Jenco v. Ledges Partners

2020 UT App 42
THE UTAH COURT OF APPEALS
JENCO LC, DEAN GARDNER I NVESTMENT LC, AND
F.M. S NOW PROPERTIES LLC,
Appellees,
v.
LEDGES P ARTNERS 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 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 	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.

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20190151-CA 	2 	2020 UT App 42
¶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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20190151-CA 	3 	2020 UT App 42
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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20190151-CA 	4 	2020 UT App 42
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.

JENCO v. Ledges Partners
20190151-CA 	5 	2020 UT App 42
¶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.