Gardiner v. Anderson

436 P.3d 237

Utah Ct. App.

2018

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RICHARD E. GARDINER v. NELS ANDERSON

No. 20170551-CA

THE UTAH COURT OF APPEALS

Filed August 30, 2018

2018 UT App 167

Fourth District Court, Fillmore Department

The Honorable Jennifer A. Brown

No. 160700010

Todd F. Anderson, Attorney for Appellant and Cross-appellee

Marlin J. Grant, Attorney for Appellee and Cross-appellant

JUDGE KATE A. TOOMEY authored this Opinion, in which JUDGES DAVID N. MORTENSEN and DIANA HAGEN concurred.

TOOMEY, Judge:

¶1 Richard E. Gardiner (Landlord) appeals the district court’s grant of summary judgment in favor of Nels Anderson (Tenant). Tenant cross-appeals the court’s decision to award Landlord attorney fees with respect to Landlord’s motions to strike and the court’s denial of Tenant’s request for attorney fees as the prevailing party. We affirm the district court’s grant of summary judgment in favor of Tenant because Landlord’s claim fails as a matter of law. We remand to the district court to provide findings of fact and conclusions of law to support its decision to award attorney fees to Landlord for the motions to strike. We reverse the district court’s conclusion that the Lease did not trigger the reciprocal attorney fees statute and remand for the court to determine whether Tenant should be awarded attorney fees as the prevailing party. We further conclude Tenant is entitled to attorney fees on appeal and remand to determine the reasonable amount of fees incurred on appeal and cross-appeal.

BACKGROUND

¶2 On November 1, 2013, Landlord and Tenant entered into a lease agreement (the Lease) for a warehouse building (the Warehouse) to last for two years until October 31, 2015. The Lease provided that Tenant was to “repair” the Warehouse “at [Tenant’s] sole cost and expense, including, but not limited to, electrical fixtures, interior painting and decorating, and glass replacement.” The agreed rent escalated gradually over time from $600 per month to $1,000 per month. The Lease prohibited Tenant from subleasing the Warehouse without Landlord’s prior written consent. The sublease provision states:

[Tenant] shall not . . . sublet or permit the leased premises or any part thereof to be used by others for any purpose, without prior written consent of [Landlord] being first obtained in each instance; provided, however, that regardless of any such assignment or sublease, [Tenant] shall remain primarily liable for the payment of the rent herein reserved and for the performance of all the other terms of this lease required to be performed by [Tenant].

¶3 Despite this provision, Tenant entered into an oral agreement to sublet the Warehouse to a subtenant (Subtenant), beginning November 1, 2013—the same day the Lease went into effect—without Landlord’s written consent. Tenant and Subtenant orally agreed that Subtenant would pay $2,250 per month in rent from November 1, 2013, through October 31, 2014; and $3,000 per month from November 1, 2014, through March 31, 2015. They later signed a written agreement to sublet¹ the Warehouse for $5,000 per month from April 1, 2015, to September 30, 2015.

¶4 In July 2015, Landlord discovered that Tenant was subletting the Warehouse and sent Tenant a letter in September 2015, giving Tenant written notice of his default of the sublease provision and giving him ten days to cure by paying Landlord $30,000. Because Tenant chose not to cure the breach, Landlord terminated the Lease pursuant to its default provisions. Tenant promptly vacated the Warehouse.

¶5 A few months later, Landlord filed a complaint, alleging that Tenant unlawfully detained the Warehouse, breached the Lease, and was unjustly enriched by the Sublease. Landlord claimed he had been damaged by the Sublease in the amount of $53,100, arguing that he “would have agreed to the Sublease if Tenant had paid Landlord the difference between Tenant’s rent and what Tenant received from [Subtenant].” Landlord sought treble damages in the amount of $159,300 and reasonable attorney fees, arguing that the Sublease amounted to an unlawful detainer under Utah Code section 78B-6-802(1)(d). Alternatively, he sought $53,100 in damages for either breach of contract or unjust enrichment, stating that “it would be unjust for the Tenant to retain the benefit from the sublet rent that he received.”

¶6 Tenant filed an answer and later a Motion to Dismiss or in the Alternative for Summary Judgment (Tenant’s Motion for Summary Judgment). He attached a Verified Memorandum of Points and Authorities (the Verified Memorandum) in which he swore “under oath to tell the whole truth.” In the Verified Memorandum, Tenant articulated material facts that were substantially similar to Landlord’s complaint, including that Tenant breached the Lease, entered into a Sublease, chose not to cure the breach, and vacated in a timely fashion pursuant to the Lease’s default provision. He referred to Landlord’s complaint and the exhibits attached to it to support these facts. Tenant also argued that Landlord’s unlawful detainer claim failed because Tenant returned possession of the Warehouse to Landlord before the term of the notice expired. He further argued that Landlord had no remedy for breach of contract because the Lease allowed Landlord to terminate the Lease and collect the $1,000 rent due each month through the end of the Lease, which included lost rents from Tenant between September 14, 2015, and October 31, 2015, but, according to Tenant, nothing in the Lease entitled Landlord to the rent from the Sublease. Finally, he argued that without evidence of an unlawful detainer or a provision in the Lease that would entitle Landlord to such damages, Landlord could not claim that Tenant was unjustly enriched from the rent collected under the Sublease.

¶7 Landlord opposed Tenant’s Motion for Summary Judgment, arguing that the Verified Memorandum did not comply with rule 56 of the Utah Rules of Civil Procedure because it did “not state that the facts set forth in the pleading were true and correct to the personal knowledge of the signer,” and instead “attempt[ed] to verify the entire contents of the pleading, not just the factual assertions, and some of the facts sworn were . . . mere assumptions or conclusions.”² Landlord also “[d]isputed” many of the facts in the Verified Memorandum, essentially claiming that the facts were not relevant to the complaint or re-characterizing the way Tenant had articulated them.³

¶8 Landlord then filed his own motion for summary judgment (Landlord’s Motion for Summary Judgment), asserting that there was no dispute as to any material fact and arguing that subletting the Warehouse without Landlord’s written consent was an unlawful detainer and a breach of contract, which “entitled [him] to judgment” for $153,600⁴ plus reasonable attorney fees and post-judgment interest. Shortly thereafter, Tenant filed a reply memorandum in support of his own motion for summary judgment and then a memorandum in opposition to Landlord’s Motion for Summary Judgment. Landlord filed motions to strike both of these replies (the Motions to Strike), claiming they were untimely filed and failed to comply with the Utah Rules of Civil Procedure. The district court heard argument on the Motions to Strike and ultimately struck Tenant’s two reply memoranda for being untimely and ordered Tenant to pay Landlord attorney fees and costs related to the Motions to Strike. But the court determined that, because Tenant filed a motion for summary judgment, Landlord’s Motion for Summary Judgment was opposed and the court would therefore “consider arguments and material” from the Verified Memorandum.⁵

¶9 The district court considered both parties’ motions for summary judgment. It concluded that nothing in the unlawful detainer statute or the Lease supported Landlord’s claim for damages of $53,100 in rent Tenant obtained from the Subtenant. The court determined that “the only remedy [Landlord] appears to be entitled to is a declaration under [the unlawful detainer statute] that the [Lease] is forfeited due to [Tenant’s] failure to perform a condition or covenant therein.” Tenant complied with Landlord’s notice to vacate when he elected to promptly vacate the Warehouse rather than cure the breach and therefore did not unlawfully possess it. The court further concluded that even if Tenant was in “unlawful detainer” of the Warehouse under Utah Code section 78B-6-802(1)(d) for unauthorized subletting, that section “does not specifically provide for damages for unauthorized subletting” and neither did the Lease. As a result, the court granted summary judgment in favor of Tenant and denied Landlord’s cross-motion.

¶10 In light of judgment in his favor, Tenant requested attorney fees, contending that he was the prevailing party in the lawsuit because he successfully defended against Landlord’s complaint. He also argued that he was entitled to attorney fees under the unlawful detainer statute because he successfully defended against the claim of unlawful detainer. Landlord challenged the request, arguing that the Lease’s enforcement provision provided for attorney fees only to the party not in breach of the Lease. The enforcement provision states:

Should either party default in the performance of any covenants or agreements contained herein, such defaulting party shall pay to the other party all costs and expenses, including but not limited to, . . . reasonable attorney’s fee[s], including such fees on appeal, which the prevailing party may incur in enforcing [the Lease] or in pursuing any remedy allowed by law for breach hereof.

¶11 The district court denied Tenant’s request, concluding that Tenant was the defaulting party and that the Lease “does not provide a basis for an award of attorney fees to . . . the party in default.” The court further concluded that Landlord did not become the party in default by virtue of losing the lawsuit. The court also concluded that Tenant was not entitled to attorney fees under the unlawful detainer statute, because the provision that would have allowed for such an award was not in effect until May 2017,⁶ after the complaint had been filed. Because the statute did not state that it could be applied retroactively and because the statute was not amended to clarify its meaning in response to judicial action, the court concluded Tenant was not entitled to attorney fees under that statute. (Citing Utah Code Ann. § 86-3-3 (LexisNexis 2016); Wasatch County v. Okelberry, 2015 UT App 192, ¶ 17, 357 P.3d 586.)

¶12 Landlord appeals the court’s grant of summary judgment in favor of Tenant. Tenant cross-appeals the court’s order requiring him to pay attorney fees for the Motions to Strike and for the denial of his request for attorney fees as the prevailing party.

ISSUES AND STANDARDS OF REVIEW

¶13 Landlord contends the district court erred in granting summary judgment in favor of Tenant in three respects. He first argues that the court should have denied Tenant’s Motion for Summary Judgment “on its face” because the Verified Memorandum did not include citations to “particular parts of materials in the record” in violation of rule 56(a) of the Utah Rules of Civil Procedure. Second, he argues that Landlord’s Motion for Summary Judgment should have been granted because the court should have dismissed the Verified Memorandum in its entirety based on its failure to conform with rule 56 and therefore the court could not have relied on it as a replacement for Tenant’s opposition to Landlord’s Motion for Summary Judgment.⁷ Third, Landlord argues that the court erred in determining that the Lease did not afford him the damages he sought.⁸

¶14 Summary judgment is appropriate where “there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law.” Utah R. Civ. P. 56(a). “We review the district court’s grant of summary judgment for correctness and accord no deference to its conclusions of law.”⁹

¶15 Tenant cross-appeals and contends the district court erred in awarding attorney fees to Landlord for the Motions to Strike.¹⁰

ANALYSIS

I. Motion for Summary Judgment

¶16 Landlord contends the district court erred in granting summary judgment in favor of Tenant for three reasons. But because we can affirm summary judgment on any ground or theory apparent on the record, regardless of whether it was identified by the district court as the basis of its ruling, see Dillon v. Southern Mgmt. Corp. Ret. Trust, 2014 UT 14, ¶ 21, 326 P.3d 656, we do not address each of his arguments and instead affirm on the basis that Landlord’s claim fails as a matter of law. We agree with the district court that the Lease “does not provide for damages as requested by [Landlord].”

¶17 Landlord argues that “the law must provide a remedy in damages” and that “‘damages are properly measured by the amount necessary to place the nonbreaching party in as good a position as if the contract had been performed.’”¹² (Quoting

Alexander v. Brown, 646 P.2d 692, 695 (Utah 1982).) He asserts that “it is an undisputed material fact that [he] would have agreed to the sublease if [Tenant] had paid [him] the difference between [Tenant’s] rent and what [Tenant] received from [Subtenant].” For example, Landlord claims he deserves $4,000 per month for the months when Tenant was required to pay $1,000 per month for rent under the Lease and Subtenant was required to pay $5,000 per month for rent under the Sublease. Landlord argues that, had the parties entered into that agreement, he would have been paid the excess rent he now seeks. Though this might be true, we do not see how this legally entitles Landlord to the excess rent from the Sublease without a provision in the Lease providing for those damages. Instead, it appears Landlord is requesting the court to enforce “an alternative benefit to the bargain” than the agreement he reached with Tenant in the Lease based on “something he might have contracted for under different circumstances.” See Toll v. Tannenbaum, 982 F. Supp. 2d 541, 559 (E.D. Pa. 2013). As in Toll, this argument fails because it is a request for equitable relief that “hinges on the existence of an agreement.” See id. (quotation simplified). There was no agreement to pay the difference between Tenant and Subtenant’s rent and there is nothing in the record to suggest that Tenant would have agreed to Landlord’s conditions for consenting to the Sublease.

¶18 Because there is no Utah case law that has addressed whether a landlord can recover excess rents obtained by a tenant through a nonconforming sublease without a provision allowing for such recovery, we requested supplemental briefing from the parties to explain how other jurisdictions have addressed this issue. Landlord has failed to provide case law from any jurisdiction that has addressed the issue with facts similar to this case that would support his request for damages. He cites Long Building v. Buffalo Anthracite Coal Co., 74 N.Y.S.2d 281 (N.Y. Special Term 1947),¹³ in which a landlord sued a tenant for breach of lease for subletting a portion of the property without the landlord’s consent. Id. at 282. The landlord claimed he had “no adequate remedy at law, and, therefore, demand[ed] judgment for an accounting for the sums of money received by the [tenant] from the subtenant.” Id. But the court explained that “[i]t is well settled that where an adequate remedy at law is provided, the reason for granting equitable relief disappears[,] and if an equitable action does not lie, for the reason that the plaintiff has an adequate remedy at law, the defendant may, before answer, move to dismiss the complaint upon that ground.” Id. (quotation simplified).

¶19 Here, Landlord not only had an adequate remedy at law explicitly provided for under the Lease, he also pursued that remedy, and Tenant complied. Landlord first sent a notice to Tenant to cure the default by paying $30,000 and evicting Subtenant. When Tenant did not comply, Landlord sent another notice stating: “Because you did not cure the default . . . I hereby exercise my right, pursuant to ¶ 22(C)(1) of the Lease, to terminate the Lease and hereby notify you that the Lease is terminated. Pursuant to ¶ 22(C)(1) of the Lease, you must ‘surrender possession of the premises immediately.’”

¶20 Because Landlord pursued an adequate remedy at law for Tenant’s breach, because the Lease did not provide for excess rent as damages for a nonconforming sublease, and because Landlord has not articulated any means by which he was actually damaged or injured by the Sublease, we conclude that Landlord’s claim fails as a matter of law. We therefore affirm the district court’s grant of summary judgment in favor of Tenant and the denial of Landlord’s motion for summary judgment.¹⁴

II. Attorney Fees

A. Motions to Strike

¶21 Tenant asserts on cross-appeal that the district court erred in ordering Tenant to pay attorney fees for the Motions to Strike. “Whether attorney fees are recoverable in an action is a question of law, which we review for correctness.” Federated Capital Corp. v. Haner, 2015 UT App 132, ¶ 9, 351 P.3d 816 (quotation simplified). To the extent that the district court exercised its discretion to award attorney fees under either statute or one of the Utah Rules of Civil Procedure, we review its decision for an abuse of discretion. See id. ¶¶ 9–10. Here, the court failed to provide any findings of fact or conclusions of law to support the award. It is unclear whether the fees were awarded under a provision of the Lease, a statute, or one of the Utah Rules of Civil Procedure. This is concerning, because Landlord never requested attorney fees in either of his Motions to Strike. We therefore remand to the district court to revisit whether attorney fees for the Motions to Strike are appropriate and, if so, to supplement the order with findings of fact and conclusions of law to support its decision.

B. Reciprocal Attorney Fees

¶22 Tenant further contends on cross-appeal that the district court erred in denying attorney fees to Tenant as the prevailing party.¹⁵

¶23 Although we review whether an award of attorney fees is appropriate for correctness, “we review certain related issues for an abuse of discretion,” such as “the determination of which party prevailed in a civil action.” Id. (quotation simplified).

¶24 Utah Code section 78B-5-826 provides that a court may award costs and attorney fees to the prevailing party in a civil action that is based upon a written contract and that written contract “allow[s] at least one party to recover attorney fees.” Utah Code Ann. § 78B-5-826 (LexisNexis 2012); see also Haner, 2015 UT App 132, ¶ 11 (“Under Utah’s reciprocal attorney fee statute, courts may award attorney fees to the prevailing party of a contract dispute so long as the contract provided for the award of attorney fees to at least one of the parties[.]”). But see Blackmore v. L & D Dev. Inc., 2016 UT App 198, ¶¶ 39–43, 382 P.3d 655 (explaining that a district court erred when relying on a “prevailing party” standard where the contract included only “defaulting party” language).

¶25 Here, the enforcement provision of the Lease provides that the “defaulting party shall pay to the other party all costs and expenses, including but not limited to, a reasonable attorney’s fee including such fees on appeal, which the prevailing party may incur in enforcing [the Lease] or in pursuing any remedy allowed by law for breach hereof.” (Emphasis added.) Although this language provides that the defaulting party must pay the prevailing party, “Utah courts generally apply a common sense flexible and reasoned approach to the interpretation of contractual ‘prevailing party’ language.” See Express Recovery Services Inc. v. Olson, 2017 UT App 71, ¶ 10, 397 P.3d 792 (quotation simplified) (quoting A.K. & R. Whipple Plumbing & Heating v. Guy, 2004 UT 47, ¶ 14, 94 P.3d 270).

¶26 The district court determined that “the fact that [Landlord] pursued damages against [Tenant] that were ultimately unsuccessful” does not translate into an award of attorney fees to Tenant because, “[a]s in Blackmore, ‘this provision clearly provides that the party who defaults is liable for attorney fees’ and it would be error for this Court to award attorney fees by deeming [Tenant] as the prevailing party under the reciprocal attorney fee statute.” (Quotation simplified.) We disagree. In Blackmore, the contract provided only “defaulting party” language and not “prevailing party” language. Here, the Lease included both. And, under the circumstances of this case, when “apply[ing] a common sense flexible and reasoned approach to the interpretation of contractual ‘prevailing party’ language” of the Lease, Tenant could have received costs and attorney fees as the prevailing party. See Express Recovery Services Inc., 2017 UT App 71, ¶ 10; see also Hooban v. Unicity Int’l Inc., 2012 UT 40, ¶ 12, 285 P.3d 766 (explaining that the reciprocal attorney fees statute “consists of a conditional if/then statement: (a) If the provisions of a written contract allow at least one party to recover attorney fees in a civil action based upon the contract, (b) then a court may award attorney fees to either party that prevails”). Tenant successfully defended against the complaint and prevailed on summary judgment because Landlord was not entitled to judgment either under the Lease or Utah law.

¶27 We conclude that the district court erred in determining that the Lease did not trigger the reciprocal attorney fee statute, because the enforcement provision of the Lease awarded attorney fees to the prevailing party and Tenant prevailed against Landlord’s complaint. See Hooban, 2012 UT 40, ¶ 12. Although Tenant was the defaulting party, he had already cured the default pursuant to the explicit requirements of the Lease by the time Landlord filed the complaint, and Tenant was the prevailing party in enforcing the Lease and defending against Landlord’s claims under the unlawful detainer statute and breach of contract.¹⁶ We therefore remand to the district court to determine whether Tenant should be awarded attorney fees for successfully defending against Landlord’s complaint.

¶28 Tenant has also requested attorney fees on appeal. Generally, “when a party who received attorney fees below prevails on appeal, the party is also entitled to fees reasonably incurred on appeal.” Golden Meadows Props., Inc. v. Strand, 2010 UT App 258, ¶ 13, 241 P.3d 371 (quotation simplified). Although Tenant was not awarded attorney fees below, “we have held that such fees may have been warranted and remand for further consideration of the issue.” See Kimball v. Kimball, 2009 UT App 233, ¶¶ 50–52, 217 P.3d 733 (holding that attorney fees may have been warranted below and remanding to the district court for factual findings to support an award of attorney fees to the husband, but also concluding that the husband was not entitled to attorney fees incurred on appeal because he did “not substantially prevail on appeal”). We therefore conclude Tenant is entitled to attorney fees incurred on appeal for substantially prevailing on appeal. See id.

CONCLUSION

¶29 We affirm the district court’s grant of summary judgment in favor of Tenant because Landlord’s claim fails as a matter of law. We reverse the district court’s conclusion that the Lease did not trigger the reciprocal attorney fee statute and remand for the court to determine whether Tenant should be awarded attorney fees for successfully defending against Landlord’s complaint and successfully enforcing the Lease. We further conclude that Tenant is entitled to attorney fees on appeal, as well as on cross-appeal, because he has substantially prevailed on appeal and “we have held that such fees may have been warranted” below. See Kimball, 2009 UT App 233, ¶¶ 50–52. We also remand for the court to revisit its decision regarding the award of attorney fees to Landlord for the Motions to Strike. If the court determines that the award is appropriate, it must provide findings of fact and conclusions of law to support its decision.

Notes

We refer to the oral and written agreements, collectively, as the Sublease.

We note that Landlord’s complaint and motion for summary judgment also included “mere assumptions or conclusions,” the most notable being that his statement of facts asserted that Landlord “would have agreed to the sublease if [Tenant] had (continued…)

For example, Tenant’s Verified Memorandum stated that he did not hear from Landlord after Tenant vacated until he was served with a summons in May 2016. Landlord “[d]isputed” this fact and referred to his own affidavit stating that there was an email thread between Landlord and Tenant about an event unrelated to the dispute regarding the Lease, the Sublease, or the Warehouse. It would not be unreasonable to infer that Tenant’s stated fact meant that he had not heard from Landlord with respect to the breach of the Lease or Landlord’s request for the excess rent as damages as a consequence of that breach until he was served with a summons.

Landlord’s calculation of damages in his motion for summary judgment differs from the amount articulated in his complaint. Because we conclude Landlord was not entitled to any of his claimed damages, we do not address this discrepancy.

Even in situations where a motion for summary judgment is unopposed, the moving party bears the burden of showing that it is entitled to summary judgment as a matter of law by demonstrating it is entitled to the remedy it seeks either under a contract or law. Utah R. Civ. P. 56(a). Summary judgment may be granted to a nonmoving party even if the nonmoving party did not file a memorandum in opposition to the moving party’s motion for summary judgment. See id. R. 56(f)(1) (explaining that a court may enter judgment “independent of the motion” and may “grant summary judgment for a nonmoving party” “[a]fter giving [the nonmoving party] notice and a reasonable time to respond”). In addition, with respect to cross-motions for summary judgment, as is relevant here, each party “must establish its own entitlement to summary judgment rather than simply rely on the other party’s failure on its own motion.” . Further, this court has determined that “[c]ross-motions for summary judgment do not ipso facto dissipate factual issues, even though both parties contend that they are entitled to prevail because there are no material issues of fact.” (quotation simplified). “Rather, cross-motions may be viewed as involving a contention by each movant that no genuine issue of fact exists (continued…)

Effective May 9, 2017, the unlawful detainer statute was amended to add a subsection that states: “In an action under this chapter, the court may award costs and reasonable attorney fees to the prevailing party.” Utah Code Ann. § 78B-6-811(5) (LexisNexis Supp. 2017). Prior to the amendment, only one subsection of the statute included attorney fees language: “The judgment shall be entered against the defendant for the rent, for three times the amount of the damages assessed under Subsections (2)(a) through (2)(e), and for reasonable attorney fees.” Id. § 78B-6-811(3) (2012).

Landlord further contends the district court erred in denying his motion for summary judgment because it was unopposed. We note, however, that in Landlord’s Motion for Summary Judgment he cited the Verified Memorandum in his statement of facts to support the factual assertion of the amount of rent Tenant collected from Subtenant under the Sublease. He therefore relied on a document, the Verified Memorandum, that he asserts the court should not have considered in determining whether there was a dispute as to any material fact. We decline (continued…)

On appeal, Landlord has abandoned his unlawful detainer claim and elected to proceed on the court’s ruling only with respect to his claim for damages under the breach of the Lease.

We take this opportunity to address some confusion raised by Landlord as to the applicable standard of review. Use of the terms “for correctness,” “de novo,” and “correction of error” under the Issues and Standards of Review sections of our opinions mean that we afford “no deference” to the district courts’ rulings with respect to their legal conclusions. See (“We review a summary judgment determination for correctness, granting no deference to the district court’s legal conclusions.” (quotation simplified)); (“We review a district (continued…)

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