Mascaro v. Davis

741 P.2d 938, 61 Utah Adv. Rep. 6, 1987 Utah LEXIS 750
CourtUtah Supreme Court
DecidedJuly 6, 1987
Docket19024
StatusPublished
Cited by51 cases

This text of 741 P.2d 938 (Mascaro v. Davis) is published on Counsel Stack Legal Research, covering Utah Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mascaro v. Davis, 741 P.2d 938, 61 Utah Adv. Rep. 6, 1987 Utah LEXIS 750 (Utah 1987).

Opinions

HALL, Chief Justice:

Plaintiffs obtained a joint and several default judgment against defendants Davis and Joseph and in favor of plaintiff Mascara for $205,869.16 and plaintiff Taylor for $85,706, as well as for attorney fees, interest, and costs. Plaintiffs seek reversal of (1) an order modifying and setting aside in part plaintiffs’ default judgment against defendant Joseph; (2) an order enforcing a settlement agreement; and (3) an order preventing plaintiffs from executing against defendant Joseph’s property pursuant to the default judgment.

The discussion in this case involves only a portion of a larger real estate transaction. Since the case has never gone to trial, the limited factual background provided below is based for the most part upon the pleadings, filings, and submissions.

I.

Early in 1978, plaintiff Mascara and defendant Joseph formed a partnership for the purpose of acquiring and developing real property. The partnership’s real estate transactions involved an option to buy eighteen acres of land in Lehi, Utah, for $117,000 (Taylor property) and a larger parcel of land contiguous to the Taylor property known as Lehi Meadows. The partnership thereafter attempted to sell the Taylor property and also acted as a real estate agent for Lehi Meadows.

After several potential buyers failed to purchase the properties, defendant Davis, an attorney, contacted Joseph on an unrelated matter. Upon learning of the partnership’s real estate venture, Davis represented to Joseph that he could sell the properties. Davis was subsequently hired by the partnership.

In March 1979, the partnership entered into an agreement with Chatillion, Inc., a corporation owned and operated by Curtis Baum. By the terms of the agreement, Chatillion agreed to purchase approximately twenty-nine acres of Lehi Meadows and several options to purchase the remainder of Lehi Meadows and the Taylor property.

In relevant part, Chatillion agreed to pay the partnership approximately $380,000 for the Taylor property (which in turn was to be used by Chatillion as part of its consideration for Lehi Meadows and accompanying options) and as a commission for the sale of Lehi Meadows. Chatillion made cash payments to the partnership totalling $140,937.09 and agreed to convey eight building lots, with a value of $30,000 each, to satisfy the balance owing on the $380,-000 obligation.

Chatillion gave the cash payments to Davis, who placed them in a client trust account. Joseph claimed that he told Davis to distribute $40,000 to Taylor, $20,000 to Mascara, and $20,000 to Joseph and to re[940]*940tain the remainder until further notice. Davis, however, issued $38,000 to Joseph and embezzled over $100,000 of the money.

After the agreement was entered into, a dispute arose as to whether the eight lots Chatillion was to convey were worth $30,-000 each. Moreover, although a closing on the twenty-nine acres of Lehi Meadows and accompanying options took place, the partnership never received title to the eight building lots.

The partnership exercised the Taylor option so it could provide Chatillion with title to the Taylor property. The terms of the option agreement provided that the partnership would pay Taylor in the form of income-producing property. Taylor received partial satisfaction of the option agreement when the partnership provided in excess of $30,000 to buy him a duplex. Taylor then located other property which he- wanted the partnership to buy for him to satisfy the remainder of the option agreement. Mascaro personally paid in excess of $10,000 for a partial down payment on this other property. However, since no funds remained in Davis’s client trust account with which to pay the remainder of the down payment, the property was foreclosed upon and Mascaro’s invested funds were lost.

In their complaint, plaintiffs alleged that Joseph and Davis converted to their own use the $140,000 placed by Davis in the trust account. Plaintiffs further alleged that Joseph and Davis refused repeated requests for an accounting, claiming that the funds were in the trust account and that they had not individually received any funds from the account. Discovery of Davis’s bank records proved otherwise, and thereafter Joseph admitted he received $38,000. There is no dispute that Davis embezzled a portion of the funds beginning in June of 1979.

Plaintiffs filed their complaint on May 1, 1980, and Davis and Joseph were both served on May 5,1980. The following day, Joseph apparently called Davis and requested that Davis take whatever steps were necessary to represent him. Davis told Joseph that everything would be taken care of and “not to worry.” Over the next several months, Joseph allegedly spoke repeatedly with Davis concerning the status of the suit. Joseph believed that Davis was taking the proper legal steps to successfully defend the action. Additionally, Davis may have told Joseph’s wife that he had filed an answer. In fact, Davis failed to answer the complaint or take any responsive action. Instead, he allowed entry of the default judgment against himself and Joseph on June 5, 1980.

A motion to set aside the default judgment was denied in February 1981 by Judge James Sawaya. Thereafter, Joseph learned of Davis’s embezzlement, obtained new counsel, and brought a similar motion before Judge Dean Conder. The motion was denied in January 1982. Joseph again retained new counsel and moved for a stay of execution, which was granted by Judge David Dee in March 1982.

In May 1982, one week prior to trial on plaintiffs’ claims and Joseph’s cross-claims against Baum and Chatillion, a pretrial conference was held. An agreement was reached, settling most of the claims, between all of the parties.

At the pretrial conference, Baum and Chatillion agreed to tender to the partnership eight lots of real property in Weber County, Utah (also known as Phase III of the Parkvale Subdivision). Taylor agreed to accept four of the eight lots in full satisfaction of his judgment against Joseph and any claims he had against Baum, Mas-caro, Joseph, and Chatillion, provided evidence could be produced that the lots in question were each worth $30,000 or more. The agreement also called for Baum and Chatillion to make certain improvements to the lots. Based upon these same terms, Mascaro agreed to accept two of the lots in partial satisfaction of his judgment against Joseph. The final two lots were to be held in escrow, pending a resolution of the remainder of Mascaro’s judgment or his other claims against Joseph and any cross-claims Joseph might have against Masca-[941]*941ro.1 Finally, all of Mascaro’s related claims against Baum and Chatillion were to be dismissed with prejudice. After negotiations to put the settlement agreement into final form were completed, plaintiffs indicated they did not intend to honor the agreement.2 In November 1982, Judge Dee granted Joseph’s motion to enforce the settlement agreement.

Thereafter, Joseph brought a third motion to set aside the default judgment. In January 1983, Judge Dee modified and set aside in part plaintiffs’ default judgment, holding that Joseph was not responsible for the embezzlement of the funds from the partnership, that Taylor’s claim had been satisfied, that Mascaro’s judgment against Joseph was partially satisfied, and that the remainder of Mascaro’s judgment should be set aside. This appeal followed.

II.

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Bluebook (online)
741 P.2d 938, 61 Utah Adv. Rep. 6, 1987 Utah LEXIS 750, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mascaro-v-davis-utah-1987.