483 P.3d 64
Utah Ct. App.2021Background:
- In Feb 2015 Win-Win Investments (lessee) signed a written lease with Bernhard and Azora Dutson (lessors) that included a $350,000 purchase option; Win-Win never deposited the $1,000 earnest-money required by the Lease.
- Win-Win subleased the Property to Foundation for Family Life of Utah; Lease had an initial one-year term renewable annually; Win-Win renewed in Jan 2016 but failed to timely renew thereafter and the Lease expired by March 2017.
- After the Dutsons sent a notice to vacate, Win-Win sued alleging wrongful termination and failure to recognize its purchase option; the Dutsons counterclaimed for breach of the Lease for failure to maintain the premises and sought declaratory relief denying the option.
- At bench trial the court dismissed Win-Win’s claims (option not timely exercised) and left the Dutsons’ counterclaim; after the Dutsons presented their damage case, Win-Win’s owner testified for the first time that Win-Win had assigned the Lease to Foundation.
- Win-Win argued post-trial that assignment barred liability, relying on a broad affirmative-defense clause in its answer and seeking to amend pleadings under Utah R. Civ. P. 15(b); the district court held assignment was not pleaded, denied amendment (no implied consent), and awarded $146,065.05 in damages plus fees.
- The Court of Appeals affirmed: assignment was not pleaded; assignment was not tried by implied consent; sufficient evidence supported damages; appellees entitled to appellate attorney fees.
Issues:
| Issue | Win-Win's Argument | Dutsons' Argument | Held |
|---|---|---|---|
| Was assignment pleaded as an affirmative defense under Utah R. Civ. P. 8(c)? | The answer’s catch‑all defenses (including “release”) encompassed assignment. | Win‑Win never used the term “assignment” or similar language to give fair notice. | Court: Not pleaded; “release” language insufficient to give notice. |
| Was the unpleaded assignment defense tried by implied consent (Utah R. Civ. P. 15(b)(1)) so pleadings must be deemed amended? | No contemporaneous objection to Mr. White’s testimony amounted to implied consent; mandatory amendment required. | Assignment was first raised at trial’s end, inconsistent with prior disclosures and trial position; Dutsons lacked notice/opportunity to defend. | Court: No implied consent; discretionary denial of amendment was appropriate. |
| Was the district court’s damages award supported by sufficient evidence? | Damages were speculative; witnesses could not fix when damage occurred; insufficient proof Win‑Win caused damage. | Photographs, unrebutted expert repair-costs, and testimonial history supported that damage occurred during Win‑Win’s possession or were items Win‑Win agreed to repair. | Court: Award supported by record; not against clear weight of evidence. |
| Are Dutsons entitled to attorney fees on appeal under the Lease? | (No separate argument preserved) | Lease’s attorney‑fee provision entitles prevailing party to appellate fees. | Court: Yes; remanded to calculate reasonable appellate fees. |
Key Cases Cited
- Hart v. Salt Lake County Comm'n, 945 P.2d 125 (clarifies standards of review for findings of fact and conclusions of law)
- Mack v. Utah State Dep't of Commerce, 221 P.3d 194 (defenses not raised in responsive pleading are waived)
- Fishbaugh v. Utah Power & Light, 969 P.2d 403 (pleadings must give fair notice to opposing party)
- Pilot v. Hill, 437 P.3d 362 (district court has broad discretion in determining whether issue was tried by implied consent under Rule 15(b))
- Berg v. Berg, 278 P.3d 1071 (when an unpleaded issue is tried by consent it must be treated as pleaded)
- Estate of Allred, 216 P.3d 929 (distinguishes mandatory and discretionary aspects of Rule 15(b))
- Guss v. Cheryl, Inc., 240 P.3d 1142 (implied consent may be found where opposing party actively defends unpleaded issue)
- Koehler v. Allen, 466 P.3d 738 (standard for sufficiency of evidence in bench trials)
- Telegraph Tower LLC v. Century Mortg. LLC, 376 P.3d 333 (prevailing party awarded appellate attorney fees when entitled below)
