447 P.3d 1265
Utah Ct. App.2019Background
- In 2012 Bergdorf bought a building for a medical clinic and sought financing from U.S. Bank to fund remodeling (the Project). She retained Randy Krantz as the on-site contractor/intermediary; Krantz’s contractor license was expired.
- Krantz arranged for Salmon Electrical Contractors (Salmon), a licensed contractor he had worked with, to be listed as general contractor for the Loan paperwork and building permit; Salmon completed and signed some loan-application forms and Salmon’s secretary paid for and obtained a permit listing Salmon as general contractor. The Proposed Contract listing Salmon was never signed and Bergdorf says she never saw it. The Loan never closed.
- While the Loan was pending (and unbeknownst to Salmon and, at times, to Bergdorf), Krantz hired a subcontractor who performed demolition; Bergdorf did not authorize the demolition and later told Krantz to stop. The Salmon-issued permit expired because no work commenced within 180 days.
- In 2013–2014 Bergdorf renewed the permit without Salmon’s knowledge, solicited new bids, and contracted with Krantz (not Salmon); payments for work were made to Krantz or his entities. Later, when sued by a subcontractor, Bergdorf sued Salmon based on Salmon’s name on the original permit.
- Salmon moved for summary judgment arguing no contractual relationship existed between Bergdorf and Salmon and that Krantz lacked authority to bind Salmon. The district court granted summary judgment; the court of appeals affirmed.
Issues
| Issue | Plaintiff's Argument (Bergdorf) | Defendant's Argument (Salmon) | Held |
|---|---|---|---|
| Whether Krantz had apparent authority to bind Salmon | Salmon clothed Krantz with apparent authority by providing permit, loan paperwork, and allowing Krantz to act as intermediary, so a jury could find agency | No manifestations by Salmon to Bergdorf show Krantz had authority; many relevant acts (permit, docs) were unknown to Bergdorf; Krantz’s statements alone cannot create apparent authority | No apparent authority as a matter of law; summary judgment affirmed |
| Whether a contract existed between Bergdorf and Salmon | Conduct (permit, loan documents, bank email, and later performance) supports finding mutual assent or implied contract | No signed contract or mutual assent; agreement to be GC was contingent on loan/funding and the loan never closed; work/payments were to Krantz, not Salmon | No contract as a matter of law; preliminary agreement contingent on financing insufficient |
| Whether Bergdorf reasonably relied and was injured by any appearance of authority | Bergdorf relied by applying for the loan, allowing work to begin, and suffering damage from demolition; bank email approving Salmon and Salmon’s silence support reliance | Bergdorf did not know about submitted documents or that Salmon obtained the permit at the relevant times; demolition was unauthorized by Bergdorf and done by Krantz alone; no reliance tied to Salmon’s manifestations | No reasonable reliance established tied to Salmon’s manifestations; third Burdick factor fails |
| Whether material facts exist requiring a trial | Evidence of Salmon’s communications, permit payment, past partnership with Krantz, and ambiguous deposition testimony create triable issues | Facts show absence of assent, no knowledge by Bergdorf, expired permit, and payments to Krantz—no triable issue for Salmon | Court finds reasonable minds could not differ; summary judgment appropriate (dissent would remand) |
Key Cases Cited
- Burdick v. Horner Townsend & Kent, Inc., 345 P.3d 531 (Utah 2015) (sets three-part test for apparent authority)
- City Elec. v. Dean Evans Chrysler-Plymouth, 672 P.2d 89 (Utah 1983) (corporate liability for agent’s apparent authority depends on principal’s knowledge and acquiescence)
- Grazer v. Jones, 289 P.3d 437 (Utah 2012) (distinguishes actual authority from apparent authority)
- Ellsworth v. American Arbitration Ass'n, 148 P.3d 983 (Utah 2006) (name on unsigned contract is not direct evidence of assent)
- Heideman v. Washington City, 155 P.3d 900 (Utah Ct. App. 2007) (mutual assent via conduct requires communications sufficient to indicate intent to bargain)
- Heslop v. Bear River Mut. Ins. Co., 390 P.3d 314 (Utah 2017) (summary judgment inferences must be reasonable, not speculative)
- Luddington v. Bodenvest Ltd., 855 P.2d 204 (Utah 1993) (all elements of apparent authority must be shown)
- Zions First Nat'l Bank v. Clark Clinic Corp., 762 P.2d 1090 (Utah 1988) (agent’s representations alone cannot create principal’s apparent authority)