Coleman v. Stuart

2019 UT App 165THE UTAH COURT OF APPEALS
DAN COLEMAN AND ARETE GYMNASTICS LLC,
Appellees and Cross-appellants,
v.
TOM STUART, STS PROPERTIES LLC, AND TOM STUART
CONSTRUCTION INC.,
Appellants and Cross-appellees.
Opinion
No. 20180182-CA
Filed October 10, 2019
Fourth District Court, Spanish Fork Department
The Honorable Kraig Powell
The Honorable Jared Eldridge
No. 160300002
Barry N. Johnson and Joshua L. Lee, Attorneys for
Appellants and Cross-appellees
Denver C. Snuffer Jr., Steven R. Paul, and Joshua D.
Egan, Attorneys for Appellees and Cross-appellants
JUDGE GREGORY K. ORME authored this Opinion, in which
JUDGES KATE APPLEBY and RYAN M. HARRIS concurred.
ORME, Judge:
¶1 Although the defendants raised the statute of frauds as a
defense to plaintiff Dan Coleman’s quiet title action in their
answer to his complaint, at the summary judgment stage, and at
trial, the trial court never addressed this important affirmative
defense. Instead, following a bench trial, the court ruled that
Coleman held a “financial interest” in the property at issue. We
hold that the statute of frauds barred Coleman’s quiet title action
and accordingly reverse. In light of our resolution of the
defendants’ appeal, we do not address Coleman’s cross­appeal.
Coleman v. Stuart
BACKGROUND 1
The Coleman–Kriser Partnership
¶2 Prior to moving to Utah, Coleman and his wife Jana were
successful and well-respected gymnastics coaches in Alaska. In
2003, they brought their gymnastics team to compete in Utah
and “dominated the competition.” Matthew Kriser, the operator
of Kid’s Universe, a local gymnastics program, was impressed
by the Colemans’ team and introduced himself. He asked the
Colemans to help him develop Kid’s Universe into a higher
quality program, and they agreed to come to Utah as consultants
to assist Kriser in his efforts.
¶3 Within a short period of time, Kriser and the Colemans
formed a partnership. Under this partnership, Kid’s Universe
was divided into two programs: Kid’s Universe and Arete
Gymnastics. Kriser primarily managed Kid’s Universe, which
offered various after-school programs such as cheerleading,
karate, and ballroom dance. Coleman focused his energies on
Arete Gymnastics, a gymnastics program aimed at producing
high-level gymnasts. The partnership proved successful, and the
programs quickly grew from approximately 150 to 650
participants, triggering the need for larger facilities.
¶4 In June 2004, Kriser purchased property in Lindon (the
Lindon Property) on which he and Coleman constructed a
building large enough to meet both programs’ growing needs.
Kriser borrowed approximately $1 million for the purchase of
the Lindon Property and construction of the building. He and
1. “On appeal from a bench trial, we view the evidence in a light
most favorable to the trial court’s findings, and therefore recite
the facts consistent with that standard.” Alvey Dev. Corp. v.
Mackelprang, 2002 UT App 220, ¶ 2, 51 P.3d 45 (quotation
simplified).
20180182-CA 2 2019 UT App 165Coleman v. Stuart
his wife Debbie held title to the Lindon Property as joint tenants.
Coleman was not listed on the title.
¶5 In June 2007, as compensation for Coleman’s
contributions to the construction of the building and
development of the Arete Gymnastics program, Kriser and
Coleman executed the “Kriser/Coleman Equity Agreement,” in
which the partners agreed to share equity in the Lindon Property
in the following manner:
If the property, building and the gym and office
equipment were to be sold, the equity would be
determined by taking the total sales price less all of
the expenses and losses. The leftover funds would
be considered “the equity”, and would be split
50%, to Matt and Debbie Kriser and 50% to Dan
and Jana Coleman.
The agreement also granted Dan Coleman a right of first refusal
to purchase the Lindon Property if it were to be offered for sale.
¶6 Around that same time, the partners began discussing the
possibility of selling the Lindon Property and constructing a new
and yet larger facility at a more favorable location with better
visibility. Additionally, Kriser, a builder by trade who viewed
Kid’s Universe more as a “labor of love” and not necessarily a
serious business pursuit, began sensing changes in the real estate
and construction markets and wished to reduce his financial
exposure in the event the market began to soften. The partners
therefore discussed the possibility of the Colemans buying out
the Krisers’ interest in the Lindon Property.
The Coleman–Stuart Joint Venture
¶7 Coleman soon found property he liked in American Fork
(the American Fork Property) that was visible from the freeway
and capable of supporting a building large enough to meet the
growing needs of Arete Gymnastics. The real estate broker who
20180182-CA 3 2019 UT App 165Coleman v. Stuart
assisted Coleman in finding the American Fork Property
recommended Tom Stuart Construction, Inc. (TSC) for the
construction of the new building.
¶8 In August 2007, Coleman met with Tom Stuart, TSC’s
“primary decision maker,” to discuss construction of the new
building. Toward the end of the meeting, Stuart asked how
Coleman would pay for the building. Coleman answered that he
intended to use his equity in the Lindon Property,
approximately $500,000, as a down payment and that he would
finance the remaining balance.
¶9 After reviewing the “Kriser/Coleman Equity Agreement,”
Stuart noted that Coleman had a right of first refusal to the
Lindon Property. This sparked discussion of Coleman and Stuart
using the right of first refusal to purchase Kriser’s interest in the
Lindon Property. Once the new facility on the American Fork
Property was completed, they would sell the Lindon Property
and Coleman would transfer any equity he realized from the sale
to help defray the expenses of the new building. 2 Ultimately,
Stuart and Coleman would jointly own the new building
through their respective business holdings, TSC and DJ Coleman
Investments, LLC (DJCI). This arrangement appealed to
Coleman because it meant that Arete Gymnastics could continue
to operate on the Lindon Property until the new building on the
American Fork Property was completed.
¶10 Coleman and Stuart reduced their arrangement to writing
(the Letter of Intent) on November 14, 2007. The Letter of Intent
stated:
2. The trial court does not articulate the evidence on which it
based this finding. Because we did not discover in the record any
written document to support this fact, the court presumably
gleaned this information from the parties’ testimony. In any
event, the finding is not challenged on appeal.
20180182-CA 4 2019 UT App 165Coleman v. Stuart
It is also proposed that [TSC] and [DJCI] enter into
an agreement to form [Arete Partners, LLC] to
effect the construction of the new building. [Arete
Partners] will become the sole owner and operator
of the building. It is understood and accepted that
TSC will own a 50% divided share (1/2 of the total
building) of [Arete Partners] and DJCI will own an
equal 50% (1/2 of the building) divided share.
¶11 Arete Partners was subsequently established as a limited
liability company in March 2008 with Stuart listed as its
manager. Although Coleman and Stuart intended Arete Partners
to be a joint venture, the formation documents did not list
Coleman as a member.
¶12 That same month, Coleman prepared the “Dan
Coleman/Tom Stewart Equity Agreement” with the purpose of
memorializing Coleman’s understanding that he and Stuart
were to be equal partners in any equity realized from the sale of
the Lindon Property. The document stated, “The determination
of the equity shall take into account all of the costs in the
acquisition of [the Lindon Property]. Cost to come out first, then
remaining equity will be split 50/50, 50% Coleman 50% Stewart.”
Coleman signed the document on March 30, 2008, and
forwarded it to Stuart to sign. Stuart’s signature does not appear
on the agreement presented at trial, and the trial court held that
“it is simply inconclusive whether or not Stuart signed the
‘Coleman/Stuart Equity Agreement.’” Coleman believed that this
agreement governed his relationship with Stuart right up until
the parties initiated the current lawsuit eight years later.
¶13 Also in March 2008, Coleman executed a Real Estate
Purchase Contract (REPC) that listed Coleman as the seller of the
Lindon Property and Arete Partners as the buyer. Section 3 of
the REPC listed the purchase price as $1,950,000 of which
$1,550,000 would be funded by a loan arranged by Stuart, and
Coleman was to pay the remaining $400,000.
20180182-CA 5 2019 UT App 165Coleman v. Stuart
¶14 On April 8, 2008, Coleman and Kriser signed closing
documents listing them both as the sellers of the Lindon
Property. The following day, the title company contacted
Coleman to inform him that he was not listed as a record
titleholder of the Lindon Property and that he and Kriser would
have to sign additional documents removing him as a seller.
Shortly thereafter, Coleman, the Krisers, and Stuart signed a
document entitled “Addendum #1 Real Estate Purchase
Contract” (Addendum #1). Although the text of Addendum #1
took up less than a third of a page, it made significant changes to
the REPC. First, it struck most of section 3 of the REPC. The only
surviving portion of section 3 then read, “Buyer shall make
payment of the total Purchase Price for the Property in the
following manner:” and provided no further information.
Regardless, Coleman ultimately contributed a little over $400,000
toward the down payment, as originally contemplated by
section 3 of the REPC. 3
¶15 More significantly, Addendum #1 replaced Coleman with
the Krisers as the sellers of the Lindon Property. And as the
buyer, the document replaced Arete Partners with another of
Stuart’s entities, STS Properties, LLC. Stuart testified that the
change to the property’s buyer was necessary because Coleman
did not qualify for the necessary loan and he believed STS
Properties should be the record titleholder because it had
3. Specifically, the loaning bank required a down payment of
$535,000 prior to closing, which Coleman could not pay. So that
the deal could move forward, Stuart made the $535,000 payment
in Coleman’s stead. After Coleman received a check for his share
of the equity realized from the sale of the Lindon Property,
totaling $497,832.92, he signed the check over to Stuart. Stuart
then wrote a check to Coleman for $95,000, which represented
the amount necessary for the continued operation of Arete
Gymnastics. Neither party intended to pay the other interest on
their respective contributions to the down payment—neither
Coleman’s $402,000 nor Stuart’s $133,000.
20180182-CA 6 2019 UT App 165Coleman v. Stuart
assumed the risk associated with the loan. Although Coleman
did not recall reading Addendum #1 or understanding the
implications of the change before signing it, he did know as
early as April 2009 that STS Properties, and not Arete Partners,
held exclusive title to the Lindon Property. Following closing, a
warranty deed conveying the Lindon Property from the Krisers
to STS Properties was recorded on April 15, 2008.
¶16 After the sale, Arete Gymnastics continued to operate in
the building on the Lindon Property. The parties agreed that
Arete Gymnastics would make the monthly mortgage payments
and cover all other expenses associated with the property. This
arrangement lasted from May 2008 until trial, late in 2017.
¶17 Before Coleman and Stuart could move forward with the
second phase of their plan—to purchase the American Fork
Property and construct a new building on it—the property
needed to be rezoned to allow for their intended use of the land.
The Letter of Intent specifically contemplated this necessity,
expressing the need for “[c]oordination with the Planning
commission to obtain city approval of the project.” A little over a
week after the sale of the Lindon Property, Coleman, Stuart, and
Stuart’s project manager attended a meeting of the American
Fork Planning Commission in an effort to persuade the
commission to rezone the property. The planning commission
denied the proposed zoning change, and the parties did not
appeal that decision.
¶18 With their plans for the American Fork Property
frustrated, Coleman began searching for an alternative location.
Between 2008 and 2015, he found approximately two properties
a year that he believed would be suitable substitutes. But for one
reason or another, Stuart’s property manager rejected each
proposed location. After failing to persuade Stuart to move on
two particularly promising locations, Coleman concluded that
Stuart was not going to build the new building and decided he
needed to find a way to purchase STS Properties’ interest in the
Lindon Property.
20180182-CA 7 2019 UT App 165Coleman v. Stuart
¶19 In January 2015, Coleman discovered that he had been
overpaying the monthly mortgage obligation by approximately
$1,100 since 2008. Stuart’s project manager acknowledged the
mistake, and following further discussions, Coleman’s monthly
payment was reduced to the correct amount, $9,511, starting in
November. Coleman continued making monthly payments in
this reduced amount until trial, apparently reserving for later the
question of how Coleman’s overpayment of approximately
$99,000 would be handled.
¶20 At the same time, around January 2015, Coleman began to
explore buying out STS Properties’ interest in the Lindon
Property. Coleman made several offers to Stuart, but following a
number of heated discussions and email exchanges, all
negotiations broke down. Coleman then filed suit against Stuart,
STS Properties, and TSC (collectively, Defendants) in January
2016, seeking to quiet title in the Lindon Property. 4 He alleged
that he was “entitle[d] to possession of the [Lindon] Property
and a determination that Stuart is not a title owner of the
property, but is only a creditor or lien holder against the
property.” Defendants asserted the statute of frauds as an
affirmative defense in their answer to Coleman’s amended
complaint. STS Properties also filed a provisional counterclaim
for partition and sale, conditioned on a finding that “Coleman
and STS are joint tenants or tenants in common of the [Lindon]
Property.” Several months later, STS Properties served Arete
Gymnastics with a “Notice to Surrender Premises.” Arete
Gymnastics did not vacate the Lindon Property as demanded,
and STS Properties filed an unlawful detainer action in
November 2016. The two suits were consolidated into the
current case.
4. Coleman also brought two claims for breach of contract, which
the trial court dismissed following the bench trial on the ground
that Coleman “failed to meet his burden of proof.” The dismissal
of these claims is not at issue on appeal.
20180182-CA 8 2019 UT App 165Coleman v. Stuart
Procedural History
¶21 Prior to trial, Defendants sought summary judgment on
Coleman’s quiet title claim arguing, among other things, that the
statute of frauds barred the action. The trial court denied
Defendants’ motion, stating that Coleman’s payment of over
$400,000 “creates a substantial question of fact as to whether
Stuart agreed that Coleman would thereafter have an ownership
interest in the property.” Although the court acknowledged that
“no evidence currently in the record indicates that the parties
contemplated that the April, 2008 transfer of title was meant to
place title in Coleman’s name,” the court did not address
Defendants’ statute of frauds argument.
¶22 The trial court held a bench trial in November and
December of 2017. Defendants again raised their
statute­of­frauds defense in their trial brief and during trial. At
the conclusion of trial, the court ruled that Coleman had
prevailed on his quiet title claim and ordered as follows:
a. Dan Coleman has a financial interest equal to
$402,000 invested in the Lindon Property
contemporaneously with the April 2008 closing.
b. Dan Coleman/Arete Gymnastics have a financial
interest equal to the total principal payments made
toward the outstanding loan on the Lindon
Property since May 2008.
c. Dan Coleman/Arete Gymnastics have a financial
interest in the Lindon Property equal to the $99,000
“overpayment.”
d. Upon a sale of the property Dan Coleman/Arete
Gymnastics have a right, interest or claim equal to
one half of the remaining equity once all of the
remaining obligations pertaining to the Lindon
Property are paid.
20180182-CA 9 2019 UT App 165Coleman v. Stuart
Although the trial court addressed many of Defendants’
arguments in its order, it again failed to address their
statute­of­frauds defense. The court also granted Defendants’
counterclaim for sale and partition of the Lindon Property, but
because the court had concluded that Coleman held an interest
in the Lindon Property, it denied STS Properties’ unlawful
detainer action. Finally, the court denied each party’s request for
attorney fees.
¶23 Defendants appeal, and Coleman cross-appeals.
ISSUES AND STANDARDS OF REVIEW
¶24 Defendants raise several issues on appeal, but because
their statute-of-frauds argument is dispositive and we reverse on
that ground, we do not address Defendants’ other arguments.
See State v. Maestas, 2002 UT 123, ¶ 41, 63 P.3d 621; Neilson v.
Neilson, 780 P.2d 1264, 1270 (Utah Ct. App. 1989). Defendants
argue that Coleman’s claim of title to the Lindon Property is
barred by “the absence of a sufficient note, memorandum, or
other instrument satisfying the statute of frauds.” “The
applicability of the statute of frauds is a question of law,” which
we review de novo. Bennett v. Huish, 2007 UT App 19, ¶ 9, 155
P.3d 917 (citation omitted).
¶25 In his cross-appeal, Coleman challenges the trial court’s
denial of his request for attorney fees incurred in successfully
defending against STS Properties’ unlawful detainer action.
Ordinarily, “whether attorney fees are recoverable is a question
of law which we review for correctness.” Golden Meadows Props.,
LC v. Strand, 2010 UT App 257, ¶ 33, 241 P.3d 375 (citation
omitted). But in light of our resolution of Defendants’ appeal
and remand of STS Properties’ unlawful detainer action, see infra
note 12, we have no occasion to reach the merits of Coleman’s
cross-appeal.
20180182-CA 10 2019 UT App 165Coleman v. Stuart
ANALYSIS
I. Scope of Analysis
¶26 Before we reach the merits of Defendants’
statute­of­frauds argument, we pause briefly to clarify the scope
of our analysis of this issue. Specifically, our inquiry is limited
by the scope of the pleadings, and in this case, Coleman pleaded
a claim to quiet title and did not plead any claims regarding
partnerships or joint ventures. Accordingly, in this quiet title
action, we limit our analysis to whether documentary evidence
of Coleman’s title interest in the Lindon Property satisfies the
statute of frauds. We do not examine whether the statute was
satisfied as regards any “financial interest” Coleman might have
in any partnership, joint venture, or other business arrangement
entered into with Defendants. 5
5. Indeed, the statute of frauds almost certainly would not apply
to a claim that Coleman is entitled to his investment and a share
of the profits realized upon a potential partnership or joint
venture with Defendants. See Pasquin v. Pasquin, 1999 UT App
245, ¶¶ 22–24, 988 P.2d 1 (amended opinion) (noting that this
court has “previously held that an oral joint venture agreement
to share in the profits of a real estate contract was not barred by
the statute of frauds” and holding that “enforcement of oral
partnership agreements is not barred by the statute of frauds”);
Mackintosh v. Hampshire, 832 P.2d 1298, 1301–02 (Utah Ct. App.
1992) (stating that although the statute of frauds barred the
plaintiff’s prior quiet title action for enforcement of an oral
agreement for interest in land owned by a partnership to which
he was not a party, the statute of frauds did not bar the
plaintiff’s action seeking a share in the profits gained by the
partnership). But for reasons discussed, see infra ¶ 28, the trial
court exceeded the scope of Coleman’s pleadings when it
concluded that “the parties intended to engage in a partnership
(continued…)
20180182-CA 11 2019 UT App 165Coleman v. Stuart
¶27 Utah’s quiet title statute provides that “[a] person may
bring an action against another person to determine rights,
interests, or claims to or in personal or real property.” Utah Code
Ann. § 78B-6-1301 (LexisNexis 2018). Coleman limited his action
to claims of title to the Lindon Property. Specifically, he claimed
that he “is entitle[d] to possession of the [Lindon] Property and a
determination that Stuart is not a title owner of the property, but
is only a creditor or lien holder against the property.” He
therefore sought “judgment quieting title to the [Lindon]
Property . . . and finding that [his] title is superior and
paramount to any claim of Defendant Stuart.”
¶28 In ruling in Coleman’s favor, the trial court did not
determine that Coleman held title to the Lindon Property, but
instead concluded that “the parties intended to engage in a
partnership or joint venture with the purchase of the Lindon
Property in April 2008” and that Coleman was therefore “an
investor in the Lindon Property in the amount of $402,000
effectively giving him an ownership interest.” But the court’s
determination that Coleman and Stuart intended to engage in a
joint venture or form a partnership and that Coleman held an
interest in such an endeavor is a few steps removed from the
conclusion that he held title to the property. A mere financial
interest in a joint venture does not equate to a title interest in real
property or the type of interest that falls within the purview of
the quiet title statute. See id. At best, Coleman’s financial interest
in his and Stuart’s joint venture would have entitled him to a
return of his investment and a share of the profits following the
sale of the Lindon Property whenever STS Properties, as owner,
chose to sell or, perhaps, following a petition for the equitable
dissolution and division of partnership property. But Coleman’s
pleadings did not reflect this. Instead, he brought a claim
(…continued)
or joint venture with the purchase of the Lindon Property in
April 2008,” and granted relief accordingly.
20180182-CA 12 2019 UT App 165Coleman v. Stuart
seeking to quiet title in him (but not partition of the property 6),
asserting that STS Properties, the record titleholder of the Lindon
Property, was “only a creditor or lien holder against the
property.”7 Absent the defendant’s express or implied consent,
“a trial court’s findings should fit within the framework of the
petition as originally drawn, or as amended,” Lee v. Sanders, 2002
UT App 281, ¶ 7, 55 P.3d 1127 (quotation simplified), and so we
limit our statute of frauds analysis to the claim Coleman actually
pleaded—a claim of title to the Lindon Property. 8
6. In its counterclaim, STS Properties sought partition and sale of
the Lindon Property, but only “[i]n the event the finder of fact
determines that Coleman and STS are joint tenants or tenants in
common of the [Lindon] Property.”
7. It was suggested at oral argument before this court that one
reason Coleman brought a quiet title action was that statutes of
limitation potentially barred the more appropriate causes of
action he could have pursued. Namely, Coleman knew as early
as April 2009 that STS Properties held exclusive title to the
Lindon Property, but he did not take legal recourse against
Defendants until 2016.
8. Coleman, relying on rule 54 of the Utah Rules of Civil
Procedure, argues that the trial court had the authority to “grant
the relief to which each party is entitled, even if the party has not
demanded that relief in its pleadings.” See Utah R. Civ. P. 54(c).
But the rule does not justify the trial court’s decision insofar as it
was based on grounds and theories that were neither tried nor
raised, see Combe v. Warren’s Family Drive-Inns, Inc., 680 P.2d 733,
735 (Utah 1984) (“Although Rule 54(c)[] permits relief on
grounds not pleaded, that rule does not go so far as to authorize
the granting of relief on issues neither raised nor tried.”), and
which ignored the statute of frauds defense. And while Coleman
asserts that “concepts of partners and equity are intertwined
throughout the pleadings, pre-trial motions, testimony and
(continued…)
20180182-CA 13 2019 UT App 165Coleman v. Stuart
II. Statute of Frauds
¶29 “Statutes of frauds are intended to bar enforcement of
certain agreements that the law requires to be memorialized in
writing.” Golden Meadows Props., LC v. Strand, 2010 UT App 257,
¶ 22, 241 P.3d 375 (citation omitted). As pertains to real property,
the Utah statute of frauds provides that “any contract conveying
an interest in land in which the agreement has not been reduced
to writing and signed by the person relinquishing the property is
unenforceable.” JDW–CM, LLC v. Clark LHS, LLC, 2014 UT App
70, ¶ 14, 323 P.3d 604. See also Utah Code Ann. § 25-5-1
(LexisNexis 2013); id. § 25-5-3. Although deeds are the preferred
method of transferring interests in real property and satisfying
the statute of frauds, see Evans v. Board of County Comm’rs, 2004
UT App 256, ¶ 9, 97 P.3d 697, “all that is required is that the
interest be granted or declared by a writing subscribed by the
party to be charged” and that the writing “include all the
essential terms and provisions of the contract,” JDW–CM, 2014
UT App 70, ¶ 15 (quotation simplified). And “in determining
whether a document purports to convey an interest in land, the
court must focus on the document to see whether it identified
the grantor, the grantee, and the interest granted or a description
of the boundaries in a manner sufficient to construe the
instrument as a conveyance of an interest in land.” Kelly v. Hard
Money Funding, Inc., 2004 UT App 44, ¶ 21, 87 P.3d 734(quotation simplified).
¶30 To satisfy the statute of frauds, a plaintiff may proffer
“one or more writings, not all of which are signed by the party to
(…continued)
evidence at trial,” he does not support this contention with
citations to the record. See Utah R. App. P. 24(a)(8) (“The
argument must explain, with reasoned analysis supported by
citations to legal authority and the record, why the party should
prevail on appeal.”) (emphasis added). Accordingly, we decline
to delve further into this issue.
20180182-CA 14 2019 UT App 165Coleman v. Stuart
be charged, [to] be considered together as a memorandum if
there is a nexus between them.” Reynolds v. Bickel, 2013 UT 32,
¶ 17, 307 P.3d 570 (quotation simplified). “A nexus for statute of
frauds purposes is indicated by express reference in the signed
writing to the unsigned one, or by implied reference gleaned
from the contents of the writings and the circumstances
surrounding the transaction.” Id. ¶ 18 (quotation simplified).
¶31 Coleman argues that “[t]he trial court rejected and
refused to address Stuart’s statute of frauds defense because the
court relied on the numerous written documents (some signed
by Stuart or created at his direction) to support its conclusion
that Coleman had a financial interest[9] in the Lindon Property.” 10
The documents to which Coleman directs our attention are the
Letter of Intent, the REPC, the Buyer’s Final Closing Statement,
and a reference to an email between two employees of STS
Properties. Having reviewed these documents, we conclude that
9. Coleman’s argument on appeal is focused entirely on the trial
court’s finding that he held a “financial interest” in the Lindon
Property. He does not argue whether the statute of frauds was
satisfied as relates to his claims of title to the property. Our
review of the record has not revealed any documentation in
addition to that already proffered by Coleman that would
support his claim of title to the Lindon Property. See infra note
11.
10. Coleman does not contend that his interest in the Lindon
Property arose by operation of law, Utah Code Ann. § 25-5-1
(LexisNexis 2013), or that an exception to the statute of frauds
applies, see, e.g., Coleman v. Dillman, 624 P.2d 713, 715 (Utah 1981)
(discussing the doctrine of part performance as an exception to
the statute of frauds); Golden Meadows Props., LC v. Strand, 2010
UT App 257, ¶ 23, 241 P.3d 375 (“A party is estopped from
asserting the statute of frauds as a defense only if it has expressly
and unambiguously waived the right to do so.”) (quotation
simplified).
20180182-CA 15 2019 UT App 165Coleman v. Stuart
they do not satisfy the statute of frauds as concerns Coleman’s
claimed title to the Lindon Property.
¶32 Although the trial court concluded that the Letter of
Intent “was still in effect at the time of the transaction and laid
out a proposed road map for the parties’ relationship,” the
document is silent as to the parties’ agreement concerning title to
the Lindon Property. Instead, the Letter of Intent is entirely
focused on the purchase and construction of a building on the
American Fork Property. The document provides that Coleman
and Stuart, through their respective entities, would own an
undivided 50% interest in the new building on the American
Fork Property, but the Letter of Intent is entirely silent as to the
parties’ intent with regard to ownership of the Lindon Property.
Indeed, the letter does not make any mention whatsoever of the
Lindon Property. Thus, the writing does not grant or confirm
Coleman’s alleged title interest in the Lindon Property. See
JDW-CM, 2014 UT App 70, ¶ 15.
¶33 In contrast, although the REPC and its corresponding
amendment, Addendum #1, deal directly with the transfer of
title to the Lindon Property, they do so in STS Properties’ favor.
The REPC listed Coleman as the seller of the Lindon Property
and Arete Partners as the buyer. According to the Letter of Intent
and the trial court’s findings, Coleman and Stuart, through their
respective entities, intended to each own a 50% interest in Arete
Partners. But the REPC cannot be viewed in isolation.
Addendum #1, signed by both Coleman and Stuart, amended
the REPC and specified that the sole purchaser of the Lindon
Property was to be STS Properties—an entity in which Coleman
had no interest, intended or otherwise. Thus, although the REPC
could arguably be construed to read that Coleman was in line to
acquire at least an indirect title interest in the Lindon Property
by virtue of his intended 50% interest in Arete Partners,
Addendum #1 revokes any such possibility. By the plain terms
of Addendum #1, STS Properties was to solely hold title to the
property.
20180182-CA 16 2019 UT App 165Coleman v. Stuart
¶34 The Buyer’s Final Closing Statement lists the Krisers and
Coleman as the sellers of the Lindon Property and STS
Properties as the sole buyer. Additionally, the statement
provides the purchase price and a breakdown of various fees
that would be incurred at the closing of the sale. Coleman argues
that “the Buyer’s Final Closing Statement resolved the purchase
in a manner consistent with the parties’ intent described in the
[Letter of Intent] and the REPC.” But, as discussed above, the
Letter of Intent contemplates only joint title ownership of the
American Fork Property and is entirely silent on the Lindon
Property, and Addendum #1 unambiguously provides that STS
Properties is the sole title owner of the Lindon Property.
¶35 Finally, Coleman points to an email between two
employees of STS Properties. The email provided a breakdown
of value of the Lindon Property around October 2015 as well as
each party’s distribution of the proceeds of the sale. The
calculation specifically contemplated a “50/50 Split” of the equity
realized on the building. The email also contemplated a return of
“[Stuart’s] Investment” in the amount of $133,098.85,
presumably for his portion of the $535,000 down payment, and
mentions a “loan” of $400,000, presumably referencing
Coleman’s portion of the down payment. However, the email
does not establish that Coleman held a title interest in the
Lindon Property, especially in light of Addendum #1. At best,
this email demonstrates Coleman’s interest in a share of the
profits realized upon the sale of the Lindon Property as part of a
joint venture with Stuart, or perhaps it goes towards establishing
that Coleman is a creditor of STS Properties. 11
11. For this same reason, the “Dan Coleman/Tom Stewart Equity
Agreement” does not satisfy the statute of frauds as concerns
title to the Lindon Property. It was unclear whether Stuart ever
signed the agreement, and even assuming there is a sufficient
nexus between the agreement and the documents proffered by
Coleman on appeal, they would not satisfy the statute of frauds
(continued…)
20180182-CA 17 2019 UT App 165Coleman v. Stuart
¶36 Having reviewed all relevant documents, we conclude
they do not satisfy the statute of frauds, and Coleman’s claim
of title to the Lindon Property is therefore barred.12 To be
sure, at an instinctive level there is no question that the result
the trial court reached in this case comports with a
basic understanding of what the parties intended and what
is fair. But the “financial interest” route taken to achieve
this result is a square peg that does not fit into the round
hole created by Coleman’s quiet title cause of action.
Accordingly, affirming the just outcome reached by the
trial court would necessitate a virtual repudiation of the
statute of frauds. And while our decision “‘may seem a
harsh result, . . . [t]he very adoption of a statute of frauds
reflects the Legislature’s considered judgment that, with
certain kinds of very important arrangements,’” such as
the transfer of real property, “‘it is preferable to invalidate a
few otherwise legitimate agreements because they were
not written than to burden the system and the citizenry
with claims premised on bogus, unwritten agreements.’”
Wardley Corp. Better Homes & Gardens v. Burgess, 810 P.2d 476, 478
(Utah Ct. App. 1991) (quoting Machan Hampshire Props., Inc. v.
Western Real Estate & Dev. Co., 779 P.2d 230, 237 (Utah Ct. App.
1989) (Orme, J., concurring)).
(…continued)
when viewed together as a memorandum. See Reynolds v. Bickel,
2013 UT 32, ¶¶ 17–18, 307 P.3d 570.
12. Because the trial court dismissed STS Properties’
unlawful detainer action on the ground that “Coleman/Arete
Gymnastics have an ownership interest in the Lindon
Property,” we also reverse the dismissal of that action and
remand for the court’s consideration of any additional
defenses that Coleman may have raised in opposing the
unlawful detainer action.
20180182-CA 18 2019 UT App 165Coleman v. Stuart
III. Attorney Fees
¶37 Coleman cross-appeals the trial court’s denial of his
request for attorney fees incurred in successfully defending
against STS Properties’ unlawful detainer action. “In Utah,
attorney fees are awardable only if authorized by statute or
contract.” Veracity Networks LLC v. MCG S. LLC, 2019 UT App 53,
¶ 15, 440 P.3d 906 (citation omitted). Coleman asserts that he is
entitled to attorney fees under Utah’s bad faith statute, which
directs trial courts to “award reasonable attorney fees to a
prevailing party if the court determines that the action or
defense to the action was without merit and not brought or
asserted in good faith.” Utah Code Ann. § 78B-5-825(1)
(LexisNexis 2018). But given our remand of STS Properties’
unlawful detainer action, see supra note 12, it remains to be
determined whether STS Properties’ action was (1) “without
merit” and, if so, (2) “not brought or asserted in good faith.” 13 Id.
Accordingly, we have no occasion to reach Coleman’s
cross­appeal.
CONCLUSION
¶38 We conclude that Coleman’s action seeking to quiet title
to the Lindon Property in his favor was barred by the statute of
frauds and accordingly reverse. We remand for further
proceedings in STS Properties’ unlawful detainer action, as
appropriate, given that the trial court’s resolution of the
unlawful detainer action was a product of its erroneous ruling
on the quiet title claim.
13. In denying Coleman’s request for attorney fees, the trial court
did not address whether STS Properties brought its unlawful
detainer action in bad faith. Instead, the court’s denial of fees
was limited to the statement, “In light of the facts involved in
this case, the Court declines to award attorney fees to either
side.”
20180182-CA 19 2019 UT App 165