Cardiff Wales v. Washington County School District

2021 UT App 21

THE UTAH COURT OF APPEALS

CARDIFF WALES LLC,
Appellant,
v.
WASHINGTON COUNTY SCHOOL DISTRICT, DESERT CANYONS
DEVELOPMENT INC., AND DSG HOLDINGS LLC,
Appellees.

Opinion
No. 20191035-CA
Filed March 4, 2021

Fifth District Court, St. George Department
The Honorable G. Michael Westfall
No. 190500076

Justin P. Matkin, Robert A. McConnell, and Jeffery A.
Balls, Attorneys for Appellant
Russell S. Mitchell, Attorney for Appellee
Washington County School District
J. Gregory Hardman and Devon J. Herrmann,
Attorneys for Appellees Desert Canyons
Development Inc. and DSG Holdings LLC

JUDGE DAVID N. MORTENSEN authored this Opinion, in which
JUDGES GREGORY K. ORME and JILL M. POHLMAN concurred.

MORTENSEN, Judge:

¶1 Cardiff Wales LLC (Cardiff) appeals the dismissal of its
complaint for failure to state a claim upon which relief can be
granted. In its complaint, Cardiff sought declaratory relief and to
set aside the sale of certain property (the Property) by
Washington County School District (WCSD). Cardiff asserts that
it conveyed the Property to WCSD under threat of
Cardiff Wales v. Washington County School District

condemnation, and therefore Utah Code section 78-34-20 1
afforded it a right of first refusal in the event WCSD sought to
later sell the Property. We hold that the Property was not
conveyed to WCSD under threat of condemnation, and we
affirm the dismissal.

BACKGROUND 2

¶2 In February 2007, WCSD notified Cardiff that it wanted to
purchase the Property for a new high school. During the
negotiation process, WCSD informed Cardiff that if a voluntary
negotiation was not successful, WCSD would seek to acquire the
Property by eminent domain. So, “[i]n order to avoid an eminent
domain lawsuit, [Cardiff] agreed to sell the Property to
[WCSD].”

¶3 The parties entered into a Real Estate Purchase and Sale
Agreement (the Agreement) by which Cardiff conveyed the
Property to WCSD. The Agreement indicated that WCSD had
advised Cardiff that it intended “to acquire a portion of the
[Property] through condemnation if necessary” but that the
parties had “negotiated an alternative to the condemnation
proceeding.” The Agreement further stated, “In lieu of an
involuntary conversion thereof, [Cardiff] agrees to sell the

1. At the time of the relevant events, Utah Code section 78-34-20
was the provision governing threat of condemnation and right of
refusal. Utah Code section 78-34-20 has since been renumbered
as section 78B-6-521. See H.B. 78, 57th Leg., 2008 Gen. Sess. (Utah
2008).

2. “When reviewing a motion to dismiss based on Rule 12(b)(6),
an appellate court must accept the material allegations of the
complaint as true.” Haynes v. Department of Public Safety, 2020 UT
App 19, ¶ 5, 460 P.3d 565 (cleaned up). We recite the facts in
accordance with that standard.

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[Property] to [WCSD] . . . upon the terms . . . set forth in this
Agreement.”

¶4 Approximately ten years after it acquired the Property,
WCSD determined that it no longer needed the Property and
decided to sell it. WCSD did not offer Cardiff a right of first
refusal, instead selling the Property to Desert Canyons
Development Inc. and DSG Holdings LLC (collectively,
Purchaser).

¶5 In February 2019, Cardiff filed suit against WCSD and
Purchaser. Cardiff brought a single claim for declaratory
judgment, asserting that it had a right of first refusal under Utah
Code section 78-34-20 and that the sale to Purchaser should be
set aside. WCSD moved to dismiss the complaint under rule
12(b)(6) of the Utah Rules of Civil Procedure, arguing Cardiff
had not alleged that WCSD acquired the Property under threat
of condemnation as defined by the statute. The district court
granted the motion and dismissed the case.

¶6 Cardiff appeals.

ISSUE AND STANDARDS OF REVIEW

¶7 Cardiff’s appeal boils down to whether the district court
interpreted Utah Code section 78-34-20 correctly in dismissing
its claim. “We review a decision granting a motion to dismiss for
correctness,” Haynes v. Department of Public Safety, 2020 UT App
19, ¶ 5, 460 P.3d 565 (cleaned up), and also review the district
court’s interpretation of a statute for correctness, see Bilanzich v.
Lonetti, 2007 UT 26, ¶ 10, 160 P.3d 1041.

ANALYSIS

¶8 “To survive a motion to dismiss, the complaint must
allege facts sufficient to satisfy each element of a claim,
otherwise the plaintiff has failed to show that he is entitled to

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relief.” Haynes v. Department of Public Safety, 2020 UT App 19, ¶ 6,
460 P.3d 565 (cleaned up). In this case, to state a claim for
declaratory relief that Cardiff has a right of first refusal in the
Property pursuant to Utah Code section 78-34-20, Cardiff must
allege facts sufficient to show that the Property was acquired
either by condemnation or under threat of condemnation. See
Utah Code Ann. § 78-34-20 (LexisNexis 2007). Here, “[t]he
parties agree that the Property was not acquired ‘through an
eminent domain proceeding.’” But Cardiff asserts that the
complaint alleges that the Property was acquired under threat of
condemnation, as contemplated by section 78-34-20. We
disagree.

¶9 Utah Code section 78-34-20 provides in relevant part:

(1) As used in this section, “condemnation or threat
of condemnation” means:
(a) acquisition through an eminent domain
proceeding; or
(b) an official body of the state or a subdivision
of the state, having the power of eminent domain,
has specifically authorized the use of eminent
domain to acquire the real property.
(2) If the state or one of its subdivisions, at its sole
discretion, declares real property that is acquired
through condemnation or threat of condemnation
to be surplus real property, it may not sell the real
property on the open market unless:
(a) the real property has been offered for sale to
the original grantor, at the highest offer made to
the state or one of its subdivisions with first right
of refusal being given to the original grantor . . . .

Id. Cardiff’s assertion that the complaint alleges that WCSD
acquired the Property under threat of condemnation is based on
WCSD’s statements that it would use its eminent domain
powers to acquire the Property if necessary. But those

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allegations do not satisfy section 78-34-20’s definition of
acquisition under “threat of condemnation.” 3

¶10 “When interpreting statutes, our primary objective is to
give effect to the legislature’s intent.” Harold Selman, Inc. v. Box
Elder County, 2011 UT 18, ¶ 18, 251 P.3d 804 (cleaned up). “To
discern legislative intent, we look first to the statute’s plain
language.” Id. (cleaned up). “We read the plain language of the
statute as a whole and interpret its provisions in harmony with
other statutes in the same chapter.” Id. (cleaned up). “When the
plain meaning of the statute can be discerned from its language,
no other interpretive tools are needed.” Id. (cleaned up).

¶11 Section 78-34-20’s plain language defines when property
is acquired under “condemnation or threat of condemnation.”

3. In an attempt to bolster its argument, Cardiff cites an IRS
publication indicating, “A threat of condemnation exists if a
representative of a government body or a public official
authorized to acquire property for public use informs you that
the government body or official has decided to acquire your
property. You must have reasonable grounds to believe that, if
you do not sell voluntarily, your property will be condemned.”
IRS Pub. No. 544, Sales and Other Dispositions of Assets (2018).
The 2007 publication uses the same language. See id. (2007). But,
as we have pointed out, our legislature has specifically defined
the term at issue in the statute, and we need not look to outside
sources to understand our legislature’s intent. See Harold Selman,
Inc. v. Box Elder County, 2011 UT 18, ¶ 18, 251 P.3d 804 (“When
the plain meaning of the statute can be discerned from its
language, no other interpretive tools are needed.” (cleaned up)).
Additionally, we note that these definitions do not have
to be mutually exclusive. Rather, each definition may have
application within the text in which it is laid forth. And here,
where we are interpreting the Utah Code, the Utah Code’s
provided definition controls.

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Utah Code Ann. § 78-34-20(1). The provided definition
comprises two distinct parts. Subsection (1)(a) clearly comports
with acquisition by “condemnation.” See id. Subsection (1)(b)
comports with acquisition by “threat of condemnation.” See id.
Thus, the statute’s plain language provides that property is
acquired under “threat of condemnation” when “an official body
of the state or a subdivision of the state, having the power of
eminent domain, has specifically authorized the use of eminent
domain to acquire the real property.” Id. (emphasis added).

¶12 Cardiff argues that the complaint “alleges sufficient facts
to support a reasonable inference that [WCSD] authorized its
representatives to threaten to use the power of eminent
domain.” But in so doing, Cardiff fails to give due meaning to
the requirement that the use of eminent domain be “specifically
authorized.” See id. In 2007, Utah Code section 78-34-4 4 governed
the process to specifically authorize eminent domain’s use,
providing that “[p]roperty may not be taken by a political
subdivision of the state unless the governing body of the
political subdivision approves the taking,” id. § 78-34-4(2)(b)—
i.e., specifically authorizes it. That specific authorization or
approval was by final vote of the governing body, before which
the body had to “provide written notice to each owner of
property to be taken of each public meeting . . . at which a vote
on the proposed taking is expected to occur.” Id. § 78-34-4(2)(c);
see also id. § 78-34-4.5 (LexisNexis 2007) 5 (“Each person who
seeks to acquire property by eminent domain or who intends to
use eminent domain to acquire property if the property cannot
be acquired in a voluntary transaction shall: . . . before taking a
final vote to approve the filing of an eminent domain action,
make a reasonable effort to negotiate with the property owner

4. Utah Code section 78-34-4 has since been renumbered as
section 78B-6-504. H.B. 78, 57th Leg., 2008 Gen. Sess. (Utah 2008).

5. Utah Code section 78-34-4.5 has since been renumbered as
section 78B-6-505. H.B. 78, 57th Leg., 2008 Gen. Sess. (Utah 2008).

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for the purchase of the property . . . .”). Accordingly, it is only
after a final vote, and the use of eminent domain powers thereby
approved, that eminent domain’s use has been “specifically
authorized” as contemplated by section 78-34-20. See id. §§ 78-34-
20(1)(b), -4(2), -4.5. 6

¶13 Accordingly, to survive the motion to dismiss under the
theory that WCSD acquired the Property by threat of
condemnation, Cardiff must allege that WCSD voted and
approved the use of its eminent domain power to acquire the
Property. And as the district court determined—and Cardiff
does not challenge—“there is no claim of any vote to specifically
approve the filing of an eminent domain action in court.”
Because Cardiff made no allegation that a final vote was taken
and the use of eminent domain powers approved in the
complaint, the district court correctly dismissed the complaint
for failure to state a claim upon which relief can be granted. 7

6. Cardiff suggests that the conclusion we reach means that “a
landowner who has been threatened with condemnation must
force the condemning agency to perform all steps to initiate an
eminent domain action if it wants to preserve a right of first
refusal in the property.” If a landowner wants to secure the
statutory right of first refusal, Cardiff is correct. But a landowner
is not limited to that course of action; it can instead negotiate for
a contractual right of first refusal as part of a voluntary
transaction.

7. Cardiff also argues on appeal that, based on WCSD’s
statements, WCSD is estopped from claiming it acquired the
Property without threat of condemnation. “There are three
elements to estoppel: (1) an admission, statement, or act
inconsistent with the claim afterwards asserted, (2) action by the
other party on the faith of such admission, statement, or act, and
(3) injury to such other party resulting from allowing the first
(continued…)

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Cardiff Wales v. Washington County School District

CONCLUSION

¶14 Cardiff’s complaint does not allege the Property was
acquired under threat of condemnation, as defined by Utah
Code section 78-34-20, and the district court correctly dismissed
it for failure to state a claim upon which relief can be granted.

¶15 Affirmed.

(…continued)
party to contradict or repudiate such admission, statement, or
act.” Monarrez v. Utah Dep’t of Transp., 2016 UT 10, ¶ 35, 368 P.3d
846 (cleaned up). But this argument, like the argument
addressed in the body of this opinion, relies on a definition of
“threat of condemnation” that is beyond that provided in the
statute, and it therefore fails to satisfy the first requirement.

20191035-CA 8 2021 UT App 21