Vierig v. Therriault ( 2023 )

2023 UT App 36THE UTAH COURT OF APPEALS
CRAIG R. VIERIG,
Appellee,
v.
SARAH A. THERRIAULT,
Appellant.
Opinion
No. 20210258-CA
Filed April 13, 2023
Third District Court, Salt Lake Department
The Honorable Robert P. Faust
No. 190907944
Steven G. Loosle, Attorney for Appellant
Troy L. Booher, Beth E. Kennedy, and
Taylor P. Webb, Attorneys for Appellee
JUDGE RYAN D. TENNEY authored the lead opinion, in which
JUDGES GREGORY K. ORME and JOHN D. LUTHY concurred.
JUDGE GREGORY K. ORME authored a separate opinion, in which
JUDGE JOHN D. LUTHY concurred.
TENNEY, Judge:
¶1 In 2011, Craig Vierig gave Sarah Therriault a trust deed (the
Trust Deed) to secure a $200,000 debt. Years later, Vierig sued
Therriault, seeking to invalidate both the Trust Deed and the
underlying debt. The district court granted Therriault’s motion
for summary judgment, thereby upholding the validity of both.
As part of this same case, Therriault counterclaimed, asserting
that the debt was now due and that she was entitled to foreclose
on the property to collect on it. But the court granted Vierig’s
request for summary judgment against the counterclaim, ruling
Vierig v. Therriault
that the debt was not yet due and that Therriault was not entitled
to foreclose on the property.
¶2 Neither party has appealed the summary judgment ruling
that went against them. Instead, this appeal only concerns
Therriault’s request for attorney fees. Therriault’s request was
based on a provision in the Trust Deed that obligated Vierig to
pay “all” of Therriault’s “costs and expenses of collection.” In
Therriault’s view, this provision applies to the attorney fees she
incurred while litigating the validity of the Trust Deed and those
that she incurred prosecuting her counterclaim. The district court
rejected both requests as a matter of law. As explained below, we
first conclude that the fee provision was ambiguous as to whether
Therriault could collect the fees she incurred defending the
validity of the Trust Deed. Because it was ambiguous in this
respect, its interpretation presents a question of fact that the
district court should decide after receiving evidence of the parties’
intent. We accordingly reverse that aspect of the court’s ruling. As
to the fees that Therriault incurred prosecuting her counterclaim,
however, we conclude that there’s no ambiguity and that
Therriault is not entitled to collect on those fees. We accordingly
affirm that portion of the court’s ruling.
BACKGROUND
¶3 Craig Vierig and Sarah Therriault were in a romantic
relationship from about 2000 through 2013. In October 2011,
Vierig executed the Trust Deed in favor of Therriault, wherein he
gave Therriault a security interest in real property that he owned.
The Trust Deed stated that it was “for the purpose of securing
payment of the indebtedness evidenced by a promissory
note . . . in the principal sum of $200,000.00, payable to
[Therriault].”
20210258-CA 2 2023 UT App 36Vierig v. Therriault
¶4 In 2019, Vierig sued Therriault, alleging that “[n]o
Promissory Note was ever executed, and no debt is owed to” her.
Vierig accordingly sought (1) a declaratory judgment that
Therriault had “no right, title, claim, or interest to the subject
property” and (2) a quiet title decree “removing the offending
Trust Deed from the subject property.”
¶5 Therriault filed an answer and counterclaim. In her
counterclaim, Therriault alleged that the parties had agreed for
the $200,000 to “be paid upon the sale or refinancing of the
property pledged as security or upon the death of Vierig.”
Although neither event had yet happened, Therriault alleged that
Vierig had now anticipatorily “repudiated the Debt” by filing his
suit. From this, Therriault sought (1) a declaratory judgment that
the $200,000 was “due and owing,” as well as (2) an order
requiring “that the [p]roperty be sold, and the proceeds be
applied to the Debt.”
¶6 The parties filed competing motions for summary
judgment, and the district court held a hearing on those motions.
The court entered an order granting Therriault’s motion for
summary judgment against Vierig’s suit, thus concluding that the
debt was valid and the Trust Deed was enforceable. Though that
order touched on Therriault’s counterclaim, it did not fully
resolve her arguments about anticipatory repudiation or her
requests for relief. In response to a request for clarification from
Therriault, the court subsequently issued a second order in which
it rejected Therriault’s assertion that Vierig had anticipatorily
“repudiated the Debt.” There, the court ruled that “since the Trust
Deed is NOT due until the [p]roperty is sold or [Vierig] dies, he is
not breaching the same and has not repudiated it by asking the
Court to interpret the document[,] and therefore, there is no[t] an
anticipatory repudiation.” The court accordingly denied her
request for foreclosure on the property.
20210258-CA 3 2023 UT App 36Vierig v. Therriault
¶7 In addition to the litigation about the competing motions
for summary judgment, the parties litigated the question of
whether Therriault was entitled to attorney fees. The Trust Deed
contained a provision (the Fee Provision) under which Vierig was
obligated “to pay all costs and expenses of collection (including
Trustee’s and attorney’s fees in event of default in payment of the
indebtedness secured hereby).” Relying on that provision,
Therriault requested attorney fees for her efforts “defending the
Complaint and prosecuting the Counterclaim,” arguing that they
were “inextricably interwoven and both fall within the scope of
fees and costs of ‘collection.’”
¶8 The court later issued a decision denying the request for
attorney fees. In the court’s view, the Fee Provision “limits the
award of attorney fees to default in payment of indebtedness.”
The court concluded that “[b]ecause the indebtedness is not yet
due, and there has been no default, no attorney fees are proper.”
The court thus specifically rejected Therriault’s argument that she
was entitled to fees incurred while defending the validity of the
Trust Deed and debt. On this, the court opined that “costs and
attorney fees are distinguishable,” and since Therriault was “not
‘collecting’ anything, the attorney fees are not taxed as costs.”
¶9 Neither party appealed the court’s rulings on the
competing summary judgment motions. Therriault, however,
timely appealed the court’s denial of her request for attorney fees.
ISSUE AND STANDARD OF REVIEW
¶10 Therriault argues that the district court erred when it
concluded that she was not entitled to recover her attorney fees
under the Fee Provision. “Whether attorney fees are recoverable
is a question of law which we review for correctness.” Anderson v.
Doms, 1999 UT App 207, ¶ 9, 984 P.2d 392. “But where a
contractual term or provision is ambiguous as to what the parties
20210258-CA 4 2023 UT App 36Vierig v. Therriault
intended, the question becomes a question of fact to be
determined by the fact-finder.” Brady v. Park, 2019 UT 16, ¶ 53, 445
P.3d 395.
ANALYSIS
¶11 Therriault argues that she was entitled to the attorney fees
she incurred (1) defending the validity of the debt and the Trust
Deed and (2) prosecuting her counterclaim. Our decision
proceeds in three parts. In Part A, we set forth the governing
framework. In Part B, we conclude that both sides have put forth
reasonable interpretations of the Fee Provision with respect to the
fees Therriault incurred defending the validity of the debt and the
Trust Deed. Because of this, we remand that question for further
development and decision. Finally, in Part C, we conclude that
there is no ambiguity with respect to the fees Therriault incurred
prosecuting her counterclaim. Instead, with respect to those fees,
we affirm the district court’s ruling.
A. Framework
¶12 “As a general rule, attorney fees are recoverable only if
authorized by contract or statute.” Anderson & Karrenberg v.
Warnick, 2012 UT App 275, ¶ 9, 289 P.3d 600. Here, Therriault does
not argue that she was entitled to attorney fees by statute; rather,
she argues that she was entitled to attorney fees by contract—i.e.,
under the Fee Provision from the Trust Deed. As noted, that
provision obligated Vierig “to pay all costs and expenses of
collection (including Trustee’s and attorney’s fees in event of
default in payment of the indebtedness secured hereby).”
¶13 “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.” Hahnel v. Duchesne Land, LC, 2013 UT App 150,
20210258-CA 5 2023 UT App 36Vierig v. Therriault
¶ 16, 305 P.3d 208 (quotation simplified). “Under basic rules of
contract interpretation, courts first look to the writing alone to
determine its meaning and the intent of the contracting parties.”
Giusti v. Sterling Wentworth Corp., 2009 UT 2, ¶ 44, 201 P.3d 966.
“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.” Id. (quotation simplified). “But
where a contractual term or provision is ambiguous as to what the
parties intended, the question becomes a question of fact to be
determined by the fact-finder.” Brady v. Park, 2019 UT 16, ¶ 53, 445
P.3d 395.
¶14 A “provision of a contract is not rendered ambiguous by
the bare existence of competing interpretations of it.” West Valley
City v. Bret W. Rawson, P.C., 2021 UT 16, ¶ 28, 489 P.3d 191.
Instead, a provision is ambiguous “if it is capable of more than
one reasonable interpretation because of uncertain meanings of
terms, missing terms, or other facial deficiencies.” Brady, 2019 UT
16, ¶ 54 (quotation simplified). A “reasonable interpretation is an
interpretation that cannot be ruled out, after considering the
natural meaning of the words in the contract provision in context
of the contract as a whole, as one the parties could have
reasonably intended.” Id. ¶ 55. “If both sides advance
interpretations” of the provision “that are plausible and
reasonably supported by the document’s language,” then the
provision is deemed ambiguous, “even if neither party actually
uses that label to describe” it. Ocean 18 LLC v. Overage Refund
Specialists LLC (In re Excess Proceeds from Foreclosure of 1107
Snowberry St.), 2020 UT App 54, ¶ 25, 474 P.3d 481.
¶15 When confronted with an ambiguous contractual
provision, “we seek to resolve the ambiguity by looking to
extrinsic evidence of the parties’ intent.” Brady, 2019 UT 16, ¶ 56
(quotation simplified). A “determination of the parties’ intent
based on extrinsic evidence is a factual determination that should
20210258-CA 6 2023 UT App 36Vierig v. Therriault
be made by the fact-finder.” Id. If “extrinsic evidence does not
reveal the intent of the parties, a district court should then, and
only then, resolve the ambiguity against the drafter.” Id.(quotation simplified); see also Gillmor v. Macey, 2005 UT App 351,
¶ 38 n.16, 121 P.3d 57 (referring to “the doctrine of construing
ambiguities in a contract against the drafter” as “a kind of
tie-breaker” that is “used as a last resort by the fact-finder” if the
“receipt and consideration of all pertinent extrinsic evidence has
left unresolved what the parties actually intended” (quotation
simplified)).
¶16 Consistent with this, if a district court interprets a
contractual provision as a matter of law but an appellate court
later reverses and concludes that the provision is ambiguous, the
proper result is a “remand to allow the fact-finder to determine
the parties’ intent with respect to [the] issues.” Northgate Vill. Dev.,
LC v. Orem City, 2014 UT App 86, ¶ 39, 325 P.3d 123; see also
Beckman v. Cybertary Franchising LLC, 2018 UT App 47, ¶ 83, 424
P.3d 1016; Hemingway v. Construction by Design Corp., 2015 UT
App 10, ¶ 17, 342 P.3d 1135. And of note, Utah’s appellate courts
have followed this same procedure when the provision at issue is
an attorney fee provision. See, e.g., Bret W. Rawson, P.C., 2021 UT
16, ¶¶ 28, 30 (considering the parties’ “competing views” on a
contractual obligation to pay attorney fees, finding ambiguity,
and declining “to resolve this question on the current record and
instead remand[ing] for further proceedings on this issue”);
Beckman, 2018 UT App 47, ¶¶ 76, 83 (determining the attorney fee
provision was “ambiguous in this context” and “remand[ing] this
issue to the trial court to consider extrinsic evidence to determine
its meaning”).
B. Fees Incurred Litigating the Validity of the Debt and the
Trust Deed
¶17 As noted, the district court ruled that Therriault was not
entitled to any fees under the Fee Provision. Notably, it did so
20210258-CA 7 2023 UT App 36Vierig v. Therriault
without any reference to any evidence of the parties’ intent. In this
sense, the court seems to have regarded the Fee Provision as being
an unambiguous provision that could be interpreted as a matter
of law. Given this, the question is whether both sides have put
forward reasonable interpretations of the Fee Provision. If they
have, it becomes a question of fact that must be determined based
on extrinsic evidence of the parties’ intent. We conclude that this
is so with respect to the fees Therriault incurred defending the
validity of the debt and the Trust Deed.
1. Vierig’s Interpretation
¶18 The Fee Provision states that Vierig must “pay all costs and
expenses of collection (including Trustee’s and attorney’s fees in
event of default in payment of the indebtedness secured hereby).”
Vierig focuses on the term “collection.” “Utah courts have a long
history of relying on dictionary definitions to determine plain
meaning.” Cook v. Department of Com., 2015 UT App 64, ¶ 13, 347
P.3d 5 (quotation simplified). Of note, some dictionaries suggest
that the term “collection” refers to the receipt of funds. See, e.g.,
Collect, Merriam-Webster 1 (defining the term “collect” as “to
claim as due and receive payment for”); Collection, Cambridge
Dictionary 2 (defining “collection” as “the act of collecting
money”). Consistent with this understanding of the term
“collection,” Black’s Law Dictionary defines the phrase “costs of
collection” as referring to “[e]xpenses incurred in receiving
payment of a note; esp., attorney’s fees incurred in the effort to
collect a note.” Costs of collection, Black’s Law Dictionary (11th ed.
2019) (emphasis added). In light of this, Vierig argues that there is
a meaningful difference between fees that Therriault incurred
1. https://www.merriam-webster.com/dictionary/collect [https://
perma.cc/4H9S-RKP3].
2. https://dictionary.cambridge.org/us/dictionary/english/collecti
on [https://perma.cc/Y5WA-6JGE].
20210258-CA 8 2023 UT App 36Vierig v. Therriault
while litigating the question of whether the debt and the Trust
Deed were valid (which would not be compensable), and fees that
she might separately incur when seeking to collect on the debt
once it’s due in what would commonly be referred to as a
“collection action” (which would be compensable).
¶19 We note that some courts have recognized this very
difference in similar cases. The Second Circuit’s decision in Jackson
v. Oppenheim, 533 F.2d 826 (2d Cir. 1976), is illustrative. There, a
man (Seller) sold another man (Buyer) shares in a company. Id. at
828. The overall sale was effectuated through two promissory
notes (each for half the shares), and each note contained language
stating that if it was “placed with an attorney for collection,”
Buyer was required to “pay all costs of collection, including, but
not limited to, counsel fees.” Id. at 828, 830. Buyer later sued,
seeking to invalidate the sale based on alleged violations of
federal securities laws during the transaction. Id. at 831. The
district court ruled against Buyer on that claim, as did the Second
Circuit. Id. at 828–30.
¶20 Importantly for our purposes, the district court in Jackson
also awarded attorney fees to Seller as “costs of collection,” but
the Second Circuit reversed that portion of the decision. Id. at 827,
830–31. The court explained that “some language more express
than ‘costs of collection’ should have been employed to have
placed [Buyer] on notice that he was undertaking to protect
[Seller] from costs incurred in defending a separate claim
regarding validity of the underlying sale transaction under the
federal securities laws.” Id. at 831. The court also concluded that
“the note in no manner suggested liability for fees for defending
the federal security law claim merely because [Seller] might
counterclaim for collection on the notes.” Id.¶21 Other courts have followed this approach. In Zimmerman v.
First Production Credit Ass’n, 412 N.E.2d 216, 217 (Ill. App. Ct.
1980), for example, the maker of a note sought declaratory
20210258-CA 9 2023 UT App 36Vierig v. Therriault
judgment that it was not liable on the note. Though the district
court rejected the maker’s claim, it also held that the payee was
not entitled to attorney fees under a provision that stated that if
the note was “placed in the hands of an attorney for collection, or
suit is brought, on the same or any portion thereof,” the maker
was obligated to “pay reasonable attorneys’ fees, reasonable
expenses incurred by the holder or its attorneys in collection and
costs of collection.” Id. (quotation simplified). The appellate court
later affirmed the denial of the fee request, explaining that “[h]ad
the original suit . . . been brought by [the] defendant for its
collection, the provision in regard to attorneys’ fees would have
entitled it to reasonable fees.” Id. “But that suit was not a suit to
collect nor was the note placed in the hands of an attorney for
collection.” Id. And in light of this, the court held that “[s]trictly
construed, the note makes no provision for payment of attorney’s
fees.” Id.¶22 A Missouri court reached the same outcome in
German-American Bank v. Martin, 107 S.W. 1108 (Mo. Ct. App.
1908). In the course of a probate case, the administrator of an
estate unsuccessfully argued that a promissory note for a debt
owed by the deceased to a bank was “invalid.” Id. at 1109. The
bank then tried to collect the attorney fees that it had incurred
while defending the validity of the note. Id. The district court
denied that request, and the bank appealed. Id. On appeal, the
Missouri Court of Appeals affirmed the denial of the fee
request. Id. The court relied on the promissory note’s language,
which stated that if it was “not paid at maturity [the payee] was
to pay reasonable expense for collection, including an attorney’s
fee.” Id. Because the “services rendered [by the attorney] were in
a collateral proceeding, and not in direct effort to collect the note,”
the court held that the note’s language did not allow recovery. Id.
Instead, the court opined that attorney fees would only be
awardable “if the note was not paid at maturity” and the plaintiff
20210258-CA 10 2023 UT App 36Vierig v. Therriault
was “put to the expense of compelling its collection by the
assistance of an attorney.” Id.¶23 These principles and these cases support Vierig’s view of
how to interpret the Fee Provision. In short, since the term
“collection” is sometimes understood to narrowly refer to efforts
to receive money, and since some courts have held that litigation
about the validity of an underlying debt is distinct from litigation
in a collection action seeking to actually recover the owed money,
Vierig can reasonably argue that the Fee Provision does not allow
Therriault to recover these fees.
2. Therriault’s Interpretation
¶24 But Therriault advances a reasonable interpretation of her
own. Therriault first notes that the Fee Provision didn’t just entitle
her to “costs of collection.” Rather, it entitled her to “all costs and
expenses of collection.” (Emphasis added.) As Therriault points
out, the inclusion of the word “all” at the outset of this phrase at
least arguably suggests that the parties intended for the ensuing
phrase to be interpreted expansively. See, e.g., World Peace
Movement of Am. v. Newspaper Agency Corp., 879 P.2d 253, 260
(Utah 1994) (noting, in a statutory interpretation case, that the
“use of the word ‘all’ indicates that [the statute] takes an inclusive,
rather than an exclusive, approach to expenses”). 3
3. We acknowledge that World Peace Movement of America v.
Newspaper Agency Corp., 879 P.2d 253 (Utah 1994), interpreted a
statute rather than a contract. But whether interpreting a statute
or a contract, we start with a plain language analysis. Compare id.
at 259 (“When faced with a question of statutory construction, we
look first to the plain language of the statute.” (quotation
simplified)), with Giusti v. Sterling Wentworth Corp., 2009 UT 2,
¶ 44, 201 P.3d 966 (“Under basic rules of contract interpretation,
(continued…)
20210258-CA 11 2023 UT App 36Vierig v. Therriault
¶25 In addition, Therriault points out that the key phrase from
this provision isn’t just “costs of collection”; rather, it’s “costs and
expenses of collection.” (Emphasis added.) It’s of course true that
the term “costs” sometimes carries a particular legal meaning, and
it’s also true that “costs” are sometimes distinguished from
“attorney fees.” See, e.g., Alpha Partners Inc. v. Transamerica Inv.
Mgmt., LLC, 2006 UT App 331, ¶ 42, 153 P.3d 714 (noting that
“costs” include “filing fees, service of the complaint, jury and
witness fees, deposition transcripts, and copy costs for trial
exhibits,” but that “[t]here is a distinction to be understood
between the legitimate and taxable ‘costs’ and other ‘expenses,’ of
litigation which may be ever so necessary, but are not properly
taxable as costs” (quotation simplified)); Redevelopment Agency of
Salt Lake City v. Daskalas, 785 P.2d 1112, 1123–24 (Utah Ct. App.
1989) (noting that statutory language referring to “all reasonable
and necessary expenses” is “far more inclusive than the term
‘costs’”); cf. Christensen v. Christensen, 2018 UT App 53, ¶ 13 n.4,
420 P.3d 106 (listing “attorney fees” and “costs” separately
(quotation simplified)).
¶26 Even so, the term “expense” doesn’t carry this same
potentially narrow baggage. In its ordinary usage, the term
“expense” commonly refers to a “financial burden or outlay” or
“something expended to secure a benefit or bring about a result.”
Expense, Merriam-Webster. 4 As a result, the inclusion of the term
“expense” in the Fee Provision at least arguably expands the
universe of things that Vierig was obligated to cover. And Utah
courts first look to the writing alone to determine its meaning and
the intent of the contracting parties.”). In light of this, we see no
basis for viewing the potential importance of the word “all” to
such an interpretation any differently based on that distinction.
4. https://www.merriam-webster.com/dictionary/expense [https:
//perma.cc/59N5-LZEU].
20210258-CA 12 2023 UT App 36Vierig v. Therriault
case law has suggested as much. See, e.g., World Peace Movement,
879 P.2d at 260 (suggesting that the expense of hiring an attorney
to defend an action “certainly falls into” the statutory phrase
“actual and necessary expenses”); Davidson v. Munsey, 80 P. 743,
744 (Utah 1905) (comparing the term “costs,” which has a
“defined and well-understood meaning,” with the term
“expenses,” which “is not so restricted, and may include[] items
of expenditure in the prosecution of an action or proceeding,”
including “a reasonable attorney’s fee”).
¶27 Beyond this, Therriault points to the parenthetical. As
noted, the Fee Provision states that Vierig must pay Therriault’s
“costs and expenses of collection (including Trustee’s and
attorney’s fees in event of default in payment of the indebtedness
secured hereby).” (Emphasis added.) The district court and Vierig
both view this parenthetical as a limitation—i.e., one that restricts
the recoverable fees to those stemming directly from a default. But
in our view, the word “including” arguably (if not persuasively)
suggests otherwise. The word “including” naturally means “to
take in or comprise as a part of a whole or group.” Include,
Merriam-Webster 5 (emphasis added). In legal contexts,
“including” is “routinely construed as introducing a non-
exclusive, exemplary list,” which “is of course the obvious,
ordinary sense of the word.” Graves v. North E. Services, Inc., 2015
UT 28, ¶ 53, 345 P.3d 619. 6 Applied here, this meaning suggests
that the items in the parenthetical are not meant to be exclusive.
5. https://www.merriam-webster.com/dictionary/including [http
s://perma.cc/PYN6-SMSL].
6. We note that Graves v. North Eastern Services, Inc., 2015 UT 28,
¶ 53, 345 P.3d 619, analyzed the word “including” in a statutory
context, as opposed to a contractual analysis like the one at issue
here. As indicated above in footnote 3, however, we regard this
distinction as being irrelevant to the question before us.
20210258-CA 13 2023 UT App 36Vierig v. Therriault
Thus, given that this parenthetical was attached to the phrase “all
costs and expenses of collection,” the natural implication of this
parenthetical is that there are some situations aside from default in
which Therriault would still incur “costs and expenses of
collection.” And in such situations, the Fee Provision obligates
Vierig to pay these costs and expenses.
¶28 What would such a situation look like? One situation
would be this one: if Vierig preemptively sought to invalidate the
debt as a means of preventing Therriault from collecting on it, any
costs or expenses that Therriault incurred while defending the
debt’s validity could arguably be seen as a component of the
collection efforts themselves.
¶29 Of note, a number of courts have agreed with this approach
when considering “costs of collection” fee provisions. The Eighth
Circuit’s decision in Duryea v. Third Northwestern National Bank of
Minneapolis, 606 F.2d 823 (8th Cir. 1979), is illustrative. There, a
bank sued a man (Duryea) in state court to collect on a loan that
was secured by a promissory note. Id. at 824. Duryea then sued
the bank in federal court, arguing that the loan violated federal
law. Id. In the federal suit, the bank counterclaimed for the loan
amount plus costs of collection, including attorney fees. Id. The
federal district court rejected Duryea’s claims, sided with the bank
on its counterclaim, and then awarded the bank its attorney
fees. Id. On appeal, Duryea argued that the bank was only entitled
to the attorney fees it incurred while prosecuting its counterclaim,
reasoning that those were the only costs that it “directly incurred
in collecting the note.” Id. at 826. But the Eighth Circuit disagreed,
concluding that because it was “necessary” for the bank to defend
against Duryea’s attack on the debt “in order to collect on the
note,” the attorney fees that it “incurred in defending against”
Duryea’s suit were properly regarded as “a ‘cost of collection’ as
that term is used in the note.” Id. (quotation simplified).
20210258-CA 14 2023 UT App 36Vierig v. Therriault
¶30 Other courts have reached this same conclusion in similar
cases. See, e.g., Jaeger v. Canadian Bank of Com., 327 F.2d 743, 746
(9th Cir. 1964) (upholding an award that included fees
attributable to a creditor’s defense against a debtor’s counterclaim
because the party had “to dispose of the counter-claim in order to
secure judgment on its note”); Finalco, Inc. v. Roosevelt, 3 Cal. Rptr.
2d 865, 869 (Cal. Ct. App. 1991) (“California law is settled that a
borrower’s obligation to pay attorneys’ fees incurred in the
collection of the note includes attorneys’ fees incurred in
defending against a challenge to the underlying validity of the
obligation.”); Casey v. Cohan, 740 So. 2d 59, 63 (Fla. Dist. Ct. App.
1999) (concluding that attorney fees incurred defending against a
recission counterclaim were a “cost of collection,” reasoning that
to “collect on the note,” the debtor “had to defeat the
counterclaim”); Covich v. Chambers, 397 N.E.2d 1115, 1123 (Mass.
App. Ct. 1979) (holding that “fees attributable to the defense of
the rescission and cancellation actions were properly awarded
under the terms of the note because the successful resistance of
these claims was intrinsic to establishing a default on the note as
a predicate for its collection”); Williamson v. Tucker, 615 S.W.2d
881, 892 (Tex. Civ. App. 1981) (holding that fees attributable to a
rescission-based counterclaim were compensable because, if the
creditor had not successfully challenged the attempt to rescind, he
“would have lost his right to collect the note”); Wright v. Doolin,
607 A.2d 1137, 1140 (Vt. 1992) (upholding an award of attorney
fees stemming from a counterclaim because “[d]efending against
the counterclaim was necessary in order to collect the debt
owed”).
¶31 We acknowledge that many (though not all) of the
above-cited cases involved the creditor’s defense against a
counterclaim by the debtor—i.e., situations in which the creditor
initially filed suit to collect on the debt, but the debtor then filed a
counterclaim seeking to invalidate the debt. And that’s of course
different from what happened here, where it was Vierig who filed
20210258-CA 15 2023 UT App 36Vierig v. Therriault
his declaratory judgment and quiet title suit in the first instance.
But while Vierig suggests that this sequencing matters, this is at
least arguably the proverbial distinction without a difference.
Consider the two scenarios back-to-back:
• Scenario A: The creditor sues to collect on the debt. In
response to that suit, the debtor files a counterclaim
seeking to invalidate the debt, thus forcing the creditor
to defend against that claim to collect on the debt.
• Scenario B: The debtor first sues for a judicial
declaration that the debt is invalid, thus forcing the
creditor to defend against that claim to ever collect on
the debt. After the debtor’s suit is filed, the creditor sues
to collect on the debt.
¶32 In Scenario A, the debtor’s claim about the validity of the
debt is reactive; in Scenario B, the debtor’s claim about the validity
of the debt is preemptive. But in both scenarios, the debtor’s
efforts are directed at the same end: preventing the creditor from
collecting on the debt. And in both scenarios, the creditor has no
choice but to defend against the claim for the same reason: to
preserve the creditor’s right to “collect on the note.” Duryea, 606
F.2d at 826 (quotation simplified). If the creditor’s ability to
receive attorney fees for these efforts turned on who filed the first
suit, parties could “coerce settlement” by “winning the ‘race to the
courthouse,’” thereby “rendering the ‘cost of collection’ provision
of little value, apparently contrary to what the parties to the note
intended.” Id. (quotation simplified).
¶33 The basic point of Therriault’s position is this: because a
creditor cannot collect on an invalid debt, a creditor’s response to
the debtor’s attempt to invalidate a debt is “inextricably
intertwined” with any effort to collect on it. Finalco, 3 Cal. Rptr.
2d at 869. Here, for example, if and when Therriault does collect
on the debt—which, under the unchallenged summary judgment
20210258-CA 16 2023 UT App 36Vierig v. Therriault
ruling she received on Vierig’s suit, she’ll be entitled to do when
Vierig either sells the property, refinances it, or dies—there will
be a direct through-line connecting this very litigation to her
recovery of owed money, because the latter could not have
occurred without the former. Because of this, the Fee Provision
can reasonably be interpreted to allow Therriault to recover those
attorney fees.
***
¶34 This brings us back to where we started. Again, “where a
contractual term or provision is ambiguous as to what the parties
intended, the question becomes a question of fact to be
determined by the fact-finder.” Brady, 2019 UT 16, ¶ 53. And a
provision is ambiguous if both sides present reasonable
interpretations that favor their positions. Id. ¶ 54. With respect to
the potential applicability of the Fee Provision to the fees
Therriault incurred while defending the validity of the debt, both
sides have indeed advanced reasonable interpretations, so we
accordingly remand for the district court to determine the parties’
intent in the first instance. See, e.g., Noel v. James, 2022 UT App 33,
¶ 13, 507 P.3d 832 (“When confronted with questions of fact, this
court will only rule as a matter of law if the evidence is so clear
and persuasive that all reasonable minds would find one way.
Otherwise, remand is appropriate to allow the district court to
make that determination.” (quotation simplified)).
C. Fees Incurred Prosecuting the Counterclaim
¶35 As noted, Therriault also asked for fees that she incurred
while prosecuting her counterclaim, but the district court denied
that request. On appeal, Therriault claims that those are also
recoverable as “costs and expenses of collection” because she
“substantially prevailed on her counterclaim.” In her view, she
substantially prevailed on the counterclaim because the
counterclaim was “necessary to respond” to Vierig’s “attempt to
20210258-CA 17 2023 UT App 36Vierig v. Therriault
set aside the Trust Deed” and recognize “its validity and the
underlying debt.”
¶36 But we disagree with Therriault’s assertion that she
“substantially prevailed on her counterclaim.” In his own initial
suit, Vierig asserted that “[n]o Promissory Note was ever
executed, and no debt is owed to” her. Based on this assertion,
Vierig asked the court to invalidate the Trust Deed. Because of
this, it wasn’t at all “necessary” for Therriault to file a
counterclaim in order to argue that the debt or the Trust Deed
were valid. Rather, any such arguments were already a necessary
part of any defense to Vierig’s suit.
¶37 What Therriault added to the litigation in the counterclaim
was her assertion that Vierig had allegedly “repudiated the debt”
by filing his suit, as well as her claims that she was accordingly
entitled to (1) “an order from this Court providing that the Debt
is due and owing” and (2) an order “providing that the Property
be sold.” But in its ruling following Therriault’s request for
clarification, the district court squarely rejected these claims,
concluding that Vierig “has not repudiated [the debt] by asking
the Court to interpret the document” and that “the Trust Deed is
NOT due until the Property is sold or [Vierig] dies.” As noted,
Therriault has not appealed that decision.
¶38 We held above that the Fee Provision can reasonably be
construed to allow Therriault to recover the attorney fees she
incurred defending the validity of the debt and the Trust Deed.
Again, this is so because there’s at least plausibly a direct line
between that effort and any future collection on the debt. But this
is not so with respect to the fees Therriault incurred prosecuting
her counterclaim. The only result of that litigation was the court’s
rejection of her attempt to prematurely collect on the debt.
Because that attempt failed, it will not directly lead to the
collection of any money that she’s owed. And because of this, we
see no plausible interpretation of the Fee Provision under which
20210258-CA 18 2023 UT App 36Vierig v. Therriault
Therriault would be entitled to the fees she incurred in that failed
effort. We accordingly affirm the district court’s rejection of that
request.
CONCLUSION
¶39 We reverse the district court’s rejection of Therriault’s
request for attorney fees relating to the litigation over the validity
of the debt and the Trust Deed. Because both parties have
advanced a reasonable interpretation of the Fee Provision as it
relates to those fees, its applicability to them presents a fact
question that should be decided by the district court after
receiving evidence of the parties’ intent. But we affirm the district
court’s rejection of Therriault’s request for attorney fees incurred
prosecuting her counterclaim. With respect to those fees, we see
no basis under the Fee Provision for awarding Therriault fees that
she incurred in that failed effort.
¶40 We accordingly remand to the district court for further
proceedings consistent with this opinion. 7
7. In addition to arguing that she’s entitled to the attorney fees she
incurred below, Therriault requests the attorney fees she incurred
on appeal. In Therriault’s view, when “attorney fees are
recoverable, a party is also entitled to recover the fees incurred in
establishing the right to fees.” As discussed above, however, we
haven’t concluded that Therriault has “the right to fees.” Rather,
we’ve remanded for further factual development and then a
decision by the district court, and we’ve done so on only some
(but not all) of the fees that Therriault has requested.
Moreover, in support of her request for appellate fees,
Therriault cites Express Recovery Services Inc. v. Olson, 2017 UT
App 71, ¶ 20, 397 P.3d 792, and Brown v. David K. Richards & Co.,
(continued…)
20210258-CA 19 2023 UT App 36Vierig v. Therriault
ORME, Judge (concurring specially):
¶41 I concur fully in the lead opinion. I write separately to
address a concern I know practitioners will have when they read
paragraphs 15, 16, 34, and 39.
¶42 Experience suggests that it is not likely there will be a
wealth of extrinsic evidence bearing on the parties’ intent with
respect to the provision in question. It is much more likely that
boilerplate language was rather uncritically used. And if there is
no relevant, admissible evidence of the parties’ actual intent, the
tie-breaker will come into play and the provision will be
construed against the drafter. See Gillmor v. Macey, 2005 UT App
351, ¶ 38 n.16, 121 P.3d 57, cert. denied, 126 P.3d 772 (Utah 2005).
Notwithstanding the likelihood of that scenario, realistically
speaking, the parties must first have their opportunity to present
whatever pertinent evidence they might have. This court cannot
jump over that step and construe the provision against the drafter
on the assumption, likely though it is, that there will be no
admissible evidence bearing on the parties’ intent in agreeing to
this provision.
1999 UT App 109, ¶ 29, 978 P.2d 470. But the cited cases and
passages all turn on whether the party prevailed on appeal.
Therriault has not argued or provided any authority establishing
that she would still be deemed the prevailing party on appeal if
we remand for further fact-finding and decision on just some of
her requested fees. Without adequate briefing on this front, we
have no basis for concluding that Therriault is the prevailing party
on appeal. We accordingly decline her request for appellate fees.
See Utah R. App. P. 24(a)(9) (requiring a party requesting attorney
fees on appeal to “state the request explicitly and set forth the
legal basis for an award”); cf. Gore v. Grant, 2015 UT App 113, ¶ 32,
349 P.3d 779.
20210258-CA 20 2023 UT App 36