Wihongi v. Catania SFH , 2020 UT App 109 ( 2020 )

2020 UT App 109THE UTAH COURT OF APPEALS
VAUGHN ERIC WIHONGI,
Appellant,
v.
CATANIA SFH LLC, CAPITAL REALTY GROUP LLC,
AND NICHOLAS SANONE,
Appellees.
Opinion
No. 20180800-CA
Filed July 30, 2020
Third District Court, Salt Lake Department
The Honorable Su Chon
No. 160903287
Troy L. Booher, Beth E. Kennedy, Dick J. Baldwin,
and Engels Tejeda, Attorneys for Appellant
Benson L. Hathaway, Ryan R. Beckstrom, and
Analise Q. Wilson, Attorneys for Appellees
JUDGE DIANA HAGEN authored this Opinion, in which JUDGES
MICHELE M. CHRISTIANSEN FORSTER and JILL M. POHLMAN
concurred.
HAGEN, Judge:
¶1 Vaughn Eric Wihongi sued to recover a commission owed
to him pursuant to a contract between himself and Catania SFH
LLC (Catania). Catania counterclaimed for breach of contract
and conversion, claiming Wihongi never returned $25,000
Catania gave to him. The district court entered summary
judgment in favor of Catania on its counterclaim, and a jury
ultimately awarded Wihongi $99,929 on his breach of contract
claim. Because the governing contract required an award of
attorney fees to the prevailing party, Wihongi moved for
attorney fees after the close of trial. The district court ruled that
Wihongi v. Catania SFH
neither Wihongi nor Catania was the prevailing party and
declined to award fees. Wihongi appeals, arguing he was the
prevailing party. Because we determine that the district court
acted within its discretion, we affirm.
BACKGROUND
¶2 In 2010, Wihongi and Catania entered into a contract
under which Wihongi would locate foreclosed properties,
purchase them on behalf of Catania, renovate them, and then sell
them for a profit. Pursuant to this contract, Catania ensured
that Wihongi had a $25,000 cashier’s check at all times so that
he would be able to make purchases as properties became
available. After a property was sold, Catania would receive
a 20% preferred rate of return on invested capital, and
the remaining profits would be split between the parties, with
30% going to Wihongi and 70% to Catania. In 2013, this contract
was modified so that Catania would receive a 12% preferred rate
of return on invested capital and the remaining profits would be
split evenly.
¶3 In 2010, Wihongi purchased one such property (the Millar
property) on behalf of Catania. The previous owner continued to
reside in the Millar property and paid Catania rent until he was
able to buy it back in 2016, generating a total profit of $210,000,
not including revenue from the rental payments. However,
Wihongi never received a commission for the sale.
¶4 Wihongi filed a complaint seeking $105,000 in
commission, equal to half of the $210,000 profit from the sale of
the Millar property. Wihongi’s complaint alleged breach of
contract, breach of the implied covenant of good faith and fair
dealing, promissory estoppel, and unjust enrichment. In
response, Catania filed a counterclaim, claiming breach of
contract and the contract’s implied covenant of good faith and
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fair dealing and conversion, alleging that Wihongi failed to
return a $25,000 cashier’s check given to him by Catania.
Wihongi then amended his complaint to include a claim for
intentional interference with economic relations against Nicholas
Sanone, Catania’s designated broker and principal broker for
Wihongi, based on many of the same facts as his claim against
Catania. Wihongi sought punitive damages from Sanone.
Wihongi also amended his complaint to increase the damages
sought against Catania from $105,000 to $244,000, his theory
being that the Millar property’s rental income should have been
included in his commission.
¶5 The district court entered summary judgment in favor of
Catania on its breach of contract counterclaim for the $25,000
cashier’s check, but Wihongi’s contract claims against Catania
and his tort claim against Sanone proceeded to a four-day jury
trial. 1 The court granted a directed verdict in favor of Sanone on
the claim against him. The jury ultimately concluded that
Catania breached the contract and awarded Wihongi damages
totaling $99,929. The jury also found that Catania breached the
implied covenant of good faith and fair dealing but awarded no
additional damages for that breach.
¶6 The contract between Wihongi and Catania contained the
following attorney fee provision:
In the event of a dispute between the parties
arising under this Agreement, the prevailing party
in such dispute shall be entitled to recover its costs,
including reasonable attorney fees, from the other
party.
1. Wihongi’s alternative claims for unjust enrichment and
promissory estoppel were voluntarily dismissed prior to trial.
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Wihongi filed a motion to recover his attorney fees, arguing that
he was the prevailing party and entitled to fees because he
prevailed on his contract claims. The district court ultimately
determined that neither party prevailed and declined to award
attorney fees. Wihongi appeals.
ISSUE AND STANDARDS OF REVIEW
¶7 The question before this court is whether the district court
erred in ruling that neither party was the prevailing party under
the contract’s attorney fee provision. “Whether the district court
applied the correct legal standard is a question of law, which we
review for correctness.” KB Squared LLC v. Memorial Bldg. LLC,
2019 UT App 61, ¶ 18, 442 P.3d 1168 (cleaned up). But “whether
a party is the prevailing party in an action is a decision left to the
sound discretion of the trial court and reviewed for an abuse of
discretion.” Vanderwood v. Woodward, 2019 UT App 140, ¶ 13, 449
P.3d 983 (cleaned up).
¶8 Wihongi argues that “‘[s]ince the right [to attorney fees in
this case] is contractual, the court does not possess the same
equitable discretion to deny attorney’s fees.’” (Quoting Express
Recovery Services Inc. v. Olson, 2017 UT App 71, ¶ 8, 397 P.3d 792(cleaned up)). While we agree that the court was legally required
to award attorney fees to the prevailing party under the terms of
the contract, the question of which party prevailed “depends, to
a large measure, on the context of each case, and, therefore, it is
appropriate to leave this determination to the sound discretion
of the trial court.” R.T. Nielson Co. v. Cook, 2002 UT 11, ¶ 25, 40
P.3d 1119. Even where a contract provides that a prevailing
party “shall be entitled” to fees, it is still possible that neither
party should be deemed to have prevailed “in litigation where
both parties obtained mixed results.” See Neff v. Neff, 2011 UT 6,
¶ 70, 247 P.3d 380 (addressing mandatory language in attorney
fee statute). “We therefore review the trial court’s determination
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as to who was the prevailing party under an abuse of discretion
standard.” 2 R.T. Nielson, 2002 UT 11, ¶ 25.
ANALYSIS
¶9 In determining which party has prevailed in a lawsuit for
purposes of awarding attorney fees, “district courts are advised
to consider relevant factors while not abandoning their common
sense.” Grove Bus. Park LC v. Sealsource Int’l LLC, 2019 UT App
76, ¶ 49, 443 P.3d 764 (cleaned up). The factors relevant to that
determination are: “(1) the language of the attorney fee
provision, (2) the number of claims brought by the parties, (3)
the importance of each claim relative to the others and their
significance considering the lawsuit as a whole, and (4) the
amounts awarded on the various claims.” Id. In conducting this
“flexible and reasoned approach,” A.K. & R. Whipple Plumbing
& Heating v. Guy, 2004 UT 47, ¶ 26, 94 P.3d 270, our supreme
court has “specifically cautioned against considering only the net
judgment in the case and stressed the importance of looking at
the amounts actually sought and then balancing them
proportionally with what was recovered.” Jordan Constr., Inc. v.
Federal Nat'l Mortgage Ass'n, 2017 UT 28, ¶ 65, 408 P.3d 296. This
approach “will permit a case-by-case evaluation by the trial
court, and flexibility to handle circumstances where both, or
2. Of course, there may be instances where the parties define the
term “prevailing party,” and in those cases, the court must apply
the contractual language as written. See, e.g., Beckman v. Cybertary
Franchising LLC, 2018 UT App 47, ¶¶ 67–84, 424 P.3d 1016. But
Utah courts have repeatedly afforded discretion to prevailing
party determinations based on contractual attorney fee
provisions where that term is undefined. See, e.g., Utah Transit
Auth. v. Greyhound Lines, Inc., 2015 UT 53, ¶ 58, 355 P.3d 947.
20180800-CA 5 2020 UT App 109Wihongi v. Catania SFH
neither, parties may be considered to have prevailed.” R.T.
Nielson Co. v. Cook, 2002 UT 11, ¶ 25, 40 P.3d 1119.
¶10 “Accordingly, it is possible that, in litigation where both
parties obtain mixed results, neither party should be deemed to
have prevailed for purposes of awarding attorney fees.” Neff v.
Neff, 2011 UT 6, ¶ 70, 247 P.3d 380. Here, the district court
determined that this was such a case. In reaching that
conclusion, the court acknowledged the net judgment and
considered each of the four factors our supreme court has
identified as relevant to the prevailing party analysis.
¶11 First, the court noted that the contractual language
showed “that the prevailing party is entitled to recover its
reasonable attorneys’ fees,” but that the contract otherwise did
not “discuss how that is determined.”
¶12 As to the second factor, the court noted that while
Wihongi asserted five claims, two of his claims were pled in the
alternative and were not dismissed on the merits, and his fifth
claim against Sanone was dismissed via directed verdict. 3
3. Although Wihongi assumes that “[t]he district court was
technically correct that [Wihongi] asserted five claims and
Catania asserted two,” we note that Wihongi’s fifth claim against
Sanone for intentional interference with economic relations
should not have been included in that count because Sanone was
not a party to the contract containing the attorney fee provision.
See Express Recovery Services Inc. v. Olson, 2017 UT App 71, ¶ 11,
397 P.3d 792 (“[W]here the parties request attorney fees pursuant
to a contract, only claims based on or related to that contract
figure into the prevailing-party analysis.”). But counting the
claim against Sanone did not affect the district court’s prevailing
party analysis because, as Wihongi acknowledges, the court
“does not appear to have given those numbers any significance.”
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Although Wihongi prevailed on his two remaining claims, “no
damages were awarded for the breach of the covenant of good
faith and fair dealing.” Therefore, the court concluded that
Wihongi “prevailed on one claim with an award of damages.”
Catania brought two counterclaims and similarly “prevailed on
one counterclaim with an award of damage.”
¶13 The court next weighed the “importance of the claims and
their significance against each other.” The court noted that the
“claims [we]re interrelated because they ar[o]se from the same
contract.” Because both parties prevailed on their breach of
contract claims, the court concluded that the claims were
“equally weighted.”
¶14 Finally, as to the last factor, the court considered the
amount of damages Wihongi sought in comparison to the
amount he recovered. The court found that Wihongi sought
damages of $244,000 and recovered $99,929. In comparison,
Catania recovered on one of its two counterclaims, but recovered
the full amount it sought in damages—$25,000. The court stated
that “a total victory [for Catania] would have been return of the
$25,000 and defeat of all of [Wihongi’s] pled claims.”
¶15 The court also acknowledged the limitations of the net
judgment rule and considered the amounts actually sought
balanced proportionally with what was recovered. The court
concluded that Wihongi’s “net judgment after paying [Catania]
is $74,929 which would be 31% of the total amount claimed. This
appears to be a draw for both parties.” Based on this analysis,
the court determined that neither party could be considered the
prevailing party and, therefore, declined to award attorney fees.
¶16 Wihongi contends that the district court’s prevailing party
analysis was flawed in three respects. First, he asserts that the
court erred by determining that Wihongi’s and Catania’s claims
were “equally weighted.” Second, Wihongi asserts that the court
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erred when it found that he “sought $244,000 in damages, rather
than the $105,000 he asked the jury” to award him. This error,
Wihongi contends, “skewed [the court’s] analysis of the
comparative victories.” Lastly, Wihongi argues that the court
abused its discretion by ignoring the relative culpability of the
parties. He asserts that culpability is “a dispositive factor in the
prevailing party analysis,” and that culpability, rather than
damages, dictates the result of that analysis. We address each
argument in turn.
A. “Equally Weighted”
¶17 First, Wihongi challenges the district court’s conclusion
that Wihongi’s and Catania’s claims were “equally weighted.”
Wihongi argues that because his damages claim “was four times
greater than Catania’s, the reason the lawsuit was filed, the
central issue in the case, and the only issue presented to the
jury,” the court’s statement was erroneous. Wihongi also
complains that the court “provided no explanation for this
puzzling ruling.”
¶18 Because the determination of which party prevailed
“depends, to a large measure, on the context of each case,” we
recognize that “the [district] court is in a better position than we
are as an appellate court to decide which party is the prevailing
party.” R.T. Nielson Co. v. Cook, 2002 UT 11, ¶ 25, 40 P.3d 1119.
This is especially true where, as here, a case involves
counterclaims, a series of pretrial motions, and legal theories that
evolved over the course of the multi-year litigation. See, e.g.,
Airport Park Salt Lake City LP v. 42 Hotel SLC LLC, 2016 UT App
137, ¶ 29, 378 P.3d 117 (declining to make the prevailing party
determination in a case which involved a “complex course of
events,” the settlement of the majority of the parties’ claims
before trial, and “reservation of the attorney-fees issue,”
recognizing that “the district court is better positioned to
determine whether one party truly prevailed”).
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¶19 Here, the court noted that both parties had successfully
asserted claims arising under the same contract. Wihongi
agrees that, “in effect, each party asserted only one claim—
[Wihongi] sought his commission, and Catania sought the return
of its cashier’s check.” But, he argues, Catania’s claim was
relatively “minor” because it amounted to only 25% of
Wihongi’s commission and “was disposed of on summary
judgment after a single round of briefing.” Catania counters that
such an approach “would have a court ignore the parties’ efforts
put into discovery, motion practice, and other pretrial aspects
of the case and punish parties that prevail as a matter of law
before trial.”
¶20 We agree with Catania that in weighing the relative
importance of the claims, the district court must consider the
entire life of the litigation, including what portion of the
litigation was consumed by discovery and pretrial motion
practice on the various claims resolved before trial and whether
the unsuccessful claims required a significant investment of time
and resources over and above that which was required to prevail
on the successful claims. Having presided over the entire course
of the litigation, the district court was in the best position to
determine “the importance of each claim relative to the others
and their significance considering the lawsuit as a whole.” See
Grove Bus. Park LC v. Sealsource Int’l LLC, 2019 UT App 76, ¶ 49,
443 P.3d 764.
¶21 Although the district court did not make detailed factual
findings to support its conclusion that the claims were “equally
weighted,” Wihongi has not argued that the district court’s
findings are legally insufficient, nor has he requested a remand
for entry of supplemental findings. And the court’s ruling is
sufficiently detailed to “enable meaningful appellate review.”
See Neff v. Neff, 2011 UT 6, ¶ 61, 247 P.3d 380 (cleaned up). A
district court’s findings of fact must “permit an appellate court
to evaluate the reasonableness of the . . . court’s decision in the
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light of the rules [the Utah Supreme Court has] set forth for
determining attorney fees awards.” Id. ¶ 62. Here, the ruling
“adequately sets forth reasoning that accounts for the various
factors we require courts to examine when awarding attorney
fees in cases, like this one, where opposing parties obtain mixed
results.” See id. ¶ 63. Having undertaken the correct analysis, the
court’s conclusion that the parties’ claims were “equally
weighted” is a determination entitled to deference on appeal.
Because the district court is better positioned to consider the
“whole scope of litigation” in determining whether either party
prevailed, see id. ¶ 5, we defer to the court’s assessment of the
relative importance of the claims.
B. Damages Sought
¶22 Wihongi next argues that only “the amount actually
sought at trial” should be considered in weighing the damages
sought and recovered. Specifically, Wihongi contends that the
district court should have used the $105,000 figure that he
sought in his initial complaint and requested at trial, rather than
the $244,000 figure sought in his amended complaint. Although
Wihongi cites cases that base the prevailing party analysis on the
“at-trial demand,” see First Sw. Fin. Services v. Sessions, 875 P.2d
553, 554 (Utah 1994); Olsen v. Lund, 2010 UT App 353, ¶ 13, 246
P.3d 521, those cases do not squarely address this issue and do
not hold that damage claims abandoned or otherwise resolved
before trial are irrelevant to the prevailing party analysis.
Moreover, our supreme court rejected a similar argument in Neff
v. Neff, 2011 UT 6, 247 P.3d 380, where one party cited “as the
basis of his victory the fact that he obtained all of the relief he
ultimately requested at trial—after he had reduced his million
dollar-plus damages request to a mere request for nominal
damages.” Id. ¶ 73.
¶23 In arguing that his recovery should be measured against
the $105,000 in damages sought in his original complaint and at
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trial, rather than the $244,000 demand in his amended
complaint, Wihongi contends that the $244,000 figure was
sought “only temporarily, as a result of Catania’s insistence that
only the strict terms of the 2010 contract governed [his] claims.”
But the amended complaint was the operative document on
which subsequent discovery, pre-trial motions, and trial
preparation were based. The district court was in the best
position to assess whether the inflated demand for damages was
attributable solely to Catania’s changing tactics, as Wihongi
suggests, or whether Catania successfully avoided liability for
more than double the amount of damages as a result of its
pretrial litigation efforts. Given the district court’s familiarity
with the intricacies of the case and the history of the litigation,
we defer to its determination that the $244,000 sought in the
amended complaint is the relevant figure for assessing the
parties’ comparative victories.
¶24 Relatedly, Wihongi challenges the district court’s
conclusion that Wihongi’s net judgment represented only 31% of
the damages sought. Having determined that the district court
acted within its discretion by treating the demand in the
amended complaint as the starting point for damages, we see no
error in the court’s calculation. Once the $99,929 recovered by
Wihongi is offset by the $25,000 recovered by Catania, Wihongi’s
net judgment of $74,929 represents approximately 31% of the
$244,000 damages sought in his amended complaint.
¶25 Wihongi further argues that even if the court’s calculation
is correct, “a 31% recovery is not a basis to find that [Wihongi]
did not prevail.” As Wihongi correctly points out, “a party who
recovers only a percentage of his claimed damages can
nonetheless be the prevailing party.” But “[t]he hallmark for
determining which party has prevailed is not whether one party
has recovered money in an absolute sense, but whether the trial
court’s decision about who prevailed was based on an approach
that was flexible and reasoned.” Neff, 2011 UT 6, ¶ 70. Here, the
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district court did not base its conclusion solely on the fact that
Wihongi’s net recovery represented only 31% of the damages
claimed in the amended complaint. See Grove Bus. Park LC v.
Sealsource Int’l LLC, 2019 UT App 76, ¶ 51, 443 P.3d 764 (noting
that, “[a]lthough the comparison of [a party’s] award to its claim
is a relevant factor under the prevailing party analysis,” it
“cannot be weighed in isolation”). Rather, the district court’s
“analysis was flexible and reasoned and proceeded from the
common-sense perspective we have asked trial courts to employ
in resolving issues like this one.” See Neff, 2011 UT 6, ¶ 74.
Having employed the correct analysis, the district court’s
ultimate conclusion that neither party prevailed is not outside
the bounds of its discretion.
C. Culpability
¶26 Finally, Wihongi argues “that the court ignored Catania’s
culpability, a dispositive factor in the prevailing party analysis.”
Relying on Brown v. Richards, 840 P.2d 143 (Utah Ct. App. 1992),
and First Southwestern Financial Services v. Sessions, 875 P.2d 553(Utah 1994), Wihongi argues that “’[i]t is the determination of
culpability, not the amount of damages, that determines who is
the prevailing party.’” See Sessions, 875 P.2d at 556 (quoting
Brown, 840 P.2d at 155). But Wihongi has not cited a single
appellate decision in the last twenty-five years that discussed
culpability in the context of a prevailing party analysis. More
importantly, the proposition that any one factor is dispositive
runs counter to the common-sense, factor-based approach
consistently applied by Utah courts in the years since those cases
were decided. The district court properly applied the legal
standard articulated in Utah’s most recent appellate case law,
which is not driven by the parties’ relative culpability.
¶27 That is not to say that a district court cannot consider
culpability as one of many relevant factors bearing on which
party prevailed. Categorically excluding such a factor would be
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contrary to the flexible and reasoned approach our supreme
court has adopted. See A.K. & R. Whipple Plumbing & Heating v.
Guy, 2004 UT 47, ¶ 26, 94 P.3d 270 (leaving “it to the trial courts’
discretion to decide which additional common sense
perspectives are most appropriate to consider in future cases”).
But we see no error in failing to address a factor that the relevant
case law last mentioned over twenty-five years ago, particularly
where the question of culpability was not as one-sided as
Wihongi suggests. Both parties alleged that the other breached
the contract, and both recovered damages on their respective
claims. The fact that Catania’s counterclaim was “disposed of on
summary judgment after a single round of briefing” might even
suggest that Wihongi’s culpability for failing to return the
$25,000 cashier’s check was more clear-cut than Catania’s
culpability for refusing to pay the commission. At the very least,
the determination that both parties breached the contract does
not establish that Catania was the only culpable party. Therefore,
even if it had factored in culpability, the district court would not
have exceeded the limits of its discretion in finding that the
result was “a draw.”
¶28 Where the district court undertakes the correct legal
analysis, we afford ample discretion to its ultimate
determination regarding the prevailing party. “The reason that
we defer to the trial court’s judgment, and reverse a trial court’s
attorney fees determination only if the trial court exceeds the
bounds of its discretion, is that the trial court is in a better
position than appellate courts to decide which party is the
prevailing party.” Neff v. Neff, 2011 UT 6, ¶ 71, 247 P.3d 380(cleaned up). Here, we conclude that the district court “acted
within the bounds of its discretion when it denied [Wihongi’s]
motion for attorney fees because the court employed the
necessary flexible and reasoned approach to awarding fees in
a case where opposing parties each obtain mixed results.” See
id ¶ 59.
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CONCLUSION
¶29 Having applied the correct legal standard, the district
court did not exceed its discretion in finding that neither party
prevailed for purposes of the contract’s attorney fee provision.
Therefore, we affirm the denial of Wihongi’s motion for attorney
fees.
20180800-CA 14 2020 UT App 109