436 P.3d 123
Utah Ct. App.2018Background
- David Fisher and OMC had a dispute with Dr. Lavern Davidhizar over loaned decompression tables; they entered a settlement agreement that Davidhizar later repudiated.
- David and OMC sued for breach; Davidhizar counterclaimed for fraudulent inducement. The district court granted summary judgment to David on breach but reserved damages; fraud counterclaim remained.
- David filed for bankruptcy before trial. David’s parents (Darwin and Cheryl Fisher) and the bankruptcy estate executed a Purchase Agreement resolving who owned the lawsuit proceeds; the Fishers moved to substitute in as plaintiffs and the court allowed substitution.
- The district court later ordered the Fishers to assume liability for any damages or fees awarded on Davidhizar’s counterclaim. The jury found David had fraudulently induced the settlement and awarded Davidhizar damages and attorney fees.
- The Fishers appealed, arguing the Purchase Agreement transferred only David’s (and the estate’s) interest in potential proceeds, not liability for the counterclaim; they also sought remand on the attorney-fees award.
Issues
| Issue | Plaintiff's Argument (Fishers) | Defendant's Argument (Davidhizar) | Held |
|---|---|---|---|
| Whether the Purchase Agreement transferred liability for Davidhizar’s counterclaim | Purchase Agreement unambiguously transferred only the bankruptcy estate’s interest in potential proceeds/causes of action, not liabilities | Definition of “Davidhizar Action” and transfer language encompassed the entire lawsuit, so Fishers assumed rights and liabilities | Reversed: agreement transferred only the estate’s interest in potential proceeds/claims by David, not liability for the counterclaim |
| Whether the attorney-fees award should be revisited given the Fishers’ non-liability | If Fishers aren’t liable, Davidhizar may not be the prevailing party; remand to reconsider fees is required | Trial court properly awarded fees under the settlement and the reciprocal-fee statute; Fishers’ objection was unpreserved, but merits depend on appeal outcome | Vacated and remanded to district court to determine who is the prevailing party and whether attorney fees should be awarded |
Key Cases Cited
- Mind & Motion Utah Invs., LLC v. Celtic Bank Corp., 367 P.3d 994 (Utah 2016) (ordinary meaning of contract language determines parties’ intent)
- Walters v. Wal-Mart Stores, Inc., 703 F.3d 1167 (10th Cir. 2013) (applying contract-law principles to settlement agreements)
- Winegar v. Froerer Corp., 813 P.2d 104 (Utah 1991) (assignment of contract may or may not include assumption of liabilities depending on terms and intent)
- Glenn v. Reese, 225 P.3d 185 (Utah 2009) (interpret contract provisions to give effect to all terms)
- Encon Utah, LLC v. Fluor Ames Kraemer, LLC, 210 P.3d 263 (Utah 2009) (harmonize provisions and avoid rendering any clause meaningless)
- R.T. Nielson Co. v. Cook, 40 P.3d 1119 (Utah 2002) (prevailing-party determination for fee awards is within trial court discretion)
- Parker v. Wendy’s Int’l, Inc., 365 F.3d 1268 (11th Cir. 2004) (pre-petition causes of action are property of the bankruptcy estate)