Pyper v. John Reil & Meridian Title Co.

POHLMAN, Judge

Opinion Third District Court, Salt Lake Department
The Honorable Andrew H. Stone
No. 130906816 Thor B. Roundy and Cory B. Mattson, Attorneys for Appellant D. Joseph Cartwright, Attorney for Appellee John Reil Rachael L. Ortiz and Garreth Long, Attorneys for Appellee Meridian Title Company JUDGE JILL M. POHLMAN authored this Opinion, in which JUDGES MICHELE M. CHRISTIANSEN FORSTER and DAVID N. MORTENSEN concurred. POHLMAN, Judge: ¶1 This dispute arises out of a failed financial transaction in which Plaintiff Robert Reed Pyper executed a promissory note and a trust deed securing that note. Pyper brought various claims against Defendants Uriah Kennedy and John Reil, who were both present when Pyper signed the documents, alleging that they defrauded him. Pyper also brought a negligence claim against Defendant Meridian Title Company, who acted as the escrow agent for the transaction. The district court granted summary judgment to Meridian and dismissed Pyper's claim against it. After a bench trial on the remaining claims, the district court entered judgment against Kennedy but dismissed Pyper's claims against Reil. ¶2 Pyper raises two issues on appeal. First, he contends that the district court erred in concluding that he had not proven his claim for civil conspiracy against Reil. Second, he contends that the district court erred in granting summary judgment to Meridian on the ground that Meridian, as the escrow agent, had no duty to stop Pyper from entering the deal even if it knew or suspected fraud was occurring. We affirm.

¶3 In October 2012, Plaintiff Pyper pledged real property as collateral for a loan to another entity in the amount of $445,401.50. Defendant Kennedy promised Pyper that in exchange for his pledge of collateral, Pyper would be paid $5,000 monthly until the loan was fully repaid to the lender. Kennedy also promised Pyper that he would receive $250,000 after the loan's repayment. The purported purpose of the loan was to fund the acquisition of a company called Seaich Corporation, and Pyper understood that the loan proceeds would be invested in that company. ¶4 Defendant Reil cosigned the loan as a borrower with Pyper. Reil also believed that he was helping to obtain a loan to fund the acquisition of Seaich. Pyper and Reil never met or communicated before or after meeting on October 19, 2012, to close the loan transaction. Reil's representations to Pyper at the October 19 closing were limited to general assurances that "[e]verything will be ok" and that "[t]his will work out." ¶5 Defendant Meridian Title Company was the escrow agent for the transaction. A representative of Meridian was present at the October 19 closing, along with Pyper, Kennedy, and Reil. At the closing, Pyper executed a note in the amount of $445,401.50 his behalf. Following the trial, the court entered its findings of fact and conclusions of law. Among other things, the court found that Kennedy, in some capacity, promised Pyper the repayment of the loan principal to the lender, along with additional monthly payments to Pyper of $5,000 until repayment, and $250,000 to Pyper out of profits following repayment. The court further found that Reil "believed that he was helping to obtain loans in order to fund the acquisition of Seaich"; that "[t]here are no facts establishing a conspiracy or any actionable conspiracy"; and that Pyper "has not proven by clear and convincing evidence that John Reil was part of a conspiracy as alleged. There is not sufficient evidence of an unlawful purpose or any agreement on such purpose by John Reil." ¶12 Based on those and other findings, the court concluded that Pyper "ha[d] not proven any claim for conspiracy against John Reil." The court further found that Pyper had not proven any other of his claims and dismissed them with prejudice. Additionally, the court entered judgment against Kennedy. Pyper appeals, challenging the district court's decisions with regard to Meridian and Reil.

¶13 Pyper contends that the district court erred in concluding that he had failed to prove his conspiracy claim against Reil. Because Pyper does not challenge the court's findings of fact but instead contends only that the court failed to analyze the facts under the proper legal standard, we review the district court's ultimate conclusion for correctness. See Purkey v. Roberts, 2012 UT App 241, ¶ 11, 285 P.3d 1242 (stating that "[w]hether the trial court applied the proper legal standard for [a tort claim] is an issue of law, which we review for correctness"). ¶14 Pyper also challenges the district court's grant of summary judgment to Meridian, claiming that the court erred in determining that an escrow agent does not owe a duty to stop an escrow transaction where the agent observes facts that would lead a reasonable escrow agent to conclude that the agent was facilitating a fraud against one of the parties to the transaction. Summary judgment is appropriate "if the moving party shows that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law." Utah R. Civ. P. 56(a). "An appellate court reviews a trial court's legal conclusions and ultimate grant or denial of summary judgment for correctness . . . ." Howick v. Salt Lake City Corp., 2018 UT 20, ¶ 5, 424 P.3d 841 (quotation simplified).

¶15 Pyper contends that the district court erred in concluding that he had not proven his claim against Reil for civil conspiracy. In particular, Pyper attacks the district court's conclusion that "Reil's actions in furtherance of the [pertinent] transaction . . . did not amount to a conspiracy between Reil and Kennedy on the basis that Reil's actions with respect to . . . Pyper did not involve an independent fraudulent misrepresentation of fact by Reil to Pyper that would be actionable under . . . the federal securities laws." We conclude that Pyper has not shown error in the district court's decision. ¶16 The tort of civil conspiracy requires proof of five elements by clear and convincing evidence: "(1) a combination of two or more persons, (2) an object to be accomplished, (3) a meeting of the minds on the object or course of action, (4) one or more unlawful, overt acts, and (5) damages as a proximate result thereof." Pohl, Inc. of Am. v. Webelhuth, 2008 UT 89, ¶ 29, 201 P.3d 944 (quotation simplified); see also Crane Co. v. Dahle, 576 P.2d 870, 872 (Utah 1978) (providing the standard of proof for civil conspiracy). It is not necessary that each member of the conspiracy commit an unlawful act in furtherance of the conspiracy to be liable. See Lawrence v. Intermountain, Inc., 2010 UT App 313, ¶ 12 n.4, 243 P.3d 508 ("Although . . . conspiracy to defraud requires proof of the underlying fraud, it is not Similarly, in its written order, the court did not conclude that Pyper's claim failed solely on the ground that Reil himself did not make a fraudulent misrepresentation to Pyper. ¶19 Second, even if the district court had erroneously believed that a conspiracy could not be proven absent an unlawful act by Reil, Pyper has not challenged the court's separate determination that the conspiracy claim failed because there was no meeting of the minds on an unlawful purpose. As noted above, to succeed on a claim for conspiracy, a plaintiff must prove the existence of all five elements of the claim. See supra ¶ 16. Pyper's challenge focuses on only one of those elements, namely, the unlawful, overt act. Because Pyper has not demonstrated any error in the district court's determination that he failed to prove another element—a meeting of the minds on the unlawful purpose—his challenge necessarily fails. See generally Federated Capital Corp. v. Shaw, 2018 UT App 120, ¶ 20 (observing that "an appellant cannot demonstrate that a district court erred if [he or she] fails to attack the district court's reasons" for its decision (quotation simplified)); Salt Lake County v. Butler, Crockett & Walsh Dev. Corp., 2013 UT App 30, ¶ 28, 297 P.3d 38 ("This court will not reverse a ruling of the trial court that rests on independent alternative grounds where the appellant challenges only one of those grounds.").

¶20 Pyper argues that the district court erred in granting summary judgment to Meridian on his negligence claim. In particular, he faults the court for failing to recognize a duty, based on title insurance industry standards, for Meridian to "stop" the apparently fraudulent transaction occurring in its presence—even apparently in contravention to closing and disbursement instructions provided and signed by the parties to the transaction. As explained below, Pyper's contention asks us to extend the law regarding an escrow agent's fiduciary duty. We conclude that Pyper has not provided sufficient argument to persuade us that it is appropriate to expand the scope of an escrow agent's well-settled fiduciary duty, and we therefore affirm the district court's decision. ¶21 "The threshold question in a negligence claim is whether the defendant owed a duty to the plaintiff." Mower v. Baird, 2018 UT 29, ¶ 16, 422 P.3d 837. A duty is "an obligation, to which the law will give recognition and effect, to conform to a particular standard of conduct toward another," see B.R. ex rel. Jeffs v. West, 2012 UT 11, ¶ 5, 275 P.3d 228 (quotation simplified), and this obligation "changes according to the relationships of the parties and the legally recognized duties that inhere in their relationships," Mower, 2018 UT 29, ¶ 41. Courts determine the existence of a duty as a matter of law, Jeffs, 2012 UT 11, ¶ 23, which depends on "the legal relationship between the parties, the foreseeability of injury, the likelihood of injury, public policy as to which party can best bear the loss occasioned by the injury, and other general policy considerations," Nebeker v. Summit County, 2014 UT App 244, ¶ 32, 338 P.3d 203 (quotation simplified); see also Jeffs, 2012 UT 11, ¶ 5 (same). ¶22 Both the existence and the scope of an escrow agent's duty are well-settled in Utah: an escrow agent owes a fiduciary duty to both parties of a transaction. See, e.g., Orlando Millenia, LC v. United Title Services of Utah, Inc., 2015 UT 55, ¶¶ 35, 40 n.5, 355 P.3d 965. A fiduciary duty requires the escrow agent "to act new legal obligation for which he requests recognition support an expansion of an escrow agent's already settled duty, see Jeffs, 2012 UT 11, ¶ 5, or that the scope of an escrow agent's duty has been the subject of evolution in law sufficient to support formal recognition in Utah law, see Mower, 2018 UT 29, ¶ 76 (concluding that, "[b]ased on the evolution of the law around the country" regarding the duty expansion being advocated by the appellant "as well as the policy considerations at play," it was appropriate to expand in a limited way the duty to refrain from recklessly inflicting emotional distress). He also does not explain how the duty for which he advocates might reasonably coexist with an escrow agent's "core" duty to follow the instructions provided to it or how the tensions inherent in affirmatively stepping outside of those instructions in situations implicating potential fraud might be resolved. See Posner, 2009 UT App 347, ¶ 19 (quotation simplified). Instead, to support his claim, Pyper makes conclusory assertions about an escrow agent's purpose, training, and position in a given transaction, and he otherwise largely focuses on the case-specific facts relevant to his closing and the parties' experts' opinions regarding the significance of certain facts. As a result, resolving the legal question of whether an escrow agent's fiduciary duty ought to be expanded would require us to "step outside our role as a neutral reviewing body and assume the burden of argument and research" on Pyper's behalf. See Nebeker v. Summit County, 2014 UT App 244, ¶ 34, 338 P.3d 203 (quotation simplified). We decline to do so. ¶28 In short, Pyper has not adequately framed or approached the issue to persuade us that it is appropriate to expand the scope of an escrow agent's well-settled fiduciary duty. On this basis, we affirm the district court's grant of summary judgment to Meridian on his negligence claim.

¶29 We affirm the district court's conclusion that Pyper had not proven his claim against Reil for civil conspiracy. We also affirm the district court's grant of summary judgment in Meridian's favor on Pyper's negligence claim.