543 P.3d 1264
Utah Ct. App.2024Background
- J&M Transmission (J&M) leased property from Young H2ORE (Young) and allegedly fell behind on rent, leading Young to claim almost $23,000 in unpaid amounts.
- The parties entered a Settlement Agreement: J&M would vacate by a specific date, and Young would waive its prior damage claims from the lease.
- J&M fully vacated the property but was 19 days late removing all equipment; Young then sued for breach of the Settlement Agreement, seeking rescission and reinstatement of the lease claims.
- The district court granted J&M summary judgment, ruling that because Young had an adequate remedy at law (damages), rescission was unavailable. Damages of $3,996.13 were awarded to Young.
- Both parties appealed aspects of the rulings, including who was the "prevailing party" for attorney fees, and how attorney fees should be allocated.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Availability of rescission as a remedy | Rescission available for material breach, not limited by adequacy of legal remedy | Rescission is equitable, barred when legal damages suffice | Adopted Restatement approach: rescission available for material breach only if equitable, considering adequacy of legal remedy and restoration of status quo. Remanded for application. |
| Materiality of breach (J&M’s late move-out) | J&M’s breach was material | Not a material breach; damages suffice | District court to determine materiality and apply Restatement test on remand. |
| Allocation of attorney fees to prevailing party | Young should be declared prevailing party and recover all fees | J&M should be prevailing party and recover all fees | No abuse of discretion in treating both as prevailing on separate issues; court’s phased approach to apportioning fees is permissible. Remanded for recalculation following merits rulings. |
| Fee entitlement after Rule 68 offer | Young’s judgment exceeded offer, so full fees justified | J&M’s offer matched judgment; Young should not get post-offer fees | Court erred; Young not entitled to fees for work done after J&M’s offer equaled final judgment. Remanded to correct this. |
Key Cases Cited
- Polyglycoat Corp. v. Holcomb, 591 P.2d 449 (Utah 1979) (recognizes rescission as a remedy for material breach)
- Acton v. Deliran, 737 P.2d 996 (Utah 1987) (rescission is an equitable remedy, limited when legal remedy suffices)
- Ockey v. Lehmer, 189 P.3d 51 (Utah 2008) (equitable relief generally unavailable if adequate legal remedy exists)
- Ong Int’l (U.S.A.) Inc. v. 11th Avenue Corp., 850 P.2d 447 (Utah 1993) (rescission aims to restore status quo; trial court discretion in remedying)
- Coalville City v. Lundgren, 930 P.2d 1206 (Utah Ct. App. 1997) (addressed both material breach and adequacy of legal remedy concepts in rescission context)