*3 maps county plat amined the and available OPINION demographic and economic data. GREENWOOD, Before JACKSON August Breuer Sometime in ORME, JJ. agreement an oral Harrison entered into Keil, Nielson, owned the Bruce who GREENWOOD, Judge: *4 worked, Keil real estate firm where and Evelyn ap- Keith and Combe Appellants Bruce, agent Duane another for firm. summary judgment peal trial court’s Keil, Nielson, agreed and They Bruce Breuer-Harrison, (B-H), Inc. appellees, for twenty-five percent equity have a Breuer, Harrison, and William Casper J. pro- in after a property interest the Combe anticipatory repudi- against the Combes for posed purchase. The three were to share into ation a real estate entered of costs, all expenses, B-H and re- appeal The Combes parties. also quired payments under the Combe con- summary judgment dis- trial court’s understanding” A tract. of “memorandum cross missing the Combes’ claims agreement outlining the terms of the was Fund, appellees Attorneys’ Guaranty Title signed by drafted and all five individuals (ATGF) We af- Inc. and Robert Froerer. in sometime 1979. December in part firm in and reverse remand August Jay In Keil contacted part. Anderson, firm, engineering owner of an in undevel- property an (GBE), and asked Engineering Basin Great oped approximately twenty acres parcel of lay- to some subdivision Anderson sketch origi- Ogden, Utah. It was located in south property. To outs of Combe assist developed by Keith nally part of a farm suitability determining in of the 1960s, early In the grandfather. Combe’s property as a residential subdivi- Combe Conservancy Dis- Basin Water Weber sion, subsequently performed, GBE Basin), pro- (Weber by condemnation trict property, variety a purchase B-H’s thirty-foot a wide ease- ceedings, obtained tasks, including engineering extensive a property constructed ment on the analysis, testing, ground water soil on-site the confines of the pipeline within water analysis, placement of road runoff flow 1970s, in the Keith easement. Sometime alignment. into mother divided Combe’s design assigned the actual Anderson parcel conveying a each parcels, four Olsen, engineer an sketch work to Charles siblings. three One and his Keith Combe a prepared base sheet at GBE. Olsen first to Keith Combe’s parcels distributed tracing from a Weber Coun- information managed by in a trust siblings was held sheet ty topography map. The base (Bank). Security Bank First boundaries, surround- showed streets, Harrison, subdivisions, a dotted line ing sole Breuer and proper- B-H, “Aqueduct,” crossing the corpora- marked in a California stockholders By direction. ty diagonally in a northwest tion, purchasing prop- interested became sheet, paper over the base development placing tracing projects. erty for in Utah sketches. Keil, prepared different an real Olsen several Ogden Steve They contacted Anderson, International gravitation. Third New marking "Aque- Webster’s According “pipe- Dictionary defines inappropriate since Webster’s sheet was the base duct" on it underground really pipeline. pumps, Web- pipe connected was as a line” line artifi- “aqueduct” valves, as a conduit or conveying, ster’s defines for and control devices water; carry- conveying one cial channel part, liquids. Id. at 1722. large quantity water flows ing a aqueduct marking, Because of the aqueduct, Olsen easement and which he did not assumed there an easement was and asked relate to the waterline because his mind easement, Anderson the size since significant there was a size difference be- typically Olsen included such information tween the two. depo- Anderson testified in on drawing. deposition Olsen testified in sition that he told Keil that that Anderson told him the information relatively compared was small to usual available, just go was not ahead and Weber Basin standards. He also testified prepare the sketches. made Olsen no fur- way there was no Keil would have attempt ther to determine the size of the thirty-foot known of the easement in 1979. did, however, easement. He make allow- September 19, 1979, meeting On aqueduct pipeline, by put- ance for the Breuer, Harrison, Keil, held with and Olsen ting roadway top over the of it on the in attendance. This was Breuer’s and Har- plat maps. He also testified that had he rison’s first contact group with GBE. The easement, thirty-foot known of the he rough reviewed Olsen’s sketches and dis- plotted would have it on the base sheet. lots, cussed the number location of road Anderson was aware of the since alignment, treatment, sewage, and water its installation on the drainage problems. None of those in early deposition 1960s. He testified in *5 attendance meeting recall which aqueduct marking originally was analyzed. sketches were There is no evi- put County on surveys Weber aerial in dence that the base sheet showing “Aque- 1963. At the time Keil contacted him in Breuer, Harrison, duct” was shown to or 1979, proba- Anderson believed there was Keil. Breuer and dep- Harrison testified in bly twenty a thirty-foot easement that osition an easement was not discussed Basin, belonged to Weber but was unaware meeting at the and that the first heard of the exact width. Anderson understood pipeline and easement was in 1983. that a house could not be built on the had Olsen no recollection of what was dis- pipeline but assumed that either roadway meeting. cussed at the Keil testified to put or pipeline. back lot line could be on the having independent recollection of ever purchase Prior to B-H’s of the Combe talking with either Breuer or Harrison re- property, primarily Anderson worked with garding pipeline a waterline or either at Keil. 1983, meeting any prior or at time testimony, From exhaustive it is clear only conjectured but that a waterline was 1979, September that in Keil was aware of probably topic of conversation at some he what considered a small waterline which time. specifically He testified that he did property. traversed the Combe It is also not discuss with Breuer or Harrison an clear that Keil did not learn of the prior easement at time to 1983. until depo- easement 1983. Keil testified in 1979, Sometime in the fall of Keil con- that his sition recollection of what he knew Froerer, Ogden tacted Robert E. attor- September of the waterline in 1979 was ney, and asked him legal to do certain work hazy being due to it a “nonissue.” He in connection with a real estate transaction biggest testified that the concerns in his involving property Ogden. in pre- Froerer discussions with Anderson the fall of pared documents, necessary legal regarding property in- deeds, exchange agreements, and that en- sewage drainage problems. volved Al- property abled a series of uncertain, trades between though the exact time is some- Keith siblings Combe and his so September that Keith appar- time Anderson up Combe and the Bank would end ently talked with Keil about the waterline property. entire Froerer putting or also drafted a roadway over it. preliminary purchase agreement prob- Keil viewed the waterline as a which was minor development plans, approximately lem in the executed B-H on one that Novem- easily could building prepared be accomodated a ber 1979. Froerer then a real profitability. road over it to insure Accord- estate contract for the Combe Keil, ing $410,880 in 1983 he price first learned of an which established a sales required $75,000.. payment a down The sale closed on December 1979. Beginning on December present and con- Froerer was closing, not at the but tinuing years, for the next three B-H was later signature obtained B-H’s on the real interest-only payments. to make annual estate payment, contract and the down purchase price The balance of the was due forwarded funds to the Combes and the in full on December payment Bank. Froerer withdrew for his contracts, drafting fees for and for fees Paragraph eight of the real estate con- for a title policy, search and from the sale required the tract Combes and the Bank to proceeds. An escrow account was never property, warrant title to the to furnish a preliminary established and no report title policy, title convey property by and to requested was or closing issued warranty deeds. The paragraph was near- Combe, of the sale. Keith deposition, ly paragraph identical to fourteen in the testified that he first learned that Froerer preliminary purchase agreement. Para- going to issue title insurance at the eight graph of the contract reads as fol- Froerer, closing. According to the title lows: probably search was started before the Seller warrants that there are no liens closing. was, however, policy The title encumbrances on the herein- issued until poli- November 1980. The agrees above described and furnish cy exception failed to make an for the Buyer expense policy at Seller’s a title pipeline easement. The underwriter on the showing good and marketable title policy issued Froerer was ATGF. At (said policy said title to be fur- time, Froerer owned stock in ATGF receipt nished at the time of the of down regularly researched titles and wrote title Further, payment Buyer). from Seller insurance company. for the agrees Buyer, to execute and deliver to *6 assigns, good warranty or and sufficient After the real estate contract was covering signed, deeds title to the above-de- GBE added sewers and utilities to property layout. completed scribed when subdivided and as the subdivision GBE the paid for in plat January accordance with the terms final placed roadway hereinabove set out. pipeline. over the after a proposed property sale of the to a third Paragraph required four that an escrow materialize, developers failed to up, convey account be set that the Combes develop plans continued their for the by warranty agent title deed to an escrow property, primarily which consisted of ob- later, agent named and that be taining governmental approval for the sub- convey by special warranty title to B-H development division. Most of the work payments Paragraph deed as were made. Nielson, Bruce, was done and Keil. five, warranties, which disclaimed stated: (cid:127) 24, 1982, hereby expressly any “The Seller disclaims On November an amendment representations, parties, gave and all warranties and ex- was executed press implied, developers years pay or as to the state of the an additional two condition, character, quality, principal purchase price. property, its balance of the [sic], suitability or or fitness for sue A second amendment was executed on Jan- existing contemplated, uary or matters whether 1983. This amendment deferred respect.” payment zoning, of other for six months of one-half of the $35,000 payment interest which had been deposition testified in that on Keil one due at the end of 1982. prior closing, he occasion went with per- spring process Keith to the office of In the in the Combe Combe’s attorney, negotiating sonal Paul Kunz. Kunz reviewed a concession for himself documents, contract, including preliminary pur- Keith Nielson’s of- Combe visited fice, changes. report him. agreement, bringing chase and made some a new title with report that Keith disclosed several easements Keil further testified title reviewing adamant about Kunz that had not been disclosed on the Froerer, signing anything. report including the documents to Keith issued Breuer, Harrison, pipeline easement. Niel- Keith following Combe several times son, Brian, pipeline Keil Although all testified that this easement disclosure. Keith generally was the first time had heard of the Combe was of the aware problems presented, the easement easement.2 he opined problem that it was Froerer’s deposition Anderson testified in that af- not his. Nielson never told Keith that the ter the disclosure of the easement development proceed would not because report, on the Combe title he discovered the easement. and communicated to Nielson that Weber early developers In late 1983 or rigorously Basin enforcing was more its firm, engineering Bingham hired a new pipeline easements. Anderson further tes- Engineering, to obtain “fresh ideas.” The thirty- tified that had he known in 1979 of a complete impact of the easement on the foot easement and the restrictions that are project Bingham Engi- was not known until enforced, he now would have advised Keil neering completed had much of its work property difficult to de- continuing and the project cost be- velop, high, the cost would be and that Keil prohibitive, particularly came in light of should piece ground. look for another right-of- disclosures about the width of the According to testimony, Anderson’s way depth pipeline. thirty-foot existence of the easement and Two additional amendments were exe- prohibit its enforced developing restrictions February cuted between the property. Apparently, Breuer and Har- 1984. The first stated that at least fifteen get project rison wanted to out of the after developed acres of the would be easement, learning of the but Nielson con- partial payments as condominiums and developing vinced them to continue ideas to would be made to the as each unit Bingham work around the En- easement. Further, was sold. the Combes were re- gineering explored platted concept quired part to subordinate their interest in developing as a condomin- developers so that the could project. ium According to Breuer and Niel- obtain a construction loan. The second son, placement of houses over the ease- amendment further pay- extended the final special problems ment would create if a ment under the contract until December developer wanted to cross the easement developers paid if the had least utilities; hamper gaining efforts in *7 $120,000 principal by the end of 1985. dig approval pipeline; place around the pipe- restrictions on the backfill over the August In Breuer and Harrison line; require property owner to make person- flew to Utah first time repairs pipeline; render fifteen feet ally met with Keith Combe and raised the pipe- property of the on either side of the option rescinding the contract. Keith except anything vegeta- line unusable for purchase Combe refused to reduce the tion; likely require special bridg- and will price of the to reflect its diminish- ing placed a concrete cover to be over ed value of the Shortly because easement. any pipeline portion of the that sits within thereafter, suit, seeking B-H filed to re- a street. money scind the contract and collect the paid to the on the contract.
Following disclosure of easement Harrison, Breuer, report, new title against The Combes filed cross claims Froerer to determine Nielson contacted Froerer and In ATGF. their first cause of action, do re- they sought damages against what he and ATGF intended to Froer- problem. upon negligence solve the Nielson also met with er based his as an attor- dispute pipeline 2. The as to when the Combes that he never knew there was a on the Breuer, property prior first learned of the easement. to its disclosure in the 1983 title Harrison, trial, report. and Keil all testified that at their Keith Combe admitted recall- meeting August ing talking with Keith Combe in his father about the water conserv- ancy filing Keith Combe mentioned to them that he re- district a condemnation action to telling pipeline. portion aqueduct called his father him about the take a for an however, deposition, Keith Combe testified in easement. action, they summary judgment, those ney; in their second cause of we review correctness, according sought damages against Froerer conclusions for no upon legal the issuance of the title the trial conclu ATGF based deference to court’s 969; policy. Ceco, insurance sions. 772 P.2d at Bonham v. (Utah 1989)(per Morgan, 788 summary granted The trial court B-H’s curiam). Combes, against the rul- judgment motion had antici- ing that the Combes committed SUMMARY JUDGMENT: title in patory breach of the warranties of BREUER-HARRISON The trial court the real estate contract. (1990) against speci- Ann. 57-1-12 granted summary judgment Utah Code later dismissing against warranty claims fies the effect of a deed as fol- their A trial was lows: Froerer and ATGF. held but determining the
was limited to amount required deed when executed as Such received B-H from the restitution to be convey- law shall have the effect of a trial, day before the trial Combes. On simple ance in fee ... with covenants against court B-H’s claims bifurcated grantor premises ... that the from the ATGF, objec- Froerer and over the Combes’ are free from all encumbrances.... jury empanelled in an tion. The which was exceptions may Any to such covenants discharged, advisory capacity, was briefly following inserted in such deed determined trial court in a directed verdict description of the land. damages against restitutionary ‘encumbrance,’ section, “An as in this used Combes, including Keith’s Combes. in land any right that a third holds brother, Clair, required to refund or limitation which constitutes burden $133,192.64 $236,966.21, pay plus upon rights of the fee title holder.” credited prejudgment interest. The court Moore, 1123, 1124 677 P.2d Bergstrom $7,500 the fair rental value the Combes 1984). that the The Combes concede agricultural property. “A irremediable. de- pipeline easement is which, by its nature cannot be re- argue that the fect appeal, the Combes
On
practical matter is
(1) awarding
moved
the seller as a
erred in
B-H sum-
trial court
claims;
that the vendor nei-
one ‘of such a nature
mary judgment on their rescission
practical
has title nor in a
sense
(2) summarily disposing of the Combes’
ther
”
ATGF;
acquiring it.’
Neves v.
prospect of
against
claims
Froerer and
cross
(Utah 1981)
(3) ordering
damage
Wright,
B-H’s
claims
Vincent, Inc., 255
(quoting
from
Davis v. Dean
against
and ATGF be severed
Froerer
(1970)). Thus,
restitutionary damages
Or.
B-H’s claims for
ease-
Combes;
(4) calculating
there is
case constitutes a substantial
damages
offsets.
ment
restitutionary
*8
proper-
fee title to the
encumbrance on the
considering
when
The standard of review
meaning
ty
of the statute. See
within
summary judgment is well
challenge to
a
(one
P.2d at 1125 n. 1
of
Bergstrom, 671
summary judgment is
grant
“A
of
settled.
constituting encum-
the three easements
of
only
genuine
no
issue
appropriate
when
thirty-foot
travers-
a
easement
brances was
moving party is
material fact exists
property in favor of the Weber
ing the
as a matter of law.”
judgment
entitled
District,'beneath
Conversancy
Basin Water
Inc., 772
Specialists,
v. Concrete
Ceco
line);
thirty-six inch water
see
lay
a
1989);
(Utah
also Utah
969
see
21, 192
Knight,
57 Utah
Thackeray
also
56(c).
construe the facts
We
R.Civ.P.
(1920)(an
pipe-
easement for a
P.
light most favor
in the
view the evidence
encumbrance).
premises
is an
line over
party.
Pipe Co.
losing
Geneva
able to
action
(Utah
settled that an
Co.,
It is well
714 P.2d
Ins.
v. S & H
of contract
Whatcott,
may maintained for breach
1986);
790 P.2d
Whatcott
Further,
anticipatory repudiation
upon the
when re
based
Ct.App.1990).
the contract. Hur-
challenge
of the
on a
one
viewing conclusions of law
Co.,
Combes,
witz v. David K. Richards
20 Utah 2d with the
drawings pre-
since the
An anticipa- pared by
engineers
B-H’s
showed
pipe-
tory
breach occurs when a
to an line and easement. The Combes cite the
executory
positive
contract manifests a
acknowledgement
trial court’s
in its order
unequivocal
not render
prom-
intent to
its
granting summary
“[tjhere
judgment that
performance
ised
the time fixed
when
for it
dispute
is a
to the
fact as
exact date at
in the contract arrives.
Id. The trial court
buyers
which the
aware of the
became
determined
that because
Combes could existence of the easement and became
not convey
fee
unencumbered
title to the
aquaduct
aware of the existence of the
required
to B-H as
the real
if B-H
Combes conclude
knew
[sic].”
contract,
estate
guilty
the Combes were
pipeline
had notice of the
and easement
anticipatory
of the
breach
contract. We prior to
the real
execution of
estate con-
agree. Notwithstanding that no breach of
tract,
rights
it waived
of rescission for
covenant
encumbrances will oc- anticipatory
contract.
gener-
breach of
See
delivered,3
cur
actually
until the deed is
it
Assocs.,
ally
Inc.,
Callister v. Millstream
plainly appears
pipeline
of the
because
(Utah Ct.App.1987);
664 n.
easement the Combes would not be
able
77 Am.Jur.2d Vendor & Purchaser
contract,
perform
constituting
their
an anti-
(1975) (the
rule that
vendee’s notice of
cipatory repudiation
the real estate
con-
upon
encumbrances
does not
tract.
duty
relieve
removing
the vendor of
encumbrance,
he
where
or she con-
correctly
The trial court
determined that
convey
encumbrances,
tracts to
of all
free
appropriate remedy
rescission was the
applies
encumbrances,
only to removable
B-H.
Supreme
clearly
The Utah
Court has
encumbrances,
not to unremovable
such as
unexcepted
established that
where
en-
building restrictions or restrictions on the
cumbrance on a seller’s title is irremediable
property).
use of the
and, as a
consequence,
seller will not be
convey
able to fulfill its contract to
title as
Viewing
light
the evidence
most
deed,
warranty
described in the
rescission
Combes, however,
favorable to the
we find
appropriate remedy.
is an
Bergstrom, 677
genuine
issue of material fact with re-
Neves,
1125;
1199;
P.2d at
638 P.2d at
gard to when
Breuer
Harrison and
Thackeray,
725 discovery deposition cient to operation after exhaustive exclude them from the testimony, the evidence does not contradict statutory against the covenant encum- any developers’ the or cast doubt on testi- brances.” Id. at 1125.
mony. Breuer and Harrison walked across assert, however, The but, Anderson, Combes that according to
the even if developers the did pipeline any physical not learn of the neither the nor man- pipeline pipeline and easement until ifestations the were visible to their five- eye. Although “Aqueduct” year asserting delay the the rescission for prepared the by anticipatory marked on base sheet Ol- Combes’ breach raised addi sen, plat map there was no cre- sketch tional factual issues waiver that could by prior ated GBE to 1983 that disclosed not be summary judgment. resolved the existence of an easement. There is no The during contend that Combes this five- executing evidence that to the con- year period, B-H its commit reaffirmed tract, saw Breuer or Harrison the base (1) ment to paying the contract annual from sheet or sketches traced the base (2) payments, hiring engi interest a new showing pipeline. sheet the Anderson’s neering explore firm to fresh ideas of de testimony reinforce our and Olsen’s conclu- veloping (3) property, the and Nielson tell fully appreciate that GBE the sion did ing B-H only Keith that would hold pipeline ramifications of the easement and ATGF and Froerer liable for the breach never communicated to B-H the existence honor the terms of the contract. pipeline Admittedly, of a easement. the An original English feature of the doc dispute the trial court found in exact date anticipatory trine of breach was that a that learned of the easement. party continuing performance in the face of However, clearly because B-H did not anticipatory repudiation thereby an waives learn of the easement until well after the repudiation only the can sue on a sub contract, dispute execution of the this does breach, sequent any, occurring if at not involve a fact. there material Because performance time when due. 4 Corbin genuine of material that is no issue fact on 981 The Contracts modern § knowledge B-H lacked on or rule, however, an party, “is that innocent 31, 1979, before December we find that it anticipatory repudia confronted with any rights not waive to title without did tion, may to treat the as continue it executed the encumbrances when con- operable performance re urge with the tract Combes. pudiating any right party waiving without knowledge if Even B-H had of the repudiation.” to sue for that United Cali or, easement as dissent irremediable Etc., Co., v. Prudential Ins. Bank fornia notice postulates, constructive under Utah (Ct.App. 140 P.2d 433 Ariz. (1990), Ann. 57-3-2 Code § 1983); see, e.g., Upland Corp. v. Indus. subject statutory cove would still be Co., P.2d Robinson Gamble Pacific under nant encumbrances section 638, 1984); see also Corbin Moore, Bergstrom 57-1-12. at 938-39. (Utah 1984), Supreme the Utah Court rule, for the modern basis unexcepted noted encumbrances brief, reply in their is to point out title, included, as in appellants’ on which give breaching party opportunity case, Basin waterline ease Weber per- cure breach before time ment, duly presumably was record party is due. A that has received formance ed, Although irremediable. the su breaching from repudiation a definite undisputed court that it was preme found penal- party should not be the contract knowledge respondent had no or no encourage the breach- easements, ized its efforts tice of least one ing bargain. end perform its if respondent court stated that “[e]ven Bank, *10 (as 681 P.2d at United some easements claimed knew of California re- repudiating party power The has a knowledge by appellants), mere of encum long there has been no sub- would not suffi- traction as as of this nature be brances change position by injured stantial pipeline the by attempting develop to prop- party nonbreaching party’s and the con- erty in ways. other Although hindsight, in tinuing urge performance may prop- be B-H would have parties saved both consid- erly keep power held to of retraction erable expense had it rescinded the con- alive. 4 Corbin 981 at 939. tract immediately upon disclosure of the easement, it policy is sound blindly to not The Combes contend that the rationale require a non-breaching party to rescind approach for the modern to anticipatory immediately upon discovering anticipa- breach of contracts inapplicable to the tory breach. Even where the remedy rescission in breach can- used this case. Be- repaired, not be non-breaching cause party may the easement is they incurable and appropriately perform attempt good are unable to in their end faith to miti- bargain, gate damages by the Combes assert that attempting there was to honor the legal or rational basis to allow B-H problems work around rescinding stall in presented the contract by until the the breach. unprofitable. sum, contract became argue that the executory real es- 2. Estoppel/Laches tate contract became no different than one also contend that B performance on which had become due at delay exercising H’s in rights its rescission the moment that B-H discovered the ease- raised material factual estoppel issues of ment. point, At that B-H should have laches, properly not by resolved sum election, made did, an in effect mary judgment. The Combes assert that argue Combes, by affirming the con- only when real plummeted estate values in
tract. 1987, did B-H seek delay, rescission. This argument The Combes’ that the non- posit Combes, precluded them from re breaching party, appropriate circum- selling the property, prior to the decline in stances, ought to rescind delay, without property values, for an amount that would mitigate order to be able to damages, is have made all whole. admittedly persuasive. University See We have stated Holding Corp., Club Invesco that 29 Utah 2d (1972)(“where party one [bjefore equitable estoppel may ap- definitely indicates that he cannot or will plied, 1) three elements present: must be perform contract, a condition of a admission, statement, an or act inconsist- required other is not to uselessly abide asserted; ent with the claim afterwards time, may upon but act the breached condi- 2) by action party the other on the faith tion. appropriate Indeed in circumstances admission, statement, act; of such or ought he mitigate to do so to damages.”). 3) injury party to such resulting from However, though pipeline even ease- allowing the first to contradict or incurable, ment was the circumstances in repudiate admission, statement, such this case did not demand immediate re- act. Successful assertion of re- laches scission of the contract B-H. The com- quires defendant plain- establish plete impact easement was unreasonably delayed tiff bringing not known until further engineering work action and prejudiced that defendant was completed development cost of delay. prohibitive became light Dep’t of Transp. Utah Reagan Outdoor Further, easement. although a Inc., Advertising, plummeting may real estate market have (citation Ct.App.1988) omitted) (emphasis precipitated B-H’s decision to rescind the added). contract, contrary represen- Combes’ tations, the record is clear We find that B-H did not that the Combes failed to dem just rights following sit on its onstrate a factual dispute regarding disclo- B-H, sure of the through i.e., easement. first estoppel: element of an admis Nielson, sion, statement, efforts of appropriately sought or act inconsistent with the ways mitigate damage caused claim afterwards Contrary asserted.
727 1) failing complete do not find tice the title work representation, we the Combes’ 2) closing; summary prior to the real estate withhold- anything in the record of the Combes; ing material information from the suggesting that Niel- proceeding judgment 3) by simultaneously representing an- they that would look told Keith Combe son conflicting other client with interests. company and Froerer for only to the title liability and that Traditionally, legal malpractice in a the terms of the contract even would honor action, is an threshold whether stated, easement. As we have with the attorney-client relationship was estab exercising delay in its rescission B-H’s Bergman England v. New Ins. lished. mitigate rights due to its efforts to 672, (5th Cir.1989); Co., 872 F.2d 674 Guil easement, pipeline and damages due to the Jenkins, 225, Ga.App. 355 lebeau v. 182 relinquishing their not because 453, (1987). Once this relation 456 S.E.2d Further, of rescission. later-asserted claim ship proven, the client has the burden of is attempt delay was a reasonable since the 1) negli showing two additional elements: easement, reject we around the work 2) part attorney, gence on the claim. laches Combes’ proximate negligence such was the See, damage e.g., the client. cause of ambiguities 3. Contractual Burton, McMurray & McKay, Dunn v. tri argue 1978); also that the (Utah Combes Thurman, 894, 584 P.2d 896 The issues improperly 674; resolved factual al court F.2d at Bergman, also 872 Guille see in the real estate by ambiguities beau, created 355 S.E.2d concerning scope of warran general, except where an attor The given by the Combes. ties of title court, attorney- ney appointed by a is escrow assert that if the unnamed relationship by contract. client is created paragraph four agent, in accordance with 391, Mitchell, 158 Ariz. 762 P.2d Franko v. contract, convey was to the real estate Pollack, 1345, (Ct.App.1988); Fox v. 1351 B-H, such special warranty deed to title 532, 954, Cal.Rptr. 226 534 Cal.App.3d 181 pipeline easement cre not cover the may express or The contract title. This the Combes took ated before parties. the conduct of the implied from are the Combes argument is meritless since Upchurch, 696 by Margulies v. Margulies real estate con clearly obligated under the 1985). The relation 1200 with no encum provide deed tract by showing ship proved is special war property and a on the brances lawyer the advice of seeks and receives require ranty could not obviate deed lawyer’s profes pertinent to in matters contend that The Combes also ment. People Morley, v. sion. eight con paragraph of title in warranties banc); (Colo.1986)(en Meyer, Steinbach of all warranties with the disclaimer flict (Iowa Ct.App.1987). 412 N.W.2d find, however, that We paragraph five. subjective in that a showing is Such a para contained provisions is” the “as relationship is evaluating the factor physical condition graph five relate thought attorney- an client whether the nothing to do with property and have relationship Matter Lie existed. client para as set forth of title warranties (D.C.1982); Matter ber, A.2d estate contract. eight the real graph Petrie, 154 Ariz. of (1987) banc); (en Bar Louisiana State JUDGMENT: SUMMARY (La. Bosworth, 481 So.2d Ass’n CLAIM MALPRACTICE However, 1986). party’s belief that FROERER AGAINST exists, relationship unless attorney-client by representations or reasonably induced argument to the Combes’ next turn We attorney, not sufficient to conduct barred summa- issues also that factual attorney-client rela create a confidential cross dismissing the Combes’ ry judgment 535; Fox, Cal.Rptr. at see tionship. con- Froerer. claims (“An Guillebeau, at 458 355 S.E.2d legal malprac- also committed that Froerer tend *12 728
attorney-client relationship attorney by cannot be cre of fees does not itself deter- ated in the unilaterally mind of a would-be attorney-client mine whether an relation- client; required.”). exists, a reasonable belief is ship Hecht, only but is one indicia. sum, the intent and of Cal.Rptr. 530; is conduct 237 at see also “[i]t Huddleston the is critical forma State, to the 45, 683, v. 259 Ga. 376 S.E.2d 684 attorney-client relationship.” tion of the (1989)(although general employ- test of Court, Cal.App.3d Superior Hecht v. 192 fee, is the ment the basic (1987). 531 Cal.Rptr. 237 regard attorney-client relationship an is whether advice or of assistance the attor- assert that under- Froerer received). ney sought both and stood that had been them he hired perform tasks, 1) including several In reviewing summary judgment, drafting of all documents for the transfer we view in light must the evidence most parcels among 2) siblings, of the Combe Combes, party to the oppos favorable drafting preliminary of real es- final ing summary judgment. Salt Lake City B-H, 3) conducting tate contracts with Constructors, Corp. James 761 P.2d 4) search, procuring title the title insur- (Utah Ct.App.1988). presented Evidence policy. ance in depo- Keith Combe testified to the court on this mostly issue consisted always sition that he assumed Froerer was deposition of testimony. Keith Combe tes attorney going pay- his since he was be deposition perceived tified that he ing pay him money. Froerer did in fact his transaction of trades between him fees from the funds delivered to siblings part himself and his as the sale payment purchase price due to B-H that he not aware was that Combes. going was Froerer to issue title insurance claims, however, repre- Froerer that he closing until he at when learned that solely, buyers sented the not the Combes. perform Froerer would the task at the re merely He counters he that because was quest Keil. The record further shows paid proceeds out of the sale does that the Combes had no contact with attorney-client not an relation- establish Froerer, they sought at no time Froerer’s ship. argues practice He that such is com- legal either or after advice before the clos mon in real estate transactions ing, present and Froerer was not at the argument pro- could be made that the sale Also, requested closing. Keith Combe actually paid by ceeds were B-H since Kunz, attorney, another review and make deposited money were the ones who necessary changes in preliminary doc closing.5 that Froerer uments drafted. Evidence supporting attorney-client existence of an
Although payment
legal
servic
relationship consists Keith
may
Combe’s tes
persuasive
es
evidence that
at
established,
timony
thought
that he
Froerer
torney-client relationship
acting
was
Knuck,
attorney;
type
162 Ariz.
his
documents
Foulke v.
excep prepared,
including the transfers
(Ct.App.1989),
among
there are
Guillebeau,
See,
siblings;
payment
at
e.g.,
tions.
355 S.E.2d
and Froerer’s
(where party obligated
pay
proceeds
closing.
sale
Viewing
herself
from the
anyone
closing
light
costs before
contacted at
this evidence in a
most favorable to
Combes,
torney,
pay attorney’s
in the
say
she did
fee
we cannot
that there is no
legal employ genuine
furtherance of a contract of
issue of
fact entitling
material
therefore,
and,
attorney-client
summary
rela
judgment.
only
ment
It is
Froerer
existed). However,
necessary
nonmoving
tionship
payment
for the
to show
ther,
legal
5. Froerer also claims that the Combes’ claims
we note that a cause of action for
accrues,
against
year
malpractice
four-year
him are
the four
statute
barred
limita
run,
Utah Code Ann. 78-12-25
the act
limitations under
tion commences to
plained
when
com
or,
presented
issue was not
first
of is
in the
Since this
discovered
exercise of
care,
to the
lution,
for its
and reso
been
trial court
consideration
reasonable
should have
discovered.
Beaslin,
(Utah
Merkley
Ct.App.
State v.
we will not consider it. See
Webb,
1989).
Ct.App.1990).
Fur
in the insured title or
liens
controverting the “facts” asserted
defects
“facts”
We, therefore,
in
may
affect the
moving party.
Id.
encumbrances
policy
*13
the factual issue of
sured title at the time
issued.”
reverse and remand on
Idaho,
attorney-client relationship ex- Malinak v.
Title Ins. Co.
whether
Safeco
69,
12,
P.2d
14
The
and the Combes. 203 Mont.
661
isted between Froerer
of whether a contract is am
fundamental factual
issue is
determination
When that
determined,
proceed
biguous
Regional
ac-
is a
of law.
the trial court can
Reichert,
P.2d
Inc. v.
784
cordingly
respect
Agency,
to this transaction.
Sales
Thus,
1210,
(Utah Ct.App.1989).
as
1213
noted,
the trial
previously
we accord
we
JUDGMENT: CONTRACTU-
SUMMARY
particular weight,
interpretation
court’s
NEGLIGENCE
AL & ABSTRACTOR
reviewing
interpretation under a correc
its
&
AGAINST FROERER
CLAIMS
that
standard. The mere fact
tion-of-error
ATGF
disagree
meaning
as to
argue that schedule A
The Combes next
language
policy
contained in the
is not
policy insures their
of the title insurance
ambiguity.
to create an
B.F.
sufficient
B-H,
at
interests as well as those of
or was
Vinyltech Corp., 711
Co. v.
Goodrich
point, rendering
this
ambiguous
least
on
1513,
(D.Ariz.1989).
F.Supp.
1517
The first
parties question
of the
of mate-
the intent
the doc
step in our review is to examine
states,
pertinent
fact.
A
rial
Schedule
entirety and in accordance
ument in its
part:
purpose, giving effect to all of its
with its
in the land
1. The estate or interest
parts.
Royal Dairy
v.
Prods.
Larrabee
herein and which is covered
described
160,
(Utah 1980);
Co.,
Region
614 P.2d
163
pursuant
policy is: An interest
Inc.,
Where (2) transaction, Consequently, superior only in a is in a there was one left est issue facts, (3) position to know material tried: the be amount restitution be carelessly negligently paid false from the makes a as determined fair market concerning them, (4) representation property. ex- value of the Since the Combes’ pecting party rely the other act claims Froerer and ir ATGF were thereon, (5) other reason- relevant the issue fair market (6) ably property, does so and suffers loss in that rental value of the the trial court transaction, representor bifurcating can held did abuse its discretion Supreme distinguishable deter- 6. The Utah Court Christenson sentation. This case from company's purport mined a title insurance acknowl- Christenson. ATGF does not to act as edgment incorrectly anything company, of a indi- other a title insurance document than company properties held had the title Chris- cated that certain in escrow whereas insurance equity had duties as an es- unencumbered ty values available as securi- tenson assumed additional negligent misrepre- agent. plaintiff amounted to crow rescission, buyers claims and cross-claims between the ease of a are entitled ordering separate quo appellees and trials. to be returned to the status and to payments recover the made on the con- OF CALCULATION tract, prem- less the fair rental value of the RESTITUTIONARY DAMAGES possession ises for the time had there- of.” 724 P.2d at Dugan, We next address the court’s verdict on damages. The claim restitutionary We find that the trial court cor concluding trial court erred in rectly expected determined that the rate of fair rental value of the had no inapplica return an investment on relationship to its fair market value at its determining ble measurement the fair highest and best use. trial court de- rental value of the for the time highest termined that the use of best possession. methodology B-H had That present in its then condition preclude restoring and, purposes there- agricultural was for positions at their the time the contract was fore, yearly rent credited the Combes *15 provide executed and would the Combes Rasmussen, Citing of Warner v. $1500. with a windfall. We also find that since (Utah 1985), the 704 P.2d property pur the the for use of residential that, law, as a matter of fair rental insist poses prohibited by is the ease equals on the value a reasonable return problems it ment was not so used property as established market value of term, during the the trial court contract by price, the contract and is calculated as reasonably highest determined that the unpaid the annual interest due on the bal- in best use of the in its contract, rate. ance of the at the contract present agricultural then condition was for According expert to the witness Combes’ purposes. amply That determination was bring a testimony, such calculation would testimony supported by the evidence and of $49,350 per of reasonable rate of return expert witness. B-H’s year. in supreme court Warner The reject argu We also Combes’ addressing the trial court’s determination prejudgment ment that the award of inter damages buyer’s breach of of seller’s delayed B-H in improper est is because contract, measured, in an installment rights. exercising its rescission See Niel by proper rental part, the fair value (Utah Droubay, v. 652 P.2d son ty during period occupancy. of 1982) (a delays pro who prevailing awarding goal in in the seller dam Warner prejudgment ceedings may not be awarded use of the was to ages for loss of noted, interest). previously have As we on the invest grant a reasonable return delay any was not unreasonable. case, in ment. Id. This contrast War Finally, agree we with the Combes’ ner, buyer’s election of re involves the trial court miscalculated pur of a assertion that scission for seller’s breach land per interest at ten prejudgment the rate of contract. Rescission is a restitution- chase cent, Ann. in of Utah Code ary remedy attempts to restore the violation which (1986).7 exe 15-1-1 The contract was quo to the status to the extent parties § therefore, prejudg by equities cuted to 1981 possible or as demanded per six cent Jones, ment interest should accrue at 724 P.2d Dugan the case. annum, 1986); Oster, per cent. Land per not ten SCM see also Potter v. Faber, (Iowa 1988). “In the & N.W.2d Co. Watkins applies charge pertinent part: law or interest Section 15-1-1 states in 7. delinquent contract or other taxes or (1) Except when to lawful May obligations before 1981. interest, made legal agree specified of on a rate statutory point interest out that the The Combes the loan or forebearance of rate of interest for the contract was exe- rate in effect at the time any money, goods, or chose in action shall be may percent. Code Ann. Nothing at six Utah per in this section cuted was annum. 10% any way any penalty affect 15-1-1 be construed to in liens_” (Utah 1986). provided B-H has us closing, at Come arguments contrary. Therefore, we the seller was to clear a unable 60-unit prejudg- remand for determination of the although restrictive covenant it succeeded substituting ment interest amount. advantageous for it a more 75-unit restriction. Id. 664. This was CONCLUSION enough. “A 75-unit encumbrance conclusion, failed to of requirements In meet the con- we affirm the trial court’s rescission, provided grounds tract and granting summary judgment to on just as the 60-unit its rescission claim encumbrance would Combes. accordingly done.” Id. We have We affirmed also affirm the trial court’s determina- judgment granting rescission. tion the fair market rental value of the propriety awarding Callister, urged we to reverse However, prejudgment re- interest. we purchaser view of the “that if the doctrine verse and remand for recalculation of upon prop- has notice of encumbrances prejudgment per at six interest amount erty, and the encumbrance is such per per annum cent instead ten cent. nature that it could not be removed We also reverse and remand on issue then purchaser pos- vendor ... takes attorney-client relationship whether an ex- subject to session the encumbrances.” Id. isted If between Froerer the Combes. at 664 n. 6. We held the authorities found, relationship such a is the Combes relied on vendor Callister were may proceed malpractice legal with their distinguishable and did not consider the claim. We affirm the trial summa- court’s noteworthy, doctrine further. id. It See *16 ry judgment for the Froerer and ATGF on however, in the restrictive covenant negligence contractual and abstractor actually was not such Callister “of a na- claims and the court’s bifurcation of claims ture that it could be not removed the against Froerer and ATGF.8 removed, contrary, the vendor.” On it was only on the a albeit condition that different JACKSON, J., concurs. But restriction be substituted. there is ORME, Judge (concurring in the result nothing suggest to that it could not have part, part, dissenting in in altogether, given been removed more suc- part): concurring in negotiations adjacent property cessful with owners or others who had to consent to the apparently lacked at actual notice change. least of the extent the ease- of waterline purchase agree- ment until well after the argument a Combes raise similar Nonetheless, ment was entered into. the undisputed apparently here and it is in — appeared easement of record and thus B-H gross unfeasibility financially view of the properly charged no- “is constructive rerouting and otherwise of a water dis- of tice” the easement. Callister v. Mills- deeply trict’s buried line and water accom- Assocs., Inc., tream 663 n. 3 panying subject prop- easement the around (Utah Ct.App.1987); Utah Code Ann. question in erty the easement cannot —that (1990). 57-3-2(1) § Although removed the be Combes. Callister, general somewhat lukewarm to the a notion which concerned similar Callister, I when authored see 738 P.2d at provision contractual the effect that title persuaded n. I am it conveyed free of now makes would be all liens and encumbrances, If provision good purchaser knowledge with no sense. a made has removed, exempt particular easements of record or of an encumbrance that cannot be easements, buy- calling we held the classes of and enters into contract for con- clear, knowledge the veyance constructive of encum- free and the entire er’s essentially futility it in opera- brance was irrelevant since is an exercise unless the right provision nonetheless “had a contractual con- tive taken exclude such an Otherwise, purchaser veyance of title free and clear of all encumbrance. suggestion appellees' 8. We have considered find mootness and it without merit. requiring has into a contract “title” policy, clearly entered both are identified as impossible, insureds, vendor which phrase to do typically with the “as be nonsensical. may appear.” their interests law, As a matter vendor-vendee opinion I concur in the court’s insofar general seems to principle be settled. See negligence” it treats the “abstractor’s Am.Jur.2d Vendor & Purchaser § claims, attorney malpractice claim, (1975). However, the rule is in otherwise issue, bifurcation and the interest issue. warranty actually Utah deed where has Finally, assuming judgment even given question an ir- been about affirmed, rescission should otherwise be I arises in the con- remediable encumbrance disagree view of with the court’s how to warranty provided text of whether against payments calculate the offset made (1990) Utah Ann. 57-3-2 has Code been § possession for B-H’s Moore, Bergstrom breached. See years between execution of the con- (Utah 1984). For the nar- rescind, right tract and assertion of row reason that the contract in this case in my which mind leaves B-H with a sub- delivery called unrestricted war- agree I stantial windfall. with Professor ranty deed, appropriate it is to read the Dobbs, suggests who that in the real usual key statutory warranty into the contractual buyer’s estate restitution case the claim to provision,11 concur that cannot back, payments gets interest on it prevail under their irremediable encum- the seller’s to the fair rental claim value of argument. brance detained, it was while should Nonetheless, I would reverse the summa- Dobbs, D. be considered a “wash.” See ry B-H. I judgment favor of believe ap- Remedies 12.9 at 846 This five-year delay asserting a rescission proach a much fairer would work result right, during payments time valuing this case than B-H’s use amended, made contract was twice rates, agricultural rental necessarily poses a material only parties’ because the contract fixes a fact: if some time to assess the situa- Even *17 (and reliable total value measure of its thus explore possibilities mitigation tion value) imputed rental at much “discovery” to B-H after available rate, higher kept B-H but also because easement, years was five more than the up many years during tied for so law permit “reasonable time” the precluded from us, I which to do so? On the record before marketing buyers. to other years five cannot conclude that was not an this case does restitution decreed delay. unreasonable whole; gives merely B-H it it a make disposition I in the court’s of who concur hefty profit. policy, the title but base insured under my so much on charac- conclusion not “owner”
terization of the term as on agreement anticipat- purchase
fact that the procuring
ed the insurance for the further fact when both purchaser
vendor under real estate intended to be insured under a
contract are warranty way, deed reason the Combes would have ment Stated another agreement their deliver an unre- breached easement’s existence. warranty upon conveying deed title sub- stricted ject and it follows were in to the easement require- anticipatory of the contract’s breach