Miсhael T. BILANZICH, Plaintiff and Petitioner, v. John LONETTI, an individual; Eunes I. Lonetti, an individual; and JDL Holdings, L.C., Defendants and Respondents.
No. 20060017.
Supreme Court of Utah.
March 20, 2007.
Rehearing Denied April 24, 2007.
2007 UT 26 | 153 P.3d 761
Terry L. Wade, Bryan J. Pattison, Michael F. Leavitt, St. George, for defendants.
PARRISH, Justice:
INTRODUCTION
¶ 1 Michael Bilanzich asks this court to overturn a court of appeals decision denying his claim for attorney fees. We hold that
BACKGROUND
¶ 2 John and Eunes Lonetti (the “Lonettis“) loaned $1,780,600 to Reese‘s Enterprises, Inc. (“REI“). The loan was evidenced by a promissory note and secured by a security agreement and a trust deed in real property owned by the corporation. The Lonettis and REI later entered into an agreement modifying the original promissory note tо account for the outstanding principal, interest, and an additional loan of $354,938. The modified promissory note held a balance of $2,167,717. The Lonettis subsequently filed suit against REI to foreclose their trust deed and collect on the note.
¶ 3 In an attempt to resolve REI‘s legal and financial woes, a representative of REI approached Bilanzich, proposing that he execute a personal guaranty on the Lonetti loan and other debts in exchange for an ownership interest in REI. Thereafter, in order to settle the Lonetti suit, REI, the Lonettis, and Bilanzich entered into a settlement agreement memorialized in a document entitled “term sheet.” Among other things, the term sheet provided that Bilanzich would place a personal guaranty of the REI promissory note into escrow and that, upon the satisfaction of the condition that REI obtain adequate financing, the guaranty would be released to the Lonettis at a closing. The term sheet specified that “[i]f financing is not obtained, the closing will not occur, all items in escrow will be returned to the party depositing them, and Lonetti will foreclose and realize on security.”
¶ 4 In accord with the provisions of the term sheet, Bilanzich signed a personal guaranty and placed it in escrow. The Bilanzich guaranty included a unilateral provision that granted to the Lonettis any “costs, expenses, and attorney‘s fees incurred in collection of the Note and realization of the security.”
¶ 5 REI did not obtain adequate financing to satisfy the conditions of the term sheet, and the corporation later filed for bankruptcy. Despite this fact, the Bilanzich guaranty was released from escrow to the Lonettis. The Lonettis subsequently assigned the REI note, the deed of trust, and the Bilanzich guaranty to their company, JDL Holdings L.C. (“JDL“).
¶ 6 Bilanzich filed this action in August 2000, seeking to have the personal guaranty
¶ 7 Bilanzich then filed a motion seeking his attorney fees pursuant to
¶ 8 The district court denied Bilanzich‘s motion for fees.2 Bilanzich appealed. The court of appeals affirmed the district court on the basis of the common law rule that a party may not “avoid [a] contract and, at the same time, claim the benefit of the provision for attorney fees.” Bilanzich v. Lonetti, 2005 UT App 522U, paras. 4, 7, 2005 WL 3315329 (quoting BLT Inv. Co. v. Snow, 586 P.2d 456, 458 (Utah 1978)). In so holding, the court of appeals reasonеd that the common law rule established in BLT Investment survived the enactment of
¶ 9 Bilanzich subsequently petitioned for certiorari, which we granted for the following issue: “Whether
STANDARD OF REVIEW
¶ 10 The question presented to us requires an interpretation of
ANALYSIS
¶ 11 Generally, attorney fees are awarded only when authorized by contract or by statute. Fericks v. Lucy Ann Soffe Trust, 2004 UT 85, ¶ 23, 100 P.3d 1200. But see Stewart v. Pub. Serv. Comm‘n, 885 P.2d 759, 782-83 (Utah 1994) (awarding fees under this court‘s equitable powers in an original proceeding challenging a telephone rate increase where the petitioner acted “as a private attorney general“). Bilanzich has no contractual right to attorney fees because the fees provision within the guaranty was unilateral,
¶ 12 Because Bilanzich cannot establish a contractual claim to attorney fees, we next consider whether
[a] court may award costs and attorney‘s fees to either party that prevails in a civil action based upon any promissory note, written contract, or other writing executed after April 28, 1986, when the provisions of the promissory note, written contract, or other writing allow at least one party to recover attorney‘s fees.
¶ 13 “When interpreting statutes, our primary goal is to evince the true intent and purpose оf the Legislature.” State v. Martinez, 2002 UT 80, ¶ 8, 52 P.3d 1276 (internal quotation marks omitted). The first step of statutory interpretation is to evaluate the “best evidence” of legislative intent, namely, “the plain language of the statute itself.” Id. (internal quotation marks omitted). “When examining the statutory language we assume the legislature used each term advisedly and in accordance with its ordinary meaning.” Id. (internal quotation marks omitted).
¶ 14 The plain language of
¶ 15 The first condition of the statute is met because the Lonettis’ claim against Bilanzich was based entirely upon the personal guaranty.
¶ 16 The second condition of the statute is also met because the guaranty provides for an award of attorney fees and costs to the Lonettis.5 Although the guaran-
¶ 17 We note, however, that the language of the statute is not mandatory but allows courts to exercise discretion in awarding attorney fees and costs. Under the plain language of
¶ 18
¶ 19 Consequently, in order to further the statute‘s purpose, the exposure to the risk of a contractual obligation to pay attorney fees must give rise to a corresponding risk of a statutory obligation to pay fees. In exercising their discrеtion, therefore, district courts should award fees liberally under
¶ 20 We stress that in furthering
¶ 21
¶ 22 Finally, Bilanzich argues that this court should reject the Lonettis’ remaining claim that the settlement agreement barred Bilanzich from seeking fees. We decline to do so. It is not the role of this court to resolve fact-sensitive claims that are not encompassed within the question on which we granted certiorari and have not been properly addressed in the courts bеlow. On remand, therefore, the district court should address all remaining issues that were properly presented to it but not resolved.
CONCLUSION
¶ 23 We hold that even though the guaranty is unenforceable,
¶ 24 Chief Justice DURHAM and Justice DURRANT concur in Justice PARRISH‘S opinion.
WILKINS, Associate Chief Justice, dissenting:
¶ 25 The legal import of the district court‘s determination that the guaranty is a nullity is to prevent either party from collecting attorney fees from the other based upon the
¶ 26 Mr. Bilanzich brought suit seeking a declaration from the district court that he had no liability under the guaranty. It is the guaranty alone that determines his fate. He alleged, and the district court found, that the guaranty had been placed in escrow and was not to be delivered to the Lonettis until and unless preconditions were met. He also alleged, and the district court found, that the relevant precondition was not met, but that the guaranty was mistakenly sent to the Lonettis anyway.
¶ 27 Mr. Bilanzich prevailed on his motion for summary judgment before the district court because the guaranty never toоk effect. To be of any legal consequence, the guaranty had to have been “delivered” to the Lonettis in the legal sense. Delivery of a document held in escrow upon conditions is not legally delivered unless done with the authorization of the guarantor. Mr. Bilanzich, as the guarantor on the document, had restricted the authority of the escrow agent to deliver the document on his behalf. The agent had no authority to deliver the document as was done. The district court said as much. The acquisition of the necessary loan was not a condition precedent to the legal effectiveness of the guaranty, it was an unmet condition precedent to the authority of the escrow agent to deliver the guaranty to the Lonettis. The guaranty, had it been properly delivered, contained no limitations relating to the loan acquisition. On its face it is unconditional. The limitation appears only in the escrow arrangement between the parties (the “term sheet” upon which both rely), and addresses nоt the obligation accruing to Bilanzich upon delivery of the guaranty, but rather, the circumstances under which the unconditional guaranty was to be delivered.
¶ 28 The facts in this case are more akin to a failure to agree than a failure of bargained consideration expressed as a condition precedent. It is as if the Lonettis found the guaranty in the parking lot, and knowing the loan had not been acquired as agreed, elected to keep the guaranty and treat it as binding on Bilanzich anyway.
¶ 29 Both рarties, at one time or another in these proceedings, have claimed that the guaranty authorizes the recovery of attorney fees by the Lonettis incurred in collecting on the promissory note and deed of trust. By extension, Mr. Bilanzich also claims that the guaranty itself provides for attorney fees to the Lonettis. I do not agree. But even if it did, it is of no consequence in this case.1
¶ 30 Having never been lawfully delivered, as is required for a guaranty to be binding, any claimed benefit from the attorney fees lаnguage in the guaranty never, as a matter of law, accrued to the benefit of the Lonettis. The statutory basis upon which Mr. Bilanzich relies for equitable award of his attorney fees is thereby defeated as well, inasmuch as the guaranty must grant fees to the Lonettis (if successful) in order for the statute to extend the same to Bilanzich.
¶ 31
¶ 32 However, for any “writing,” including a promissory note or a written contract, to be of any legal сonsequence, it must be given to the party claiming the benefit. Just as a guaranty intended for one but mistakenly given to another cannot be enforced by the recipient, a guaranty intended to be given only after the occurrence of an event that is
¶ 33 Just as a stolen promissory note cannot be enforced by the thief, neither can a guaranty be enforced by one aware of legally deficient delivery.
¶ 34 Had the Lonettis been unaware of the limitations on the escrow аgent‘s authority to deliver the guaranty, or had they been unaware of the condition regarding the loan set forth in the “term sheet,” or had they been unaware the loan had not been arranged at the time of closing as contemplated by the parties, the result might well be different. If those were unresolved issues of fact, a remand to resolve them would be in order. However, there appears to be no dispute regarding these critical facts.
¶ 35 Equity cannot revive that which has never lived. The obligations of the guaranty executed by Mr. Bilanzich never commenced legal life. As the district court correctly put it, the guaranty is (and always was) a “nullity.” Neither party is entitled to any benefit, or burden, from its stillborn terms. The legislature did not address the question, and the existing rule of law, as expressed in BLT Investment Co. v. Snow, 586 P.2d 456, 458 (Utah 1978), has not changed: One who successfully establishes that no agreement exists between the parties cannot then claim a purported benefit from it. Just as the attorney fees provisions work both ways, so does the effect of nullificatiоn.
¶ 36 At least, that is my opinion. Consequently, I would affirm the court of appeals.
¶ 37 Justice NEHRING concurs in Associate Chief Justice WILKINS’ dissenting opinion.
Notes
The rule of common law that statutes in derogation thereof are to be strictly construed has no application to the statutes of this state. The statutes establish the laws of this state respecting the subjects to which they relate, and their provisions and all proceedings under them are to be liberally construed with a view to effect the objects of the statutes and to promote justice.