                                                                FILED
                                                    United States Court of Appeals
                                PUBLISH                     Tenth Circuit

               UNITED STATES COURT OF APPEALS February 19, 2015
                                                        Elisabeth A. Shumaker
                           TENTH CIRCUIT                    Clerk of Court


E. JEFFREY DONNER; JUDEE M.
DONNER,

           Plaintiffs - Appellants,
v.                                              No. 13-4057


JACK NICKLAUS; JACK
NICKLAUS GOLF CLUB, LLC,

           Defendants - Appellees.


             Appeal from the United States District Court
                       for the District of Utah
                    (D.C. No. 2:11-CV-00489-CW)


Justin T. Toth, Ray Quinney & Nebeker P.C., Salt Lake City, Utah
(Greggory J. Savage, Ray Quinney & Nebeker P.C., Salt Lake City, Utah,
with him on the brief) for Plaintiffs-Appellants E. Jeffrey Donner and
Judee M. Donner.

Alan Bradshaw, Manning Curtis Bradshaw & Bednar LLC, Salt Lake City,
Utah (Brent V. Manning and Aaron C. Garrett, Manning Curtis Bradshaw &
Bednar LLC, Salt Lake City, Utah, and Patrick A. Shea, Patrick A. Shea,
P.C., Salt Lake City, Utah, and Jacque M. Ramos, J. Ramos Law Firm
P.L.L.C., Salt Lake City, Utah, with him on the brief) for Defendants-
Appellees Jack Nicklaus, and Jack Nicklaus Golf Club, LLC.


Before BRISCOE, Chief Judge, KELLY, and BACHARACH, Circuit
Judges.
BACHARACH, Circuit Judge.

      This appeal grew out of a plan to build a luxurious golf course and

development. The golf course would be designed by legendary golfer Jack

Nicklaus, who would have a house in the development and serve as a

member. Mr. Nicklaus joined the developer to solicit investors, lending his

name in exchange for millions of dollars.

      Mr. Nicklaus’s participation allegedly led a married couple (Jeffrey

and Judee Donner) to invest $1.5 million in the development. But, plans

went awry: The developer’s parent company went bankrupt, and the

developer was not able to build the golf course or development. The

Donners settled with the developer’s parent company in its bankruptcy

proceedings and sued Jack Nicklaus and Jack Nicklaus Golf Club, LLC for

intentional misrepresentation, negligent misrepresentation, and violation of

the Interstate Land Sales Full Disclosure Act, 15 U.S.C. §§ 1701-20

(2006). The district court dismissed the action, holding in the alternative:

      1.    The complaint failed to state a valid claim for relief.

      2.    The defendants were entitled to summary judgment because the
            Donners elected their remedies by entering into a settlement
            agreement with other parties.

On appeal, we must decide five issues:

      1.    Timeliness of Claims. The defendants argue that the tort
            claims are untimely under state law. But, the defendants
            waived this argument in district court by waiting to raise the
            argument in their reply brief. Because the defendants have
            waived the timeliness argument, we will not consider it.

                                      2
     2.    Interstate Land Sales Full Disclosure Act. The district court
           dismissed the claims under the Interstate Land Sales Full
           Disclosure Act because the Donners’ purchase of a charter
           membership did not concern a “lot.” We agree, concluding that
           the alleged misrepresentations did not involve a specific,
           identifiable tract. In the absence of a “lot” (as this term is used
           in the statute), we affirm the dismissal of the statutory claims.

     3.    Claims Involving Intentional Misrepresentation. The district
           court concluded that the Donners have not adequately alleged
           claims involving intentional misrepresentation. We conclude
           that the Donners have adequately alleged misrepresentation of
           Mr. Nicklaus’s membership status; thus, we reverse the
           dismissal of this claim. But, the Donners have not adequately
           alleged the remaining claims of intentional misrepresentation.
           Those claims were properly dismissed.

     4.    Claims Involving Negligent Misrepresentation (Economic
           Loss Doctrine). The defendants argue that the negligent
           misrepresentation claims are barred by the economic loss
           doctrine. We agree. The charter membership agreement covers
           the subject matter of the dispute, and the Donners have not
           alleged the factual basis for a duty outside of that agreement.
           As a result, we uphold dismissal of the negligent
           misrepresentation claims.

     5.    Election of Remedies. In an alternative ruling, the district
           court granted summary judgment to the defendants on the
           ground that the Donners had elected their remedies through
           their settlement agreement with the developer’s parent
           company. We disagree with the district court because the
           settlement agreement did not include the defendants and the
           Donners neither affirmed nor repudiated a contract. Thus, we
           reverse the summary judgment ruling.

I.   The Donners’ Investment

     To address these issues, we must understand what the Donners

allegedly read and relied on when they paid $1.5 million.



                                      3
      A.    The Mount Holly Club

      In 2002, a group formed, calling itself “Mount Holly Club L.L.C.,”

and set out to develop an exclusive private ski and golf resort in Utah. The

club’s showcase would be a golf course designed by legendary golfer Jack

Nicklaus.

      B.    Jack Nicklaus’s Anticipated Role in the Development

      Beginning in 2006, the developer worked with Mr. Nicklaus to

develop the golf course and market the club.

      As part of this effort, the developer entered into a contract with Mr.

Nicklaus’s golf-course design company: The design company agreed to

build the golf course, and the developer obtained the right to use the

Nicklaus brand 1 and promote Mr. Nicklaus’s involvement. With this right,

the developer issued Mr. Nicklaus an “honorary Founder Membership” in

the club.

      Shortly thereafter, the developer expanded its relationship with Mr.

Nicklaus by entering into a licensing agreement with another company of

his, Nicklaus Golf. The licensing agreement allowed the developer to use

the Nicklaus brand to advertise and promote membership in the golf club

and the development.



1
     The Nicklaus brand includes certain trademark rights in the name and
phrase “Jack Nicklaus Golf Club™” and its Golden Bear™ logo. Aplt.
App. at 69.
                                      4
     C.    Marketing Materials

     Following execution of the agreements, the developer joined Mr.

Nicklaus and Nicklaus Golf to market the new venture. These marketing

efforts included a press release and a brochure.

     1.    The Press Release

     The press release was issued by the developer and Nicklaus

Golf. This document highlighted Mr. Nicklaus’s involvement and

included a quotation by Mr. Nicklaus, reflecting his enthusiastic

decision to become a “founding charter member”: “When I walked

Mt. Holly Club, I was so captured by its potential [that] I thought

through all 18 holes. In fact, I have been so impressed with the club

and its management team that I became a founding charter member.”

Aplt. App. at 88 (emphasis added).

     2.    The Brochure

     After issuing the press release, the developer and the defendants

created a full-color marketing brochure entitled: “Mt. Holly Club and Jack

Nicklaus Invite You to Become a Charter Member.” Id. at 105-07.

Immediately below this invitation was a quotation from Mr. Nicklaus:

     Mt. Holly Club enjoys the ideal alpine setting. I knew from my
     first visit there that we had been given a canvas on which to
     design a truly spectacular golf course. I am so impressed with
     the Mt. Holly Club and its management team that I became a
     founding charter member. I look forward to seeing you there.



                                      5
Id. at 107 (emphasis added). Immediately following that statement, the

brochure stated that “Charter Memberships can be acquired for [a] $1.5

million entry fee.” Id. (emphasis in original omitted).

      D.    The Charter Membership Agreement

      The Donners allegedly saw the press release and brochure and

decided to buy a charter membership. For this charter membership, the

Donners paid $1.5 million and signed a charter membership agreement.

      Under this agreement, the developer issued the Donners an estate lot

certificate. The certificate could eventually be redeemed for an estate lot

when it became available.

      E.    The Filing of Bankruptcy and the Settlement Agreement

      The developer’s parent company filed bankruptcy. With the filing of

bankruptcy, the Donners settled with the parent company, obtaining a lot

near the ski area and the right to trade that property for a lot in the

development once it is platted. And, if the golf club and ski area are

eventually developed, the Donners would be entitled to memberships.

      F.    The Donners’ Lawsuit

      The Donners sued Mr. Nicklaus and Nicklaus Golf for intentional

misrepresentation, negligent misrepresentation, and violation of the

Interstate Land Sales Full Disclosure Act.




                                       6
      The central claim is that Mr. Nicklaus induced purchase of a charter

membership through material misrepresentations and omissions in the

marketing materials.

      The district court concluded that

      ●    the Donners had failed to state plausible tort claims,

      ●    the Donners were not entitled to relief under the Interstate
           Land Sales Full Disclosure Act, and

      ●    the Donners could not recover damages because they had
           already elected other remedies through settlement.

With these conclusions, the court alternatively dismissed the action under

Fed. R. Civ. P. 12(b)(6) and granted summary judgment to the defendants

under Fed. R. Civ. P. 56. This appeal followed.

II.   Consideration of the Motion to Dismiss

      We uphold the dismissal except on the claim involving intentional

misrepresentation of Mr. Nicklaus’s membership status.

      A.   Standard of Review

      To survive a motion to dismiss, a complaint must contain enough

factual matter to state a plausible claim. Slater v. A.G. Edwards & Sons,

Inc., 719 F.3d 1190, 1196 (10th Cir. 2013). We engage in de novo review

of the dismissal. Sutton v. Utah State Sch. for Deaf and Blind, 173 F.3d

1226, 1236 (10th Cir. 1999).




                                     7
      B.      Timeliness

      The defendants argue that the tort claims are untimely under Utah

Code Ann. § 78B-2-305(3) (2011), which provides that “[a]n action may be

brought within three years . . . for relief on the ground of fraud or

mistake.” This argument has been waived.

      In district court, the defendants raised the timeliness argument for

the first time in a reply brief. That was too late because the District of

Utah does not allow parties to assert new arguments in a reply brief. See

Rios-Madrigal v. United States, Nos. 2:08-cv-257 CW, 2:05-cr-691, 2010

WL 918087, at *3 (D. Utah Mar. 9, 2010) (“Because this argument was

raised for the first time in Rios’ reply brief, the argument is waived.”); see

also DUCiv R 7-1 (stating that reply memoranda “must be limited to

rebuttal of matters raised in the memorandum opposing the motion”). In

light of the waiver, we will not consider the defendants’ argument on

timeliness.

      C.      Claims Under the Interstate Land Sales Full Disclosure Act

      The Donners also argue that the district court erroneously dismissed

their claims under the Interstate Land Sales Full Disclosure Act, 15 U.S.C.

§ 1701 et seq. (2006). According to the Donners, they bought a lot based

on Mr. Nicklaus’s fraudulent representations. We reject this argument: The

statute addresses misrepresentations concerning the sale of a “lot,” and Mr.



                                       8
Nicklaus’s alleged misrepresentations did not involve a “lot.” 15 U.S.C.

§ 1703(a)(2) (2006).

      The district court drew a similar conclusion, 2 and we engage in

de novo review. United States v. Porter, 745 F.3d 1035, 1040 (10th

Cir. 2014).

      We conduct this review based on the events described in the

amended complaint. There, the Donners allege that when they bought a

charter membership, they were promised an estate lot certificate rather

than a specific parcel of land. The Donners could redeem the certificate for

a specific parcel once the land was platted and available lots were

designated. But, the certificate did not refer to a specific parcel. To the

contrary, the certificate imposed three limitations on a purchase:

      1.      The Donners could redeem the certificate within a certain
              time period; if the Donners chose not to “select and purchase”
              an available lot within that period, the certificate would expire.

      2.      The Donners’ right to select an available lot for purchase was
              subject to the prior right (if any) of other charter members.



2
      The district court also concluded that

      ●       the Donners had not sufficiently alleged any
              misrepresentations or omissions, and

      ●       the defendants had not qualified as “developers or agents”
              under the statute.

We need not address these conclusions because we conclude that the
Donners’ purchase did not involve a “lot.”
                                        9
      3.    If the Donners chose to redeem the certificate and to buy an
            available lot, the purchase would be “effected pursuant to a real
            estate purchase contract containing customary terms and
            conditions.”

Aplt. App. at 231, 236-37.

      Because the development was never completed, no lots were platted

for the Donners to purchase. Thus, the Donners never had an opportunity to

redeem their certificate.

      The resulting issue is whether the Donners’ allegations fit the statute.

The statute prohibits misrepresentation “with respect to the sale . . . or

offer to sell . . . any lot” that does not fall within an exemption. Interstate

Land Sales Full Disclosure Act, 15 U.S.C. § 1703(a)(2) (2006). The parties

disagree about whether the alleged misrepresentations pertain to a “lot.”

      The term is undefined in the statute, 15 U.S.C. § 1701 et seq. (2006).

Winter v. Hollingsworth Props., Inc., 777 F.2d 1444, 1447 (11th Cir.

1985). In the absence of a statutory definition, the scope is ambiguous.

One can reasonably interpret the statutory reference to a “lot” to mean a

specifically defined parcel of land. 3 But, one could also reasonably



3
      This interpretation of the term “lot” is consistent with the definition
of local officials in the pertinent county (Beaver). Beaver County’s zoning
ordinances defined the term “lot” as

      A parcel . . . of land . . . by metes and bounds and held or
      intended to be held in separate lease or ownership; or a unit of
      land shown as a lot or parcel on a recorded subdivision map; or
      a unit of land shown on a plat used in the lease or sale or offer
                                       10
interpret the statute to refer to any piece of land, whether specifically

defined or not. Thus, the Donners do not question the ambiguity of the

statute.

      Instead, the Donners rely on a regulation adopted by the agency

administering the statute (the Consumer Financial Protection Bureau). This

agency interpreted the term “lot” to mean “any portion, piece, division,

unit, or undivided interest in land . . . if the interest include[d] the right to

the exclusive use of a specific portion of the land.” 12 C.F.R. § 1010.1(b)

(2007). The Donners do not question the validity of this regulatory

definition. See Chevron, U.S.A. v. Nat. Res. Def. Council, 467 U.S. 837,

842-44 (1984). Instead, they rely on this definition.

      The resulting issue is whether the Donners were promised something

that fit the agency’s definition of a “lot.” This definition contains a string

of three prepositional phrases:


      of lease or sale of land resulting from the division of a larger
      tract into two (2) or more smaller units.

Zoning Ordinances of Beaver County § 10.02.060(85) (Apr. 1993). The
county’s subdivision ordinances provided a similar definition of “lot”:

      [A] parcel of real property with a separate and distance number
      or other designation shown on a plat or a parcel of real
      property delineated on an approved map of a record of survey,
      split or sub-parceling map as filed in the office of the County
      Recorder and intended as a unit for building development or
      transfer of ownership.

Beaver County Subdivision Ordinance ch. 10(14) (1996).
                                       11
        ●     “to the exclusive use”

        ●     “of a specific portion” and

        ●     “of the land.”

The first phrase (“to the exclusive use”) narrows the statute to cover

representations about a unit of land available for the plaintiff’s exclusive

use. The following two prepositional phrases serve to define that unit of

land.

        The phrase “of the land” is clear. This phrase refers either to the

development as a whole or to some larger area.

        The regulation defines “lot” based on a “specific portion” of the

land. Thus, the term “lot” must refer to a specific portion of the

development or some larger area.

        With this regulatory definition of “lot,” the statute cannot be

stretched to cover the defendants’ alleged misrepresentations. Those

misrepresentations concerned what the Donners would eventually receive

for their investment, but did not refer to a “specific portion” of land that

would be subject to the Donners’ exclusive use. Thus, even if the Donners’

allegations were true, they would not fit the regulatory definition of the

statutory term “lot.” 4


4
      The record on appeal contains a proposed plat among the Donners’
settlement documents. This document does not affect our analysis. When
the Donners invested $1.5 million, they acknowledged that they would
receive only an estate lot certificate. Aplt. App. at 37. This certificate does
                                       12
      We are guided not only by the regulatory definition, but also by the

larger statutory context. See In re BDT Farms, Inc., 21 F.3d 1019, 1021

(10th Cir. 1994) (examining “the larger statutory context” to interpret the

statute). The statutory prohibition is phrased in the present tense, covering

misrepresentations or omissions with respect to a “lot” already in

existence, not one to be designated later. Thus, a misrepresentation or

omission falls under the statute only if it involves exclusive use of a

specific, identifiable portion of land.

      The Donners’ claim does not involve a specific portion of land that

was identifiable at the time of the alleged misrepresentations. In their

opening brief, the Donners argue that they could select their “lot” “once

the final resort [was] finalized.” Plaintiffs’ Opening Br. at 51-52. This

argument is self-defeating: The promise could not involve a specific

portion of the land if it could not have been selected until a future event

took place (finalization of the plat).

      The portion of land would presumably be identifiable later, when the

plat was finalized. But, we know from other parts of the statute that it

applies only when the portion of land is identifiable at the time of the

misrepresentations. For example, the statute exempts subdivisions

containing fewer than 25 “lots.” 15 U.S.C. § 1702(a)(1) (2006). Under the

not constitute a legal title to a specific lot within the development.
Therefore, no one could have identified the Donners’ eventual lot at the
time of the alleged misrepresentations.
                                         13
Donners’ interpretation, no one could determine whether the exemption

applies until the development is eventually platted. If the plat ultimately

contains fewer than 25 identifiable parcels (“lots”), Mr. Nicklaus’s

representations could be exempt from the statute. If the plat ultimately

contains 25 or more identifiable parcels, Mr. Nicklaus’s representations

would not be exempt. One can apply the exemptions only by being able to

count the lots in the subdivision at the time of the representation. See

Bodansky v. Fifth on Park Condo, LLC, 635 F.3d 75, 83 (2d Cir. 2011)

(holding that a different exemption in the statute, one covering 100 or

more “lots,” is based on the number of lots existing when the contract is

signed); Nahigian v. Juno-Loudon, LLC, 677 F.3d 579, 587-89 (4th Cir.

2012) (holding that the 100-lot exemption does not include future sales of

lots); Nickell v. Beau View of Biloxi, L.L.C., 636 F.3d 752, 756-57 (5th

Cir. 2011) (holding that the 100-lot exemption is based on the number of

lots existing when the contract is signed).

      Against the backdrop of the regulatory definition and statutory

context, the Donners argue that their claim fits the statute’s broad remedial

purpose. But, “Congress did not . . . intend that [the Interstate Land Sales

Full Disclosure Act] regulate all sales of real property.” Long v. Merrifield

Town Ctr. L.P., 611 F.3d 240, 245 (4th Cir. 2010). Thus, to determine

which types of real property Congress intended to cover, we assume “that

the legislative purpose is expressed by the ordinary meaning of the words

                                     14
used.” Richards v. United States, 369 U.S. 1, 9 (1962). Applying the

ordinary meaning of the words and the larger statutory context, we

conclude that the alleged misrepresentations did not pertain to a “lot.” That

is true even if Congress had broad remedial objectives.

      We hold that the Donners have not stated a valid claim under the

Interstate Land Sales Full Disclosure Act. Given this holding, we affirm

the dismissal of the statutory claims.

      D.    Claims Involving Intentional Misrepresentation Under
            State Law

      In the amended complaint, the Donners assert that Mr. Nicklaus and

Nicklaus Golf made three false statements:

      1.    Mr. Nicklaus is a “charter member” of Mount Holly and, as a
            charter member, paid the $1.5 million purchase price for that
            membership.

      2.    Mount Holly was an existing facility that had development
            approval and would continue to achieve certain development
            benchmarks.

      3.    The developer had the authority to convey legal title when the
            Donners bought a charter membership.

The Donners also allege a failure to disclose that one of the developer’s

executives was a convicted felon.

      We conclude that the Donners have adequately alleged intentional

misrepresentation of Mr. Nicklaus’s membership status. Thus, we reverse

the dismissal of that claim. But, we affirm the dismissal of the remaining

claims of intentional misrepresentation.

                                     15
     1.    Elements of the Claims Involving Intentional
           Misrepresentation

     A misrepresentation claim involves

     ●     a representation about a material fact

     ●     that was false

     ●     that the defendant knew was false or recklessly made without
           enough knowledge

     ●     to induce another party to act

     ●     and the other party acted in reasonable reliance and
           without knowing of the falsity

     ●     to that party’s injury.

Utah v. Apotex Corp., 282 P.3d 66, 80 (Utah 2012).

     2.    Mr. Nicklaus’s Membership Status

     The Donners allege that Mr. Nicklaus falsely represented that he was

a charter member by stating: “I have been so impressed with the club and

its management team that I became a founding charter member.” Aplt. App.

at 25. This representation allegedly influenced the Donners, who claim

they spent $1.5 million for a charter membership in part because they

believed Mr. Nicklaus had also paid $1.5 million for the same type of

membership.

     We conclude that the Donners have adequately alleged that

Mr. Nicklaus misrepresented that he was a charter member. At this stage of




                                     16
the proceedings, we look only to the amended complaint, and the Donners

have adequately pleaded:

     ●     Mr. Nicklaus represented that he was a charter member of
           Mount Holly.

     ●     By stating he was a “charter member,” Mr. Nicklaus implied
           that he had paid the $1.5 million purchase price for that
           membership.

     ●     Mr. Nicklaus’s representation was false because he was not a
           charter member and had not paid $1.5 million.

     ●     The Donners reasonably relied on the representation by
           purchasing a charter membership.

     a.    Charter Membership

     The Donners have adequately pleaded that Mr. Nicklaus held himself

out as a charter member.

     In the brochure attached to the amended complaint, Mr. Nicklaus

states that he is a “charter member” immediately between (1) inviting the

Donners to “become a charter member” and (2) explaining how the

Donners can acquire a “charter membership.” Aplt. App. at 105-07. 5




5
    Mr. Nicklaus also says in the press release that he is a charter
member. Aplt. App. at 88.
                                    17
In this context, the Donners have plausibly alleged that Mr. Nicklaus held

himself out as a charter member.

     The defendants argue that Mr. Nicklaus’s statement constitutes an

opinion, which cannot serve as the basis for a claim of intentional

misrepresentation. This argument is based on the first half of the statement

(that Mr. Nicklaus was impressed with the Mount Holly Club and its



                                     18
management team). The defendants contend that Mr. Nicklaus’s

“impression” involves an opinion rather than a fact.

     The defendants are correct about Mr. Nicklaus’s impressions. See

Berkeley Bank for Coops. v. Meibos, 607 P.2d 798, 805 (Utah 1980). But

Mr. Nicklaus stated more than his impressions; he stated that he was so

impressed that he became a “charter member.” And Mr. Nicklaus’s

declaration of a “charter membership” is a representation of present fact

that goes beyond his opinion.

     b.    $1.5 Million Purchase Price

     The Donners also allege that Mr. Nicklaus implied that he had paid

the $1.5 million price for a charter membership.

     The marketing brochure states:

     1.    A charter membership costs $1.5 million.

     2.    Mr. Nicklaus was a charter member.

Aplt. App. at 107. Thus, a fact-finder could reasonably infer that Mr.

Nicklaus was implying that he had paid the $1.5 million purchase price for

his charter membership.

     c.    False Representation

     The Donners have also adequately pleaded that the representation

was false because Mr. Nicklaus was not a charter member.

     The defendants argue that Mr. Nicklaus’s statement is true because

he was an “honorary founding member” of Mount Holly. But, a fact-finder

                                      19
could reasonably distinguish between Mr. Nicklaus’s honorary status as a

“founding member” and a charter membership. The brochure describes a

charter membership based on the $1.5 million purchase price.

Mr. Nicklaus’s “founding membership” was “honorary,” meaning he paid

nothing. Though “charter membership” and “founding membership” may

ordinarily be synonymous, the price difference (free versus $1.5 million)

could have struck the Donners as significant.

      The Donners allege in the amended complaint that they were induced

to act by Mr. Nicklaus’s willingness to pay $1.5 million for his charter

membership. It was the purchase price, rather than the title of the

membership, that allegedly influenced the Donners. Thus, the Donners

have adequately pleaded falsity of the representation regarding

Mr. Nicklaus’s payment of the purchase price.

      d.    Reasonable Reliance

      The Donners have also adequately alleged reasonable reliance on

Mr. Nicklaus’s representation.

      To determine whether reliance is reasonable, courts consider the

facts. Robinson v. Tripco Inv., Inc., 21 P.3d 219, 224-25 (Utah Ct. App.

2000). The Donners allege that they reasonably relied on Mr. Nicklaus’s

representation based on his use of the term “charter member” and his

reputation for honesty and integrity. These allegations present a plausible

basis for reasonable reliance.

                                     20
      The defendants contend that the reliance cannot be reasonable

because:

      ●     the Donners were sophisticated purchasers and

      ●     the charter membership agreement would have clarified any
            false representations.

      First, we reject the defendants’ argument involving the Donners’

sophistication. In Utah, plaintiffs may accept representations without

investigation unless “‘facts should make it apparent . . . that [they are]

being deceived.’” Robinson, 21 P.3d at 225 (quoting Conder v. A.L.

Williams & Assocs., 739 P.2d 634, 638 (Utah Ct. App. 1987)).

      The reasonableness of the reliance involves a fact question. In the

amended complaint, the Donners did not include any facts that would have

made their reliance unreasonable, regardless of their sophistication. In

these circumstances, the Donners’ pleading of reasonable reliance is

sufficient notwithstanding their alleged sophistication.

      Second, the defendants argue that

      ●     the charter membership agreement would have clarified any
            false representations, and

      ●     a party “cannot reasonably continue to rely on [initially-
            received false information] once true and corrected information
            is furnished to him.”

Mikkelson v. Quail Valley Realty, 641 P.2d 124, 126 (Utah 1982). This

argument is invalid. The agreement did not say, one way or the other,

whether Mr. Nicklaus was a charter member.

                                      21
      The agreement did say that the Donners would not rely on

representations by a “Company representative.” Aplt. App. at 232. But,

this provision does not apply to the defendants. The membership agreement

defines “Company” as “Mount Holly Club, LLC,” not Mr. Nicklaus or

Nicklaus Golf. Id. at 231.

      We conclude that the Donners have adequately alleged reasonable

reliance notwithstanding their sophistication or the terms of the charter

membership agreement. Thus, we reverse the dismissal of the claim

involving intentional misrepresentation of Mr. Nicklaus’s membership

status.

      3.   Remaining Claims of Intentional Misrepresentation

      But, the Donners have not adequately alleged any other basis for

liability involving an intentional misrepresentation.

      a.   Progress of the Mount Holly Development

      The Donners allege that the defendants falsely represented that the

Mount Holly development had already been approved and would continue

to achieve certain benchmarks. This allegation is not plausible given the

express terms of the charter membership agreement and the associate

program contract.

      The charter membership agreement states that

      ●    “at the present time[,] none of the Club facilities are
           completed” and


                                     22
      ●     “the substantial majority of the Resort has not yet been
            developed.”

Aplt. App. at 232. Thus, when the Donners signed the agreement, they

should have realized that the facilities were not fully developed.

      The associate program contract states that

      ●     the defendants “make no representations concerning the . . .
            completeness” or “date of completion” of the Club facilities
            and

      ●     “no claim shall be made by any member . . . related to the
            foregoing.”

Id. at 253. Thus, when the Donners signed the associate program contract,

they should have realized that the defendants were not representing

completion of the facilities by any specific date.

      Given the express terms of these agreements, the Donners have not

adequately pleaded reasonable reliance on statements concerning the

development’s progress.

      b.    Legal Title to the Property

      The Donners also complain that Mr. Nicklaus did not tell the truth

when he said in the marketing materials that a buyer would receive an

“estate lot.” The Donners regard this representation as false because “no

title to an Estate Lot could [have been] conveyed at that time.” Id. at 39,

¶ 102(d).

      Even viewing these allegations favorably to the Donners, we

conclude a fact-finder could not infer reasonable reliance. The problem is

                                     23
that the charter membership agreement and accompanying certificate make

clear that a charter membership does not include conveyance of property.

For example, the charter membership agreement states that the Donners

would receive an “Estate Lot Certificate” that could be redeemed to buy

“any available lot” “pursuant to a real estate purchase contract containing

customary terms and conditions.” Id. at 236. With this written explanation,

no reader could have justifiably expected immediate delivery of title to a

lot.

       c.   Criminal History of an Executive for the Developer

       The Donners also allege that the defendants failed to disclose the

criminal history of an executive for the developer. This allegation is also

not plausible.

       To survive the motion to dismiss on this claim, the Donners had to

adequately allege a factual basis to infer that Mr. Nicklaus and Nicklaus

Golf owed a duty to disclose this information. Shah v. Intermountain

Healthcare, Inc., 314 P.3d 1079, 1085 (Utah Ct. App. 2013).

       The Donners have not adequately alleged such a duty. As we explain

below, the parties’ relationship is attenuated, and the Donners have not

alleged a basis for a fiduciary duty or an obligation arising out of a statute

or license. See Yazd v. Woodside Homes Corp., 143 P.3d 283, 287 (Utah

2006) (“A person who possesses important, even vital, information of

interest to another has no legal duty to communicate the information where

                                      24
no relationship between the parties exists.”). Because the Donners have not

adequately alleged such a duty, we conclude this claim is not plausible.

     E.    Claims Involving Negligent Misrepresentation Under State
           Law (Economic Loss Doctrine)

     On the claims involving negligent misrepresentation, the defendants

invoke the economic loss doctrine. We conclude that this doctrine

precludes recovery for negligent misrepresentation.

     Under the economic loss doctrine, a plaintiff cannot ordinarily

recover economic damages for negligence when the subject matter is

covered by a contract. Reighard v. Yates, 285 P.3d 1168, 1176 (Utah

2012). But, the economic loss doctrine does not apply when the tortfeasor

incurs a duty outside of any contract. Davencourt at Pilgrims Landing

Homeowners Ass’n v. Davencourt at Pilgrims Landing, LC, 221 P.3d 234,

246-47 (Utah 2009).

     The general rule applies: The charter membership agreement covers

the subject matter of the Donners’ dispute; thus, that agreement provides

the “exclusive means of obtaining economic recovery.” Reighard, 285 P.3d

at 1176. And, the Donners have not adequately alleged that Mr. Nicklaus or

Nicklaus Golf incurred a duty outside of a contract.




                                    25
      1.    General Rule (Subject Matter of the Dispute)

      We first ask whether the charter membership agreement covers the

subject matter of the dispute. If so, the general rule would preclude

liability for negligent misrepresentation. See id. 6

      We conclude that the agreement covers the subject matter of the

Donners’ dispute with Mr. Nicklaus and Nicklaus Golf. The Donners’

alleged damages relate to whether they received the benefit of their bargain

under the charter membership agreement. As a result, that agreement

provides the “exclusive means of obtaining economic recovery.” Id.

      2.    Exception (Existence of a Duty Outside of any Contract)

      We next ask whether Mr. Nicklaus or Nicklaus Golf incurred a duty

outside of the charter membership agreement. If so, the doctrine would not

apply because the Donners’ claims would be based on a duty independent

of any contract. See Hermansen v. Tasulis, 48 P.3d 235, 240 (Utah 2002).

We conclude that the Donners have not adequately alleged such a duty.

      The existence of a duty entails a question of law. Yazd v. Woodside

Homes Corp., 143 P.3d 283, 286 (Utah 2006). To determine whether a duty

arises outside of a contract, we analyze the nature of the parties’

relationship. See id. In general, the more attenuated the relationship, the

less likely a duty exists. Id.

6
      The general rule would apply notwithstanding the absence of privity
of contract between the Donners and the defendants. See West v. Inter-
Financial, Inc., 139 P.3d 1059, 1063 (Utah Ct. App. 2006).
                                       26
     Even under the Donners’ allegations, the parties’ relationship is

attenuated: The Donners have no contractual relationship with the

defendants and never dealt directly with them. In the absence of a direct

relationship, Utah courts have recognized an independent duty only when

the defendant has incurred a fiduciary duty or an obligation to deal fairly

and honestly under a statute or license. See Hermansen v. Tasulis, 48 P.3d

235, 240-41 (Utah 2002) (real estate agents); West v. Inter-Financial, Inc.,

139 P.3d 1059, 1065 (Utah Ct. App. 2006) (real estate appraisers); see also

Milliner v. Elmer Fox & Co., 529 P.2d 806, 808 (Utah 1974) (stating that

an accountant can incur liability to a non-contracting third party when the

accountant knew that his work would be relied on by a party to extend

credit or assume certain obligations); Davencourt at Pilgrims Landing

Homeowners Ass’n v. Davencourt at Pilgrims Landing, LC, 221 P.3d 234,

246-47 (Utah 2009) (recognizing a developer’s limited fiduciary duty).

     The Donners have not alleged a basis for a fiduciary duty or an

obligation arising out of a statute or license. Instead, the Donners have

alleged that Mr. Nicklaus is known for his integrity and trustworthiness.

Though the Donners allegedly trusted Mr. Nicklaus based on these

qualities, there was no relationship between the Donners and Mr. Nicklaus

or Nicklaus Golf. In the absence of any relationship, Mr. Nicklaus and

Nicklaus Golf had no independent duty to the Donners. See Yazd v.

Woodside Homes Corp., 143 P.3d 283, 287 (Utah 2006) (“A person who

                                     27
possesses important, even vital, information of interest to another has no

legal duty to communicate the information where no relationship between

the parties exists.”); see also Davencourt at Pilgrims Landing Homeowners

Ass’n v. Davencourt at Pilgrims Landing, LC., 221 P.3d 234, 245 (Utah

2009) (“Knowledge and expertise alone do not establish an independent

duty; privity or a direct relationship is also required.”).

      The parties’ relationship is attenuated, and Mr. Nicklaus and

Nicklaus Golf have no obligations growing out of a fiduciary duty, statute,

or license. In these circumstances, we conclude that neither Mr. Nicklaus

nor Nicklaus Golf has incurred a duty outside the charter membership

agreement.

      The Donners argue that Mr. Nicklaus and Nicklaus Golf incurred an

independent duty based on

      ●      conduct preceding the contract and

      ●      the Interstate Land Sales Full Disclosure Act.

We reject both arguments. The first argument is invalid under Utah law;

and, as discussed above, the Interstate Land Sales Full Disclosure Act does

not apply.

      Utah courts have not confined the economic loss doctrine to

wrongdoing taking place after entry into a contract. This sort of limitation

would make little sense: The doctrine is designed to allow parties “to

allocate risk by contract.” West v. Inter-Financial, Inc., 139 P.3d 1059,

                                       28
1064 (Utah Ct. App. 2006). The parties can use a contract to allocate risks

that may arise pre- or post-formation. As a result, we must apply the

economic loss doctrine to conduct regardless of whether it preceded or

post-dated the contract. See Gibbons v. Hidden Meadow, LLC., 524 F.

App’x 451, 453 (10th Cir. 2013) (unpublished) (applying Utah law)

(holding that the economic loss doctrine precluded a claim involving “pre

contractual disclosures” when no independent source existed for a duty); 7

accord Holden Farms, Inc. v. Hog Slat, Inc., 347 F.3d 1055, 1063 (8th Cir.

2003) (“We know of no reason why the economic loss doctrine in Iowa

would not cover pre-contract-formation negligent-misrepresentation

claims.”).

      The Donners rely on Price-Orem Inv. Co. v. Rollins, Brown &

Gunnell, Inc., 713 P.2d 55, 59 (Utah 1986), and Worldwide Mach., Inc. v.

Wall Mach., Inc., No. 2:06CV130DS, 2006 WL 2666411 (D. Utah 2006)

(unpublished). Reliance on these opinions is misguided.

      In Price-Orem, a property owner hired a contractor, and the

contractor entered into a contract with a surveyor. The surveyor erred in

marking the property boundary, and the owner sued the surveyor for

negligent misrepresentation. See Price-Orem, 713 P.2d at 56-57.




7
      Gibbons is persuasive, but not precedential. See 10th Cir. R. 32.1(a).

                                     29
      On appeal, the surveyor argued that the contractor was an

indispensable party because the only parties to the surveying contract (the

second contract) were the contractor and the surveyor. See id. at 59. The

Utah Supreme Court rejected this argument, holding that privity of contract

was not necessary for liability based on negligent misrepresentation. Id.

      In reaching this holding, the court never mentioned the economic loss

doctrine. See id., passim. That is not surprising: None of the parties had

mentioned the economic loss doctrine in their appeal briefs, and it would

be another decade before the economic loss doctrine gained recognition in

Utah outside of product liability cases. See West v. Inter-Financial, Inc.,

139 P.3d 1059, 1061 (Utah Ct. App. 2006) (“Outside of a products liability

context, Utah first applied the economic loss rule in American Towers

Owners Ass’n v. CCI Mech[.], Inc., 930 P.2d 1182 (Utah 1996).”).

      Because privity was unnecessary for liability, the Utah Supreme

Court never had to address the effect of the contract between the owner


                                     30
and the contractor (the first contract). Instead, the court noted that the

owner’s claim did not depend on rights under the separate contract between

the contractor and the surveyor. Price-Orem, 713 P.2d at 59.

      Likewise, the Donners’ claim does not depend on rights under any

contracts between the developer and Mr. Nicklaus or Nicklaus Golf. No

one suggests otherwise, for the Donners’ claim of negligent

misrepresentation involves the inability to obtain the benefits of their own

contract with the developer.

      The circumstances in Price-Orem were similar. There, the owner’s

claim involved an inability to obtain the benefit of its contract with the

contractor. But, the state supreme court had not yet recognized the

economic loss doctrine outside of products liability cases; the parties did

not mention the doctrine in the appeal; and the Utah Supreme Court never

referred to the doctrine. Thus, Price-Orem has no bearing on the

defendants’ invocation of the economic loss doctrine.

         We are also unpersuaded by Worldwide Mach. There, a federal

district court stated that the economic loss doctrine does not apply when a

party is fraudulently induced to enter a contract. Worldwide Mach., Inc. v.

Wall Mach., Inc., No. 2:06CV130DS, 2006 WL 2666411, at *4-5 (D. Utah

2006) (unpublished). For this conclusion, the district court relied on two

cases:

         ●   Grynberg v. Questar Pipeline Co., 70 P.3d 1 (Utah 2003), and

                                      31
      ●    United Int’l Holdings, Inc. v. Wharf Ltd., 210 F.3d 1207 (10th
           Cir. 2000).

      In Grynberg, the court applied Wyoming’s version of the economic

loss doctrine, not Utah’s. Grynberg v. Questar Pipeline Co., 70 P.3d 1, 10-

14 (Utah 2003). As a result, Grynberg does not shed light on Utah law. See

BC Technical, Inc. v. Ensil Int’l Corp., 464 F. App’x 689, 699 n.16 (10th

Cir. 2012) (unpublished) (“Grynberg is not relevant because it interprets

Wyoming law rather than Utah law.”).

      The federal district court also relied on United Int’l Holdings, which

applied Colorado’s version of the economic loss doctrine. United Int’l

Holdings, Inc. v. Wharf Ltd., 210 F.3d 1207, 1226-27 (10th Cir. 2000).

But, the Utah Supreme Court has noted its disagreement with aspects of

Colorado’s version of the rule:

     [T]he Association contends that we abandoned the economic
     loss rule as set forth in American Towers and expressly adopted
     Colorado’s interpretation. We have not. Although we have
     agreed with Colorado regarding the independent duty analysis,
     we have not abandoned our own line of cases interpreting and
     applying the economic loss rule. Nor do we wholly adopt all of
     the independent duties recognized by Colorado.

Davencourt at Pilgrims Landing Homeowners Ass’n v. Davencourt at

Pilgrims Landing, LC, 221 P.3d 234, 248 (Utah 2009).




                                    32
       The Utah Supreme Court has never recognized an exception for

claims of fraudulent inducement, and we do not regard the federal district

court’s unreported decision in Worldwide Mach as persuasive. 8

       We must apply the doctrine here, rejecting the Donners’ reliance on

pre-contract misrepresentations and the Interstate Land Sales Full

Disclosure Act. Under the economic loss doctrine, the defendants cannot

incur liability for negligent misrepresentation because the Donners’ claim

involves the benefit of their bargain under the charter membership

agreement. 9

III.   Consideration of the Motion for Summary Judgment (Election of
       Remedies)

       In an alternative ruling, the district court granted summary judgment

to the defendants on all claims. The court did so on the ground that the

Donners had elected their remedies against the defendants through the

settlement agreement. This ruling was erroneous.


8
      The Donners also cite MP Nexlevel, LLC v. Codale Elec. Supply,
Inc., No. 2:08-CV-0727CW, 2010 WL 1687985 (D. Utah 2010)
(unpublished), for the proposition that the economic loss doctrine does not
apply to pre-contract misrepresentations. There, the district judge (who
also issued the decision we are reviewing) stated that the economic loss
doctrine does not apply to pre-contract misrepresentations, but gave no
authority for this conclusion. MP Nexlevel, 2010 WL 1687985, at *4. The
Utah Supreme Court has never recognized an exception for pre-contract
misrepresentations.
9
      The economic loss doctrine does not affect the claims involving
intentional misrepresentation. See SME Indus., Inc. v. Thompson, Ventulett,
Stainback & Assocs., Inc., 28 P.3d 669, 680 n.8 (Utah 2001).
                                     33
      In considering the ruling on summary judgment, we view the

evidence in the light most favorable to the Donners. Lenox MacLaren

Surgical Corp. v. Medtronic, Inc., 762 F.3d 1114, 1118 (10th Cir. 2014).

Viewing the evidence in this manner, we can uphold the summary judgment

ruling only if there is no genuine dispute over a material fact and the

defendants establish their right to judgment as a matter of law. Kovnat v.

Xanterra Parks & Resorts, 770 F.3d 949, 954 (10th Cir. 2014). Because

election of remedies involves an affirmative defense, the defendants’

burden is intensified. See Kuhl v. Hayes, 212 F.2d 37, 39 (10th Cir. 1954)

(“An election of remedies is an affirmative defense.”); Pelt v. Utah, 539

F.3d 1271, 1280 (10th Cir. 2008) (“[I]f the moving party has the burden of

proof, a more stringent summary judgment standard applies.”). This

standard requires the defendants to “establish, as a matter of law, all

essential elements of the issue before the nonmoving party can be

obligated to bring forward any specific facts alleged to rebut the movant’s

case.” Pelt, 539 F.3d at 1280.

      The doctrine of election of remedies precludes a party from obtaining

redress for an injury through two wholly inconsistent remedies. See Cook

v. Covey-Ballard Motor Co., 253 P. 196, 200 (Utah 1927) (stating that a

party cannot pursue two remedies that are “so inconsistent that the

assertion of one involves a negation or repudiation of the other”). The



                                     34
burden of proving an inconsistency lies with Mr. Nicklaus and Nicklaus

Golf. Kuhl, 212 F.2d at 39.

     They argue that the Donners are seeking inconsistent remedies

involving both affirmance and repudiation of the charter membership

agreement. We disagree. Mr. Nicklaus and Nicklaus Golf have not shown

either an affirmation or a repudiation of the agreement.

     In settling a bankruptcy claim against the developer’s parent

company, the Donners agreed to accept a lot, with certain amenities, if the

development was ever completed. The lot was acquired through settlement

against a bankrupt debtor, not through a judgment based on a successful

contract claim. The defendants have not proven that this settlement

involves affirmation of a contract or that the Donners were made whole by

obtaining the lot in an undeveloped tract.

     Nor have the defendants proven the Donners’ disaffirmance of the

contract. In settling with other entities and seeking damages from Mr.

Nicklaus and Nicklaus Golf, the Donners are merely trying to recoup their

losses from separate parties under separate causes of action.

     We addressed a similar issue in Sade v. N. Nat. Gas Co., 483 F.2d

230, 234 (10th Cir. 1973), where we applied Oklahoma’s doctrine of

election of remedies. After a catastrophic injury, the claimant settled with

Northern Natural Gas Co., releasing Northern but not its employees. See

id. at 232. The claimant then sued Northern’s employees, who successfully

                                     35
defended by arguing that they were released through the settlement with

Northern. See id. at 232-33. The claimant sued Northern for fraud. See id.

at 233. Northern invoked the election-of-remedies doctrine, arguing that

the claimant was seeking to affirm the settlement agreement after

disaffirming the settlement agreement in state court. See id. at 234. We

rejected this argument, in part because the claimant had never

“disaffirmed” the settlement agreement:

            In the first place, we disagree with Northern’s initial
      premise that in instituting the [state court] action, [the
      claimant] disaffirmed the . . . settlement. Rather, as we see it,
      in instituting the [state court] proceeding it was [the
      claimant’s] position that the [settlement] agreement was valid
      and binding, but that it did not cover Northern’s employees, but
      only Northern itself. In this regard, as earlier noted, the release
      made no mention of Northern’s employees, and, according to
      [the claimant], Northern’s attorneys repeatedly assured him
      that the release did not preclude him from suing Northern’s
      employees. Hence, we fail to see just how [the claimant] was
      disaffirming the release when he sued Northern’s employees.

Id. at 234-35.

      Similarly, the Donners did not disaffirm the charter membership

agreement by suing Mr. Nicklaus or Nicklaus Golf. Like the claimant in

Sade, the Donners did not believe they had been made whole when they

settled with the developer. Thus, the Donners―like the claimant in

Sade―sued other parties for fraudulently inducing entry into the contract.

Like the panel in Sade, we do not regard this fraud action as

“disaffirmance” of the contract.


                                      36
      The contract was not “affirmed” through receipt of a lot worth less

than $1.5 million or “repudiated” through the assertion of tort claims. In

these circumstances, the election-of-remedies doctrine does not apply. See

Angelos v. First Interstate Bank of Utah, 671 P.2d 772, 778 (Utah 1983)

(concluding that “[t]he doctrine of election of remedies is inapplicable . . .

because [the claimant] is not seeking or obtaining ‘double redress for a

single wrong’”). Because the election-of-remedies doctrine is inapplicable,

the district court erred in granting summary judgment to Mr. Nicklaus and

Nicklaus Golf.

      Because the Donners are not precluded from pursuing tort remedies,

we reverse the award of summary judgment.

IV.   Conclusion

      In conclusion, we reverse (1) the dismissal of the claim involving

intentional misrepresentation of Mr. Nicklaus’s membership status, and (2)

the award of summary judgment to Mr. Nicklaus and Nicklaus Golf.

Accordingly, we remand to the district court for further proceedings on the

Donners’ claim relating to intentional misrepresentation of Mr. Nicklaus’s

membership status. But, we affirm the dismissal on the claims involving

(1) violation of the Interstate Land Sales Full Disclosure Act, (2)

intentional misrepresentations or omissions involving progress of the

development, availability of legal title, and failure to disclose an

executive’s criminal history, and (3) negligent misrepresentation.

                                      37
