E & H Land, Ltd. v. Farmington City
2014 UT App 237
| Utah Ct. App. | 2014Background
- In 2011 Farmington City purchased a narrow 1.5-acre strip from E&H Land (REPC exhibits depict a strip that flares into a lead-off shaped like half an intersection) to facilitate a Park Lane extension across E&H’s property connecting Park Lane and Clark Lane.
- Paragraph 6 of the REPC states Farmington bought the property "with the intent that it will be used for a realignment of the future Park Lane extension," and places responsibility for public improvements on owners of abutting parcels; the REPC contains an integration clause and an abrogation/merger clause.
- Prior to closing, E&H contends parties orally agreed the intersection would be centered on E&H’s eastern boundary; Farmington later decided to shift the intersection off E&H’s land for engineering/safety reasons.
- E&H sued for breach of contract, reformation for mutual mistake, promissory estoppel, breach of the covenant of good faith and fair dealing, and related claims; Farmington moved for summary judgment and the district court granted it on all claims.
- On appeal the court considered whether the REPC is facially ambiguous (so extrinsic evidence is admissible), whether reformation is available despite integration/merger, and which equitable claims survive given an enforceable contract.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the REPC obligate Farmington to build the roadway and place the intersection at a particular location on E&H’s land? | REPC language and the exhibits (strip + lead-off) show Farmington agreed to use the parcel to build the roadway and intersection at E&H’s eastern boundary. | REPC contains no language obligating Farmington to locate the intersection at any specific spot; at most it purchased land for a possible realignment. | REPC is facially ambiguous on whether Farmington was bound to a particular intersection location; issue of intent is factual — remand for extrinsic evidence. |
| May extrinsic evidence be considered despite the REPC’s integration clause to resolve ambiguity? | Prior emails/meetings show mutual understanding; extrinsic evidence should be considered to reveal latent/facial ambiguity. | Integration clause bars reliance on prior negotiations; the contract is the final expression. | Because the REPC is facially ambiguous, parol/extrinsic evidence is admissible to determine parties’ intent. |
| Does a breach of the covenant of good faith and fair dealing survive summary judgment? | If contract obligated Farmington to build at a location and Farmington moved the intersection, that could frustrate E&H’s contractual benefit and breach the covenant. | Covenant cannot create duties not in the contract. | Reversed as to this claim — survival depends on factual finding whether contract imposed the specific obligation. |
| Is reformation for mutual mistake available despite integration/merger/abrogation clauses? | Mutual mistake excusing mismatch between written REPC and actual agreement justifies reformation; extrinsic evidence should be considered. | Merger/abrogation clause and deed integration preclude reforming the contract. | Reformation claim survives; merger/abrogation do not preclude reformation when obligations are collateral or mutual mistake is alleged. |
| Was promissory estoppel actionable given the existence of an enforceable contract? | E&H alternatively pleads promissory estoppel based on reliance on Farmington’s promises. | Because a valid contract governs the dispute, promissory estoppel is barred as inconsistent. | Affirmed dismissal of promissory estoppel — equitable estoppel cannot stand once an enforceable contract governs. |
Key Cases Cited
- Ward v. Intermountain Farms Ass’n, 907 P.2d 264 (Utah 1995) (parol evidence may be considered to determine whether a contract term is ambiguous)
- Saleh v. Farmers Ins. Exch., 133 P.3d 428 (Utah 2006) (facial ambiguity exists when terms have two or more plausible meanings)
- Daines v. Vincent, 190 P.3d 1269 (Utah 2008) (if contract is facially ambiguous, parol evidence of parties’ intent should be admitted)
- Tangren Family Trust v. Tangren, 182 P.3d 326 (Utah 2008) (integration clause exceptions; clarifies when extrinsic evidence may be considered)
- Davencourt at Pilgrims Landing v. Davencourt at Pilgrims Landing, LC, 221 P.3d 234 (Utah 2009) (merger doctrine and collateral-obligations exception to merger/abrogation)
- Oakwood Vill. LLC v. Albertsons, Inc., 104 P.3d 1226 (Utah 2004) (covenant of good faith cannot create duties beyond contract; breach requires interference with contract benefits)
- Secor v. Knight, 716 P.2d 790 (Utah 1986) (merger doctrine in real estate conveyances)