Hardy v. Sagacious Grace , 2021 UT App 23 ( 2021 )

2021 UT App 23THE UTAH COURT OF APPEALS
DAVID HARDY,
Appellant,
v.
SAGACIOUS GRACE LC AND LESLIE MOWER,
Appellees.
Amended Opinion *
No. 20190063-CA
Filed March 4, 2021
Fourth District Court, American Fork Department
The Honorable Roger W. Griffin
The Honorable Christine S. Johnson
No. 150100206
Justin D. Heideman and Justin R. Elswick, Attorneys
for Appellant
Denver C. Snuffer Jr., Attorney for Appellees
JUDGE MICHELE M. CHRISTIANSEN FORSTER authored this Opinion,
in which JUDGES GREGORY K. ORME and KATE APPLEBY concurred.
CHRISTIANSEN FORSTER, Judge:
¶1 David Hardy contends that the district court erred in
denying his summary judgment motion and granting Leslie
Mower and Sagacious Grace LC’s motion for summary
judgment based on its determination a real estate purchase
contract was unenforceable because it was signed by someone
* This Amended Opinion replaces the Opinion in Case No.
20190063-CA issued on October 16, 2020. After our opinion
issued, the Appellant filed a petition for rehearing, and we called
for a response. We grant the petition for the purpose of clarifying
the analysis in footnote 4.
Hardy v. Sagacious Grace
other than the manager of the limited liability company that
owned the property. We affirm.
BACKGROUND
¶2 Desiring to expand his business to an adjacent lot
(Property) in Springville, Utah, Hardy reached out to the
Property owner’s legal counsel (Attorney). Attorney told Hardy
that he represented Leslie Mower and Sagacious Grace LC (SG).
SG owned the Property and was a manager-managed limited
liability company. Leslie Mower was the sole member of SG. 1
¶3 Attorney told Hardy that SG was not interested in leasing
the Property but was willing to sell it. After some negotiations,
Hardy prepared a real estate purchase contract (REPC) to
purchase the Property for $150,000 and submitted the REPC to
Attorney on August 4, 2015. Mower initialed and signed each
page of the REPC. Hardy did not sign the REPC, but he initialed
each page and hand printed his name below the signature line. 2
Hardy tendered an earnest money deposit of $3,000 and
obtained the financing necessary to complete the purchase.
Hardy proceeded to make plans to incorporate the Property into
1. Based on Mower’s testimony during deposition and at trial, it
appears that she was the sole member of SG, a point the parties
do not dispute on appeal. At trial, Mower testified, “I believe I’m
the only member [of SG].” And in her deposition, she
unequivocally stated, “I am the only member [of SG].” The
record does not include SG’s certificate of organization.
2. Both parties acknowledge that Hardy never signed the REPC
on the designated line, but nothing in the record suggests that
either party contended the REPC was invalid for this reason.
This issue has not been raised on appeal.
20190063-CA 2 2021 UT App 23Hardy v. Sagacious Grace
his business, including changing his business model and
obtaining a variance from the city for use of the Property.
¶4 On September 3, 2015, Attorney contacted Hardy to
inform him that SG was repudiating the REPC. 3 Attorney
informed Hardy that he would be returning the earnest money,
but Hardy instructed him not to because the returned earnest
money would not be accepted and stated that he intended to
close the transaction. Attorney reiterated that SG would not
close the transaction. Hardy contacted legal counsel. That same
day, Hardy’s counsel contacted Attorney seeking assurances that
SG would perform the contract. Hardy’s counsel followed up by
sending a letter demanding “additional assurances that the
REPC between [Hardy and SG would] be fully executed by the
stated closing date, September 8, 2015.”
¶5 On September 8, 2015, the parties again communicated by
letter. Attorney first informed Hardy’s counsel that closing was
not until September 16 and that his “client [was] out of the
country until September 14.” Attorney suggested moving the
closing to September 30 to “give [his] client time to the make an
informed decision.” In a second letter, also dated September 8,
Attorney asserted,
I have taken a close look at the REPC in this matter.
I have noticed that it is signed by Leslie Mower on
behalf of [SG]. [SG] is a manager managed limited
liability company and Leslie Mower is not the
manager. Therefore, I do not believe that the
contract is binding on [SG]. Therefore, [SG] will not
be closing the transaction.
3. SG maintains that “[s]hortly after August 3, 2015, Hardy was
informed that SG was repudiating the REPC.” We note that
Mower signed the REPC on August 6, 2015.
20190063-CA 3 2021 UT App 23Hardy v. Sagacious Grace
¶6 Hardy’s counsel responded in writing the same day.
“After performing some research,” he had discovered that
Mower was not in fact SG’s manager and that another limited
liability company—LC Manager, LC—managed SG. Hardy
further learned that the manager of LC Manager was Jami Ross,
not Mower, and that Ross had the authority to act for SG.
Hardy’s counsel’s letter underscored two main points. First, he
noted that Attorney’s conduct during negotiations and obtaining
the signed REPC indicated that Mower had the authority to sign
the contract on SG’s behalf: “Given the representation of
[a]uthorization, [Hardy] had no reason to believe otherwise, and
no constructive knowledge would indicate that . . . Mower was
not authorized.” Second, he noted that even though Mower was
not SG’s manager, she was authorized to sign the REPC, thus
binding SG to its terms. Specifically, Hardy pointed to Section 13
of the REPC, which stated, “If Buyer or Seller is a corporation,
partnership, trust, estate, limited liability company or other
entity, the person signing the REPC on its behalf warrants his or
her authority to do so and to bind Buyer and Seller.”
¶7 On September 9, Attorney wrote to Hardy’s counsel,
noting that he disagreed with the facts as stated and with
counsel’s conclusions; he also enclosed a check refunding the
earnest money.
¶8 Hardy filed a complaint in district court alleging
numerous causes of action: fraudulent non-disclosure/fraudulent
misrepresentation as to Mower, anticipatory breach and/or
breach of contract, breach of the covenant of good faith and fair
dealing, apparent authority as to Mower, agency, breach of
warranty as to Mower, and constructive trust as to SG.
¶9 In June 2016, the district court granted SG’s motion for
summary judgment and dismissed all of Hardy’s causes of
action except his claim of fraudulent misrepresentation.
Specifically, the court determined that because Mower was not
SG’s manager, she lacked the authority—actual or apparent—to
20190063-CA 4 2021 UT App 23Hardy v. Sagacious Grace
sign the REPC on behalf of SG. The court reasoned that apparent
authority must stem from the conduct of the principal—in this
case LC Manager, the sole manager of SG: “Hardy has offered no
facts to support his position that the principal of [SG] caused
Hardy to believe that either Mower or [Attorney] had authority
to act on behalf of [SG]. Accordingly, Hardy cannot prevail on
summary judgment under the theory of apparent authority.”
Furthermore, the court determined that the REPC was “voidable
and subject to ratification only by the injured party, [SG]. [SG]
offered no written ratification of the REPC.”
¶10 The court also ruled that Hardy’s pendant claims,
including the claim for breach of warranty, could not survive
because they were based on an unenforceable REPC: “Because
[the district court] has determined the REPC to be voidable, and
because the REPC has not been ratified by [SG], the REPC fails
and all claims which are dependent upon it must likewise fail.”
As to Hardy’s claim of fraudulent misrepresentation, the court
observed that “this claim necessarily entail[ed] the weighing the
reasonableness of Hardy’s conduct,” “a fact-dependent task not
properly undertaken on summary judgment.”
¶11 At a bench trial on the remaining fraudulent
misrepresentation claim, Mower testified that (1) she was the
sole member of SG; (2) SG did not have a board of directors; (3)
she regularly signed documents without reading them; (4) she
should not have signed the REPC because, unbeknownst to her,
it pertained to a property SG owned and therefore should not
have been presented to her; (5) she was uncertain if she had the
authority to sign the REPC; (6) she did not “pay attention” or
“even look at” the REPC when she signed it; (7) she knew she
“probably shouldn’t have been signing” the REPC, but she did
not “even think about it” because she trusts “people that work
for [her]” when they put a paper “in front of [her] and say ‘sign
it’”; (8) she thought the REPC pertained to a piece of property
she owned in Salem, Utah; (9) she did not notice the REPC
identified a property in Springville as the one being sold; (10)
20190063-CA 5 2021 UT App 23Hardy v. Sagacious Grace
though Mower was not its manager, she had signed documents
on behalf of SG in the past; and (11) had SG been identified on
the REPC, she would not have signed the REPC “because the
only property at the time that [she] was selling was a house in
Salem,” which was owned by a different company.
¶12 Hardy testified that had he known LC Manager managed
SG, he would have wanted Ross’s signature on the REPC. He
also revealed that he had completed “three to five” REPCs in the
past, usually with the help of a realtor, but felt comfortable
handling the purchase of the Property himself because he was
dealing with SG’s legal counsel.
¶13 Following trial, the court dismissed the fraudulent
misrepresentation claim with prejudice, finding that Hardy had
not met his burden of proof. Hardy appeals.
ISSUE AND STANDARD OF REVIEW
¶14 The issue on appeal is whether the district court erred in
granting summary judgment in favor of SG based on its
determination that because Mower lacked the authority to bind
SG to the terms of the REPC as she was not its manager, the
REPC was voidable and unenforceable. “Summary judgment is
appropriate if the moving party shows that there is no genuine
dispute as to any material fact and the moving party is entitled
to judgment as a matter of law. We review the district court’s
decision to grant summary judgment for correctness.” Berger v.
Ogden Reg'l Med. Center, 2020 UT App 85, ¶ 16, 469 P.3d 1127(quotation simplified). 4
4. Hardy also contends the district court erred in finding that SG
was an injured party and was entitled to void the REPC. Because
(continued…)
20190063-CA 6 2021 UT App 23Hardy v. Sagacious Grace
(…continued)
Mower lacked the authority to sign on behalf of SG, we need not
address this issue.
Hardy further argues that the district court, based on its
determination that the REPC was not enforceable, erred in
granting summary judgment in favor of Mower on Hardy’s
breach of warranty claim. We are unpersuaded by Hardy’s
argument, largely owing to the cursory manner in which he
develops it. To carry his burden of persuasion on appeal,
Hardy’s brief “must provide meaningful legal analysis” of “the
issues with citation to relevant legal authority.” State v. Hawkins,
2016 UT App 9, ¶ 60, 366 P.3d 884 (quotation simplified). But,
“mere bald citation to authority, devoid of any analysis, is not
adequate.” Id. (quotation simplified) Although Hardy cites at
length the Restatement (Third) of Agency on the topic of breach
of warranty in support of his assertion that the court erred, he
makes little effort to explain the specific error in the district
court’s reasoning. Rather, he makes this conclusory assertion:
“Even if this Court does not reverse the trial court’s
determinations as to the issue of authority and voidability of the
REPC, this Court can and should reverse the trial court’s
dismissal of the Breach of Warranty claim against Mower
personally.” More significantly, in citing the Restatement, Hardy
does not address the rather obvious condition placed on an
implied warranty of authority:
A person who purports to make a contract,
representation, or conveyance to or with a third
party on behalf of another person, lacking power to
bind that person, gives an implied warranty of
authority to the third party and is subject to
liability to the third party for damages for loss
caused by breach of that warranty, including loss
of the benefit expected from performance by the
principal, unless . . . the third party knows that the
person who purports to make the contract,
(continued…)
20190063-CA 7 2021 UT App 23Hardy v. Sagacious Grace
ANALYSIS
¶15 Hardy contends that the district court erroneously
concluded that because Mower lacked the authority to sign the
REPC on its behalf, that document was not binding on SG.
¶16 Utah law provides that “[i]n a manager-managed limited
liability company . . . , any matter relating to the activities and
affairs of the limited liability company is decided exclusively by
the manager.” Utah Code Ann. § 48-3a-407(3)(a) (LexisNexis
2015). The parties agree that SG was a manager-managed limited
liability company, that LC Manager was the publicly listed sole
manager of SG, and that Ross was the sole manager of LC
Manager. Relying on these facts and precedent, the district court
concluded that only Ross had the authority to act on SG’s behalf
and that Mower lacked authority—actual or apparent—to bind
SG to the REPC.
¶17 “Under agency law, an agent cannot make its principal
responsible for the agent’s actions unless the agent is acting
pursuant to either actual or apparent authority.” Hussein v. UBS
Bank USA, 2019 UT App 100, ¶ 30, 446 P.3d 96 (quotation
simplified). Here, Mower had neither type of authority. She had
no actual authority to sign the REPC because she was not SG’s
(…continued)
representation, or conveyance acts without actual
authority.
Restatement (Third) of Agency § 6.10 (Am. Law Inst. 2006)
(emphasis added). As we explain, see infra ¶ 17, Hardy should
have known that Mower lacked authority—actual or apparent—
through SG’s public filings. “Accordingly, [Hardy] fails to carry
his burden of persuasion on appeal” with respect to whether the
district court erred in granting summary judgment in favor of
Mower on the breach of warranty claim. See Hawkins, 2016 UT
App 9, ¶ 60.
20190063-CA 8 2021 UT App 23Hardy v. Sagacious Grace
manager. See Utah Code Ann. § 48-3a-407(3)(a) (“[A]ny matter
relating to the activities and affairs of the limited liability
company is decided exclusively by the manager . . . .”). And
Hardy has not shown that SG did anything to indicate to Hardy
that Mower had apparent authority to sign the REPC. “Apparent
authority exists where the conduct of the principal causes a third
party to reasonably believe that someone has authority to act on
the principal’s behalf, and the third party relies on this
appearance of authority and will suffer loss if an agency
relationship is not found.” Zions Gate R.V. Resort, LLC v. Oliphant,
2014 UT App 98, ¶ 11, 326 P.3d 118 (quotation simplified).
Moreover, Hardy should have been aware that Mower lacked
apparent authority through SG’s public filings. See id. ¶ 14(“[T]he law imposed on [the tenant] the obligation to ascertain
whether [the agent] had authority to enter into the [l]ease—
including obtaining a copy of the [certificate of organization]
from the state if necessary.”). And “knowledge of an agent’s lack
of authority defeats a claim for apparent authority.” Id. ¶ 11(quotation simplified).
¶18 But Hardy does not argue that Mower exercised authority
to sign the REPC as SG’s manager; rather, he asserts that Mower
exercised authority pursuant to a statutory grant: “The
affirmative vote or consent of all members is required to . . .
undertake any act outside the ordinary course of the limited
liability company’s activities and affairs . . . .” Utah Code Ann.
§ 48-3a-407(3)(c)(ii). 5 Under this provision, Hardy contends that
5. SG argues that this court “should ignore this argument
because Hardy raises it for the first time after his appeal on other
issues.” Specifically, SG contends that because this argument
was first raised in a motion to reconsider and because Hardy’s
notice of appeal does not explicitly reference the district court’s
decision on that motion, this argument lies outside the scope of
this appeal. We are not persuaded. Hardy’s notice of appeal
indicated that he was appealing from the court’s first summary
(continued…)
20190063-CA 9 2021 UT App 23Hardy v. Sagacious Grace
“Mower was the sole member of SG and had intentionally
consented to sign the REPC. As a result, Mower could (and did)
override the general restriction in Utah Code Ann.
§ 48-3a-407(3)(a) which requires that the activities and affairs of a
manager-managed company be decided exclusively by the
manager.”
¶19 In support of his argument, Hardy asserts that Mower
had the authority to sign because (1) she signed the REPC
intentionally and (2) selling the Property was an “act outside the
ordinary course” of SG’s “activities and affairs,” thereby
superseding the requirement that the manager (namely, LC
Manager) execute the REPC. (Quotation simplified.) Hardy
specifically argues that because SG had not sold property in a
“very, very long time” and because Ross (on behalf of LC
Manager) had not signed documents on behalf of SG during the
previous five years, 6 selling the Property was outside “the
(…continued)
judgment ruling and the final judgment dismissing with
prejudice his claim of fraudulent misrepresentation. As this
court has stated, “Where the notice of appeal sufficiently
identifies the final judgment at issue and the opposing party is
not prejudiced, the notice of appeal is to be liberally construed.
Put another way, where the appealing party’s intent is clear and
the appellee suffers no prejudice, the notice of appeal is
sufficient.” Pulham v. Kirsling, 2018 UT App 65, ¶ 29, 427 P.3d
261 (quotation simplified), aff’d, 2019 UT 18, 443 P.3d 1217. Thus,
even though Hardy’s “notice of appeal failed to explicitly
reference [the order on his motion to reconsider,] we nonetheless
determine[] that the notice of appeal sufficiently demonstrated
the intent to appeal [that] unreferenced order.” See Pulham v.
Kirsling, 2019 UT 18, ¶ 29 n.8, 443 P.3d 1217.
6. While Hardy contends that Mower stated in her deposition
that SG had not sold property in “very, very long time,” Mower
(continued…)
20190063-CA 10 2021 UT App 23Hardy v. Sagacious Grace
ordinary course of business.” In essence, Hardy’s argument is
that Mower intentionally exercised her prerogative—by
executing an action outside SG’s ordinary course of activities—
as the sole member of SG to override the requirement that LC
Manager sign the REPC.
¶20 Hardy’s argument is unpersuasive for two reasons. First,
Hardy’s contention that selling the Property was “outside [SG’s]
ordinary course of business” is unsupported by the record.
Hardy has presented only minimal evidence regarding the
nature of the “ordinary course” of SG’s “activities and affairs.”
Neither SG’s certificate of organization nor any operating
agreement 7 appears to be included in the record. Having
presented little evidence of SG’s purpose or the nature of its
“activities and affairs,” Hardy has not carried his burden to
(…continued)
in fact said she personally had not sold property in some time.
When asked why she signed the REPC even though she was
uncertain as to which property it pertained, Mower replied, “I
didn’t even—I didn’t even think about it, because I haven’t sold
a piece of property for a long, long time. I’ve bought property,
but I haven’t sold property. In fact, this is the first piece of
property that I’ve sold in a very, very long time sir.” So far from
saying SG had not sold property in a “very, very long time,”
Mower said that she, as an individual, had not done so. When
asked “how often . . . Ross ha[d] executed documents in the last
five years on behalf” of SG, Mower replied, “None, to my
knowledge.”
7. A manager-managed limited liability company must be
designated as such in the operating agreement. See Utah Code
Ann. § 48-3a-407(1) (LexisNexis 2015). See generally id.
§ 48-3a-201 (describing the provisions required in a certificate of
organization); id. § 48-3a-112 (setting out the requirements of an
operating agreement).
20190063-CA 11 2021 UT App 23Hardy v. Sagacious Grace
show that selling property was outside the ordinary course of
SG’s activities. See Montana Food, LLC v. Todosijevic, 2015 WY 26,
¶ 23, 344 P.3d 751 (looking to a company’s operating agreement
and articles of organization to determine whether an action was
outside the ordinary course of activities); In re Estate of Kelley,
No. M2001-00847-COA-R3-CV, 2002 WL 1484445, at *11 (Tenn.
Ct. App. July 12, 2002) (requiring a plaintiff to offer proof that
certain actions were “made outside the ordinary course of
business”); Osterweil v. Crean, 26 A.2d 307, 308 (Pa. 1942) (per
curiam) (stating that the plaintiff had the burden of proving that
the sale of clothing was outside the ordinary course of business).
¶21 Second, Mower’s deposition testimony that she had not
sold property in some time and that she was unaware of when
Ross had last signed documents for SG, see supra note 6, is not
evidence that gives rise to a “reasonable inference” that selling
property was outside SG’s ordinary course of activities and
affairs. See Levitt v. Iasis Healthcare Holdings Inc., 2019 UT App 68,
¶ 20, 442 P.3d 1211. “When the facts are so tenuous, vague, or
insufficiently established that determining an issue of fact
becomes completely speculative, the claim fails as a matter of
law, and summary judgment is appropriate.” Pintar v. Houck,
2011 UT App 304, ¶ 17, 263 P.3d 1158 (quotation simplified); see
Nelson v. Target Corp., 2014 UT App 205, ¶ 25, 334 P.3d 1010 (“A
plaintiff cannot avoid summary judgment based on doubtful,
vague, speculative or inconclusive evidence.” (quotation
simplified)). Indeed, Mower testified that SG “simply holds
land.” 8 If SG is a property holding company—which it may well
be given Mower’s testimony and because the record indicates
that it owned other properties—one would not necessarily
8. During her deposition, Mower stated that “[SG] is land” and
that it held “three or four” properties. Earlier in the deposition,
she had stated that SG also manufactured powdered drinks but
later clarified that “SG doesn’t manufacture anything” and “just
holds properties.”
20190063-CA 12 2021 UT App 23Hardy v. Sagacious Grace
expect SG to buy and sell property with any frequency, yet
selling property could still be within the ordinary course of its
business. SG might hold property for many years waiting for the
opportunity to make a profitable sale. Moreover, the mere facts
that Mower had not sold property in a long time and that
Mower could only speculate about whether Ross had executed
documents on behalf of SG during the previous five years is
largely irrelevant; these facts do not address the scope of SG’s
ordinary course of affairs but focus instead on Mower’s activity
as an individual and Mower’s speculation about Ross’s
involvement in SG’s affairs. To survive summary judgment,
Hardy was required to do more than speculate; he needed to
provide some evidence of SG’s business purpose—such as
would be indicated in its certificate of organization or testimony
from SG’s manager—that would show selling property was
outside the company’s ordinary course of affairs. Thus, the
district court did not err in granting summary judgment,
because there nothing—apart from vague speculation—to give
rise to a reasonable inference that selling property fell outside
SG’s ordinary course of affairs.
CONCLUSION
¶22 The district court did not err in granting SG and Mower’s
motion for summary judgment or by determining that Mower
did not possess the authority to sign the REPC.
¶23 Affirmed.
20190063-CA 13 2021 UT App 23