437 P.3d 584
Utah Ct. App.2018Background
- Sara Skolnick, an OB/GYN, entered a three-year Employment Agreement with Exodus Healthcare; Exodus agreed to pay monthly base compensation in biweekly installments.
- Skolnick also entered a Recruiting Agreement with Jordan Valley Medical Center (Hospital) providing guaranteed monthly payments to her, which she was to endorse to Exodus to fund her salary; Hospital would forgive the loan if she practiced three years.
- For ~9 months the flow worked: Hospital paid Skolnick, she passed funds to Exodus, Exodus paid her salary. After Skolnick gave notice of resignation in December 2014, Hospital stopped its guaranteed payments and Exodus ceased paying Skolnick for work performed from Nov 22, 2014 to Jan 13, 2015.
- Skolnick sued for breach of the Employment Agreement; the district court granted summary judgment for Skolnick, awarding $35,707.92 in damages and attorney fees under the contract.
- Procedural dispute: Skolnick submitted an affidavit and also filed a separate motion for fees; the district court initially entered fees of $42,489.50, then vacated and reduced to $24,300, then reinstated the higher award after holding Exodus’s opposition untimely.
- On appeal, this Court affirmed breach-of-contract judgment, held Exodus’s payment obligation was a covenant (not condition precedent), reversed the district court’s timing ruling under Utah R. Civ. P. 73/7, reinstated the February 28 $24,300 reasonableness determination, and remanded for (1) entry of judgment consistent with that reduced fee award and (2) quantification of appellate fees allocable to the successful contract issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Exodus’s duty to pay was conditional on Hospital’s payments or an independent covenant | Skolnick: Exodus covenanted to pay ("shall pay") and thus remained obligated even if Hospital stopped payments | Exodus: Payment obligation was contingent on Hospital’s guaranteed monthly payments (condition precedent) | Court: Obligation was a covenant (not a condition); summary judgment for Skolnick affirmed |
| Whether district court erred in applying expedited timing (7 days) under Utah R. Civ. P. 73 to Exodus’s opposition | Skolnick: Rule 73(d) applied because liability for fees was decided; expedited 7-day response controlled despite her filing a motion | Exodus: By filing a separate motion for fees, rule 7(d)(1) gives 14 days to oppose; its opposition was timely | Court: Exodus prevailed; when a motion is filed, 14-day rule applies—court erred treating opposition as untimely |
| Proper fee amount after procedural error | Skolnick: Entitled to full $42,489.50 requested | Exodus: Court should consider reasonableness; its objection timely so reduced award appropriate | Court: Vacated the March 27 reinstatement; reinstated the district court’s Feb 28 reasonableness reduction to $24,300 and remanded for judgment consistent with that ruling |
| Recoverable appellate fees | Skolnick: Entitled to appellate fees for defending all issues on appeal | Exodus: Opposed fees for the issues it prevailed on (rule interpretation) | Court: Skolnick entitled to fees for successful defense of contract interpretation but not for defending the (unsuccessful) rule 73 position; remand to quantify appellate fees allocable to successful issues |
Key Cases Cited
- Fort Pierce Indus. Park Phases II, III & IV Owners Ass’n v. Shakespeare, 379 P.3d 1218 (Utah 2016) (standard of review and contract interpretation principles)
- Mind & Motion Utah Invs., LLC v. Celtic Bank Corp., 367 P.3d 994 (Utah 2016) (distinction between covenants and conditions; interpretation guidance)
- R.T. Nielson Co. v. Cook, 40 P.3d 1119 (Utah 2002) (contractual fee awards governed by contract terms)
- Valcarce v. Fitzgerald, 961 P.2d 305 (Utah 1998) (prevailing party on appeal entitled to appellate fees for successful issues)
- Gilbert Dev. Corp. v. Wardley Corp., 246 P.3d 131 (Utah Ct. App. 2010) (fees attributable only to successful contractual claims)