Can forbearing from a lawsuit constitute valid consideration in Utah? Mortensen v. Mortensen Explained

The Utah Court of Appeals recently addressed whether forbearance from pursuing potential litigation can constitute valid consideration for a contract, even when the underlying claims may lack merit. In Mortensen v. Mortensen, 2025 UTApp 8, the court affirmed that good faith forbearance is sufficient consideration under Utah law.

Background and Facts

Three brothers—Matthew, Makay, and Mayne Mortensen—became embroiled in an inheritance dispute after their father Larry died. During his lifetime, Larry had repeatedly promised his sons that his estate would be divided equally among them. He made similar promises to their mother Melony during divorce proceedings, leading her to make significant concessions regarding marital property. However, Larry secretly executed wills in 2007 and 2011 that left substantially everything to Mayne, with Matt and Makay receiving only $5,000 each and some firearms.

After learning of their disinheritance, the family held numerous discussions to resolve the problem. To avoid litigation and address his brothers’ concerns, Mayne promised to split equally any proceeds from the sale of inherited real property. Matt and Makay agreed and performed their obligations by forgoing their challenges to Larry’s bequeathment. However, when Mayne later sold property for $2 million and used the proceeds in a 1031 exchange without sharing, Matt and Makay sued for breach of contract.

Key Legal Issues

The court addressed three primary issues: (1) whether the brothers’ oral agreement was supported by valid consideration; (2) whether the district court made adequate findings regarding contract terms; and (3) whether a 1031 exchange excused Mayne’s obligation to distribute proceeds.

Court’s Analysis and Holding

On the consideration issue, the court applied Utah precedent establishing that forbearance can constitute valid consideration when there is a “bona fide dispute” made in “good faith.” Citing Golden Key Realty, Inc. v. Mantas, the court emphasized that such disputes “need not be well-founded, so long as [they are] in good faith.” The court found that Matt and Makay had good faith beliefs in their claims based on their father’s promises and their potential status as third-party beneficiaries of promises made during the divorce.

Regarding the 1031 exchange, the court rejected Mayne’s argument that the tax-deferred transaction excused his obligation. The brothers were entitled to “proceeds derived from the real property,” and the $2 million in proceeds existed regardless of Mayne’s subsequent decision to use them in an exchange. The court noted that Matt and Makay were not obligated to participate in Mayne’s chosen investment strategy.

Practice Implications

This decision reinforces that Utah courts take a broad view of what constitutes sufficient consideration, particularly in family dispute contexts. The case also demonstrates the importance of timing when challenging the adequacy of findings—such challenges must be raised after the court issues its final ruling to afford the trial court an opportunity to correct any deficiencies. The court declined to address Mayne’s adequacy challenge because it was not properly preserved.