What happens when trial courts fail to make adequate findings of fact? Interstate Income Properties v. La Jolla Loans Explained

In Interstate Income Properties v. La Jolla Loans, the Utah Court of Appeals addressed the critical requirement that trial courts make adequate findings of fact and conclusions of law, even when parties fail to properly preserve their objections to inadequate findings.

Background and Facts

Interstate Income Properties claimed it validly transferred property known as “Pad A” to BRB-5 LLC in 1997, before BRB-5 was formally organized. In 2007, D. Gregory Hales, purporting to act as Interstate’s vice president, executed a quitclaim deed attempting to transfer the same property to Carlsbad Development entities, which then secured a $3,245,000 loan from La Jolla Loans using the property as collateral. Interstate sought to nullify La Jolla’s trust deeds as wrongful liens, arguing that Interstate no longer owned the property after the 1997 transfer.

Key Legal Issues

The case presented complex issues regarding the validity of property transfers to unformed entities, the authority to execute deeds, and the application of Utah’s wrongful lien statute. La Jolla challenged the 1997 deed’s validity on grounds that BRB-5 didn’t exist when the deed was executed and that Barbara Busch lacked proper authority or didn’t sign in a representative capacity.

Court’s Analysis and Holding

The trial court ruled that La Jolla’s trust deeds should be declared “void ab initio” and awarded Interstate attorney fees, but provided only a brief oral ruling without detailed findings. The Utah Court of Appeals found the trial court’s findings of fact and conclusions of law inadequate for meaningful appellate review. The court could not determine whether the trial court relied on theories of delayed delivery, preformation activities, or other legal grounds to validate the 1997 deed.

Practice Implications

This decision reinforces that trial courts must make findings on all material issues and explain the legal basis for their conclusions. While parties who fail to object to inadequate findings may waive their right to challenge the detail of those findings, appellate courts retain the authority to remand when the inadequacy prevents effective review. The case demonstrates the importance of requesting specific findings during trial proceedings and highlights the risks of participating in drafting orders without preserving objections to their adequacy.