Wm. Douglas Horne Family Revocable Trust v. Wardley/McLachlan Development, LLC ( 2013 )

2013 UT App 129_________________________________________________________
THE UTAH COURT OF APPEALS
WM. DOUGLAS HORNE FAMILY REVOCABLE TRUST,
Plaintiff, Appellant, and Cross‐appellee,
v.
WARDLEY/MCLACHLAN DEVELOPMENT, LLC; LYNN WARDLEY;
AND SCOTT MCLACHLAN,
Defendants, Appellees, and Cross‐appellants.
Memorandum Decision
No. 20120263‐CA
Filed May 23, 2013
Fourth District, Provo Department
The Honorable Lynn W. Davis
No. 110400781
Stephen Quesenberry and Christopher R. Infanger,
Attorneys for Appellant and Cross‐appellee
John T. Anderson, Attorney for Appellees and
Cross‐appellants
JUDGE CAROLYN B. MCHUGH authored this Memorandum
Decision, in which JUDGES STEPHEN L. ROTH and
MICHELE M. CHRISTIANSEN concurred.
McHUGH, Judge:
¶1 The Wm. Douglas Horne Family Revocable Trust (the Trust)
appeals from the district court’s order granting summary judgment
in favor of Wardley/McLachlan Development, LLC, Lynn Wardley,
and Scott McLachlan (collectively, the Wardley Parties). On cross‐
appeal, the Wardley Parties challenge the district court’s denial of
their request for attorney fees. We affirm, in part, and reverse and
remand, in part.
Horne Family Trust v. Wardley/McLachlan
¶2 The Trust and the Wardley Parties entered into a settlement
agreement (the Agreement) in March 2003, which provided that the
Wardley Parties would pay the Trust a sum of $1.8 million over the
course of six years. The Agreement provided that no interest would
accrue on the principal during the first three years but that during
the final three years, interest would accrue at the prime rate as
published by the Wall Street Journal and late payments would bear
interest of 18% per year. It also included a provision awarding
attorney fees and costs to the prevailing party in any legal action to
enforce the Agreement. The Wardley Parties were each jointly and
severally liable for the amounts due under the Agreement.
¶3 In early 2010, the Wardley Parties had not fully paid their
obligation under the Agreement and were interested in reducing
the late payment interest rate to 9%. However, the Trust never
agreed to modify the contractual interest rate of 18%. On January
20, 2010, the Wardley Parties sent the Trust a check for $473,422.96,
which represented the payoff number calculated by the Wardley
Parties plus interest running at 18% from the due date of the
obligation. On the same day, the Wardley Parties’ accounting
representative emailed the Trust’s accountant informing him that
the check would be the final payment due under the Agreement
and further instructing, “Once the check has cleared, please send
the original note, marked PAID IN FULL . . . .” The Trust received
and deposited the check. On February 1, 2010, the Trust’s accoun‐
tant emailed Scott McLachlan and explained, “As we discussed,
Lynn Wardley has tendered a check for the final payment on the
[balance] required under our [A]greement . . . . If Lynn’s check
remains good, your personal guarantee will no longer apply to the
[balance].” There is no dispute that the Wardley Parties’ check
remained good and that the Trust received $473,422.96.
¶4 Eight months after it received the check, the Trust discov‐
ered an accounting error. The Trust had inadvertently recorded the
Wardley Parties’ payment twice in March 2009, resulting in the
Trust understating the Wardley Parties’ final payoff obligation by
$100,000 plus interest. The Trust informed the Wardley Parties of
20120263‐CA 2 2013 UT App 129Horne Family Trust v. Wardley/McLachlan
this shortfall and requested payment for the remaining balance of
$132,011.57. The Wardley Parties refused, claiming that they had
already paid in full and the Trust had received all amounts owed
under the Agreement.
¶5 In 2011, the Trust filed this action and alleged that the
Wardley Parties breached the terms of the Agreement by default‐
ing on their payment obligation. In response, the Wardley Parties
asserted several affirmative defenses, including payment and
accord and satisfaction. Thereafter, the Trust and the Wardley
Parties each moved for summary judgment.
¶6 After a hearing on the motions in January 2012, the district
court orally granted summary judgment in favor of the Wardley
Parties. The court later issued a written ruling that incorporated by
reference its reasoning as stated during the hearing. The Wardley
Parties then sought attorney fees under the Agreement, but the
district court denied that request. The Trust timely appealed the
grant of summary judgment, and the Wardley Parties cross‐
appealed the denial of their motion for attorney fees.
¶7 The Trust challenges the district court’s grant of summary
judgment in favor of the Wardley Parties. “Summary judgment is
appropriate where (1) there is no genuine issue as to any material
fact and (2) the moving party is entitled to a judgment as a matter
of law.” Hillcrest Inv. Co. v. Utah Dep’t of Transp., 2012 UT App 256,
¶ 11, 287 P.3d 427 (citation and internal quotation marks omitted).
“We review a district court’s grant of summary judgment de novo,
reciting all facts and fair inferences drawn from the record in the
light most favorable to the nonmoving party.” Id. (citation and
internal quotation marks omitted). We therefore construe the facts
in the light most favorable to the Trust.
¶8 The Trust contends that the district court erred in granting
the Wardley Parties’ motion for summary judgment because
genuine issues of material fact exist concerning each requisite
condition necessary for a valid accord and satisfaction to arise. In
20120263‐CA 3 2013 UT App 129Horne Family Trust v. Wardley/McLachlan
response, the Wardley Parties urge this court to affirm summarily
because the Trust did not challenge each ground on which the
district court’s summary judgment order is based.
¶9 “This court will not reverse a ruling of the trial court that
rests on independent alternative grounds where the appellant
challenges only one of those grounds.” Salt Lake Cnty. v. Butler,
Crockett & Walsh Dev. Corp., 2013 UT App 30, ¶ 28, 297 P.3d 38; see
also Republic Outdoor Adver., LC v. Utah Dep’t of Transp., 2011 UT
App 198, ¶ 32, 258 P.3d 619 (declining to consider a challenge to an
alternative basis for the court’s grant of summary judgment where
appellant failed to adequately challenge an independent basis for
the court’s ruling). Consequently, we may affirm if the Trust failed
to challenge each of the grounds for the district court’s grant of
summary judgment.
¶10 The Trust argues that the district court based its ruling only
on accord and satisfaction. However, the record reveals that the
district court granted summary judgment on two alternative bases:
(1) the Wardley Parties had tendered, and the Trust had accepted,
final payment under the Agreement and (2) accord and
satisfaction.1 During the summary judgment hearing, the district
1. The Trust did not argue to the district court that a unilateral or
mutual mistake as to the terms of the Agreement justified
reformation or rescission of the agreement to accept the check as
final payment. See, e.g., Cantamar, LLC v. Champagne, 2006 UT App
321, ¶ 38, 142 P.3d 140 (“A mutual mistake occurs when both
parties, at the time of contracting, share a misconception about a
basic assumption or vital fact upon which they based their
bargain.” (citation and internal quotation marks omitted)).
Similarly, the Trust did not assert mistake in response to the
Wardley Parties’ accord and satisfaction defense. See generally
England v. Horbach, 944 P.2d 340, 344, 346 (Utah 1997) (holding that
where the parties were mutually mistaken in their belief that the
debtor owed the creditor $25,000, there was not “a compromise to
(continued...)
20120263‐CA 4 2013 UT App 129Horne Family Trust v. Wardley/McLachlan
court stated, “I don’t even have to get to an accord and satisfaction,
based upon [the Wardley Parties’] argument, as it relates to a
tender and acceptance.” Later, while articulating its ruling in favor
of the Wardley Parties, the district court explained,
Now, there’s an argument that the accord and
satisfaction does not apply because there was no
dispute. I think[] there was a dispute as it relates to
the applicable interest rate and, then, there was a
concession, on the one side, as it relates to that, but,
at the very least, there’s a tender, there’s an offer,
there’s an acceptance. The check was tendered. It was
accompanied with significant written communica‐
tions and, then, within the one document, . . . some
six times there’s notice of the debtor’s intentions in
connection with that.
There’s no mutual mistake and, in connection
with this, I’ll grant [the Wardley Parties’] motion . . . .
¶11 Subsequently, the Trust’s trial counsel indicated that he
“under[stood] . . . that [the Wardley Parties] have been granted
their motion for summary judgment on a new contract which arose
to modify the . . . [A]greement.” The district court immediately
clarified,
No. I did it on both claims because there is a—they
have made two arguments as it relates to that. One is
accord and satisfaction but, initially, as it relates to
1. (...continued)
satisfy an uncertain debt” and an accord and satisfaction did not
occur); see also Neiderhauser Builders & Dev. Corp. v. Campbell, 824
P.2d 1193, 1198 (Utah Ct. App. 1992) (“When there is a unilateral
mistake, and a party accepts less than it is entitled to, the theory of
accord and satisfaction will not prevent the mistaken party’s
recovery of the actual, correct amount.”).
20120263‐CA 5 2013 UT App 129Horne Family Trust v. Wardley/McLachlan
the offer and acceptance under a tender and that
constitutes a contract. A check was tendered accom‐
panied with written communications and constituted
a contract and I’ve ruled I believe there is sufficient
evidence to support that or, in the alternative that, in
fact, there is accord and satisfaction . . . .
¶12 The district court’s written ruling on the Wardley Parties’
request for attorney fees provides additional support for our
conclusion that final payment constituted one basis for summary
judgment and accord and satisfaction served as an alternative
basis. The district court’s order explained that the Wardley Parties
“did prevail on [their] motion [for summary judgment], which
argued two theories. The first was accord and satisfaction. The
second was that the communication, tender of payment, and
acceptance of payment created a new contract.”
¶13 Thus, the district court’s summary judgment ruling was
based on two alternative theories. Yet in its briefing to this court,
the Trust challenges only the district court’s ruling on accord and
satisfaction. Accordingly, we affirm the district court’s judgment
on the unchallenged alternative ground of payment without
reaching the merits of that decision.2 See generally Butler, Crockett &
Walsh Dev. Corp., 2013 UT App 30, ¶ 28.
¶14 On cross‐appeal, the Wardley Parties challenge the district
court’s conclusion that they are not entitled to attorney fees under
the Agreement. “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. “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 established by contract,
Utah law clearly requires the court to apply the contractual
2. Indeed, we express no opinion about the correctness of either of
the grounds for the district court’s decision.
20120263‐CA 6 2013 UT App 129Horne Family Trust v. Wardley/McLachlan
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.). In relevant part, the Agreement states, “Should legal action
be necessary to enforce, construe, cancel, terminate, rescind or
recover for the breach of the provisions of this Agreement, the
prevailing party shall be entitled to recover all costs of suit,
including reasonable attorney’s fees incurred herein.”
¶15 The Trust’s complaint alleges breach of contract, and the
Wardley Parties successfully defended against that claim based on
the Trust’s receipt of full payment and accord and satisfaction. See
Utah R. Civ. P. 8 (“A party shall set forth affirmatively in a
responsive pleading accord and satisfaction, . . . payment, . . . and
any other matter constituting an avoidance or affirmative de‐
fense.”). As a result, the Wardley Parties are the prevailing party in
a legal action brought to enforce the Agreement.
¶16 Nevertheless, the Trust contends that the Wardley Parties
are not entitled to attorney fees because the district court granted
summary judgment only on the basis of a purported accord and
satisfaction. Because an accord and satisfaction is a separate
contract from the Agreement and did not have its own attorney fee
provision, the Trust contends that the Agreement’s attorney fee
provision is not applicable. See, e.g., Quealy v. Anderson, 714 P.2d
667, 669 (Utah 1986) (“[A]ttorney fees are not recoverable by either
party unless there was a provision for them in the accord and
satisfaction.”); Golden Key Realty, Inc. v. Mantas, 699 P.2d 730, 734
(Utah 1985) (“Since the plaintiffs have not prevailed in enforcing
the listing agreement and since there was no provision in the
accord and satisfaction for attorney’s fees, they are not entitled to
recover them.”). But see Dishinger v. Potter, 2001 UT App 209,
¶¶ 38–39, 47 P.3d 76 (remanding for a determination of whether
either party should be awarded attorney fees as the prevailing
party under a lease after concluding that there was an accord and
satisfaction). In this case, however, we have concluded that the
district court also granted summary judgment on the ground that
the Wardley Parties had fully performed because the Trust
20120263‐CA 7 2013 UT App 129Horne Family Trust v. Wardley/McLachlan
accepted the $473,422.96 as final payment. The district court denied
fees on the basis that the acceptance of that amount as final
payment also created a new contract. On appeal, the Wardley
Parties argue that the district court “improperly conflated” their
defenses by suggesting that both payment and accord and satisfac‐
tion created a new contract unconnected with the Agreement.
¶17 We agree that the district court’s decision conflates the two
theories. “Generally, formation of a contract requires an offer, an
acceptance, and consideration.” Cea v. Hoffman, 2012 UT App 101,
¶ 24, 276 P.3d 1178. In the case of an accord and satisfaction, the
consideration requirement is satisfied by the settlement of a
dispute between the parties. Golden Key Realty, 699 P.2d at 733 (“As
a general rule, a creditor who agrees to accept a lesser amount than
is due is not bound by his agreement, because of lack of consider‐
ation. However, where there is a bona fide dispute as to the
amount due, sufficient consideration exists.” (citation omitted)).
Where there is no dispute as to the amount owed, the defense of
accord and satisfaction is unavailable. See England v. Horbach, 944
P.2d 340, 344 (Utah 1997) (“[T]here could have been no accord and
satisfaction . . . because the first element of accord and satisfac‐
tion—the existence of a bona fide dispute or uncertainty over an
unliquidated amount—was not present.”).3 Where the parties are
certain as to the amount owed, but are actually mistaken, the
acceptance of the payment “represent[s] merely the conclusion of
the parties’ original contract . . . .” See id. The Wardley Parties
argued both payment and accord and satisfaction, and the district
court ruled in favor of the Wardley Parties on each.4 Under the
3. In the absence of a dispute, there is no consideration for the Trust
to enter into a new contract to accept less than was due under the
Agreement.
4. Although the theories are mutually exclusive because accord and
satisfaction is dependent upon a dispute over the amount owed
and payment is dependent upon the absence of a dispute, see
(continued...)
20120263‐CA 8 2013 UT App 129Horne Family Trust v. Wardley/McLachlan
payment theory, the parties merely concluded their original
Agreement and the attorney fees provision therein remains
applicable. See id.
¶18 The Wardley Parties prevailed in the Trust’s breach of
contract action and are entitled to recover their attorney fees under
the plain language of the Agreement. Because the Wardley Parties
“have also prevailed on appeal, they are entitled to their reasonable
attorney fees incurred in this court.” See Gilbert Dev. Corp. v.
Wardley Corp., 2010 UT App 361, ¶ 58, 246 P.3d 131. We remand to
the district court for a calculation of those fees.
¶19 In sum, the district court’s grant of summary judgment
rested on two independent alternative grounds, and we affirm that
order summarily because the Trust challenges only one of those
grounds on appeal. The Wardley Parties were the prevailing party
in the Trust’s breach of contract action and are entitled to recover
their attorney fees. Accordingly, we reverse the district court’s
denial of the Wardley Parties’ request for attorney fees and remand
for a determination of the Wardley Parties’ reasonable attorney fees
incurred in the district court and on appeal.
4. (...continued)
generally England, 944 P.2d at 344 , the Trust has challenged only the
determination that there was an accord and satisfaction.
20120263‐CA 9 2013 UT App 129