Opinion ID: 2525492
Heading Depth: 2
Heading Rank: 1

Heading: sme's breach of contract claim against tvsa

Text: ¶ 10 SME's first claim for relief is based upon an alleged breach of the County-TVSA contract. SME was not a party to the County-TVSA contract and therefore is pursuing its breach of contract claim under a purported assignment by the County of its rights, causes of action, and claims against TVSA to Hughes-Hunt, and Hughes-Hunt's subsequent assignment of such interests to SME. In dismissing the claim, the trial court ruled that SME's breach of contract cause of action failed because an anti-assignment clause contained in the County-TVSA contract prohibited the assignment by the County to Hughes-Hunt, and subsequently to SME, of a breach of contract cause of action against TVSA. ¶ 11 As a general rule, a contract provision prohibiting the assignment of the contract itself, or of rights and privileges under the contract, does not, unless a different intention is manifested, prohibit the assignment of a claim for damages on account of breach of the contract. See, e.g., U.S. Indus., Inc. v. Touche Ross & Co., 854 F.2d 1223, 1234 (10th Cir.1988); Rosecrans v. William S. Lozier, Inc., 142 F.2d 118, 124 (8th Cir.1944); Paley v. Cocoa Masonry, Inc., 433 So.2d 70, 70-71 (Fla.Dist.Ct.App.1983); Grady v. Commers Interiors, Inc., 268 N.W.2d 823, 825 (S.D.1978); Ford v. Robertson, 739 S.W.2d 3, 5 (Tenn.Ct.App.1987); Restatement (Second) of Contracts § 322 (1981); 6 Am.Jur.2d Assignments §§ 22, 59 (1999). This rule was adopted by the Utah Supreme Court in Fuller v. Favorite Theaters Co., 119 Utah 570, 230 P.2d 335 (1951) (per curiam). In Fuller, the defendant argued that the plaintiff was prohibited from asserting an assigned breach of contract claim against the defendant because the contract expressly prohibited the assignment of the contract without the written consent of the defendant. 119 Utah at 571, 230 P.2d at 336. In rejecting the defendant's argument, this court held that the provision prohibiting the assignability of the contract itself does not affect the assignability of a cause of action which has arisen from the breach. 119 Utah at 572, 230 P.2d at 336; see also Tanasse v. Snow, 929 P.2d 351, 354 n.9 (Utah Ct.App.1996), rev'd in part on other grounds by Snow, Nuffer, Engstrom & Drake v. Tanasse, 1999 UT 49, ¶ 12, 980 P.2d 208. The rationale underlying the general rule is that parties have the right to select and insist upon the personalities with which they will sustain . . . personal relationships. However, such reasoning is valid only so long as such a contract is executory. After it has been performed and the only thing remaining is payment for the services rendered, the contract is no longer one for personal services and the reason for non-assignability no longer exists. Prudential Fed. Sav. & Loan Ass'n v. Hartford Accident & Indem. Co., 7 Utah 2d 366, 374, 325 P.2d 899, 904 (1958). ¶ 12 However, while acknowledging the general rule enunciated above, courts in other jurisdictions have held that where a contract expressly states that the right to sue for breach of contract is non-assignable, full force and effect must be given to such provision. See, e.g., Allhusen v. Caristo Constr. Corp., 303 N.Y. 446, 103 N.E.2d 891, 892-93 (1952); Cloughly v. NBC Bank-Seguin, N.A., 773 S.W.2d 652, 655 (Tex.App.1989). In view of these cases, TVSA argues that the language of the anti-assignment provision at issue in this case, despite the fact that it does not expressly say so, indicates an intent to prevent not merely the assignment of the performance of the contract, but also the assignment of a cause of action for breach of the contract. TVSA notes that unlike the anti-assignment provision in Fuller, which merely prohibited the assignment of the contract itself, the anti-assignment provision in the County-TVSA contract states that neither party shall assign its interest in this Agreement. (Emphasis added.) [6] This language, TVSA argues, plainly prohibits the County from assigning any interest in the County-TVSA contract, which means all interests, including a cause of action for breach of contract. According to TVSA, the term interest is the most general term that can be employed to denote a right, claim, or legal share in something, and therefore construing it to apply only to the performance of the contract would essentially render it ineffective. ¶ 13 In contrast, SME argues that the language prohibiting the assignment of any interest in the County-TVSA contract must be construed, in accordance with the general rule enunciated in Fuller, to mean any interest in the performance of the executory contract and should not, after performance is completed, prohibit the assignment of a cause of action for breach of the contract. In support of its position, SME cites cases from other jurisdictions which have concluded that the term interest in a contractual anti-assignment clause does not manifest an intent to prohibit the assignment of the right to sue for breach of contract damages after the contract has been fully performed. See Lomas Mortgage U.S.A., Inc. v. W.E. O'Neil Constr. Co., 812 F.Supp. 841, 844 (N.D.Ill.1993); Ford, 739 S.W.2d at 5; Berschauer/Phillips Constr. Co. v. Seattle Sch. Dist. No. 1, 124 Wash.2d 816, 881 P.2d 986, 994-95 (1994) (en banc). In view of these cases, SME argues that the anti-assignment provision contained in the County-TVSA contract was drafted with insufficient clarity to prohibit the assignment of a breach of contract cause of action. ¶ 14 The parties' arguments highlight the ambiguities that should have prevented the trial court from granting summary judgment against SME on its breach of contract claim. Indeed, assignments are construed according to well established rules of contract construction. Winegar v. Froerer Corp., 813 P.2d 104, 108 (Utah 1991); 6 Am. Jur.2d Assignments § 145 (1999). The basic purpose in construing or interpreting a contract  here an anti-assignment clause  is to determine the intentions of the parties, which are controlling. Winegar, 813 P.2d at 108; John Call Eng'g, Inc. v. Manti City Corp., 743 P.2d 1205, 1207 (Utah 1987). Accordingly, we have held that a court may consider extrinsic evidence if the meaning of the contractual provision at issue is ambiguous or uncertain. See Winegar, 813 P.2d at 108. A contract provision is ambiguous if it is capable of more than one reasonable interpretation because of `uncertain meanings of terms, missing terms, or other facial deficiencies.' Id. (quoting Faulkner v. Farnsworth, 665 P.2d 1292, 1293 (Utah 1983)). When ambiguity exists, the intent of the parties becomes a question of fact. Plateau Mining Co. v. Utah Div. of State Lands & Forestry, 802 P.2d 720, 725 (Utah 1990). Therefore, in considering a motion for summary judgment, [f]ailure to resolve an ambiguity by determining the parties' intent from parol evidence is error. Id. ¶ 15 Here, the parties have presented contrary, tenable interpretations of the language contained in the anti-assignment provision. See id. (stating that to demonstrate ambiguity, the contrary positions of the parties must each be tenable); Grow v. Marwick Dev., Inc., 621 P.2d 1249, 1252 (Utah 1980) (same). Accordingly, it is unclear from the language of the provision whether the parties intended to prohibit only the assignment of rights and privileges under the County-TVSA contract, or whether the parties also intended to prohibit the assignment of a cause of action seeking money damages for breach of contract after the contract had been fully performed. Because the intent of the parties is unclear, extrinsic evidence is necessary to determine the meaning of the anti-assignment provision, and the trial court erred in granting judgment as a matter of law on this issue. ¶ 16 Therefore, we reverse the trial court's dismissal of SME's breach of contract claim against TVSA and remand this issue to the trial court for a determination of whether the parties intended the anti-assignment clause contained in the County-TVSA contract to prohibit only the assignment of the performance of the contract, or whether it also prohibited the assignment of a cause of action seeking money damages for breach of the contract after the contract had been fully performed. In the event the trial court determines that the anti-assignment provision was intended to prohibit only the assignment of the performance of the contract, and that SME may proceed with its assigned breach of contract claim, SME's damages, if any, are limited to those damages suffered by the County as a result of TVSA's alleged breach of the County-TVSA contract inasmuch as SME may recover only what the County could recover from TVSA per the assignment. Indeed, as is well stated in American Jurisprudence : [T]he assignee is subject to any defenses that would have been good against the [assignor]; the assignee cannot recover more than the assignor could recover; and the assignee never stands in a better position than the assignor.  6 Am.Jur.2d supra ¶ 14, at § 144 (emphasis added).