Court Opinion

ID: 9901017
Source: CourtListenerOpinion
Date Created: 2023-11-20 22:11:40.979169+00
Date Added: 2024-06-11T09:21:24.409971
License: Public Domain

2023 UT App 115

                THE UTAH COURT OF APPEALS

                    VAL PETERSON INC.,
                        Appellant,
                            v.
     TENNANT METALS PTY. LTD. AND METALCORP GROUP BV,
                        Appellees.

                             Opinion
                        No. 20210732-CA
                    Filed Septembeer 28, 2023

           Third District Court, Salt Lake Department
                    The Honorable Su Chon
                          No. 180906137

       Trent J. Waddoups, John D. Hanover, and Hannah S.
                 Goodwin, Attorneys for Appellant
        Jonathan O. Hafen, Robert S. Clark, Anna Rotman,
             and Grant Jones Attorneys for Appellees

    JUDGE JOHN D. LUTHY authored this Opinion, in which
JUDGES MICHELE M. CHRISTIANSEN FORSTER and RYAN M. HARRIS
                        concurred.

LUTHY, Judge:

¶1     This case involves the site of the Geneva Steel mill that once
operated in Utah County. Sometime after the mill ceased
operations, the site was acquired by Anderson Geneva LLC and
Ice Castle Retirement Fund LLC (collectively, Geneva). Geneva
then entered into a contract with Val Peterson Inc. (VPI) and
Tennant Metals Pty. Ltd. (Tennant), under which VPI agreed to
both purchase and remove about two million tons of industrial
byproducts that remained on the site so that Geneva could
develop the property for other uses and Tennant agreed to
guarantee VPI’s performance by providing funding for the
                  Val Peterson v. Tennant Metals

project. Separately, Metalcorp Group BV (Metalcorp) guaranteed
Tennant’s performance.

¶2      After VPI began its removal of the industrial byproducts,
Tennant and Metalcorp allegedly failed to provide the promised
funding, leaving VPI unable to perform and causing Geneva to
terminate the contract. VPI then sued Tennant and Metalcorp
(collectively, Defendants), and Defendants moved to dismiss
VPI’s numerous claims for failure to state a claim upon which
relief can be granted.

¶3    The district court granted Defendants’ motion and
dismissed all of VPI’s claims. VPI now appeals. We reverse the
dismissal of VPI’s breach of contract claims against Tennant, but
we otherwise affirm the dismissal of VPI’s claims. Accordingly,
we remand this case to the district court for further proceedings.

                        BACKGROUND 1

                            The Facts

¶4     Geneva owned a decommissioned steel mill site in Utah
County. The site contained approximately two million metric tons
of industrial byproducts referred to as “Red Sea” and “Black Sea”
(the Red Sea byproducts). Geneva wanted to hire someone to
undertake the extraction of the Red Sea byproducts (the Geneva
project) so that Geneva could develop the land for residential and
other uses.

¶5     In August 2011, VPI’s president learned of the Geneva
project. Shortly thereafter, he was introduced to a general

1. “Because this is an appeal of the trial court’s grant of a rule
12(b)(6) motion, we accept as true the facts alleged in the
complaint and, accordingly, recite the facts as contained therein.”
Williams v. Bench, 2008 UT App 306, n.2, 193 P.3d 640.

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                   Val Peterson v. Tennant Metals

manager of Tennant, and the two discussed an arrangement
whereby “VPI would extract the [Red Sea byproducts] and move
those materials to ports on the West Coast . . . and then Tennant
would take possession of the [Red Sea byproducts] for shipment
to and sale in China.” VPI and Tennant thereafter completed steps
to evaluate the likely success of such a venture, including by
conducting a feasibility study and a resource-definition study.
These studies showed that the Red Sea byproducts “could be
removed and sold at a price of $145 per ton for delivery in China,”
that this would result in a gross value of over $136 million, and
that “the cost to ship the [Red Sea byproducts] to China would be
$86 per ton.”

¶6      On April 24, 2012, VPI, Tennant, and Geneva entered into
an agreement entitled “Contract for Purchase of Iron Byproducts”
(the Purchase Contract). Under the Purchase Contract, Geneva
agreed to sell the Red Sea byproducts for $5 per ton and VPI
agreed to “purchase and remove” all of the Red Sea byproducts.
The Purchase Contract was lengthy and detailed, not only setting
forth the terms related to the financial aspects of the sale but also
specifying a number of requirements related to the removal itself,
such as recognizing that “time is of the essence” and that Geneva
needed the Red Sea byproducts removed “as soon as possible to
facilitate development of the [p]roperty”; granting a limited
license to use the property during the removal process; and
setting benchmarks and deadlines for the removal.

¶7    As a signatory to the Purchase Contract, Tennant
“absolutely and unconditionally guarantee[d] to [Geneva] the
payment and financial performance by [VPI] of all of its duties
and obligations under [the Purchase Contract]” and
“guarantee[d] the full and faithful payment and financial
performance by [VPI].” Additionally, Metalcorp, Tennant’s
parent company, executed an Acknowledgment and Guarantee
(the Guarantee), by which it guaranteed to Geneva the
performance of Tennant’s obligations under the Purchase

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                   Val Peterson v. Tennant Metals

Contract. Thus, Tennant guaranteed the performance of VPI, and
Metalcorp guaranteed the performance of Tennant.

¶8       VPI and Tennant also executed a Memorandum of
Understanding (the MOU). The MOU said that it was to “serve[]
as an [a]greement for the execution of work associated with the
purchase and removal of [the Red Sea byproducts] from [Geneva]
. . . and [the sale] and delivery of [the Red Sea byproducts] to what
is anticipated to be predominantly Asian based customers.” The
MOU specified the portions of the Geneva project for which each
party would be responsible. It also purported to “create a Joint
Venture between Tennant and VPI, whereby VPI [would] receive
a twenty percent interest (20%) of Tennant’s net share of profits
arising from [the Geneva project].” Further, the MOU spoke to
future events, referencing “a strategic relationship between the
[p]arties” wherein they would offer each other the first rights of
refusal on future projects, and discussing an anticipated
“Participation Agreement” that the parties would enter into,
“some key terms” of which were listed in the MOU. 2

¶9    VPI commenced performance of its obligations under the
Purchase Contract in late July 2012, “including but not limited to

2. Two additional defendants not mentioned previously came into
play at this stage: Horus Capital Incorporated and Metal
Extraction Corporation, which is a joint venture of Tennant and
Horus Capital Incorporated. Metal Extraction Corporation was
created during this same general timeframe, allegedly to “lay[] off
some of Tennant’s financial risk relating to [the Geneva project].”
Tennant “assigned its rights and obligations under the Purchase
Contract and the MOU” to this joint venture.
    All claims against these two additional defendants were
dismissed without prejudice under rule 4(b) of the Utah Rules of
Civil Procedure due to VPI’s failure to timely serve them. Thus,
we do not address on appeal any of the claims against these
parties.

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                  Val Peterson v. Tennant Metals

obtaining all necessary permits for the work, obtaining required
insurance coverages, and engaging subcontractors.” VPI was able
to finance the first six weeks of performance “with its own capital
and with payments from [D]efendants,” but on or about
September 15, 2012, Defendants “failed and refused . . . to meet
their obligations to fund VPI’s [p]roject performance and
provided VPI with no further funding.” VPI was therefore unable
to meet its obligations under the Purchase Contract, and Geneva
terminated the agreement.

                      VPI’s Causes of Action

¶10 Nearly six years later, on August 22, 2018, VPI commenced
this action against Defendants. Thereafter, VPI twice amended its
complaint, the most recent version of which contains nine causes
of action.

¶11 VPI’s first cause of action contains claims against Tennant
for breach of contract. Specifically, VPI alleges that Tennant
breached both the Purchase Contract and the MOU by “refus[ing]
and/or fail[ing] to fund [the Geneva project] operations and/or [to]
perform its other contractual obligations in the Purchase Contract
and the MOU.”

¶12 VPI’s third cause of action 3 contains claims against
Metalcorp for breach of contract. VPI alleges that “Metalcorp
breached the Purchase Contract and the Guarantee by failing to
provide funding to VPI to perform its obligations under the
Purchase Contract.”

¶13 VPI’s fourth cause of action is a third-party beneficiary
breach of contract claim against Metalcorp. For this claim, VPI
alleges that if “the Purchase Contract and the Guarantee did not
create enforceable contractual agreements between [VPI] and

3. VPI’s second cause of action is solely against Metal Extraction
Corporation, and we do not address it. See supra note 2.

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                   Val Peterson v. Tennant Metals

Metalcorp,” then VPI is a third-party beneficiary of the Purchase
Contract and of the Guarantee and was damaged when
“Metalcorp breached the Purchase Contract and the Guarantee by
failing to provide funding to VPI to perform its obligations under
the Purchase Contract.”

¶14 VPI’s fifth cause of action contains breach of fiduciary duty
claims against both Defendants. For this claim, VPI alleges that
because of the joint venture allegedly created by the MOU,
Defendants owed fiduciary duties to VPI, including the duties of
good faith and loyalty, and that Defendants breached those
duties.

¶15 VPI’s sixth, seventh, and eighth causes of action are all
equitable claims against both Defendants. The sixth is a claim of
unjust enrichment based on the theory of a “contract implied in
law.” The seventh is a claim of unjust enrichment based on the
theory of a “contract implied in fact.” The eighth asserts equitable
estoppel. For each of these, VPI alleges that if “the Purchase
Contract and the Guarantee did not create enforceable contractual
agreements between [VPI] and Defendants,” then equity should
intervene to prevent Defendants “from retaining the benefits they
obtained from [VPI].”

¶16 Finally, VPI’s ninth cause of action asserts alter ego
liability. Specifically, VPI alleges that “there is a unity of interest
and ownership such that there is no separation of the corporate
personalities of [Tennant and Metalcorp]” and, therefore, that
Metalcorp should be “liable for the conduct, actions, liabilities,
and any judgments awarded” against Tennant.

                   Defendants’ Motion to Dismiss

¶17 Defendants responded to VPI’s complaint by filing a
motion under rule 12(b)(6) of the Utah Rules of Civil Procedure to
dismiss each of VPI’s claims against them. In their motion,
Defendants argued that all of VPI’s claims were barred by

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                  Val Peterson v. Tennant Metals

applicable statutes of limitations. They also argued that the MOU
was not an enforceable contract, that Metalcorp owed no
contractual duties to VPI, that VPI was not a third-party
beneficiary of either the Purchase Contract or the Guarantee, that
VPI’s breach of fiduciary duty claims were barred by the
economic loss rule, that VPI’s equitable claims were precluded by
the existence of valid contracts, and that VPI’s alter ego claim is
not a stand-alone cause of action.

¶18 VPI opposed the motion and argued that its various causes
of action had not, as a matter of law, failed to state claims upon
which relief could be granted and that dismissal would be
inappropriate.

¶19 The district court held a hearing on the motion to dismiss
and issued its ruling about three weeks later. The court ruled in
favor of Defendants and dismissed all of VPI’s causes of action.
The court determined that the majority of VPI’s claims were
barred by a four-year statute of limitations, that the MOU was not
an enforceable contract, that VPI was not a third-party beneficiary
of the Purchase Contract or the Guarantee, that the economic loss
rule barred VPI’s breach of fiduciary duty claims, that VPI’s
equitable claims were precluded by the existence of valid
contracts, and that alter ego is not a stand-alone claim. VPI now
appeals.

            ISSUES AND STANDARDS OF REVIEW

¶20 VPI contests the district court’s dismissal of each of its
claims. “When reviewing a rule 12(b)(6) motion to dismiss, we
accept the factual allegations in the complaint as true and
interpret those facts, and all reasonable inferences drawn
therefrom, in a light most favorable to the plaintiff as the
nonmoving party.” National Title Agency LLC v. JPMorgan Chase
Bank NA, 2018 UT App 145, ¶ 7, 429 P.3d 758 (cleaned up), cert.
denied, 432 P.3d 1232 (Utah 2018). “Because the propriety of a

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                    Val Peterson v. Tennant Metals

motion to dismiss is a question of law, we review the dismissal for
correctness.” Id. (cleaned up).

                              ANALYSIS

¶21 “Rule 12(b)(6) concerns the sufficiency of the pleadings, not
the underlying merits of a particular case.” Alvarez v. Galetka, 933
P.2d 987, 989 (Utah 1997). Thus, “a motion to dismiss should be
granted only if, assuming the truth of the [factual] allegations in
the complaint and drawing all reasonable inferences therefrom in
the light most favorable to the plaintiff, it is clear that the plaintiff
is not entitled to relief.” Hudgens v. Prosper, Inc., 2010 UT 68, ¶ 14,
243 P.3d 1275 (cleaned up). “The district court is not permitted to
consider dueling evidence or make findings on disputed facts.”
1600 Barberry Lane 8 LLC v. Cottonwood Residential O.P. LP, 2021
UT 15, ¶ 43, 493 P.3d 580. We employ these principles as we
address each of VPI’s claims on appeal.

                       I. First Cause of Action

¶22 VPI’s first cause of action alleges two breach of contract
claims against Tennant: (A) that Tennant breached the Purchase
Contract and (B) that Tennant breached the MOU. We address
each of these claims in turn.

A.     VPI’s Claim Against Tennant for Breach of the Purchase
       Contract

¶23 VPI argues that the district court erred in dismissing—at
this stage of the proceedings—its claim against Tennant for breach
of the Purchase Contract as being time-barred by the four-year
statute of limitations contained in the Uniform Commercial Code
(the UCC). We agree.

¶24 The assertion that a statute of limitations applies to bar a
claim is an affirmative defense. Barnard & Burk Group, Inc. v. Labor

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                   Val Peterson v. Tennant Metals

Comm’n, 2005 UT App 401, ¶ 6, 122 P.3d 700. Because affirmative
defenses “often raise issues outside of the complaint, [they] are
not generally appropriately raised in a motion to dismiss under
rule 12(b)(6).” Tucker v. State Farm Mutual Auto. Ins. Co., 2002 UT
54, ¶ 7, 53 P.3d 947. But if “the existence of the affirmative defense
. . . appear[s] within the complaint itself”—“for example, a
complaint showing that the statute of limitations has run on the
claim”—then “a motion to dismiss under rule 12(b)(6) may raise
affirmative defenses.” Id. ¶ 8 (cleaned up).

¶25 Here, the parties agree, at least for purposes of the motion
to dismiss, that VPI’s claim against Tennant for breach of the
Purchase Contract arose on September 15, 2012, when Tennant
allegedly refused to provide additional funding to facilitate VPI’s
removal of the Red Sea byproducts. And VPI commenced this
case nearly six years later, on August 22, 2018. The parties
disagree, however, as to which statute of limitations applies to
this claim.

¶26 Defendants argue that the Purchase Contract was a
contract for the sale of goods—i.e., the sale of the Red Sea
byproducts—and, therefore, that the four-year statute of
limitations from the UCC applies to any breach of contract claim
arising from it. See Utah Code § 70A-2-725(1) (“An action for
breach of any contract for sale must be commenced within four
years after the cause of action has accrued.”); see also id. § 70A-2-
102 (“Unless the context otherwise requires, this chapter applies
to transactions in goods . . . .”). VPI, on the other hand, argues that
the Purchase Contract is for the provision of services—i.e., the
removal of the Red Sea byproducts—and, therefore, that the six-
year statute of limitations for claims based “upon any contract,
obligation, or liability founded upon an instrument in writing”
applies. Id. § 78B-2-309(1)(b). When faced with these competing
arguments, the district court determined that Utah law required
it to assess “the primary purpose” of a contract when deciding the

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                   Val Peterson v. Tennant Metals

correct statute of limitations and found that “the primary purpose
of [the Purchase Contract] was for the sale of goods.”

¶27 Despite the parties’ contrary contentions, it is clear that the
Purchase Contract is an agreement for both the sale of goods and
the provision of services. For such contracts, Utah has “adopted
the one-law approach, which applies the UCC to the entire
contract if it is predominately a contract for goods” and applies
the common law if “the contract is primarily for services.” Salt
Lake City Corp. v. Sekisui SPR Ams., LLC, 482 F. Supp. 3d 1177,
1187–89 (D. Utah 2020); see also Utah Local Gov’t Trust v. Wheeler
Mach. Co., 2008 UT 84, ¶ 30, 199 P.3d 949 (“If service
predominates, and the transfer of title to personal property is only
an incidental feature of the transaction, the contract does not fall
within the ambit of the UCC.” (cleaned up)). Thus, the
“predominant purpose test” determines which statute of
limitations applies to VPI’s claim, and the district court was
correct to apply this test. 4 See Sekisui, 482 F. Supp. 3d at 1187–89.

4. Defendants assert that VPI “failed to preserve its predominant
purpose argument” for appeal because it did not raise the issue
until the hearing on the motion to dismiss and, even then, did not
support the argument with “any analysis of supporting
authorities.” “The fundamental purpose of the preservation rule
is to ensure that the district court had a chance to rule on an issue
before an appellate court will address it.” Helf v. Chevron U.S.A.
Inc., 2015 UT 81, ¶ 42, 361 P.3d 63. Thus, we consider an issue
preserved for appeal “when the district court was given notice of
the issue . . . and when the court in response to such notice made
a specific ruling on the issue.” Pratt v. Nelson, 2007 UT 41, ¶ 24,
164 P.3d 366. Here, this issue was raised before the district court,
the court had time to consider the issue in the several weeks
before ruling, and the court ultimately made a specific ruling on
the issue. Therefore, this issue is preserved for appeal.

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                  Val Peterson v. Tennant Metals

¶28 “To determine the predominant purpose of the [c]ontract,
the court first looks to the language of the agreement.” Salt Lake
City Corp. v. Southwest Pipeline & Trenchless Corp., 561 F. Supp. 3d
1160, 1166 (D. Utah 2021). Here, the parties glean very different
purposes from the text of the Purchase Contract. Defendants
assert that the Purchase Contract was predominantly (if not
solely) for the sale of goods. They point to several factors to
support that assertion: (1) the Purchase Contract is titled
“Contract for Purchase of Iron Byproducts,” (2) the Purchase
Contract refers to VPI by the title “Purchaser,” (3) the Purchase
Contract’s terms frequently mention the sale of goods, and (4) the
removal tasks assigned to VPI in the Purchase Contract have no
specific payment amount associated with them. VPI, on the other
hand, asserts that many factors point to the opposite conclusion—
that the Purchase Contract is predominantly one for services:
(1) the Purchase Contract emphasizes the expeditious removal of
all the Red Sea byproducts, (2) the Purchase Contract contains
benchmarks focused on the mechanism and speed of removing
specified quantities of Red Sea byproducts weekly, (3) VPI was to
purchase the Red Sea byproducts for $5 per ton when the
potential resale value was apparently many times that amount at
$145 per ton, (4) the Purchase Contract included a temporary
license for VPI to use Geneva’s property during removal of the
Red Sea byproducts, and (5) the parties were not merchants but,
instead, included a real estate developer (which wanted its
property cleared for development) and a construction contractor.
Clearly, the Purchase Contract can be seen in various lights.

¶29 These differing interpretations based on the text of the
Purchase Contract highlight that, while courts must first look to
the text of the contract, they must also “consider facts outside of
the four corners of the contract to determine its primary purpose,
including the circumstances of the contract’s negotiation,
formation, and performance.” Sekisui, 482 F. Supp. 3d at 1189. And
because the predominant purpose inquiry looks beyond the four
corners of the contract, it cannot be resolved on a rule 12(b)(6)

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                   Val Peterson v. Tennant Metals

motion when the complaint “do[es] not paint a full picture of the
formation and performance of the [contract].” Id. This is the
situation here. The text of VPI’s complaint and the documents
attached to it—the only things we may look to when reviewing a
dismissal under rule 12(b)(6), see Oakwood Village LLC v. Albertsons,
Inc., 2004 UT 101, ¶¶ 9–10, 104 P.3d 1226—did not present the
district court with “a full picture” of the Purchase Contract’s
negotiation, formation, and performance. Thus, a determination
of its predominant purpose (and, by extension, the applicable
statute of limitations) was inappropriate at this stage of the
proceedings. See Southwest Pipeline, 561 F. Supp. 3d at 1166. 5

¶30 This is not to say that the predominant purpose of a hybrid
contract cannot in some situations be decided as a matter of law.
But if the court needs to look beyond the complaint and
documents attached to it to determine the predominant purpose,
dismissal under rule 12(b)(6) is improper. These principles are
highlighted in two cases discussed in the briefs on appeal. In Salt
Lake City Corp. v. Sekisui SPR Americas, LLC, 482 F. Supp. 3d 1177
(D. Utah 2020), the court addressed an issue essentially identical
to the one before us, that is, whether a “breach of contract
crossclaim was governed by the four-year UCC statute of
limitations for a claim based on [a] contract for the sale of goods
or whether the crossclaim was governed by the six-year statute of
limitations for a claim based on a written contract for services.”

5. For this case, one significant set of facts that is still needed to
paint a full picture of the Purchase Contract’s negotiation,
formation, and performance is more complete information
regarding the fair market value of the Red Sea byproducts and,
relatedly, whether the $5 per ton price bargained for was a
reduced price to offset the value of the byproduct removal. See
Salt Lake City Corp. v. Southwest Pipeline & Trenchless Corp., 561 F.
Supp. 3d 1160, 1166 (D. Utah 2021) (stating that a consideration in
the predominant purpose test is “the cost of the goods and non-
goods portions of the contract” (footnote omitted)).

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                   Val Peterson v. Tennant Metals

Id. at 1186. The court recognized that the predominant purpose
test was applicable to the determination but that the test could not
be resolved on a rule 12(b)(6) motion because “consider[ing] only
the well-pleaded facts of the complaint,” “there [was] little factual
context concerning the negotiation and formation of the contract.”
Id. at 1188–89. “Perhaps most importantly,” neither the cross-
complaint nor the contract at issue “state[d] the full cost of the
goods sold . . . or the full cost or value of the . . . services
provided.” Id. at 1189. The court concluded that “[w]ithout this
key information, [it could not] determine whether goods or
services predominate[d] at [that] stage of the proceedings.” Id.

¶31 The same crossclaim (after having been consolidated with
a separate case involving the same parties) was again addressed
by the court over a year later in Salt Lake City Corp. v. Southwest
Pipeline & Trenchless Corp., 561 F. Supp. 3d 1160 (D. Utah 2021),
this time when summary judgment was sought on the statute of
limitations issue. See id. at 1164. During the intervening year, the
parties had submitted affidavits and presumably engaged in
other discovery. See id. at 1164, 1169. This time, the court first
examined the language of the contract and determined that the
contract appeared to be predominantly for the sale of goods, see
id. at 1166–69, but the court also then considered evidence from
outside the four corners of the contract to determine whether that
evidence “create[d] a genuine dispute of material fact as to the
predominant purpose of the contract,” see id. at 1169–70. When the
court determined that the additional evidence did not create a
genuine dispute regarding the predominant purpose of the
contract, it concluded that the UCC’s four-year statute of
limitations applied as a matter of law and granted summary
judgment on the crossclaim. See id. at 1170–71.

¶32 In sum, although the predominant purpose of a contract
may, under certain conditions, be determined as a matter of law,
when the issue is before a court on a rule 12(b)(6) motion, a
determination of the contract’s predominant purpose is improper

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                  Val Peterson v. Tennant Metals

if the text of the contract and the allegations of the complaint do
not present a complete picture of the circumstances surrounding
the contract’s negotiation, formation, and performance. Because
we determine that such a complete picture was not before the
district court here, dismissal based on application of the
predominant purpose test was inappropriate at this stage of the
proceedings. We therefore reverse the district court’s dismissal of
VPI’s claim for Tennant’s alleged breach of the Purchase Contract.

B.     VPI’s Claim Against Tennant for Breach of the MOU

¶33 The district court also applied the UCC’s four-year statute
of limitations to VPI’s breach of contract claim based on Tennant’s
alleged breach of the MOU. For the same reasons given in Part
I.A, dismissal on this ground was inappropriate at this stage of
the proceedings. However, the district court additionally
determined that any contract claims based on the MOU should be
dismissed for an independent reason: because the MOU is not an
enforceable contract but, instead, an unenforceable agreement to
agree. VPI contests this alternate ground for dismissal of its claim
against Tennant for breach of the MOU. We agree with VPI that
dismissal on a rule 12(b)(6) motion was inappropriate under this
reasoning as well.

¶34 “To form an enforceable contract, the parties must have a
meeting of the minds on the essential terms of the contract.” Bloom
Master Inc. v. Bloom Master LLC, 2019 UT App 63, ¶ 13, 442 P.3d
1178 (cleaned up). “So long as there is any uncertainty or
indefiniteness, or future negotiations or considerations to be had
between the parties, there is not a contract.” Id. (cleaned up). “An
agreement to agree at some later date is thus unenforceable.” Id.
¶ 14.

¶35 The district court’s determination that the MOU is an
unenforceable agreement to agree was based on the following
language in the MOU regarding the parties’ intent to enter into a
participation agreement in the future: “Tennant has agreed in

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                   Val Peterson v. Tennant Metals

principle to go into a ‘Participation Agreement’ with VPI, some
key terms of which are enumerated in this MOU. This
participation agreement concerns profit share, risk allocation and
funding of the Geneva project.” By this language, the parties
clearly expressed an intention to enter into some further
agreement that would contain the remaining “key terms”
regarding the Geneva project. VPI concedes that the MOU
contemplates that “further negotiations would occur” regarding
the Geneva project, but it argues that “the principal function of
the MOU was to create [a] Joint Venture, not to provide an
exhaustive plan of action for the Joint Venture’s work on the
[Geneva] [p]roject.” That is, VPI argues that even if the MOU is
not an enforceable contract as to all of the rights and
responsibilities of the parties regarding the Geneva project, the
MOU is an enforceable contract to create a joint venture.6 The

6. Defendants argue that this issue was not preserved for appeal.
We disagree. In VPI’s opposition to the motion to dismiss, it
argued that “rather than sell goods, the MOU, by its express
terms, ‘create[s] a Joint Venture’ between Tennant and [VPI].”
(First alteration in original.) Further, VPI’s counsel addressed the
issue at some length during the hearing on the motion to dismiss,
stressing that the focus should not be on the MOU language that
mentioned a future agreement but, rather, the MOU language that
created a joint venture:
        [I]t says, “Shall create a joint venture.” It doesn’t say,
        “This is a memorandum of understanding where
        we might agree to a joint venture.” . . . So it’s not an
        agreement to agree. It is saying “We agree that as
        soon as we sign the bottom line, these parties are
        creating a joint venture . . . .”
Hence, the issue was “presented to the [district] court in such a
way that the [district] court ha[d] an opportunity to rule on that
issue,” Brookside Mobile Home Park, Ltd. v. Peebles, 2002 UT 48, ¶ 14,
48 P.3d 968, and the issue was appropriately preserved for our
review on appeal.

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                   Val Peterson v. Tennant Metals

MOU does certainly purport to create a joint venture between the
parties. But this alone is not dispositive of whether a joint venture
was actually created by the MOU; instead, such a determination
must still assess whether the various required elements of a joint
venture are present. See Betenson v. Call Auto & Equip. Sales, Inc.,
645 P.2d 684, 686 (Utah 1982) (“Even the use of the words ‘joint
venture’ in a contract will not be found determinative if the
elements of a joint venture are missing.”).

¶36 “A joint venture is an agreement between two or more
persons ordinarily but not necessarily limited to a single
transaction for the purpose of making a profit.” Bassett v. Baker,
530 P.2d 1, 2 (Utah 1974).

       The requirements for the relationship are not exactly
       defined, but certain elements are essential: The
       parties must combine their property, money, effects,
       skill, labor and knowledge. As a general rule, there
       must be a community of interest in the performance
       of the common purpose, a joint proprietary interest
       in the subject matter, a mutual right to control, a
       right to share in the profits, and unless there is an
       agreement to the contrary, a duty to share in any
       losses which may be sustained.

Id.; accord Ellsworth Paulsen Constr. Co. v. 51-SPR-LLC, 2008 UT 28,
¶ 15, 183 P.3d 248. Thus, to ultimately succeed on its claim
regarding the MOU, VPI will need to establish that the parties had
reached an agreement on each of the required elements of a joint
venture when executing the MOU.

¶37 The MOU does not on its face specifically establish each of
the essential elements for a joint venture, but neither does it
specifically exclude them or plainly leave them for future
determination. Rather, the MOU’s language as it relates to this
issue suffers from some ambiguity—not being entirely clear as to
what exactly was encompassed in the parties’ stated agreement to

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                   Val Peterson v. Tennant Metals

“create a Joint Venture.” It is conceivable that after discovery
related to the parties’ intentions, extrinsic evidence will show that
the parties intended to form a joint venture—including all of its
required elements—by their execution of the MOU. See generally
Brady v. Park, 2019 UT 16, ¶ 29, 445 P.3d 395 (“[I]f a contract term
is ambiguous, district courts should consider extrinsic evidence to
resolve the ambiguity.”). Because VPI alleges an agreement to
form a joint venture and a breach of that agreement, and because
the terms of the MOU do not specifically preclude or definitively
leave for future determination any of the essential elements of a
joint venture, it was error for the district court to dismiss—at this
stage of the proceedings—VPI’s breach of contract claim based on
an alleged breach of a joint venture agreement under the rationale
of an unenforceable agreement to agree. See Betenson, 645 P.2d at
686–87 (holding that “agreements entered into by the plaintiffs
and [a defendant] were not joint venture agreements” only after
identifying contractual language that “specifically excluded” the
possibility of a joint venture). We therefore reverse the district
court’s dismissal of VPI’s claim for Tennant’s alleged breach of the
joint venture agreement allegedly reflected in the MOU.

                   II. Third Cause of Action:
       VPI’s Breach of Contract Claims Against Metalcorp

¶38 In its third cause of action, VPI alleges claims of breach of
contract against Metalcorp based on Metalcorp’s alleged breach
of the Purchase Contract and the Guarantee. The district court
dismissed this cause of action based on the above statute of
limitations rationale and did not reach Defendants’ additional
arguments for dismissal of this cause of action. Again, for the
reasons discussed above, see supra Part I.A, we do not agree with
dismissal—at least not at this stage of the proceedings—of this
cause of action based on the statute of limitations; nonetheless, we
affirm the dismissal of this cause of action based on an alternative
ground that is apparent in the record. See Madsen v. Washington
Mutual Bank FSB, 2008 UT 69, ¶ 26, 199 P.3d 898 (“When

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                  Val Peterson v. Tennant Metals

reviewing a decision made on one ground, we have the discretion
to affirm the judgment on an alternative ground if it is apparent
in the record.” (cleaned up)).

¶39 Metalcorp is not a party to the Purchase Contract, which
expressly identifies the parties as VPI, Tennant, and Geneva.
Moreover, VPI is not a party to the Guarantee. “A guaranty is a
separate, independent and collateral contract in which the
guarantor undertakes the obligation to pay for debts incurred by,
or the performance of some duty by, another person or entity.”
CIG Toledo LLC v. NZR Retail of Toledo, Inc., 131 N.E.3d 351, 358–
59 (Ohio Ct. App. 2019); accord First Com. Bank, NA v. Walker, 969
S.W.2d 146, 152 (Ark. 1998) (“A guarantor is one who makes a
contract, which is distinct from the principal obligation, to be
collaterally liable to the creditor if the principal debtor fails to
perform.”). The party whose performance is being guaranteed “is
not a party to [the] guaranty, and the guarantor is not a party to
the principal obligation.” Boxum v. Munce, 751 N.W.2d 657, 663
(Neb. Ct. App. 2008). Here, Metalcorp is plainly a party to the
Guarantee because it is the entity making the promises contained
in the Guarantee. Yet because Metalcorp “agrees to absolutely and
unconditionally guarantee to [Geneva] . . . all obligations of
Tennant as set forth in Section 15 of the [Purchase] Contract” and
makes no promise to any other person or entity, Geneva is the
only other party to the Guarantee. 7

7. VPI’s second amended complaint nevertheless alleges that VPI
“is a named party to . . . [the] [G]uarantee.” However, because this
allegation is at odds with the unambiguous language of the
Guarantee, it is a legal conclusion, see Carrier Brokers, Inc. v.
Spanish Trail, 751 P.2d 258, 261 (Utah Ct. App. 1988) (stating that
“interpretation of what we believe is an unambiguous written
contract” is a “legal question”), and when ruling on a motion to
dismiss, we “need not accept legal conclusions . . . couched as
                                                     (continued…)

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                   Val Peterson v. Tennant Metals

¶40 Because Metalcorp is not a party to the Purchase Contract
and VPI is not a party to the Guarantee, Metalcorp owes VPI no
contractual duty, and VPI cannot make out a breach of contract
claim against Metalcorp. See Richards v. Cook, 2013 UT App 250,
¶ 7, 314 P.3d 1040 (“The elements of a prima facie case for breach
of contract are (1) a contract, (2) performance by the party seeking
recovery, (3) breach of the contract by the other party, and
(4) damages.” (cleaned up) (emphasis added)). Accordingly, we
affirm the district court’s dismissal of VPI’s third cause of action.

                  III. Fourth Cause of Action:
     VPI’s Third-party Beneficiary Claim Against Metalcorp

¶41 As an alternative to its direct breach of contract claim
against Metalcorp, VPI alleges as its fourth cause of action a third-
party beneficiary claim for breach of contract against Metalcorp.
In this regard, VPI asserts that it was “an intended third-party
beneficiary of both [the Purchase Contract and the Guarantee]”
and can therefore maintain a claim for breach of those agreements
by Metalcorp.

¶42 “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.” SME Indus., Inc. v. Thompson, Ventulett, Stainback
& Assocs., Inc., 2001 UT 54, ¶ 47, 28 P.3d 669 (cleaned up), holding
modified by Sunridge Dev. Corp. v. RB & G Eng’g, Inc., 2010 UT 6,
230 P.3d 1000. The Purchase Contract expressly states that it has
no third-party beneficiaries. Moreover, as a party to the Purchase
Contract, VPI cannot, by definition, be a third-party beneficiary
thereof. See McCall ex rel. Estate of McCall v. SSC Montgomery S.
Haven Operating Co., No. 2:14-cv-588-MHT-PWG, 2015 WL
13603823, at *10 (M.D. Ala. Aug. 6, 2015) (holding that a party

facts,” Miller v. West Valley City, 2017 UT App 65, ¶ 12, 397 P.3d
761 (cleaned up), cert. denied, 406 P.3d 249 (Utah 2017).

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                   Val Peterson v. Tennant Metals

“cannot simultaneously be a party to a contract and a third-party
beneficiary”). We are therefore left with only the question of
whether VPI is a third-party beneficiary under the Guarantee.

¶43 “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.”
SME Indus., 2001 UT 54, ¶ 47 (cleaned up). This is a high standard.
“It 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.”
Id. (cleaned up). There is barely a reference to VPI in the
Guarantee, let alone anything from which we may infer a clear
intention to confer a distinct benefit upon VPI. The Guarantee
expressly intends a benefit to Geneva by guaranteeing Tennant’s
performance under the Purchase Contract, but there is no
indication that benefit to a third party is anticipated. Thus, VPI is
not a third-party beneficiary of the Guarantee, and the district
court correctly dismissed VPI’s fourth cause of action. 8

                    IV. Fifth Cause of Action:
   VPI’s Breach of Fiduciary Duty Claims Against Defendants

¶44 VPI’s fifth cause of action contains claims of breach of
fiduciary duties by Defendants. The district court dismissed this
cause of action based on the economic loss rule. “The economic
loss rule prevents recovery of economic damages under a theory
of nonintentional tort when a contract covers the subject matter of

8. VPI’s second amended complaint alleges that VPI is an
intended beneficiary of the Guarantee and the Purchase Contract.
But this also is an allegation at odds with the unambiguous
language of those contracts and is thus an erroneous legal
conclusion that we need not accept in reviewing VPI’s motion to
dismiss. See supra note 7.

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                   Val Peterson v. Tennant Metals

the dispute.” Reighard v. Yates, 2012 UT 45, ¶ 20, 285 P.3d 1168.
“Thus, when a conflict arises between parties to a contract
regarding the subject matter of that contract, the contractual
relationship controls, and parties are not permitted to assert
actions in tort in an attempt to circumvent the bargain they agreed
upon.” Id. (cleaned up).

¶45 VPI does not challenge the court’s determination that the
economic loss rule bars recovery for breach of fiduciary duties if
those duties arise out of the contracts at issue between the parties.
Instead, VPI argues that it “has adequately pleaded the required
elements of a breach of fiduciary duty claim that exists separate
from its contract-based claims.” However, even assuming there
are fiduciary duties that exist outside the contracts at issue here,
such claims for breach of fiduciary duty “are subject to the general
four-year statute of limitations.” See National Title Agency LLC v.
JPMorgan Chase Bank NA, 2018 UT App 145, ¶ 16, 429 P.3d 758,
cert. denied, 432 P.3d 1232 (Utah 2018); see also Utah Code § 78B-2-
307. And because the alleged breaches of fiduciary duty occurred
over four years before this case was filed, claims based on such
breaches would be barred by the statute of limitations. We
therefore affirm the dismissal of VPI’s claims in its fifth cause of
action.

         V. Sixth, Seventh, and Eighth Causes of Action:
          VPI’s Equitable Claims Against Defendants

¶46 VPI argues that the district court erred in dismissing its
equitable claims of quantum meruit (both contract implied in law
and contract implied in fact) and estoppel, challenging the district
court’s reasoning that such claims were “barred where an express
contract governs the issue.” However, even assuming that the
district court erred in this regard, these equitable claims allegedly
arose due to Defendants’ non-payment in late 2012 and would
therefore have been barred by the four-year catch-all statute of
limitations, see Utah Code § 78B-2-307, which applies to equitable

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                   Val Peterson v. Tennant Metals

actions, see American Tierra Corp. v. City of West Jordan, 840 P.2d
757, 761 (Utah 1992) (applying the catch-all statute of limitations
to an equitable action after relying on both the “principle that
actions in equity frequently are governed by a state’s catch-all
limitation statute” and “the Utah precedents that have applied
our four-year catch-all statute to equitable actions”). We therefore
affirm the dismissal of VPI’s sixth, seventh, and eighth causes of
action.

                    VI. Ninth Cause of Action:
                      VPI’s Alter Ego Claim

¶47 Finally, VPI contests the dismissal of its ninth cause of
action, which purports to allege a claim of alter ego liability. VPI
argues that its alter ego claim should survive if we determine—as
we have—that any other of its claims survive the motion to
dismiss. Of course, Defendants are correct that “[a]lter ego theory
is not an independent claim for relief; rather, it is a theory of
liability.” Jones & Trevor Mktg., Inc. v. Lowry, 2012 UT 39, ¶ 6 n.1,
284 P.3d 630. Therefore, the court rightly dismissed VPI’s ninth
cause of action as a stand-alone claim. “However, to the extent
[VPI] relies on alter ego as a theory for recovery against
Defendants under [a] valid cause[] of action, [VPI] is free to
amend [its] complaint to put Defendants on notice of recovery
based on that theory.” Al-Fouzan v. Activecare, Inc., No. 2:15-cv-
373-BCW, 2016 WL 1092495, at *5 (D. Utah Mar. 21, 2016).

                          CONCLUSION

¶48 The dismissal of VPI’s breach of contract claims against
Tennant for alleged breaches of the Purchase Contract and the
MOU (VPI’s first cause of action) was inappropriate at this stage
of the proceedings, and we reverse this dismissal. We affirm the
dismissal of all other causes of action. However, VPI may amend
its complaint to include alter ego as a theory of recovery under its

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                  Val Peterson v. Tennant Metals

surviving claims as appropriate. We remand the case to the
district court for further proceedings consistent with this opinion.

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