Nolin v. S & S Construction, Inc. ( 2013 )

2013 UT App 94_________________________________________________________
THE UTAH COURT OF APPEALS
RAYMOND K. NOLIN, CATHERINE R. NOLIN,
GORDON RUSHFORTH, AND EVELYN RUSHFORTH,
Plaintiffs and Appellees,
v.
S&S CONSTRUCTION, INC.,
Defendant and Appellant.
Opinion
No. 20110663‐CA
Filed April 18, 2013
Fifth District, St. George Department
The Honorable James L. Shumate
No. 060501825
Dennis R. James, Stephen F. Edwards, and Jeremy S. Stuart,
Attorneys for Appellant
D. Williams Ronnow, Attorney for Appellees
JUDGE CAROLYN B. MCHUGH authored this Opinion, in which
JUDGES WILLIAM A. THORNE JR. and J. FREDERIC VOROS JR.
concurred.
McHUGH, Judge:
¶1 S&S Construction, Inc. (S&S) appeals the district court’s
entry of judgment for attorney fees and costs. We reverse.
Nolin v. S&S Construction
BACKGROUND
¶2 On August 29, 2002, Raymond and Catherine Nolin entered
into a Real Estate Purchase Contract (REPC) with S&S for
construction of a new home to be built on lot 244 of the Paradise
Canyon subdivision in St. George, Utah. Likewise, on August 26,
2003, Gordon and Evelyn Rushforth entered into a REPC with S&S
for construction of a new home to be built on lot 243 in the same
subdivision.
¶3 Sometime in 2002, S&S constructed a rock retaining wall (the
Retaining Wall) in a “Limited Common Area”1 between lots 243
and 244. On January 10, 2005, the Retaining Wall collapsed after a
prolonged rain storm, which caused dirt and rocks to slough onto
the Nolins’ lot. Shortly thereafter, the Retaining Wall was restacked
in nearly identical fashion to the manner in which it was initially
constructed. In response, the Nolins and the Rushforths
(collectively, the Homeowners) filed a complaint against S&S and
others alleging defective construction of the Retaining Wall.
1. The Declaration of Covenants Conditions and Restrictions of
Paradise Canyon defines a “Limited Common Area” as follows:
[T]hat portion of Property owned by the [Paradise
Canyon Owners Association] shown on the Plat as
Limited Common Area. The Owner of the Lot to
which such Limited Common Area is adjacent and/or
appurtenant has the use and enjoyment of that
Limited Common Area to the exclusion of other
Owners. Limited Common Area is subject to rights of
the [Paradise Canyon Owners Association] set forth
in this Declaration.
Those limitations impose a duty on the Nolins and the Rushforths
to maintain the Limited Common Area, and if they fail to do so,
“[t]he cost of such maintenance shall be assessed against” them.
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¶4 After several years of litigation, the parties entered into a
settlement agreement under which the Homeowners dismissed
their complaint in return for S&S’s $20,000 contribution to the
estimated $60,000 cost of removing and replacing the Retaining
Wall. Because the parties could not reach an agreement on whether
the Homeowners were entitled to recover their attorney fees under
the REPC, they reserved that issue for resolution by the district
court. The settlement agreement provides,
The Parties agree the issue of attorney[] fees and
costs against S&S shall be reserved and submitted to
the [c]ourt by motion pursuant to Utah Rules of Civil
Procedure [rule] 7 and other governing Utah law and
that for the purposes of the motion for attorney[] fees
and costs, the [Homeowners] shall be considered
prevailing parties.
¶5 As anticipated, the Homeowners filed a motion for attorney
fees and costs in the district court, which S&S opposed. In support
of their motion, the Homeowners introduced an affidavit
containing facts and expert opinion. At the hearing on the motion,
S&S sought permission to conduct discovery and to cross‐examine
the Homeowners’ expert if the district court was inclined to
consider this evidence in deciding the motion for attorney fees. The
district court denied that request, stating,
I really don’t think that’s necessary, [c]ounsel. There
does not appear to be a substantial factual issue over
the issue of attorney[] fees as it applies here. I think
. . . courts look within the four corners of the
documents. It’s interesting that we do have the
affidavit there to put a general factual umbrella over
it. But I think the legal decision is made as the parties
in the settlement outlined it within the documents
that we have here. So I wouldn’t think that it’s
necessary to go any f[u]rther than that.
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Ultimately, the district court granted the Homeowners’ motion for
attorney fees.
¶6 The Homeowners then filed a series of affidavits seeking an
award of $141,575, which was accompanied by billing statements
reflecting the costs and fees submitted by their trial counsel. S&S
objected to the request as unreasonable and unsupported. On July
17, 2011, the district court signed an order awarding $141,575 in
attorney fees and costs to the Homeowners. S&S filed a timely
appeal.
ISSUES AND STANDARDS OF REVIEW
¶7 S&S argues that the district court erred in granting the
Homeowners’ motion for attorney fees and costs because it
incorrectly interpreted the REPCs and based its decision, in part, on
extrinsic facts and expert opinions outside of the four corners of
those agreements. “Whether attorney fees are recoverable is a
question of law, which we review for correctness.” R.T. Nielson Co.
v. Cook, 2002 UT 11, ¶ 16, 40 P.3d 1119.
¶8 S&S also challenges the amount of the attorney fees and
costs awarded. The “‘[c]alculation of reasonable attorney fees is in
the sound discretion of the district court, and will not be
overturned in the absence of a showing of a clear abuse of
discretion.’” Moore v. Smith, 2007 UT App 101, ¶ 53, 158 P.3d 562(quoting Dixie State Bank v. Bracken, 764 P.2d 985, 988 (Utah 1988)).
ANALYSIS
¶9 S&S contends that the district court erred because the
Homeowners are not entitled to recover their attorney fees. “As a
general rule, attorney fees are recoverable only if authorized by
contract or statute.” Anderson & Karrenberg v. Warnick, 2012 UT App
275, ¶ 9, 289 P.3d 600. “If the legal right to attorney fees is
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established by contract, Utah law clearly requires the court to apply
the contractual attorney fee provision and to do so strictly in
accordance with the contract’s terms.” Jones v. Riche, 2009 UT App
196, ¶ 2, 216 P.3d 357 (mem.).
¶10 In relevant part, the REPCs state, “17. Attorney Fees and
Costs. In the event of litigation or binding arbitration to enforce this
[REPC], the prevailing party shall be entitled to costs and
reasonable attorney fees.” (Emphasis added.) Because the parties
agreed that the Homeowners were to be considered the prevailing
parties, the issue before us is whether the litigation was “to
enforce” the REPCs. In concluding that it was, the district court
relied on section 10.2 of the REPCs, which states, in relevant part,
10.2 Condition of Property. . . . [S&S] . . . warrant[s]
the heating, cooling, electrical, plumbing and
sprinkler systems (including all gas and electric
appliances), fixtures, and structural elements of the
Residence (including the roof, walls, and foundation)
against defects in material and workmanship for a
period of one year after the Settlement Deadline.
(Emphasis added.)
¶11 According to the district court, S&S “breached the
warranties of construction in a workmanlike manner and
habitability in the defective construction of the Retaining Wall and
therefore breached the Parties’ [REPCs].” In reaching that
conclusion, the district court relied on
photographic evidence show[ing] that the Retaining
Wall is over eight‐feet high and not only retains fill
between lots 243 and 244, but serves as a critical
component of the [Homeowners’] improved lots
providing retention and support of the fill soil on
which [the Rushforths’] home is built, and is
therefore critical to the structural stability and
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function of the Rushforth lot and residence and the
safety and enjoyment for the Nolins of their yard and
lot.
The district court concluded that, “[a]s such, it was clearly within
the intent and purview of the Parties’ [REPCs] to include the
Retaining Wall as a structural element of the residences as
provided under Section 10.2 of the Parties’ [REPCs].” S&S contends
that the district court ignored the plain language of the warranty
provision and inappropriately relied on the photographs provided
by the Homeowners.
¶12 “Under basic rules of contract interpretation, [we] first look
to the writing alone to determine its meaning and the intent of the
contracting parties.” Giusti v. Sterling Wentworth Corp., 2009 UT 2,
¶ 44, 201 P.3d 966, holding modified by Central Utah Water
Conservancy Dist. v. King, 2013 UT 13. “‘If the language within the
four corners of the contract is unambiguous, the parties’ intentions
are determined from the plain meaning of the contractual
language, and the contract may be interpreted as a matter of law.’”
Id. (quoting Green River Canal Co. v. Thayn, 2003 UT 50, ¶ 17, 84 P.3d
1134). “Only where there is ambiguity in the terms of the contract
may the parties’ intent ‘be ascertained from extrinsic evidence.’” Id.(quoting Deep Creek Ranch, LLC v. Utah State Armory Bd., 2008 UT
3, ¶ 16, 178 P.3d 886).
¶13 “When determining whether the plain language is
ambiguous, we attempt to harmonize all of the contract’s
provisions and all of its terms.” KeyBank Nat’l Assʹn v. Systems W.
Computer Res., Inc., 2011 UT App 441, ¶ 19, 265 P.3d 107 (citations
and internal quotation marks omitted). “[T]o harmonize the
provisions of a contract, we examine the entire contract and all of
its parts in relation to each other and give a reasonable construction
of the contract as a whole to determine the parties’ intent.” Id.(alteration in original) (citation and internal quotation marks
omitted). Also, “[w]hen interpreting the plain language, we look
for a reading that harmonizes the provisions and avoids rendering
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any provision meaningless.” Id. (alteration in original) (citation and
internal quotation marks omitted). “A term or provision of the
contract is ambiguous if it is capable of more than one reasonable
interpretation because of uncertain meanings of terms, missing
terms, or other facial deficiencies.” Hillcrest Inv. Co. v. Utah Dep’t of
Transp., 2012 UT App 256, ¶ 14, 287 P.3d 427 (citation and internal
quotation marks omitted). While we will consider “any credible
evidence” in determining whether a contract is ambiguous, see
Ward v. Intermountain Farmers Assʹn, 907 P.2d 264, 268 (Utah 1995),
a conclusion that a contract is ambiguous requires that both
competing interpretations be “‘reasonably supported by the
language of the contract,’” see Daines v. Vincent, 2008 UT 51, ¶ 31,
190 P.3d 1269 (quoting Ward, 907 P.2d at 268).
¶14 S&S argues that the plain language of the REPCs is
unambiguous and does not provide any warranties for the
Retaining Wall installed in the Limited Common Area of the
Paradise Canyon subdivision. The Homeowners respond that
S&S’s argument “defies logic and would exclude from any concept
of structural element, and any implied warranty, footings, drive‐
ways, slab floors, concrete patios, and would even exclude footings
under vertical posts supporting second story decks and the decks
themselves” and, therefore, “illustrates the need to broadly
construe application of . . . implied warranties” into the REPCs.
Relying on the evidence they presented to the district court, the
Homeowners argue that the Retaining Wall is a fundamental,
structural element of their lots and residences that falls within the
implied warranties provided for in the REPCs.
¶15 There is no dispute that the Retaining Wall was built in the
Limited Common Area between the Homeowners’ lots. Thus, even
if the Retaining Wall were considered to be a “structural element,”
the plain language of the REPCs clearly limits the warranty to
structural elements “of the Residence.” Furthermore, the examples
of structural elements of the residence provided by section 10.2 are
“roof, walls, and foundation.” Each of these examples are elements
of the residence itself and are critical to its structural integrity,
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stability, and soundness. Cf. Utah Code Ann. § 58‐3a‐304(1)(e)
(LexisNexis 2012) (defining “structural elements of a building”
under the Architects Licensing Act to include “foundations, beams,
columns, and structural slabs, joists, bearing walls, and trusses”).
¶16 Our review of the contracts as a whole convinces us that the
REPCs differentiate between the terms “Lot” and “Residence,” and
use each advisedly. Section 1.1 of the REPCs indicates that “[t]he
Purchase Price for the Residence . . . includes . . . the Lot.” Section
11.1 of the REPCs states, in pertinent part, “[The Homeowners]
agree[] that during the period of construction [S&S] shall have the
unrestricted right to access the Lot for the purpose of construction
of the Residence and any necessary subdivision improvements.”
Generally, a “residence” is defined as “[a] house or other fixed
abode; a dwelling.” Black’s Law Dictionary 1423 (9th ed. 2009).
Likewise, a “lot” is generally defined as “[a] tract of land,
esp[ecially] one having specific boundaries or being used for a
given purpose.” Black’s Law Dictionary 1032 (9th ed. 2009). The
REPCs’ precise use of the terms “residence” and “lot” convince us
that if the warranty was intended to cover structural elements of
the lots, as well as of the residences, it would have said so.
Accordingly, the express warranty in the REPCs does not cover the
Retaining Wall. See Daines, 2008 UT 51, ¶ 30 n.5 (holding that Utah
courts will not find “ambiguity based on usage of a term that is not
reasonable or is the product of ‘forced or strained construction’”
(quoting Saleh v. Farmers Ins. Exch., 2006 UT 20, ¶ 17, 133 P.3d 428)).
¶17 Nevertheless, the Homeowners argue that a warranty
covering the Retaining Wall should be implied. In support, they
cite the Utah Supreme Court’s decision in Davencourt at Pilgrims
Landing Homeowners Association v. Davencourt at Pilgrims Landing,
LC, 2009 UT 65, 221 P.3d 234. There, the supreme court held for the
first time that “[u]nder Utah law, in every contract for the sale of a
new residence, a vendor in the business of building or selling such
residences makes an implied warranty to the vendee that the
residence is constructed in a workmanlike manner and fit for
habitation.” Id. ¶ 55 (emphases added). However, the court limited
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the scope of the implied warranty to situations where the plaintiff
can show
(1) the purchase of a new residence from a defendant
builder‐vendor/developer‐vendor; (2) the residence
contained a latent defect; (3) the defect manifested
itself after purchase; (4) the defect was caused by
improper design, material, or workmanship; and
(5) the defect created a question of safety or made the
house unfit for human habitation.
Id. ¶ 60. As discussed, the Homeowners have not alleged that their
residences contain a latent defect. Furthermore, they do not contend
that their homes were rendered uninhabitable or unsafe as a result
of the collapse of the Retaining Wall on the common area.
Accordingly, the requirements of Davencourt cannot be met.
¶18 Under these circumstances, the litigation was not based on
an implied warranty of workmanlike manner and habitability.
Consequently, the litigation was not undertaken “to enforce” the
REPCs and the Homeowners were not entitled to recover their
attorney fees and costs.2
CONCLUSION
¶19 As a matter of law, the REPCs contain neither an express nor
an implied warranty covering the Retaining Wall. Therefore, the
litigation was not brought to enforce the REPCs and the
Homeowners were not entitled to attorney fees under the terms of
those contracts.
2. Because we determine that the Homeowners were not entitled to
attorney fees as a matter of law, we need not reach S&S’s other
arguments challenging the amount awarded or the district court’s
reliance on the Homeowners’ affidavit.
20110663‐CA 9 2013 UT App 94Nolin v. S&S Construction
¶20 Reversed.
20110663‐CA 10 2013 UT App 94