Opinion ID: 2525492
Heading Depth: 2
Heading Rank: 5

Heading: sme's breach of third-party beneficiary claims against tvsa, gsbs, and reaveley

Text: ¶ 46 SME's fifth and final claim alleges direct and assigned rights of a third-party beneficiary under the County TVSA, TVSA-GSBS, and TVSA-Reaveley contracts. Specifically, SME argues that it has enforceable third-party beneficiary rights under the respective contracts because (1) the County-TVSA contract was expressly incorporated into the TVSA-GSBS and TVSA-Reaveley contracts, making the County a third-party beneficiary of the TVSA-GSBS and TVSA-Reaveley contracts, and SME, as assignor of the County, assumes the County's status, [11] and (2) even if SME, standing in the shoes of the County, does not have a third-party beneficiary claim, SME, as subcontractor to and assignee of Hughes-Hunt, was an intended third-party beneficiary of the County-TVSA, TVSA-GSBS, and TVSA-Reaveley contracts. [12] ¶ 47 Third-party beneficiaries are `persons who are recognized as having enforceable rights created in them by a contract to which they are not parties and for which they give no consideration.' Rio Algom Corp. v. Jimco Ltd., 618 P.2d 497, 506 (Utah 1980) (quoting 4 Arthur L. Corbin, Corbin on Contracts § 774, at 6 (1960)). For a third party to have enforceable rights under a contract, the intention of the contracting parties to confer a separate and distinct benefit upon the third party must be clear. Id. (emphasis added); see also American Towers Owners Assoc., Inc. v. CCI Mech., Inc., 930 P.2d 1182, 1188 (Utah 1996); Ron Case Roofing & Asphalt Paving, Inc. v. Blomquist, 773 P.2d 1382, 1386 (Utah 1989). Accordingly, a party only incidentally benefitted has no right to recover under the contract. American Towers, 930 P.2d at 1188; Rio Algom, 618 P.2d at 506. Indeed, this court has stated that `[i]t is not enough that the parties to the contract know, expect or even intend that others will benefit from the [contract]. . . . The contract must be undertaken for the plaintiff's direct benefit and the contract itself must affirmatively make this intention clear.' American Towers, 930 P.2d at 1188 (quoting 155 Harbor Drive Condominium Ass'n v. Harbor Point, Inc., 209 Ill.App.3d 631, 154 Ill.Dec. 365, 568 N.E.2d 365, 374-75 (1991)). ¶ 48 Turning to the facts of this case, neither the TVSA-GSBS contract nor the TVSA-Reaveley contract evidences any intention on the part of the contracting parties to confer a separate and distinct benefit upon the County. Indeed, it is undisputed that GSBS refused to sign its contract with TVSA because the contract did not contain, among other things, an express disclaimer of any intention to create contractual rights in third parties, including the County. Moreover, even assuming, as SME argues, that GSBS is nevertheless bound by the TVSA-GSBS contract because it performed in accordance with the terms of the contract, SME has failed to cite to any contractual language in the TVSA-GSBS or the TVSA-Reaveley contract evidencing an intent to confer a direct benefit on the County that was separate and distinct from those conferred upon TVSA. Rather, an examination of the terms of the TVSA-GSBS and TVSA-Reaveley contracts indicates that the contracts were undertaken not for the County's direct benefit, but for the sole benefit of TVSA. At most, the County was merely an incidental beneficiary of the TVSA-GSBS and TVSA-Reaveley contracts. ¶ 49 Similarly, there is nothing in the County-TVSA, TVSA-GSBS, and TVSA-Reaveley contracts suggesting that the contracting parties clearly and affirmatively contracted to confer a separate and distinct benefit upon SME or Hughes-Hunt. To the contrary, the County-TVSA contract, which SME argues was expressly incorporated into the TVSA-GSBS and TVSA-Reaveley contracts, explicitly disclaims any independent duty or liability to the contractors or subcontractors working on the project. Specifically, the contract states: It is understood and agreed that the CONSULTANT's services under this agreement . . . shall not create for the CONSULTANT any independent duties, liabilities, agreements, or rights to or with the contractor, subcontractor, their employees, or any third persons. (Emphasis added.) If TVSA owed no duties to SME and Hughes-Hunt, obviously TVSA's consultants could not owe any duties to SME or Hughes-Hunt in the performances of the same services. ¶ 50 Despite the contractual disclaimer of independent duties to third parties, SME argues that TVSA, GSBS, and Reaveley generally knew that a contractor and/or one or more subcontractors involved in constructing the project would use their design documents to build portions of the project, and that this is sufficient to create third-party beneficiary rights in SME. However, as we held in American Towers, `With respect to construction contracts . . . [i]t is not enough that the parties to the contract know, expect or even intend that others will benefit. . . . The contract must be undertaken for the plaintiff's direct benefit and the contract itself must affirmatively make this intention clear.' 930 P.2d at 1188 (quoting 155 Harbor Drive Condominium Ass'n, 154 Ill.Dec. 365, 568 N.E.2d at 374-75); accord Detweiler Bros. v. John Graham & Co., 412 F.Supp. 416, 419 (E.D.Wash.1976) (holding that owner-architect contract did not create third-party beneficiary rights in subcontractor); Collins Co. v. City of Decatur, 533 So.2d 1127, 1132-34 (Ala.1988) (holding that owner-architect contract did not create enforceable third-party beneficiary rights in contractor); Linde Enters., Inc. v. Hazelton City Auth., 412 Pa.Super. 67, 602 A.2d 897, 900-01 (1992) (holding that owner-engineer contract did not create enforceable third-party rights in general contractor); Valley Landscape Co. v. Rolland, 218 Va. 257, 237 S.E.2d 120, 122-24 (1977) (holding that owner-landscape architect contract did not create third-party rights in contractor). ¶ 51 In sum, the respective contracts at issue in this case do not evidence an intent on the part of the contracting parties to confer a separate and distinct benefit upon the County, Hughes-Hunt, or SME. Accordingly, the trial court correctly dismissed SME's direct and assigned breach of third-party beneficiary claims against TVSA, GSBS, and Reaveley as a matter of law.