Opinion ID: 2581167
Heading Depth: 2
Heading Rank: 3

Heading: Meeting the Sharing of Losses Element on Summary Judgment

Text: ¶ 19 Although a court may, as part of its fact-finding function at trial, infer an intent to share losses from the agreement, from the parties' actions, or from a profit-sharing provision, the issue before us is whether it is appropriate for a court to make such an inference on summary judgment. This question is especially important in a case such as this one, in which the other four elements of a joint venture are undisputed. We agree with the court of appeals that such an inference can be made  thereby making summary judgment appropriate  only if the opposing party does not present evidence to refute the inference. See Bassett, 530 P.2d at 2. ([When the] facts are not in dispute . . . the question of the relationship of the parties is a matter of law.). ¶ 20 Summary judgment is appropriate only if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Utah R. Civ. P. 56(c). Here, there were no factual disputes regarding the first four elements of a joint venture. Both parties conceded that the plain language of the Agreement between 51-SPR and Broadstone clearly demonstrated that there was a community of interest in the performance of the common purpose, a joint proprietary interest in the subject matter, a mutual right to control, [and] a right to share in the profits. Bassett, 530 P.2d at 2. ¶ 21 There was, however, a genuine issue of material fact regarding the loss-sharing element. EPCO may have carried its initial burden of providing evidence of an intent to share losses by relying on its interpretation of the Agreement, the actions of the parties, or the prima facie evidence of the profit-sharing provision, but the inquiry does not end there. Under rule 56(e) of the Utah Rules of Civil Procedure, after a motion for summary judgment has been made and supported, the nonmoving party may prevent summary judgment by set[ting] forth specific facts showing that there is a genuine issue for trial. Chimento's affidavit, which asserts that Hatch and Broadstone were solely responsible for the losses of the Northshore Project, raised a different, but plausible, interpretation of the Agreement. And as noted by the court of appeals, Chimento's interpretation of the Agreement was not a bald assertion; rather, when Chimento's affidavit testimony is viewed together with the Agreement's provisions, several of the provisions . . . lend credence to his assertions and give rise to reasonable inferences favorable to [51-SPR's] position. Ellsworth Paulsen Constr. Co., 2006 UT App 353, ¶ 15, 144 P.3d 261. Where, as here, equally plausible contrary inferences may be drawn, neither party should have been granted summary judgment. Goodnow v. Sullivan, 2002 UT 21, ¶ 18, 44 P.3d 704 (Wilkins, J., concurring). Thus, because 51-SPR raised a reasonable inference that it had no duty to share in the losses of the Northshore Project, a genuine issue of material fact existed and summary judgment was inappropriate. ¶ 22 Our holding is consistent with the District of Columbia Court of Appeals' holding in Beckman v. Farmer, 579 A.2d 618 (D.C.1990). In Beckman, Farmer brought a claim for breach of fiduciary duty against two attorneys with whom he practiced law (collectively, Beckman). Id. at 625-26. In order to assert this claim, Farmer first had to establish that a partnership existed between himself and Beckman; accordingly, Farmer filed a motion for summary judgment on the partnership claim. Id. at 626. There was no partnership agreement with a loss-sharing provision; thus, in his motion for summary judgment, Farmer proffered other evidence  such as a lease and promissory notes securing bank loans  to show that he had agreed to share in the losses of the firm. Id. at 628. In rebuttal, Beckman asserted that he and Farmer had agreed to an employer/employee relationship in which Farmer was not obligated to share in the losses of the firm, and Beckman supported this allegation with specific incidents and events, tax returns, and a profit-sharing agreement. Id. at 630-32. The superior court concluded that Beckman did not overcome Farmer's very substantial evidence; thus, it held that a partnership existed as a matter of law and granted Farmer's motion for summary judgment. Id. at 626. ¶ 23 The District of Columbia Court of Appeals reversed, holding that summary judgment was inappropriate on the partnership claim because Beckman had raised genuine issues of material fact regarding the duty to share losses. [4] Id. at 632. The court reasoned that Beckman's rebuttal evidence and the inferences drawn therefrom raised material issues of fact regarding whether the parties intended to share losses, which in turn raised questions of fact regarding the ultimate issue of the existence of a partnership. Id. at 629, 632. The court noted that although the inferences drawn from Beckman's evidence far from overwhelmingly supported Beckman's contention that Farmer had no duty to share in the losses, the inferences were sufficient to raise a genuine issue of material fact, thereby making the partnership determination inappropriate for summary judgment. Id. at 632. ¶ 24 Similarly, in this case, although EPCO's motion for summary judgment contained some evidence of an intent to share losses between 51-SPR and Broadstone, 51-SPR's rebuttal evidence  Chimento's affidavit and the inferences drawn from it  raised genuine issues of material fact regarding the loss-sharing element. Consequently, an issue of material fact remained regarding the ultimate question of whether a joint venture existed, and summary judgment was inappropriate. We therefore uphold the court of appeals' reversal of the district court's grant of partial summary judgment. II. THE COURT OF APPEALS CORRECTLY HELD THAT EPCO'S LIEN WAS NOT ABUSIVE BECAUSE THE LIEN WAS NOT FILED WITH THE REQUISITE CULPABLE MENTAL STATE ¶ 25 In its cross-petition, 51-SPR argues that the court of appeals erred in ruling that EPCO's lien was not abusive under Utah Code section 38-1-25 (2005). ¶ 26 51-SPR disputes the appropriateness of EPCO's inclusion of the $78,000 change order in the lien. The district court found that EPCO was not entitled to collect the $78,000 as part of the lien because it did not relate to the Northshore Project or 51-SPR. The court of appeals upheld the district court's conclusion. Ellsworth Paulsen Constr. Co. v. 51-SPR-L.L.C., 2006 UT App 353, ¶¶ 26-29, 144 P.3d 261. Neither party disputes the court of appeals' holding on this point. Indeed, EPCO concedes that it cannot collect the $78,000 as part of its lien on the Northshore buildings. ¶ 27 Although the district court held that EPCO could not collect the $78,000, it concluded that the inclusion of the $78,000 did not render the lien abusive because EPCO had acted in good faith when it included the $78,000 in the lien amount. The court of appeals upheld the district court's ruling, holding that subsection (1)(b) of the abusive lien statute requires proof of intent to extract more than is due. Id. ¶ 31. Based on the district court's finding that EPCO had acted in good faith when it filed the lien, the court of appeals concluded that EPCO did not file the lien with the requisite culpable mental state; thus, the lien was not abusive. Id. ¶¶ 32-34. We agree. ¶ 28 Utah's abusive lien statute is found in Utah Code section 38-1-25. Subsection (1) provides: Any person entitled to record or file a lien . . . is guilty of a class B misdemeanor who intentionally causes a claim of lien against any property, which contains a greater demand than the sum due to be recorded or filed: (a) with the intent to cloud the title; (b) to exact from the owner or person liable by means of the excessive claim of lien more than is due; or (c) to procure any unjustified advantage or benefit. Id. § 38-1-25(1). [5] Subsection (2) of the statute provides that, in addition to the criminal penalties, a person who files an abusive lien is liable to the owner of the property upon which the lien was filed for the greater of actual damages or twice the amount by which the wrongful lien exceeds the amount actually due. Id. § 38-1-25(2). ¶ 29 51-SPR argues that because subsection (1)(a) specifically mentions intent but subsections (1)(b) and (1)(c) do not, there is no intent requirement under the latter two subsections. Subsection (1)(a) provides that a lien is abusive if a person files the lien  with the intent to cloud title, whereas subsections (1)(b) and (1)(c) provide that a lien is abusive if a person files the lien to exact . . . more than is due or to procure any unjustified advantage or benefit. Id. § 38-1-25(1) (emphasis added). 51-SPR thus argues that the absence of an intent requirement in subsections (1)(b) and (1)(c) renders them akin to strict liability statutes. Because 51-SPR claims that the lien is abusive under subsection (1)(b), 51-SPR asserts that EPCO's good faith is immaterial and, consequently, that the district court erred in holding that the lien was not abusive. As noted by the court of appeals, any potential confusion about an intent requirement is cured by referencing Utah Code section 76-2-102 (2003), which provides: Every offense not involving strict liability shall require a culpable mental state, and when the definition of the offense does not specify a culpable mental state and the offense does not involve strict liability, intent, knowledge, or recklessness shall suffice to establish criminal responsibility. An offense shall involve strict liability if the statute defining the offense clearly indicates a legislative purpose to impose criminal responsibility for commission of the conduct prohibited by the statute without requiring proof of any culpable mental state. ¶ 30 The abusive lien statute is a criminal statute and does not clearly indicate[] a legislative purpose to impose strict liability on a lien claimant who fails to collect the entire amount of the originally filed lien. Id. Thus, although subsections (1)(b) and (1)(c) do not specify the required mental state necessary to establish criminal responsibility, the default culpable mental states of intent, knowledge, or recklessness apply. Id. ¶ 31 The district court's holding that EPCO acted in good faith was based on its finding that, when EPCO filed its lien on the Northshore buildings, it did not know exactly how Hatch had used the $78,000 it had loaned to him. All EPCO had was a change order for $78,000 on one of the Northshore buildings; EPCO did not yet know how much, if any, of the $78,000 had actually been used or applied to the construction of the Northshore buildings. The court of appeals concluded that these findings were not clearly erroneous, Ellsworth Paulsen Const. Co., 2006 UT App 353, ¶¶ 33-34, 144 P.3d 261, and we conclude likewise. Based on the district court's findings, we hold that EPCO acted in good faith and did not intentionally, knowingly, or recklessly include the $78,000 in order to exact more than was due; thus, EPCO's lien was not abusive. ¶ 32 In sum, we conclude that the court of appeals correctly interpreted Utah Code section 38-1-25 by incorporating the default mental state from Utah Code section 76-2-102. We further conclude that EPCO did not file the lien with the requisite culpable mental state. Therefore, we affirm the court of appeals' holding that the lien was not abusive.