Lebrecht v. Deep Blue Pools & Spas Inc.

2016 UT App 110THE UTAH COURT OF APPEALS
BRIAN LEBRECHT AND ELIZABETH LEBRECHT,
Appellees,
v.
DEEP BLUE POOLS AND SPAS INC.
AND ANTHONY FINDLEY,
Appellants.
Opinion
No. 20140536-CA
Filed May 26, 2016
Third District Court, Salt Lake Department
The Honorable Paul B. Parker
No. 130900973
Marcus R. Mumford, Joshua S. Ostler, and Michelle
Q. Mumford, Attorneys for Appellants
Edwin C. Barnes and Robert D. Andreasen,
Attorneys for Appellees
JUDGE KATE A. TOOMEY authored this Opinion, in which JUDGE
STEPHEN L. ROTH and SENIOR JUDGE RUSSELL W. BENCH
concurred.1
TOOMEY, Judge:
¶1 This case involves a dispute between property owners
and the contractor they hired to install a pool and other outdoor
features in their backyard. There are two main issues on appeal.
First, we must decide whether the trial court correctly
determined that the parties entered into an enforceable
settlement agreement. And second, we must determine whether
1. Senior Judge Russell W. Bench sat by special assignment as
authorized by law. See generally Utah R. Jud. Admin. 11-201(6).
Lebrecht v. Deep Blue Pools & Spas
the court erred when it declined to sanction the plaintiffs and
their lawyer for dishonesty. We affirm the court’s decision not to
impose sanctions but reverse its ruling that the parties’
negotiations were an enforceable settlement agreement.
BACKGROUND
¶2 In February 2013, Brian and Elizabeth Lebrecht filed a
lawsuit against Deep Blue Pools and Spas Inc. and its owner,
Anthony Findley (collectively, Deep Blue Pools). Their complaint
alleged that Deep Blue Pools failed to construct their swimming
pool, built-in barbeque pit, concrete decking, and waterfall in a
‚workmanlike‛ manner. Deep Blue Pools answered the
Lebrechts’ complaint and filed a counterclaim, alleging the
Lebrechts did not fully pay for the work performed on their
property.
¶3 After nearly a year of litigation, including discovery, the
parties met twice to negotiate a settlement. Although Mr.
Lebrecht himself is a transactional attorney, neither party had
attorneys present during these meetings. During the second
meeting, Mr. Lebrecht and Mr. Findley each initialed or signed a
handwritten paper,2 dated February 18, 2014, which included
information material to the parties’ purported settlement (the
Term Sheet). The terms began with the number $125,000 crossed
out and the number $112,500 written above it. Next, among
other terms, the Term Sheet stated, ‚$20,000 on signing
settlement,‛ ‚payable . . . $56,250 in 6 mo.,‛ and ‚remaining . . .
balance due in 12 mo[.], earn 10% interest beginning in 6 mo.‛ It
also indicated that the parties were negotiating for mutual
confidentiality agreements and would tell the Utah Division of
Occupational and Professional Licensing that they had ‚settled
2. Mr. Lebrecht initialed or signed on behalf of both Lebrechts.
Mr. Findley signed on behalf of Deep Blue Pools.
20140536-CA 2 2016 UT App 110Lebrecht v. Deep Blue Pools & Spas
amicably.‛ Finally, the Term Sheet indicated that Deep Blue
Pools would ‚drop *the+ counter claim.‛ At the close of the
February 18 negotiations, Mr. Lebrecht told Mr. Findley he
would have his attorney ‚get *the settlement agreement+ ready
as soon as possible.‛
¶4 The next day, after Mr. Findley met with his attorney
regarding the settlement negotiations and terms, his attorney
emailed the Lebrechts’ attorney and stated, ‚Mr. Findley feels
very misled by the Lebrechts. And he does not wish to enter into
any further discussions without counsel present.‛ The Lebrechts’
attorney responded,
As you are aware, the parties reached a settlement
yesterday. Indeed, my understanding is that [Mr.
Findley] was speaking with you immediately
before [he] and the Lebrechts reduced the terms of
that agreement to writing, which they then both
signed. Utah law is clear that such agreements will
be enforced and I will be filing the appropriate
motion to enforce with the Court.
¶5 One week later, the Lebrechts moved the trial court to
enforce the parties’ purported settlement agreement, stating that
they ‚succeeded in coming to a meeting of the minds on the
terms of a settlement.‛ In support of their motion, the Lebrechts
attached to their memorandum a copy of the Term Sheet, a
declaration from their attorney, and a declaration from Mr.
Lebrecht. In his declaration, Mr. Lebrecht stated, ‚[M]y wife and
I reached a settlement with Mr. Findley that we put into writing
with both me and Mr. Findley drafting parts of the document.‛
He added, ‚The Agreement was signed by both parties. I wrote
several of the main points . . . , and Mr. Findley directly
participated in the drafting by writing a term as well.‛
¶6 Deep Blue Pools opposed the Lebrechts’ motion, arguing
that it was deceptive and false. More importantly, Deep Blue
20140536-CA 3 2016 UT App 110Lebrecht v. Deep Blue Pools & Spas
Pools revealed that Mr. Findley had recorded the February 18
meeting, and argued that the recording demonstrated that Mr.
Lebrecht had assured him the Term Sheet was ‚not binding‛ and
had threatened him and his company. In its memorandum in
opposition to the motion, Deep Blue Pools included a transcript
of the meeting, and argued that an enforceable settlement
agreement was never reached because the parties did not intend
to be bound by the Term Sheet and the purported agreement
was the result of undue influence and fraud. Deep Blue Pools
also asked the court to sanction the Lebrechts and their attorney
for dishonesty.
¶7 During an evidentiary hearing on the Lebrechts’ motion,
the Lebrechts and Mr. Findley each testified about their
negotiations and the trial court received into evidence a copy of
the transcript of the recording of the February 18 meeting. At the
end of the hearing, the court expressed three specific concerns. It
pointed out that ‚the Lebrechts almost seemed to be in an unfair
advantage at least at the start, they seemed to do all the talking,
Mr. Findley kind of respond[ed] in short one-word sentences.‛
Next, it expressed concern about ‚the tenor of the language in
the confrontation between Mr. Lebrecht and Mr. Findley.‛
Finally, the court was concerned about Mr. Lebrecht’s
assurances that the Term Sheet was ‚not binding.‛
¶8 After expressing these concerns, the court nevertheless
determined that the parties had reached an enforceable
settlement agreement. The court found it particularly relevant
that Mr. Lebrecht’s statements that the Term Sheet was not
binding occur in ‚the middle‛ of the transcript, after which the
parties’ negotiations continued. The court stated it was also
persuaded by Mr. Findley’s expression at the end of the
negotiations of his desire to settle the matter. In particular, the
court noted that Mr. Findley ‚seems to stand up for himself, he
negotiates . . . , [and] indicates several times that it was in his
best interest to get on with this . . . that he would like to settle the
matter.‛ The court also pointed out that at the end of
20140536-CA 4 2016 UT App 110Lebrecht v. Deep Blue Pools & Spas
negotiations, Mr. Findley read and agreed that the terms and
conditions listed on the Term Sheet were accurate. It stated,
‚[T]hey end up shaking hands. They affirm, not just in the points
[at the end] but the various parts of the transcription, that that is
in fact, the agreement.‛ Consequently, the court concluded,
The issue . . . is whether or not one can take the
terms and conditions as they are found on that
piece of paper and in the transcription and enforce
it against either of the parties. I am convinced that
it can, that consideration . . . was given on both
sides for the agreement. I’ll therefore find that [the
Term Sheet] is binding.
The court further stated,
I find that the parties settled. I find that the terms
are enough that they came from meeting of the
minds and agreed on the terms. . . . I believe the
term settlement agreement is enforceable and valid
and binding as it sits now. It was orally agreed
upon, it was agreed upon in writing, that’s enough
to enforce it.
¶9 Deep Blue Pools appeals.
ANALYSIS
I. The Parties Did Not Create an Enforceable Settlement
Agreement
¶10 ‚It is a basic rule that the law favors the settlement of
disputes.‛ Mascaro v. Davis, 741 P.2d 938, 942 (Utah 1987). In
general, a trial court’s ‚enforcement of a settlement agreement
will not be reversed on appeal unless it is shown that there was
an abuse of discretion.‛ John Deere Co. v. A & H Equip., Inc., 876
20140536-CA 5 2016 UT App 110Lebrecht v. Deep Blue Pools & Spas
P.2d 880, 883 (Utah Ct. App. 1994) (citation and internal
quotation marks omitted). But ‚basic contract principles affect
the determination of when a settlement agreement should be so
enforced.‛ Mascaro, 741 P.2d at 942. ‚Questions of contract
interpretation not requiring resort to extrinsic evidence are
matters of law, and on such questions we accord the trial court’s
interpretation no presumption of correctness.‛ Zions First Nat’l
Bank, N.A. v. National Am. Title Ins. Co., 749 P.2d 651, 653 (Utah
1988). ‚Factual findings, on the other hand, are upheld ‘unless
clearly erroneous, and due regard shall be given to the
opportunity of the trial court to judge the credibility of the
witnesses.’‛ Id. (quoting Utah R. Civ. P. 52(a)). Here, based on its
order and oral ruling, the court’s determination rested on a
review of the February 18 negotiation transcript and the Term
Sheet.3 ‚A trial court’s finding about whether a party accepted
an offer or counteroffer is a finding of fact,‛ usually reviewed for
clear error. Cal Wadsworth Constr. v. City of St. George, 898 P.2d
1372, 1378 (Utah 1995). But because we are in as good a position
as the trial court to examine the transcript of the negotiation and
the plain language of the Term Sheet, we owe the trial court no
deference in that regard. Cf. State v. Arriaga-Luna, 2013 UT 56,
¶ 8, 311 P.3d 1028 (providing no deference to the district court’s
conclusion that a confession was coerced because it ‚was based
entirely on its review of the interrogation transcripts‛).
¶11 On appeal, Deep Blue Pools argues the trial court erred
when it concluded the parties had a meeting of the minds and
the Term Sheet was an enforceable settlement agreement.
Specifically, it contends the transcript and the Term Sheet
3. The trial court heard testimony regarding the February 18
negotiations. But the court’s ruling regarding whether a
settlement agreement existed was based only on the
documentary evidence; it refers only to the transcript and Term
Sheet, makes no credibility determinations, and does not draw
on the testimony at the evidentiary hearing.
20140536-CA 6 2016 UT App 110Lebrecht v. Deep Blue Pools & Spas
demonstrate the parties had a mutual understanding that ‚‘a
binding contract would not be entered until some point in the
future.’‛ (Quoting Sackler v. Savin, 897 P.2d 1217, 1221 (Utah
1995).) It also argues the Lebrechts did not meet their burden to
demonstrate the parties had ‚‘proceeded beyond preliminary
negotiations for a settlement agreement’‛ because they each
reserved the right to consult their attorneys regarding several of
the terms. (Quoting id. at 1222.)
¶12 The Lebrechts contend the court correctly determined the
parties had reached a binding settlement agreement because
they ‚bargained to resolve their dispute and set forth the
essential terms of their resolution in the *Term Sheet+.‛
Specifically, they argue the transcript ‚establishes that the
parties agreed on every term in the [Term Sheet] without
reservation.‛ More importantly, the Lebrechts argue that the fact
that ‚the parties intended to incorporate those terms into a final
form of agreement does not invalidate their settlement,‛ because
neither side expressly conditioned its ‚assent on a consultation
with counsel.‛ Rather, they argue, the essential terms were
agreed upon and only left the exact contours of the settlement
provisions to be reviewed by counsel.
¶13 Under the principles of basic contract law, ‚a contract is
not formed unless there is a meeting of the minds.‛ Sackler, 897
P.2d at 1220. The parties’ intentions are controlling. WebBank v.
American Gen. Annuity Serv. Corp., 2002 UT 88, ¶ 17, 54 P.3d 1139.
Two elements, among others, are necessary to form an
enforceable contract: (1) an offer and (2) an acceptance. 1-800
Contacts, Inc. v. Weigner, 2005 UT App 523, ¶ 2, 127 P.3d 1241.
‚An offer is a ‘manifestation of willingness to enter into a
bargain, so made as to justify another person in understanding
that his assent to the bargain is invited and will conclude it.’‛ Id.(quoting Engineering Assocs., Inc. v. Irving Place Assocs., Inc., 622
P.2d 784, 787 (Utah 1980)). ‚For an offer to be one that would
create a valid and binding contract, its terms must be definite
and unambiguous.‛ DCM Inv. Corp. v. Pinecrest Inv. Co., 2001 UT
20140536-CA 7 2016 UT App 110Lebrecht v. Deep Blue Pools & Spas
91, ¶ 12, 34 P.3d 785. ‚An acceptance must unconditionally
assent to all material terms presented in the offer, including price
and method of performance, or it is a rejection of the offer.‛ Cal
Wadsworth Constr., 898 P.2d at 1376. Thus, a conditional
acceptance or a ‚proposal of different terms from those of the
offer constitutes a counteroffer, and no contract arises.‛ Id. at
1378. The proponent of the contract ‚has the burden of showing
that an offer and acceptance were more probable than not.‛
Sackler, 897 P.2d at 1222.
¶14 ‚‘In determining whether the parties created an
enforceable contract, a court should consider all preliminary
negotiations, offers, and counteroffers and interpret the various
expressions of the parties for the purpose of deciding whether
the parties reached agreement on complete and definite terms.’‛
1-800 Contacts, Inc., 2005 UT App 523, ¶ 4 (quoting Nunley v.
Westates Casing Servs., Inc., 1999 UT 100, ¶ 22, 989 P.2d 1077).
Accordingly, we first ‚look to the writing itself to ascertain the
parties’ intentions.‛ WebBank, 2002 UT 88, ¶ 18 (citation and
internal quotation marks omitted). ‚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. ¶ 19 (citation and internal quotation marks
omitted). But ‚if the language of the contract is ambiguous such
that the intentions of the parties cannot be determined by the
plain language of the agreement, extrinsic evidence must be
looked to in order to determine the intentions of the parties.‛ Id.(citation and internal quotation marks omitted). Thus, if a
settlement agreement is ambiguous, ‚the court may consider the
parties’ actions and performance as evidence of the parties’ true
intention.‛ Id.
¶15 The Term Sheet, which the trial court determined
memorialized an enforceable oral settlement agreement, is
ambiguous on its face. It consists of several bullet-point terms
and phrases that, without the assistance of extrinsic evidence,
20140536-CA 8 2016 UT App 110Lebrecht v. Deep Blue Pools & Spas
are vague or unclear. These terms lack specific identifying
information, including for which party each term applies. For
instance, the first term merely states, ‚$112,500‛ with the
number ‚125,000‛ crossed out below it. Nothing defines this
number—it could be a payment, a total price, or a cost. Another
example is the next term which states, ‚$20,000 on signing
settlement.‛ From the plain language alone, it is unclear who
must pay this amount on signing. Even looking at the Term
Sheet as a whole we are unable to identify the obligor. Because
of these ambiguities, extrinsic evidence is necessary to determine
whether there was a meeting of the minds regarding a
settlement agreement.
¶16 The transcript of the parties’ negotiations make this an
unusual case. It is apparent each party made offers to settle,
demonstrating and explicitly stating an interest in resolving their
dispute instead of proceeding to trial. Indeed, the parties
discussed the terms of a potential settlement agreement for
several hours. The Lebrechts first offered to settle the lawsuit in
exchange for $150,000. But Mr. Findley refused the offer, and
later counteroffered, explaining he would be willing to pay
$112,500 if he could pay it over twelve months. The parties even
negotiated a payment structure and also discussed at length
various conditions they each wanted, including a confidentiality
clause, an agreement that Mr. Findley would drop his
counterclaims, and an agreement that the Lebrechts would not
file a complaint regarding Mr. Findley’s business license with
the Division of Occupational and Professional Licensing. Our
review of the transcript suggests they agreed on many of the
essential terms and conditions, and at one point when Mr.
Lebrecht stated he thought they reached ‚the terms of the
settlement,‛ Mr. Findley agreed.
¶17 But each time the parties appeared to agree on a term,
they continued to negotiate other terms or conditions, sometimes
revisiting terms previously decided. For example, toward the
end of the negotiations, Mr. Findley stated he wanted to settle
20140536-CA 9 2016 UT App 110Lebrecht v. Deep Blue Pools & Spas
because he ‚just needed to be done‛ with the lawsuit, but
immediately after this, Mr. Lebrecht attempted to renegotiate the
payment from $112,500 to $125,000. Several pages later in the
transcript, the parties agreed to delay signing the settlement
agreement until it could be drafted and so that Mr. Findley could
discuss some of the terms with his attorney. This demonstrates
that both parties contemplated additional steps before the
agreement was complete and final.
¶18 The Restatement of Contracts states, with regard to
preliminary negotiations, that ‚*a+ manifestation of willingness
to enter into a bargain is not an offer if the person to whom it is
addressed knows or has reason to know that the person making
it does not intend to conclude a bargain until he has made a
further manifestation of assent.‛ Restatement (Second) of
Contracts § 26 (Am. Law Inst. 1981); accord Sackler v. Savin, 897
P.2d 1217, 1221 (Utah 1995). It also explains that the parties’
manifestation of ‚an intention to prepare and adopt a written‛
agreement ‚may show that the *parties’+ agreements are
preliminary negotiations,‛ rather than a contract. Restatement
(Second) of Contracts § 27. This makes sense considering
‚*p+arties who plan to make a final written instrument as the
expression of their contract, necessarily discuss the proposed
terms of the contract before they enter into it and often, before
the final writing is made, agree upon all the terms which they
plan to incorporate therein.‛ Id. § 27 cmt a. ‚‘[I]f an intention is
manifested in any way that legal obligations between the parties
shall be deferred until the writing is made, the preliminary
negotiations and agreements do not constitute a contract.’‛ 1-800
Contacts, Inc. v. Weigner, 2005 UT App 523, ¶ 7, 127 P.3d 1241(alteration in original) (quoting R.J. Daum Constr. Co. v. Child, 247
P.2d 817, 820 (Utah 1952)).
¶19 Considering both the Term Sheet and the February 18
negotiation transcript as a whole, it is clear the parties expected
to be bound by a written agreement, not an oral one. Mr. Findley
stated that, considering Mr. Lebrecht is an attorney, he felt at a
20140536-CA 10 2016 UT App 110Lebrecht v. Deep Blue Pools & Spas
disadvantage in the negotiations. For example, near the
beginning of the transcript, Mr. Findley stated, ‚You know,
the—the benefit . . . you and [Mrs. Lebrecht] have is that you
know a little bit—you’re more versed in what’s going on in this
whole courtroom proceeding and everything else. . . . I try to
depend on an attorney to help me make the decisions that are
correct.‛ At several points, Mr. Findley said he did not
understand certain proposed terms. For example, with regard to
the Lebrechts’ term ‚confession of judgment with fraud,‛ he
stated, ‚I don’t understand what it is‛ and ‚again, I am not an
attorney.‛ Later, he stated, ‚I don’t even necessarily know what
the—the term ‘confession of judgment’ entails or what . . . but I
assume that when it gets written up . . . then [my attorney] and I
will have an opportunity to sit down and he can explain it
thoroughly.‛ Mr. Lebrecht responded, ‚Absolutely.‛ Indeed, Mr.
Findley later stated he thought they were ‚close to making this
arrangement‛ but he would have to review it with legal counsel
to make sure nothing was missing. Although Mr. Findley did
not explicitly state he conditioned his assent on consultation
with counsel, he plainly stated on several occasions that he
wanted to discuss the negotiated terms with his lawyer before
signing an agreement. Thus, Mr. Findley’s lack of understanding
and expression of his intention to meet with his attorney before
signing a written agreement leads us to believe he did not
unconditionally assent to all material terms discussed in the
parties’ negotiations.
¶20 The Lebrechts’ statements also demonstrate they were
negotiating for a written settlement agreement to be signed in
the future. Near the end of the negotiations, Mr. Findley
suggested they delay ‚a bit further in signing‛ so he could try to
negotiate a deal with his subcontractors. But Mr. Lebrecht
responded, ‚I don’t want to delay the signing of the settlement
agreement.‛ After proposing that their agreement include a
mutual confidentiality clause, Mr. Lebrecht stated, ‚[W]e’ll just
see what that looks like in writing.‛ Mr. Findley suggested that
his attorney may ‚have a way to propose it in wording.‛ Mrs.
20140536-CA 11 2016 UT App 110Lebrecht v. Deep Blue Pools & Spas
Lebrecht then asked, ‚So do you want it delayed by one week?‛
Mr. Findley replied, ‚Yeah, one week’s fine.‛
¶21 More than halfway through the negotiations, Mr. Findley
asked if his attorney needed to draft the settlement agreement,
but Mr. Lebrecht responded, ‚I’d probably like to have our guy
do it.‛ Then, Mr. Lebrecht asked Mr. Findley to initial the Term
Sheet, stating,
Not that it’s binding, but that way . . . I can give it
to [my] guy . . . . *W+e’ll make—get a copy made,
you give it to [your attorney], and . . . at least this is
what we agreed to as we left here. Obviously, it’s
not binding . . . .
Mr. Findley then asked, ‚[H]ow quick can your guy write it up?
I mean, . . . I can make it a point to go and meet with [my
attorney+ today.‛ Mr. Lebrecht responded that it could happen
within the week. Then, he stated, ‚And if we don’t sign the
settlement agreement, then we’re back where we are right now.
And that would give us a week to get it drafted, passed back and
forth, and executed.‛ After Mr. Findley acknowledged the
parties had reached some essential terms, Mr. Lebrecht stated
‚[T]hat’s part of the reason why we put this here and you can
kind of initial it. And then you give this to [your attorney], this is
what we agreed to, you know.‛
¶22 Contrary to his position on appeal, Mr. Lebrecht’s
statements during negotiations demonstrate he understood the
parties would not enter a binding agreement until sometime in
the future. See Sackler, 897 P.2d at 1221 (explaining that a party’s
expression of willingness to enter into a bargain is not an offer if
it is clear that the party does not intend to conclude a bargain
until he or she has made a further manifestation of assent).
Indeed, he assured Mr. Findley the Term Sheet was not binding.
‚Neither real nor apparent intention that a promise be legally
binding is essential to the formation of a contract, but a
20140536-CA 12 2016 UT App 110Lebrecht v. Deep Blue Pools & Spas
manifestation of intention that a promise shall not affect legal
relations may prevent the formation of a contract.‛ Restatement
(Second) of Contracts § 21. Mr. Lebrecht also acknowledged that
he understood there would be further negotiations, or a ‚back
and forth‛ of the written settlement agreement, until it was
executed later that week.
¶23 Although the parties may have agreed on some of the
essential terms of their settlement, these agreements are not
dispositive. Where it is apparent from their negotiations ‚‘that
the determination of certain details is deferred until the writing
is made out’‛ or ‚‘if an intention is manifested in any way that
legal obligations between the parties shall be deferred until the
writing is made, the preliminary negotiations and agreements do
not constitute a contract.’‛ R.J. Daum Constr. Co. v. Child, 247 P.2d
817, 820 (Utah 1952) (quoting Restatement (First) of Contracts
§ 26 cmt. a (Am. Law Inst. 1932)). As discussed above, the parties
agreed to defer certain terms, such as a confidentiality clause,
until an agreement was drafted. Mr. Lebrecht assured Mr.
Findley the Term Sheet was not binding and acknowledged that
Mr. Findley wanted to have his attorney review some of the
terms before executing a settlement agreement. At no point did
either party definitely agree their dispute was settled; rather,
they made clear their intention to enter into a written settlement
agreement in the future. Thus, the parties did not merely intend
to memorialize an oral contract but planned to defer their legal
obligations until the settlement was drafted. Furthermore, even
if the Lebrechts manifested an intention to be bound by the
parties’ oral agreements, they have failed to meet the burden of
showing that Mr. Findley’s acceptance of the terms reached in
their preliminary negotiations was more probable than not. See
Sackler v. Savin, 897 P.2d 1217, 1222 (Utah 1995). Because these
were merely preliminary negotiations regarding terms of a
future settlement agreement, the parties did not create an
enforceable contract.
20140536-CA 13 2016 UT App 110Lebrecht v. Deep Blue Pools & Spas
II. The Lebrechts’ Motions and Conduct Do Not Warrant
Sanctions
¶24 Deep Blue Pools argues the trial court erred in denying its
motion to sanction Mr. Lebrecht for making false statements. It
argues that Mr. Lebrecht’s sworn declaration was inconsistent
with his negotiations with Mr. Findley. Deep Blue Pools further
argues that the court erroneously ‚perceived the parties as being
on equal footing‛ because Mr. Lebrecht is an experienced
transactional lawyer. It also argues that Mr. Lebrecht’s
assurances that the Term Sheet was ‚not binding‛ conflict
directly with his declaration that the parties created a binding
settlement agreement.
¶25 Deep Blue Pools asked the court to sanction Mr. Lebrecht
and his attorney under rule 11 of the Utah Rules of Civil
Procedure.4 Rule 11 states, ‚By presenting a pleading, written
motion, or other paper to the court . . . , an attorney or
unrepresented party is certifying that to the best of the person’s
knowledge, information, and belief‛ the claims or other legal
4. We note that although it asked the court for sanctions under
rule 11 of the Utah Rules of Civil Procedure, Deep Blue Pools’s
request was not properly initiated by following the requirements
of rule 11. See Utah R. Civ. P. 11(c)(1)(A) (providing that ‚a
motion for sanctions under this rule shall be made separately
from other motions or requests and shall describe the specific
conduct alleged to violate‛ subsection (b)). Here, Deep Blue
Pools’s request for sanctions was not filed as a separate motion
but was raised in its opposition to the Lebrechts’ motion to
enforce. Because neither party raises an argument on appeal
regarding whether Deep Blue Pools properly initiated its rule 11
motion, we address the merits of the parties’ arguments,
interpreting Deep Blue Pools’s argument for sanctions as an
invitation to the court to enter an order for sanctions on its own
initiative.
20140536-CA 14 2016 UT App 110Lebrecht v. Deep Blue Pools & Spas
contentions are supported by existing law and have evidentiary
support. Utah R. Civ. P. 11(b). This rule gives the court
discretion to ‚impose an appropriate sanction upon the
attorneys, law firms, or parties that have violated subdivision
(b).‛ Id. R. 11(c).
¶26 Different standards of review apply to our review of a
trial court’s determination of whether sanctions are appropriate
under rule 11 of the Utah Rules of Civil Procedure. Archuleta v.
Galetka, 2008 UT 76, ¶ 6, 197 P.3d 650. ‚Findings of fact are
reviewed under a clear error standard, while conclusions of law
are reviewed for correctness.‛ Id. ‚The trial court’s
determination regarding the type and amount of sanctions to be
imposed is reviewed for abuse of discretion.‛ Id. Generally,
Decisions regarding rule 11 sanctions are best left
in the hands of the trial court. We therefore accord
reasonable discretion to the trial court to determine
when sanctions are useful and appropriate. When
applying the appropriate standards of review, we
grant considerable deference to the trial court’s
factual findings and some deference to the trial
court’s application of the facts when reaching its
legal conclusions of whether rule 11 has been
violated. We also afford substantial deference to
the trial court’s ultimate determination of when,
and to what extent, sanctions are a useful tool in
controlling abuses of the judicial process.
Id. ¶ 7. Accordingly, ‚it remains within the court’s discretion to
apply sanctions under rule 11(c) even if it finds a violation of
rule 11(b).‛ See Crank v. Utah Judicial Council, 2001 UT 8, ¶ 34, 20
P.3d 307.
¶27 Here, the court determined that it ‚did not find anything,
either in the testimony or in the transcript, that [one] really could
lay [a] finger on as being false as compared to two parties
20140536-CA 15 2016 UT App 110Lebrecht v. Deep Blue Pools & Spas
making a reasonable negotiation without attorneys present.‛
Although we disagree with the court’s determination that the
parties had an enforceable settlement agreement, nothing
suggests Mr. Lebrecht lacked an honest belief that the parties
had reached an agreement by the conclusion of the February 18
negotiations or that their attorney filed the motion to enforce the
Term Sheet in bad faith. Given the high level of deference
afforded to the trial court’s determination, we are not persuaded
it abused its discretion when it declined to sanction Mr. Lebrecht
and his attorney under rule 11.
CONCLUSION
¶28 Because the parties mutually understood a settlement
agreement would not be entered into until some point in the
future, we conclude it was clear error for the trial court to find
that the parties entered into an enforceable settlement
agreement. Deep Blue Pools has failed to persuade us the court
exceeded its discretion when it declined to sanction Mr. Lebrecht
and his attorney. We therefore affirm the court’s decision to
reject Deep Blue Pools’s request for sanctions and reverse the
court’s determination that the parties’ negotiations created an
enforceable settlement agreement.
20140536-CA 16 2016 UT App 110