Sanpete America, LLC v. Willardsen
269 P.3d 118
Utah2011Background
- Sanpete America, LLC purchased the Farm and WR920 water right in 1999; closing occurred at Neeley’s office, with the Warranty Deed drafted but initially omitting WR920.
- Sanpete America’s agents believed WR920 was owned by Willardsen and intended to transfer with the land; records showed Christensen as the prior owner and South Fork of Ditch 28 Pumping Co. as holder of WR920 stock.
- A 1999 deed package described WR920 and WR918, but the Warranty Deed delivered at closing did not include WR920; a later letter attempted to correct WR918, not WR920.
- Division of Water Rights records later indicated WR920 was owned by South Fork; Sanpete America was unable to sell portions of WR920 and faced financial distress.
- Sanpete America filed suit in 2004 against Graser, Willardsen, Neeley, and others seeking quiet title and damages; judgments and stipulations eventually resolved ownership and title issues.
- Trial court found that WR920 was appurtenant but that Willardsen conveyed clouded title and breached no covenants; Neeley’s breaches were found not to have caused Sanpete America’s damages; Rule 59 motions were involved, with Bagley amending some rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did WR920 pass to Sanpete America under the Warranty Deed? | Sanpete America contends WR920 was appurtenant and conveyed with the land by warranty deed. | Willardsen contends WR920 did not pass under the deed due to stock-based conveyance and statutory exceptions. | WR920 passed to Sanpete America under the Warranty Deed. |
| Did Willardsen breach the covenant of warranty by not defending title against Graser? | Sanpete America asserts breach of warranty by failure to defend against a cloud on title. | Willardsen contends there was no breach because title was not unlawfully clouded and Sanpete did not suffer eviction. | No breach of the covenant of warranty; Sanpete America did not prove damages from a defective title defense. |
| Was Judge Bagley’s Rule 59 ruling regarding Neeley proper? | Sanpete America argues Bagley acted within Rule 59(e) by considering the merits after trial. | Neeley contends his Rule 59 motion was timely and proper. | Bagley erred in granting Neeley’s untimely Rule 59 motion; but Mower’s causation finding against Neeley stood. |
| Did Neeley’s actions cause Sanpete America's damages? | Neeley’s failures caused damages by failing to include WR920 in the Warranty Deed. | Sanpete America’s damages were due to its own failure to research WR920; Neeley’s breaches did not cause the damages. | Neeley’s actions did not cause Sanpete America's damages; dismissal of Neeley claims affirmed. |
Key Cases Cited
- Abbott v. Christensen, 660 P.2d 254 (Utah 1988) (presumption against appurtenance of water rights; rebuttal with clear and convincing evidence)
- Brimm v. Cache Valley Banking Co., 269 P.2d 859 (Utah 1954) (test for appurtenance and conveyance of water rights with land)
- In re Johnson's Estate, 228 P.748 (Utah 1924) (water-right use on land as factor in appurtenance)
- Roundy v. Coombs, 668 P.2d 550 (Utah 1983) (use on land as appurtenance indicator; extent of use matters)
- Stephens v. Burton, 546 P.2d 240 (Utah 1976) (conveyance language and water rights; substantial evidence rule)
- Holmes Dev., LLC v. Cook, 48 P.3d 895 (Utah 2002) (covenants in warranty deeds; five covenants recognized)
- Goebel v. Salt Lake City S.R.R. Co., 104 P.3d 1185 (Utah 2004) (proximate cause as a factual issue; standard of review)