Airport Park Salt Lake City LP v. 42 Hotel SLC LLC , 816 Utah Adv. Rep. 4 ( 2016 )

2016 UT App 137THE UTAH COURT OF APPEALS
AIRPORT PARK SALT LAKE CITY LP,
Appellee,
v.
42 HOTEL SLC LLC,
Appellant.
Opinion
No. 20140981-CA
Filed June 30, 2016
Third District Court, Salt Lake Department
The Honorable Robert P. Faust
No. 110916940
Bruce Wycoff, Attorney for Appellant
Scott O. Mercer and Scott S. Bridge, Attorneys
for Appellee
JUDGE MICHELE M. CHRISTIANSEN authored this Opinion, in
which JUDGE STEPHEN L. ROTH and SENIOR JUDGE PAMELA T.
GREENWOOD concurred. 1
CHRISTIANSEN, Judge:
¶1 In this case, we review the district court’s denial of a
request for attorney fees. We vacate the court’s order and
remand to the district court for further proceedings consistent
with this opinion.
1. Senior Judge Pamela T. Greenwood sat by special assignment
as authorized by law. See generally Utah R. Jud. Admin. 11-
201(6).
Airport Park Salt Lake City v. 42 Hotel SLC
BACKGROUND
¶2 42 Hotel SLC LLC (Hotel) owns a parcel of land on which
it operates its business. Patrons and employees access that parcel
and several adjacent lots via a private road owned by Airport
Park Salt Lake City LP (Developer). Developer’s road is
burdened by at least two easements that benefit specified lots
abutting the road.
¶3 The earlier of these easements (the First Easement) grants
access to certain benefitted parcels via the road in exchange for
an annual maintenance fee that increases by 4% per year. The
First Easement requires parties to attempt to resolve any
enforcement dispute by negotiation. If negotiation fails, the
parties are required to engage in professional mediation. And if
both negotiation and mediation fail, the parties are required to
submit the dispute to binding arbitration. The First Easement
further provides that the prevailing party “shall be entitled to
recover its costs and reasonable attorney’s fees.”
¶4 The later of the easements (the Second Easement) grants
access to other benefitted parcels via the road in exchange for
payment of a pro rata share of the road’s actual maintenance and
repair costs. The Second Easement does not require negotiation,
mediation, or arbitration of disputes. It simply provides that the
owner of the benefitted parcel may enforce the easement “by any
proceeding at law or in equity” and that “[t]he prevailing party
in such enforcement action or suit shall be entitled to receive an
award of its reasonable attorneys’ fees and costs.”
¶5 Hotel acquired its parcel in 2008, and the following year,
Developer asked Hotel to pay maintenance dues pursuant to the
First Easement. Hotel did so in the amount of $5,516.16.
Nevertheless, Developer sent a demand letter, in apparent error,
asking Hotel to pay the maintenance dues again. In response,
Hotel determined that the First Easement did not apply to its
parcel at all. Hotel therefore requested a return of the monies it
had paid. Hotel explained that its parcel was not subject to the
20140981-CA 2 2016 UT App 137Airport Park Salt Lake City v. 42 Hotel SLC
First Easement; Developer replied that if the First Easement did
not apply and Hotel refused to pay, Developer had no duty to
continue to provide access via the road. At some point during
this series of escalating demand letters, Developer threatened to
install barricades to cut off road access to Hotel’s parcel unless
Hotel paid “its fair share” of the road’s maintenance costs.
¶6 Several months later, Hotel sent Developer a copy of the
title report, which twice referred to the Second Easement but did
not mention the First Easement. On February 11, 2011,
Developer agreed to bill Hotel for maintenance costs as
calculated per the Second Easement, i.e., based on the
“completed building floor area.” Developer provided its
calculation of the building floor area to Hotel and sent an invoice
for maintenance costs that included storm drain fees, taxes, and
insurance. Hotel disputed its obligation to pay any amount
beyond simple maintenance and repair costs. Developer
responded that maintenance costs necessarily included the
additional fees because “[w]e cannot maintain the property
without paying real estate taxes on the property, having storm
drains on the property, and insuring the property. These costs
are as much a part of maintenance as sweeping and snow
removal.” Several months later, Developer sent an invoice to
Hotel that sought payment calculated per the First Easement
rather than the Second Easement.
¶7 On August 17, 2011, Developer filed a complaint against
Hotel, alleging, among other things, that Hotel had failed to pay
its obligations arising from the Second Easement. Developer
sought $6,508.78 plus attorney fees and costs. Hotel filed a
counterclaim seeking (1) declaratory judgment that Hotel’s
obligations were governed by the Second Easement rather than
the First Easement; (2) declaratory judgment that the Second
Easement’s term “maintenance and repair costs” did not include
storm drain fees, taxes, and insurance; (3) disgorgement of the
$5,516.16 Hotel had paid Developer in 2009; and (4) an award of
attorney fees pursuant to either of the easements as well as costs.
20140981-CA 3 2016 UT App 137Airport Park Salt Lake City v. 42 Hotel SLC
¶8 The parties attempted to negotiate a settlement,
eventually agreeing to all terms bar one. The term on which the
parties could not agree was the fourth recital, which described
the nature of the dispute. Hotel proposed language that
emphasized the dispute over the two easements:
WHEREAS: Since acquiring their respective
properties, [Developer] and [Hotel] have
experienced disagreements regarding which of the
two Easements defines their rights and obligations
to each other arising from [Hotel’s] right to use a
private access road across [Developer’s property]
to reach [Hotel’s property], which disagreements
culminated in [Developer] filing a Complaint . . . .
In contrast, Developer proposed a recital that emphasized the
monetary aspects of the dispute:
WHEREAS: Since acquiring their respective
properties, [Developer] and [Hotel] have
experienced disagreements regarding monies
owed to [Developer] from [Hotel’s] use of the
private access road across [Developer’s property]
to reach [Hotel’s property], which disagreements
culminated in [Developer] filing a Complaint . . . .
¶9 On April 23, 2013, Hotel filed a motion seeking
enforcement of the unsigned settlement agreement. Developer
opposed that motion and argued that there had not been a
meeting of the minds, that Developer’s response was a
counteroffer rather than acceptance, that Hotel had rejected the
counteroffer, that the proposed settlement agreement was
unsigned, and that the proposed settlement agreement did not
dispose of all disputes. The district court conducted a hearing, at
which Hotel explained that the disputed fourth recital was
“stage setting but . . . not part of the agreement.” Hotel asserted
that the nature of the dispute was not an essential term of the
agreement because it was a historical fact that could not be
20140981-CA 4 2016 UT App 137Airport Park Salt Lake City v. 42 Hotel SLC
changed by a recital. Accordingly, Hotel argued that the
essential terms of the proposed agreements were identical. Hotel
concluded that it would be “more than happy if the Court
would[] order both of us to sign the settlement agreement
without the fourth recital at all.”
¶10 The district court ruled that the fourth recital “is not a
substantial or material term to the agreement,” struck it from the
proposed settlement agreement, and enforced the remainder of
that agreement. 2 The district court explained that the issue of
whether to award attorney fees in the underlying case was not
properly before it because the settlement agreement reserved the
issue of attorney fees. Nevertheless, the district court opined
that, because neither party fully prevailed, it would not award
fees if asked to do so:
[I]f the Court were called upon by either party to
determine which party was the prevailing party
and thus entitled to fees, the court could easily
determine neither party is awarded attorney fees
and costs as each party was both successful and
unsuccessful in various aspects of their claims and
defenses and the court would also consider the fact
the parties settled this matter.
¶11 Developer then moved to dismiss the case “with prejudice
and on the merits, with each party bearing its own attorney fees
and costs,” on the basis that the case had been fully resolved by
the settlement agreement. Hotel responded by filing a motion
seeking an award of $55,804.06 in attorney fees on the grounds
that (1) Hotel had convinced Developer that the First Easement
did not apply, (2) Hotel had established that “maintenance and
repair costs” in the Second Easement did not include storm drain
2. Neither party challenges the district court’s decision to enforce
the settlement agreement.
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fees, and (3) Hotel had succeeded in asking the court to enforce
the settlement agreement. The district court denied Hotel’s
attorney-fee motion:
Turning initially to [Hotel’s] Motion for Attorney
Fees, after reviewing the record, the Court is not
persuaded such is well taken. Indeed, the parties
resolved all their substantive claims in this case
through the settlement agreement enforced by this
Court on June 17, 2013. The Court did not
adjudicate any claim asserted by either party and
no judgment has been entered. Moreover, [Hotel]
is not entitled to fees for pre-litigation disputes
over which agreement governed as it admits it was
never bound under [the First Easement], and
regardless, under applicable Utah law, such is not
awardable, particularly here, where the parties
have settled all claims between them. Finally, the
facts indicate [Developer] was willing to sign the
settlement agreement (as long as the disputed
recital was removed) and ultimately, it was [Hotel]
who paid [Developer] for amounts incurred in
2012.
Based upon the foregoing, [Hotel’s] Motion for
Attorney Fees is, respectfully, denied.
¶12 Hotel timely appeals.
ISSUE AND STANDARDS OF REVIEW
¶13 The central issue on appeal is the propriety of the district
court’s denial of Hotel’s request for attorney fees. “If the legal
right to attorney fees is 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.”
Giles v. Mineral Resources Int’l, Inc., 2014 UT App 259, ¶ 17, 338
20140981-CA 6 2016 UT App 137Airport Park Salt Lake City v. 42 Hotel SLC
P.3d 825 (citation and internal quotation marks omitted).
Generally speaking, whether attorney fees are recoverable by the
prevailing party presents a question of law, and we review the
district court’s ruling for correctness. Federated Capital Corp. v.
Haner, 2015 UT App 132, ¶ 9, 351 P.3d 816. However, we review
a district court’s factual determination of whether a party
prevailed in a civil action for an abuse of discretion. Id.ANALYSIS
¶14 Hotel contends that the district court erred by failing to
award attorney fees to Hotel as the prevailing party. Hotel
presents three arguments in support of its challenge to the
district court’s decision not to award attorney fees. First, Hotel
argues that it is entitled to attorney fees pursuant to the First
Easement for prevailing in pre-litigation efforts to show that
Hotel was not bound by the First Easement. Second, Hotel
argues that it is entitled to attorney fees related to its successful
efforts to show that the Second Easement did not require Hotel
to pay storm drain fees, taxes, and insurance. Third, Hotel
argues that because the settlement agreement reserved the issue
of attorney fees for judicial determination, the district court
erred in concluding that attorney fees were not awardable where
the parties resolved their dispute through the settlement
agreement.
¶15 In order to award attorney fees to Hotel, the district court
would have had to determine that a legal basis for awarding
attorney fees to the prevailing party existed and that Hotel was
the prevailing party. See Mountain States Broad. Co. v. Neale, 783
P.2d 551, 555 (Utah Ct. App. 1989).
I. Legal Basis for Awarding Attorney Fees
¶16 In denying the motion for attorney fees, the district court
first ruled that the motion was not “well taken,” because “the
parties resolved all their substantive claims in this case through
20140981-CA 7 2016 UT App 137Airport Park Salt Lake City v. 42 Hotel SLC
the settlement agreement.” However, the settlement agreement
explicitly provided, “Nothing in this Settlement Agreement
compromises, limits or settles . . . either party’s claim for
attorney fees or restricts either party’s ability to seek an award of
its costs and reasonable attorney fees from the Court . . . .”
Indeed, the district court acknowledged as much in its earlier
order enforcing the settlement agreement. While the
“substantive” claims were settled via the agreement, the issue of
attorney fees was reserved. As a result, the fact that the
“substantive” claims were settled by agreement did not mandate
the result that attorney fees were not recoverable.
¶17 The court next noted that it had not adjudicated “any
claim asserted by either party and [that] no judgment has been
entered.” 3 The court explained that “under applicable Utah law,”
attorney fees were “not awardable, particularly here, where the
parties have settled all claims between them.” But the parties
had not settled all claims between them; the claim for attorney
fees had been excepted from the settlement agreement.
Moreover, the district court did not identify what authority it
was relying on for the proposition that attorney fees were “not
awardable” under “applicable Utah law,” and it is not clear that
Utah law precludes attorney-fees awards for settled claims; this
court has previously expressed doubt as to that proposition. See
Larry J. Coet Chevrolet v. Labrum, 2008 UT App 69, ¶¶ 24–25, 180
P.3d 765 (refusing to endorse a trial court’s assertion that
“‘[p]revailing party analysis must be grounded only in claims
litigated through trial and resulting in a judgment’”).
¶18 The district court continued, “Moreover, [Hotel] is not
entitled to fees for pre-litigation disputes over which agreement
governed as it admits it was never bound under [the First
Easement] . . . .” When interpreting contractual language, we
3. However, the court did adjudicate the dispute as to the
enforceability of the settlement agreement.
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consider each contract provision “in relation to all of the others,
with a view toward giving effect to all and ignoring none.” See
Café Rio, Inc. v. Larkin-Gifford-Overton, LLC, 2009 UT 27, ¶ 25, 207
P.3d 1235 (citation and internal quotation marks omitted). We
note that the First Easement’s terms precluded litigation by
requiring the parties to settle any dispute first by negotiation,
then by mediation, and finally by binding arbitration. As a
result, any dispute arising from the First Easement was
necessarily resolved in “pre-litigation.” The First Easement
nevertheless provided that “the prevailing party in such dispute
shall be entitled to recover its costs and reasonable attorney’s
fees.” (Emphasis added). Therefore, it appears that a prevailing
party could recover attorney fees incurred for “pre-litigation”
activities pursuant to the First Easement. See Café Rio, 2009 UT
27, ¶ 25. As for Hotel’s status under that easement, it is true that
Hotel succeeded in establishing that it was not bound by the
First Easement. However, standing alone, that was not a
sufficient basis for the district court to rule that attorney fees
could not be awarded pursuant to the First Easement. See, e.g.,
Hooban v. Unicity Int’l, Inc., 2012 UT 40, ¶¶ 31–32, 285 P.3d 766(holding that Utah’s reciprocal fee statute mandated an attorney-
fees award to a defendant pursuant to a contract provision even
when that defendant successfully showed that it was not a party
to the contract); see also Utah Code Ann. § 78B-5-826 (LexisNexis
2012).
¶19 We conclude that the district court erred in ruling that
Hotel could not recover attorney fees pursuant to the First
Easement even if Hotel were the prevailing party.
¶20 Hotel’s attorney-fees motion also sought an award
pursuant to the Second Easement as well as for successfully
obtaining an order enforcing the settlement agreement. The
district court’s order did not explicitly address whether the
relevant provision of the Second Easement created a legal basis
for the prevailing party to receive such an award. To the extent
that the district court intended to deny such an award on the
20140981-CA 9 2016 UT App 137Airport Park Salt Lake City v. 42 Hotel SLC
ground that the parties had settled their claims, the above
analysis makes clear that the court’s implicit determination was
erroneous.
II. Prevailing Party
A. The District Court Did Not Rule that Hotel Was Not the
Prevailing Party.
¶21 Developer contends that, even if a legal basis for an
attorney-fees award existed, the district court denied Hotel’s
motion for attorney fees on the basis that Hotel was not a
prevailing party. When a legal basis exists to award attorney fees
to “the prevailing party,” the court must determine which party,
if any, prevailed. See, e.g., Reighard v. Yates, 2012 UT 45, ¶ 41, 285
P.3d 1168.
¶22 Here, the district court’s June 17, 2013 order enforcing the
settlement agreement noted that the issue of attorney fees had
been reserved and explained how it might rule if a party
requested an attorney-fees award:
The parties settled the merits of the dispute and
normally on that basis the court would not award
fees. However, since the settlement agreement
reserves fees, if the Court were called upon by
either party to determine which party was the
prevailing party and thus entitled to fees, the court
could easily determine neither party is awarded
attorney fees and costs as each party was both
successful and unsuccessful in various aspects of
their claims and defenses and the court would also
consider the fact the parties settled this matter.
Hotel then filed a request for an award of attorney fees, which
the court denied in a September 16, 2013 order.
20140981-CA 10 2016 UT App 137Airport Park Salt Lake City v. 42 Hotel SLC
¶23 The district court explained why it concluded that there
was no legal basis for such an award. See supra ¶ 11. But the
court also ruled that, “ultimately, it was [Hotel] who paid
[Developer] for amounts incurred in 2012.” Developer would
have us read the two orders together as a determination that
Hotel was not the prevailing party.
¶24 However, we will not speculate as to the district court’s
unwritten intent. Rather, we consider as controlling the written
order issued by the court after Hotel made its attorney-fees
motion. Cf. M.F. v. J.F., 2013 UT App 247, ¶ 6, 312 P.3d 946(explaining that, “where a court’s oral ruling differs from a final
written order, the latter controls”). Once the court was actually
confronted with Hotel’s motion seeking an attorney-fees award,
the court did not conduct a prevailing-party analysis and did not
explicitly cast its order as a no-prevailing-party determination.
The court noted only that Hotel ended up owing money to
Developer. We conclude that the district court did not rule on
whether Hotel was or was not the prevailing party.
B. We Decline to Determine Whether There Was a Prevailing
Party.
¶25 On appeal, Hotel asserts that “when a trial court
erroneously determines that an appellant was not a ‘prevailing
party’, it is not necessary for an appellate court to remand to the
district court to revisit the issue.” Instead, Hotel asks us to
conclude that Hotel was the prevailing party and to order the
district court to enter an attorney-fees award in the amount
specified in Hotel’s motion for attorney fees.
¶26 “Which party is the prevailing party is an appropriate
question for the trial court.” R.T. Nielson Co. v. Cook, 2002 UT 11,
¶ 25, 40 P.3d 1119. Nevertheless, a prevailing-party determination
pursuant to a contractual attorney-fees provision may be made
by an appellate court in appropriate circumstances. See, e.g.,
Olsen v. Lund, 2010 UT App 353, ¶¶ 13–15, 246 P.3d 521(determining that defendants, who offered to settle a $23,866.98
20140981-CA 11 2016 UT App 137Airport Park Salt Lake City v. 42 Hotel SLC
claim for $5,000, were the prevailing party when the plaintiffs
recovered only $754.77 at trial, because “[t]his represents a
success rate of slightly over 3% for [the plaintiff], whereas [the
defendants] were almost 97% successful” at trial). However,
while a judgment for money damages is generally determinative
as to which party prevailed, the circumstances of a particular
case may require more complex analysis. See Crowley v. Black,
2007 UT App 245, ¶ 13, 167 P.3d 1087. For example, when a case
involves multiple claims or when the money-damages award
does not adequately represent the actual success of the parties, a
court may need to consider contractual language, the number
and type of claims, the significance of the claims in the context of
the whole action, and the dollar amounts of the claims. See id.; see
also R.T. Nielson, 2002 UT 11, ¶¶ 25–26. Consideration of these
factors “will permit a case-by-case evaluation by the trial court,
and flexibility to handle circumstances where both, or neither,
parties may be considered to have prevailed.” R.T. Nielson, 2002
UT 11, ¶ 25.
¶27 Here, Developer and Hotel engaged in extensive pre-
litigation activities including demand letters, title research, and a
floor area survey before Developer filed suit. Developer sought a
judgment for $6,508.78, a declaration that Hotel was in breach of
the Second Easement for failing to pay its share of the
maintenance costs, an injunction to stop Hotel from using the
access road, and attorney fees and costs. Hotel filed an answer
and counterclaim, seeking a declaration that the Second
Easement rather than the First Easement controlled; a
declaration that the Second Easement’s use of the term
“maintenance and repair” did not include taxes, storm drain
fees, and insurance; a disgorgement or set-off of the $5,516.16
Hotel had erroneously paid Developer pursuant to the First
Easement; an injunction preventing Developer from blocking
Hotel’s use of the road; and attorney fees. The parties then
managed to reach a settlement agreement regarding the majority
of the claims and counterclaims, leaving only the issue of
attorney fees for the district court to resolve. The district court
20140981-CA 12 2016 UT App 137Airport Park Salt Lake City v. 42 Hotel SLC
then enforced that settlement, and Hotel filed a motion seeking
$55,804.06 in attorney fees.
¶28 It appears that Hotel prevailed on many, but not all, of the
issues in this extensive litigation. The initial demand letters and
responses sent by the parties’ counsel concerned the
applicability of the First Easement, and Hotel successfully
established that it was not bound by that easement. Developer
then demanded payment pursuant to the Second Easement,
which Hotel was bound by. Hotel objected to the amount of the
payment and refused to pay. After Developer filed suit to
recover the maintenance costs, Hotel responded by bringing
several counterclaims. Judging from the content of the
settlement agreement, Hotel succeeded in showing that
Developer had included extraneous items in the maintenance
cost calculation. On the other hand, the parties came to a
settlement agreement pursuant to which, among other things,
Hotel admitted that it was obligated to pay maintenance costs to
Developer, Hotel acknowledged that it had not fully satisfied
that obligation, Developer agreed to Hotel’s understanding of
the Second Easement’s maintenance-costs provision, and the
parties agreed to reserve the issue of attorney fees and costs for
later determination.
¶29 Given this complex course of events, the fact that the
parties settled the majority of their claims (although at least the
First Easement explicitly provided for an award of attorney fees
and costs for pre-litigation activities), and the parties’
reservation of the attorney-fees issue, we decline to make a
prevailing-party determination on appeal. Rather, the district
court is better positioned to determine whether one party truly
prevailed here and, if so, for which claims and pursuant to
which easement that party is entitled to recover its attorney fees
and costs. See R.T. Nielson, 2002 UT 11, ¶ 25 (“Which party is the
prevailing party is an appropriate question for the trial court.
This question depends, to a large measure, on the context of each
20140981-CA 13 2016 UT App 137Airport Park Salt Lake City v. 42 Hotel SLC
case, and, therefore, it is appropriate to leave this determination
to the sound discretion of the trial court.”). 4
CONCLUSION
¶30 The district court erred in determining that there was no
legal basis for an award of attorney fees. We therefore vacate its
denial of Hotel’s motion seeking an attorney-fees award. We
remand the case to the district court without expressing an
opinion as to whether a single party prevailed below and which
party that might be.
4. Hotel also asks us to “instruct the district court to determine
[Hotel’s] reasonable attorney fees incurred in this appeal” and
cites Reeve & Associates, Inc. v. Tanner, 2015 UT App 166, 355 P.3d
232. There, this court awarded attorney fees incurred on appeal
to the defendants because they (1) were contractually entitled to
and should have been granted an award of attorney fees below
and (2) had prevailed on appeal. Id. ¶ 39. Here, it has not yet
been decided whether Hotel prevailed in the district court, and
Hotel has therefore not established an entitlement to an award of
attorney fees incurred below. If, however, Hotel is adjudged the
prevailing party after remand, the district court should award
Hotel its reasonable attorney fees incurred on appeal.
20140981-CA 14 2016 UT App 137