2015 UT App 34

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### T H E 

### U TA H 

### C O U RT O F 

### A P P E A L S

A NT HO NY B. T OR

RE SAND Y V E TT E T OR RE S , Plainti ffs and Appellees,

v. D OUG L A S L. M AD S E N; E MMA S I L L C RI D D L E ; AND D OUGAND E MM

Y’ S F AMI LY R E S TAUR ANT AND C AF É, I N C ., Defendan ts and Appellants.

Memor andumDeci si on No. 20131028-CA Filed February 12, 2015

Second Di stric t Co urt, F armi ngto n Department The Honorable David M. Co nnors

No. 080700361

James E. Magleby, A tto rney fo r Appellants

Lorr ai ne P. Brown, Atto rney fo r Appellees

J UD G E J AM E S Z. D AVI Sauthore d thi s Memorandum Dec i si on, i n whi ch J UD G E S T E P H E N L. R OT H concu rr ed. J U

D G E J. F RE D E RI C V OR O S J R . concu rr ed, wi th opini on.

DAVIS, Judge:

¶1 Douglas L. Ma d sen, Emma Sill Criddle, and Doug and E mmy’s Fami ly Restaurant and Café, In c

. ( c ol l e c tive l y, D e fe n d a nts ) appeal t he di stric t court ’s deni al of their mot i on to reconsi der the di smi ssalof their counterclai m for att or ney fees. We affi rm.
¶2 In June 2008, Anthony B. Torr es and Yve tte Torr es brought

a complaint again s t Defendan ts seeki ng to enforce a Lette r of Intent i n whi ch Defendan ts agr eed to sell their restaurant to the Torr eses. Relying on the Lette r of Intent, the Torr eses ret ained an atto rney to prepar e a Purchas e Agr eement. However, Defendan ts rej ected the Purchas e Agr eement and cut off negot i at io ns wi th the Torr eses. Accordi ngly, t he Purch ase Agre ement was n ever si gned.Torres v. Ma dsen

¶3 On Sept ember 9, 2009 , t he di stric t court gr anted sum mary judgment in favor of De fendants, deter mining that the Lette r of Intent was unenf or ceable. The court also permi tte d the Torr eses to amend thei r complai nt, whi ch they di d on Octo ber 8, 2009.

¶4 In response to the amended complaint, Defendan ts fi led an
answ er and counterclai m in whi ch they sought to recov er atto rney fees. Thi s counterclai m was based on Defendants ’ a sserti on that the

or ig inal complaint relied on the uns i gned Purchas e Agr eement, whi ch c ontained a pro vis i on for pay ment of att or ney fees. Defen

da nt s a r g ued that becau se the Torr eses “sought to enforce a contract whi ch had an atto rney fee prov i si on,” Defendan ts were “entitled to recov er their atto rney fees and costs” in accordance wi th the Reci procal Att or ney F e e s St atute. See Utah Code Ann. § 78B-5-826 ( Lexis Nexis 2012).

¶5 In respons e , the Torr eses fi led a motion to di smi ss Defendants’ counterclai m for atto rney fees, asserting that all of their contract clai ms were based on the Lette r of Intent, whi ch contained

no atto rney fee prov i si on. They maintai ned that they never sought to enforce the Purchas e Agr eement, whi ch “ was at no tim e accepted, agreed t o or executed by either part y.”

¶6 The di stric t court agr eed wi th the Torr eses “that all contract relat ed clai ms [in the or i gin al complaint] were based upon the 2007 Lette r of Int e nt and not upon the 2008 Purchas e

. . . Agr eement.” Alter nati vely , the court found that the Purchas e Agr eement could not be subject to the Reci procal Att or ney Fees St atute becau se i t

was not “executed.” Accor d ing l y , the di stric t court gr anted the 1 Torr eses’ moti on to di smi ss.

1. Defendan ts arg ue that a contract can be executed in ways other than si gni ng, such as “thro ugh perfo r ma nce of the contract’ s ter ms.” (Ci tin g Black’s Law Dictionary 567 (6th ed. 1990) (emphas i s omi tte d).) H owever , even accepti ng Defendants’ argument, there i s no i ndi cati on that the Purchas e Agr eement was ever perfor med

or other wi se executed. Accordi ngly, we see no err or in the di stric t court’s deter mination that the Purchas e Agr eement was not executed.

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¶7 Two year s later , in October 2012, Defen d ants moved the court to reconsi der i ts gr ant of the Torr eses’ motion to di smi ss, on t he gr ound that the Utah Supreme Court ’s deci si on in Hoob an v

. Unic ity International, Inc. , 2012 UT 40, 285 P.3d 766 , p e r mit ted

recov ery of atto rney fees und er the Reci procal Att or ney Fees St atute based on an agr eement that had not been si gn e d by t he party seeki ng to enforce i t. See id. ¶¶ 4–6. The di stric t c ourt found Hoob an di stingui sha bl e and deni ed Defendan ts’ motion to reconsi der. Defendants appeal.

¶8 Defendan ts’ ap p e a l t urns on the questi on of whether the Torr eses’ contract-r elated clai ms are su bj ect to the Reci procal Att or ney Fee s Stat ute, as interpr eted by Hoob an . A di stric t court ’s i nterpr etat i on of a statute presents an iss ue of law, whi ch we
rev i ew for corr ectness. State Farm Mut. Auto. Ins. Co. v. Green , 2003 UT 48, ¶ 44, 89 P.3d 97. A di stric t court’s interpr etat i on of case law li kewi se presents an i ssu e of law, whi ch we rev i ew for corr ectness. State v. Rogers , 2006 UT 85, ¶ 7, 151 P.3d 171.

¶9 The Reci procal At tor ney Fee s Stat ute pro videsas follows :

A c ourt may award costs and atto rney fees to ei ther party that prev ai ls in a civil acti on based upon any promis sory note, wr itten contract, or other wri tin g executed after April 28, 1986, when the prov i si ons of the promis sory note, wri tt e n contract, or other wri tin g allow at least one party to r e co v er atto rney fees.

Utah Code Ann. § 78B-5-826 (Lex i sNexi s 2012). The Hoob an court deter mined that parties to li tigati on imp l icating the Reci procal Att or ney Fees St atute need not be par ties to the r e levant contract i n or der to recov er fees. Hoob an , 2012 UT 40, ¶¶ 21–22. Instead, the Reci procal Att or ney Fees St atute may b e invo ke d wh e n e ver a party seeks enforcement of a contr a ct that prov i des for recov ery of atto rney fees. Id. ¶¶ 25–26; see also Bilanzich v. Lonett i, 2007 UT 26, ¶¶ 15–16, 160 P.3d 1041 (explai ning t hat the Reci procal Att or ney Fees St atute “requires only that a party to the li tigati on assert the wri tin g’s enforceabi li ty as basi s for recov ery ”). In othe r words,

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even i f the court ulti mately deter mines that the relev ant contract i s not enforceable as t o the parties to the li tigati on, the prev ai ling party may r e cover atto rney fees pursuant to the ter ms of the contract i f the other party would have been able to recov er fees had the contract been deter mine d to be enforceable. Hoob an , 2012 UT 40, ¶¶ 25–26.

¶10 Defendan ts assert th a t t he Torr eses sought to enforce the Purchas e Agr eeme nt , whi ch contai ned an atto rney fee prov i si on. Had the court deter mined that the Purchas e Ag r e e me nt was enforceable, Defendan ts arg ue, the Torr eses would have been able to recov er atto r ne y fees. Thus, in accordance wi th Hoob an , Defendan ts assert that the y should be permi tte d to recov er atto rney fees becaus e they pr evailed on the enforceabi li ty iss ue.
¶11 Had the Torr eses actually so ug ht to enforce the Purchas e Agr eement, Defendan ts would have a better arg u m e nt. However , 2 i t i s clear from the context of the comp l a int that the Torr eses’ contract-r elated clai ms w ere based on the si gned Lett er o f Intent. The Torr eses’ complaint readily admi ts that De fendants rej ected the Purchas e Agr eement “in i ts entirety” and makes no atte mpt to assert that the uns i gned Purchas e Ag re e m e n t was enforceable. The di stric t court clearly read the co mp l a int thi s way as well, even befor e i t was asked to explic i tly rule on the questi on when consi dering the Torr eses’ motion to di smi ss Defendan ts’ atto rney fee counterclai m. The di stric t court’s ruli ng on Defendants’ motion for summary judgment indi cated that t he Torr eses “concede that the survival of their Contr act Reli ant Clai ms depends on the enforceabi li ty o f t he October 17, 2007 Lette r of Intent as a

2. The di stric t court di stingui shed Hoob an becau se the contract in Hoob an was actually si gned by the defendant and another party , whereas the c ontr act i n thi s cas e was n ever si gned by anyone. See Hoob an v. Unic ity In t’ l , In c

. , 2012 UT 40, ¶¶ 4–6, 285 P.3d 766

. See generally Utah Code Ann. § 78B-5-826 (Lexi sNexi s 2012) (indi cati ng that the Reci procal Att or ney Fees St atute applies to “executed” wri tin gs). We need not exami ne t he r e l evance of thi s di stincti on, however , becau se we conclu de that t he Torr eses never sought to enforce the unsi gned Purchas e Agr eement.

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contract.” Its analy sis addressed only the enforceabi li ty of the

3 Lette r of Intent and di d not even touch on the enforceabi li ty of the Pur chas e Agr eement. Although we acknowledge that the

co mp laint’s refer ence to two di fferent contracts—the Lette r o f Intent and the Purchas e A g r eement—had the potent i al to caus e confus i on, i t i s clear from the context of these refer ences that the Torr eses’ contract-r elated clai ms were b a s e d on the L e tt e r of Intent, not t he Purch ase Agre ement.

¶12 B e c a u s e the T or re s e s ’ c ontr a c t- re l a te d c lai ms were not base d

on the Purchas e Agr eement, the Reci procal Att or ney Fees St atute does not apply. The supreme court ’ s deci si on in Hoob an does not alter that result. Accordi ngly, we affi rm the di stric t court’s gr ant of the Torr eses’ motion to di smi ss Defendan ts’ atto r ne y fee counterclai m and i ts deni al of Defendan ts’ motion to r econsi der.

VOROS , Judge (c oncurring):

¶13 I concu r fully i n the lead opin i o n. B ut even i f the prim ary rat i onale of that opin i on were incorre ct, a nd Defendan ts’ praye r for speci fi c perfor manc e “accordi ng to t he ter ms of the purchas e contract” could be r e a d to mean that the Torr eses’ acti on was

3. Defendan ts poin t out that the To r r e ses’ ini tial di scl osures i ndi cated that the remedy they sought was speci fi c perfor manc e of the sale “accordi ng to the ter ms of the [P ur ch a se Agr eement].” However , by the tim e the Torr eses’ clai ms were actually put to the test by Defendan ts’ motion for sum mary judgment, th e y ha d conceded that their clai ms depended solely on the enforceabi li ty of the Lette r of Intent. Whi le the Torr eses’ ambi tions ma y a r guably have gone beyond enforcement of the Lette r of Intent at one point i n the process, nei ther the complaint nor the Torr eses’ response to the sum mary judgment motion went so far. I t seems too much o f

a stret ch to ext end the reach of the Reci procal Att or ney Fees St atute to make i r rev ocable a posi tion take n at an early procedural stage that has been abandoned by the tim e of the di sposi tive motion that ulti mately r esolves the matt er.

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based on the Purchas e Agr eement, I would never theless affi rm solely on the alte r nat i ve gr ound relied upon by both the di stric t

c ou rt and the major i ty opin i on: the Purchas e Agr eem e n t w a s ne ve r executed. I wri te t o explain bri efly why I conclu de that the Reci procal Att or ney Fees St atute requires execution and why that requirement was not met her e.
¶14 The Reci procal At tor ney Fee s Stat ute c learly stat es at least three di sti nct requirements: (1) a wr it ing executed after a certain date, (2) a ci vil acti on based upon that wri tin g, and (3) a prov i si on allowing at least o ne party to r ecover fees:

A court may award costs and atto rney fees to ei ther party that prev ai ls in [1] a civil a ct io n based upon any promis sory note, wri tte n contract, or other wri tin g [2] execu ted after April 28, 1986 , when [ 3] the prov i si ons of the promi ssory note, w ritten contract,

or other wri tin g allow at l e a st one party to recov er atto rney fees.

Utah Code Ann. § 78B-5-826 (emphas i s added). Here, the thi rd requirement was not ati ssu e, but the di stric t courtaddressed the other two. It ruled th a t t he civil acti on brought by the Torr eses “was not based upon” the 2008 Purchas e Agr eement, but the 2007 Lette r of Intent. It also ruled that “the only executed document was the 2007 Lette r of Intent.” The court refused to award fees, becau se the Lett er o f Intent contained no fee provisi on.
¶15 Defendant s a r gue persuasi vely in their openi ng bri ef that the ter m of art “executed” may, depend ing on context, mean “perfor med” as well as “ signed.” But thi s line of arg ument leads nowhere becau se, of course, nei ther party si gned or perfor med the Pu rchase Agr eement. So even under Defendan ts’ prefer r e d reading of the statute, the Purchas e Agr eement was not “executed after A pril 28, 1986.”

¶16 Defendan ts also arg ue that t he sup reme court ’s opi ni on i n Hoob an effecti vely abrog ates the statuto ry requirement that the wri tin g be executed. However , that o pini on addresses only the

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statuto ry requirement t hat the acti on be “based upon” a wr itin g, not the statuto ry requirement that the wri tin g be “executed.” The court held that “an act i on i s ‘based upon’ a contract under the statute i f a ‘part y to the li tigati on a ss e r t [s] the wri tin g’s enforceabi li ty as basi s for recov ery .’” Hoob an v. Unic ity Int’ l , Inc. 2012 UT 40, ¶ 22, 285 P.3d 766 (alterat i on in or i gin al) (quoti ng Bilanzich v. Lonetti, 2007 UT 26, ¶ 15, 160 P.3d 1041). Th e o pini on does not menti on, mu ch l ess abrog ate, the port i on of the Reci procal Att or ney Fees St atute li mi tin g the statute’s appli cati on to wri tin gs “executed after April 2 8 , 1 9 8 6.” In fact, the opin i on’s quotat i on of the statuto ry tex t eli des that phrase. See id. ¶ 12. And i n any event, as the court i tself stated, “our cases cannot be read to

ov err i de the clear te rms of the statute.” Id. ¶ 20 n.4.

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