336 P.3d 55
Utah Ct. App.2014Background
- Pamela Pero orally agreed in 1998 to quitclaim her Scofield, Utah property to her son Jody Knowlden so he could obtain a loan to pay medical debt and then reconvey title after repayment; parties agreed on limits (one loan, taxes paid, loan ≤ $20,000).
- Pero quitclaimed the property to Jody and Denise Knowlden in July 1998; a $48,000 deed of trust was recorded the same day, and a $71,500 deed of trust was recorded in February 2000—amounts Pero did not authorize and learned of later.
- From 1998–2004 Pero and family continued using the property; in 2004 Knowlden changed locks and posted no-trespass notices. Pero sent multiple letters (2004–2005) requesting reconveyance but received no response.
- Pero sued in May 2009 seeking reconveyance via breach of agreement, rescission, constructive trust, and unjust enrichment. After a 2013 bench trial, the district court found breaches in 1998 and 2000 and found Pero had notice of repudiation by 2004; it dismissed all claims as time-barred.
- On appeal, the Utah Court of Appeals affirmed dismissal of the equitable claims (constructive trust, unjust enrichment, rescission) as barred by the four-year statute of limitations under the discovery rule, but vacated dismissal of the breach-of-agreement claim and remanded for additional findings on whether Knowlden retained a continuing obligation to reconvey and whether Pero’s remedies remained viable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Pero's breach-of-agreement and rescission claims are time-barred | Pero argued repudiation did not occur until litigation; claims timely | Knowlden argued breaches/repudiation occurred by 2000/2004 and SOL expired | Court vacated dismissal of breach claim and remanded for findings on continuing obligation; rescission barred by SOL as applied to breaches known in 1998/2000 or repudiation in 2004 |
| Effect of anticipatory repudiation on accrual/SOL | Pero contended she could treat contract as operable and delay suit | Knowlden argued repudiation started SOL in 2004 | Court acknowledged non-repudiating party may await performance but remanded to clarify whether contract obligation survived and whether SOL bars enforcement when performance becomes due |
| Whether constructive trust and unjust enrichment claims accrued later (discovery rule) | Pero argued silence/evasion did not give clear repudiation; discovery rule tolled SOL | Knowlden argued Pero had actual/constructive notice by 2000/2004 so SOL lapsed | Court affirmed district court: discovery rule tolled until beneficiary knew or should have known; Pero had notice by 2000 (breach) and by 2004 (repudiation), so equitable claims are time-barred |
| Whether district court made adequate findings on continuing obligations and remedies | Pero sought clarification whether she retained right to compel future reconveyance | Knowlden relied on district court’s bar rulings | Court remanded for additional findings/conclusions regarding whether Knowlden has ongoing duty to reconvey and whether Pero forfeited ability to compel future performance or seek damages |
Key Cases Cited
- Russell Packard Dev., Inc. v. Carson, 108 P.3d 741 (Utah 2005) (standard of review and discovery-rule principles)
- Snow v. Rudd, 998 P.2d 262 (Utah 2000) (discovery rule for constructive trust; SOL tolls until beneficiary knows or should know of breach/repudiation)
- Breuer-Harrison, Inc. v. Combe, 799 P.2d 716 (Utah Ct. App. 1990) (anticipatory repudiation permits suit but non-repudiating party may await performance)
- Hurwitz v. David K. Richards & Co., 436 P.2d 794 (Utah 1968) (contract law on treating repudiation and timing of suit)
- Kasco Servs. Corp. v. Benson, 831 P.2d 86 (Utah 1992) (non-repudiating party can continue to treat contract as operable without waiving rights)
- Estate of Davis v. Davis, 265 P.3d 813 (Utah Ct. App. 2011) (constructive trust subject to the four-year SOL and discovery-rule tolling)