Jenco v. Ledges Partners

2020 UT App 42

THE UTAH COURT OF APPEALS

JENCO LC, DEAN GARDNER INVESTMENT LC, AND
F.M. SNOW PROPERTIES LLC,
Appellees,
v.
LEDGES PARTNERS LLC AND SJI LLC,
Appellants.

Opinion
No. 20190151-CA
Filed March 19, 2020

Fifth District Court, St. George Department
The Honorable Jeffrey C. Wilcox
No. 120500362

R. Stephen Marshall, Cameron J. Cutler, and
Kevin Paulsen, Attorneys for Appellants
Bryan J. Pattison, Attorney for Appellees

JUDGE MICHELE M. CHRISTIANSEN FORSTER authored this Opinion,
in which JUDGES KATE APPLEBY and JILL M. POHLMAN concurred.

CHRISTIANSEN FORSTER, Judge:

¶1 SJI LLC appeals the district court’s order confirming a
constable’s sale and dismissing SJI’s counterclaim. We reverse
and remand for further proceedings.

BACKGROUND

¶2 JENCO LC, Dean Gardner Investment LC, and F.M. Snow
Properties LLC (collectively, JENCO) have had business dealings
with Ledges Partners LLC (Ledges) since 2004. In July 2010,
JENCO and Ledges entered into an option agreement that gave
Ledges the option to purchase 67.5 acres of land from JENCO.
JENCO v. Ledges Partners

¶3 In October 2015, JENCO obtained a judgment against
Ledges in the amount of $382,787.08 in connection with a
dispute concerning another contract between the parties. JENCO
applied for a writ of execution to allow it to satisfy its judgment
by selling Ledges’ interest in the option agreement. The district
court issued the requested writ on July 20, 2016, and the
constable scheduled the sale for June 13, 2017.

¶4 The writ of execution and the notice of sale each identified
the property to be sold as “[a]ll interest, right, title, and equity of
[Ledges] in the ‘Land Owners to Ledges Partners, LLC New Real
Property Option Agreement’ entered into, as of July 15, 2010 by
and between Ledges . . . and JENCO.” The notice of sale was
served on Ledges, with copies sent to Ledges’ managers,
including Hans Kuhni.

¶5 The day before the sale, Kuhni filed a notice of interest on
behalf of SJI, an affiliate of Ledges, claiming that Ledges had
assigned its interest in the option agreement to SJI on December
8, 2010. SJI’s attorney also sent a letter to JENCO’s attorney
informing him of SJI’s interest in the option agreement. The
assignment was evidenced by an Assignment of Interest
Agreement, purportedly entered into on December 8, 2010, and
signed by Kuhni on behalf of both Ledges and SJI. The
signatures were neither dated nor notarized. SJI did not file a
reply to the writ of execution or request a hearing. At the sale,
JENCO purchased Ledges’ interest in the option agreement for
$100.

¶6 On December 13, 2017, JENCO filed a motion to join SJI as
a defendant in interpleader for the purpose of confirming the
sale. After the district court granted JENCO’s motion, JENCO
filed a motion to confirm the sale, requesting that the court
extinguish SJI’s purported interest in the option agreement. SJI
opposed the motion and also filed a counterclaim seeking a
declaratory judgment that the writ of execution did not affect

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JENCO v. Ledges Partners

SJI’s interest in the option agreement, that SJI was not obligated
to respond to the writ, that the option agreement is an interest in
real property, that JENCO was not a good-faith purchaser, and
that the constable’s sale should be set aside because of
procedural irregularities and an inadequate sale price. SJI
alternatively requested an extension of the time to redeem the
option agreement.

¶7 Following several hearings, the district court granted
JENCO’s motion to confirm and extinguished SJI’s claimed
interest in the option agreement. It also dismissed SJI’s
counterclaim. The court determined that SJI had notice of the
execution sale because Kuhni was a manager of both Ledges and
SJI. Further, the court determined that any interest SJI claimed in
the option agreement was extinguished because it did not reply
to the writ of execution before the sale occurred as required by
rule 64(e)(1) of the Utah Rules of Civil Procedure. The court also
rejected SJI’s request for an extension of the redemption period,
determining that the option agreement was an interest in
personal property rather than real property and was therefore
not subject to redemption. SJI now appeals.

ISSUE AND STANDARD OF REVIEW

¶8 The resolution of this appeal depends on the scope of the
writ of execution and whether it included SJI’s purported
interest in the option. 1 Thus, “our task is to interpret the
language of the writ of execution and the [notice] of sale to

1. SJI also challenges the district court’s determination that,
under rule 64(e)(1) of the Utah Rules of Civil Procedure, SJI
waived its rights to challenge the sale by not replying to the writ
of execution prior to the sale. Because we ultimately determine
SJI’s purported rights could not have been affected by the
constable’s sale, we need not address this issue on appeal.

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determine what effect, if any, the sale had on” SJI’s rights. See
ASC Utah, Inc. v. Wolf Mountain Resorts, LC, 2013 UT 24, ¶ 7, 309
P.3d 201.

ANALYSIS

¶9 The plain language of the writ of execution stated that the
constable was to collect on JENCO’s judgment by selling the
“interest, right, title, and equity” of Ledges in the option
agreement. These documents did not authorize the constable to
convey any other interest in the option agreement or give notice
that other interests were subject to sale. Cf. ASC Utah, Inc. v. Wolf
Mountain Resorts, LC, 2013 UT 24, ¶¶ 8–9, 309 P.3d 201
(interpreting language in a writ of sale purporting to convey “all
rights, title, claims and interests” of a plaintiff in a cause of
action to exclude the plaintiff’s right to appeal, which was not
explicitly listed (quotation simplified)).

¶10 SJI asserts that as of December 8, 2010, Ledges no longer
had any interest in the option agreement because it had
conveyed all of its interest to SJI. If this is true, then the option
agreement could not have been transferred to JENCO by way of
the execution sale because the writ authorized the sale of only
Ledges’ interest.

¶11 JENCO, however, asserts that Ledges’ purported
conveyance to SJI of its interest in the option agreement is a
sham. It maintains that the Assignment of Interest Agreement is
not authentic and that there is no evidence that SJI gave
consideration for the transfer. It also points to emails from
Kuhni, one sent a year before the sale and one just after the sale,
in which Kuhni represented that the option agreement is Ledges’
“only remaining asset.” If JENCO is correct that the purported
December 8, 2010 transfer was defective, then SJI cannot prevail
in any attempt to set aside the execution sale because it cannot
be deemed to have an interest in the option agreement.

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JENCO v. Ledges Partners

¶12 The district court did not directly address the question of
whether the December 8, 2010 Assignment of Interest
Agreement effectively conveyed Ledges’ interest in the option
agreement to SJI. Rather, the district court appeared to conclude
that all of SJI’s arguments were waived by SJI’s failure to
respond to the writ of execution. However, the writ of execution
did not seek to execute on SJI’s purported rights or on the option
agreement as a whole—it applied only to Ledges’ “interest,
right, title, and equity” in the option agreement. Thus, the court
could not confirm a sale of all interest in the option agreement to
JENCO unless it first determined that SJI’s purported interest in
the option agreement was invalid. We therefore find it necessary
to reverse the district court’s order confirming the sale and
remand for further proceedings. We also reverse and remand the
court’s dismissal of SJI’s counterclaim.

¶13 If the court determines that Ledges effectively conveyed
its interest in the option agreement to SJI, then the constable’s
sale could not have conveyed the option agreement, in its
entirety, to JENCO. On the other hand, if the 2010 assignment
was not valid, then SJI cannot claim an interest in the option
agreement and has no basis to challenge the sale. The sale could
then be confirmed and SJI’s counterclaim dismissed.

CONCLUSION

¶14 We determine that the writ of execution authorized the
constable to sell only Ledges’ interest in the option agreement.
Therefore, any interest SJI may have had in the agreement could
not have been conveyed to JENCO, as only Ledges’ interest
could be effectively conveyed. In light of this determination, we
must reverse the district court’s ruling and remand for a
determination of whether the 2010 assignment conveyed the
option agreement to SJI.

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