2013 UT App 129

_________________________________________________________



### T HE 

### U TAH 

### C OURT OF 

### A PPEALS

W M

. D OUGLAS H ORNE F AMILY R EVOCABLE T RUST

, Plaintiff, Appellant, and Cross

‐ appellee,

v.

W ARDLEY /M C L ACHLAN D EVELOPMENT

, LLC; L YNN W ARDLEY ;

AND S COTT M C L ACHLAN

, Defendants, Appellees, and Cross

‐ appellants.

Memorandum Decision

No. 20120263

‐ CA

Filed May 23, 2013

Fourth District, Provo Department

The Honorable Lynn W. Davis

No. 110400781

Stephen Quesenberry and Christopher R. Infanger,

Attorneys for Appellant and Cross

‐ appellee

John T. Anderson, Attorney for Appellees and

Cross

‐ appellants

J UDGE C AROLYN B. M C H UGH authored this Memorandum

Decision, in which J UDGES S TEPHEN L. R OTH and

M ICHELE M. C HRISTIANSEN concurred.

McHUGH, Judge:

¶1 The Wm. Douglas Horne Family Revocable Trust (the Trust)

appeals from the district court’s order granting summary judgment

in favor of Wardley/McLachlan Development, LLC, Lynn Wardley,

and Scott McLachlan (collectively, the Wardley Parties). On cross

‐ appeal, the Wardley Parties challenge the district court’s denial of

their request for attorney fees. We affirm, in part, and reverse and

remand, in part.Horne Family Trust v. Wardley/McLachlan

¶2 The Trust and the Wardley Parties entered into a settlement

agreement (the Agreement) in March 2003, which provided that the

Wardley Parties would pay the Trust a sum of $1.8 million over the

course of six years. The Agreement provided that no interest would

accrue on the principal during the first three years but that during

the final three years, interest would accrue at the prime rate as

published by the Wall Street Journal and late payments would bear

interest of 18% per year. It also included a provision awarding

attorney fees and costs to the prevailing party in any legal action to

enforce the Agreement. The Wardley Parties were each jointly and

severally liable for the amounts due under the Agreement.

¶3 In early 2010, the Wardley Parties had not fully paid their

obligation under the Agreement and were interested in reducing

the late payment interest rate to 9%. However, the Trust never

agreed to modify the contractual interest rate of 18%. On January

20, 2010, the Wardley Parties sent the Trust a check for $473,422.96,

which represented the payoff number calculated by the Wardley

Parties plus interest running at 18% from the due date of the

obligation. On the same day, the Wardley Parties’ accounting

representative emailed the Trust’s accountant informing him that

the check would be the final payment due under the Agreement

and further instructing, “Once the check has cleared, please send

the original note, marked PAID IN FULL

. . . .” The Trust received

and deposited the check. On February 1, 2010, the Trust’s accoun

‐

tant emailed Scott McLachlan and explained, “As we discussed,

Lynn Wardley has tendered a check for the final payment on the

[balance] required under our [A]greement

. . . . If Lynn’s check

remains good, your personal guarantee will no longer apply to the

[balance].” There is no dispute that the Wardley Parties’ check

remained good and that the Trust received $473,422.96.

¶4 Eight months after it received the check, the Trust discov

‐

ered an accounting error. The Trust had inadvertently recorded the

Wardley Parties’ payment twice in March 2009, resulting in the

Trust understating the Wardley Parties’ final payoff obligation by

$100,000 plus interest. The Trust informed the Wardley Parties of

20120263

‐ CA 2013 UT App 129 2Horne Family Trust v. Wardley/McLachlan

this shortfall and requested payment for the remaining balance of

$132,011.57. The Wardley Parties refused, claiming that they had

already paid in full and the Trust had received all amounts owed

under the Agreement.

¶5 In 2011, the Trust filed this action and alleged that the

Wardley Parties breached the terms of the Agreement by default

‐ ing on their payment obligation. In response, the Wardley Parties

asserted several affirmative defenses, including payment and

accord and satisfaction. Thereafter, the Trust and the Wardley

Parties each moved for summary judgment.

¶6 After a hearing on the motions in January 2012, the district

court orally granted summary judgment in favor of the Wardley

Parties. The court later issued a written ruling that incorporated by

reference its reasoning as stated during the hearing. The Wardley

Parties then sought attorney fees under the Agreement, but the

district court denied that request. The Trust timely appealed the

grant of summary judgment, and the Wardley Parties cross

‐ appealed the denial of their motion for attorney fees.

¶7 The Trust challenges the district court’s grant of summary

judgment in favor of the Wardley Parties. “Summary judgment is

appropriate where (1) there is no genuine issue as to any material

fact and (2) the moving party is entitled to a judgment as a matter

of law.” Hillcrest Inv. Co. v. Utah Dep’t of Transp

., 2012 UT App 256,

¶ 11, 287 P.3d 427 (citation and internal quotation marks omitted).

“We review a district court’s grant of summary judgment de novo,

reciting all facts and fair inferences drawn from the record in the

light most favorable to the nonmoving party.” Id. (citation and

internal quotation marks omitted). We therefore construe the facts

in the light most favorable to the Trust.

¶8 The Trust contends that the district court erred in granting

the Wardley Parties’ motion for summary judgment because

genuine issues of material fact exist concerning each requisite

condition necessary for a valid accord and satisfaction to arise. In

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‐ CA 2013 UT App 129 3Horne Family Trust v. Wardley/McLachlan

response, the Wardley Parties urge this court to affirm summarily

because the Trust did not challenge each ground on which the

district court’s summary judgment order is based.

¶9 “This court will not reverse a ruling of the trial court that

rests on independent alternative grounds where the appellant

challenges only one of those grounds.” Salt Lake Cnty. v. Butler

, Crockett & Walsh Dev. Corp

., 2013 UT App 30, ¶ 28, 297 P.3d 38; see

also Republic Outdoor Adver., LC v. Utah Dep’t of Transp

., 2011 UT

App 198, ¶ 32, 258 P.3d 619 (declining to consider a challenge to an

alternative basis for the court’s grant of summary judgment where

appellant failed to adequately challenge an independent basis for

the court’s ruling). Consequently, we may affirm if the Trust failed

to challenge each of the grounds for the district court’s grant of

summary judgment.

¶10 The Trust argues that the district court based its ruling only

on accord and satisfaction. However, the record reveals that the

district court granted summary judgment on two alternative bases:

(1) the Wardley Parties had tendered, and the Trust had accepted,

final payment under the Agreement and (2) accord and

satisfaction. 1 During the summary judgment hearing, the district

1. The Trust did not argue to the district court that a unilateral or

mutual mistake as to the terms of the Agreement justified

reformation or rescission of the agreement to accept the check as

final payment. See, e.g.

, Cantamar, LLC v. Champagne

, 2006 UT App

321, ¶ 38, 142 P.3d 140 (“A mutual mistake occurs when both

parties, at the time of contracting, share a misconception about a

basic assumption or vital fact upon which they based their

bargain.” (citation and internal quotation marks omitted)).

Similarly, the Trust did not assert mistake in response to the

Wardley Parties’ accord and satisfaction defense. See generally

England v. Horbach

, 944 P.2d 340, 344, 346 (Utah 1997) (holding that

where the parties were mutually mistaken in their belief that the

debtor owed the creditor $25,000, there was not “a compromise to

(continued...)

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‐ CA 2013 UT App 129 4Horne Family Trust v. Wardley/McLachlan

court stated, “I don’t even have to get to an accord and satisfaction,

based upon [the Wardley Parties’] argument, as it relates to a

tender and acceptance.” Later, while articulating its ruling in favor

of the Wardley Parties, the district court explained,

Now, there’s an argument that the accord and

satisfaction does not apply because there was no

dispute. I think[] there was a dispute as it relates to

the applicable interest rate and, then, there was a

concession, on the one side, as it relates to that, but,

at the very least, there’s a tender, there’s an offer,

there’s an acceptance. The check was tendered. It was

accompanied with significant written communica

‐

tions and, then, within the one document,

. . . some

six times there’s notice of the debtor’s intentions in

connection with that.

There’s no mutual mistake and, in connection

with this, I’ll grant [the Wardley Parties’] motion

. . . .

¶11 Subsequently, the Trust’s trial counsel indicated that he

“under[stood]

. . . that [the Wardley Parties] have been granted

their motion for summary judgment on a new contract which arose

to modify the

. . . [A]greement.” The district court immediately

clarified,

No. I did it on both claims because there is a—they

have made two arguments as it relates to that. One is

accord and satisfaction but, initially, as it relates to

1. (...continued)

satisfy an uncertain debt” and an accord and satisfaction did not

occur); see also Neiderhauser Builders & Dev. Corp. v. Campbell

, 824

P.2d 1193, 1198 (Utah Ct. App. 1992) (“When there is a unilateral

mistake, and a party accepts less than it is entitled to, the theory of

accord and satisfaction will not prevent the mistaken party’s

recovery of the actual, correct amount.”).

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‐ CA 2013 UT App 129 5Horne Family Trust v. Wardley/McLachlan

the offer and acceptance under a tender and that

constitutes a contract. A check was tendered accom

‐ panied with written communications and constituted

a contract and I’ve ruled I believe there is sufficient

evidence to support that or, in the alternative that, in

fact, there is accord and satisfaction

. . . .

¶12 The district court’s written ruling on the Wardley Parties’

request for attorney fees provides additional support for our

conclusion that final payment constituted one basis for summary

judgment and accord and satisfaction served as an alternative

basis. The district court’s order explained that the Wardley Parties

“did prevail on [their] motion [for summary judgment], which

argued two theories. The first was accord and satisfaction. The

second was that the communication, tender of payment, and

acceptance of payment created a new contract.”

¶13 Thus, the district court’s summary judgment ruling was

based on two alternative theories. Yet in its briefing to this court,

the Trust challenges only the district court’s ruling on accord and

satisfaction. Accordingly, we affirm the district court’s judgment

on the unchallenged alternative ground of payment without

reaching the merits of that decision. 2 See generally Butler

, Crockett &

Walsh Dev. Corp

., 2013 UT App 30, ¶ 28.

¶14 On cross

‐ appeal, the Wardley Parties challenge the district

court’s conclusion that they are not entitled to attorney fees under

the Agreement. “Whether attorney fees are recoverable is a

question of law, which we review for correctness.” R.T. Nielson Co.

v. Cook

, 2002 UT 11, ¶ 16, 40 P.3d 1119. “As a general rule, attorney

fees are recoverable only if authorized by contract or statute.”

Anderson & Karrenberg v. Warnick

, 2012 UT App 275, ¶ 9, 289 P.3d

600. “If the legal right to attorney fees is established by contract,

Utah law clearly requires the court to apply the contractual

2. Indeed, we express no opinion about the correctness of either of

the grounds for the district court’s decision.

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‐ CA 2013 UT App 129 6Horne Family Trust v. Wardley/McLachlan

attorney fee provision and to do so strictly in accordance with the

contract’s terms.” Jones v. Riche

, 2009 UT App 196, ¶ 2, 216 P.3d 357

(mem.). In relevant part, the Agreement states, “Should legal action

be necessary to enforce, construe, cancel, terminate, rescind or

recover for the breach of the provisions of this Agreement, the

prevailing party shall be entitled to recover all costs of suit,

including reasonable attorney’s fees incurred herein.”

¶15 The Trust’s complaint alleges breach of contract, and the

Wardley Parties successfully defended against that claim based on

the Trust’s receipt of full payment and accord and satisfaction. See

Utah R. Civ. P. 8 (“A party shall set forth affirmatively in a

responsive pleading accord and satisfaction,

. . . payment,

. . . and

any other matter constituting an avoidance or affirmative de

‐ fense.”). As a result, the Wardley Parties are the prevailing party in

a legal action brought to enforce the Agreement.

¶16 Nevertheless, the Trust contends that the Wardley Parties

are not entitled to attorney fees because the district court granted

summary judgment only on the basis of a purported accord and

satisfaction. Because an accord and satisfaction is a separate

contract from the Agreement and did not have its own attorney fee

provision, the Trust contends that the Agreement’s attorney fee

provision is not applicable. See, e.g.

, Quealy v. Anderson

, 714 P.2d

667, 669 (Utah 1986) (“[A]ttorney fees are not recoverable by either

party unless there was a provision for them in the accord and

satisfaction.”); Golden Key Realty, Inc. v. Mantas

, 699 P.2d 730, 734

(Utah 1985) (“Since the plaintiffs have not prevailed in enforcing

the listing agreement and since there was no provision in the

accord and satisfaction for attorney’s fees, they are not entitled to

recover them.”). But see Dishinger v. Potter

, 2001 UT App 209,

¶¶ 38–39, 47 P.3d 76 (remanding for a determination of whether

either party should be awarded attorney fees as the prevailing

party under a lease after concluding that there was an accord and

satisfaction). In this case, however, we have concluded that the

district court also granted summary judgment on the ground that

the Wardley Parties had fully performed because the Trust

20120263

‐ CA 2013 UT App 129 7Horne Family Trust v. Wardley/McLachlan

accepted the $473,422.96 as final payment. The district court denied

fees on the basis that the acceptance of that amount as final

payment also created a new contract. On appeal, the Wardley

Parties argue that the district court “improperly conflated” their

defenses by suggesting that both payment and accord and satisfac

‐

tion created a new contract unconnected with the Agreement.

¶17 We agree that the district court’s decision conflates the two

theories. “Generally, formation of a contract requires an offer, an

acceptance, and consideration.” Cea v. Hoffman

, 2012 UT App 101,

¶ 24, 276 P.3d 1178. In the case of an accord and satisfaction, the

consideration requirement is satisfied by the settlement of a

dispute between the parties. Golden Key Realty

, 699 P.2d at 733 (“As

a general rule, a creditor who agrees to accept a lesser amount than

is due is not bound by his agreement, because of lack of consider

‐

ation. However, where there is a bona fide dispute as to the

amount due, sufficient consideration exists.” (citation omitted)).

Where there is no dispute as to the amount owed, the defense of

accord and satisfaction is unavailable. See England v. Horbach

, 944

P.2d 340, 344 (Utah 1997) (“[T]here could have been no accord and

satisfaction

. . . because the first element of accord and satisfac

‐

tion—the existence of a bona fide dispute or uncertainty over an

unliquidated amount—was not present.”). 3 Where the parties are

certain as to the amount owed, but are actually mistaken, the

acceptance of the payment “represent[s] merely the conclusion of

the parties’ original contract

. . . .” See id. The Wardley Parties

argued both payment and accord and satisfaction, and the district

court ruled in favor of the Wardley Parties on each. 4 Under the

3. In the absence of a dispute, there is no consideration for the Trust

to enter into a new contract to accept less than was due under the

Agreement.

4. Although the theories are mutually exclusive because accord and

satisfaction is dependent upon a dispute over the amount owed

and payment is dependent upon the absence of a dispute, see

(continued...)

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‐ CA 2013 UT App 129 8Horne Family Trust v. Wardley/McLachlan

payment theory, the parties merely concluded their original

Agreement and the attorney fees provision therein remains

applicable. See id.

¶18 The Wardley Parties prevailed in the Trust’s breach of

contract action and are entitled to recover their attorney fees under

the plain language of the Agreement. Because the Wardley Parties

“have also prevailed on appeal, they are entitled to their reasonable

attorney fees incurred in this court.” See Gilbert Dev. Corp. v.

Wardley Corp

., 2010 UT App 361, ¶ 58, 246 P.3d 131. We remand to

the district court for a calculation of those fees.

¶19 In sum, the district court’s grant of summary judgment

rested on two independent alternative grounds, and we affirm that

order summarily because the Trust challenges only one of those

grounds on appeal. The Wardley Parties were the prevailing party

in the Trust’s breach of contract action and are entitled to recover

their attorney fees. Accordingly, we reverse the district court’s

denial of the Wardley Parties’ request for attorney fees and remand

for a determination of the Wardley Parties’ reasonable attorney fees

incurred in the district court and on appeal.

4. (...continued)

generally England

, 944 P.2d at 344

, the Trust has challenged only the

determination that there was an accord and satisfaction.

20120263

‐ CA 2013 UT App 129 9