2013 UT App 185

_________________________________________________________



### T HE 

### U TAH 

### C OURT OF 

### A PPEALS

M C C LEVE P ROPERTIES

, LLC,

Plaintiff, Appellee, and Cross

‐ appellant,

v.

D. R AY H ULT F AMILY L TD

. P ARTNERSHIP AND D. R AY H ULT

, Defendants, Appellants, and Cross

‐ appellees.

Memorandum Decision

No. 20110594

‐ CA

Filed July 26, 2013

Third District, Salt Lake Department

The Honorable Stephen L. Henriod

The Honorable Robert K. Hilder 1

No. 070905164

Jon C. Heaton and M. David Eckersley, Attorneys

for Appellants

Bruce J. Nelson and Jeffrey S. Williams, Attorneys

for Appellee

J UDGE S TEPHEN L. R OTH authored this Memorandum Decision,

in which J UDGES W ILLIAM A. T HORNE J R

. and

M ICHELE M. C HRISTIANSEN concurred.

ROTH, Judge:

¶1 D. Ray Hult Family Ltd. Partnership and D. Ray Hult

(collectively, Hult) appeal from the district court’s entry of partial

1 All of the decisions from which the parties appeal were

made by Judge Stephen L. Henriod, but because “[n]o final

Court Order of disposition ha[d] been issued,” there was no final

order for purposes of seeking appellate review. The parties

therefore stipulated to a final order, which was entered by Judge

Robert K. Hilder.McCleve Properties v. D. Ray Hult Family

summary judgment in favor of McCleve Properties, LLC (McCleve)

and its subsequent award of income tax

‐ related damages to

McCleve. McCleve cross

‐ appeals, asserting that the district court

erroneously denied its request for additional damages for loss of

use and delayed amortization. We affirm the grant of summary

judgment and the district court’s denial of loss of use and

amortization damages. We reverse the award of tax

‐ related

damages and remand for further proceedings consistent with this

decision.

¶2 The background facts are undisputed. In 2004, Marshall

Industries, Inc. (Marshall) rented commercial space (the Premises)

from Hult pursuant to a lease agreement (the Lease) with a term of

nine years. According to the Lease, Marshall could not “assign this

Lease or sublet the Premises or any part thereof with out the prior

written consent of [Hult].” The Lease also contained a provision

(the purchase option) affording Marshall or its assigns “an ‘Option

to Purchase’ the Premises, which option may be exercised during

a window of time from March 1, 2005, through the end of February

2007.” To exercise that option, Marshall, or its assignee, was

required to give Hult “written notice of intent to purchase the

Premises and then complete the purchase transaction within 120

days thereafter, unless [Hult] requests that the closing date

. . . be

extended for up to sixty (60) days.” The Lease also contemplated

that Marshall would “reasonably cooperate with [Hult] on [a]

Section 1031 tax deferred exchange.”

¶3 On October 30, 2006, Marshall notified Hult, by a notarized

letter printed on Marshall letterhead, that it had “assign[ed the]

‘Option to Purchase’ outlined in [the Lease] to McCleve.” The

Marshall letter was signed by Dennis J. Savage, as President of

Marshall, and by Randall D. McCleve, as General Partner of

McCleve. The letter did not seek written permission for the

assignment but simply noted that Marshall had assigned the

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‐ CA 2013 UT App 185 2McCleve Properties v. D. Ray Hult Family

purchase option. The next day, Mr. McCleve, again in his capacity

as McCleve’s General Partner, sent Hult, on McCleve letterhead

and with notarized signature, a “written notice that the purchase

option is being exercised as per the [L]ease.” In the letter, McCleve

explained that it intended to employ a section 1031 exchange in the

purchase of the Hult property in order to attain a tax deferral on

the proceeds of other rental property it had sold. McCleve advised

that to accomplish its purpose, “[t]his exchange must take place no

later than March 31, 2007,” but the closing could occur sooner if

Hult so desired. The letter further stated that McCleve was

exercising the purchase option pursuant to the assignment from

Marshall and that a copy of the “[w]ritten notice of this assignment

is included.” A copy of the assignment was attached to the letter.

¶4 Hult responded on November 20, 2006, with a letter

addressed to Randall D. McCleve at Marshall’s address. Hult

confirmed receipt of the McCleve letter “notifying

. . . that you are

going to exercise your Purchase Option as per” the Lease and

explained that Hult “anticipate[d] waiting for a March 2007

closing,” although it would evaluate whether an earlier date was

possible. Hult expressed no concern with Marshall’s assignment of

the purchase option to McCleve without Hult’s written consent,

nor did Hult acknowledge that the anticipated closing in March

2007 would occur beyond the 120

‐ day period specified by the

option for completing the purchase once the option was exercised.

In March 2007, McCleve contacted Hult to make arrangements for

the closing. In response, Hult’s attorney informed McCleve, for the

first time, that Hult would not participate in any closing,

apparently because the closing date was outside the purchase

option’s120

‐ day closing period, which had ended on February 28,

2007.

¶5 McCleve then filed this suit, seeking specific performance

and damages resulting from breach of contract. The parties filed

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‐ CA 2013 UT App 185 3McCleve Properties v. D. Ray Hult Family

cross

‐ motions for summary judgment, with Hult asserting that

McCleve had failed to strictly comply with the terms of the Lease

either in obtaining the assignment or in exercising the purchase

option and McCleve claiming both that it had timely exercised the

purchase option and that Hult had waived any claim that the

assignment was void. McCleve attached to its motion copies of the

Lease and the three letters. In support of its opposition to

McCleve’s motion for summary judgment and its own cross

‐

motion, Hult attached the affidavit of D. Ray Hult, in which Mr.

Hult stated, in pertinent part,

2. At no time was I asked to, nor in fact did I, consent

to any assignment of any of the rights or obligations

contained in the Lease between [Hult] and

[Marshall].

. . . .

4. On November 20, 2006, I prepared a letter

addressed to Marshall Industries, Inc.

acknowledging receipt of the written Notice.

5. At the time I wrote the letter of November 20, 2006,

I did not review the underlying Option contained in

the Lease and was not aware that it required the

completion of the purchase within one hundred

twenty (120) days from receiving written notice.

6. At no time did I intend to waive any of the

requirements of the Option to Purchase and fully

intended that it be exercised in conformity with its

terms.

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‐ CA 2013 UT App 185 4McCleve Properties v. D. Ray Hult Family

¶6 Following argument, the district court granted McCleve’s

motion, concluding that Hult had waived strict compliance with

the terms of the Lease. Specifically, in response to Hult’s claim that

the Lease required Hult’s permission to assign the option

provision, the court said, “No one sought [Hult’s] permission

. . . [but t]he undisputed material facts before the Court,

demonstrate an inference of relinquishment, because [Hult]’s letter

made no attempt to assert the Lease’s requirement that [Hult’s]

permission must be first obtained.” The court further explained

that Hult’s use of “your” in describing McCleve’s intent to

“exercise your Purchase Option” “show[ed] that [Hult] accepted

the assignment, and offered little resistance to the fact that

[McCleve] was ‘going to exercise’ that option” instead of Marshall,

especially when viewed in light of the fact that Hult “expressed an

anticipated closing date that met the requirements of [McCleve]’s

prior letter.” Regarding Hult’s claim that the purchase option was

exercised outside the window contemplated by the Lease, the court

stated,

[Hult] signed the Lease agreement and agreed to its

terms. [Hult] agreed to [McCleve’s] request for a

March 2007 closing and again made utterly no

attempt to enforce the provisions of the Lease

. . . . This letter manifested [Hult]’s acquiescence to

[McCleve’s] assertion of its right to exercise the

purchase option in March 2007. The totality of the

circumstances, make patent, that as a matter of law,

[Hult] extended the deadline and waived [its] right

to now claim [McCleve] did not follow the Lease’s

[purchase option] deadlines.

¶7 While the court granted summary judgment to McCleve on

the issue of Hult’s waiver of the Lease requirements, the court

declined to make a contemporaneous award of specific

performance or damages “because issues of material fact remain as

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‐ CA 2013 UT App 185 5McCleve Properties v. D. Ray Hult Family

to what the appropriate remedies are[] and whether the remedy

should be damages or specific performance.” McCleve

subsequently moved for an order of specific performance, which

the court granted, and other damages, on which the court reserved

its ruling. When Hult then refused to complete the sale, McCleve

moved for an order to compel. The court ordered Hult to close the

sale of the Premises, found Hult in contempt, and awarded

McCleve its attorney fees, costs, and expenses resulting from Hult’s

delay in completing the purchase transaction. After the transaction

was completed, McCleve filed a motion seeking additional

damages from Hult’s breach of the Lease and its earlier contempt

in failing to close. McCleve estimated its total damages, including

“(1) interest on tenant security deposits, (2) closing costs, (3) cash

flow payments, (4) amortization benefits, (5) income taxes paid,

and (6) attorneys’ fees,” at $144,000. The court ”granted

[McCleve]’s damages for (1) interest on security deposits,

(2) closing costs, (3) income taxes paid, and (4) attorney’s fees,”

which amounted to an award of $83,354.

¶8 Hult now appeals the district court’s decision to grant

summary judgment to McCleve on the issue of waiver and to deny

Hult’s own motion for summary judgment on this issue. Both

parties appeal the damages award. Hult contends that the court

erred in awarding McCleve $52,096 in compensation for additional

income taxes McCleve paid as a result of its contemplated section

1031 exchange having been thwarted by Hult’s failure to close,

asserting that such damages “could not have been contemplated by

the parties to the contract” because McCleve itself was not a party

to the original Lease agreement. For its part, McCleve argues that

the court erred in not awarding additional damages, specifically

McCleve’s loss of use of the Premises and the loss of principal

amortization on the loan it took out to pay for the Premises

between the time McCleve should have acquired the Premises in

March 2007 and the time that McCleve actually acquired it in July

2008.

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‐ CA 2013 UT App 185 6McCleve Properties v. D. Ray Hult Family

I. Summary Judgment

¶9 “Summary judgment is proper only where ‘there is no

genuine issue as to any material fact and

. . . the moving party is

entitled to a judgment as a matter of law.’” Peterson v. Coca

‐ Cola

USA

, 2002 UT 42, ¶ 7, 48 P.3d 941 (quoting Utah R. Civ. P. 56(c)).

“However, unlike most cases, the legal conclusions underlying a

trial court’s grant of summary judgment on a waiver issue are

reviewed with some measure of deference.” IHC Health Servs., Inc.

v. D & K Mgmt., Inc.

, 2003 UT 5, ¶ 6, 73 P.3d 320. “Waiver is an

intensely fact dependent question.” Id. ¶ 7. This means that

[i]n a waiver case decided on a motion for summary

judgment, we must first inquire whether there are

disputed material facts. If there are no disputed

material facts, we consider all undisputed material

facts in the light most favorable to the nonmoving

party before determining whether the trial court’s

decision on the application of the law of waiver to

those facts falls within the bounds of its discretion.

Id. ¶ 6 (citation omitted).

¶10 “‘A waiver is the intentional relinquishment of a known

right. To constitute waiver, there must be [(1)] an existing right,

benefit or advantage, [(2)] a knowledge of its existence, and [(3)] an

intention to relinquish it.’” Geisdorf v. Doughty

, 972 P.2d 67, 72

(Utah 1998) (quoting Soter’s, Inc. v. Deseret Fed. Sav. & Loan Ass’n

,

857 P.2d 935, 940 (Utah 1993)). A waiver may be express or

implied, but it must be distinctly made under the totality of the

circumstances. Id. In the contract context, a waiver “occurs when

a party to a contract intentionally acts in a manner inconsistent

with its contractual rights, and, as a result, prejudice accrues to the

opposing party or parties to the contract.” Mid– America Pipeline Co.

v. Four–Four, Inc.

, 2009 UT 43, ¶ 17, 216 P.3d 352 (citation and

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‐ CA 2013 UT App 185 7McCleve Properties v. D. Ray Hult Family

internal quotation marks omitted). The Utah Supreme Court,

however, has cautioned “trial courts to be especially careful in their

examination of the evidence in questions of waiver and option

performances, especially where

. . . waiver is merely implied.”

Geisdorf

, 972 P.2d at 72. Nevertheless, even though the optionee

ordinarily must act “precisely according to the terms of the option”

when it seeks to exercise a purchase option, id. at 70 (citation and

internal quotation marks omitted), strict compliance may be

excused by the optionor’s waiver so long as that waiver is distinctly

made in a manner that is “unambiguous,” id. at 72.

¶11 Hult claims that the district court erred in determining that

it had unambiguously waived its right to enforce the Lease’s

assignment and purchase option provisions by means of the Hult

letter. Hult’s claim rests on two interdependent arguments. First,

it asserts that Mr. Hult’s affidavit statement “denying the intent to

waive” the requirements for an assignment under the Lease,

regardless of anything to the contrary in the Hult letter, raises an

issue of fact sufficient to survive summary judgment. Second, Hult

asserts that it could not have waived its right to enforce the time

restrictions governing exercise of the purchase option when,

because Mr. Hult had not read the Lease for some time, he was not

even aware of the relevant Lease provisions at the time he wrote

the letter. 2 Thus, we are presented with a question of whether

2 At oral argument before this court, Hult focused on a

third basis for reversing the grant of summary judgment to

McCleve: Hult was confused about who was exercising the

purchase option because it thought Mr. McCleve was acting on

behalf of Marshall, for which he was an agent. Hult asserted that

the fact that the November 20, 2006 Hult letter was addressed to

Mr. McCleve at Marshall Industries evidenced that confusion.

Hult did not make this argument to the district court. Conse

‐ (continued...)

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‐ CA 2013 UT App 185 8McCleve Properties v. D. Ray Hult Family

Hult’s unambiguous acceptance of the Marshall letter assigning the

Lease purchase option to McCleve and the McCleve letter’s terms

for exercising that option can be overcome by Hult’s purported

lack of actual intention to waive strict compliance with the Lease

terms. See generally id. (requiring a waiver to be intentional,

although it may be implied).

¶12 In the context of contract formation, the Utah appellate

courts have held that “each party has the burden to read and

understand the terms of a contract before he or she affixes his or

her signature to it.” John Call Eng’g, Inc. v. Manti City Corp.

, 743 P.2d

1205, 1208 (Utah 1987) (reversing the trial court’s determination

that there was no “meeting of the minds” as a result of the city’s

failure to read the contract terms). “[S]ophisticated business parties

are charged with knowledge of the terms of the contracts they enter

into”; as a consequence, such parties are “not permitted to show

that [they] did not know [a contract’s] terms, and in the absence of

fraud or mistake [they] will be bound by all its provisions, even [if

they have] not read the agreement and do not know its contents.”

ASC Utah, Inc. v. Wolf Mountain Resorts, LC

, 2010 UT 65, ¶ 28, 245

P.3d 184 (citation and internal quotation marks omitted); accord

2 (...continued)

quently, it is unpreserved for our review. See 438 Main St. v. Easy

Heat, Inc.

, 2004 UT 72, ¶ 51, 99 P.3d 801 (“[I]n order to preserve

an issue for appeal[,] the issue must be presented to the trial

court in such a way that the trial court has an opportunity to rule

on that issue

. . . . Issues that are not raised at trial are usually

deemed waived.” (alterations in original) (citations and internal

quotation marks omitted)). In addition, we generally decline to

consider an argument made for the first time during oral argu

‐

ment. See, e.g., In re Gregory

, 2011 UT App 170, ¶ 10, 257 P.3d 495

(refusing to consider “unbriefed argument raised for the first

time at oral argument”).

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‐ CA 2013 UT App 185 9McCleve Properties v. D. Ray Hult Family

John Call Eng’g

, 743 P.2d at 1208 (“A party may not sign a contract

and thereafter assert ignorance or failure to read the contract as a

defense.”); cf. Copper State Leasing Co. v. Blacker Appliance &

Furniture Co.

, 770 P.2d 88, 93 (Utah 1988) (explaining that, absent

misrepresentation, a party to a contract has an obligation “to take

reasonable steps to inform himself, and to protect his own

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

¶13 These principles of contract formation and enforcement

were applied in the waiver context in ASC Utah, Inc. v. Wolf

Mountain Resorts, LC, 2010 UT 65, 245 P.3d 184. In that case, the

Utah Supreme Court considered whether the district court

properly determined that the defendant, Wolf Mountain, had

waived its right to assert an arbitration provision in the underlying

contract. Id. ¶¶ 9, 26–31. Wolf Mountain contended that “it could

not relinquish a ‘known’ right because it originally believed that it

did not have the right to pursue arbitration.” Id. ¶ 26. The supreme

court disagreed, stating that the underlying contract contained a

clear arbitration provision and that Wolf Mountain, as a

“sophisticated business part[y],” could not claim its own

misunderstanding or ignorance of the contract provision as a

defense when its “actions

. . . clearly manifest[ed] an intent to

pursue litigation rather than arbitration.” Id. ¶¶ 27–28, 31; see also

Geisdorf

, 972 P.2d at 68–69, 72–73 (holding that a landlord had not

waived her right to strictly enforce a lease option agreement when

she failed to notify the tenant that the renewal option could only be

exercised in writing, based on its reasoning that the commercial

lessee had an obligation to read the contract and take reasonable

steps to protect his own interest). We do not see any reason why

these principles would not be applicable to the analysis of waiver

in the purchase option context.

¶14 Here, there is no dispute that the Lease clearly describes

both the requirement that Marshall obtain the consent of Hult

before making any assignment and the requirements for exercise

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‐ CA 2013 UT App 185 10McCleve Properties v. D. Ray Hult Family

of the purchase option. Marshall’s October 30, 2006 letter to Hult

stated that Marshall had “assign[ed the] ‘Option to Purchase’

outlined in [the Lease] to McCleve Properties, LLC.” And

McCleve’s own letter, dated October 31, 2006, reiterated that

“Marshall Industries, Inc. has assigned this purchase option to

McCleve Properties, Inc.” and attached a copy of the assignment

itself. At that point, Hult had unequivocal notice that the purchase

option had been assigned and that the assignment had occurred

without Hult’s prior consent. McCleve’s letter further informed

Hult “that the purchase option is being exercised as per the

[L]ease” to facilitate a section 1031 exchange, which had to “take

place no later than March 31, 2007.” The outer bounds of the

closing period that McCleve thus described was clearly beyond the

120

‐ day period in which the purchase transaction must be

completed under the terms of the Lease. The two letters left no

room for doubt that the purchase option had been assigned to

McCleve and that McCleve was exercising the option. 3 Hult’s

written response was itself unambiguous, noting no objection to

the assignment having been made without Hult’s consent and

unequivocally (though with some regret) acknowledging

McCleve’s exercise of the purchase option on the terms McCleve

set forth. Indeed, Hult itself designated March—clearly beyond the

option’s 120

‐ day closing period—as its preferred time frame for

closing. By unequivocally acknowledging Marshall’s assignment

of the purchase option to McCleve, accepting McCleve’s exercise

of the option, and suggesting a closing date outside the 120

‐ day

3 Indeed, other than the claim, raised for the first time at

oral argument, that Hult did not understand that Mr. McCleve

was exercising the purchase option on behalf of McCleve Proper

‐

ties, LLC, and not as an agent for Marshall, Hult has not asserted

that the Marshall or McCleve letters misled or deceived it about

Marshall’s and McCleve’s intentions concerning the assignment

and exercise of the purchase option.

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‐ CA 2013 UT App 185 11McCleve Properties v. D. Ray Hult Family

closing window, Hult performed “intentional[] acts in a manner

inconsistent with its contractual rights.” See Mid–America Pipeline

Co.

, 2009 UT 43, ¶ 17. Furthermore, “as a result” of Hult’s

unambiguous acceptance of McCleve’s terms for exercise of the

purchase option, which did not conform to the requirements of the

Lease, “prejudice accrue[d] to” McCleve when Hult later attempted

to enforce the Lease as written. See id. Under these facts, the district

court correctly determined that Hult had waived its right to strictly

enforce the pertinent Lease provisions. Waiver eliminated Hult’s

defense to McCleve’s breach of contract claims, rendering

summary judgment in favor of McCleve appropriate. We therefore

affirm the district court’s summary judgment in favor of McCleve

and denial of Hult’s motion for summary judgment.

II. Damages

¶15 We now consider the parties’ claims regarding the district

court’s damages award.

A. Income Tax Liability

¶16 Hult contends that the district court erred in awarding

McCleve $52,096 in general damages for income taxes it owed as a

result of the failed tax

‐ deferred section 1031 exchange. Hult argues

that such damages were not general damages, but consequential

damages, which required a showing by McCleve that the damages

were “within the contemplation of the parties at the time they

contracted,” see Castillo v. Atlanta Gas Co.

, 939 P.2d 1204, 1209 (Utah

Ct. App. 1997) (citation and internal quotation marks omitted).

Hult contends that “any damages flowing from the failed exchange

could not have been contemplated by the parties to the contract”

because “the purported assignee of the contract wasn’t a party to

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‐ CA 2013 UT App 185 12McCleve Properties v. D. Ray Hult Family

the agreement when it was entered.” 4 McCleve does not challenge

Hult’s contention that the income tax liability it incurred was more

in the nature of consequential damages than general damages, but

it nevertheless contends that the award was proper because Hult

was told that McCleve planned to acquire the Premises as part of

a section 1031 exchange when McCleve notified Hult of its intent

to exercise the purchase option.

¶17 “Damages recoverable for breach of contract include both

general [or direct] damages, i.e.

, those flowing naturally from the

breach, and consequential [or special] damages, i.e.

, those

reasonably within the contemplation of, or reasonably foreseeable

by, the parties at the time the contract was made.” Beck v. Farmers

Ins. Exch.

, 701 P.2d 795, 801 (Utah 1985). In other words, general

damages are “those resulting from the ordinary and obvious

purpose of the contract,” which in the case of an option agreement

“would be the ‘loss of the bargain’ represented by the difference

between the market value of the [property] and the option price.”

Ranch Homes, Inc. v. Greater Park City Corp.

, 592 P.2d 620, 624 (Utah

1979); see also 22 Am. Jur. 2d Damages § 41 (2003) (“In contract cases,

general damages are those that flow naturally from the breach of

a contract

. . . [and] include such items as loss of the bargain

. . . .”

(citations omitted)). By definition then, the category of general

damages does not seem to include adverse tax consequences that

stemmed from McCleve’s inability to complete a planned section

1031 property exchange as a result of Hult’s refusal to convey the

4 Hult also asserts that McCleve did not actually incur any

unexpected income taxes, as a section 1031 exchange merely

defers the payment of taxes, rather than eliminate them. Hult

does not make an argument for reversing the damages award on

that basis, however, but instead asserts that McCleve’s

“mischaracterization” of the tax consequences of a section 1031

exchange “is actually irrelevant” to this appeal.

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‐ CA 2013 UT App 185 13McCleve Properties v. D. Ray Hult Family

Premises after McCleve exercised the purchase option. Rather, such

damages “arise from the special circumstances of the case” and are

therefore consequential or special damages. Ranch Homes

, 592 P.2d

at 624; see also 22 Am. Jur. 2d Damages § 41 (“Special damages, on

the other hand, are other foreseeable damages within the

reasonable contemplation of the parties at the time the contract was

made

. . . [and] flow

. . . from unusual circumstances which were

known to the parties when they contracted.” (citation omitted)).

¶18 Therefore, to recover its tax losses as consequential

damages, McCleve had to prove “(1) that [the tax loss] damages

were caused by the contract breach; (2) that [those] damages ought

to be allowed because they were foreseeable at the time the parties

contracted; and (3) the amount of consequential damages within a

reasonable certainty.” See Mahmood v. Ross

, 1999 UT 104, ¶ 20, 990

P.2d 933. Although the briefing suggests that McCleve satisfied its

burden as to the first and third factors, the parties present

conflicting facts on the question of whether McCleve’s tax liability

was foreseeable at the time the parties contracted. See Ranch Homes

,

592 P.2d at 624 (explaining that for damages to be foreseeable,

“[m]ere knowledge of possible harm is not enough; the defendant

must have reason to foresee, as a probable result of the breach, the

damages claimed”). And because the district court awarded the tax

liability as general damages, it did not undertake any analysis of

foreseeability in its written minute entries or order regarding

damages. Without any findings relating to the foreseeability of the

tax consequences if Hult failed to perform the purchase option

agreement, this court is not equipped to assess the propriety of the

award for tax liability as consequential damages. Accordingly, we

remand the case to the district court for the limited purpose of

assessing whether McCleve’s tax liability as a consequence of the

failed 1031 exchange ought to be assessed against Hult as

consequential damages.

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‐ CA 2013 UT App 185 14McCleve Properties v. D. Ray Hult Family

¶19 On remand, the district court will likely be presented with

the question of when the contemplation of tax consequences from

a failed option contract had to occur in order to meet the

foreseeability prong of the consequential damages analysis. For

example, must the kind of loss McCleve suffered in connection

with the exercise of the option agreement have been foreseeable to

Marshall and Hult at the time they entered into the Lease or only

at the time McCleve sought to exercise the purchase option?

Ordinarily, we would endeavor to provide the district court with

guidance on a legal issue likely to arise on remand. See Wilson v.

IHC Hosps., Inc.

, 2012 UT 43, ¶ 79, 289 P.3d 369. Neither party,

however, has addressed this question in briefing, and we therefore

believe it is better to leave this issue for the district court to address

in the first instance based on appropriate briefing by the parties. See

State v. James

, 819 P.2d 781, 795 (Utah 1991) (noting that appellate

courts only provide guidance for purposes of remand on “[i]ssues

that are fully briefed ” (emphasis added)); Medley v. Medley

, 2004 UT

App 179, ¶ 11 n.6, 93 P.3d 847 (declining, “in the exercise of judicial

discipline—if not judicial economy—” to provide guidance on

remand where there was “no consensus” on “what any such

guidance should be”). Accordingly, we remand to the district court

for factual and legal determinations on this issue.

B. Loss of Use of the Premises

¶20 McCleve challenges the district court’s denial of damages for

its loss of use of the Premises as consequential damages.

Specifically, McCleve requested $63,738 in compensation for

“positive cash flow from rents [it would have] received” had the

conveyance occurred as scheduled in March 2007. To support its

claim, McCleve attached to its damages memorandum a chart, in

which it quantified the monthly net “positive cash flow” it had

expected to receive each month after making a “hypothetical loan

payment” and collecting rent. McCleve did not offer any factual

basis or other foundation for the rental rate or other figures it

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‐ CA 2013 UT App 185 15McCleve Properties v. D. Ray Hult Family

presented. The district court, in its written ruling, declined to

award McCleve damages for the loss of use of the Premises

because it failed to “produce a sufficient evidentiary basis to

establish the fact of damages” when it “provided [only] a computer

generated table, listing a hypothetical loan payment and principal

and interest based on the hypothetical loan” without “any

foundation for

. . . the hypothetical information.” (Citation

omitted.)

¶21 McCleve now challenges the district court’s ruling on the

basis that its damages were foreseeable at the time the contract was

made and reasonably certain. The district court’s ruling, however,

rejected McCleve’s claim not because the loss of use damages it

claimed were not recoverable as consequential damages, but

because McCleve failed to provide an evidentiary foundation for

those damages. Because McCleve failed to challenge the basis of

the court’s ruling and because such an evidentiary decision appears

to be within the court’s discretion, we affirm the court’s denial of

the loss of use damages. See generally Benns v. Career Serv. Review

Office

, 2011 UT App 362, ¶ 2, 264 P.3d 563 (per curiam) (“If an

appellant does not challenge the lower court’s basis for its

judgment, the lower court’s determination is placed beyond the

reach of further appellate review

. . . .”); State v. Burke

, 2011 UT App

168, ¶ 17, 256 P.3d 1102 (“A trial court’s determination that there

was [or was not] a proper foundation for the admission of evidence

. . . [is reviewed for] an abuse of discretion.” (omission and second

alteration in original) (citation and internal quotation marks

omitted)).

C. Amortization

¶22 Finally, McCleve contends that the district court

inappropriately denied its claim for consequential damages

resulting from the loss of amortization benefits it would have

enjoyed had the sale occurred in March 2007 rather than sixteen

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‐ CA 2013 UT App 185 16McCleve Properties v. D. Ray Hult Family

months later as it actually did. According to McCleve, because “[a]

portion of the loan payments amortizes the unpaid principal of the

loan, reducing the amount of the loan each month,” it would have

reduced its total loan balance by $15,824 between March 2007,

when the sale should have occurred, and July 2008, when the sale

actually took place. McCleve, however, has not lost any of the

benefit of amortization but merely has had the benefit delayed, i.e.,

it reduced the loan balance and built up equity between July 2008

and November 2009 as it would have between March 2007 and July

2008. Even if such damages were recoverable in principle, an issue

that we do not decide, McCleve did not provide any evidence to

the district court to demonstrate any loss caused by the delay, for

example that the later interest rate was higher or even that there

was a net loss based on present value principles. We therefore

affirm the district court’s denial of amortization damages.

III. Conclusion

¶23 In summary, Hult unambiguously accepted McCleve’s clear

statement that it would exercise the Lease’s purchase option, which

was assigned to it by Marshall, and suggested a closing date

outside the time frame contemplated by the Lease. This conduct

evidenced Hult’s intent to waive strict compliance with the Lease

provisions. Thus, there were no material facts in dispute regarding

Hult’s breach of the contract, and summary judgment was properly

awarded to McCleve.

¶24 We reverse the award of income tax damages to McCleve

because the court analyzed their appropriateness under the general

damages standard and remand for consideration under the

consequential damages standard. Other damages to McCleve were

appropriately denied where McCleve failed to provide an

evidentiary basis for the loss of use damages and the amortization

benefits of purchasing the Premises were merely delayed, rather

than lost.

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‐ CA 2013 UT App 185 17McCleve Properties v. D. Ray Hult Family

20110594

‐ CA 2013 UT App 185 18