2013 UT 49
Utah2013Background
- Two Vehicle Contracts were formed March 4, 2002 for two Ford GT40s, each with a $1,000 deposit, contingent on Ford allocating GT40s to Henry Day.
- Ford renamed the production version of the GT40 to the Ford GT; the contracts referred to GT40, creating a latent ambiguity about vehicle identity.
- Henry Day refunded Watkins’s deposits on December 31, 2002 after Ford indicated Henry Day would not receive allocations, sending Watkins a refund checks.
- Ford later allocated multiple GTs to Henry Day in 2004–2005, causing Watkins to seek two GTs at MSRP but Henry Day offered at $250,000 each.
- The district court ruled the contracts were clear and not enforceable due to ambiguity or abandonment; it found waiver and damages mitigation issues unresolved.
- The court of appeals reversed, concluding latent ambiguity existed but did not excuse obligations and remanded for abandoned-right and damages-mitigation determinations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Latent ambiguity absolves performance? | Watkins: ambiguity exists but does not excuse obligations; they intended GT production model. | Henry Day: latent ambiguity could excuse performance; contract terms unambiguous to sale of GT40/GT. | Latent ambiguity does not excuse obligations; parties intended production GT. |
| Did Henry Day abandon the Vehicle Contracts? | Watkins: no unequivocal abandonment; Watkins continued to seek vehicles and contested delays. | Henry Day: refunded deposits and asserted no allocations, signaling abandonment. | Henry Day abandoned the contracts; remand on Watkins’s abandonment viability and mitigation. |
| Did Watkins’s actions after December 31, 2002 amount to abandonment or acquiescence? | Watkins’s actions could be acquiescence only if he understood there were no contingent rights left. | Watkins deposited the refund assuming no further allocations were possible. | Remand to determine Watkins’s understanding; if he admitted no rights, abandonment may be found; otherwise not. |
Key Cases Cited
- Wallace v. Build, Inc., 402 P.2d 699 (Utah 1965) (abandonment shown by unequivocal acts with acquiescence)
- Parduhn v. Bennett, 61 P.3d 982 (Utah 2002) (mutual assent or conduct can demonstrate abandonment)
- Soter’s, Inc. v. Deseret Federal Savings & Loan Ass’n, 857 P.2d 935 (Utah 1993) (waiver is intentional relinquishment of a known right)
- Tangren Family Trust v. Tangren, 182 P.3d 326 (Utah 2008) (parol evidence allowed to interpret integrated contracts when ambiguity exists)
- Ward v. Intermountain Farmers Ass’n, 907 P.2d 264 (Utah 1995) (consider surrounding circumstances to interpret contract terms)
- Daines v. Vincent, 190 P.3d 1269 (Utah 2008) (contract interpretation requires considering extrinsic evidence for ambiguity)
- Guardian State Bank v. Stangl, 778 P.2d 1 (Utah 1989) (reformation and misrepresentation principles in contract)
- Mahmood v. Ross (In re Estate of Ross), 990 P.2d 933 (Utah 1999) (avoidance of damages when mitigation duties apply)