JENCO LC v. Perkins Coie LLP ( 2016 )

2016 UT App 140THE UTAH COURT OF APPEALS
JENCO LC, DEAN GARDNER INVESTMENT LC, AND F.M. SNOW
PROPERTIES LLC,
Appellees,
v.
PERKINS COIE LLP,
Appellant.
Opinion
No. 20140996-CA
Filed July 8, 2016
Fifth District Court, St. George Department
The Honorable Jeffrey C. Wilcox
No. 120500458
James L. Ahlstrom and Barry Stratford, Attorneys
for Appellant
Bryan J. Pattison, Attorney for Appellees
JUDGE GREGORY K. ORME authored this Opinion, in which JUDGES
STEPHEN L. ROTH and KATE A. TOOMEY concurred.
ORME, Judge:
¶1 Appellees JENCO LC, Dean Gardner Investment LC, and
F.M. Snow Properties LLC (collectively JENCO) entered into an
agreement with Ledges Partners LLC (Ledges) in which Ledges
agreed to purchase certain real property from JENCO. After
Ledges defaulted on this agreement, JENCO sought judicial
foreclosure of its trust deed given as security for Ledges’
performance of its obligations. Ledges, which is not a party to
this appeal, did not contest the foreclosure proceeding, and a
default judgment was entered against it. Appellant Perkins Coie
LLP (Perkins)—a law firm that had done work for Ledges and
that held a junior lien on the same property—was named a
defendant and answered JENCO’s foreclosure complaint. After
JENCO v. Perkins Coie
both JENCO and Perkins moved for summary judgment, the
district court ruled against Perkins and granted summary
judgment to JENCO. Perkins appeals from this adverse decision.
We affirm.
BACKGROUND
¶2 In March 2004, JENCO and Ledges entered into an
agreement (the Option Agreement) that reserved to Ledges an
option to purchase certain real property that it intended to
resell.1 The Option Agreement included a formula by which
Ledges agreed to pay JENCO ‚for the Purchased Property.‛
Importantly, the Option Agreement defined the capitalized term
‚Minimum Payment‛ as ‚*t+he amount calculated by
multiplying the number of acres (or partial acres) in the
Purchased Property by Forty Thousand Dollars.‛ The Option
Agreement also required Ledges to ‚execute and deliver *to
JENCO] . . . [a] Note and [a] Trust Deed encumbering the
Purchased Property.‛
¶3 In October 2005, Ledges exercised its option to begin
purchasing property from JENCO. In accordance with the
Option Agreement, Ledges executed a promissory note (the
JENCO Note), which provided that upon default ‚the entire
unpaid principal balance of [this] Note, [shall] . . . become due
and payable.‛ The JENCO Note further provided that, in the
event of default, all acquired but as-yet undeveloped and unsold
property—property that the Option Agreement defined as ‚Bulk
Property‛—was to be appraised for fair market value and
deemed sold at that price, with the balance due on the JENCO
Note to be adjusted accordingly. The trust deed required Ledges
1. Ledges’ plan was to develop the property and sell lots, but it
also contemplated reselling undeveloped property. This appeal
deals only with undeveloped property, referred to by the parties
as ‚Bulk Property.‛
20140996-CA 2 2016 UT App 140JENCO v. Perkins Coie
‚*t+o pay . . . all taxes and assessments affecting‛ the acquired
property.
¶4 Nearly five years later, in July 2010, the parties signed
both an amendment to the Option Agreement (First
Amendment) and a Settlement Agreement,2 the latter being
intended to settle, as explained by JENCO in its brief, ‚the
various defaults that Ledges . . . had accumulated over the
preceding five years.‛ The First Amendment modified the
payment provision of the Option Agreement.3 Specifically,
section 4 of the First Amendment provided—and the
underlining is in the document—that Ledges’
sole obligation to make payments to [JENCO] with
respect to [acquired] Property shall be limited to:
(i) the specific Percentage Payments stipulated in
. . . Section 4, which amounts are payable upon the
sale of the property; [and] (ii) such payment
obligations as shall arise as a result of *JENCO’s+
exercise of its enforcement rights under the Trust
Deeds . . . .
Section 4 obligated Ledges, for each resale of Bulk Property, to
make a ‚Percentage Payment,‛ defined as ‚the Minimum
Payment allocable to any Bulk Property, plus 25% of the excess
2. Both Perkins’s and JENCO’s briefs on appeal state that the
First Amendment and the Settlement Agreement were both
signed on July 15, 2010.
3. We refer to the Option Agreement, as amended by the First
Amendment, as the ‚Amended Option Agreement.‛
20140996-CA 3 2016 UT App 140JENCO v. Perkins Coie
Selling Price above an amount equal to the Minimum Payment
attributable to such sale.‛4
¶5 The Settlement Agreement also addressed the payment
scheme, outlined in the Amended Option Agreement. Section
3(d) of the Settlement Agreement provided that ‚Ledges has
paid all minimum payments due to [JENCO] under the
Amended Option Agreement, and no additional minimum
payments will be required thereunder.‛ Section 3(e) of the
Settlement Agreement further clarified that ‚*t+he only amounts
that will be payable to [JENCO] with respect to properties
previously acquired from [JENCO] under the Amended Option
Agreement are the amounts specifically stipulated in the First
Amendment, including the cost of collection thereof*.+‛
¶6 As Ledges struggled to pay JENCO, it also fell behind on
its payments due Perkins. As a result, Ledges granted Perkins a
promissory note (the Perkins Note) secured by a Deed of Trust.
Both the Perkins Note and the Deed of Trust were executed on
July 15, 2010—the same day that the First Amendment and
Settlement Agreement were signed. See supra note 2. Once the
Deed of Trust in favor of Perkins was recorded, Perkins held a
lien on the Purchased Property junior to JENCO’s trust deed.
¶7 Apparently unbeknownst to JENCO and not mentioned
in the Settlement Agreement, between 2007 and 2011 Ledges had
failed to pay any of the property taxes assessed against the
Purchased Property. As a result, in April 2012 JENCO was
4. The Settlement Agreement confirms that these capitalized
terms were used as defined in the Option Agreement. Thus, as
explained above, a Minimum Payment equals $40,000 per acre.
See supra ¶ 2. The ‚Selling Price‛ is defined as ‚*t+he gross
purchase price which a buyer pays in an arms-length
transaction, before deducting any real estate commissions or
closing costs.‛
20140996-CA 4 2016 UT App 140JENCO v. Perkins Coie
forced to pay the delinquent property taxes, penalties, and
interest owed on the property to avoid a tax sale. Given Ledges’
default on its obligation to pay the taxes, JENCO elected to
accelerate all amounts due under the JENCO Note and exercised
its right to foreclose on the property.
¶8 Just over six months later, in November 2012, the
manager of Ledges contacted JENCO and disclosed that Ledges
was in negotiations with a proposed buyer. Perkins concedes
that in the course of this discussion, JENCO informed Ledges
that ‚to get a payoff amount for the *JENCO+ Note, *JENCO+
would need specific acreage on what portions of the . . . Property
Ledges was planning to sell, and [JENCO] also gave a rough
estimate of $832,000 as a Minimum Payment.‛5 JENCO informed
Ledges that other sums would need to be added to this amount,
namely $197,000 as the 25% payment called for in the First
Amendment, the now-paid property taxes, default interest, and
attorney fees. Ledges did not challenge the payoff amount or any
of its components but asked only for a waiver of the default
interest. After the proposed sale fell through, JENCO continued
the foreclosure action. Perkins, as a junior lienholder on the
Purchased Property, was the only party to respond to JENCO’s
complaint, and a default judgment was entered against Ledges
in February 2013.
¶9 Approximately a year and a half later, and two years after
discovery opened, Perkins moved for summary judgment on the
ground that through the Settlement Agreement, JENCO
affirmatively waived its right to receive the contractual
‚Minimum Payment.‛ JENCO disputed Perkins’s interpretation
5. The $832,000 estimate was apparently calculated using the
Minimum Payment formula found in the Option Agreement and
the acreage JENCO estimated was included in the proposed sale.
See supra ¶ 2.
20140996-CA 5 2016 UT App 140JENCO v. Perkins Coie
and filed a cross-motion for summary judgment, which the
district court ultimately granted. This appeal followed.
ANALYSIS
¶10 When reviewing a grant of summary judgment, ‚*a+n
appellate court reviews a trial court’s legal conclusions and
ultimate grant or denial of summary judgment for correctness,
and views the facts and all reasonable inferences drawn
therefrom in the light most favorable to the nonmoving party.‛
Orvis v. Johnson, 2008 UT 2, ¶ 6, 177 P.3d 600 (citations and
internal quotation marks omitted). See also Utah R. Civ. P. 56(c)
(explaining that summary judgment is appropriate if ‚there is no
genuine issue as to any material fact and . . . the moving party is
entitled to a judgment as a matter of law‛).6 Such review
considers, ‚in addition to whether there is any genuine issue as
to any material fact, whether the movant is entitled to judgment
as a matter of law.‛ Stevensen v. Goodson, 924 P.2d 339, 350 (Utah
1996). In the course of our review, ‚we grant no deference to the
district court’s legal conclusions.‛ Anderson Dev. Co. v. Tobias,
2005 UT 36, ¶ 19, 116 P.3d 323 (citation and internal quotation
marks omitted).
I. The Plain Language of the First Amendment, in Conjunction
with the Settlement Agreement, Unambiguously Supports
JENCO’s Interpretation and Precludes Perkins’s Interpretation.
¶11 ‚The underlying purpose in construing or interpreting a
contract is to ascertain the intentions of the parties to the
contract.‛ WebBank v. American Gen. Annuity Serv. Corp., 2002 UT
88, ¶ 17, 54 P.3d 1139. Furthermore, ‚we consider each contract
provision . . . in relation to all of the others, with a view toward
6. Rule 56 was reorganized effective May 1, 2016. The former
rule 56(c) is now rule 56(a). We refer in this opinion to the rule as
written at the time the district court granted JENCO's motion.
20140996-CA 6 2016 UT App 140JENCO v. Perkins Coie
giving effect to all and ignoring none.‛ Id. ¶ 18 (omission in
original) (citation and internal quotation marks omitted).
Although extrinsic evidence may be considered in some
circumstances, ordinarily ‚*i+f 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. ¶ 19 (citation and internal quotation marks omitted).
‚An ambiguity exists where the *contractual+ language is
reasonably capable of being understood in more than one
sense.‛ Central Florida Invs., Inc. v. Parkwest Assocs., 2002 UT 3,
¶ 12, 40 P.3d 599 (citation and internal quotation marks omitted).
¶12 Taken alone, section 3(d) of the Settlement Agreement
might seem to waive JENCO’s right to an additional ‚Minimum
Payment.‛ After all, the Settlement Agreement states that
‚Ledges has paid all minimum payments due to [JENCO] under
the Amended Option Agreement, and no additional minimum
payments will be required thereunder.‛7 Thus, if the Settlement
Agreement ended here, we would likely agree that JENCO
waived its right to receive a portion of the Percentage Payment
defined in the First Amendment—that is, the portion derived
from the calculation of the Minimum Payment. Section 3(e) of
the Settlement Agreement states, however, with our emphasis,
that ‚*t+he only amounts that will be payable to *JENCO+ with
7. Although the Settlement Agreement is not a model of clarity
with respect to the intended meaning of the term ‚minimum
payments,‛ writing this term in lower case in the Settlement
Agreement at least suggests that it has a different meaning than
the capitalized term as used in the Option Agreement and the
First Amendment, especially because the Settlement Agreement
provides that ‚*c+apitalized term*s+ . . . have the meanings given
them in the Amended Option Agreement.‛ In any event, given
the clarity of section 3(e), it is unnecessary to determine the
interpretation and operation of section 3(d) read in isolation.
20140996-CA 7 2016 UT App 140JENCO v. Perkins Coie
respect to properties previously acquired from [JENCO] under
the Amended Option Agreement are the amounts specifically
stipulated in the First Amendment.‛ Thus, Perkins’s attempt to
read out the Minimum Payment provision—itself a part of the
‚amounts specifically stipulated in the First Amendment‛—is
unavailing.
¶13 There are several additional points worth noting. First, it
is instructive that both the First Amendment and the Settlement
Agreement were signed on the same day. See supra note 2. It is
unlikely that JENCO, having negotiated a favorable term, would
agree to have that term rescinded a few minutes later. Second,
Ledges, the actual obligor, has never disputed JENCO’s
calculation of the amount due and owing to JENCO. Third,
Perkins’s reading of section 3(d) would render section 3(e)—not
to mention the payment provisions of the First Amendment—
entirely superfluous.8 We read the contract to say exactly what it
unambiguously, if somewhat cumbersomely, expresses: the only
8. As the district court correctly observed, ‚*i+f Ledges . . . and
[JENCO] had understood the amount of the Minimum Payment
portion to be zero, as Perkins . . . claims, then it makes no sense
that they would have included the term ‘plus’ on top of zero to
determine the amount due and payable.‛ Whatever the truth of
the stereotype that legal professionals are bad at math, see Arden
Rowell & Jessica Bragant, Numeracy and Legal Decision Making,
46 Ariz. St. L.J. 191, 193 (2014), we assume that all parties to the
suit knew that the sum of zero plus any number is equal to that
number, see Properties of Zero, Basic-Mathematics.com,
http://www.basic-mathematics.com/properties-of-zero.html (last
visited July 5, 2016) [https://perma.cc/J2TS-AWYK] (noting that
‚a number does not change when adding or subtracting zero
from that number‛). Thus, we agree with the district court that
the terms of the Settlement Agreement ‚make*+ no sense‛ if
Perkins’s interpretation of those terms is adopted.
20140996-CA 8 2016 UT App 140JENCO v. Perkins Coie
payments Ledges owes to JENCO are the ‚amounts specifically
stipulated in the First Amendment,‛ i.e., the ‚Minimum
Payment, . . . plus 25% of the excess Selling Price.‛ 9 Because the
contract is unambiguous, ‚the language within the four corners
of the contract‛ makes Perkins’s alternative interpretation
untenable. See WebBank, 2002 UT 88, ¶ 19 (citation and internal
quotation marks omitted). Therefore, the district court did not
err in interpreting the contract as it did, ‚as a matter of law.‛ Id.(citation and internal quotation marks omitted).
II. The District Court Properly Considered the Admissible
Evidence That Was Presented to It and Did Not Improperly
Weigh the Evidence.
¶14 Perkins’s main argument, treated above, is that while the
key agreements are clear and unambiguous, they should have
been interpreted, in Perkins’s favor, as a matter of law. Its
fallback position is that if the agreements are not interpreted in
9. As we read the Settlement Agreement, sections 3(b)–(d) refer
primarily to Ledges’ settlement of its outstanding dispute with
JENCO over certain funds that were placed in escrow to be
delivered to JENCO after the sale of several residential lots but
that were returned to Ledges instead (the Missed Payment
Amount). It would appear, then, that while section 3(d) refers to
‚all minimum payments due,‛ it is not referring to the term
‚Minimum Payment‛ as defined in the First Amendment.
Instead, it simply means that when the Settlement Agreement
was signed, Ledges owed JENCO no payments aside from the
Missed Payment Amount. Our reading is bolstered by Ledges’
further acknowledgment in section 3(e) that, as future lots were
(or were not) sold, it would incur additional liability ‚with
respect to properties previously acquired from *JENCO+.‛ Such
liability was to be determined according to the terms of the First
Amendment.
20140996-CA 9 2016 UT App 140JENCO v. Perkins Coie
the manner Perkins urges, then they were at least ambiguous
enough to render summary judgment in JENCO’s favor
improper.10 There is nothing illogical with this two-pronged
approach. As we previously explained,
Cross-motions for summary judgment do not ipso
facto dissipate factual issues, even though both
parties contend . . . that they are entitled to prevail
because there are no material issues of fact. Rather,
cross-motions may be viewed as involving a
contention by each movant that no genuine issue of
fact exists under the theory it advances, but not as
10. While Perkins is not responsible for the drafting of the
Option Agreement or the JENCO Note and trust deed, Perkins
acknowledges that the interpretation of ‚its own work‛ is at the
heart of this appeal. Thus, although we decide this issue on other
grounds, given that Perkins drafted the First Amendment and
Settlement Agreement—for its then-client, Ledges— it is peculiar
that Perkins now suggests that its own drafting is ambiguous. For
one thing, clients do not engage lawyers to draft ambiguous
contracts, and Perkins should not benefit from ambiguity in its
own drafting. Moreover, an ambiguous contract is interpreted
against the drafter. See, e.g., Sears v. Riemersma, 655 P.2d 1105,
1107 (Utah 1982) (‚*A+ny uncertainty with respect to
construction of a contract should be resolved against the party
who *drafted+ the agreement.‛); Parks Enters., Inc. v. New Century
Realty, Inc., 652 P.2d 918, 920 (Utah 1982) (‚It is also settled law
that a contract will be construed against its drafter.‛). As the
doctrine is regularly applied to a party to a contract, even
though it is often that party’s counsel who is responsible for
drafting the contract, see Sears, 655 P.2d at 1107 (applying the
doctrine against the party whose counsel had drafted the
contract), it is even more appropriate to apply it directly against
that counsel on the rare occasion when the opportunity presents
itself.
20140996-CA 10 2016 UT App 140JENCO v. Perkins Coie
a concession that no dispute remains under the
theory advanced by its adversary. In effect, each
cross-movant implicitly contends that it is entitled
to judgment as a matter of law, but that if the court
determines otherwise, factual disputes exist which
preclude judgment as a matter of law in favor of
the other side.
Wycalis v. Guardian Title, 780 P.2d 821, 824–25 (Utah Ct. App.
1989) (omission in original) (citations and internal quotation
marks omitted). But the alternative argument is unavailing in
this case.
¶15 On summary judgment, the district court may neither
weigh credibility nor assign weight ‚to conflicting evidence.‛
Martin v. Lauder, 2010 UT App 216, ¶ 14, 239 P.3d 519. Thus, to
qualify for summary judgment, a party must demonstrate that
no dispute exists concerning material facts. Id. ¶¶ 14–15. And
while an appellant who is challenging a summary judgment
entered against it ‚is ‘entitled to all favorable inferences, *it+ is
not entitled to build a case on the gossamer threads of whimsy,
speculation and conjecture.’‛ Ladd v. Bowers Trucking, Inc., 2011
UT App 355, ¶ 7, 264 P.3d 752 (quoting Manganaro v. Delaval
Separator Co., 309 F.2d 389, 393 (1st Cir. 1962)). In essence, ‚the
parties must submit admissible evidence‛ ‚*t+o present an issue
of material fact,‛ Ladd, 2011 UT App 355, ¶ 7, and
‚unsubstantiated conclusions and opinions are inadmissible,‛
Martin, 2010 UT App 216, ¶ 6 n.4 (citation and internal quotation
marks omitted).
¶16 As the district court noted, ‚*t+he facts as set forth *by
JENCO were+ . . . undisputed.‛ This was true even after two
years of discovery, during which Perkins apparently did not
turn up any evidence contradicting JENCO’s evidence or
JENCO’s interpretation of the legal effect of that evidence.
Indeed, Perkins chose not to depose any of Ledges’ executives or
employees. In JENCO’s words, Perkins ‚instead stood on its
20140996-CA 11 2016 UT App 140JENCO v. Perkins Coie
summary judgment papers without a single sworn statement
contradicting or explaining any of Ledges’ actions and conduct.‛
And Perkins’s contention that Ledges’ former executives
‚might‛ dispute JENCO’s interpretation of the agreements was
simply supposition that Perkins could not rely upon to avoid
summary judgment in favor of JENCO. See Ladd, 2011 UT App
355, ¶ 7; Martin, 2010 UT App 216, ¶ 6 n.4. Accordingly, there
was no evidence before the district court from which it could
have inferred that a dispute of material fact existed that bore on
the interpretation of key terms in the agreement between the
parties to the agreement, and therefore, it properly granted
summary judgment to JENCO. See Evans v. Huber, 2016 UT App
17, ¶¶ 13–16, 366 P.3d 862 (noting that where a party’s
‚opposition to summary judgment merely rested on allegations
in *its+ complaint,‛ ‚failed to refute the facts *as+ set forth in *the
opposing party’s+ motion[,] and did not provide or cite any
evidentiary support‛ for its position, the district court was right
to conclude that there was no ‚genuine issue of material fact‛
and to grant summary judgment to the opposing party).
¶17 Furthermore, as noted, ‚*t+he underlying purpose in
construing or interpreting a contract is to ascertain the intentions
of the parties to the contract.‛ WebBank v. American Gen. Annuity
Serv. Corp., 2002 UT 88, ¶ 17, 54 P.3d 1139 (emphasis added).
Perkins is not now, and never has been, a party to the
agreements between JENCO and Ledges. Thus, Perkins’s
‚intentions‛ with respect to those agreements are irrelevant. See
id.III. JENCO Is Entitled to Augment Its Judgment with the
Amount of Attorney Fees Reasonably Incurred on Appeal.
¶18 Although no agreement addressing attorney fees exists
between JENCO and Perkins, the JENCO Note and trust deed
both authorized JENCO to collect attorney fees, among other
costs, from Ledges in the event that an enforcement action
20140996-CA 12 2016 UT App 140JENCO v. Perkins Coie
proved necessary. The JENCO Note provides, with our
emphasis, that Ledges
shall pay all costs and expenses incurred by
[JENCO] in connection with the collection and
enforcement of this Note (regardless of the
particular nature of such costs and expenses and
whether incurred before or after the initiation of
suit or before or after judgment), including, without
limitation, court costs and . . . attorneys’ fees and
costs.
JENCO thus contends that fees it incurred in connection with the
instant appeal are recoverable as against Ledges, and it seeks to
have its judgment augmented accordingly. Perkins does not
oppose the request in its reply brief, and the request appears to
be in order. Accordingly, we remand the case to the district court
for the calculation of JENCO’s attorney fees reasonably incurred
on appeal and augmentation of its judgment as appropriate. See
Department of Soc. Servs. v. Adams, 806 P.2d 1193, 1197–98 (Utah
Ct. App. 1991).
CONCLUSION
¶19 The district court properly granted summary judgment to
JENCO. The plain language of the agreements is unambiguous
and forecloses Perkins’s alternative interpretation. Perkins
presented no admissible evidence to the district court disputing
the factual context against which the court interpreted the
agreement. The court properly accepted the facts JENCO
presented as undisputed because Perkins did not dispute them.
Accordingly, we affirm the district court’s judgment in all
respects, remanding to the district court only for the calculation
of JENCO’s fees reasonably incurred on appeal and for
augmentation of its judgment as appropriate.
20140996-CA 13 2016 UT App 140