Eskelsen v. Theta Investment Company

2019 UT App 1
THE UTAH COURT OF APPEALS
C HAD ESKELSEN AND L ORNA ESKELSEN ,
Appellants,
v.
THETA I NVESTMENT C OMPANY ,
Appellee.
Opinion
No. 20160955-CA
Filed January 4, 2019
Fifth District Court, St. George Department
The Honorable Jeffrey C. Wilcox
No. 120500400
Daniel J. Tobler, Attorney for Appellants
Bryan J. Pattison, Attorney for Appellee
JUDGE M ICHELE M. C HRISTIANSEN F ORSTER authored this Opinion,
in which J UDGES K ATE A PPLEBY and JILL M. P OHLMAN concurred.
CHRISTIANSEN FORSTER, Judge:
¶1 	Chad Eskelsen and Lorna Eskelsen appeal from the trial
court’s judgment in favor of Theta Investment Company (Theta).
We affirm.
BACKGROUND
¶2 	In August 2007, JENCO LC and VC Holdings LLC teamed
up to purchase real property (the Property) in St. George, Utah.
Gilbert Jennings formed, and was the manager of, JENCO.
Vaughn Hansen and Carolyn Hansen formed VC Holdings in
2005. VC Holdings was a manager-managed company, and the
Hansens were the company’s only members. Together, the two
companies purchased the Property, with JENCO receiving a
68.2% interest in the Property and VC Holdings receiving a

Eskelsen v. Theta Investment Company
20160955-CA 	2 	2019 UT App 1
31.8% 	interest. 	Shortly 	after 	purchasing 	its 	interest 	in 	the
Property, VC Holdings named Mr. Hansen as manager.
¶3 	In March 2008, JENCO and VC Holdings formed JVC
Leasing LC, and Mr. Jennings was appointed manager of the
company. 	A 	few 	months 	later, 	JENCO 	and 	VC 	Holdings
transferred 100% of their respective interests in the Property to
JVC Leasing. In return, JENCO received a 68.2% interest in JVC
Leasing, and VC Holdings received a 31.8% interest in JVC.
¶4 	In May 2009, the Eskelsens loaned the Hansens $120,000.
The Hansens signed a promissory note for the full amount of the
loan, and, as security for the loan, they executed a “Limited
Liability Company Membership Interest Pledge Agreement,”
pledging 	to 	the 	Eskelsens 	100% 	of 	the 	total 	issued 	and
outstanding membership interests in VC Holdings. Importantly,
VC Holdings was not a party to the promissory note.
¶5 	In June 2010, the Hansens defaulted on the promissory
note, and the Eskelsens hired attorney Daniel J. Tobler to help
them collect on the promissory note.1 The Eskelsens also filed a
UCC-1 	financing 	statement 	with 	the 	Utah 	Department 	of
Commerce to perfect their security 	interest in 	100% of the
membership interests in VC Holdings.2
1. Mr. Tobler is also representing the Eskelsens on appeal.
2. 	“A 	financing 	statement 	is 	a 	document 	stating 	that
an 	entity/individual 	(secured 	party) 	has 	a 	claim 	(security
interest) in certain property (collateral) belonging to another
entity/individual 	(debtor). 	For 	example, 	a 	business 	owner
borrows money from a bank and uses the assets of a business as
collateral for the loan. The bank as the ‘secured party’ will most
likely file a financing statement with the UCC Office within the
Division of Corporations. By filing a financing statement, the
bank establishes its priority over the collateral in the event the
(continued…)

Eskelsen v. Theta Investment Company
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¶6 	In late December 2010, as part of his collection efforts, Mr.
Tobler sent a letter (the Foreclosure Letter) to the Hansens,
stating that the Eskelsens were “accepting [the Hansens’] total
issued and outstanding membership interests in VC Holdings”
“in full satisfaction” of the promissory note. The letter stated that
the Eskelsens “were the sole members of VC Holdings” and that
they were removing the Hansens as members and managers of
the company. Finally, the letter said the Hansens had twenty
days to object to the Eskelsens’ proposal.
¶7 	Mr. Tobler also sent a letter to JVC Leasing in care of Mr.
Jennings. That letter stated that the Eskelsens “have elected to be
admitted as members of VC Holdings, and are now managers of
the same. Thus all notices from JVC Leasing, LC, and payments
or distributions for VC Holdings, LLC’s 31.8% interest in JVC
Leasing, LC, shall be paid to the Eskelsens at the address listed
below.” The letter did not include a copy of the Foreclosure
Letter sent to the Hansens or the loan documents between the
Eskelsens and the Hansens. In addition, the letter did not state
that Mr. Hansen would be removed as manager of VC Holdings.
¶8 	In January 2011, Mr. Tobler received a telephone call from
another attorney, Mr. Blanchard, who was calling as a favor to
the 	Hansens. 	Mr. 	Blanchard 	stated 	that 	his 	firm 	officially
represented Mr. Jennings. Mr. Blanchard also stated that he did
not 	believe 	the 	Eskelsens 	had 	properly 	foreclosed 	on 	the
Hansens’ 	membership 	interests 	in 	VC 	Holdings, 	but 	he
nevertheless 	suggested 	a 	compromise 	whereby 	Mr. 	Hansen
would broker a sale of the Property to Mr. Jennings (through one
of Mr. Jennings’s entities) and place in escrow the proceeds of
(…continued)
business owner files for bankruptcy or becomes insolvent.” Utah
Dep’t of Commerce, Division of Corps. & Commercial Code,
Uniform Commercial Code: Frequently Asked Questions, https://corp
orations.utah.gov/ucc-cfs/ucc.html [https://perma.cc/6WY3-
4TF3].

Eskelsen v. Theta Investment Company
20160955-CA 	4 	2019 UT App 1
the sale. The Hansens and the Eskelsens could then determine
how the proceeds should be distributed. Mr. Tobler agreed to
consult with the Eskelsens and to contact Mr. Blanchard with
their answer.
¶9 	After 	his 	discussion 	with 	Mr. 	Blanchard, 	Mr. 	Tobler
received a letter from Mr. Jennings in response to Mr. Tobler’s
December 2010 letter. Mr. Jennings asked for “documentary
proof of the transition of ownership” of VC Holdings. He also
stated that VC Holdings was “indebted to [JVC Leasing] in the
amount of $54,270.50” and suggested that the Eskelsens contact
him to “work out a repayment plan.” Mr. Tobler never provided
Mr. Jennings or Mr. Blanchard with the Foreclosure Letter or the
signed agreement between the Eskelsens and the Hansens. He
also never provided Mr. Jennings or Mr. Blanchard with the
requested “documentary proof” of the transfer of ownership of
VC Holdings.
¶10 	According 	to 	Mr. 	Jennings, 	after 	he 	received 	the
Eskelsens’ December 27, 2010 letter, he consulted with Mr.
Hansen about the Eskelsens’ claims. Mr. Jennings testified that
Mr. Hansen claimed that he (Mr. Hansen) was still the owner of
VC Holdings. Mr. Jennings also searched Utah’s Department of
Commerce website and found that Mr. Hansen was still listed as
VC Holdings’ manager.
¶11 	In January 2011, Mr. Tobler contacted Mr. Blanchard and
informed him that the Eskelsens would agree to the proposed
escrow 	agreement. 	Both 	attorneys 	later 	testified 	that 	they
understood that the Eskelsens, the Hansens, and Mr. Jennings
would agree to sign the escrow agreement. Approximately one
month later, Mr. Blanchard contacted Mr. Tobler and informed
him that he had not yet had a chance to put together the escrow
agreement. Then, on March 22, Mr. Blanchard informed Mr.
Tobler 	that the 	Hansens wished 	to 	work 	directly 	with 	the
Eskelsens. Mr. Blanchard stated that he had not prepared an
escrow agreement. He also stated that Mr. Tobler should contact
him if the Eskelsens did not hear from the Hansens within the

Eskelsen v. Theta Investment Company
20160955-CA 	5 	2019 UT App 1
next 	few 	days. 	Mr. 	Blanchard 	later 	testified 	that 	when 	he
contacted Mr. Tobler on March 22, he was unaware that the
Hansens and Mr. Jennings planned to sell VC Holdings’ interest
in the Property. Mr. Tobler did not contact Mr. Blanchard within
the next few days as requested.
¶12 	Ultimately, the Hansens and Mr. Jennings agreed that VC
Holdings would sell its ownership interest in JVC Leasing to
Theta for $236,337. At that time, Mr. Jennings was the vice
president of Theta. Mr. Jennings later testified that he asked Mr.
Hansen if he had authority to conduct business on behalf of VC
Holdings, and Mr. Hansen confirmed that he did. Mr. Hansen
also told Mr. Jennings that the Eskelsens did not have a valid
claim to VC Holdings.
¶13 	On March 23, 2011, 	Mr. Engstrom, a partner at Mr.
Blanchard’s firm, ordered closing documents from Southern
Utah Title Company for a transfer of 31.8% of the Property
interest from JVC Leasing to VC Holdings and then to Theta.
Before closing, Southern Utah Title independently verified that
Mr. Hansen had the authority to sign the closing documents for
VC Holdings. On March 29, Mr. Hansen, acting as manager of
VC Holdings, signed an agreement redeeming VC Holdings’
31.8% 	membership 	interest 	in 	JVC 	Leasing. 	In 	return, 	JVC
Leasing 	conveyed 	a 	31.8% 	interest 	in 	the 	Property 	to 	VC
Holdings. 	VC 	Holdings 	then 	sold 	its 	31.8% 	interest 	in 	the
Property to Theta for $236,337. After satisfying the $54,270 debt
VC Holdings owed to JVC Leasing, Theta placed $180,000 in
escrow 	with 	Southern 	Utah 	Title. 	Mr. 	Hansen 	instructed
Southern Utah Title to release the $180,000 to a company called
ME Jenkins Management LLC. Mr. Hansen later testified that he
used the money for personal expenses instead of repaying the
Eskelsens.
¶14 	In August 2011, the Eskelsens received notice of the
Hansens’ chapter 7 bankruptcy filing. That same day, Mr. Tobler
searched the relevant recorder’s office website and discovered
the March 29 transfer documents.

Eskelsen v. Theta Investment Company
20160955-CA 	6 	2019 UT App 1
¶15 	The Eskelsens sued the Hansens, VC Holdings, and Theta.
The Eskelsens sought a judgment declaring that VC Holdings,
not 	Theta, 	owned 	the 	31.8% 	interest 	in 	the 	Property. 	The
Eskelsens asserted that (1) the transfer to Theta was void as a
fraudulent transfer, (2) even if the transfer was not fraudulent, it
was void because Mr. Hansen lacked authority to act as VC
Holdings’ 	manager, 	and 	(3) 	even 	if 	the 	transfer 	was 	not
fraudulent and Mr. Hansen had authority to act as VC Holdings’
manager, the transfer was void because it was “outside of the
ordinary course of business” and “Mr. Hansen did not have
specific authority to transfer away all of VC Holdings’ assets.”
¶16 	After a two-day bench trial, the trial court ruled in Theta’s
favor. In its written findings of fact and conclusions of law, the
court concluded (1) that the March 29, 2011 transfer was not a
fraudulent transfer, (2) that the Eskelsens failed to properly
remove Mr. Hansen as VC Holdings’ manager and Mr. Hansen
was therefore VC Holdings’ manager on the date of the transfer,
(3) 	and 	that 	Mr. 	Hansen’s 	actions 	as 	manager 	bound 	VC
Holdings.
¶17 	After trial, the Eskelsens filed a motion to amend and
make additional findings pursuant to rule 52(b) of the Utah
Rules of Civil Procedure. The trial court granted the motion in
part and denied it in part. The court granted the Eskelsens’
motion 	to 	amend 	several 	clerical 	errors, 	such 	as 	replacing
“Theta” with “JENCO” and “2015” with “2011.” But the court
“otherwise denied” their motion. The Eskelsens appeal.
ISSUES AND STANDARDS OF REVIEW
¶18 	The Eskelsens first contend that the trial court erred in
determining that Mr. Hansen “did not commit a fraudulent
transfer under the Utah [Uniform] Fraudulent Transfer Act.”
With regard to this claim, we review questions of fact for clear
error and questions of law for correctness. Tolle v. Fenley, 2006
UT App 78, ¶ 11, 132 P.3d 63. Although we review questions of

Eskelsen v. Theta Investment Company
20160955-CA 	7 	2019 UT App 1
law for correctness, “we may still grant a trial court discretion in
its application of the law to a given fact situation.” Id. (quotation
simplified). “Questions of statutory interpretation are questions
of law that are reviewed for correctness and no deference is
given to the trial court’s determination.” Id.
¶19 	Second, the Eskelsens contend that the trial court erred in
determining the Eskelsens had the burden of disproving Theta’s
defense that it was a good faith transferee.3 “Burden of proof
questions typically present issues of law that [we] review[] for
correctness.” Martinez v. Media-Paymaster Plus/Church of Jesus
Christ of Latter-day Saints, 2007 UT 42, ¶ 41, 164 P.3d 384.
¶20 	Third, the Eskelsens contend that the trial court erred in
determining two particular facts. They assert error in the trial
court’s determination that “Theta . . . did not have notice of the
Eskelsens’ superior claim.” A finding that Theta had notice of
the Eskelsens’ claim, they assert, means Theta could not have
been a good faith transferee. See Utah Code Ann. § 25-6-9(1)
(LexisNexis Supp. 2015) (stating that a fraudulent transfer “is not
voidable . . . against a person that took in good faith and for a
reasonably equivalent value”). The Eskelsens also contend that
3. In the event of a fraudulent transfer, a third-party transferee
may seek to prevent a creditor’s remedy of voiding the transfer
pursuant to the Utah’s Uniform Fraudulent Transfer Act. To do
so, the transferee must establish that it took the property in good
faith and for reasonably equivalent value. See Utah Code Ann.
§ 25-6-9(1) (LexisNexis Supp. 2015). The parties and the trial
court employed various terms describing this status including
“bona 	fide 	purchaser,” 	“bona 	fide 	purchaser 	for 	value,”
“innocent actor,” “innocent party,” and “innocent purchaser.”
We do not here attempt to distinguish any of these terms
because they each presumably describe the same status. To
avoid 	confusion, 	we 	use 	the 	term 	“good 	faith 	transferee”
because it better comports with the language of the Uniform
Fraudulent Transfer Act.

Eskelsen v. Theta Investment Company
20160955-CA 	8 	2019 UT App 1
the 	trial 	court 	erred 	in 	determining 	that 	Mr. 	Hansen 	had
authority to act on behalf of VC Holdings on March 29, 2011.
Theta correctly observes that this issue “depends entirely on the
trial 	court’s 	determination 	of 	whether 	Theta 	had 	notice 	or
knowledge of any restrictions on [Mr. Hansen’s] authority[,]
which is a fact question.” See 4447 Assocs. v. First Sec. Fin., 889
P.2d 467, 471 (Utah Ct. App. 1995). “A determination concerning
whether 	a 	party 	had 	notice 	or 	knowledge 	of 	a 	particular
transaction or occurrence is a finding of fact and will not be set
aside” absent clear error. Id. (quotation simplified); see also Utah
R. Civ. P. 52(a)(4) (“Findings of fact, whether based on oral or
other evidence, must not be set aside unless clearly erroneous,
and the reviewing court must give due regard to the trial court’s
opportunity to judge the credibility of the witnesses.”).
¶21 	Fourth, the Eskelsens argue that the trial court erred “by
not 	imputing 	knowledge 	through 	the 	principal-agency
relationship between Theta . . . and its attorneys.” “Whether a
principal 	is 	imputed 	with 	its 	agent’s 	knowledge 	is 	a 	legal
question” 	we 	review 	for 	correctness. 	Lane 	v. 	Provo 	Rehab.
& Nursing, 2018 UT App 10, ¶ 23, 414 P.3d 991; see also Insight
Assets, Inc. v. Farias, 2013 UT 47, ¶ 13, 321 P.3d 1021 (observing
that whether a title company’s knowledge of a mortgage was
imputed to a bank was a question of law). However, whether an
agent has knowledge to impute, and what that knowledge is,
presents a question of fact, which is we review for clear error.
See id. (observing that whether a bank had actual knowledge of a
mortgage was a question of fact).
¶22 	Fifth, the Eskelsens contend that the trial court erred by
denying in part their motion to amend and make additional
findings of fact under rule 52(b) of the Utah Rules of Civil
Procedure. 	We 	review 	the 	trial 	court’s 	underlying 	factual
findings for clear error and its ultimate grant or denial of a
motion to amend or make additional findings for abuse of
discretion. See Express Recovery Servs. Inc. v. Reuling, 2015 UT
App 299, ¶ 22, 364 P.3d 766 (“We review the trial court’s denial

Eskelsen v. Theta Investment Company
20160955-CA 	9 	2019 UT App 1
of a motion to amend a judgment for an abuse of discretion.”
(quotation simplified)); see also Utah R. Civ. P. 52(a)(4).
ANALYSIS
I. Fraudulent Transfer
¶23 	The Eskelsens contend that “[t]he trial court erred in
determining [that] the Hansens did not commit a fraudulent
transfer.” According to the Eskelsens, “even if [the Hansens] did
have some form of authority, the transfer of VC Holdings’
property interest (in JVC Leasing) is voidable as a fraudulent
transfer under the Utah [Uniform] Fraudulent Transfer Act.” We
are not persuaded.
¶24 	Utah’s 	Uniform 	Fraudulent 	Transfer 	Act 	(the 	Act)
“affords remedies for ‘creditors’ against ‘debtors’ who have
engaged in fraudulent transfers of property.” See Utah Code
Ann. 	§ 	25-6-303 	(LexisNexis 	2013). 	Generally, 	a 	fraudulent
transfer occurs when a debtor (a) transfers property with actual
intent to hinder, delay, or defraud any creditor, or (b) transfers
property 	under 	specified 	circumstances 	without 	receiving
reasonably equivalent value in exchange. 	See id. § 25-6-5(1).
Under the Act, a creditor may seek to undo or void a debtor’s
transfer, for example, that fraudulently “plac[es] assets beyond
[the] creditors’ reach.” Timothy v. Pia, Anderson, Dorius, Reynard
& Moss LLC, 2018 UT App 31, ¶ 11, 424 P.3d 937, cert. granted,
421 P.3d 439 (Utah 2018); see also Utah Code Ann. §§ 25-6-1 to -14
(LexisNexis 2013).4
¶25 	Importantly, “[a] fraudulent transfer in Utah first requires
a creditor-debtor relationship.” Bradford v. Bradford, 1999 UT App
4. These sections of the code were renumbered in May 2017. See
Utah Code Ann. §§ 25-6-101 to -104; 25-6-202 to -203; 25-6-302 to
-305; 25-6-404 to -406; -502 (LexisNexis 2017).

Eskelsen v. Theta Investment Company
20160955-CA 	10 	2019 UT App 1
373, ¶ 14, 993 P.2d 887. A “creditor” is “a person who has a
claim,” and a “debtor” is “a person who is liable on a claim.”
Utah Code Ann. § 25-6-2(4), (6). A “claim” under the Act is “a
right 	to 	payment, 	whether 	or 	not 	the 	right 	is 	reduced 	to
judgment.” Id. § 25-6-2(3). The Act may afford relief if the
parties’ circumstances meet these definitions. As relevant here, a
creditor may seek a remedy under the Act only if the claim is
against a “debtor” as that term is defined by the Act.
¶26 	The trial court concluded that the March 29, 2011 transfer
between VC Holdings and Theta was not a fraudulent transfer.
First, the court determined that “[t]here is no issue that the
Hansens are ‘Debtors’ under the Act. The Hansens individually
borrowed $120,000 from the Eskelsens. Thus a Debtor/Creditor
relationship was established.” And the parties do not dispute
this determination on appeal.
¶27 	Next, the court observed that VC Holdings was not a
party 	to 	the 	loan 	between 	the 	Eskelsens 	and 	the 	Hansens
and that VC Holdings did not owe a debt to the Eskelsens.
Therefore, the trial court concluded, VC Holdings was not a
“debtor” under the Act, and the Eskelsens’ fraudulent transfer
claim against VC Holdings necessarily failed. We agree. The
record 	demonstrates that 	VC 	Holdings 	owned 	the 	asset 	at
issue—the membership interest in JVC Leasing, which owned
the Property—and that VC Holdings transferred its interest in
JVC Leasing to Theta. See generally Utah Code Ann. § 48-2c-
701(2) (LexisNexis 2010) (providing that an asset of the entity
belongs to the entity, not its members). VC Holdings was not a
party to the loan between the Eskelsens and the Hansens and
therefore was not “liable on a claim” to the Eskelsens for the
Hansens’ default on that loan. See id. § 25-6-2(6). Thus, VC
Holdings was not a debtor, as that term is defined in the Act, of
the Eskelsens. See id. Consequently, the Act does not afford the
Eskelsens a remedy against Theta.
¶28 	Regarding 	the 	Eskelsens’ 	fraudulent 	transfer 	claim
against the Hansens as individuals, the trial court observed that

Eskelsen v. Theta Investment Company
20160955-CA 	11 	2019 UT App 1
“JVC Leasing was the owner of the Property, not the Hansens.”
The court noted that VC Holdings owned an interest in JVC
Leasing, and it was VC Holdings’ interest in JVC Leasing that
was transferred to Theta at the March 29, 2011 closing. Because
the Hansens, in their individual capacity, did not own an interest
in JVC Leasing, the Hansens “could not and did not transfer any
interest in JVC Leasing at the March 29, [2011] closing.” The
court therefore concluded that the Eskelsens’ fraudulent transfer
claim against the Hansens also failed. Again, we agree with the
trial court.
¶29 	The Act defines a “transfer” as “every mode . . . of
disposing of or parting with an asset or an interest in an asset.”
Id. § 25-6-2(12). An “asset” is defined as “property of a debtor.”
Id. § 25-6-2(2). Here, the record demonstrates that VC Holdings
and JENCO purchased the Property in 2007. In July 2008, VC
Holdings and JENCO formed JVC Leasing and transferred 100%
of the Property to JVC Leasing. In exchange for the transfer, VC
Holdings received a 31.8% interest in JVC Leasing, while JENCO
received 	a 	68.2% 	interest. 	Thus, 	JVC 	Leasing 	owned 	the
Property, 	and 	VC 	Holdings 	(not 	the 	Hansens 	individually)
owned a 31.8% interest in JVC Leasing.5 See id. § 48-2c-701(2).
Although Mr. Hansen signed all of the necessary documents to
exchange 	VC 	Holdings’ 	31.8% 	membership 	interest 	in 	JVC
Leasing for a 31.8% interest in the Property, and to then transfer
VC Holdings’ 31.8% 	interest in the 	Property to Theta, Mr.
Hansen was acting as manager of VC Holdings, not in an
individual capacity. Consequently, we agree with the trial court
that the Hansens “could not and did not transfer any interest in
JVC 	Leasing 	at 	the 	March 	29, 	2011 	closing.” 	We 	therefore
conclude that, because the Hansens did not transfer “property of
a debtor,” the Act does not afford the Eskelsens a remedy
against the Hansens.
5. The Eskelsens acknowledge these facts in their briefing on
appeal.

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20160955-CA 	12 	2019 UT App 1
¶30 	The record also does not establish, and the Eskelsens do
not directly argue, that VC Holdings was Mr. Hansen’s “alter
ego” so that the sale of VC Holdings’ interest in JVC Leasing
could 	nevertheless 	be 	considered 	a 	transfer 	of 	a 	debtor’s
property. Under the “alter ego” doctrine, a court may disregard
a corporate entity and hold an individual liable as a debtor if
there is a concurrence of two circumstances:
(1) 	there 	must 	be 	such 	unity 	of 	interest 	and
ownership that the separate personalities of the
corporation and the individual no longer exist, viz.,
the corporation is, in fact, the alter ego of one or a
few individuals; and (2) the observance of the
corporate form would sanction a fraud, promote
injustice, or an inequitable result would follow.
Norman v. Murray First Thrift & Loan Co., 596 P.2d 1028, 1030
(Utah 1979). Courts have referred to the first prong as the
“formalities requirement.” d'Elia v. Rice Dev., Inc., 2006 UT App
416, ¶ 30, 147 P.3d 515. A non-exclusive list of factors courts
consider 	in 	determining 	whether 	this 	prong 	has 	been 	met
includes:
(1) 	undercapitalization 	of 	a 	one-[person]
corporation; 	(2) 	failure 	to 	observe 	corporate
formalities; 	(3) 	nonpayment 	of 	dividends; 	(4)
siphoning 	of 	corporate 	funds 	by 	the 	dominant
stockholder; (5) nonfunctioning of other officers or
directors; (6) absence of corporate records; [and] (7)
the 	use 	of 	the 	corporation 	as 	a 	facade 	for
operations 	of 	the 	dominant 	stockholder 	or
stockholders. [6]
6. We note that while most of these factors apply to traditional
corporations, the alter ego doctrine applies equally to Utah
limited 	liability 	companies, 	though 	there 	is 	little 	case 	law
(continued…)

Eskelsen v. Theta Investment Company
20160955-CA 	13 	2019 UT App 1
Colman v. Colman, 743 P.2d 782, 786 (Utah Ct. App. 1987). Courts
have referred to the second prong as the “fairness requirement,”
and its satisfaction is left “to the conscience of the court.” d'Elia,
2006 UT App 416, ¶ 30 (quotation simplified). Both prongs of the
Norman test must be met in order to make an alter ego claim. See
Lodges at Bear Hollow Condo. Homeowners Ass'n, Inc. v. Bear Hollow
Restoration, LLC, 2015 UT App 6, ¶ 12, 344 P.3d 145.
¶31 	Nothing 	in 	the 	record 	establishes 	that 	there 	was 	no
meaningful separation between Mr. Hansen and VC Holdings at
the time of the loan, or that Mr. Hansen did not observe proper
formalities or keep proper records as an owner, or that funds
between VC Holding and Mr. Hansen were being comingled
when he was an owner. Additionally, nothing suggests that the
loan 	was 	for 	VC 	Holdings. 	The 	trial 	court 	did 	reach 	an
alternative conclusion on the issue of whether the Hansens’
actions could be considered a fraudulent transfer if the Hansens’
and 	VC 	Holdings’s 	interests 	could 	“somehow 	be 	melded
together so as to become a ‘Debtor.’”7 But because it is not
established, or even argued, that there was a melding together or
unity of VC Holdings and Mr. Hansen’s interests so as to prove
that he was the alter ego of VC Holdings, we need not and do
not undertake that inquiry.
(…continued)
developing this area of law. See d'Elia v. Rice Dev., Inc., 2006 UT
App 416, ¶ 26 n.5, 147 P.3d 515. See generally Allen Sparkman,
Will Your Veil Be Pierced? How Strong Is Your Entity's Liability
Shield?-Piercing the Veil, Alter Ego, Ego, and Other Bases for Holding
an Owner Liable for Debts of an Entity, 12 Hastings Bus. L.J. 349
(2016).
7. The trial court determined that this claim would fail because
the Eskelsens provided no evidence that VC Holdings did not
receive 	a 	reasonably 	equivalent 	value 	in 	exchange 	for 	the
transfer.

Eskelsen v. Theta Investment Company
20160955-CA 	14 	2019 UT App 1
¶32 	Based on the foregoing, we decline to disturb the trial
court’s conclusions.
II. Theta’s Affirmative Defense
¶33 	The Eskelsens next contend that “[t]he trial court erred in
determining [that] the Eskelsens had the burden of proving
Theta Investment’s affirmative defense” that Theta was a good
faith transferee. More specifically, the Eskelsens assert that Theta
had the burden of showing that it “paid valuable consideration
and did so without notice” in order to be protected as a good
faith transferee, and that the trial court incorrectly shifted that
burden to the Eskelsens. Theta, on the other hand, contends that
because 	“[t]he 	Eskelsens 	never 	demonstrated 	a 	fraudulent
transfer,” “the burden never shifted to Theta on its affirmative
defense.” We agree with Theta.
¶34 	Section 25-6-5(1) of the Act provides that a fraudulent
transfer occurs when a debtor (a) transfers property with actual
intent to hinder, delay, or defraud any creditor, or (b) transfers
property 	under 	certain 	circumstances 	without 	receiving
reasonably 	equivalent 	value 	in 	exchange. 	Utah 	Code 	Ann.
§ 25-6-5(1) (LexisNexis 2013). The party bringing a claim has the
burden of demonstrating that a fraudulent transfer has occurred.
Generally, the transfer is voidable once a fraudulent transfer has
been established. However, section 25-6-9(1) of the Act provides
an affirmative defense if the transferee took the property (1) in
good faith (2) for reasonably equivalent value. Id. § 25-6-9(1). The
burden of establishing both elements as a defense to avoidance
of the transfer is on the transferee. Where a debtor makes a
transfer “with actual intent to hinder, delay, or defraud any
creditor of the debtor,” see id. § 25-6-5(1)(a), the Uniform Law
Commission’s official comment on the Transfer Act provides
that any person wishing to invoke the defense set forth in section
25-6-9(1) “carries the burden of establishing good faith and the
reasonable 	equivalence 	of 	the 	consideration 	exchanged,” 	see
Uniform Fraudulent Transfer Act § 8 cmt. 1 (Nat’l Conference of
Comm’rs on Unif. State Laws, 1984), http://www.uniformlaws.or

Eskelsen v. Theta Investment Company
20160955-CA 	15 	2019 UT App 1
g/shared/docs/fraudulent%20transfer/UFTA_Final_1984.pdf
[https://perma.cc/9P93-2JQ5].
¶35 	Here, the trial court did not find that the underlying
transaction was voidable as a fraudulent transfer, and thus, the
burden never shifted to Theta to prove that it took the Property
in good faith and for reasonably equivalent value. Consequently,
we conclude that the trial court committed no error on this issue.
III. Theta’s Knowledge
A. 	The Eskelsens’ Competing Claim to the Property
¶36 	The Eskelsens next contend that the trial court erred in
determining certain facts. First, it determined that Theta, via Mr.
Jennings, did not have notice of the Eskelsens’ claim to VC
Holdings and the Property, and therefore Theta could not have
been a good faith transferee. See Utah Code Ann. § 25-6-9(1)
(LexisNexis Supp. 	2015). 	According 	to 	the 	Eskelsens, 	“[t]he
December 27, 2010 letter sent to Mr. Jennings . . . gave actual
notice of the Hansens’ lack of authority” to act on VC Holdings’
behalf and transfer its interest in JVC Leasing to Theta. They
further assert that the December 2010 letter “was sufficient
information to create a duty to investigate the Eskelsens’ claim
further” and “amounted to inquiry notice.”
¶37 	In the context of the good faith transferee defense “[i]t is
notice, not knowledge, that the purchaser must have, and it need
not be actual notice[—]constructive notice is sufficient to defeat
the purchaser’s claim.” Meyer v. General Am. Corp., 569 P.2d 1094,
1097 (Utah 1977). Constructive notice, such as inquiry notice,
“can 	occur 	when 	circumstances 	arise 	that 	should 	put 	a
reasonable person on guard so as to require further inquiry on
his part.” Id.; see also FDIC v. Taylor, 2011 UT App 416, ¶¶ 36–39,
267 P.3d 949 (observing that “Utah courts recognize both actual
notice and constructive notice,” and “constructive notice can
include . . . inquiry notice which is presumed because of the fact
that a person has knowledge of certain facts which should

Eskelsen v. Theta Investment Company
20160955-CA 	16 	2019 UT App 1
impart to him, or lead him to, knowledge of the ultimate fact”
(quotation simplified)). Here, the trial court concluded that Mr.
Jennings was made aware of the Eskelsens’ claim when he
received 	the 	December 	2010 	letter, 	and 	that 	Mr. 	Jennings
therefore “had a duty to inquire about the Eskelsens’ claims.”
The 	court 	further 	concluded 	that 	Mr. 	Jennings 	had 	indeed
conducted “a reasonable inquiry into the Eskelsens’ claims.”
¶38 	Specifically, the court found that upon receipt of the
December 2010 letter, Mr. Jennings immediately responded with
his own letter asking for “documentary proof of the transition of
ownership,” but that the Eskelsens never responded to that
request. 	Mr. 	Jennings 	also 	asked 	Mr. 	Hansen 	about 	the
Eskelsens’ claim, and Mr. Hansen told Mr. Jennings that their
claim was not valid and that he (Mr. Hansen) had authority to
sign for VC Holdings. Mr. Jennings then searched the Utah
Department of Commerce’s website and saw that Mr. Hansen
was listed as the manager for VC Holdings. Theta conducted the
closing 	through 	Southern 	Utah 	Title 	Company, 	which 	had
performed its own search of the Department of Commerce’s
website and found that Mr. Hansen was listed as manager of VC
Holdings. Theta also received a title commitment that did not
show 	any 	encumbrances 	to 	JVC 	Leasing’s 	interest 	in 	the
Property.
¶39 	The court further found that (1) Mr. Jennings relied on
Mr. Hansen’s representations and the documents he signed to
determine that Mr. Hansen “had authority to execute the closing
documents,” (2) “Mr. Jennings relied on Southern Utah Title
Company’s determination that [Mr.] Hansen had authority to
execute the closing documents,” (3) Theta “paid sufficient value
to VC Holdings for [Mr.] Hansen to pay his debts,” and (4) both
Mr. Jennings and Mr. Blanchard separately believed that Mr.
Hansen 	intended to 	pay his debts. Although the Eskelsens
asserted that Mr. Jennings should have contacted them a second
time when he did not hear back from them in response to his
letter requesting “documentary proof” of their claims, the court
determined that “[t]he ball, so to speak, was in the Eskelsens[’]

Eskelsen v. Theta Investment Company
20160955-CA 	17 	2019 UT App 1
court and they had the duty to provide the information Mr.
Jennings requested.”
¶40 	“[T]o successfully challenge a trial court’s factual findings
on appeal, the appellant must overcome the healthy dose of
deference owed to factual findings by identifying and dealing
with 	the 	supportive 	evidence 	and 	demonstrating 	the 	legal
problem in that evidence, generally through marshaling the
evidence.” Taft v. Taft, 2016 UT App 135, ¶ 19, 379 P.3d 890
(quotation simplified). “[A] party who fails to identify and deal
with supportive evidence will never persuade an appellate court
to reverse under the deferential standard of review that applies
to factual findings.” Id. (quotation simplified).
¶41 	Theta is correct that, on appeal, the Eskelsens do not
marshal the supportive evidence or challenge “the trial court’s
extensive findings that the inquiry was exhaustive and turned
up nothing.” Rather, they make claims about what Mr. Jennings
and Theta should have known or might have learned had they
investigated 	further. 	For 	example, 	the 	Eskelsens 	assert 	that
“[h]ad [Mr. Jennings] investigated further or possibly inquired
of his own attorneys he would have learned the Eskelsens’ claim
was legitimate.” They also assert that “relying on the Utah
Department 	of 	Commerce’s 	website 	. 	. 	. 	was 	inadequate”
because 	“Mr. 	Jennings 	himself 	had 	not 	update[d] 	the
Department’s website when he moved from vice-president to
president of Theta . . . for at least three to four years, indicating
he 	should 	know 	it 	is 	not 	a 	reliable 	source 	for 	definitive
information.”
¶42 	The Eskelsens’ self-serving statements do not discharge
their burden of demonstrating that the trial court’s findings are
not adequately supported by the record. See Taft, 2016 UT App
135, ¶ 19. Because the Eskelsens have “not adequately marshaled
the evidence” and have “otherwise failed” to demonstrate clear
error, “we presume that the evidence supports the trial court’s
finding” that Theta, via Mr. Jennings, conducted a reasonable

Eskelsen v. Theta Investment Company
20160955-CA 	18 	2019 UT App 1
inquiry into the Eskelsens’ claim. See Grimm v. DxNA LLC, 2018
UT App 115, ¶ 17, 427 P.3d 571.
B. 	Mr. Hansen as Manager of VC Holdings
¶43 	The Eskelsens also contend that “[t]he trial court erred in
determining [that] the Hansens had authority to act for VC
Holdings on March 29, 2011.” VC Holdings was established as a
manager-managed company. At the time the transfer took place,
manager-managed companies were governed under the Utah
Revised Limited Liability Company Act.8 This act required initial
managers to be “designated in the articles of organization”; and
afterwards 	“managers 	shall 	be 	those 	persons 	identified 	in
documents 	filed 	with 	the 	division.” 	Utah 	Code 	Ann.
§ 48-2c-804(1). 	New 	managers must 	be 	elected 	by 	members
holding 	a 	majority 	of 	interest 	in 	the 	company. 	Id.
§ 48-2c-804(6)(a). Moreover, a manager need not be a member of
the company. Id. § 48-2c-804(6)(d). A manager will serve as such
until 	“death, 	withdrawal, 	or 	removal.” 	Id. 	§ 	48-2c-804(6)(i).
Therefore, as Theta notes, “losing membership status does not
automatically strip a person of their position as a manager.”
¶44 	The Eskelsens assert that Mr. Hansen lacked the authority
to act on behalf of VC Holdings. As part of this argument they
assert that “[a]s they became the sole members of VC Holdings,
[they] removed the Hansens as managers and placed themselves
in that position.” Thus, according to the Eskelsens, because the
Hansens were no longer managers of VC Holdings, they “could
not act on behalf of the company.”
8. The Utah Revised Limited Liability Company Act became
effective on July 1, 2001, but was repealed January 1, 2016.
“Because we apply the law as it existed at the time of the events
giving rise to this suit . . . we apply the Act as it existed before
the revised act became effective.” Taghipour v. Jerez, 2002 UT 74,
¶ 5 n.1, 52 P.3d 1252.

Eskelsen v. Theta Investment Company
20160955-CA 	19 	2019 UT App 1
¶45 	At 	trial, 	the 	Eskelsens 	asserted 	that 	they 	properly
foreclosed 	on 	the 	Hansens’ 	membership 	interests 	in 	VC
Holdings pursuant to Utah Code section 70A-9a-620. The trial
court agreed and determined that “[t]he security agreement . . .
was 	properly 	foreclosed 	and 	the 	Eskelsens 	obtained 	the
ownership interests of VC Holdings.” However, the trial court
disagreed with the Eskelsens’ additional assertions that (1) when
the 	Eskelsens 	obtained 	ownership 	of 	VC 	Holdings, 	“they
removed the Hansens as managers and placed themselves in
that position” and (2) the “Hansens were no longer managers of
VC Holdings and could not act on behalf of the company.”
Instead, the court concluded that Mr. Hansen was the manager
of VC Holdings on March 29, 2011:
Because the Eskelsens, as new members of VC
Holdings, did not properly remove Mr. Hansen as
the 	manager 	of 	VC 	Holdings; 	did 	not 	file 	a
certificate of amendment pursuant to paragraph
8.1(a) of the Operating Agreement; and, did not
dispute the Division’s website prior to the March
29, 2011 closing, . . . Mr. Hansen, not the Eskelsens,
was the Manager of VC Holdings on March 29,
2011.
¶46 	On 	appeal, 	the 	Eskelsens 	do 	not 	engage 	with 	the
reasoning behind the trial court’s conclusion that Mr. Hansen
was 	the 	manager 	of 	VC 	Holdings 	on 	March 	29, 	2011. 	See
Hi-Country Estates Homeowners Ass’n v. Jesse Rodney Dansie Living
Trust, 2015 UT App 218, ¶ 5, 359 P.3d 655 (“[A]n appellant must
address 	the 	basis 	for 	the 	district 	court’s 	ruling.”); 	Golden
Meadows Props., LC v. Strand, 2010 UT App 257, ¶ 17, 241 P.3d
375 (explaining that an appellant cannot demonstrate that a
district 	court 	erred 	if 	it 	“fails to 	attack 	the 	district 	court’s
reasons” for its decision). Instead, as Theta correctly observes,
“[t]he Eskelsens proceed as though it was established that they
removed [Mr.] Hansen as manager of VC Holdings and installed
themselves 	to 	that 	position.” 	The 	Eskelsens 	have 	failed 	to
provide 	any 	meaningful 	authority 	or 	reasoned 	analysis

Eskelsen v. Theta Investment Company
20160955-CA 	20 	2019 UT App 1
challenging the trial court’s finding that the Eskelsens did not
remove Mr. Hansen as manager of VC Holdings. See Utah R.
App. P. 24(a)(8). Because the Eskelsens have failed to address the
trial court’s reasoning on this issue they have failed to carry their
burden of persuasion on appeal, and we do not disturb the trial
court’s 	determination 	that 	Mr. 	Hansen 	was 	VC 	Holdings’
manager when the transaction with Theta closed.
C. 	Mr. Hansen’s Authority as Manager
¶47 	The Eskelsens next assert that “the Hansens’ actions on
March 	29, 	2011, 	exchanging 	VC 	Holdings’ 	interest 	in 	JVC
Leasing for an interest in [the Property] and then transferring
that real property interest to Theta Investment was done without
authority because the Hansens . . . did not have the Eskelsens’
approval.”
¶48 	Utah 	Code 	section 	48-2c-802 	provides 	that, 	in 	a
manager-managed company,
an act of a manager, including the signing of a
document in the company name, for apparently
carrying on in the ordinary course of the company
business, or business of the kind carried on by the
company, binds the company unless the manager had
no authority to act for the company in the particular
matter and the lack of authority was expressly described
in the articles of organization or the person with whom
the manager was dealing knew or otherwise had notice
that the manager lacked authority.
Utah Code Ann. § 48-2c-802(2)(c) (LexisNexis 2010) (emphasis
added).
¶49 	Here, the trial court observed that VC Holdings’ Articles
of 	Organization 	contain 	“no 	express 	language 	limiting 	Mr.
Hansen’s authority, as Manager, to transfer VC Holdings[’s]
assets.” However, VC Holdings’s Operating Agreement contains

Eskelsen v. Theta Investment Company
20160955-CA 	21 	2019 UT App 1
a prohibition on managers’ actions. Specifically, article 5.4 of the
Operating Agreement provides:
Notwithstanding 	any 	other 	provision 	of 	this
Agreement, 	without 	the 	approval 	of 	Members
whose aggregate Membership Interest is at least 51
percent, the Managers may take no action with
respect 	to: 	the 	sale, 	lease, 	exchange, 	mortgage,
pledge or other disposition of all or substantially
all of the Company’s assets . . . .
Based on Utah Code section 48-2c-802 and article 5.4 of the
Operating Agreement, the court determined that the issue was
“whether Mr. Jennings knew that Mr. Hansen had to have VC
Holdings’ members’ approval before participating in the March
29, 2011 closing.” Observing that the Eskelsens had “presented
no evidence at trial regarding this issue,” the court concluded
that 	Mr. 	Jennings 	had 	no 	knowledge 	of 	article 	5.4’s
requirements.
¶50 	Theta 	correctly 	observes 	that 	the 	Eskelsens 	do 	not
challenge the trial court’s finding that Mr. Jennings did not have
notice 	of 	any 	restriction 	on 	Mr. 	Hansen’s 	authority 	to 	act
pursuant to section 5.4 of VC Holdings’ Operating Agreement.
Rather, the Eskelsens acknowledge the trial court’s finding and
continue 	to 	assert 	that 	Mr. 	Jennings 	“had 	significant 	and
continual notice of the Eskelsens’ claim,” which “must amount
to knowledge that the Hansens lacked authority” to act on behalf
of VC Holdings.
¶51 	As 	previously 	discussed, 	however, 	the 	court 	found
that 	Mr. 	Jennings 	conducted 	a 	reasonable 	inquiry 	into 	the
Eskelsens’ claim. Mr. Jennings asked for “documentary proof” of
their claim but never received it. Mr. Jennings spoke with Mr.
Hansen about his authority to act on VC Holdings’ behalf. He
also 	searched 	the 	Department 	of 	Commerce’s 	website 	and
discovered 	that 	Mr. 	Hansen 	was 	listed 	as 	VC 	Holdings’
manager. 	As 	the 	trial 	court 	observed, 	the 	“simple 	act” 	of

Eskelsen v. Theta Investment Company
20160955-CA 	22 	2019 UT App 1
updating the Department of Commerce’s website, as required by
section 8.1(a) of VC Holdings’ Operating Agreement, would
have “provided part of the additional proof that Mr. Jennings
requested” from the Eskelsens. That update also would have put
Southern Utah Title, which conducted its own search of the
Department 	of 	Commerce’s 	website, 	on 	notice 	that 	the
Eskelsens’ did not intend to retain Mr. Hansen as the manager of
VC Holdings.
¶52 	In addition, pursuant to Utah Code section 48-2c-121,
“Articles of organization that have been filed with the [state
division of corporations] constitute notice to third persons . . . of
all statements set forth in the articles of organization that are . . .
expressly permitted to be set forth in the articles of organization
by 	[Utah 	Code 	section] 	48-2c-403(4).” 	Utah 	Code 	Ann.
§ 48-2c-121(1) (LexisNexis 2010). Utah Code section 48-2c-403(4)
further provides, in relevant part, “The articles of organization
may contain any other provision not inconsistent with law,
including . . . a statement of whether there are limitations on the
authority of managers or members to bind the company and, if
so, what the limitations are . . . .”
¶53 	Here, the trial court correctly recognized that, although
section 5.4 of VC Holdings’ Operating Agreement contained a
restriction on Mr. Hansen’s authority to act, the company’s
articles of organization, which are a matter of public record, did
not contain a similar restriction on authority. Thus, the trial court
appropriately considered whether Mr. Jennings knew of section
5.4’s requirement “that Mr. Hansen had to have VC Holding[s’s]
members[’] approval before participating in the March 29, 2011
closing,” and the court concluded that Mr. Jennings had no
notice or knowledge of section 5.4’s restriction on Mr. Hansen’s
authority.
¶54 	The trial court found additional support for its conclusion
that Mr. Jennings had no knowledge of any restrictions on Mr.
Hansen’s 	authority 	under 	article 	5.5 	of 	the 	Operating

Eskelsen v. Theta Investment Company
20160955-CA 	23 	2019 UT App 1
Agreement, 	titled 	“Agency 	Power 	and 	Authority,” 	which
provides:
A Manager apparently acting for the Company in
the usual course of business has the power to bind
the Company and no person has an obligation to
inquire into the Manager’s actual authority to act on the
company’s 	behalf. 	However, 	if 	a 	Manager 	acts
outside 	the 	scope 	of 	the 	Manager’s 	actual
authority, 	the 	Manager 	will 	indemnify 	the
Company for and costs of damages it incurs as a
result of the unauthorized act.
(Emphasis added.) The court observed that each of the Hansens
signed a “Resolution of Members” authorizing the sale of VC
Holdings’ ownership interest in JVC Leasing. And although
neither of the Hansens were actually members of VC Holdings
on March 29, 2011,9 “no evidence was produced at trial that Mr.
Jennings was aware of that fact.” Because Mr. Jennings “had
known and done business with Mr. Hansen . . ., and VC
Holdings for years,” the court determined that Mr. Jennings had
no 	obligation 	to 	make 	further 	inquiries 	regarding 	member
approval as to Mr. Hansen’s authority to act.
¶55 	On appeal, the Eskelsens fail to acknowledge the trial
court’s 	findings 	regarding 	section 	5.5 	of 	the 	Operating
Agreement. See Golden Meadows Props., LC v. Strand, 2010 UT
App 257, ¶ 17, 241 P.3d 375 (explaining that an appellant cannot
demonstrate that a district court erred if it “fails to attack the
district court’s reasons” for its decision). Consequently, they
have not carried their burden of demonstrating that the trial
court’s 	findings 	regarding 	section 	5.5 	were 	not 	adequately
supported by the record. See Taft v. Taft, 2016 UT App 135, ¶ 19,
379 P.3d 890.
9. A manager of a company “need not be a member of the
company.” Utah Code Ann. § 48-2c-804(6)(d) (LexisNexis 2010).

Eskelsen v. Theta Investment Company
20160955-CA 	24 	2019 UT App 1
¶56 	In sum, the Eskelsens have not demonstrated clear error
in the trial court’s findings relating to Mr. Hansen’s authority to
act, and its findings that Theta and Mr. Jennings had no notice or
knowledge of the restrictions in section 5.4 of VC Holdings’s
Operating Agreement are adequately supported by the evidence.
Consequently, we are not persuaded the trial court erred in
determining that Mr. Hansen had the authority to act on VC
Holdings’s behalf on March 29, 2011, the date the Property was
transferred.
IV. The Principal-Agency Relationship
¶57 	The Eskelsens next contend that “[t]he trial court erred by
not 	imputing 	knowledge 	through 	the 	principal-agency
relationship 	between 	Theta 	Investment 	and 	its 	attorneys.”
According 	to 	the 	Eskelsens, 	“[t]hrough 	his 	attorneys”—Mr.
Blanchard 	and 	Mr. 	Engstrom—“Mr. 	Jennings 	had 	full
knowledge of the loan between the Eskelsens and the Hansens
because Mr. Blanchard had actually drafted those agreements.”
“Further,” the Eskelsens assert, “Mr. Jennings knew the only
reason the Eskelsens were not taking further steps to exclude the
Hansens 	after 	accepting 	their 	membership 	interest 	in 	VC
Holdings 	is 	because 	of 	a 	tentative 	agreement 	to 	allow 	the
Hansens to broker a sale,” i.e., the escrow agreement. We are not
persuaded.
¶58 	To begin, Mr. Blanchard prepared the loan agreement for
the Hansens, not Mr. Jennings. Pursuant to the Restatement
(Third) of the Law Governing Lawyers, “[u]nder traditional
agency 	principles, 	a 	lawyer’s 	knowledge 	relating 	to 	the
representation is attributed to the lawyer’s client.” Restatement
(Third) of the Law Governing Lawyers § 28 cmt. B (Am. Law
Inst. 2000). Id. § 28 cmt. b. But “[a] client is not charged with a
lawyer’s 	knowledge 	concerning 	a 	transaction 	in 	which 	the
lawyer does not represent the client.” Id. See generally Utah R.
Prof’l Cond. 1.6(a) (“A lawyer shall not reveal information
relating to the representation of a client unless the client gives
informed consent . . . .”). Thus, the fact that Mr. Blanchard

Eskelsen v. Theta Investment Company
20160955-CA 	25 	2019 UT App 1
prepared the loan agreement for the Hansens in one transaction
does not automatically impute his knowledge of that transaction
to a different client—Mr. Jennings—in a different transaction.
¶59 	Moreover, at trial, Mr. Blanchard struggled to remember
the loan agreement he prepared for the Hansens. He was unsure
whether he wrote it or whether a paralegal wrote it under his
direction. Mr. Blanchard could tell from the agreement that he
sent it to the Hansens with blanks for them to fill in. He could
not recall if he was present when the agreement was signed, and
he did not “remember ever having a signed copy.” When asked
if he recalled preparing the loan agreement at the time he spoke
with Mr. Tobler, Mr. Blanchard stated, “It’s possible I had
forgotten. I think I remembered, but maybe I—maybe I didn’t.
Again, I didn’t pull it up. I didn’t look at it. I didn’t see it.
Frankly, I didn’t spend a lot of time on it.” Mr. Engstrom was
not called to testify at trial.
¶60 	The trial court listened to the testimony of Mr. Jennings
and Mr. Blanchard and declined to find that Mr. Blanchard knew
what the Eskelsens claim he should have known and that any of
Mr. Blanchard’s knowledge should be imputed to Mr. Jennings.
See American Fork City v. Thayne, 2012 UT App 130, ¶ 4, 279 P.3d
840 (per curiam) (“We defer to the trial court’s ability and
opportunity to evaluate credibility and demeanor.” (quotation
simplified)). Indeed, the court found that if “Mr. Jennings is
deemed to know what Mr. Blanchard knew, he would know that
Mr. Blanchard contacted Mr. Tobler in March and informed him
(Mr. Tobler) that Mr. Hansen wanted to work directly with the
Eskelsens and that he (Mr. Blanchard) would not be preparing
an 	escrow 	agreement.” 	The 	court 	found 	that 	when 	Mr.
Blanchard sent that email to Mr. Tobler, Mr. Blanchard “did not
know there was any plan between the Hansens and Mr. Jennings
to sell the property interest at issue.” The court also found that
“[Mr.] Jennings and [Mr.] Blanchard separately believed that
[Mr.] Hansen intended to pay the debts he had.”

Eskelsen v. Theta Investment Company
20160955-CA 	26 	2019 UT App 1
¶61 	Based 	upon 	the 	trial 	court’s 	advantaged 	position 	in
judging credibility and resolving conflicts in the evidence, and
the deference we thus owe it, we conclude that the court did not
err 	in 	declining 	to 	impute 	unproven 	“knowledge” 	to 	Mr.
Jennings or Theta.
V. The Eskelsens’ Motion to Amend
¶62 	Finally, the Eskelsens assert that “[t]he trial court erred in
denying in part [their] motion to amend its findings.” According
to the Eskelsens, “the Trial Court made a few incorrect Findings
of Fact” that “potentially had a significant impact on the Court’s
conclusions.” (Emphasis added.)
¶63 	First, the Eskelsens challenge paragraph 31 of the trial
court’s findings of fact, which states, “Mr. Tobler never gave Mr.
Blanchard the Foreclosure Letter or the signed Agreements.” The
Eskelsens assert that the court should also have found that “Mr.
Blanchard 	actually 	drafted 	those 	exact 	agreements 	and
remembered that fact at the time he was discussing these matters
with Mr. Tobler.” Thus, according to the Eskelsens, “it is really
of 	no 	significance 	that 	Mr. 	Tobler 	did 	not 	provide 	[Mr.
Blanchard] with signed agreements because [Mr. Blanchard]
already knew exactly what was in them.”
¶64 	At trial, however, Mr. Blanchard had no clear recollection
on the matter:
Q. At the time you’re talking to [Mr.] Tobler, did
you recall that you had done the promissory note
and pledge agreement that . . . formed the basis of
the debt between the Eskelsens and the Hansens,
or had you maybe forgotten that?
A. 	It’s 	possible 	I 	had 	forgotten. 	I 	think 	I
remembered, but maybe I—maybe I didn’t. Again,
I didn’t pull it up. I didn’t look at it. I didn’t see it.
Frankly, I didn’t spend a lot of time on it . . . .

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20160955-CA 	27 	2019 UT App 1
In addition, he was unsure whether he wrote the loan agreement
or 	whether 	a 	paralegal 	wrote 	it 	under 	his 	direction. 	Mr.
Blanchard could not recall whether he was present when the
agreement was signed, and he did not “remember ever having a
signed copy.”
¶65 	“We defer to the trial court’s ability and opportunity to
evaluate credibility and demeanor.” American Fork City v. Thayne,
2012 UT App 130, ¶ 4, 279 P.3d 840 (per curiam) (quotation
simplified). Here, the trial court listened to Mr. Blanchard’s
testimony and had the opportunity to evaluate his credibility
and 	demeanor. 	Based 	on 	that 	testimony, 	the 	trial 	court
reasonably could have determined that Mr. Blanchard did not
have any specific memory of the loan agreement he prepared for
the 	Hansens 	and 	the 	Eskelsens. 	Consequently, 	we 	cannot
conclude that the court exceeded its discretion in declining to
make the Eskelsens’ requested finding.
¶66 	Second, the Eskelsens challenge paragraph 32 of the trial
court’s 	findings 	of 	fact, 	which 	states, 	“Mr. 	Tobler 	never
discussed 	[Mr. 	Jennings’s] 	request 	for 	documents 	with 	Mr.
Blanchard.” According to the Eskelsens, Mr. Blanchard testified
that “he did not remember it being discussed, not that it was
never discussed.” At trial, the following exchange with Mr.
Blanchard took place:
Q. Did Mr. Tobler ever tell you about a document
request from [Mr.] Jennings?
A. No, I don’t remember that.
Q. Did Mr. Tobler[,] during these conversations in
January, February, and March of 2011, did Mr.
Tobler provide you with any documentary proof
that 	. 	. 	. 	the 	Hansens’ 	interests 	were 	validly
foreclosed on?
A. No. Again, we did not—that was not a heavy
item of discussion.

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20160955-CA 	28 	2019 UT App 1
The trial court heard Mr. Blanchard’s testimony and observed
his demeanor at trial. Based on Mr. Blanchard’s testimony, the
court 	reasonably 	could 	infer 	that 	Mr. 	Blanchard 	did 	not
remember Mr. Tobler telling him about a document request from
Mr. Jennings because that conversation never occurred.
¶67 	Third, the Eskelsens challenge paragraph 45 of the trial
court’s findings of fact, which states, “[O]n March 22, 2011, Mr.
Blanchard informed Mr. Tobler that [Mr.] Hansen wanted to
work directly with the Eskelsens and that he (Mr. Blanchard)
would not be preparing an agreement.” (Emphasis omitted.) The
Eskelsens 	assert 	that 	it 	was 	not 	until 	May 	2011, 	that 	Mr.
Blanchard informed Mr. Tobler that he would not be preparing
an escrow agreement. According to the Eskelsens, the timing of
these communications is of “paramount” concern because it
“lulled [them] into continuing to wait for a mutually beneficial
outcome involving all parties.”
¶68 	But the email Mr. Blanchard sent to Mr. Tobler on March
22, 2011, also stated, “If your clients don’t hear from [Mr.
Hansen] in the next day or so please let me know.” Thus, Mr.
Blanchard’s email indicated he was waiting to hear from Mr.
Tobler, and Mr. Blanchard testified at trial that he did not receive
a response from Mr. Tobler or the Eskelsens “in the next day or
so” and “at that point [he] thought it was done and resolved.”
Mr. 	Tobler 	confirmed 	at 	trial 	that 	he 	did 	not 	contact 	Mr.
Blanchard in the next couple of days to let him know whether
Mr. 	Hansen 	had 	spoken 	with 	the 	Eskelsens. 	Based 	on 	the
foregoing, 	we 	agree with 	Theta 	that 	“the 	trial 	court 	could
reasonably infer and therefore find, as it did, that as of March 22,
the Eskelsens were to work directly with the Hansens and that
[Mr.] Blanchard would not be preparing any agreement unless
he heard otherwise from [Mr.] Tobler.”
¶69 	Lastly, we note that the Eskelsens have failed to explain,
in the context of the trial court’s unchallenged findings, what
impact these allegedly incorrect findings had on the trial court’s
ultimate conclusions. Rather, the Eskelsens merely assert that

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20160955-CA 	29 	2019 UT App 1
“[t]hese incorrect findings potentially had a significant impact on
the 	Court’s 	conclusions.” 	(Emphasis 	added.) 	That 	is 	not
sufficient 	to 	demonstrate 	that 	the 	trial 	court 	exceeded 	its
discretion in declining to amend its findings. See Utah R. Civ. P.
61 (“The court at every stage of the proceeding must disregard
any error or defect in the proceeding which does not affect the
substantial rights of the parties.”).
CONCLUSION
¶70 	We conclude that Utah’s Uniform Fraudulent Transfer
Act does not afford the Eskelsens a remedy against Theta, VC
Holdings, or the Hansens. In addition, the trial court did not err
in determining that Mr. Jennings conducted a reasonable inquiry
into the Eskelsens’ claim, that Theta and Mr. Jennings had no
notice 	or 	knowledge 	of 	any 	restrictions 	on 	Mr. 	Hansen’s
authority to act, and that Mr. Hansen had the authority to act on
behalf of VC Holdings on March 29, 2011. Lastly, we conclude
that the trial court did not exceed its discretion when it denied
the Eskelsens’ motion to amend and make additional findings of
fact. The judgment of the trial court is affirmed.