Black Diamond v. Big Cottonwood Pine

2020 UT App 90, 470 P.3d 445
CourtCourt of Appeals of Utah
DecidedJune 11, 2020
Docket20190237-CA
StatusPublished
Cited by4 cases

This text of 2020 UT App 90 (Black Diamond v. Big Cottonwood Pine) is published on Counsel Stack Legal Research, covering Court of Appeals of Utah primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Black Diamond v. Big Cottonwood Pine, 2020 UT App 90, 470 P.3d 445 (Utah Ct. App. 2020).

Opinion

2020 UT App 90

THE UTAH COURT OF APPEALS

BLACK DIAMOND FINANCIAL LLC, Appellant and Cross-appellee, v. BIG COTTONWOOD PINE TREE WATER COMPANY, Appellee and Cross-appellant, and VICKI KINCAID, Appellee.

Opinion No. 20190237-CA Filed June 11, 2020

Third District Court, Salt Lake Department The Honorable Keith A. Kelly No. 160903434

Erik A. Olson and Kevin Paulsen, Attorneys for Appellant and Cross-appellee John A. Snow and Alex B. Leeman, Attorneys for Appellee and Cross-appellant Big Cottonwood Pine Tree Water Company Michael F. Skolnick and Jeremy Speckhals, Attorneys for Appellee Vicki Kincaid

JUDGE MICHELE M. CHRISTIANSEN FORSTER authored this Opinion, in which JUDGES DAVID N. MORTENSEN and DIANA HAGEN concurred.

CHRISTIANSEN FORSTER, Judge:

¶1 Black Diamond Financial LLC (Black Diamond) appeals the district court’s grant of summary judgment in favor of Vicki Kincaid, its grant of Big Cottonwood Pine Tree Water Company’s (Big Cottonwood) motion to strike Black Diamond’s supplemental disclosures, and its grant of summary judgment in favor of Big Cottonwood on the issue of damages. We affirm. Black Diamond v. Big Cottonwood

BACKGROUND

¶2 In the 1980s, the Pine Tree subdivision was built in Big Cottonwood Canyon. Big Cottonwood is a nonprofit corporation responsible for administering water rights to shareholders living in Pine Tree. The water is supplied by Salt Lake City Corporation pursuant to a Water Supply Permit and Agreement entered in 1984.

¶3 When Big Cottonwood was established, its bylaws stated that each lot-owner, or “member,” would be issued a share of stock that would entitle them to connect only their own cabin to the main water line. The member’s lot number was to “be specified on the share certificate” and was to “be transferable only at such time as said lot is transferred and only to the transferee or transferees of said lot.” If a share certificate was surrendered for transfer, Big Cottonwood was to cancel the certificate and issue a new one, but it was not permitted to issue a new certificate “until the former certificate for a like number of shares shall have been surrendered and cancelled.” The bylaws further provided that shares are “not transferrable to another lot” and that “if [a] member, at the time of transfer of [a] lot, does not transfer the share to the transferee of the lot, ownership of the share shall automatically revert to” Big Cottonwood, which would “hold the share for the benefit of the transferee or subsequent transferee of said lot.” As a matter of practice, Big Cottonwood “did not implement any system for checking the title of a particular lot when it was asked to issue a new water share stock certificate” but instead “simply assumed that the person asking for the new water share also had an interest in the property.”

¶4 In 2005, Steven Rollins obtained Lot 25 in Pine Tree, along with its water share, represented by Share Certificate No. 59. Between 2003 and 2009, Rollins and the previous owners of Lot 25 paid Big Cottonwood assessments on the water share and used the water. At the time he purchased Lot 25, Rollins was in a relationship with Kincaid. Rollins borrowed money from

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Kincaid to remodel the property and promised to repay her out of the proceeds when the property was sold. When Rollins was unable to sell the property for a satisfactory price, he entered into a new agreement with Kincaid in which he agreed, among other things, to transfer his water share to her in exchange for forgiving the loan. At the time, “both Rollins and Kincaid . . . were unaware of the provisions of [Big Cottonwood’s] Articles and Bylaws that prohibited Rollins from conveying to Kincaid his share of [Big Cottonwood] stock unless he also conveyed to her title to Lot 25.”

¶5 Rollins signed the water share for Lot 25 over to Kincaid, and she asked Big Cottonwood to issue a new share in her name. After Kincaid paid a processing fee, Big Cottonwood canceled Rollins’s Share Certificate No. 59 and issued Share Certificate No. 63 to Kincaid.

¶6 In 2011, Rollins’s lender foreclosed on Lot 25. The lender began marketing the property but was soon informed that the water share had previously been transferred to Kincaid and that Lot 25 therefore had no water service. In 2013, Black Diamond expressed interest in purchasing Lot 25. The real estate agent “informed Black Diamond that the property did not come with water, but Black Diamond pursued the matter anyway, hoping to get the property for a much lower price.” Black Diamond believed that it could obtain water from another source but also had a “‘common sense’ understanding . . . that water shares in the Pine Tree Subdivision ‘had to stay’ with the land” so that if it “became the owner of the lot it would have some right to the water.”

¶7 After failing to obtain water through other means, Black Diamond sued Big Cottonwood and Kincaid, (1) seeking a declaratory judgment that Rollins’s transfer of the water share to Kincaid was void, that the share automatically reverted back to Big Cottonwood upon the attempted transfer, and that Big Cottonwood must issue the share to Black Diamond; (2) asserting that Big Cottonwood breached its articles and bylaws

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and its duty of good faith by issuing Share Certificate No. 63 to Kincaid and that Black Diamond, as a third-party beneficiary of the contract, suffered losses as a result; and (3) asserting that Kincaid intentionally interfered with Black Diamond’s potential economic relationships by refusing to transfer her water share to Black Diamond.

¶8 Black Diamond provided initial disclosures in which it stated that it had not yet calculated its damages. The disclosures asserted that one of Black Diamond’s intended witnesses, its principal Brandon Wixom, would testify regarding damages. When deposed, Wixom was asked how he had been damaged. He responded, “I cannot occupy and use the property. I cannot rent the property. Several ways we have been damaged . . . . I cannot market the property to sell. . . . Quiet enjoyment, use all the privileges that a landowner should have, I am unable to have.” When asked more specifically how he would calculate damages, he responded that “it could be done very easily” based on “lack of rent for . . . X amount per month, over the time that it’s been unable to be rented.”

¶9 Kincaid moved for summary judgment on the ground that she was a protected purchaser under Utah Code section 70A-8-303. Black Diamond and Big Cottonwood filed cross motions for partial summary judgment on Black Diamond’s breach of contract claim. The district court granted summary judgment in favor of Kincaid on Black Diamond’s claims against her because it agreed with Kincaid that she was a protected purchaser. On the other hand, the district court granted summary judgment in favor of Black Diamond on the breach of contract issue, concluding that Black Diamond was a third-party beneficiary under the bylaws, that Big Cottonwood had breached the bylaws, and that Big Cottonwood was therefore liable for any damages caused by the breach. The court determined that specific performance was not available because Kincaid was a protected purchaser but left open the question of what damages Black Diamond sustained as a result of the breach of contract.

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¶10 Following the court’s ruling on summary judgment and after the close of fact discovery, Black Diamond served supplemental disclosures on Big Cottonwood, which included a new theory and computation of damages based on the devaluation of Lot 25 caused by the property’s lack of access to water.

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Cite This Page — Counsel Stack

Bluebook (online)
2020 UT App 90, 470 P.3d 445, Counsel Stack Legal Research, https://law.counselstack.com/opinion/black-diamond-v-big-cottonwood-pine-utahctapp-2020.