2020 UT App 122

THE UTAH COURT OF APPEALS

BAD ASS COFFEE COMPANY OF HAWAII INC.,

Appellant and Cross-appellee,

v.

ROYAL ALOHA INTERNATIONAL LLC

AND FRANCOUNSEL GROUP LLC,

Appellees and Cross-appellants.

Opinion

No. 20190181-CA

Filed August 20, 2020

Third District Court, Salt Lake Department

The Honorable Barry G. Lawrence 

No. 130906130

Blake T. Ostler, Attorney for Appellant 

and Cross-appellee

Joshua R. Furman, Amy F. Sorenson, and Tanya N. 

Lewis, Attorneys for Appellees and Cross-appellants

JUDGE JILL M. POHLMAN authored this Opinion, in which 

JUDGES GREGORY K. ORME and DIANA HAGEN concurred.

POHLMAN, Judge:

¶1 Following negotiations in 2011, Bad Ass Coffee Company 

of Hawaii Inc. (BACH) and FranCounsel Group LLC 

(FranCounsel) entered into an operating agreement (the 

Operating Agreement) to form Royal Aloha International LLC 

(Royal) as well as a license agreement (the License Agreement) 

for the purpose of developing BACH’s international presence. 

The parties’ relationship eventually deteriorated, and litigation 

ensued. After the completion of two phases of trial adjudicating 

BACH’s claims related to both agreements and FranCounsel and 

Royal’s counterclaims, BACH now appeals several of the district 

court’s rulings regarding the validity of the agreements and the 
Bad Ass Coffee v. Royal Aloha

20190181-CA 2 2020 UT App 122

supportability of the jury’s damages verdict in FranCounsel’s 

favor. For their part, Royal and FranCounsel cross-appeal the 

district court’s denial of their request for attorney fees and costs 

under both agreements. We affirm.

BACKGROUND1

¶2 In 2011, BACH was looking to develop an international 

presence for its established coffee business. BACH—through its 

former president and director, Harold Hill—approached 

FranCounsel, an international franchise consultancy for help 

with that effort. Eventually, BACH and FranCounsel—through 

its owner, Bachir Mihoubi—agreed to form Royal, a new entity, 

to pursue BACH’s international expansion.

¶3 Hill, on behalf of himself and BACH, and Mihoubi, on 

behalf of FranCounsel, executed the Operating Agreement for 

Royal. The Operating Agreement divided Royal’s membership 

interests between BACH, FranCounsel, and Hill. Specifically, the 

Operating Agreement provided Hill a 25% personal membership 

interest, BACH a 25% interest, and FranCounsel the remaining 

50% interest.

 

1. This case proceeded in two phases—a bench trial followed by 

a jury trial. “On appeal from a bench trial, we view the evidence 

in a light most favorable to the trial court’s findings, and 

therefore recite the facts consistent with that standard.” Wood v. 

Salt Lake City Corp., 2016 UT App 112, ¶ 1 n.2, 374 P.3d 1080 

(cleaned up). Similarly, “in reviewing a jury verdict, we view the 

evidence in the light most favorable to it, and recite the facts

accordingly. We present conflicting evidence only to the extent 

necessary to understand the issues raised on appeal.” CDC 

Restoration & Constr. LC v. Tradesmen Contractors LLC, 2016 UT 

App 43, n.1, 369 P.3d 452 (cleaned up).
Bad Ass Coffee v. Royal Aloha

20190181-CA 3 2020 UT App 122

¶4 As relevant to the issues raised on appeal, the Operating 

Agreement provided that FranCounsel’s initial capital 

contribution would be “its time for the day-to-day management 

and the international franchise development,” which had a “fair 

market value of approximately $500,000.00.” It also included an 

indemnification provision for its members.

¶5 Following Royal’s formation and the execution of the 

Operating Agreement, Hill and Mihoubi, on behalf of BACH 

and Royal respectively, executed the License Agreement. The 

agreement provided Royal rights to use and exploit BACH’s 

franchise system, in exchange for which BACH received a 25% 

interest in Royal.

¶6 In 2013, BACH filed suit against FranCounsel and Royal 

(collectively, Appellees), alleging that through the Operating 

Agreement and the License Agreement, Appellees conspired to 

defraud BACH of the value of its international franchising 

rights. On this basis, BACH sought a declaration from the 

district court that the Operating Agreement and the License 

Agreement were void and unenforceable, estopping Appellees 

from asserting the validity of both agreements. In response, 

Appellees asserted several counterclaims against BACH, 

including breach of contract claims arising out of the License 

Agreement and the Operating Agreement.

¶7 The case was tried in two phases. The first phase was 

tried to the bench, where the district court adjudicated all 

BACH’s claims in Appellees’ favor. In particular, the court 

rejected BACH’s arguments that Hill lacked authority to enter 

into the agreements on BACH’s behalf and that Mihoubi had a 

duty to further investigate Hill’s authority before entering into 

the agreements. Thus, the court ruled that the Operating 

Agreement and the License Agreement were valid and 

enforceable.

¶8 In the second phase, and following various rulings, only 

FranCounsel’s breach of contract claim regarding the Operating 
Bad Ass Coffee v. Royal Aloha

20190181-CA 4 2020 UT App 122

Agreement was tried to the jury. The jury was asked to 

determine whether BACH had breached the Operating 

Agreement and, if so, to set the amount of damages.

¶9 Regarding the amount of damages, in its initial 

disclosures FranCounsel claimed $2,000,000 in damages for lost 

profits, $500,000 for the reasonable value of its marketing and 

promotion work, and $500,000 for its lost capital investment in 

Royal. However, the only damages theory FranCounsel was 

allowed to present to the jury was one based on the $500,000 

in-kind capital contribution identified in the Operating 

Agreement.2

¶10 The jury found that BACH had breached the Operating 

Agreement and awarded FranCounsel $100,000 in damages. 

BACH then filed a motion for judgment notwithstanding the 

verdict (the JNOV), arguing that the jury’s damages award was 

not supported by the evidence. The district court denied the 

motion, reasoning that BACH had “failed to meet its burden of 

demonstrating” entitlement to relief.

¶11 Following the phase-two jury trial, Appellees filed a 

motion for attorney fees. Appellees cited provisions in both the 

Operating Agreement and the License Agreement, claiming that 

such provisions entitled them to recover all attorney fees they 

incurred in both phases of the case.3 The court disagreed, 

 

2. FranCounsel voluntarily withdrew its claims for damages 

based on lost profits before trial. The district court also 

concluded before trial that FranCounsel had failed to 

demonstrate that the claim for $500,000 based on the 

“Reasonable Value of marketing and promotion work” was 

viable.

3. Appellees also requested bad-faith attorney fees under Utah 

Code section 78B-5-825. The court denied Appellees’ request, but 

Appellees do not seek review of that decision on appeal.
Bad Ass Coffee v. Royal Aloha

20190181-CA 5 2020 UT App 122

concluding that the cited provisions did not provide a basis for 

an attorney fees award. Accordingly, the court denied Appellees’ 

request for fees.4

¶12 BACH appeals the district court’s resolution of its claims 

in the first phase of this case, challenging the court’s ruling 

regarding Hill’s authority to enter into the Operating 

Agreement5 and Mihoubi’s alleged duty to have investigated 

such authority. BACH also appeals a range of decisions related 

to the damages awarded, including the court’s denial of the 

JNOV. Appellees cross-appeal the court’s denial of their request 

for attorney fees.

ISSUES AND STANDARDS OF REVIEW

¶13 BACH challenges the district court’s ruling, following the 

phase-one bench trial, that the Operating Agreement is valid and 

enforceable. On appeal from a bench trial, “we review the court’s 

legal conclusions for correction of error,” and “we will not 

disturb the court’s findings of fact unless they are clearly 

 

4. The court granted in part Appellees’ associated request under 

rule 54 of the Utah Rules of Civil Procedure for certain 

deposition and transcript costs but denied recoupment for copy 

costs. On appeal, Appellees generally contend that they are 

entitled to all their costs, but they do not specifically address the 

court’s denial of their copy costs. Accordingly, we do not 

address the district court’s denial of Appellees’ copy costs under 

rule 54.

5. Although the court ultimately determined that Hill had 

authority to enter into both the License Agreement and the 

Operating Agreement on BACH’s behalf, BACH appears to 

appeal the court’s conclusions only with respect to Hill’s 

authority for the Operating Agreement. We therefore similarly 

limit our analysis.
Bad Ass Coffee v. Royal Aloha

20190181-CA 6 2020 UT App 122

erroneous.” Hale v. Big H Constr. Inc., 2012 UT App 283, ¶ 13, 288 

P.3d 1046 (cleaned up); see also VT Holdings LLC v. My Investing 

Place LLC, 2019 UT App 37, ¶ 17, 440 P.3d 767 (“On appeal from 

a bench trial, we review the findings of fact for clear error and 

give due regard to the district court’s opportunity to judge the 

credibility of the witnesses.” (cleaned up)).

¶14 BACH also challenges the damages award on three 

grounds. First, BACH claims that the district court erred by 

allowing FranCounsel’s breach of contract claim to be tried 

because FranCounsel did not comply with the damages 

disclosure requirement under rule 26 of the Utah Rules of Civil 

Procedure. We review a district court’s discovery decisions, 

including decisions about discovery sanctions, for abuse of 

discretion. Bodell Constr. Co. v. Robbins, 2009 UT 52, ¶ 16, 215 P.3d 

933; see also Thurston v. Workers Comp. Fund, 2003 UT App 438, 

¶ 11, 83 P.3d 391 (“Generally, the trial court is granted broad 

latitude in handling discovery matters, and we will not find 

abuse of discretion absent an erroneous conclusion of law or 

where there is no evidentiary basis for the trial court’s rulings.” 

(cleaned up)).

6

¶15 Second, BACH argues that the court erred by allowing, 

through a summary judgment ruling, FranCounsel’s damages to 

be based on the value of its capital contribution to Royal. 

Summary judgment is appropriate “if the moving party shows 

that there is no genuine dispute as to any material fact and the 

moving party is entitled to judgment as a matter of law.” Utah R. 

Civ. P. 56(a). We “review a district court’s legal conclusions and 

ultimate grant or denial of summary judgment for correctness, 

viewing the facts and all reasonable inferences drawn therefrom 

in the light most favorable to the nonmoving party.” Penunuri v. 

 

6. Although this rule 26 discovery issue was raised in the context 

of a motion for summary judgment, given the nature of the 

challenge, both parties agree that this issue should be reviewed 

under an abuse of discretion standard.
Bad Ass Coffee v. Royal Aloha

20190181-CA 7 2020 UT App 122

Sundance Partners Ltd., 2017 UT 54, ¶ 14, 423 P.3d 1150 (cleaned 

up).

¶16 Finally, BACH challenges the sufficiency of the evidence 

supporting the damages award, arguing that the court erred by 

denying the JNOV and that there was no basis in the evidence to 

support the fact of damages or the amount. “On a motion for 

judgment notwithstanding the verdict, we will reverse the trial 

court’s ruling only if, viewing the evidence in the light most 

favorable to the prevailing party, we conclude that the evidence 

is insufficient to support the verdict.” Pinney v. Carrera, 2019 UT 

App 12, ¶ 33, 438 P.3d 902 (cleaned up), aff’d, 2020 UT 43.

¶17 In their cross-appeal, Appellees challenge the district 

court’s denial of their request for attorney fees. “Whether 

attorney fees are recoverable is a question of law, which we 

review for correctness.” Fisher v. Davidhizar, 2018 UT App 153, 

¶ 9, 436 P.3d 123 (cleaned up).

ANALYSIS

I. BACH’s Appeal

A. The Enforceability of the Operating Agreement

¶18 BACH asks that we reverse the district court’s conclusion 

that the Operating Agreement is valid and enforceable. Citing 

Mihoubi’s purported knowledge about the circumstances 

surrounding the corporate opportunity Hill acquired through 

the Operating Agreement—a 25% interest in Royal—BACH 

claims that the court erred in concluding that Hill had the 

apparent authority to bind BACH to the agreement. BACH asks 

us to hold that the court erred in determining that Mihoubi had 

no obligation to further investigate Hill’s authority to enter into 

the Operating Agreement in light of Mihoubi’s alleged 

knowledge that Hill was personally benefiting from the 

transaction.
Bad Ass Coffee v. Royal Aloha

20190181-CA 8 2020 UT App 122

¶19 “Under agency law, an agent cannot make its principal 

responsible for the agent’s actions unless the agent is acting 

pursuant to either actual or apparent authority.” Hussein v. UBS 

Bank USA, 2019 UT App 100, ¶ 30, 446 P.3d 96 (cleaned up).

“Apparent authority exists where the conduct of the principal 

causes a third party to reasonably believe that someone has 

authority to act on the principal’s behalf, and the third party 

relies on this appearance of authority and will suffer loss if an 

agency relationship is not found.” Zions Gate R.V. Resort LLC v. 

Oliphant, 2014 UT App 98, ¶ 11, 326 P.3d 118 (cleaned up); see 

also Burdick v. Horner Townsend & Kent Inc., 2015 UT 8, ¶ 22, 345 

P.3d 531 (“The authority of an agent is not ‘apparent’ merely 

because it looks so to the person with whom he deals, but rather 

it is the principal who must cause third parties to believe that the 

agent is clothed with apparent authority.” (cleaned up)); Grazer 

v. Jones, 2012 UT 58, ¶ 11, 289 P.3d 437 (“Where the principal 

does something to support a third party’s reasonable belief that 

the agent has the authority to act, that agent is vested with 

apparent authority to bind the principal.”).

¶20 Importantly, “a belief that results solely from the 

statements or other conduct of the agent, unsupported by any 

manifestations traceable to the principal, does not create 

apparent authority.” Burdick, 2015 UT 8, ¶ 22 (cleaned up); see 

also Bergdorf v. Salmon Elec. Contractors Inc., 2019 UT App 128, 

¶ 20, 447 P.3d 1265 (“[A]pparent authority cannot be premised 

on the manifestations of the purported agent.”); Hussein, 2019 

UT App 100, ¶ 35 (“Apparent authority can be inferred only 

from the acts and conduct of the principal.” (cleaned up)). And 

“knowledge of an agent’s lack of authority defeats a claim for 

apparent authority.” Zions Gate R.V. Resort, 2014 UT App 98, ¶ 11 

(cleaned up).

¶21 Additionally, a district court’s apparent authority 

determination is entitled to significant deference. As our 

supreme court has explained, such determinations are “mixed 

question[s] of law and fact of an extremely fact-sensitive nature,” 

and we therefore owe them “significant deference” because of 
Bad Ass Coffee v. Royal Aloha

20190181-CA 9 2020 UT App 122

the “vast array and mix of facts” that can create apparent 

authority in the eyes of a third party. Glew v. Ohio Sav. Bank, 2007 

UT 56, ¶ 19, 181 P.3d 791. This is so because apparent authority 

determinations are not made in a vacuum; they do not “lend 

[themselves] to consistent resolution by a uniform body of 

appellate precedent,” as the “particular facts and 

circumstances . . . are likely to be so complex and varying that no 

rule adequately addressing the relevance of all these facts can be 

spelled out.” See In re adoption of Baby B., 2012 UT 35, ¶¶ 42–43, 

308 P.3d 382 (cleaned up).

¶22 Here, the district court concluded that “Mihoubi 

reasonably and justifiably relied on Mr. Hill’s apparent 

authority” “to enter into the Operating Agreement.” To support 

this conclusion, the court determined that Mihoubi’s reasonable 

reliance on Hill’s authority was supported by various indicia of 

authority vis-à-vis BACH, the principal, and Mihoubi, the third 

party, including: “Hill’s position as president, director, 

shareholder, and the ‘face’ of BACH”; “[t]he Corporate 

Resolution signed by [BACH’s current director and only other 

board member] and provided by BACH to Mr. Mihoubi”; “[t]he 

fact that BACH had already made a provision for Mr. Hill or [the 

other board member with Hill] to receive a personal interest in 

the transactions with FranCounsel,” which testimony suggested 

“was not unusual for BACH”; and a “provision in the draft 

agreement prepared by BACH’s attorneys” that also showed 

“that an arrangement where a principal of BACH received a 

personal interest in a BACH transaction is typical of how BACH 

operated.”

¶23 Significantly, the court also expressly determined that 

Mihoubi had no knowledge of any facts surrounding Hill’s 

conflict of interest and self-dealing to draw into question Hill’s 

authority to enter into the Operating Agreement on BACH’s 

behalf. Rather, the court determined that the “appearance of a 

conflict of interest in the transaction [did] not change Mr. Hill’s 

authority,” finding that the evidence BACH offered about the 

formation of the Operating Agreement did not demonstrate a 
Bad Ass Coffee v. Royal Aloha

20190181-CA 10 2020 UT App 122

“change in circumstances that would have impacted Mr. Hill’s 

authority to negotiate for BACH.”

¶24 It further found that Mihoubi’s “conduct towards BACH 

on behalf of FranCounsel and Royal was at arms’ length and 

shows only a reasonable, business-like approach to the 

transactions”; that Hill’s “unauthorized conduct . . . was only the 

result of BACH’s lack of corporate formalities, diligence, and 

oversight,” and did “not implicate Mr. Mihoubi, FranCounsel, or 

Royal”; and that, given the indicia of Hill’s authority to act on 

behalf of BACH, “Mihoubi was not required to do more,” such 

as further investigate the “business relationship” between Hill 

and BACH.

¶25 BACH does not challenge these (and other) factual 

findings supporting the court’s ultimate determination that 

Mihoubi reasonably relied on Hill’s apparent authority in 

entering into the Operating Agreement. Indeed, while BACH 

makes numerous statements to the effect that Mihoubi “knew” 

about Hill’s self-dealing, it makes no attempt to demonstrate that 

the court’s findings to the contrary were clearly erroneous. 

Instead, BACH asks us to hold, based on its assertions that 

Mihoubi “knew” about Hill’s “conflicting interest” and 

self-dealing in proposing to take a 25% interest in Royal, that the 

district court erred when it concluded that Mihoubi had no 

obligation to further investigate Hill’s authority to enter into the 

transaction on BACH’s behalf. We are not persuaded.

¶26 To begin with, the obligation determination BACH urges 

us to make in this case is premised on its own characterization of 

the facts surrounding Mihoubi’s knowledge of Hill’s conflicting 

interest. But because BACH has not challenged the court’s 

clearly contrary findings on those issues, we are unable to accept 

the factual premise underlying its request. See Glew, 2007 UT 56, 

¶ 18 (explaining that, where the district court “act[s] as the 

fact-finder in [a] bench trial” and makes findings to support its 

apparent authority conclusions, “[w]e will not disturb the court’s 

findings of fact unless they are clearly erroneous”); R.B. v. L.B., 
Bad Ass Coffee v. Royal Aloha

20190181-CA 11 2020 UT App 122

2014 UT App 270, ¶ 26, 339 P.3d 137 (explaining that an 

appellant “bears the heavy burden of demonstrating that [a]

finding is clearly erroneous”). See generally Grimm v. DxNA LLC, 

2018 UT App 115, ¶¶ 15–17, 427 P.3d 571 (rejecting the 

appellant’s clear error argument where the appellant did “not 

discuss the evidence supporting [the court’s] findings but 

instead focuse[d] on the evidence most favorable to its 

position”).

¶27 Moreover, BACH has not otherwise persuaded us that 

reversal is appropriate under the significantly deferential 

standard of review we are obliged to apply to the district court’s 

apparent authority determination. See Glew, 2007 UT 56, ¶ 19.

BACH has not shown—given the particular variety of facts and 

circumstances found by the court that BACH authorized Hill to 

enter into the Operating Agreement on its behalf and that 

Mihoubi had no knowledge of facts drawing Hill’s authority into 

question—that the court erred when it applied those (and other 

salient) facts and circumstances to conclude that Hill had 

apparent authority and that Mihoubi had no obligation to 

further investigate Hill’s authority in the manner BACH urges.7

While BACH cites authority for the general proposition that an 

agent cannot bind a principal in circumstances where the third 

party knows the agent lacks authority, BACH cites no authority 

with circumstances comparable to the unique circumstances 

here. And BACH does not otherwise provide a cognizable legal 

basis from which we could make the determination it seeks 

about Mihoubi’s obligation to further investigate Hill’s 

authority.

 

7. For example, BACH suggests that we hold Mihoubi was 

required to investigate whether BACH’s board had voted to 

approve Hill’s interest in the Operating Agreement. But in doing 

so, BACH overlooks the fact-intensive nature of this inquiry and 

the combination of facts on which the district court relied to 

conclude that Mihoubi’s reliance was reasonable under all the 

circumstances. See supra ¶¶ 21–25.
Bad Ass Coffee v. Royal Aloha

20190181-CA 12 2020 UT App 122

¶28 For these reasons, BACH has not demonstrated that the 

district court erred in concluding that Hill had apparent 

authority to enter into the Operating Agreement on BACH’s 

behalf.8

B. The Damages Decisions

¶29 BACH raises several challenges to various aspects of the 

district court’s damages decisions. As set out above, during 

phase two of the case, the jury heard FranCounsel’s claim for 

breach of the Operating Agreement. The jury found that BACH 

had breached the agreement and awarded $100,000 in damages. 

BACH then filed the JNOV, arguing that the evidence was 

insufficient to support the damages award, which the court 

denied.

¶30 On appeal, BACH raises three challenges to the verdict 

and the district court’s resolution of the damages issue. First, 

BACH claims that the court erred by allowing FranCounsel’s 

breach of contract claim to be tried because FranCounsel did not 

comply with the requirement under rule 26 of the Utah Rules of 

Civil Procedure to disclose a calculation of its damages in its 

initial disclosures or supplemental discovery. Second, BACH 

argues that the court erred by allowing FranCounsel’s damages 

to be based on the value of its capital contribution to Royal 

 

8. BACH also challenges the district court’s alternative 

conclusion that Hill had actual authority to enter into the 

Operating Agreement on behalf of BACH. However, as with the 

court’s apparent authority conclusion, BACH has not persuaded 

us that the court’s actual authority conclusion was wrong. In any 

event, we have affirmed the court’s apparent authority 

determination, and affirmance on that issue is sufficient to 

uphold the enforceability of the Operating Agreement. See Grazer 

v. Jones, 2012 UT 58, ¶¶ 9–13, 289 P.3d 437 (explaining that an 

agent may bind a principal to a transaction through either actual 

or apparent authority).
Bad Ass Coffee v. Royal Aloha

20190181-CA 13 2020 UT App 122

because under applicable law, BACH, as a member of Royal, is 

not liable to reimburse FranCounsel, another member of Royal, 

for its capital contribution. Finally, BACH challenges the 

sufficiency of the evidence supporting the damages award, 

arguing that the court erred by denying the JNOV and that there 

was no basis in the evidence to support the fact of damages or 

the amount. We address each issue below, ultimately affirming 

the district court’s damages decisions and the verdict.9

1. Disclosure of Damages Under Rule 26

¶31 BACH first argues that the district court erred in allowing 

FranCounsel’s breach of the Operating Agreement claim to be 

tried because FranCounsel failed to adequately disclose its 

damages under rule 26 of the Utah Rules of Civil Procedure. 

BACH contends that the damages FranCounsel identified in its 

initial disclosures were “incomplete” where it “merely 

 

9. BACH also challenges the district court’s decision to instruct 

the jury that FranCounsel “may recover the value of the services 

it provided” in reliance on the promises encapsulated in the 

Operating Agreement, arguing that the instruction was 

improper because the court excluded evidence of the actual 

value of services offered by FranCounsel. We review a court’s 

jury instruction decision for correctness, and we will “affirm 

when the instructions taken as a whole fairly instruct the jury on 

the law applicable to the case.” Paulos v. Covenant Transport Inc., 

2004 UT App 35, ¶ 10, 86 P.3d 752 (cleaned up). Here, we discern 

no error in the court’s decision to so instruct the jury. During 

trial, FranCounsel argued that it had fully performed under the 

Operating Agreement by providing services toward achieving 

international franchising and that due to BACH’s breach of the 

Operating Agreement, it was entitled to the value of its own 

performance—which the parties contractually agreed had a 

value of $500,000. The court therefore did not err in instructing 

the jury that FranCounsel could recover the value of services it 

provided in reliance on the Operating Agreement.
Bad Ass Coffee v. Royal Aloha

20190181-CA 14 2020 UT App 122

provid[ed] a round figure of $500,000 . . . , without a 

computation as to how it arrived at this value,” as representative 

of the in-kind contribution of its services. In this respect, BACH 

asserts that FranCounsel did not disclose “how that value was 

calculated, derived or that it related [to] any work actually 

performed.”

¶32 Rule 26 of the Utah Rules of Civil Procedure, which 

governs disclosures during discovery, requires a party, “without

waiting for a discovery request,” to serve certain initial 

disclosures on the other parties. Utah R. Civ. P. 26(a)(1). A

“computation of any damages claimed and a copy of all 

discoverable documents or evidentiary material on which such 

computation is based, including materials about the nature and 

extent of injuries suffered,” is one of the required disclosures. Id.

R. 26(a)(1)(C). In this respect, this court has explained that “even 

if a plaintiff cannot complete its computation of damages before 

future events take place, the fact of damages and the method for 

calculating the amount of damages must be apparent in initial 

disclosures.” Williams v. Anderson, 2017 UT App 91, ¶ 18, 400 

P.3d 1071 (cleaned up).

¶33 In its counterclaims, FranCounsel alleged that BACH had 

breached the Operating Agreement and that, as a result of 

BACH’s breach, FranCounsel had lost the value of its capital 

contribution. In its initial disclosures, FranCounsel identified, as 

an element of its damages, “Lost capital investment in Royal: 

$500,000.” BACH moved for summary judgment on 

FranCounsel’s counterclaims, arguing that it had failed to, 

among other things, provide “any calculation of damages.” 

FranCounsel opposed the motion, arguing that the parties 

contractually agreed to the value of its in-kind contribution at 

$500,000, that FranCounsel claimed this amount in its initial 

disclosures, and that the Operating Agreement had “been 

produced in discovery and authenticated in depositions.” 

FranCounsel pointed out that “BACH and FranCounsel freely 

contracted for [the $500,000 figure] based on their own 

negotiations and experience” and that “[s]ince the value of 
Bad Ass Coffee v. Royal Aloha

20190181-CA 15 2020 UT App 122

FranCounsel’s services is stipulated to be $500,000, the contract 

itself is adequate evidence of damages.” Accordingly, 

FranCounsel contended that it was “not required to establish 

some kind of formal calculation for the stipulated value of its 

services in the Operating Agreement because BACH . . . already 

agreed to that amount.”

¶34 The court denied BACH’s motion on the issue of whether 

FranCounsel adequately disclosed its damages, concluding that 

BACH had not demonstrated that it was entitled to judgment as 

a matter of law. Noting that FranCounsel “never supplemented” 

its initial disclosure on the computation of damages or 

“designated any expert to support” its theories of damages, 

following additional briefing, the court determined that 

FranCounsel’s only “possible remedy is that stated within the 

four corners of the Operating Agreement—i.e., return of its 

expressly stated $500,000 capital contribution.” Because the 

parties contractually agreed to $500,000 as the value of 

FranCounsel’s in-kind contribution, the court concluded that 

FranCounsel was not required to make further disclosures to 

support a damages theory based on that value.

¶35 On appeal, BACH relies heavily on this court’s decision in 

Sleepy Holdings LLC v. Mountain West Title, 2016 UT App 62, 370 

P.3d 963, to support its argument of error. In that case, we 

affirmed the district court’s conclusion that Sleepy Holdings’ 

initial damages disclosures were inadequate under rule 26.10 Id.

¶¶ 16–18. Among other things, although Sleepy Holdings 

described a lost sale in its complaint, it did not “identify the 

failed sale as damages” or further “offer a computation or 

method of calculating the damages,” as required by rule 26. Id.

¶ 17. It also “did not supplement its disclosures within the 

discovery period.” Id. ¶ 18. BACH argues that like the appellant 

 

10. Sleepy Holdings applies an earlier version of the discovery 

rules, but the applicable disclosure requirement has not 

changed.
Bad Ass Coffee v. Royal Aloha

20190181-CA 16 2020 UT App 122

in Sleepy Holdings, FranCounsel failed to comply with rule 26 

when it merely disclosed the “perfectly round number of 

$500,000” as damages and did not supplement that disclosure.

¶36 However, our decision in Sleepy Holdings is factually 

distinguishable from the present case. While FranCounsel did 

not supplement its initial disclosures, unlike the appellant in 

Sleepy Holdings, FranCounsel identified the lost capital 

contribution consisting of in-kind services as damages in its 

counterclaim and in its initial disclosures, and it provided the 

Operating Agreement itself as a basis for damages early in the 

litigation.

¶37 Moreover, the $500,000 damages figure required no 

computation. FranCounsel’s theory was that the figure 

represented the entire value of its in-kind contribution to the 

parties’ venture as agreed to by the parties in the Operating 

Agreement. Cf. Williams, 2017 UT App 91, ¶¶ 17–22 (concluding 

that a damages disclosure, where the claim to damages was to be 

based on a “fixed percentage” of the price paid for the business 

at issue, was sufficient under rule 26’s computation of damages 

requirement (cleaned up)). Because FranCounsel purported to 

seek that full amount as damages for breach of the Operating 

Agreement, no further disclosure was needed. Accordingly, the 

district court did not abuse its discretion by concluding that 

FranCounsel’s damages disclosures were sufficient under rule 

26’s damages disclosure requirement.

2. Return of FranCounsel’s Capital Contribution

¶38 BACH next contends that the district court erred in 

rejecting its argument that, as a matter of law, BACH could not 

be liable to FranCounsel for the value of its capital contribution 

under the breach of contract theory FranCounsel advanced. 

Characterizing FranCounsel’s damages theory as a request for a 

return or reimbursement of its capital contribution to Royal, 

BACH asserts that, as a member of Royal, it cannot be liable to 

FranCounsel for the reimbursement of FranCounsel’s in-kind 
Bad Ass Coffee v. Royal Aloha

20190181-CA 17 2020 UT App 122

contribution to Royal. Rather, BACH contends that FranCounsel 

could seek return or reimbursement of its capital contribution 

only from Royal itself, not from a member of Royal.

¶39 In the district court’s partial denial of BACH’s summary 

judgment motion on FranCounsel’s’ counterclaims, the court 

ruled that FranCounsel’s “claim relating to the value of its 

in-kind contribution . . . survives [the] Motion, but only to the 

extent [FranCounsel] may rely upon the contractually 

agreed-upon figure of $500,000 as its damages,” noting that 

“[t]he issue will need to be fully briefed before that claim may 

proceed to trial.” Accordingly, the court ordered the parties to 

“separately brief” before trial “the proper measure of damages 

on [FranCounsel’s] claims and whether it may rely on [the 

Operating Agreement’s contribution] provision or was required 

to make a more detailed showing.”

¶40 Following that briefing, the court ruled that FranCounsel 

could measure its damages according to “the value of its stated 

capital contribution” as provided in the Operating Agreement. 

As to whether FranCounsel was legally barred from recovering 

the capital contribution, the court found BACH’s argument that 

“one member of a limited liability company was not required to 

reimburse another for a debt obligation or other liability of the 

LLC” unavailing. (Cleaned up.) Noting that BACH appeared to 

be arguing that one member of an LLC cannot be personally 

liable to reimburse another member’s capital contribution and 

that the Operating Agreement precluded such reimbursement, 

the court concluded that FranCounsel was “not seeking 

reimbursement of the capital contribution, per se.” Rather, the 

court explained that FranCounsel sought “its damages 

associated with BACH’s alleged breach,” which the court 

concluded could be based on and measured by the agreed-upon 

value of its performance as stated in the Operating Agreement.

¶41 BACH has not persuaded us that the court’s ruling in 

allowing FranCounsel to proceed to trial on a damages theory 

based on the value of its capital contribution to Royal was in 
Bad Ass Coffee v. Royal Aloha

20190181-CA 18 2020 UT App 122

error. The court determined that FranCounsel was not seeking 

reimbursement of its capital contribution from BACH, but rather 

damages based on the services it provided in reliance on the 

Operating Agreement, as measured by the contribution value 

stated in the agreement itself. BACH does not acknowledge or 

address this determination, and it does not explain how the 

court’s decision to allow the damages theory to go forward was 

wrong, given this determination. Instead, BACH argues this 

issue on appeal as though FranCounsel was indeed seeking 

reimbursement or return of its capital contribution from BACH 

as opposed to merely relying on the agreed value of 

FranCounsel’s performance as set forth in the Operating 

Agreement to measure the damages flowing from BACH’s 

breach.

¶42 Furthermore, our review of the record suggests that, as 

the district court determined, FranCounsel was not seeking 

reimbursement of its capital contribution from BACH. Rather, 

FranCounsel sought the value of the work it performed in 

developing BACH’s product, and it relied on the contribution 

provision in the Operating Agreement as evidence of that value.

¶43 For example, in its trial brief regarding damages, 

FranCounsel explained that it sought the value of its capital 

contribution to Royal as damages for BACH’s breach, which it 

claimed represented the value of services it provided in the 

venture. Likewise, at trial, FranCounsel argued to the jury that it 

was seeking to recover from BACH the value of its work and 

services, performed in reliance on the Operating Agreement, to 

develop BACH’s brand internationally—an amount it argued 

the parties themselves valued in the Operating Agreement as 

$500,000.

¶44 In this respect, the authority on which BACH relies to 

argue for error on this ground is not persuasive. BACH cites case 

law, statutes, and various Operating Agreement provisions to 

argue that BACH cannot be liable to FranCounsel for the return 

of its capital contribution. But such authority does not address 
Bad Ass Coffee v. Royal Aloha

20190181-CA 19 2020 UT App 122

the actual issue decided by the district court—whether 

FranCounsel could rely on the agreed-upon value of its services, 

as provided in the Operating Agreement, to measure and prove 

the damages it suffered due to BACH’s breach of the Operating 

Agreement. Accordingly, we are not persuaded that reversal on

this issue is appropriate.

3. The Sufficiency of the Evidence Supporting the Award

¶45 BACH also claims that the damages verdict cannot be 

sustained on the evidence. Contending that there was no basis in 

the evidence supporting the fact or amount of the $100,000 in 

damages awarded to FranCounsel for reliance on the Operating 

Agreement, BACH asserts that the court erred by failing to grant 

the JNOV.11

¶46 Following the jury trial, BACH filed the JNOV, arguing, 

as it does on appeal, that the damages award was the product of 

speculation and that there was insufficient evidence supporting 

the fact or the amount of the $100,000 award. The district court 

denied the motion because it concluded that BACH had “failed 

to meet its burden of demonstrating that insufficient evidence 

supported the verdict.” Specifically, the court noted that the 

judgment notwithstanding the verdict standard required BACH 

 

11. As it did in the JNOV, BACH makes a number of arguments 

regarding the damages verdict and the lack of evidence 

supporting it. For example, BACH argues on appeal that there 

was no rational basis in the evidence to support the award, no 

evidence of the fact of damages, and no evidence of the amount 

of damages. However, having included these arguments in the 

JNOV, the operative ruling on appeal addressing these 

arguments and the sufficiency of the evidence supporting the 

jury’s damages award is the court’s denial of the JNOV. 

Accordingly, we address and resolve all BACH’s sufficiency 

arguments through our analysis of the district court’s JNOV 

ruling.
Bad Ass Coffee v. Royal Aloha

20190181-CA 20 2020 UT App 122

to show that there was “no competent evidence” to support the 

verdict, taking into account “all reasonable inferences in a light 

most favorable to the nonmoving party.” (Cleaned up.) The 

court then stated that BACH failed to meet this burden—that it 

failed to cite the record presented to the jury, to acknowledge the 

evidence potentially supporting the jury’s verdict, or to explain 

how, despite the evidence presented, the jury could not have 

reached the verdict it did.

¶47 A district court “may grant a JNOV motion only if there is 

no basis in the evidence, including reasonable inferences which 

could be drawn therefrom, to support the jury’s determination.”

ASC Utah Inc. v. Wolf Mountain Resorts LC, 2013 UT 24, ¶ 18, 309 

P.3d 201 (cleaned up); DeBry v. Cascade Enters., 879 P.2d 1353, 

1359 (Utah 1994) (“A directed verdict and a judgment n.o.v. are 

justified only if, after looking at the evidence and all reasonable 

inferences in a light most favorable to the nonmoving party, the 

trial court concludes that there is no competent evidence which 

would support a verdict in his favor. A motion should be denied 

if reasonable persons could reach differing conclusions on the 

issue in controversy.” (cleaned up)). Our review on appeal is 

similar: “On a motion for judgment notwithstanding the verdict, 

we will reverse the trial court’s ruling only if, viewing the 

evidence in the light most favorable to the prevailing party, we 

conclude that the evidence is insufficient to support the verdict.” 

Pinney v. Carrera, 2019 UT App 12, ¶ 33, 438 P.3d 902 (cleaned 

up), aff’d, 2020 UT 43.

¶48 Here, BACH does not acknowledge the district court’s 

reasoning in the JNOV denial, nor does it attempt to explain why 

the court was wrong in ruling that BACH failed to carry its 

burden to show it was entitled to have the verdict set aside. 

BACH cannot persuade us that reversal is appropriate without 

acknowledging the district court’s decision and dealing with its 

reasoning. See, e.g., Living Rivers v. Executive Dir. of the Utah Dep’t 

of Envtl. Quality, 2017 UT 64, ¶¶ 41–43, 50–51, 417 P.3d 57 

(discussing that an appellant’s burden requires “timely” 

explaining to the appellate court why the lower tribunal was 
Bad Ass Coffee v. Royal Aloha

20190181-CA 21 2020 UT App 122

wrong, and declining to reach the “important questions” 

implicated in the case because of the appellant’s failure to do so); 

Federated Cap. Corp. v. Shaw, 2018 UT App 120, ¶ 20, 428 P.3d 12 

(explaining that an appellant who “does not meaningfully 

engage with the district court’s reasoning” necessarily “falls 

short of demonstrating any error on the part of the district 

court”); Duchesne Land LC v. Division of Consumer Prot., 2011 UT 

App 153, ¶ 8, 257 P.3d 441 (“Because [the appellants] have not 

addressed the actual basis for the district court’s ruling, they 

have failed to persuade us that the district court’s ruling 

constituted error . . . .”); Golden Meadows Props. LC v. Strand, 2010 

UT App 257, ¶ 17, 241 P.3d 375 (explaining that when a party 

“fails to attack the district court’s reasons” for a decision, the 

party “cannot demonstrate that the district court erred” with 

respect to that decision). Stated another way, to persuade us that 

reversal of the JNOV denial is appropriate, BACH must at least 

persuade us that the court was wrong in its assessment of 

BACH’s briefing failures for the original motion. BACH has not 

done so. Accordingly, we cannot set aside the jury’s verdict on 

this basis.

II. The Cross-Appeal

¶49 In their cross-appeal, Appellees argue that the 

district court erred by denying their request for approximately 

$230,000 in attorney fees. “In Utah, attorney fees are 

awardable only if authorized by statute or by contract.” Federated 

Cap. Corp. v. Haner, 2015 UT App 132, ¶ 11, 351 P.3d 816 (cleaned 

up).

¶50 Appellees moved for an award of attorney fees, arguing 

to the district court that both the Operating Agreement and the 

License Agreement contained provisions entitling them to their 

requested fees. More specifically, Appellees pointed to an 

indemnification provision in each agreement that they claimed 

required an award of attorney fees. The Operating Agreement 

contained a provision entitled “Indemnification by Member,” 

which provides,
Bad Ass Coffee v. Royal Aloha

20190181-CA 22 2020 UT App 122

Any Member who is in violation of this Operating 

Agreement agrees to indemnify and hold the 

Company and the Other Members harmless from 

all costs and expenses, including reasonable 

attorneys’ fees . . . and court costs, incurred by the 

Company and/or Other Members as a result of the 

violation of this Operating Agreement. The 

Company shall fund the indemnification 

obligations provided herein in such a manner and 

to such extent as the Members may from time to 

time deem proper.

Appellees argued that they were entitled to fees under this 

provision because BACH was a member of Royal as defined by 

this provision and a jury in phase two of the case had found in 

their favor, determining that BACH had violated the Operating 

Agreement.

¶51 Similarly, Appellees pointed to the Indemnification 

provision in the License Agreement as the contractual basis for 

an award of attorney fees. It provides,

Licensor . . . agrees to indemnify and hold harmless 

the Licensee and its members, directors, officers, 

employees, affiliates, agents and assigns from and 

against any and all claims, suits, damages, attorney 

fees, cost, expenses and losses of Licensee directly 

or indirectly, as a result of, or based upon or 

arising from any inaccuracy in or breach or 

nonperformance of any of the representations, 

warranties, covenants or agreements made by 

Licensor in or pursuant to this Agreement 

(whether or not of a material nature) and/or 

damages or liability resulting from or arising out of 

a claim that Licensee’s use of the Licensed Mark 

infringes the trademark rights of any third party. 

However, Licensor shall not be liable to indemnify 
Bad Ass Coffee v. Royal Aloha

20190181-CA 23 2020 UT App 122

the Licensee if the claims, suits, damages, attorney 

fees, cost, expenses and losses are caused by 

Licensee’s gross negligence or willful misconduct 

or by Licensee’s material breach of this Agreement.

Appellees argued that they were entitled to attorney fees under 

this provision because a “central issue” in BACH’s complaint 

was Hill’s lack of authority to execute the License Agreement, 

which was resolved in Appellees’ favor during phase one of the 

case, pointing to another provision in the agreement 

representing and warranting that Hill had authorization to 

execute and enter into the agreement on BACH’s behalf.12 On

this basis, Appellees contended that BACH’s complaint was 

“based upon” or arose from a representation and warranty in the 

License Agreement, thus triggering the indemnification clause’s 

provision for attorney fees.

¶52 The district court denied Appellees’ request for attorney 

fees, concluding that neither agreement had fees provisions 

entitling Appellees to their requested fees. Noting that 

contractual fees are available “only in strict accordance with the 

terms of the contract,” the court determined that there was 

“nothing in either the Operating Agreement or the License 

Agreement that indicates a meeting of the minds whereby 

 

12. The authorization provision Appellees cited provides, 

Harold J. Hill as President/CEO, has full corporate, 

power and authority and has taken all corporate 

actions and has obtained all necessary approvals or 

authorizations from any other third party and 

government authority to represent BACH and to 

execute and perform this Agreement, which will 

not constitute or result in a violation of any 

enforceable and effective laws or former 

agreements.
Bad Ass Coffee v. Royal Aloha

20190181-CA 24 2020 UT App 122

BACH agreed to pay the fees and costs in the event of a dispute 

with [Royal] or FranCounsel.” (Cleaned up.)

¶53 Regarding the Operating Agreement, the court focused on 

the second sentence of the indemnification provision, which 

provides that Royal would fund the indemnification obligations, 

concluding that the plain language demonstrated that only 

Royal would be liable for fees, not a member such as a BACH. 

For the License Agreement, the court first determined that the 

plain language of the provision “does not clearly reflect an 

agreement for fees between the parties.” The court next focused 

on the language stating that indemnification applied to “any 

inaccuracy in or breach or nonperformance of” the License 

Agreement, determining that “that issue has never been 

determined by this Court, and was never presented to the jury.” 

The court noted that during the phase-one bench trial, the court 

merely held that the License Agreement was enforceable but did 

not determine whether a breach of that agreement occurred. And 

in the second phase, the jury determined only that the Operating 

Agreement had been violated, not that the License Agreement 

had. The court further determined that, to the extent the two 

provisions at issue were indemnification provisions, Appellees 

“never ever asserted an indemnification claim” and were 

thereby barred from asserting one post-trial.

¶54 In their opening brief, Appellees summarily contend, 

without reference to the record or to relevant authority, that the 

district court erred in its interpretation of the indemnification 

provisions. And to support their contention, Appellees, by their 

own admission, duplicate for us the briefing from their motion 

before the district court. Appellees do not attempt to address the 

district court’s decision and reasoning until their reply brief. 

Even then, much of Appellees’ argument focuses on disproving 

BACH’s arguments in opposition, not the court’s reasoning and 

decision.

¶55 We therefore cannot grant Appellees the relief they seek. 

The district court denied Appellees’ motion in a well-reasoned, 
Bad Ass Coffee v. Royal Aloha

20190181-CA 25 2020 UT App 122

written ruling. Appellees, by their own admission, did not 

address the district court’s reasoning and explain why it was 

wrong in their opening brief. Rather, in their opening brief, 

Appellees essentially argued the merits of their request for 

attorney fees as though the district court had not considered the 

issue. But appeals are not do-overs. They are opportunities to 

correct error. See State v. Thornton, 2017 UT 9, ¶ 49, 391 P.3d 1016 

(“American courts have long followed the writ of error approach 

to appellate review. Under this framework, the appellate court 

does not review the trial record in a search for an idealized 

paradigm of justice. We ask only whether the trial court 

committed a reversible error in resolving a question presented 

for its determination.” (cleaned up)). And Appellees cannot 

persuade us that the district court erred without addressing the 

district court’s decision on its own terms. See, e.g., Living Rivers v. 

Executive Dir. of the Utah Dep’t of Envtl. Quality, 2017 UT 64, 

¶¶ 41–43, 50–51, 417 P.3d 57; Federated Cap. Corp. v. Shaw, 2018 

UT App 120, ¶ 20, 428 P.3d 12 (explaining that an appellant who 

“does not meaningfully engage with the district court’s 

reasoning” necessarily “falls short of demonstrating any error on 

the part of the district court”).13

 

13. And this failure is not saved by Appellees’ belated attempt to 

grapple with the district court’s reasoning in their reply brief, 

especially because the timing of the attempt rendered BACH 

unable to respond to these new arguments. See Allen v. Friel, 2008 

UT 56, ¶ 8, 194 P.3d 903 (stating that issues not raised in the 

opening brief are considered waived, and explaining that a reply 

brief is limited to addressing matters raised in the opposing brief 

due to “considerations of fairness,” because “[i]f new issues 

could be raised in a reply brief, the appellee would have no 

opportunity to respond to those arguments”); Martin v. 

Kristensen, 2019 UT App 127, ¶ 61, 450 P.3d 66 (explaining that 

the “failure to engage with the court’s reasoning until the reply

brief is fatal”), cert. granted, 456 P.3d 386 (Utah 2019); Bahnmaier 

v. Northern Utah Healthcare Corp., 2017 UT App 105, ¶ 11 n.2, 402 

(continued...)
Bad Ass Coffee v. Royal Aloha

20190181-CA 26 2020 UT App 122

CONCLUSION

¶56 Regarding BACH’s appeal, we affirm the district court’s 

conclusion that the Operating Agreement was valid and 

enforceable. We likewise affirm the various challenged 

determinations regarding damages. As to Appellees’ 

cross-appeal, we affirm the district court’s decision not to award 

attorney fees.

 

(...continued)

P.3d 796 (stating that because the appellant “made no attempt to 

challenge the district court’s reasoning for rejecting” one of her 

claims “in her opening brief [on appeal], . . . we do not address 

the court’s ruling in that regard”).