Can a party challenge contracts between third parties without standing? Harman v. 105 Partners Explained

The Utah Court of Appeals addressed important questions about third-party standing and specific performance in real estate disputes in Harman v. 105 Partners, a case involving competing claims to the same property.

Background and Facts

Two real estate developers sought to purchase the same downtown Provo property. 105 Partners had entered a 2014 Contribution Agreement with the Trust Defendants (the property owners), but failed to fulfill conditions for years. In 2020, Harman signed a Real Estate Purchase Contract (REPC) with the Trust Defendants for $500,000. When 105 Partners sued to enforce their agreement, they settled with the Trust Defendants and received title for $375,000. Harman then sued both parties, raising seven claims seeking to invalidate the partnership between 105 Partners and the Trust Defendants while pursuing specific performance of his own contract.

Key Legal Issues

The court addressed whether Harman had standing to challenge contracts between third parties, whether his claims became moot after buildings on the property were demolished during the appeal, and whether he could obtain specific performance despite failing to tender the purchase price and other alleged contractual deficiencies.

Court’s Analysis and Holding

The court held that Harman’s claims were not moot because he could still obtain specific performance with abatement for the remaining land, citing Kelley v. Leucadia Financial Corp. On standing, the court affirmed dismissal of Harman’s “Partnership Claims,” ruling he lacked a legally protectable interest in asserting claims between 105 Partners and the Trust Defendants. However, the court reversed dismissal of his specific performance claim under the REPC, finding the district court failed to address Harman’s preserved futility defense regarding his failure to tender payment. The court also reversed dismissal of Harman’s quiet title claim but affirmed dismissal of his claim under Utah’s Recording Act because he had not yet received title to the property.

Practice Implications

This decision reinforces that parties cannot challenge contracts between third parties without demonstrating a legally protectable interest in asserting such claims. However, it also demonstrates the importance of preserving equitable defenses like futility when facing specific performance challenges. The court’s analysis of mootness in the context of partial specific performance provides valuable guidance for practitioners handling real estate disputes where property conditions change during litigation.