Wittingham v. TNE Limited Partnership
469 P.3d 1035
Utah2020Background
- The Muir Second Family Limited Partnership (the Muir Partnership) was administratively dissolved in 2007; two years later Nicholas Muir (former general partner) obtained a $435,000 loan from TNE secured by a trust deed on apartment buildings owned by the dissolved partnership.
- Muir hid the dissolution, created a nearly identically named new entity (omitting the word "the"), and represented the loan would remove an existing encumbrance to benefit the partnership.
- The alleged prior encumbrance (a Trump Security trust deed) was a sham; funds were released and then diverted by Gavin Dickson/Trump Security for uses not benefiting the partnership.
- Wittingham, LLC (successor-in-interest) sued to void the TNE trust deed and recover damages; the district court found Muir competent, found he acted for the original Muir Partnership, but held the trust deed void ab initio because the transaction was not a winding-up act. The court dismissed many of TNE's claims and denied attorney fees to Wittingham.
- On appeal the Utah Supreme Court reversed the "void" holding (holding the deed presumptively voidable under Ockey), reversed the court's sua sponte dismissal for lack of personal jurisdiction over Muir (he waived service objection), and affirmed findings that Muir was competent and that the intended grantor was the original Muir Partnership; the case was remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trust deed executed post-dissolution is void or voidable | Wittingham: deed void because partner lacked authority after dissolution; acts outside winding-up are illegal and absolutely void | TNE: under Ockey, contracts by dissolved entities are presumed voidable unless they clearly violate public policy | Held: Reversed — deed is presumptively voidable (Ockey presumption) and Wittingham failed to rebut; remanded for further proceedings |
| Whether the court lacked personal jurisdiction over Muir for TNE's cross-claims due to defective service | Wittingham/district court: insufficient Rule 4 service means no jurisdiction; dismissal appropriate | TNE: Muir waived objection by participating (service on his counsel / failure to assert defense) | Held: Reversed — Muir waived the Rule 4 objection by not timely asserting it; court had jurisdiction; remand to consider claims against Muir on the merits |
| Whether Muir was competent when he executed the transaction | Wittingham: Muir's prior head injury rendered him incompetent (clear and convincing evidence) | TNE: Expert and lay testimony support competence; presumption of competence applies | Held: Affirmed — district court did not clearly err; Wittingham failed to rebut presumption of competency |
| Whether the deed named the correct grantor (misnomer v. misidentification) | Wittingham: omission of "the" created misidentification — deed lists a different entity with no interest, so deed invalid | TNE: omission is a misnomer/latent ambiguity; extrinsic evidence shows parties intended the dissolved Muir Partnership | Held: Affirmed — deed ambiguous; extrinsic evidence supports that the intended grantor was the original Muir Partnership (misnomer), not the new entity |
Key Cases Cited
- Ockey v. Lehmer, 189 P.3d 51 (Utah 2008) (presumption that defective conveyances by terminated entities are voidable unless clearly against public policy)
- Houston v. Utah Lake Land, Water & Power Co., 187 P. 174 (Utah 1919) (older authority treating contracts by defunct entities as void; implicitly overruled by Ockey)
- Arndt v. First Interstate Bank of Utah, N.A., 991 P.2d 584 (Utah 1999) (limited partnership principles and application of corporate/derivative doctrines)
- Luddington v. Bodenvest Ltd., 855 P.2d 204 (Utah 1993) (apparent authority and partner agency principles)
- Peterson v. Coca-Cola USA, 48 P.3d 941 (Utah 2002) (presumption of competency to contract and requirement to prove incapacity by clear and convincing evidence)
- USA Power, LLC v. PacifiCorp, 372 P.3d 629 (Utah 2016) (expert testimony cannot rest exclusively on post hoc/circular reasoning)
- VCS, Inc. v. Utah Cmty. Bank, 293 P.3d 290 (Utah 2012) (equitable relief is exceptional and precluded if adequate legal remedies exist)