Montes v. National Buick GMC , 2023 UT App 47 ( 2023 )

2023 UT App 47THE UTAH COURT OF APPEALS
DAVIE MONTES,
Appellee,
v.
NATIONAL BUICK GMC INC.,
Appellant.
Opinion
No. 20210621-CA
Filed May 4, 2023
Fourth District Court, Provo Department
The Honorable Thomas Low
No. 210400542
Trevor C. Lang and Connor B. Arrington, Attorneys
for Appellant
Eric Stephenson, Attorney for Appellee
JUDGE DAVID N. MORTENSEN authored this Opinion, in which
JUDGE RYAN M. HARRIS concurred. SENIOR JUDGE KATE APPLEBY
dissented, with opinion.1
MORTENSEN, Judge:
¶1 National Buick GMC Inc. (National) sold a used car to
Davie Montes using a motor vehicle contract of sale (the Purchase
Agreement) that contained an integration clause and indicated
that there were no “other terms agreed to” between the parties.
The parties also signed an arbitration agreement (the Arbitration
Agreement) that day. Later, a dispute arose, and Montes sued on
the contract. National filed a motion to compel arbitration, which
the district court denied, ruling that the integration clause and the
parol evidence rule worked to exclude the Arbitration Agreement
1. Senior Judge Kate Appleby sat by special assignment as
authorized by law. See generally Utah R. Jud. Admin. 11-201(7).
Montes v. National Buick GMC, Inc.
from adding to the terms of the contract. National appeals. We
agree with the district court that the parties’ agreement was fully
integrated and did not include the terms contained in the
Arbitration Agreement. We therefore affirm.
BACKGROUND
¶2 In March 2021, Montes purchased a used vehicle from
National. Both parties signed the Purchase Agreement, which
identified the car, set the sales price at $3,000, acknowledged that
no trade-in or other credits applied, and indicated all other fees
and charges. The Purchase Agreement contained the following
integration clause:
This [c]ontract includes all of the terms, conditions,
restrictions, limitations and other provisions on
both the face and the reverse side hereof. This
contract cancels and supersedes any prior contract
and as of the date hereof comprises the complete
and exclusive statement of the terms of the
[c]ontract relating to the subject matters covered
hereby.
¶3 The Purchase Agreement also contained a section related
to financing, in which the parties indicated that seller financing
terms were not applicable and in which Montes signed a
disclosure indicating that he would arrange financing.
Additionally, the Purchase Agreement contained a notice
integrating the “window form [Buyer’s Guide] for this vehicle” as
“part of this contract.” (Brackets in original.) The Purchase
Agreement also addressed warranties, specifying,
Seller makes no warranty, express or implied, with
respect to the merchantability, fitness for particular
purpose, or otherwise concerning the vehicle, parts
or accessories described herein. Unless otherwise
20210621-CA 2 2023 UT App 47Montes v. National Buick GMC, Inc.
indicated by Seller in writing, any warranty is
limited to the manufacturer’s warranty, if any, as
explained and conditioned by paragraph 4 on the
reverse side hereof.
¶4 The Purchase Agreement had a large box at the bottom
where “other terms agreed to” could be noted, but that space was
empty, and a check box labeled “NONE” was marked with two
Xs.
¶5 That same day, the parties also executed the Arbitration
Agreement in the course of signing paperwork for the sale. It
stated,
Any claim or dispute between the Parties, whether
in contract, tort, statute, or otherwise (including the
interpretation and scope of this Agreement, and the
arbitrability of the claim or dispute), which arises
out of or relates to Buyer’s credit application, the
condition of a vehicle, Buyer’s purchase or financing
contract, or any related transaction between the
parties or related third-parties shall be resolved by
neutral and binding arbitration in Salt Lake County,
Utah before a single arbitrator and not by a court
action or as a class action.
The Arbitration Agreement also addressed the topic of
warranties, reiterating the denial of warranties and adding that
“all used car purchases are as is and where is, except as may be
expressed in writing by Seller.” The Arbitration Agreement then
stated that “Buyer is hereby authorized and encouraged to have a
mechanic, at Buyer’s expense, inspect the vehicle” and further
discussed the topics of inspection and the condition of the car.
¶6 The next month, Montes filed a complaint against
National, alleging fraud and other deceptive sales practices and
requesting more than $300,000 in damages. Based on the
20210621-CA 3 2023 UT App 47Montes v. National Buick GMC, Inc.
Arbitration Agreement, National filed a motion to stay litigation
and compel arbitration. After further briefing and a hearing, the
district court denied the motion. It determined that the
Arbitration Agreement was ineffectual, reasoning that “[b]ecause
the [Purchase] Agreement unambiguously comprises ‘the
complete and exclusive statement of the terms of the [c]ontract[,]’
any other agreements between the parties are irrelevant” and the
Arbitration Agreement should be disregarded under the parol
evidence rule. National now brings this interlocutory appeal.
ISSUES AND STANDARDS OF REVIEW
¶7 National argues that the district court erred in applying the
parol evidence rule to prevent consideration of the Arbitration
Agreement. “[I]ssues pertaining to . . . admittance of parol
evidence present questions of law which we review under a
correctness standard, granting no particular deference to the trial
court.” See Bennett v. Huish, 2007 UT App 19, ¶ 8, 155 P.3d 917.
¶8 We also address Montes’s request for attorney fees on
appeal. “[E]ntitlement to attorney fees on appeal is a matter for us
to determine in the first instance.” Tronson v. Eagar, 2019 UT App
212, ¶ 15, 457 P.3d 407.
ANALYSIS
¶9 The parol evidence rule operates “to exclude evidence of
contemporaneous conversations, representations, or statements
offered for the purpose of varying or adding to the terms of an
integrated contract.” Tangren Family Trust v. Tangren, 2008 UT 20,
¶ 11, 182 P.3d 326 (cleaned up). An integrated contract is “a
writing or writings constituting a final expression of one or more
terms of an agreement.” Id. ¶ 12 (cleaned up). The district court
concluded that because the Purchase Agreement included an
integration clause stating that the Purchase Agreement provided
20210621-CA 4 2023 UT App 47Montes v. National Buick GMC, Inc.
“the complete and exclusive statement of the terms of the
[c]ontract,” the parol evidence rule functioned to render any other
contemporaneous agreement between the parties related to the
sale, including the Arbitration Agreement, “irrelevant.” We agree
with this conclusion.
I. The Effect of the Integration Clause
¶10 Our supreme court has stated that “if a contract is
integrated, parol evidence is admissible only to clarify ambiguous
terms; it is not admissible to vary or contradict the clear and
unambiguous terms of the contract.” Tangren Family Trust v.
Tangren, 2008 UT 20, ¶ 11, 182 P.3d 326 (cleaned up). “The
application of the parol evidence rule is therefore a two-step
process.” Id. First, we “must determine whether the agreement is
integrated.” Id. (cleaned up). If so, we take the second step of
examining the contract for ambiguity because, for an integrated
agreement, “parol evidence may be admitted only if [we make] a
subsequent determination that the language of the agreement is
ambiguous.” Id. (cleaned up).2
¶11 An integrated contract may consist of more than one
writing if the parties adopted the writings together “as the final
and complete expression of their bargain.” See id. ¶¶ 11–12
(cleaned up). Accordingly, National argues that the district court
erred in failing to consider the Purchase Agreement and the
Arbitration Agreement together, ultimately relying on a principle
stated in Bullfrog Marina, Inc. v. Lentz, 501 P.2d 266 (Utah 1972).3
2. Neither party argues that the Purchase Agreement is
ambiguous.
3. National cites Jensen v. West Jordan City, No. 2:12-CV-736-DAK,
2017 WL 4620983, at *9 (D. Utah Oct. 13, 2017), aff’d, 968 F.3d 1187(10th Cir. 2020), in support of its proposition that, under Bullfrog
(continued…)
20210621-CA 5 2023 UT App 47Montes v. National Buick GMC, Inc.
In that case, the parties had executed both an employment
agreement and, later, a lease. Id. at 269. The question was whether
the lease was an integrated agreement to which the parol evidence
rule would apply. Id. at 270. The Bullfrog Marina court determined
that consideration of parol evidence was appropriate and that
there was substantial evidence to support the lower court’s
determination that the employment contract and the lease should
be considered as one agreement. Id. The court also stated:
The trial court did not err in following the rule of
law that where two or more instruments are
executed by the same parties contemporaneously,
or at different times in the course of the same
transaction, and concern the same subject matter,
they will be read and construed together so far as
determining the respective rights and interests of
the parties, although they do not in terms refer to
each other.
Id. at 271. National argues that under Bullfrog Marina and its
progeny, the Purchase Agreement and Arbitration Agreement are
not two separate contracts but rather two parts of the same
contract; thus, the Arbitration Agreement is not precluded by the
integration clause. Indeed, much of National’s argument is that
the question of parol evidence has no place in the interpretation
of the Purchase Agreement since both the Purchase Agreement
Marina and its progeny, the Purchase Agreement and Arbitration
Agreement are not two separate contracts but rather two parts of
the same contract. But this decision, like Bullfrog Marina, did not
analyze the effect of a clear integration clause. Jensen, 968 F.3d at
1207 n.8 (“West Jordan has waived its argument, raised for the
first time in this appeal in its reply brief, that the Settlement
Agreement should be evaluated separately because it contains an
integration clause.”). Thus, our analysis on this point applies to
Jensen just as it applies to Bullfrog Marina.
20210621-CA 6 2023 UT App 47Montes v. National Buick GMC, Inc.
and the Arbitration Agreement are smaller parts of a single
contract.
¶12 Montes, on the other hand, argues that the integration
clause found in the Purchase Agreement precludes the
Arbitration Agreement from applying to the Purchase
Agreement. He relies on a more recent case from our supreme
court, Tangren Family Trust v. Tangren, 2008 UT 20, 182 P.3d 326,
which—unlike Bullfrog Marina—addressed the effect of an
agreed-upon integration clause. In Tangren, our supreme court
considered a lease with an integration clause (also known as a
merger clause, see Integration clause, Black’s Law Dictionary (11th
ed. 2019)) and a separate oral agreement with contradictory terms,
and the court stated that “the purpose and effect of including a
merger clause is to preclude the subsequent introduction of
evidence of preliminary negotiations or of side agreements in a
proceeding in which a court interprets the document.” Tangren,
2008 UT 20, ¶ 13 (cleaned up) (emphasis added). Thus, the court
determined that parol evidence was not appropriately considered
in the determination of whether the lease was an integrated
agreement:
To argue that the Lease is not the complete
agreement of the parties is to argue in direct
contradiction to the clear integration clause. Thus,
we will not allow extrinsic evidence of a separate
agreement to be considered on the question of
integration in the face of a clear integration clause.
To the extent any of our prior cases provide
otherwise, we overrule those cases.
Id. ¶ 16 (cleaned up). Pointedly, the Tangren court expressly
acknowledged that the contract at issue in Bullfrog Marina did not
contain an integration clause, whereas the contract in Tangren did,
further distinguishing the precedents set forth in Bullfrog Marina
from the new rule put forth in Tangren. 2008 UT 20, ¶ 16 n.20. And
20210621-CA 7 2023 UT App 47Montes v. National Buick GMC, Inc.
the court also expressly disavowed the Bullfrog Marina standard:
“To the extent our statements in Bullfrog Marina, Inc., Eie, Spears,
and Hall suggest that extrinsic evidence of a separate oral
agreement is admissible where the contract contains a clear
integration clause, we disavow them.” Id. Contra Bullfrog Marina,
Inc., 501 P.2d at 270; Eie v. St. Benedict’s Hosp., 638 P.2d 1190, 1194
(Utah 1981); Spears v. Warr, 2002 UT 24, ¶ 19, 44 P.3d 742; Hall v.
Process Instruments & Control, Inc., 890 P.2d 1024, 1028 (Utah 1995).
¶13 Tangren thus represented a sea change in Utah’s
jurisprudence regarding the treatment of fully integrated
contracts, and later cases have followed Tangren’s lead. See, e.g.,
iDrive Logistics LLC v. IntegraCore LLC, 2018 UT App 40, ¶ 37, 424
P.3d 970 (“Determining which terms fall within the four corners
of the contract is a straightforward task when a contract contains
an integration clause, as is the case here.”), cert. denied, 425 P.3d
803 (Utah 2018); Daines v. Vincent, 2008 UT 51, ¶ 22, 190 P.3d 1269(“We recently held in Tangren that extrinsic evidence is not
admissible on the question of integration where the contract at
issue contains a clear integration clause. Thus, a contract is
integrated if it contains a clear integration clause.” (cleaned up)).
¶14 The Tangren court applied its holding only to oral side
agreements because the side agreement at issue in that case was
oral. Tangren, 2008 UT 20, ¶¶ 7 n.1, 17. But the language of Tangren
is strong and categorical and, as we understand it, applies to
written parol evidence as well.4 Indeed, Utah already has case law
4. While the court stated, “We hold today that in the face of a clear
integration clause, extrinsic evidence of a separate oral agreement
is not admissible on the question of integration,” Tangren Family
Trust v. Tangren, 2008 UT 20, ¶ 17, 182 P.3d 326 (emphasis added),
its language that “we will not allow extrinsic evidence of a
separate agreement to be considered on the question of
integration in the face of a clear integration clause” clearly applies
(continued…)
20210621-CA 8 2023 UT App 47Montes v. National Buick GMC, Inc.
suggesting that written side agreements do fall under Tangren. In
Far West Bank v. Robertson, 2017 UT App 213, 406 P.3d 1134, cert.
denied, 417 P.3d 576 (Utah 2018), a party, citing Bullfrog Marina,
tried to introduce as parol evidence an email it had received
contemporaneously with the execution of a contract, despite the
presence of an integration clause in the disputed contract. Id. ¶ 20.
In holding that the email was inadmissible parol evidence, we
acknowledged that an email was not the type of “instrument” at
issue in Bullfrog Marina. Id. ¶ 21. Instead of stopping there,
however, we continued to reason that “more importantly [than
the email not being an instrument], [the party’s] reliance on
Bullfrog Marina is at odds with the Utah Supreme Court’s more
recent jurisprudence on the doctrine of integration.” Id. We went
on to reinforce the rule that separate agreements will not be
considered when a contract contains an integration clause. Id.
¶¶ 23–24. Our language in Robertson strongly implies that even if
an email was enough to be considered a formal “instrument,” it
would still be inadmissible under the Tangren standard.5
¶15 The signed Arbitration Agreement at issue in this case is
likely the type of “instrument” that Bullfrog Marina was
referencing, see 501 P.2d at 270–71, yet under Tangren and
Robertson, it is still not admissible in the face of an integration
clause unless the separate instrument is expressly referenced by
the contract as being included or unless there is ambiguity in the
contract. In Robertson, we noted that once a document (or group
of documents) is “deemed an integration, under the parol
here, id. ¶ 16. It is possible that our supreme court did not intend
this result, but we give Tangren its most reasonable reading and
conclude that this is its natural application.
5. The dissent does not argue that we are wrong in suggesting that
Far West Bank v. Robertson, 2017 UT App 213, 406 P.3d 1134, cert.
denied, 417 P.3d 576 (Utah 2018), extended Tangren’s holding to
non-oral parol evidence.
20210621-CA 9 2023 UT App 47Montes v. National Buick GMC, Inc.
evidence rule evidence of contemporaneous conversations,
representations, or statements offered for the purpose of varying
or adding to the terms of [the] integrated contract is
inadmissible.” 2017 UT App 213, ¶ 22 (cleaned up). And the
Arbitration Agreement certainly adds a term—a requirement for
arbitration. While this requirement applies to “[a]ny claim or
dispute between the Parties, whether in contract, tort, statute, or
otherwise,” and is thus broader than the terms of the Purchase
Agreement, it specifically binds the parties to arbitrate “[a]ny
claim or dispute . . . which arises out of or relates to . . . the
condition of a vehicle [or] Buyer’s purchase . . . contract.” In other
words, the Arbitration Agreement adds a term directly to the
Purchase Agreement. And beyond this, giving effect to the
Arbitration Agreement would vary and indeed contradict the
terms of the Purchase Agreement, which explicitly states
“NONE” for “other terms agreed to.”
¶16 Here, as in Tangren, the contract contains a clear integration
clause. The plain language of the integration clause before us
prevents our consideration of the Arbitration Agreement. The
integration clause dictates that the Purchase Agreement “includes
all of the terms, conditions, restrictions, limitations and other
provisions” of the parties’ agreement and makes clear that it
“cancels and supersedes any prior contract and as of the date hereof
comprises the complete and exclusive statement of the terms of
the [c]ontract relating to the subject matters covered hereby.”
(Emphasis added.) The Arbitration Agreement was signed on the
same date as the Purchase Agreement, though it is not clear which
was signed first. Thus, the plain language of the integration clause
renders the Arbitration Agreement canceled if it was signed
before the Purchase Agreement and excluded if it was signed the
same day—on “the date hereof”—but afterward. In other words,
the text of the integration clause serves as both a backward-
looking and a forward-looking invalidation of agreements made
outside the Purchase Agreement. This language excludes
additional “terms, conditions, restrictions, limitations and other
20210621-CA 10 2023 UT App 47Montes v. National Buick GMC, Inc.
provisions”—and a requirement to arbitrate is just that. National
can hardly cry foul when the plain language of the integration
clause is applied to the facts of this case.
¶17 And the Arbitration Agreement does indeed address some
of the “subject matters covered” by the Purchase Agreement,
rendering it voided by the integration clause. National
acknowledges that “both the Purchase [Agreement] and
Arbitration Agreement . . . dealt with the same subject matter.”
We agree. Not only do both agreements have to do with the same
overall transaction, but the Arbitration Agreement addresses
warranties, which is a topic explicitly and repeatedly discussed in
the Purchase Agreement. Both documents also discuss the
condition of the vehicle. Accordingly, the plain language of the
integration clause precludes the Arbitration Agreement’s
application because the Purchase Agreement “comprises the
complete and exclusive statement of the terms of the [c]ontract
relating to the subject matters covered hereby”—including these
overlapping topics. (Emphasis added.) In other words,
considering the Arbitration Agreement to be part of the contract
would contravene the exclusivity imposed by the integration
clause.
¶18 This conclusion is further supported by the parties’ other
statements in the Purchase Agreement indicating that the contract
includes no terms beyond those set forth in that instrument. The
front side of the Purchase Agreement has a section for “other
terms agreed to” that has space for additional terms, and the
parties marked the box that said “NONE,” leaving the rest of the
space blank. All they had to do to integrate the Arbitration
Agreement into the Purchase Agreement was to write
“Arbitration Agreement” in the space provided. Instead, they left
it blank. Or, if National had wanted its standard Arbitration
Agreement to apply to its standard Purchase Agreement for all
sales, it could simply have stated so in the prepared portion of the
Purchase Agreement. In fact, the Purchase Agreement did this for
20210621-CA 11 2023 UT App 47Montes v. National Buick GMC, Inc.
another term by integrating the “window form [Buyer’s Guide]
for this vehicle” as “part of this contract.” (Brackets in original.)
The manner in which National incorporated the window form
shows that National knew how to integrate other terms into the
Purchase Agreement. It would have been easy for National to do
the same for the Arbitration Agreement, and the failure to do so
cuts against National. We rejected an argument like National’s in
Robertson:
If, when drafting [the contract], the parties had
indeed intended that the emails they exchanged in
the days leading up to the date those instruments
were signed should be included within the sweep of
the instruments’ integration clauses along with
[certain identified documents], undoubtedly they
would have made that explicit.
2017 UT App 213, ¶ 26. The same could be said here, but even
more strongly. Had the parties meant for the Arbitration
Agreement to come within the sweep of the Purchase
Agreement’s unambiguous integration clause, undoubtedly they
would have taken advantage of the space provided exactly for
such reference in the Purchase Agreement. But they didn’t. Or
they would have explicitly referenced the Arbitration Agreement
in the text of the Purchase Agreement. But they didn’t do that
either. Furthermore, the parties didn’t just omit mention of the
Arbitration Agreement; they double-checked the box marked
“NONE” for other terms. This affirmative action additionally
signifies the parties’ intent not to be bound by terms outside of the
Purchase Agreement.6 Therefore, the Arbitration Agreement
6. The dissent asserts that its conclusion that the Arbitration
Agreement was a collateral contract is most consistent with “the
general contract interpretation principle that ‘we attempt to give
effect to each provision and we look for a reading that harmonizes
(continued…)
20210621-CA 12 2023 UT App 47Montes v. National Buick GMC, Inc.
cannot be added to the terms of the fully integrated Purchase
Agreement.
II. The Collateral Contract Exception
¶19 The dissent argues that the Arbitration Agreement falls
under the collateral contract exception, see infra ¶¶ 34–38, relying
on non-binding authority for the principle that the presence of a
“merger clause does not prohibit the forming of a separate
arbitration agreement contemporaneously” with another
contract. Kates v. Chad Franklin Nat’l Auto Sales N., LLC, No. 08-
0384-CV-W-FJG, 2008 WL 5145942, at *4 (W.D. Mo. Dec. 1, 2008);
see also Ritter v. Grady Auto. Group, Inc., 973 So. 2d 1058, 1062 (Ala.
the provisions and avoids rendering any provision meaningless.’”
See infra ¶ 37 (quoting McNeil Eng’g & Land Surveying, LLC v.
Bennett, 2011 UT App 423, ¶ 17, 268 P.3d 854 (cleaned up)).But in
seeking to give effect to the Arbitration Agreement, the dissent
renders meaningless the affirmative act of the parties in double-
checking “NONE” for other terms agreed to. The dissent’s
insistence on giving effect to the Arbitration Agreement, which it
postulates “the parties obviously intended . . . to be a collateral
agreement with legal effect,” see infra ¶ 37, would require us to
depart from the plain language of the Purchase Agreement and of
its integration clause. But “when we interpret a contract[,] we first
look at the plain language of the contract to determine the parties’
meaning and intent. If the language within the four corners of the
contract is unambiguous, the parties’ intentions are determined
from the plain meaning of the contractual language, and the
contract may be interpreted as a matter of law.” Brady v. Park, 2019
UT 16, ¶ 53, 445 P.3d 395 (cleaned up). Here the language within
the four corners of the Purchase Agreement is unambiguous, so
we determine the parties’ intentions from the plain meaning of
the contractual language.
20210621-CA 13 2023 UT App 47Montes v. National Buick GMC, Inc.
2007) (“A merger clause . . . does not bar evidence of
contemporaneous collateral agreements between the parties.”).
¶20 First, we note that National does not actually argue that
the Arbitration Agreement falls under the collateral contract
exception, nor does its brief ever cite Kates or Ritter; instead,
National insists that the two agreements “should be construed as
one contract as a matter of law.” The authority the Ritter court
relied on states that “[i]t is only when the instrument shows that it
does not contain all the terms of the contract . . . that evidence may
be offered to show further stipulation than those expressed,
unless it is proposed to prove an engagement independent of and
collateral to the matters embraced in such written instrument.”
See Alabama Elec. Coop., Inc. v. Bailey’s Constr. Co., 950 So. 2d 280,
288 (Ala. 2006) (cleaned up) (emphasis added), quoted in Ritter, 973
So. 2d at 1062. Accordingly, it seems odd for the dissent to rest
on this “overlooked” but “obvious” principle, see infra ¶ 29 note
9, when National has never explicitly offered such an
interpretation.
¶21 But more substantively, we do not agree that the
Arbitration Agreement can be properly considered collateral. We
first note that the general principle of collateral contracts has been
applied differently by various courts. See 11 Williston on Contracts
§ 33:26 (4th ed. 2022) (“[C]ourts do not agree regarding when an
extrinsic agreement or term which existed prior to the integration
or was made simultaneously with it involves a sufficiently
separate and distinct matter that it is capable of existence as an
independent legal act or when it must be disregarded as a futile
attempt to change the effect of the legal act integrated in the
written memorial.”). Furthermore, the specific issue of the
viability of an arbitration agreement in light of a purchase
contract’s integration agreement, while it has not been addressed
in Utah, has been addressed in other jurisdictions, and the results
have not been uniform:
20210621-CA 14 2023 UT App 47Montes v. National Buick GMC, Inc.
Several courts have had opportunity to examine the
effect of a merger clause on separately executed
arbitration agreements in cases with similar facts—
vehicle purchasers who agree to arbitrate in one
document but contemporaneously sign [a] sales
contract that contains no arbitration provision, but
includes a merger clause stating that it is the “entire
agreement.”
....
Courts in [some] states have . . . conclude[d]
that a merger clause does not necessarily foreclose
the enforceability of agreements reached in
collateral documents, where they are
contemporaneously executed as part of a single
transaction.
....
Other courts, however, have interpreted
merger clauses more strictly, refusing to allow
predecessor or contemporaneous documents, which
purport to add to or alter the “final agreement,” to
require arbitration or other matters.
TD Auto Fin. LLC v. Reynolds, 842 S.E.2d 783, 789–90 (W. Va. 2020)
(collecting cases). While we believe it is—at least theoretically—
possible that a contract bearing an integration clause could be
integrated as to the topics it covers while a wholly distinct
contract coexists collaterally under the larger umbrella of the
whole of the parties’ agreement, we are not certain that this is a
legal possibility under Utah’s case law on integration clauses.
¶22 The language in Tangren Family Trust v. Tangren, 2008 UT
20, 182 P.3d 326, and elsewhere suggests that an integration clause
renders not just the contract bearing it but the whole agreement
integrated, thereby precluding the possibility of collateral
contracts. Again, the Tangren court stated, “To argue that the
Lease is not the complete agreement of the parties is to argue in direct
20210621-CA 15 2023 UT App 47Montes v. National Buick GMC, Inc.
contradiction to the clear integration clause.” Id. ¶ 16 (emphasis
added). It also said, “Importantly, we have explained that when
parties have reduced to writing what appears to be a complete
and certain agreement, it will be conclusively presumed, in the
absence of fraud, that the writing contains the whole of the
agreement between the parties.” Id. ¶ 12 (cleaned up) (emphasis
added). In other words, while the dissent presents the question of
whether the Purchase Agreement is fully integrated as essentially
irrelevant to the issue of whether the two documents in question
can operate collaterally, we believe that the Purchase Agreement’s
very integration also renders it “the whole of the agreement
between the parties.” See id. (cleaned up). When the Tangren court
determined that the lease was integrated, it stated, “We agree that
the [l]ease is a final and complete expression of [the parties’] bargain
. . . .” Id. ¶ 17 (emphasis added). In other words, the lease didn’t
just provide the complete terms of its own application, it provided
the complete terms of the parties’ whole agreement. Additionally,
when the court discussed what role parol evidence could play
after a finding of integration, it stated that “if a contract is
integrated, parol evidence is admissible only to clarify ambiguous
terms.” Id. ¶ 11 (cleaned up) (emphasis added). Under a plain
reading of this language, the dissent’s allowance of parol evidence
to determine if the parties agreed to a separate, collateral contract
is simply not permissible. The dissent argues that parol evidence
is only so limited “to determine the initial question of whether a
contract is fully integrated,” see infra ¶ 30, but that is not what
Tangren says. Tangren’s language expressly excludes side
agreements. Tangren, 2008 UT 20, ¶ 13.
¶23 Furthermore, as noted above, in Far West Bank v. Robertson,
2017 UT App 213, 406 P.3d 1134, we stated that once a document
(or group of documents) is “deemed an integration, under the
parol evidence rule evidence of contemporaneous conversations,
representations, or statements offered for the purpose of varying
or adding to the terms of the integrated contract is inadmissible.” Id.
¶ 22 (cleaned up) (emphasis added). This runs counter to the
20210621-CA 16 2023 UT App 47Montes v. National Buick GMC, Inc.
dissent’s suggestion that an integration clause merely prevents
the operation of contradictory terms, not excluding from
consideration parol evidence of additional, noncontradictory
terms. See infra ¶ 36. If an integration clause renders a contract the
parties’ whole, fully integrated agreement, and if parol evidence
of additional—not just contradictory—terms is prohibited,
collateral contracts appear to be a legal impossibility under Utah
law on integration clauses.
¶24 But even if this is not true, here the specific language of the
Purchase Agreement controls to prevent consideration of the
Arbitration Agreement as a collateral contract.7 The actual
7. Differences between the language at issue in Ritter v. Grady
Auto. Group, Inc., 973 So. 2d 1058 (Ala. 2007), and that of the
Purchase Agreement preclude that case from providing the
support the dissent desires even if the possibility of a collateral
contract is not foreclosed. First, the Purchase Agreement contains
a statement that no other terms apply—the double-checked box
labeled “NONE”—while the purchase agreement at issue in Ritter
did not.
Second, there are material differences in the language of
the integration clauses. Notably, the integration clause at issue in
Ritter stated, “No oral representations are binding unless written
on this form and all terms of the agreement are printed or written
herein.” Id. at 1062 (cleaned up). This language is more limited
than that of the present integration clause.
Third, there is no indication that in Ritter the arbitration
agreement purported to establish terms for topics covered by the
purchase contract. See id. at 1063–65. The court found the
arbitration agreement there to be collateral because, in part, the
topics covered therein and in the purchase contract were different
and “the agreements [were] not so related that one would expect
them to be included in the same document.” Id. at 1065. But we
conclude that the topics of the Purchase Agreement and the
(continued…)
20210621-CA 17 2023 UT App 47Montes v. National Buick GMC, Inc.
language of the integration clause excludes any statements of
terms related to any “subject matter[] covered” by the Purchase
Agreement.8 Because both documents discuss the condition of the
car and the warranties involved in the sale, their topics do
overlap—a reality that the dissent ignores. See infra ¶ 35.
Arbitration Agreement overlap—a conclusion that excludes the
Arbitration Agreement’s operation based on the language of the
integration clause.
8. While the integration clause in Kates v. Chad Franklin Nat’l Auto
Sales N., LLC, No. 08-0384-CV-W-FJG, 2008 WL 5145942 (W.D.
Mo. Dec. 1, 2008), is substantially similar to the one here, see id. at
*3, we note two distinguishing factors between that case and the
present case. First, while in Kates the parties did fail to check a box
acknowledging the application of an arbitration agreement, see
id.—though the Kates court may have determined that “the
checkbox in the sales contract referred to the arbitration clause on
the back of that contract, not the separate arbitration agreement
signed by the buyer,” Stubblefield v. Best Cars KC, Inc., 506 S.W.3d
377, 381 (Mo. Ct. App. 2016)—here the parties affirmatively
double-checked the box indicating “NONE” for other terms. We
give meaning to this intentional action.
Second, the Kates court did not determine that the
arbitration agreement related to the subject matters covered by
the parties’ final agreement such that it was excluded by the plain
language of the integration clause, but we do.
Furthermore, though the Kates court highlighted that the
arbitration agreement was “governed by the Federal Arbitration
Act (‘FAA’), 9 U.S.C. § 1, et seq., at the agreement of the parties,”
which “[t]he Supreme Court has interpreted . . . as ensuring the
enforceability of arbitration agreements,” 2008 WL 5145942, at *2,
“state and federal policies favoring arbitration cannot be used to
defeat the plain language of the parties’ contract,” HITORQ, LLC
v. TCC Veterinary Services, Inc., 2021 UT 69, ¶ 25, 502 P.3d 281(cleaned up).
20210621-CA 18 2023 UT App 47Montes v. National Buick GMC, Inc.
Accordingly, even if the terms in the Arbitration Agreement on
warranties and vehicle condition do not directly contradict their
counterparts in the Purchase Agreement, as the dissent seems to
demand, see infra ¶¶ 32–33, 36, the very existence of any terms on
those topics in the Arbitration Agreement disqualifies that
document from being collateral based on the integration clause’s
clear language on exclusivity.
III. Attorney Fees
¶25 Montes requests that we provide an award for his attorney
fees and costs. He provides two grounds for this request. First, he
argues that an award for attorney fees and costs is warranted
under rule 33 of the Utah Rules of Appellate Procedure.
Alternatively, Montes argues that he is entitled to such an award
pursuant to the terms of the Purchase Agreement. We decline to
award fees and costs on either ground.
¶26 Rule 33 of the Utah Rules of Appellate Procedure indicates
that “if the court determines that a motion made or appeal taken
under these rules is either frivolous or for delay, it will award just
damages, which may include . . . reasonable attorney fees, to the
prevailing party.” Utah R. App. P. 33(a). The rule defines a
“frivolous appeal” as “one that is not grounded in fact, not
warranted by existing law, or not based on a good faith argument
to extend, modify, or reverse existing law.” Id. R. 33(b). Given that
various courts have disagreed as to outcomes in cases with similar
facts, see supra ¶ 21, and that our own esteemed colleague
disagrees with our resolution, this case clearly does not involve a
frivolous appeal, see Thayne v. Thayne, 2022 UT App 122, ¶ 17 n.9,
521 P.3d 190 (“Although [the appellant’s] appeal was
unsuccessful, we do not see that it rises to the level of frivolous
and warrants sanctions under rule 33.”); O’Brien v. Rush, 744 P.2d
306, 310 (Utah Ct. App. 1987) (“A frivolous appeal is one without
merit.”). We also do not conclude that National’s appeal was
20210621-CA 19 2023 UT App 47Montes v. National Buick GMC, Inc.
brought merely for delay. Accordingly, we decline to award fees
and costs on this ground.
¶27 Alternatively, Montes argues that he should receive fees
and costs based on the language of the Purchase Agreement. Our
supreme court has determined that because on interlocutory
appeal “final judgment has yet to be entered[,] . . . [u]nless
provided by statute, there shall be no application for costs or
attorney[] fees made in connection with a petition for review by
interlocutory appeal. Issues of costs and attorney[] fees, if any,
shall abide the final resolution of the adjudication.” Benjamin v.
Amica Mutual Ins. Co., 2006 UT 37, ¶ 39, 140 P.3d 1210 (cleaned
up). “We therefore instruct the district court to evaluate
[Montes’s] request for costs and attorney fees incurred in
defending against this interlocutory appeal when the case is
finally resolved and it can identify the prevailing party.” See id.CONCLUSION
¶28 The Purchase Agreement is fully integrated. By glomming
a side agreement—the Arbitration Agreement—onto the
Purchase Agreement, National asks us to add a term to the
contract. This is inconsistent with both Utah law and the text of
the parties’ integration clause. Tangren and the plain language of
the Purchase Agreement expressly and dispositively exclude any
operation of the Arbitration Agreement. Accordingly, we affirm.
We decline to award Montes attorney fees on this interlocutory
appeal.
APPLEBY, Senior Judge, dissenting:
¶29 I dissent. Although extending Tangren Family Trust v.
Tangren, 2008 UT 20, 182 P.3d 326, arguably supports the majority
opinion’s conclusion, I do not agree that Tangren requires the
20210621-CA 20 2023 UT App 47Montes v. National Buick GMC, Inc.
result the majority opinion reaches. Instead, I agree with National
that the district court “incorrectly excluded the parties’ separate
Arbitration Agreement under the parol evidence rule.”9
¶30 The parol evidence rule “exclude[s] evidence of
contemporaneous conversations, representations, or statements
offered for the purpose of varying or adding to the terms of an
integrated contract.” Id. ¶ 11 (quotation simplified). Tangren
addressed what evidence can be considered to determine the
initial question of whether a contract is fully integrated. See id.
¶ 16 (“[This case] does not present a circumstance under which
we allow extrinsic evidence to be considered on the question of
integration in the face of a clear integration clause. . . . To the extent
any of our prior cases provide otherwise, we overrule those
cases.” (emphasis added)); id. ¶ 17 (“We hold today that in the
face of a clear integration clause, extrinsic evidence of a separate
oral agreement is not admissible on the question of integration.”
(emphasis added)).
¶31 Nothing in Tangren modifies the parol evidence rule itself
or how it is to be applied once an integrated contract brings the
rule into play. Instead, the Tangren court quoted, without
9. National raises the issue of whether the district court correctly
determined that the Arbitration Agreement was irrelevant under
the parol evidence rule. Thus, our consideration of that rule and
its exceptions—even those not argued by National—is proper. See
State v. Johnson, 2017 UT 76, ¶ 14 n.2, 416 P.3d 443 (“We view
issues narrowly, but . . . new arguments, when brought under a
properly preserved issue or theory, do not require an exception to
preservation.” (quotation simplified)); Kaiserman Assocs., Inc. v.
Francis Town, 977 P.2d 462, 464 (Utah 1998) (“In our view, an
overlooked or abandoned argument should not compel an
erroneous result. We should not be forced to ignore the law just
because the parties have not raised or pursued obvious
arguments.”).
20210621-CA 21 2023 UT App 47Montes v. National Buick GMC, Inc.
alteration, prior case law defining the parol evidence rule. Id. ¶ 11.
In doing so, the Tangren court acknowledged that (1) “the parol
evidence rule has a very narrow application,” id. (quotation
simplified), and (2) the rule prohibits only the consideration of
parol evidence that would somehow alter an integrated contract,
id. (explaining that the rule “exclude[s] evidence of
contemporaneous conversations, representations, or statements
offered for the purpose of varying or adding to the terms of an
integrated contract” (emphasis added) (quotation simplified)); id.
(“If a contract is integrated, parol evidence . . . is not admissible to
vary or contradict the clear and unambiguous terms of the
contract.” (emphasis added) (quotation simplified)); see also id.
¶ 18 (“The parol evidence rule therefore bars the use of extrinsic
evidence to vary or add to the terms of the [contract] because it is
valid, integrated, and unambiguous.” (emphasis added)); id. ¶ 13
(stating that a document’s merger clause precludes evidence of
side agreements when interpreting that document).
¶32 Indeed, our supreme court has long recognized that the
parol evidence rule “should not be regarded as applicable in
rigidity and without exception.” Youngren v. John W. Lloyd Constr.
Co., 450 P.2d 985, 987 (Utah 1969). Additionally, the court has long
recognized the collateral contract exception to the parol evidence
rule: “[T]he fact that the parties have a written contract on a
subject does not prevent them from entering into other
agreements relating to the same general subject matter.” Id.; see
also Garrett v. Ellison, 72 P.2d 449, 451 (Utah 1937) (“Of course, the
rule, even as between the parties to the instrument, does not
foreclose all parol evidence, but only such as would change or
vary or contradict the terms of the writing, when such terms are
clear and definite.”); Mooneyham v. BRSI, LLC, 682 F. App’x 655,
660 (10th Cir. 2017) (stating that a merger clause “precludes
incorporation of other agreements into the [contract]” but
“doesn’t preclude incorporation of other agreements into the
transaction as a whole”); 11 Williston on Contracts § 33:27 (4th ed.
2022). And I am not prepared to say that Tangren’s references to
20210621-CA 22 2023 UT App 47Montes v. National Buick GMC, Inc.
the “complete agreement” or “complete expression” existing in
that case were carefully chosen phrases meant to convey a
determination that collateral contracts are now “a legal
impossibility under Utah law on integration clauses,” see supra
¶¶ 22–23; that is, I do not think Tangren—a case that neither
mentioned collateral contracts nor addressed facts that could have
supported the existence of a collateral contract—consciously used
these phrases to implicitly overrule prior case law allowing a
collateral contract to exist alongside a fully integrated contract.10
¶33 In sum,
[The parol evidence rule] serves a useful purpose in
appropriate circumstances in safeguarding the
integrity of [written] documents. However, it
should not be applied with any such unreasoning
rigidity as to defeat what may be shown to be the
actual purpose and intent of the parties, but should
be applied in the light of reason to serve the ends of
justice. It does not preclude proof of agreements as
to collateral matters relating to the contract or its
performance, so long as they are not inconsistent
with nor in repudiation of the terms of the written
agreement.
FMA Fin. Corp. v. Hansen Dairy, Inc., 617 P.2d 327, 329 (Utah 1980)
(footnote omitted); see also 11 Williston on Contracts § 33:28 (4th ed.
2022) (“Although a binding integrated agreement discharges
prior agreements to the extent that it is inconsistent with them, the
rule does not apply to a collateral agreement, that is, a separate
10. I also note the significant implications of the majority’s broad
reading of Tangren. Under its reasoning, whenever parties execute
a contract with an integration clause, they cannot simultaneously
execute any other valid contracts without incorporating them into
the first contract.
20210621-CA 23 2023 UT App 47Montes v. National Buick GMC, Inc.
contract between the same parties which does not contradict,
vary, or alter and is not inconsistent with the terms of the written
instrument.”). Thus, the ultimate question in the case before us is
whether the Arbitration Agreement “is within the scope of” the
Purchase Agreement or whether it “is independent of, collateral
to, and not inconsistent with the [Purchase Agreement] even
though it relates to the same general subject matter and grows out
of the same transaction.” See 11 Williston on Contracts § 33:27 (4th
ed. 2022).
¶34 The majority opinion reasons that the Arbitration
Agreement is not a collateral contract because it is inconsistent
with the Purchase Agreement’s double-checked box indicating no
“other terms.” For several reasons, I disagree.
¶35 First, considering the double-checked box in context, I
cannot agree that it is broader than the Purchase Agreement’s
integration clause itself. The integration clause states that the
Purchase Agreement “comprises the complete and exclusive
statement of the terms of the [c]ontract relating to the subject matters
covered hereby.” (Emphasis added.) Thus, the clause does not
foreclose all agreements tangentially related to the vehicle, but
only those agreements relating to the matters covered by the
Purchase Agreement, that is, matters governing the sale of the
vehicle. Likewise, the double-checked box does not prevent the
parties from agreeing to any other terms, but only other terms
related to the sale of the vehicle that the contract is meant to
govern. Thus, because the Purchase Agreement contains the
integration clause and rejects additional terms related to the sale
of the vehicle, it alone governs the terms of the sale of the vehicle;
accordingly, no parol evidence of other agreements should be
considered when interpreting the Purchase Agreement and
determining the parties’ rights and responsibilities related to the
sale. But the Arbitration Agreement addresses a collateral issue
not “covered” by the Purchase Agreement—the actions of the
parties if a dispute should arise between them (and not just a
20210621-CA 24 2023 UT App 47Montes v. National Buick GMC, Inc.
dispute based on the Purchase Agreement, but any dispute,
“whether in contract, tort, statute, or otherwise”).
¶36 Second, I do not agree that Utah’s case law supports the
majority opinion’s broad interpretation of the meaning of the
double-checked box. In each of the cases on which the majority
opinion relies, the prohibited side agreement at issue was directly
contrary to the express principal terms of the integrated contract.
See Tangren Family Trust v. Tangren, 2008 UT 20, ¶ 14, 182 P.3d 326(oral agreement that the contract would not be a valid contract at
all); iDrive Logistics LLC v. IntegraCore LLC, 2018 UT App 40, ¶ 39,
424 P.3d 970 (parol evidence that “effectively change[d] multiple
key terms of the [a]greement”), cert. denied, 425 P.3d 803 (Utah
2018); Daines v. Vincent, 2008 UT 51, ¶ 34, 190 P.3d 1269 (parol
evidence that an executed release “from any and all liabilities and
or claims in connection with services provided” was not intended
to release a prior claim to eight ownership shares); Far West Bank
v. Robertson, 2017 UT App 213, ¶ 20, 406 P.3d 1134 (email evidence
that would have added an “essential term” to the parties’
agreement and ultimately excused the defendant’s nonpayment
of obligations under the agreement and provided entitlement to
an award of damages), cert. denied, 417 P.3d 576 (Utah 2018). None
of these cases refused to consider a separate written contract that
in no way contradicted or modified the “clear and definite” type
of terms that the parol evidence rule protects.11 See Garrett, 72 P.2d
at 451.
11. I find persuasive several cases from other jurisdictions that
have addressed the issue before us and ultimately allowed the
operation of collateral arbitration agreements. See, e.g., Ritter v.
Grady Auto. Group, Inc., 973 So. 2d 1058, 1063–65 (Ala. 2007)
(applying the collateral contract exception to the parol evidence
rule to allow the application of a non-contradictory arbitration
agreement that “govern[ed] the relationship between the parties
(continued…)
20210621-CA 25 2023 UT App 47Montes v. National Buick GMC, Inc.
¶37 Third, the majority opinion’s interpretation of the double-
checked box is inconsistent with the general contract
interpretation principle that “we attempt to give effect to each
provision and we look for a reading that harmonizes the
provisions and avoids rendering any provision meaningless.”
McNeil Eng’g & Land Surveying, LLC v. Bennett, 2011 UT App 423,
¶ 17, 268 P.3d 854 (quotation simplified). Given the circumstances
under which the documents here were executed, the parties
obviously intended the Arbitration Agreement to be a collateral
agreement with legal effect. I cannot agree that they signed
multiple documents in connection with the sale of this vehicle but
intended only one of them to be effective—for some reason
signing additional documents as an exercise in futility. Thus, if we
determine the Arbitration Agreement was not a collateral
agreement, we thereby violate the parties’ contractual intentions,
although their intentions should be the driving consideration. See
WebBank v. American Gen. Annuity Service Corp., 2002 UT 88, ¶ 17,
54 P.3d 1139 (“The underlying purpose in construing or
interpreting a contract is to ascertain the intentions of the parties
to the contract.”); Johnson ex rel. Johnson v. JF Enters., LLC, 400
S.W.3d 763, 769 (Mo. 2013) (“In this case, the intent of the parties
is demonstrated by all the documents the parties signed
contemporaneously. To protect the sanctity of the parties’ written
contract, all the provisions in the writings can and should be
harmonized and given effect, including a valid arbitration
agreement.”); Najera v. David Stanley Chevrolet, Inc., 2017 OK CIV
APP 62, ¶ 17, 406 P.3d 592 (“If we were to conclude that the [sales
preceding and following the sale of the car”); Kates v. Chad
Franklin Nat’l Auto Sales N., LLC, No. 08-0384-CV-W-FJG, 2008 WL
5145942, at *4 (W.D. Mo. Dec. 1, 2008) (“Arbitration agreements
that are separate from an underlying purchase or financing
agreement are not unusual and are routinely enforced. The Court
further finds that the merger clause does not prohibit the forming
of a separate arbitration agreement contemporaneously with the
other contracts in this matter.” (quotation simplified)).
20210621-CA 26 2023 UT App 47Montes v. National Buick GMC, Inc.
contract] constitutes the only and complete agreement of the
parties, execution of these other documents would be rendered
nugatory. Such a result would fail to effectuate the intent the
parties clearly expressed by executing the various agreements
together.”).
¶38 I would determine that the Arbitration Agreement, which
does not “vary or contradict the clear and unambiguous terms of
the [Purchase Agreement],” see Tangren, 2008 UT 20, ¶ 11
(quotation simplified), is a collateral agreement and therefore not
rendered invalid or irrelevant through the application of the parol
evidence rule.
20210621-CA 27 2023 UT App 47