic Bank defaulted.
- County approvals by multiple offices (planning commission, county engineer, county attorney, commissioners) were required before recordation; Celtic Bank’s ability to record depended on those approvals.
- Mind & Motion extended the recording deadline once; when the plat still was not recorded before the second deadline, Mind & Motion refused to extend further, sought return of earnest money and liquidated damages, and sued for breach; district court granted summary judgment for Mind & Motion.
Issues
| Issue | Plaintiff's Argument (Mind & Motion) | Defendant's Argument (Celtic Bank) | Held |
|---|---|---|---|
| Whether the recording obligation is a covenant or a condition | Language is mandatory ("shall", "agrees to record") and deadlines are "time is of the essence," so obligation is a covenant — failure is breach | Because recordation depended on third‑party county approvals outside bank's control, the obligation is a condition precedent | Recording provision is a covenant; mandatory phrasing and other conditional language elsewhere show parties knew how to draft conditions |
| Whether the REPC is facially ambiguous | N/A (Mind & Motion argued plain meaning governs) | The provision is reasonably susceptible to the conditional reading because third parties controlled recordation timing | REPC is not facially ambiguous; Celtic’s reading is not plausibly supported by the contract language |
| Whether there is a latent ambiguity permitting extrinsic evidence | N/A | Bank submitted affidavits of officers claiming they subjectively intended the provision as a condition; asked court to consider those affidavits | No latent ambiguity; affidavits of subjective intent are insufficient absent objective collateral matter showing mislabeling or trade usage |
| Remedy/fees on appeal | Mind & Motion sought attorney fees/costs on appeal per stipulation | N/A | Court affirmed judgment, remanded to calculate reasonable appellate fees and costs |
Key Cases Cited
- McArthur v. State Farm Mut. Auto. Ins. Co., 274 P.3d 981 (Utah 2012) (distinguishes conditions by conditional words like "until" and third‑party dependence)
- WebBank v. Am. Gen. Annuity Serv. Corp., 54 P.3d 1139 (Utah 2002) (plain meaning within four corners controls interpretation)
- Central Utah Water Conservancy Dist. v. Upper East Union Irrigation Co., 321 P.3d 1113 (Utah 2013) (party who undertakes obligation to obtain permits assumes risk of nonissuance)
- Watkins v. Ford, 304 P.3d 841 (Utah 2013) (latent ambiguity arises when collateral facts show the writing misidentifies the parties' subject)
- Daines v. Vincent, 190 P.3d 1269 (Utah 2008) (extrinsic evidence to uncover latent ambiguity is the exception, not the rule)
- Encon Utah, LLC v. Fluor Ames Kraemer, LLC, 210 P.3d 263 (Utah 2009) (contract interpretation is a question of law reviewed de novo)