Court Opinion

ID: 5138385
Source: CourtListenerOpinion
Date Created: 2021-12-21 15:02:27.031767+00
Date Added: 2024-06-11T08:24:15.791761
License: Public Domain

2017 UT App 160

              THE UTAH COURT OF APPEALS

               SA GROUP PROPERTIES INC.,
                      Appellee,
                          v.
 HIGHLAND MARKETPLACE LC, HIGH NOON LC, SOLANA BEACH
    HOLDINGS LC, THOMAS A. HULBERT, AND BRET B. FOX,
                     Appellants.

                           Opinion
                      No. 20151046-CA
                    Filed August 24, 2017

           Fourth District Court, Provo Department
               The Honorable James R. Taylor
                        No. 120401312

       James E. Magleby and Kennedy D. Nate, Attorneys
                        for Appellants
       Steven T. Waterman and Nathan S. Seim, Attorneys
                        for Appellee

  JUDGE DAVID N. MORTENSEN authored this Opinion, in which
 JUDGES J. FREDERIC VOROS JR. and KATE A. TOOMEY concurred.1

MORTENSEN, Judge:

¶1    Highland Marketplace LC, High Noon LC, Solana Beach
Holdings LC, Thomas A. Hulbert, and Bret B. Fox (collectively,
Highland) invested in a land-development project that ran up
against the economic recession of 2008. Highland defaulted on
its multimillion-dollar loan, and SA Group Properties Inc. (SA
Group) foreclosed on Highland’s investment property, an

1. Judge J. Frederic Voros Jr. participated in this case as a
member of the Utah Court of Appeals. He retired from the court
before this decision issued.
           SA Group Properties v. Highland Marketplace

incomplete commercial development in Highland, Utah, just east
of an area known as Silicon Slopes (the Property). The
foreclosure sale price was less than the loan balance, leading to
this deficiency action. After a bench trial, a judgment of almost
$5,000,000 was entered against Highland. On appeal, Highland
contends that the trial court erroneously denied its motion to
amend its answer. Highland also contends that the court erred
when it concluded that the fair market value of the Property was
$10,568,000, essentially rejecting Highland’s expert’s opinion on
the market value of the Property at the time of the foreclosure
sale. We affirm.

                        BACKGROUND

¶2      Highland obtained a $28,000,000 loan, secured by the
Property, from First Community Bank in September 2007. It
used the loan to develop the Property, including connecting
utilities, building roads and sidewalks, and constructing
commercial buildings on several lots. Development eventually
stalled and Highland defaulted on the loan. SA Group, as
successor to First Community Bank, foreclosed on the Property.

¶3    At the time of foreclosure, Highland owed $14,685,370 on
the loan. The foreclosure sale yielded $8,565,000. SA Group
commenced this deficiency action2 against Highland in August
2012.

2. Utah Code section 57-1-32 governs the process for obtaining a
deficiency judgment against a debtor. The statute states,
       At any time within three months after any sale of
       property under a trust deed . . . an action may be
       commenced to recover the balance due upon the
       obligation for which the trust deed was given as
       security . . . . The court may not render judgment
                                                    (continued…)

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           SA Group Properties v. Highland Marketplace

¶4    In March 2014, Highland filed its second motion to amend
seeking to extend fact discovery and to assert counterclaims
against SA Group based on First Community Bank’s alleged

(…continued)
        for more than the amount by which the amount of
        the indebtedness with interest, costs, and expenses
        of sale, including trustee’s and attorney’s fees,
        exceeds the fair market value of the property as of
        the date of the sale.
Utah Code Ann. § 57-1-32 (LexisNexis 2010). “In other words,
when the proceeds from a trustee’s sale do not completely satisfy
the debt underlying a trust deed, section 57-1-32 allows the
creditor to sue the debtor in an attempt to recover the amount
remaining due on the note.” AmericanWest Bank v. Kellin, 2015
UT App 300, ¶ 12, 364 P.3d 1055. The statute allows creditors to
recover against debtors but also “is meant to prevent creditors
from reaping a windfall by obtaining valuable trust deed
property at a fraction of its fair market value while pursuing the
debtor (or guarantor) for the full amount due on the underlying
note.” Id. ¶ 13 (citation and internal quotation marks omitted).
        Thus, in the ordinary deficiency action, it is in the
        creditor’s interest to establish a low fair market
        value of the foreclosed property to avoid or
        minimize the effect of the statutory cap and obtain
        a judgment for as close as possible to the full
        amount of the deficiency. By contrast, the debtor
        has an incentive to show that the foreclosed
        property had a high fair market value, so as to
        minimize or even eliminate the creditor’s
        deficiency judgment.
Id. ¶ 14.

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           SA Group Properties v. Highland Marketplace

failure to fund a draw request.3 By this time, fact discovery had
concluded and a motion for summary judgment filed by SA
Group had been decided. However, no trial date had been set.

¶5     Although SA Group provided 29,000 pages of discovery
in nine separate disclosures between April 2013 and February
2014, the proposed amended answer was purportedly based on
five documents produced between April and September 2013.
Other documents long in Highland’s possession—the draw
request, loan forms, and a 2010 email chain4—show that
Highland was aware of the unfunded draw request prior to the
commencement of the deficiency action.

¶6     The trial court denied the motion to amend, concluding
that the motion to amend was “untimely based on [Highland’s]
previous knowledge of the failed draw requests and the
completion of significant procedural stages in the case.” The
court also concluded that the delay in filing the motion to amend
was not justified, due to Highland’s long-held knowledge of the
operative facts.

¶7    The trial court held a three-day bench trial in May and
August 2015. The only issue at trial was the fair market value of
the Property as of the foreclosure date. Three experts testified;

3. Highland filed an initial motion to amend in December 2013,
which it withdrew in March 2014. That motion attempted to
address unfunded draw requests as well.

4. The emails, dated between April 19 and 22 of 2010 are
communications between Thomas Hulbert, a principal of
Highland, and a representative at First Community Bank. The
emails identify the unfunded draw request and discuss a general
contractor’s threat to put a lien on the Property and the need for
Highland to pay delinquent property taxes prior to the bank
processing the draw.

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           SA Group Properties v. Highland Marketplace

Kerry Jorgensen and Darrin Liddell testified for SA Group and
Philip Cook testified for Highland. Jorgensen valued the
Property at $10,568,000. Liddell valued the Property at
$9,240,000. Cook valued the Property at $14,710,000. The trial
court ultimately adopted Jorgensen’s opinion and rejected the
valuations of the other experts. The court entered a judgment
against Highland for $4,747,891 plus attorney fees and costs.

¶8     The trial court referenced several reasons for its decision
to reject Cook’s valuation of the Property. First, it found that
Cook ascribed too much value—$475,000—to a letter of intent
from a restaurant chain, Jack in the Box (the Letter of Intent). The
court noted that the Letter of Intent was “dated days prior to the
foreclosure sale and was signed by Highland as the Landlord,”
even though Highland no longer owned the Property at the
time.5

¶9     The trial court also found that Cook used unreliable facts
and data in valuing one of the lots on the Property known as the
Anchor Pad. The trial court based this conclusion on Cook’s
testimony that he valued the Anchor Pad as multi-unit housing
because Highland “said [it was] going to do multi-family, and so
[he] started down that road . . . [and] just sort of finished it on
that basis.” However, Cook also opined in a report that the
multi-unit housing appraisal is in effect the same as a
commercial property appraisal because “the value of the
underlying land for commercial use is roughly the same as the
value of the underlying land for multifamily use.” Cook testified

5. The trial court also criticized Liddell’s treatment of the Letter
of Intent, saying, “The Court is of the view that the letter of
intent would have added only marginal value [to] the property
because [Highland] did not have title to the property included in
the letter. Nevertheless, Mr. Liddell gave the circumstance no
credence, at all.” Jorgensen, whose testimony the trial court
eventually adopted, assigned no value to the Letter of Intent.

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           SA Group Properties v. Highland Marketplace

at trial that he valued the Anchor Pad as commercial property,
and Jorgensen testified that Cook “did it correctly for the
anchors.” The trial court determined that Cook’s valuation was
unreliable because he

      valued the “Anchor Pad” of [the Property] using
      the condition that the Anchor Pad would function
      as multi-family housing, even though, (1) [the
      Property] was not zoned for multi-family housing;
      (2) [the Property] was not equipped with a sewer
      system or other necessary infrastructure to handle
      multi-family housing; [(3)] Highland City has
      stated that it is against re-zoning the property; and
      (4) there is no indication, other than [Highland’s]
      own statements to Mr. Cook, that Highland City
      was ever willing to [re-zone] the Highland
      Property for multi-family use.

¶10 In addition to Cook’s valuation of the Anchor Pad, the
trial court criticized Cook’s appraisal of these and other lots for
his use of assumed conditions. Those assumed conditions are

      (1) the relied-upon letter of intent would be
      executed and that a “Jack in the Box” would be
      constructed; (2) the zoning of the anchor pads
      would be changed; (3) a Walgreens would be
      timely constructed; (4) Pad I would be subdivided
      into two parcels; (5) the fitness club lease would be
      terminated; (6) the fitness space lease would be
      converted to retail space; and (7) the entire project
      would be leased to stabilized occupancy.

The trial court made these findings despite Jorgensen’s
testimony that he and Cook each assumed that Walgreens would
be constructed and deducted costs to determine the actual value
of the lease, the subdivision of Pad I was irrelevant to the

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            SA Group Properties v. Highland Marketplace

valuation,6 and each expert performed a stabilized estimate to
arrive at an “as is” appraisal value.

¶11 There was some discussion at trial about the methods the
experts used to reach their valuations, especially whether Cook
used the “land residual method.”7 Jorgensen conceded that Cook
used “a slightly different technique” than the land residual
method but explained that “what [Cook] used was still a land
residual technique” and that “all land residual techniques . . .
have that same problem.” Jorgensen also conceded that this
same critique of Cook’s approach could be applied to his
“incremental value enhancement” in the Walgreens lot.

¶12 Based on the above findings, the trial court determined
that Cook’s valuation was less reliable than the other experts’
valuations. Specifically, the court found that Cook based his
appraisal on unsupported and unreliable facts and data, used
unestablished and unreliable methods to reach his valuation,

6. While Jorgensen agreed that the subdivision of Pad I was
irrelevant, he explained, “My only complaint has been when you
. . . hypothetically split it . . . and then come up with a value
that’s for two pieces that are greater than the value of the whole
pad . . . it’s a further extension of this problem that I keep talking
about.”

7. The trial court’s finding on the land residual method states
that the method “takes the projected future value of a
hypothetical project on the land . . . and then deducts the costs of
building the project to reach the value of the land. Courts have
shown a clear disdain for this valuation methodology because
small variations in the variables used can result in a dramatic
change in the land value estimate.” Highland has not challenged
this finding, and we therefore have no occasion to question its
accuracy.

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           SA Group Properties v. Highland Marketplace

and did not value the Property “as is.” Accordingly, the trial
court adopted Jorgensen’s valuation.

            ISSUES AND STANDARDS OF REVIEW

¶13 Highland presents two issues for our review. First,
Highland contends that the trial court erred in denying its
motion to amend its answer. We review a trial court’s denial of
leave to amend for an abuse of discretion. Estrada v. Mendoza,
2012 UT App 82, ¶ 19, 275 P.3d 1024. A trial court abuses its
discretion if there is “no reasonable basis for the decision.”
Tschaggeny v. Milbank Ins. Co., 2007 UT 37, ¶ 16, 163 P.3d 615
(citation and internal quotation marks omitted).

¶14 Second, Highland contends that the trial court erred in
concluding that the fair market value of the Property on the date
of the foreclosure sale was no greater than $10,568,000, where its
conclusion is based on the finding that Jorgensen gave a credible
appraisal while Cook did not.

      Determinations regarding the weight to be given to
      the testimony of expert witnesses are within the
      province of the finder of fact, [and] we will not
      second guess a court’s decisions about evidentiary
      weight and credibility if there is a reasonable basis
      in the record to support them. Thus, we may
      reverse a trial court’s credibility determination if its
      findings in support of that determination are
      clearly erroneous, that is, if they are against the
      clear weight of the evidence, or if we otherwise
      reach a definite and firm conviction that a mistake
      has been made.

AmericanWest Bank v. Kellin, 2015 UT App 300, ¶ 25, 364 P.3d
1055 (citations and internal quotation marks omitted).

20151046-CA                     8                2017 UT App 160
           SA Group Properties v. Highland Marketplace

                            ANALYSIS

                       I. Motion to Amend

¶15 Highland argues that the trial court erred when it
determined that the motion to amend was untimely and
unjustified. Under rule 15(a) of the Utah Rules of Civil
Procedure, parties may amend pleadings prior to trial. Utah R.
Civ. P. 15(a). That rule exists to “allow parties to have their
claims fully adjudicated.” Timm v. Dewsnup, 851 P.2d 1178, 1183
(Utah 1993). Parties may amend a pleading “as a matter of
course” where the amendment is filed within twenty-one days
after serving it or, for pleadings to which a responsive pleading
is required, within twenty-one days after service of the
responsive pleading or twenty-one days after service of a motion
under rule 12(b), (e), or (f), whichever is earlier. Utah R. Civ. P.
15(a)(1). “In all other cases, a party may amend its pleading only
with the court’s permission or the opposing party’s written
consent. . . . The court should freely give permission when justice
requires.” Id. R. 15(a)(2).

¶16 “When determining whether to grant or deny a motion to
amend, a court may consider certain factors, including: (1) the
timeliness of the motion; (2) the justification given by the movant
for the delay; and (3) the resulting prejudice to the responding
party.” Armer Texas Trust v. Brazell, 2017 UT App 35, ¶ 11, 397
P.3d 604 (citation and internal quotation marks omitted).
Highland claims the trial court abused its discretion when it
determined that the motion to amend was untimely and
unjustified.

¶17 “Utah appellate courts have consistently refused the
invitation to establish a bright line rule regarding how far into
the litigation process a motion to amend must be filed in order to
be deemed untimely.” Kelly v. Hard Money Funding, Inc., 2004 UT
App 44, ¶ 28, 87 P.3d 734. Generally, a motion to amend is
untimely when it is “filed in the advanced procedural stages of

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           SA Group Properties v. Highland Marketplace

the litigation process, such as after the completion of discovery,
on the eve of a scheduled trial date, or after an order of dismissal
has already been entered.” Id. ¶ 29. A motion to amend is
typically found untimely if it is “filed several years into the
litigation.” Id. ¶ 30.

¶18 Here, Highland filed its motion to amend in March 2014,
a year and a half after the commencement of the case. By this
time fact discovery was complete. Therefore, there is a factual
basis for concluding that the motion was untimely and we
cannot conclude under such circumstances that the trial court
exceeded its discretion in denying the motion for this reason.
Further, by the time Highland filed its motion, the case was
advanced in its procedural progression, with the court having
already denied a motion for summary judgment filed by SA
Group and having dismissed affirmative defenses asserted by
Highland. The passing of this procedural stage also supports the
court’s determination that the motion was not timely. Therefore,
there was a “reasonable basis for the decision” to deny
Highland’s motion to amend. See Tschaggeny v. Milbank Ins. Co.,
2007 UT 37, ¶ 16, 163 P.3d 615 (citation and internal quotation
marks omitted).

¶19 To show justification for a delayed motion to amend, a
party may demonstrate that the delay was not “due to a dilatory
motive, a bad faith effort during the pleading process, or
unreasonable neglect in terms of pleading preparation,” or that
the “party’s prior knowledge” of the events prompting the
amendment “was minimal” or “based on suspicious or
inconclusive evidence.” Kelly, 2004 UT App 44, ¶ 38.

¶20 The documents that Highland relied on for its proposed
counterclaim were received no later than September 2013. There
is also undisputed evidence in the record from emails, loan
documents, and the draw request itself that Highland had actual
knowledge of the events that supported the proposed
amendment. Accordingly, the trial court could reasonably

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           SA Group Properties v. Highland Marketplace

conclude that Highland had more than minimal, speculative
knowledge of the facts underlying the proposed amendment
months prior to the close of fact discovery and many months
prior to filing the motion. Thus, the record supports a
determination that the delay in filing the motion to amend was
unjustified, and we cannot conclude under such circumstances
that the court exceeded its discretion in denying the motion on
this basis. See id.

¶21 Highland argues that any delay in bringing the motion to
amend was caused by SA Group’s “failure to produce relevant
documents until the eve of the close of fact discovery.” Indeed,
SA Group produced documents all the way up to February 2014
when fact discovery closed. However, Highland’s argument
ignores that the documents relevant to its proposed amendment
were produced no later than September 2013 and that Highland
had actual knowledge of the facts forming the basis of its
amendment prior to the commencement of this action.

¶22 Because there is a reasonable basis to conclude that the
motion was untimely and unjustified, we cannot conclude that
the trial court exceeded its discretion. See Tschaggeny, 2007 UT
37, ¶ 16. Therefore, we affirm the denial of the motion to amend.

         II. The Trial Court’s Findings and Conclusions

¶23 Highland argues that the trial court made erroneous and
inconsistent findings—that its expert, Cook, was not credible
and that SA Group’s expert, Jorgensen, was credible—and that
those errors warrant reversal. Highland does not challenge the
admissibility of any of the expert testimony but instead takes
issue with the weight the trial court gave the experts’ opinions
and the court’s associated credibility determinations.

¶24 Attacking credibility and weight determinations of a fact
finder, such as a judge in a bench trial, presents a significant
hurdle for any appellant, particularly as it pertains to expert

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           SA Group Properties v. Highland Marketplace

witnesses. Because the weight to be given to the testimony is
“within the province of the finder of fact, we will not second
guess a court’s decisions about evidentiary weight and
credibility if there is a reasonable basis in the record to support
them.” Barrani v. Barrani, 2014 UT App 204, ¶ 6, 334 P.3d 994;
accord AmericanWest Bank v. Kellin, 2015 UT App 300, ¶ 25, 364
P.3d 1055; Fullmer v. Fullmer, 2015 UT App 60, ¶ 25, 347 P.3d 14.
“In a bench trial or other proceeding in which the judge serves as
fact finder, the court has considerable discretion to assign
relative weight to the evidence before it,” including “the right to
minimize or even disregard certain evidence.” Poll v. Poll, 2011
UT App 307, ¶ 9, 263 P.3d 534 (citation and internal quotation
marks omitted). Indeed, the judge as fact finder “is in the best
position to judge the credibility of witnesses and is free to
disbelieve their testimony,” Ouk v. Ouk, 2015 UT App 104, ¶ 14,
348 P.3d 751 (citation and internal quotation marks omitted),
“even if that testimony comes from an expert witness,”
Woodward v. LaFranca, 2016 UT App 141, ¶ 13, 381 P.3d 1125. A
trial court’s finding of fact is erroneous when the finding “is
against the clear weight of the evidence, or if we otherwise reach
a firm conviction that a mistake has been made.” Covey v. Covey,
2003 UT App 380, ¶ 17, 80 P.3d 553 (citation and internal
quotation marks omitted). “When the evidence is susceptible to
more than one interpretation, the [trial] court, as the fact finder,
is to consider the evidence and has significant discretion to
assign relative weight to the evidence before it.” Lohman v.
Headley, 2012 UT App 337, ¶ 9, 293 P.3d 380.

¶25 Attacking only the court’s respective witness credibility
determinations, Highland asks us to reverse the trial court’s
order on the fair market value of the Property. The court found
that Jorgensen was more credible than Cook and adopted
Jorgensen’s valuation. We conclude that Highland has failed to
demonstrate error in either the trial court’s finding that
Jorgensen was credible or its finding that Cook was not credible.

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           SA Group Properties v. Highland Marketplace

A.    The Trial Court’s Acceptance of Jorgensen’s Appraisal

¶26 Highland asserts that the trial court’s valuation was
clearly erroneous because the court adopted Jorgensen’s analysis
and conclusion and, Highland maintains, Jorgensen’s analysis
was flawed. However, Highland has failed to carry its burden on
appeal in demonstrating error in the trial court’s finding that
Jorgensen was credible.

      [A]n appellant who seeks to prevail in challenging
      the sufficiency of the evidence to support a factual
      finding or a verdict on appeal should follow the
      dictates of rule 24(a)(9), as a party who fails to
      identify and deal with supportive evidence will
      never persuade an appellate court to reverse under
      the deferential standard of review that applies to
      such issues.

State v. Nielsen, 2014 UT 10, ¶ 40, 326 P.3d 645. The Utah
Supreme Court explained, “In Nielsen, we repudiated the hard-
and-fast notion of dismissing a claim based solely on ‘a technical
deficiency in marshalling.’” State v. Prater, 2017 UT 13, ¶ 43 n.6,
392 P.3d 398 (quoting Nielsen, 2014 UT 10, ¶ 37). And after
reiterating the principle stated above, the court further
explained, “We focus on the ‘question of whether the appellant
has established a basis for overcoming the healthy dose of
deference owed to . . . jury verdicts.’” Id. (omission in original)
(quoting Nielsen, 2014 UT 10, ¶ 41). We, too, focus on the
deference owed to the fact finder in this case.

¶27 Highland expends most of its energy attacking the trial
court’s treatment of Cook. In what little space it devotes to
disputing the court’s treatment of Jorgensen’s opinion, Highland
asserts that Jorgensen’s opinion is not credible while making no
effort “to identify and deal with supportive evidence.” See id.

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¶28 The trial court heard three days of evidence from three
experts testifying on the single issue of the fair market value of
the Property. Highland provided only a smattering of examples
that it believes demonstrate that Jorgensen was not credible.
Highland argues that “Jorgensen’s appraisal is replete with
conservatism” and adds, “some examples follow.” Highland
then argues that Jorgensen’s valuation used downward
adjustments in “the major factors that go into valuing a
property,” that Jorgensen used rents from outdated buildings to
determine market rent, that Jorgensen valued a building more
than a Walgreens lease, and that Jorgensen applied a twenty-
five-percent discount to the Walgreens lease. Even if we agreed
that the examples it provided were conservative, Highland
ignores the rest of Jorgensen’s appraisal. Highland’s argument
does not “persuade [us] to reverse under the deferential
standard of review that applies” to the trial court’s credibility
determination because it “fails to identify and deal with
supportive evidence.” See Nielsen, 2014 UT 10, ¶ 40. This is
because Highland’s failure to identify supportive evidence does
not give us a clear picture to determine whether the trial court’s
finding “is against the clear weight of the evidence.” See Covey v.
Covey, 2003 UT App 380, ¶ 17, 80 P.3d 553 (citation and internal
quotation marks omitted). Highland does not attempt to
highlight what evidence supports Jorgensen’s opinion, let alone
succeed in showing that the supporting evidence is so deficient
that the adoption of Jorgensen’s opinion is clearly erroneous.

¶29 What is more, the attack Highland does make against
Jorgensen fails. Highland points to Jorgensen’s use of older
comparable properties in his appraisal and his use of, in
Highland’s view, unsupported and unreasonably conservative
estimates in his analysis. In its findings, the trial court
acknowledged “that the older shopping centers used in
[Jorgensen’s] appraisal as comparables were not only inferior in
appearance, but also did not look as modern nor as good as [the
Property].” However, the court concluded that “Jorgensen
adequately compensated for these variations in computing the

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‘as is’ market value of the property.” By expressly considering
the very contention that Highland brings on appeal, the trial
court demonstrated that it “considered the evidence but
weighed it differently” than Highland argues. See Lohman v.
Headley, 2012 UT App 337, ¶ 8, 293 P.3d 380 (explaining that the
court properly considered and weighed evidence where it did so
expressly in its oral and written ruling). And because the weight
to be given to the testimony is “within the province of the finder
of fact, we will not second guess a court’s decisions about
evidentiary weight and credibility” because “there is a
reasonable basis in the record to support them.” Barrani v.
Barrani, 2014 UT App 204, ¶ 6, 334 P.3d 994.

¶30 While Highland makes a compelling argument why a trial
court might have questioned Jorgensen’s approach, Highland
fails to show that adopting a valuation based on “conservative
choices” was clearly erroneous. The findings of the trial court
demonstrate that it considered Highland’s arguments but in the
end found Jorgensen’s valuation to be the most compelling. And
because we cannot conclude that the court’s subsidiary findings
were clearly erroneous, the ultimate finding of fair market value
is supported by the evidence and well within the trial court’s
discretion. Accordingly, Highland fails to carry its burden on
appeal to show that the court’s determination of fair market
value was clearly erroneous.

B.     The Trial Court’s Rejection of Cook’s Appraisal

¶31 The trial court found that Cook’s valuation of the
Property was less credible than the valuations of the other
experts. It listed three reasons for making this finding: (1) Cook’s
valuation was “based on unsupported and unreliable facts and
data”; (2) Cook’s valuation was “based on un-established and
unreliable valuation [methods]”; and (3) Cook did not value the
Property “in its ‘as is’ condition as of the . . . foreclosure date.”
Any one of these reasons would be sufficient to find that Cook
lacked credibility.

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           SA Group Properties v. Highland Marketplace

¶32 In support of its finding that Cook’s valuation used
unsupported and unreliable facts, the trial court explained that
Cook gave too much value to the Letter of Intent. Highland
argues this was clearly erroneous because the trial court found
that the Letter of Intent, signed by Highland as landlord when
Highland no longer owned the Property, warranted marginal
value, and that Jorgensen and Liddell both assigned the Letter of
Intent no value. But this argument does not demonstrate that the
trial court’s credibility determination was clearly erroneous. The
court decided, as the finder of fact, that assigning a value of
$475,000 to the Letter of Intent made Cook less credible than the
other experts who assigned the Letter of Intent no value at all.
Although it is admittedly inconsistent for the trial court to
criticize Liddell for assigning the Letter of Intent no value and to
not criticize Jorgensen for doing the same thing, this
inconsistency does not demonstrate that, in the trial court’s
“significant discretion to assign relative weight to the evidence
before it,” see Lohman, 2012 UT App 337, ¶ 9, it was against the
clear weight of the evidence to find Cook even less credible for
valuing the Letter of Intent at $475,000. There is a reasonable
basis to conclude that Cook lacked credibility for overvaluing
the Letter of Intent. Therefore, the court’s finding on Cook’s
credibility is not clearly erroneous. See AmericanWest Bank v.
Kellin, 2015 UT App 300, ¶ 25, 364 P.3d 1055; see also id. ¶¶ 27–28
(explaining that the trial court was not required to disregard an
expert’s testimony altogether where it found issues with parts of
that expert’s testimony).

¶33 No extrinsic evidence was presented on the absolute
value of the Letter of Intent. Instead, each expert explained why
he did or did not assign value to it. In determining what weight
to give competing experts, “[f]act finders are not required to
divorce themselves of common sense, but rather should apply to
facts which they find proven such reasonable inferences as are
justified in the light of their experience as to the natural
inclinations of human beings.” M.K. v. Doyle, 2014 UT App 160,
¶ 7, 330 P.3d 1278 (citation, and internal quotation marks

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           SA Group Properties v. Highland Marketplace

omitted). A reasonable fact finder could conclude that a promise
executed by a party with no authority to make the promise is no
promise at all. The Letter of Intent illustrates what potential
investment the lot could support, but that illustration goes only
so far. Given that the Letter of Intent was signed by Highland—
as landlord—when it no longer owned the land, the trial court
concluded that it provided only marginal value. In the trial
court’s view, Cook’s nearly half-million-dollar valuation was not
marginal. And given Highland’s incentive to show that the
foreclosed property had a high fair market value, see supra ¶ 3
note 2, and the fact that the Letter of Intent was signed just days
before the foreclosure sale, a reasonable fact finder could
conclude that the Letter of Intent was essentially a ploy and an
attempt to manufacture evidence to artificially inflate any
market value analysis. This finding alone demonstrates a
“reasonable basis in the record to support” the trial court’s
finding that Cook was not credible, and thus the trial court’s
credibility determination is not “clearly erroneous.” See
AmericanWest Bank, 2015 UT App 300, ¶ 25 (citations and internal
quotation marks omitted).

¶34 Of course, the trial court did not rest its determination of
Cook’s credibility solely on his valuation of the Letter of Intent.
The trial court relied on several other factors that are reasonably
supported by the record and weigh against Cook’s credibility.
The court explained that Cook valued the Anchor Pad relying on
the assumption that it would function as multi-unit housing, an
assumption the trial court found unreasonable. The court found
that this unsubstantiated assumption demonstrated that Cook’s
valuation was based on unsupported and unreliable facts.
Highland argues that the trial court committed clear error by
relying on this finding.

¶35 Highland points out that Cook and Jorgensen testified
that Cook correctly appraised the Anchor Pad. However, Cook
also testified that he valued the property as multi-unit housing,
saying that he “started down that road . . . [and] just sort of

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           SA Group Properties v. Highland Marketplace

finished it on that basis.” At best, the evidence here is
conflicting, and finding one way or the other is within the trial
court’s discretion and not against the clear weight of the
evidence. See Lohman v. Headley, 2012 UT App 337, ¶ 9, 293 P.3d
380 (“When the evidence is susceptible to more than one
interpretation, the [trial] court, as the fact finder, is to consider
the evidence and has significant discretion to assign relative
weight to the evidence before it.”). It is not error for the trial
court to criticize Cook for this conclusion where the Anchor Pad
was not equipped for, nor was there any indication from
Highland City that the Anchor Pad would ever be zoned for,
multi-unit housing. Therefore, we are not convinced that this
finding was against the clear weight of the evidence or that a
mistake was made.

¶36 Highland argues that the trial court erred in finding that
Cook used a land residual technique in his valuation. We
disagree. The trial court’s finding rested, in part, upon
Jorgensen’s testimony that Cook used the land residual
technique. However, Highland ignores the full context of this
testimony. Jorgensen testified on cross-examination that Cook
used “a slightly different technique” than the land residual
technique and that Jorgensen used the same methodology of
valuing the Walgreens lot. Jorgensen characterized the technique
Cook used as “still a land residual technique,” and explained
that “all land residual techniques . . . have that same problem.” It
was therefore the general approach and its failings that
undermined the trial court’s confidence in Cook’s analysis.
Again, “[w]hen the evidence is susceptible to more than one
interpretation, the [trial] court, as the fact finder, is to consider
the evidence and has significant discretion to assign relative
weight to the evidence before it.” Id. In light of this testimony,
we see no clear error in finding that, even if the technique Cook
used was slightly different from a traditional land residual
technique, the method was a type of land residual technique.
And while Highland makes much of Jorgensen’s concession that
the same critique could be applied to his “incremental value

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           SA Group Properties v. Highland Marketplace

enhancement” in the Walgreens lot, the trial court has
“significant discretion to assign relative weight to the evidence
before it,” id. It is not against the clear weight of the evidence to
find that Cook’s valuation of the Property was overall less
credible than Jorgensen’s valuation. Instead, this is a classic case
of a fact finder determining the relative weight to give
competing expert testimony.

¶37 Lastly, the trial court examined several assumptions Cook
relied on and concluded that he did not appraise the Property
“as is.” We have reviewed the record and conclude that, in great
part, evidence exists to support the trial court’s findings. The
assumptions criticized by the trial court are

       (1) the relied-upon letter of intent would be
       executed and that a “Jack in the Box” would be
       constructed; (2) the zoning of the anchor pads
       would be changed; (3) a Walgreens would be
       timely constructed; (4) Pad I would be subdivided
       into two parcels; (5) the fitness club lease would be
       terminated; (6) the fitness space lease would be
       converted to retail space; and (7) the entire project
       would be leased to stabilized occupancy.

¶38 It is important to note that Highland does not rebut in any
meaningful way on appeal the assumptions numbered (1), (5),
and (6). The trial court’s finding that the Letter of Intent would
be executed and that a Jack in the Box would be constructed is
only rebutted by Highland’s argument that “evidence irrefutably
establishes that the [Letter of Intent] had already been executed.”
This argument ignores that the finding criticized Cook’s
assumption that the Letter of Intent would be acted upon and
the restaurant would be constructed. For the reasons previously
outlined, there was ample reason to believe that the Letter of
Intent was essentially a ploy and an attempt to manufacture
evidence to artificially inflate any market value analysis.
Highland similarly fails to rebut the trial court’s findings that

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           SA Group Properties v. Highland Marketplace

Cook assumed unreasonably that “the fitness club lease would
be terminated” and that “the fitness space lease would be
converted to retail space.” Appellate courts “may accept
unchallenged findings of fact as true.” See Bel Courtyard Invs., Inc.
v. Wolfe, 2013 UT App 217, ¶ 23, 310 P.3d 747. These findings
stand unchallenged and weigh in favor of the trial court’s
ultimate determination that Cook’s appraisal was unreliable.

¶39 Assumption (2), the Anchor Pad’s zoning status, has
already been discussed. See supra ¶ 35. We decided that the trial
court’s findings were not against the clear weight of the evidence
in concluding that Cook lacked credibility in treating the Anchor
Pad as a multi-unit development. That analysis applies here and
also weighs in favor of the court’s determination that Cook’s
appraisal was not “as is.”

¶40 Continuing, assumptions (3) and (4) are reasonably open
to criticism. Assumption (3)—that the Walgreens would be
completed—was adequately explained away by the trial court.
The court did not necessarily doubt that Walgreens intended
ultimately to build, but the court took issue with Cook assuming
that the store would be completed “as of the effective date of the
appraisal.” There was no direct evidence that this would occur,
and the trial court could, and apparently did, conclude that
Cook’s assumption in this regard was unreasonably optimistic.
As for assumption (4)—that Pad I would be subdivided—the
court had a basis to conclude that Pad I had value, but that since
it was not subdivided, to assume a subdivision would occur
would artificially inflate the valuation. See supra ¶ 10 and note 6.
Where Jorgensen testified that one should not assume the
subdivision and where Cook testified that one could make that
assumption, the trial court as fact finder was within its discretion
to adopt the reasoning of one expert over another.

¶41 This leaves assumption (7)—that “the entire project
would be leased to stabilized occupancy.” It appears that all
experts assumed the entire project would eventually be leased to

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           SA Group Properties v. Highland Marketplace

stable occupancy. Therefore, as to this single finding the trial
court may have erred in rejecting this assumption.8 But in light
of the overwhelming findings supported by the evidence, we
cannot conclude that this single assumption would have induced
the trial court to adopt Cook’s valuation instead of Jorgensen’s.
The conclusion remains: the record contains an adequate basis
for the trial court to determine that Cook’s valuation lacked
credibility and was less reliable than Jorgensen’s valuation.
Again, the trial court “has significant discretion to assign relative
weight to the evidence before it,” Lohman v. Headley, 2012 UT
App 337, ¶ 9, 293 P.3d 380, and we cannot say that the trial
court’s findings are against the clear weight of the evidence.

                          CONCLUSION

¶42 We conclude that the trial court did not err when it
determined that Highland’s motion to amend was untimely and
unjustified. We further conclude that the trial court did not err
when it rejected Highland’s expert’s opinion and instead
adopted SA Group’s expert’s opinion on the fair market value of
the Property. There is a reasonable basis in the evidence to
support the trial court’s findings, and thus the findings were not
clearly erroneous.

¶43    Affirmed.

8. Although it is also plausible that the trial court believed all
experts were wrong in this regard.

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