Wolf Mountain Resorts, LC v. ASC Utah, Inc.
268 P.3d 872
Utah Ct. App.2011Background
- ASCU and Wolf Mountain entered a 2005 leasehold mortgage designating ASCU as Mortgagor and Wolf Mountain as Mortgagee to secure ASCU's Ground Lease obligations.
- The Mortgage includes a Due On Sale Clause with an Exception that purportedly allows certain transfers without default; the language appears to refer to Mortgagee's rights, not Mortgagor's.
- In 2007 Talisker acquired ASCU; Wolf Mountain sued to foreclose, arguing the Talisker transfer triggered the Due On Sale Clause, while ASCU argued the Exception applied to ASCU's rights.
- The district court concluded the word Mortgagee in the Exception was a scrivener's error and reformed the language to Mortgagor, denying Wolf Mountain's summary judgment and granting ASCU summary judgment.
- Wolf Mountain presented extrinsic evidence, including Rauch's affidavit, arguing the Exception was deliberate to allow joint sales, creating a material fact question regarding the parties' intent.
- This appeal challenges the district court's reformation based on alleged scrivener's error and its handling of extrinsic evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether extrinsic evidence creates a fact question on intent | Wolf Mountain contends Rauch's affidavit shows deliberate use of Mortgagee. | ASCU argues the language was the scrivener's error and intended Mortgagor. | Material fact question exists; summary judgment improper. |
| Whether the district court erred by not considering extrinsic evidence | Extrinsic evidence bears on parties' mutual intent and should have been considered. | Even with extrinsic evidence, reformation not appropriate if language reflects intent; court should decide on the record. | District court erred in failing to consider extrinsic evidence. |
| Whether mutual mistake supports reformation | Scholarly authority supports reformation for mutual mistake when language does not reflect intent. | If intent is clear from language, reformation should not occur; evidence shows error in drafting. | Mutual mistake evidence creates material fact; reformation inappropriate at this stage. |
| Whether the case should be remanded or decided on remnant facts | Remand for evaluation of the Mortgage language as a whole with extrinsic proof. | Remand unnecessary if intent is determined; but if fact questions persist, remand is proper. | Remand for further proceedings to evaluate intent and the language as a whole. |
Key Cases Cited
- Haslem v. Ottosen, 689 P.2d 27 (Utah 1984) (mistakes in legal effect may be corrected by reformation)
- West One Trust Co. v. Morrison, 861 P.2d 1061 (Utah 1993) (parol evidence to prove mutual mistake admissible)
- Hottinger v. Jensen, 684 P.2d 1271 (Utah 1984) (mutual mistake and scrivener's error in deeds/deeds drafting)
- Best v. Daimler Chrysler Corp., 141 P.3d 624 (Utah Ct. App. 2006) (one sworn statement can create a material issue of fact in reformation)
- Merrick Young Inc. v. Wal-Mart Real Estate Bus. Trust, 257 P.3d 1083 (Utah 2011) (intent disputed; contract language ambiguous; extrinsic evidence relevant)