NICK KELLY, Appellant and Cross-appellee, υ. TIMBER LAKES PROPERTY OWNERS ASSOCIATION, Appellee and Cross-appellant, AND HOLLYVALE RENTAL HOLDINGS LLC, Appellee.
No. 20191079-CA
THE UTAH COURT OF APPEALS
February 17, 2022
2022 UT App 23
Fourth District Court, Heber Department. The Honorable Jennifer A. Brown. No. 160500088.
Russell A. Cline, Attorney for Appellant and Cross-appellee
Jeremy C. Reutzel, James C. Dunkelberger, and Ryan M. Merriman, Attorneys for Appellee and Cross-appellant Timber Lakes Property Owners Association
Todd W. Prall, Attorney for Appellee Hollyvale Rental Holdings LLC
JUDGE GREGORY K. ORME authored this Opinion, in which JUDGES JILL M. POHLMAN and DIANA HAGEN concurred.
¶1 To collect on past due assessments, Timber Lakes Property Owners Association (Timber Lakes) conducted a nonjudicial foreclosure on Nick Kelly‘s property, which Hollyvale Rental Holdings LLC purchased at auction. Following the sale, Kelly sought to set aside the trustee‘s deed to Hollyvale, arguing, among other things, that Timber Lakes’ failure to wait the statutory three-month period before publishing a notice of trustee‘s sale was against public policy and thus rendered the foreclosure sale void. He also argued that this failure to wait the full three-month period excused him from paying the past due assessments under the first-to-breach rule.
¶2 The district court concluded that the nonjudicial foreclosure did not violate public policy and granted summary judgment to Timber Lakes and Hollyvale on that claim. Kelly‘s remaining claims proceeded to a bench trial, at which Kelly presented what the court found to be a forged receipt as evidence that he had paid at least a portion of the assessments that Timber Lakes claimed were past due. Following the trial, the court found in Timber Lakes’ favor and, based on a finding that following summary judgment Kelly pursued his claims in bad faith, awarded Timber Lakes its attorney fees incurred from the point of summary judgment onward. The court, however, denied Timber Lakes’ request for attorney fees incurred prior to summary judgment.
¶3 Kelly appeals the court‘s grant of summary judgment, post-trial rulings, and the attorney fees award. As part of his challenge to the court‘s summary judgment order, Kelly raises an argument for the first time on appeal and requests that we review it for plain error. Timber Lakes cross-appeals the court‘s denial of its request for pre-summary-judgment attorney fees. We affirm the district court in every respect and further hold that, with limited exceptions, plain error review is not available in the civil context. We remand only for calculation of an award of attorney fees in favor of Timber Lakes, for attorney fees it incurred on appeal.
BACKGROUND1
¶4 Timber Lakes is the homeowners association that governs the Timber Lakes Estates development, located outside Heber City. Timber Lakes derives its authority as a
¶5 Under the CC&Rs, each property owner within Timber Lakes Estates “is deemed to covenant and agree to pay” annual and special assessments to Timber Lakes, both of which “together with interest, costs and reasonable attorney fees shall be a charge on the land and shall be a continuing lien upon the property against which each such assessment is made.” The CC&Rs further provide that for assessments that are over 90 days past due, Timber Lakes “may bring an action at law against the Owner personally obligated to pay the [assessments] or foreclose the lien against the property.” Timber Lakes’ bylaws, which were adopted in 1979, also provide that it is the duty of Timber Lakes’ board of directors “[t]o foreclose the lien against any property for which assessments are not paid within ninety (90) days after due date or to bring an action at law against the Owner personally obligated to pay the same.”
¶6 On November 17, 2011, Kelly purchased property within Timber Lakes Estates (the Property). Prior to closing on the sale, Kelly delivered a $1,000 money order to the seller‘s agent to cover unpaid assessments on the Property. And at the time of closing, the title company issued a check in the amount of $909.41 to Timber Lakes, $809.41 of which was designated as “delinquent dues” and the remaining $100 as a “transfer fee.” Kelly also testified at trial that on November 24, 2011, he went into the Timber Lakes office and paid $1,839 in cash to cover current and future assessments. He provided a copy of a receipt at trial in support of this assertion.
¶7 On February 24, 2016, Timber Lakes, through counsel, sent Kelly a letter informing him that it intended to conduct a nonjudicial foreclosure on the Property to collect past due assessments and that Kelly could “prevent a foreclosure action” by contacting Timber Lakes and making payment arrangements. The letter also informed Kelly of his right to instead demand a judicial foreclosure. On May 2, 2016, Timber Lakes recorded a notice of default and election to sell against the Property (the Notice of Default). The Notice of Default indicated that Kelly had been informed of his right to request a judicial foreclosure at least 30 days prior and that he “did not request a judicial foreclosure.” By July 2016, Timber Lakes’ records indicated that Kelly owed over five thousand dollars in unpaid assessments, late fees, and interest. Its records did not reflect the $1,839 cash payment Kelly claimed to have made on November 24, 2011. And in early July 2016, Timber Lakes, again through counsel, recorded and published a Notice of Trustee‘s Sale that set August 1, 2016, as the public auction date.
¶8 On July 18, 2016, Kelly, who at the time was in Puerto Rico on business and had been away for “many months,” was informed for the first time either by his daughter or by an employee that the Notice of Trustee‘s Sale had been posted on the Property. Kelly immediately called Timber Lakes’ property management company, which conversation he recorded. Kelly told an agent of the property management company that although he “may owe something,” it was not the amount that was alleged and that he was in Puerto Rico and needed time to retrieve supporting documentation. The agent informed Kelly that the Timber Lakes board of directors would be holding a meeting on August 17 and that she would request that Timber Lakes’ counsel postpone the August 1 sale date until August 18 so that the board could consider further postponement of the sale at that meeting.
¶9 That same day, Kelly also spoke with a paralegal at the law firm that represented Timber Lakes, which conversation he also recorded. During that conversation, Kelly acknowledged, “I believe that we actually do owe for some HOA. But make no mistake, it might have been for partial of this year, and it might have been for a little bit of last year. But that‘s it.” He also confirmed that he had documentation of prior payments but explained that they were not readily accessible because he was in Puerto Rico and was not
¶10 Following the call, and at Kelly‘s request, the paralegal emailed Kelly “copies of statements, notices and return mail sent to the addresses” the law firm had on file for Kelly. The paralegal also informed Kelly,
[W]e are not postponing the foreclosure sale date beyond August 18, 2016. You need to pay off the account in our office . . . or provide copies of your bank statements showing payments to Timber Lakes . . . [that] cleared your account along with copies of the front and back sides of all checks clearly showing they were cashed by Timber Lakes . . . or its agents.
¶11 The district court later found that “[a]side from making contact with Timber Lakes and its legal counsel and asking them to postpone the sale, [Kelly] took no affirmative action to enjoin the trustee‘s sale.” The court further noted that “Kelly testified at the trial that he had family and friends who were available to him to either help him provide evidence of his claimed payments or to present payment to Timber Lakes. He chose not to have them do so.” And despite having claimed he had an attorney, Kelly did not engage counsel to enjoin the trustee‘s sale.
¶12 The Timber Lakes board of directors held its scheduled meeting on August 17, 2016. The board discussed the pending trustee‘s sale of the Property but decided against postponing the sale any further. The trustee‘s sale of the Property took place the next day, on August 18, 2016. Hollyvale, the highest bidder, purchased the Property at auction.
¶13 In September 2016, Kelly filed suit against Timber Lakes and Hollyvale seeking to set aside the trustee‘s deed to Hollyvale as void and to quiet title in the Property. Kelly also asserted, among other things, claims for breach of contract and breach of the implied covenant of good faith and fair dealing against Timber Lakes. He later amended his complaint to add a claim for mistake against both defendants and a request for an accounting against Timber Lakes. Timber Lakes counterclaimed for declaratory judgment on the validity of the sale and for an award of attorney fees.
¶14 In early 2017, all three parties filed motions for partial summary judgment, seeking “a determination by the Court regarding the validity of Timber Lakes’ trustee‘s sale” of the Property. Kelly argued that the sale was “void because the trustee did not wait the statutorily required time before giving ‘notice of sale.‘” Specifically, Kelly argued that the trustee was statutorily required to wait at least three months after recording the Notice of Default before giving the Notice of Trustee‘s Sale. See
¶15 The district court denied Kelly‘s motion and granted Timber Lakes’ and Hollyvale‘s motions on the ground that the sale of the Property was not void or voidable. The court concluded that the trustee‘s deed was not void because recording the Notice of Trustee‘s Sale approximately one month early did not rise to the level of violating public policy. The court further held that Kelly had not demonstrated the sale was voidable because he had “not alleged that the alleged defect in the Sale deprived [him] of the right to cure [his] default or bring an injunction to challenge the adequacy of the notice prior to the Sale.” Indeed, it was undisputed that Kelly had actual notice of the sale as early as July 18, 2016, but “did nothing to enjoin it.”
¶16 Around that same time, Kelly also moved for leave to amend his complaint for a second time to add a claim against Timber Lakes for failure to comply with applicable statutes, specifically
¶17 In July 2018, the case proceeded to a three-day bench trial on the remaining claims. Regarding his claim for breach of contract, Kelly argued that he was excused from paying the assessments because Timber Lakes was the first to breach the contract when it failed to wait three months after recording the Notice of Default before posting the Notice of Trustee‘s Sale. Kelly also provided evidence that he had paid the assessments, including his testimony and a copy of a receipt dated November 24, 2011—Thanksgiving Day—indicating that he had paid $1,839 in cash to the Timber Lakes office for current and future assessments. To rebut this evidence, Timber Lakes provided bank records showing no deposit reflecting Kelly‘s claimed payment. Timber Lakes also called a handwriting expert, who testified that the receipt was a forgery. Finally, it introduced evidence that the Timber Lakes office was closed on November 24 for the Thanksgiving holiday and therefore no one would have been on hand to receive payments on that day or issue receipts.
¶18 In February 2019, the district court extended its findings of fact and conclusions of law, ruling against Kelly on all claims. As relevant to this appeal, the court held that Kelly‘s first-to-breach argument “ignores the reason for the Notice of Default and . . . Notice of the Trustee‘s Sale in the first place.” And “[u]nless [Kelly] could demonstrate to the Court that he actually had paid his dues,” which burden Kelly had not satisfied, “he would be in the position of having been the first to breach the contract.” The court found that Kelly‘s testimony “had some credibility issues,” while the handwriting expert “was highly qualified, and credible in his testimony.” Accordingly, the court found that Kelly “never actually paid [his] dues and may have attempted to perpetrate a fraud on this Court by relying upon a forged receipt to claim that [he] had.” Based on these findings, the court held that Timber Lakes was not the first party to breach the contract.
¶19 Timber Lakes then sought attorney fees under
¶20 Kelly appeals, and Timber Lakes cross-appeals.
ISSUES AND STANDARDS OF REVIEW
¶21 Kelly raises several issues on appeal. First, he argues that the trustee‘s sale of the Property is void because Timber Lakes lacked the statutory and contractual authority to conduct a nonjudicial foreclosure sale. Kelly acknowledges that this argument is unpreserved, but he contends that the plain error exception to our preservation rule
¶22 Next, Kelly argues that the district court erred in failing to declare the trustee‘s sale void on summary judgment. “We
review a district court‘s grant of summary judgment for correctness and afford no deference to the court‘s legal conclusions.” Jones v. Farmers Ins. Exch., 2012 UT 52, ¶ 6, 286 P.3d 301 (quotation simplified).
¶23 Kelly also contends that the district court erred in concluding, following a bench trial, that Timber Lakes was not the first to breach the contract and that it did not breach the implied covenant of good faith and fair dealing. “Following a bench trial, we review a trial court‘s legal conclusions for correctness, according the trial court no particular deference.” Camco Constr. Inc. v. Utah Baseball Academy Inc., 2018 UT App 78, ¶ 36, 424 P.3d 1154 (quotation simplified). We review the court‘s findings of fact for clear error, granting “due regard to the opportunity of the trial court to judge the credibility of the witnesses.” Id. (quotation simplified).
¶24 Finally, both Kelly and Timber Lakes challenge the district court‘s attorney fees award. Kelly argues that the court misapplied the bad faith statute when it awarded attorney fees incurred by Timber Lakes after the entry of summary judgment in its favor. “We review a trial court‘s grant of attorney fees under the bad faith statute as a mixed question of law and fact.” Fadel v. Deseret First Credit Union, 2017 UT App 165, ¶ 16, 405 P.3d 807 (quotation simplified). A party is entitled to attorney fees under the bad faith statute when an action or defense is both “(1) without merit, and (2) not brought or asserted in good faith.” In re Discipline of Sonnenreich, 2004 UT 3, ¶ 46, 86 P.3d 712. “The ‘without merit’ determination is a question of law, and therefore we review it for correctness.” Fadel, 2017 UT App 165, ¶ 16 (quotation simplified). “A finding of bad faith is a question of fact and is reviewed by this court under the clearly erroneous standard.” Id. (quotation simplified). Furthermore, “because the good faith element implicates fact-intensive questions about the losing party‘s subjective intent, a lower court‘s finding on this element typically will be afforded a substantial measure of discretion.” Linebaugh v. Gibson, 2020 UT App 108, ¶ 23, 471 P.3d 835 (quotation simplified).
¶25 And on cross-appeal, Timber Lakes argues that the district court erred in determining that it was not entitled, under the CC&Rs and bylaws, to all attorney fees it reasonably incurred in defending against Kelly‘s action. “Whether attorney fees are recoverable in an action is a question of law, which we review for correctness.” Martin v. Kristensen, 2019 UT App 127, ¶ 31, 450 P.3d 66 (quotation simplified), aff‘d, 2021 UT 17, 489 P.3d 198. See Brady v. Park, 2019 UT 16, ¶ 32, 445 P.3d 395 (“[L]egal questions that
ANALYSIS
I. Plain Error Review in Civil Cases
¶26 Kelly argues that Timber Lakes lacked statutory and contractual authority to conduct a nonjudicial foreclosure on the Property. Specifically, Kelly points to the Utah Community Association Act (the UCAA). See generally
¶27 Kelly argues that Timber Lakes lacked the statutory authority to conduct a nonjudicial foreclosure on the Property because it never amended the CC&Rs to adopt the relevant provisions of the UCAA authorizing nonjudicial foreclosure for unpaid assessments. Indeed, the CC&Rs had never been amended since their initial recordation in 1989. Kelly additionally argues that Timber Lakes lacked contractual authority to conduct a nonjudicial foreclosure on the Property because the CC&Rs limit Timber Lakes to two remedies for unpaid assessments: (1) bringing an action at law against the property owner personally or (2) bringing an action at law to foreclose the lien, which he asserts is limited to judicial foreclosures.
¶28 Kelly concedes that he did not preserve these issues before the district court and accordingly asks us to review them under the plain error doctrine. Timber Lakes counters, challenging the application of plain error review in the civil context. We agree with Timber Lakes and therefore have no occasion to consider the merits of Kelly‘s argument.
¶29 “The plain error standard of review is typically raised in the context of a criminal proceeding,” and “it is generally unusual for a party to raise the plain error standard in a civil matter.” Danneman v. Danneman, 2012 UT App 249, ¶ 10 n.5, 286 P.3d 309. Indeed, “there is an ongoing debate about the propriety of civil plain error review.” Utah Stream Access Coal. v. Orange Street Dev., 2017 UT 82, ¶ 14 n.2, 416 P.3d 553. Our Supreme Court has stated that, in the absence of an opportunity to address the question head on, it neither endorses nor repudiates “the ongoing viability of plain error review in civil cases.” Id. And although Utah appellate courts have occasionally applied plain error review in civil cases, they have been careful to emphasize that they did so only because neither party challenged the applicability of the plain error doctrine in those cases. See, e.g., H&P Invs. v. iLux Cap. Mgmt. LLC, 2021 UT App 113, ¶ 21 n.2, 500 P.3d 906; Freight Tec Mgmt. Group Inc. v. Chemex Inc., 2021 UT App 92, ¶ 39 n.11, 499 P.3d 894; Miner v. Miner, 2021 UT App 77, ¶ 11 n.3, 496 P.3d 242; Cook Martin Poulson PC v. Smith, 2020 UT App 57, ¶ 22 n.3, 464 P.3d 541; Tronson v. Eagar, 2019 UT App 212, ¶ 18 n.7, 457 P.3d 407; Gerwe v. Gerwe, 2018 UT App 75, ¶ 6 n.1, 424 P.3d 1113; Danneman, 2012 UT App 249, ¶ 10 n.5.
¶30 Here, however, Timber Lakes directly challenges the availability of plain error review in civil cases. Accordingly, we must consider this important, oft-avoided question before we can reach the merits of Kelly‘s unpreserved argument. We begin by discussing the context and policy considerations in which the plain error standard developed in Utah and conclude by determining whether, given the context and policy considerations behind the standard, it is applicable in civil cases.
¶31 “Our appellate system has developed along the adversarial model, which is founded on the premise that parties are in the best position to select and argue the issues most advantageous to themselves, while allowing an impartial tribunal to determine the merits of those arguments.” State v. Johnson, 2017 UT 76, ¶ 8, 416 P.3d 443. See Robert J. Labrum, History and Application of the Plain Error Doctrine in Utah, 2000 Utah L. Rev. 537, 537–38 (2000) [hereinafter Labrum] (identifying as a basic premise of the adversarial model “that out of the sharp clash of proofs presented by adversaries is most likely to come information from which a neutral and passive decision maker can resolve a litigated dispute in a manner that is acceptable both to the parties and to society“) (quotation simplified). Put differently, “[u]nder our adversary system, the responsibility for detecting error is on the party asserting it, not on the court.” Patterson v. Patterson, 2011 UT 68, ¶ 16, 266 P.3d 828. See Johnson, 2017 UT 76, ¶ 14 (“Under our adversarial system, the parties have the duty to identify legal issues and bring arguments before an impartial tribunal to adjudicate their respective rights and obligations.“).
¶32 In the appellate context, this responsibility explains our preservation rule, which provides that “[w]hen a party fails to raise and argue an issue in the trial court, it has failed to preserve the issue, and an appellate court will not typically reach that issue[.]” Johnson, 2017 UT 76, ¶ 15. “This system preserves judicial economy and fairness between the parties.” Id. ¶ 8. Our preservation rule promotes judicial economy in that it, among other things, “encourages parties to resolve their controversies at the trial level,” “allows the trial judge to correct errors at the trial level,” establishes a comprehensive record for appeal, and helps alleviate the otherwise heavy burden on appellate courts. See generally David William Navarro, Jury Interrogatories and the Preservation of Error in Federal Civil Cases: Should the Plain-Error Doctrine Apply?, 30 St. Mary‘s L.J. 1163, 1173–76 (1999), cited in Utah Stream Access Coal., 2017 UT 82, ¶ 14 n.2. The rule also promotes fairness between the parties because if no objection was made in the trial court, “the adverse party would not be compelled to overcome the objection by presenting a rebuttal, providing an alternative argument, establishing an alternative defense, or introducing new evidence in an effort to overcome such an objection.” Id. at 1175. By extension, “that party would be restricted from introducing new evidence, defenses, and factual arguments in an appellate court in order to rebut or defend an unpreserved issue.” Id.
¶33 Historically speaking, the adversarial model is the product of merging two separate methods of review under the old English court system: the writ of error and the appeal in equity. Johnson, 2017 UT 76, ¶¶ 9–10. The writ of error was applicable to rulings from the English courts of law and was “strictly limited to reviewing orders and judgments made by the court of law on issues raised in that court.” Id. ¶ 9. Conversely, the appeal in equity applied to the review of rulings from the English courts of equity. Id. Under this method of review, “appellate courts in equity were free to consider any issue de novo and developed flexible procedures to address the needs of individual cases.” Id. (quotation simplified). For example, one of the procedures applied in appeals in equity “was the device of rehearing, which allowed the court to address new facts or law not originally raised by the parties.” Barry A. Miller, Sua Sponte Appellate Rulings: When Courts Deprive Litigants of an Opportunity to Be Heard, 39 San Diego L. Rev. 1253, 1263–64 (2002), cited in Johnson, 2017 UT 76, ¶¶ 9–11.
¶34 While the adversarial model employed in most American appellate courts today more closely resembles the writ of error method of review, Johnson, 2017 UT 76, ¶ 10, the model‘s appeal-in-equity roots are still present insofar as appellate courts “retain [the] discretion to balance the need for procedural regularity with the demands of fairness,” id. ¶ 12 (quotation simplified). See id. (stating that “there is widespread agreement that appellate courts have the authority to” address issues that were not raised in the district court) (quotation simplified). Consequently, “[a]ppellate judges across the country have wrestled with the correct balance between law and equity and the scope of review on appeal.” Id. ¶ 11. Thus, “[i]n an effort to serve the policy considerations of judicial economy and fairness to the parties, to preserve the adversarial model, and to provide clear guidelines to
¶35 Under the current iteration of the plain error standard of review, “a defendant must establish that (i) an error exists; (ii) the error should have been obvious to the trial court; and (iii) the error is harmful.” Id. ¶ 20 (quotation simplified). In Utah, the gradual development of the plain error standard had its genesis in the criminal context in 1931, when our Supreme Court stated in State v. Stenback, 2 P.2d 1050 (Utah 1931), that, in capital cases, the Court “may and should sua sponte consider manifest and prejudicial errors which are neither assigned nor argued.”4
Id. at 1056. See State v. Tillman, 750 P.2d 546, 551 (Utah 1987) (plurality opinion), disagreed with on other grounds by State v. Hummel, 2017 UT 19, 393 P.3d 314; Labrum, 2000 Utah L. Rev. at 541. And a few years later, in State v. Cobo, 60 P.2d 952 (Utah 1936), criticized by State v. Mitchell, 278 P.2d 618 (Utah 1955), when faced with an unpreserved issue raised for the first time on appeal, the Court extended the exception articulated in Stenback beyond capital cases to also include “cases of grave and serious charged offenses and convictions of long terms of imprisonment, cases involving the life and liberty of the citizen.”5 Id. at 958. See Tillman, 750 P.2d at 551; Labrum, 2000 Utah L. Rev. at 541–42. In such cases, the Court further clarified that the exception allows appellate courts to notice and correct an unpreserved or waived error “when palpable error is made to appear on the face of the record and to the manifest prejudice of the accused.” Cobo, 60 P.2d at 958. A few months later, the Court extended the exception to criminal convictions that would bring the defendant “into public contempt and disrepute of great intensity.” State v. Waid, 67 P.2d 647, 652 (Utah 1937). See Labrum, 2000 Utah L. Rev. at 543. Finally, the following year, the Court suggested that the exception extended to all criminal cases. State v. Arnold, 79 P.2d 87, 87 (Utah 1938). See Labrum, 2000 Utah L. Rev. at 543–44.
¶36 Over the next fifty years, our Supreme Court sporadically applied or considered the “palpable error” and “manifest prejudice” criteria articulated in Cobo but only in criminal cases. See, e.g., State v. Dubois, 98 P.2d 354, 360 (Utah 1940);
State v. Peterson, 240 P.2d 504, 507 (Utah 1952); State v. Sanchez, 361 P.2d 174, 174–75 (Utah 1961) (stating that the standard may be applied “in serious criminal cases, under special circumstances, where the interests of justice so require“); State v. Poe, 441 P.2d 512, 515 & n.9 (Utah 1968) (citing Cobo in support of the proposition that although the error was not preserved, the court “will not allow such a technicality to influence its decision in a case such as this“); State v. Wood, 648 P.2d 71, 77 (Utah 1982) (stating that the standard is the “established rule” for direct appeals in capital cases). See also State v. Kazda, 545 P.2d 190, 193 (Utah 1976) (stating that the Cobo “exception is applied only rarely where there appears to be a substantial like[l]ihood that an injustice has resulted“). But see Mitchell, 278 P.2d at 621 (“[I]f no request is made for instructions on lesser offenses, and none is given, such failure to instruct is not reviewable as a matter of right on appeal.“).
¶37 Although a product of the common law, a limited form of the plain error doctrine
Criminal Procedure (rule 19), see Labrum, 2000 Utah L. Rev. at 546–47; and
greater detail below, although there is no significant difference in their current application, the plain error doctrine historically is the product of two separate branches: the common law and codified rules.
¶38 In light of the aforementioned rules, subsequent cases further developed the plain error doctrine along lines that more closely resemble its current iteration. In State v. Eldredge, 773 P.2d 29 (Utah 1989), the defendant raised an unpreserved evidentiary challenge. See id. at 35. Our Supreme Court held that under rule 103, a court may take notice of a plain error if two requirements are met: “[F]irst . . . that the error be ‘plain,’ i.e., from our examination of the record, we must be able to say that it should have been obvious to a trial court that it was committing error,” and “second . . . that the error affect the substantial rights of the accused, i.e., that the error be harmful.” Id. In discussing the first requirement, the Court stated that “the premise of rule 103(d)8 is that the ends of justice must not be lost sight of in the pursuit of procedural regularity and that when an error is plain, a trial court can legitimately be said to have had a reasonable opportunity to address and correct it, even in the absence of an objection.” Id. at 36. And concerning the second requirement, the Court noted “that the harmfulness standard set forth in rule 103 is substantively identical to that of Utah Rule of Criminal
Procedure
¶39 A few days after issuing Eldredge, our Supreme Court issued State v. Verde, 770 P.2d 116 (Utah 1989), in which it addressed the “manifest injustice” standard of
¶40 Plain error review was first applied in the civil context in D.B. v. Division of Occupational and Professional Licensing, 779 P.2d 1145 (Utah Ct. App. 1989), in which this court, applying
¶41 Following our review of the development of and policy considerations behind the plain error standard in Utah, we conclude that, unless expressly authorized by rule, see, e.g.,
¶42 The interests at stake in civil cases are generally not as fundamental as those at stake in criminal cases.10 As noted above, plain error review first developed in criminal cases “involving the life and liberty of the citizen,” such as capital cases and “cases of grave and serious charged offenses and convictions of long terms of imprisonment.” State v. Cobo, 60 P.2d 952, 958 (Utah 1936), criticized by State v. Mitchell, 278 P.2d 618 (Utah 1955). Although this standard was originally limited to certain criminal appeals, it was eventually extended to all of them due to the significant liberty interests at stake in such cases. Conversely, the economic and property interests that are typically the subject of civil cases are not as fundamental as the liberty interests at stake in criminal cases.11 See United States v. Courtney, 816 F.3d 681, 683 (10th Cir. 2016) (recognizing the higher interests at stake in criminal cases); Deppe v. Tripp, 863 F.2d 1356, 1364 (7th Cir. 1988) (“In civil cases where economic and property interests are usually at stake, as opposed to criminal cases where more substantial liberty interests are involved, a plain error doctrine is unneeded.”).
¶43 Furthermore, the application of plain error review in ordinary civil cases prejudices the faultless party, who is then obliged to bear the additional financial burden of briefing the issues on appeal and dealing with a possible remand for a new trial or other proceeding so that their opponent might be relieved of an error the opponent’s attorney could have raised at the time it occurred. See Deppe, 863 F.2d at 1361 (“Requiring a non-erring party to bear the burden of his opponent’s errors may not be reasonable in many circumstances and in fact may constitute a miscarriage of justice.”). This reasoning is squarely in line with the American system of litigation, under which “a party voluntarily chooses her attorney and therefore is generally bound by the acts or omissions of his or her attorney.” Menzies v. Galetka, 2006 UT 81, ¶ 76, 150 P.3d 480. Indeed, having voluntarily chosen its attorney, a party cannot “avoid the consequences of the acts or omissions of this freely selected agent” by claiming that doing so “imposes an unjust penalty on the client,” Link v. Wabash R.R. Co., 370 U.S. 626, 633–34 (1962), especially where alleviation of the “penalty” would impose a financial burden on the other party.
¶44 For the foregoing reasons, we hold that plain error review is not available in ordinary civil cases unless expressly authorized by rule. Accordingly, because no rule
II. Validity of the Trustee’s Sale
¶45 “When title to real property is at issue, the need for finality is at its apex.” Bank of Am. v. Adamson, 2017 UT 2, ¶ 17, 391 P.3d 196 (quotation simplified). For this reason, “once a trustee sale is completed,” and the trustee conveys a deed to the successful bidder, “the remedy of setting aside the sale will be applied only in cases which reach unjust extremes.” Id. ¶ 20 (quotation simplified).
¶46 “[T]here are three categories of deeds: void, voidable, and valid.” Id. A deed is void ab initio if it violates public policy. Id. ¶ 21. In such cases, the deed “cannot be ratified or accepted, and anyone can attack its validity in court.” Id. ¶ 20 (quotation simplified). To establish that a deed is void, the challenging party must make “a showing free from doubt that the [deed] is against public policy.” Ockey v. Lehmer, 2008 UT 37, ¶ 21, 189 P.3d 51 (quotation simplified). And in determining whether a deed is against public policy, courts look to the following two factors: “1) legislative statements of public policy, and 2) whether the conveyance ‘harmed the public as a whole.’” Adamson, 2017 UT 2, ¶ 21 (quoting Ockey, 2008 UT 37, ¶¶ 19, 23-24).
¶47 A deed is voidable when “the interests of the debtor were sacrificed or there was some attendant fraud or unfair dealing.” Id. ¶ 22 (quotation simplified). “A voidable deed is valid against the world, because only the injured party has standing to ask the court to set it aside.” Id. ¶ 20 (quotation simplified). But absent “evidence of fraud or other unfair dealing, the [debtor] is required to show he suffered prejudice from some defect in the sale,” id. ¶ 23, and must also “establish a causal connection between the defect and the prejudice,” id. ¶ 24. Furthermore, unless the debtor challenges the sale before title passes into the hands of a bona fide purchaser, id. ¶ 25, “the only remedy left to a [debtor] under a voidable deed is damages from the party causing the injury,” id. ¶ 26.
¶48 Finally, if a deed “results from only inconsequential errors that do not affect the validity of the sale,” i.e., errors that do not prejudice the debtor, the deed is valid and may not be set aside. See id. ¶¶ 20, 24.
¶49 Kelly argues that the district court erred in determining that the premature recordation of the Notice of Trustee’s Sale did not render the sale of the Property void. Specifically, Kelly points out, a trustee is statutorily required to wait “at least three months” between recording a notice of default and recording a notice of sale. See
¶50 Kelly argues that the early recordation of the Notice of Trustee’s Sale violated public policy because “the legislature imposed certain ‘obligations’ and ‘restrictions’” on parties electing to proceed with nonjudicial foreclosures to protect the debtor. And, he asserts, “[t]he law is clear that a three-month grace period must be provided before a trustee’s sale is held.” Although Kelly correctly states the purpose behind the procedural requirements for trustee’s sales, we disagree that the premature recordation of the Notice of Trustee’s Sale rises to the level of violating public policy.
¶51 “The detailed procedural requirements for a trustee’s sale of real property are intended to protect the debtor/trustor,” and “the objective of the notice requirements is to protect the rights of those with an interest in the property to be sold.” Occidental/Nebraska Fed. Savings Bank v. Mehr, 791 P.2d 217, 220 (Utah Ct. App. 1990) (quotation simplified). But a failure to adhere to procedural requirements does not automatically rise to the level of a public policy violation. Our Supreme Court has held that “failure of the trustee to strictly comply with the statutory requirements of the Trust Deed Act” renders the deed issued following the nonjudicial foreclosure sale at most voidable, and the debtor is still required to show prejudice and “a causal connection between the defect and the prejudice” before the deed will be set aside. Adamson, 2017 UT 2, ¶ 24. See Timm v. Dewsnup, 2003 UT 47, ¶ 37, 86 P.3d 699 (“Whatever irregularities [the debtor] may allege in the technicalities of the notice requirement, they are immaterial if she does not demonstrate that she was unable to protect her interests, or if there were a resulting effect of chilling the bidding and causing an inadequacy of price.”) (quotation simplified).
¶52 Kelly contends that the trustee’s failure to wait the full three-month period is not a mere technical violation. Indeed, he asserts that “the assumption that the trustor would use this full time was the basis for the Utah Supreme Court holding that in most cases a trustee’s deed cannot be voided for ‘technical defects’ in the foreclosure process after the foreclosure sale.” In support of this contention, he points to the Court’s statement that the requirement “that a trustor assert her rights before the trustee’s sale . . . is consistent with the statutory right to cure the default, which also must be exercised during the three-month grace period before a trustee’s sale is held.” Adamson, 2017 UT 2, ¶ 16 (quotation simplified). He further asserts that if failure to adhere to the prescribed timeframe were not against public policy, there would be “nothing to constrain the [sale] of property by reducing the time period prescribed by [the] Utah Trust Deed Act by 40 days or even 60 days” and that “the notice could arguably then be slashed to 24 hours.” We disagree.
¶53 Where irregularities in the procedure are at issue, absent “exceptional circumstances, the proper remedy is to seek an injunction prior to a sale, which allows a debtor to challenge irregularities and protect her rights before the sale is completed and a trustee’s deed is executed and delivered to the purchaser.” Reynolds v. Woodall, 2012 UT App 206, ¶ 15, 285 P.3d 7. See Adamson, 2017 UT 2, ¶ 16 (“A trustor may by acquiescence and failure to assert his rights at the proper time be estopped to set up irregularities in the foreclosure proceedings to defeat rights of the purchaser.”) (quotation simplified). We would thus agree with Kelly that a deed violates public policy if the three-month period is reduced to such a degree as to amount to an exceptional circumstance, meaning the trustor, once notified, lacked a reasonable time in which to enjoin the foreclosure. See RJW Media, Inc. v. CIT Group/Consumer Fin., Inc., 2008 UT App 476, ¶ 30, 202 P.3d 291 (stating that “the trial court should have concluded that [the] trustee’s sale was void” because the trustee conducted a sale after it issued a notice of cancellation of a previously scheduled sale and conducted the newly scheduled sale without issuing a new notice of default and providing a new three-month wait period). This approach balances the competing legislative purposes of protecting the debtor, see Occidental/Nebraska, 791 P.2d at 220 (“The detailed procedural requirements for a trustee’s sale of real property are intended to protect the debtor/trustor.”) (quotation simplified), and the need for finality in transactions involving title to real property, see Adamson, 2017 UT 2, ¶ 17 (“When title to real property is at issue, the need for finality is at its apex.”) (quotation simplified).
¶54 Here, following a bench trial, the district court specifically found, and we quote:
- Aside from making contact with Timber Lakes and its legal counsel and asking them to postpone the sale, [Kelly] took no affirmative action to enjoin the trustee’s sale.
- Mr. Kelly testified at the trial that he had family and friends who were available to him to either help him provide evidence of his claimed payments or to present payment to Timber Lakes. He chose not to have them do so.
- Mr. Kelly could have tendered payment, reserving his rights to challenge Timber Lakes’ position as to nonpayment,
[thereby] preventing the sale from proceeding. - During his communications with Timber Lakes, Mr. Kelly made reference to having counsel, but he did not instruct counsel to act on his behalf to seek to enjoin the trustee’s sale.
Based on these findings, which Kelly does not challenge on appeal, it is clear that the early recordation of the Notice of Trustee’s Sale was not so premature as to prevent Kelly from acting to protect his interests in the Property.
¶55 This court addressed a similar situation in Occidental/Nebraska. In that case, the trustee recorded an amended notice of default on September 9, 1985, to correct an omission of three lots in the original notice’s property description, which it had recorded approximately six weeks earlier. See 791 P.2d at 218–19. The trustee mailed a notice of trustee’s sale on November 13—approximately one month short of the 3-month waiting period. See id. at 219. Following sale of the property, the trustee, dissatisfied with the price it paid at its own sale, moved to set the sale aside as invalid on the ground that “only two months elapsed from the filing of the amended notice of default until the notice of the . . . sale was sent.” See id. This court first determined that although the original notice of default failed to include three lots in the property description, the original notice nonetheless met the statutory requirements and “was sufficient to alert those with an interest in the trust property of impending foreclosure.” Id. at 220. Alternatively, the court held that although the notice of the trustee’s sale was sent only two months after the amended notice of default, “the only kinds of defects in the notice of a foreclosure sale that will justify a renunciation of the sale are those that would have the effect of chilling the bidding and causing an inadequacy of price.” Id. at 221 (quotation simplified). And although the trustee “failed to comply strictly with the procedural requirements that should precede a trustee’s sale[,] . . . the steps taken afforded all parties the rights and protections the statutory requirements for a nonjudicial foreclosure were intended to ensure.” Id.
¶56 Kelly contends that Occidental/Nebraska is distinguishable from the present case because “[i]n that case, the property owner had the full ‘protection period’ prior to sale on the property.” Specifically, he points to this court’s holding that the original notice of sale—sent more than three months prior to the second notice of sale—served as sufficient notice to the trustors. See id. at 220. Kelly is correct in that regard, but as described above, this court alternatively held that although the notice of sale was sent prematurely, this defect in the notice did not justify setting the sale aside absent a showing of prejudice. See id. at 221. By so holding, this court necessarily determined that an inadequate wait-period rendered the trustee’s deed at most voidable—not void ab initio, as Kelly asserts.
¶57 For these reasons, we conclude that the premature recordation of the Notice of Trustee’s Sale was not against public policy and thus the trustee’s deed of sale was not void ab initio. The deed is at best voidable, but because Kelly does not challenge on appeal the district court’s holding that the deed was not voidable, we have no occasion to further consider Kelly’s challenge to the deed based on the insufficient wait-period.
III. First to Breach
¶58 The governing documents of a homeowners association, including the recorded CC&Rs and bylaws, “constitute a contract between the association and the property owners.” Swan Creek Homeowners Ass’n v. Warne, 2006 UT 22, ¶ 44, 134 P.3d 1122. See Workman v. Brighton Props., Inc., 1999 UT 30, ¶ 10, 976 P.2d 1209 (“Recorded restrictive covenants are enforceable against property owners who purchased land subject to those covenants.”) (quotation simplified). And under the first to breach rule, “a party first guilty of a substantial or material breach of contract cannot complain if the other party thereafter refuses to perform” and “can neither insist on performance by the other party nor maintain an action against the other party for a subsequent failure to perform.” Backbone Worldwide Inc. v. LifeVantage Corp., 2019 UT App 80, ¶ 25, 443 P.3d 780 (quotation simplified).
¶60 Kelly contends that, “[i]n fact, exactly the opposite is true.” Namely, he asserts that he “was excused from failing to pay all assessments owed by August 18, 2016, the date of the trustee’s sale, because Timber Lake[s] had breached its contract in its failure to provide Kelly with additional time to pay the assessments that were owed, or challenge the trustee’s [sale].” He explains that “the terms of the agreement . . . included a three-month cure period, in the event Timber Lakes commenced a nonjudicial foreclosure proceeding” and that “Timber Lakes’ failure to give [him] enough time to pay his assessments excused [his] failure to pay the delinquent assessment before the trustee’s sale was held.” In support of his assertion that Timber Lakes had a contractual duty to provide the full three-month wait-period, Kelly points to, among other things, Timber Lakes’ bylaws, which provide that “[i]t shall be the duty of the Board of Directors . . . [t]o supervise all officers, agents and employees of [Timber Lakes] and to see that their duties are properly performed.” Kelly states that the board’s duty to supervise extended to ensuring that those conducting the nonjudicial foreclosure on the Property complied with the governing statutes.
¶61 But, as applicable here, the CC&Rs and bylaws permit Timber Lakes to foreclose as a remedy for past due assessments. Both documents obligate property owners to pay annual and special assessments. They further provide that for assessments that are more than 90 days past due, Timber Lakes “may bring an action at law against the Owner personally obligated to pay the same or foreclose the lien against the property.” Thus, foreclosure as a means to collect on past due assessments is a contractual remedy invoked in response to Kelly’s prior breach.
¶62 Kelly correctly asserts that he had a “statutory right to cure the default, which . . . must be exercised during the three-month grace period before a trustee’s sale is held,” see Bank of Am. v. Adamson, 2017 UT 2, ¶ 16, 391 P.3d 196 (quotation simplified), but this right was triggered only after Timber Lakes initiated nonjudicial foreclosure proceedings as a remedy for his existing breach in failing to pay assessments. Indeed, the three-month period is provided specifically for the purpose of curing an already existing default or breach. See id. Thus, any missteps undertaken during the foreclosure process occurred in the context of Timber Lakes’ pursuit of a remedy in response to Kelly’s initial breach. And Kelly does not cite any legal authority, nor are we aware of any, supporting the proposition that failure to properly execute a remedy, in and of itself, constitutes a breach of contract. For this reason, Kelly’s argument is unavailing.12
¶63 Both Kelly and Timber Lakes challenge the district court’s attorney fees award. Kelly argues that the court misapplied the bad faith statute when it awarded Timber Lakes attorney fees “incurred from the point of the court’s summary judgment ruling through trial and post-trial briefing on the attorney’s fees issue.” Timber Lakes cross-appeals, arguing that the court erroneously declined to award pre-summary-judgment attorney fees pursuant to the CC&Rs and bylaws. Finally, Timber Lakes seeks an award of attorney fees on appeal. We address each argument in turn.
A. The Bad Faith Statute
¶64 The bad faith statute provides that “[i]n civil actions, the court shall award reasonable attorney fees to a prevailing party if the court determines that the action or defense to the action was without merit and not brought or asserted in good faith[.]”
¶65 An action or defense “is without merit if it is frivolous, is of little weight or importance having no basis in law or fact, or clearly lacks a legal basis for recovery.” Wardley Better Homes & Gardens v. Cannon, 2002 UT 99, ¶ 30, 61 P.3d 1009 (quotation simplified). “[A] finding of bad faith turns on a factual determination of a party’s subjective intent.” Sonnenreich, 2004 UT 3, ¶ 49. “A party acts in bad faith when he brings an action [or defense] and either (1) lacks an honest belief in the propriety of the activities in question, (2) intends to take unconscionable advantage of others, or (3) intends to or has knowledge of the fact that his actions will hinder, delay, or defraud others.” Wardley, 2002 UT 99, ¶ 29. Thus, an unmeritorious action may still be “in good faith as long as there is an honest belief that it is appropriate and as long as there is no intent to hinder, delay, defraud, or take advantage of the other party.” Boyer v. Boyer, 2008 UT App 138, ¶ 24, 183 P.3d 1068 (quotation simplified).
¶66 Kelly argues that the district court’s finding of bad faith was in error because the “[b]ad faith must be relevant or material.”13 Specifically, he contends that “the ‘forged receipt’ was of negligible significance to the issues raised at trial” because even if he “had paid the $1,83[9] payment, Kelly still would have owed assessments.” Instead, he asserts that his theory at trial was that “Timber Lakes breached the contract first by not giving him the time allowed by contract . . . to pay the assessments.” Accordingly, he asserts that “essentially the same trial would have been . . . held irrespective of the legitimacy of the $1,83[9] payment.”
¶67 This is at odds with the district court’s view of the trial’s necessity. In its order, the court specifically stated that Timber Lakes was entitled to attorney fees incurred from the point “the case continued solely because Kelly continued to maintain that he had paid the homeowners’ association fees at issue in this case.” The court stated that Timber Lakes would not have been entitled to attorney fees under the bad faith statute had the case ended when the court concluded on summary judgment that the trustee’s deed was neither void nor voidable. But “Kelly continued to assert the payment of his HOA Fees in bad faith,” the court determined, based on its finding that Kelly had forged the receipt on which he relied at trial.14 The
¶68 In any event, we review a district court’s finding of bad faith for clear error. See Fadel v. Deseret First Credit Union, 2017 UT App 165, ¶ 16, 405 P.3d 807. Under that standard, “this court will affirm a finding of bad faith when there is sufficient evidence in the record to support a finding” of bad faith. Id. ¶ 35 (quotation simplified). See Jensen v. Cannon, 2020 UT App 124, ¶ 44, 473 P.3d 637 (“We . . . will reverse [a court’s bad faith] finding only if it is against the clear weight of the evidence or we otherwise reach a firm conviction that a mistake has been made.”) (quotation simplified). Moreover, “because the good faith element implicates fact-intensive questions about the losing party’s subjective intent, a lower court’s finding on this element typically will be afforded a substantial measure of discretion.” Linebaugh v. Gibson, 2020 UT App 108, ¶ 23, 471 P.3d 835 (quotation simplified).
¶69 Here, the district court’s finding of Kelly’s bad faith was based on his submission of a forged receipt at trial. Thus, even assuming that “essentially the same trial would have been . . . held irrespective of the legitimacy of the $1,83[9] payment” as Kelly asserts, the relevancy of the forged receipt went toward Kelly’s subjective intent in pursuing the remaining claims that were not dismissed on summary judgment. And Utah appellate courts have repeatedly held that a party’s proffer of untruthful evidence is sufficient to pass clear error review of a bad faith finding. See Wardley, 2002 UT 99, ¶ 29 (“Wardley automatically lacked an honest belief in the propriety of bringing a suit to collect a commission under a fraudulently-obtained listing agreement.”); Topik v. Thurber, 739 P.2d 1101, 1104 (Utah 1987) (“[T]he trial court’s findings that defendant’s defense was partially in bad faith and that his testimony constituted ‘willful falsehoods’ support the court’s decision to award attorney fees in this case, and in accordance with the applicable standard of review, we do not disturb those findings.”) (footnote omitted); Blum v. Dahl, 2012 UT App 198, ¶ 13, 283 P.3d 963 (“The trial court’s belief that [the plaintiff] testified untruthfully is sufficient to support a finding of bad faith, and we will not disturb it on appeal.”) (quotation simplified); Gallegos v. Lloyd, 2008 UT App 40, ¶ 17, 178 P.3d 922 (same).
¶70 Accordingly, we conclude that the district court did not clearly err in finding that Kelly proceeded to trial on his remaining claims in bad faith.
B. The CC&Rs and Bylaws
¶71 In its cross-appeal, Timber Lakes asserts that under the CC&Rs and bylaws, it is contractually entitled to the remaining attorney fees it incurred in this litigation. “If the legal right to attorney fees is established by contract, Utah law clearly requires the court to apply the contractual attorney fee provision and to do so strictly in accordance with the contract’s terms.” Express Recovery Services Inc. v. Olson, 2017 UT App 71, ¶ 8, 397 P.3d 792 (quotation simplified). Additionally, “we interpret the provisions of [governing documents] as we would a contract.” View Condo. Owners Ass’n v. MSICO, LLC, 2005 UT 91, ¶ 21, 127 P.3d 697.
¶72 Under the CC&Rs, each property owner within Timber Lakes Estates “is deemed to covenant and agree to pay to” Timber Lakes annual and special assessments, both of which, “together with interest, costs and reasonable attorney fees shall be a charge on the land and shall be a continuing lien upon the property against which each assessment is made.” The CC&Rs further provide that Timber Lakes “may bring an action at law against the Owner personally obligated to pay the [assessments] or foreclose the lien
Any assessments which are not paid when due shall be delinquent. If the assessment is not paid within ninety (90) days after the due date, . . . [Timber Lakes] may bring an action at law against the Owner personally obligated to pay the same or foreclose the lien against the property; and interest, costs and reasonable attorney fees of any such action shall be added to the amount of such assessment.
The district court denied Timber Lakes’ request for attorney fees incurred prior to the summary judgment phase under the CC&Rs and bylaws, stating that the documents “are drafted to apply to collection efforts up to and including foreclosure,” which fees Timber Lakes already recovered via foreclosure.
¶73 Timber Lakes asserts that because its “various claims and defenses all hinged on validating the prior foreclosure and establishing that Kelly did in fact fail to pay his annual assessments,” its efforts in this case were “essentially a collection action to retain the funds it had recovered to pay Kelly’s unpaid fees.” And “[i]n that respect, [its] counterclaim is ‘an action at law against [an] Owner personally obligated to pay’ annual assessments.” It further argues that “the counterclaim also involves efforts to ‘foreclose the lien against’ Kelly’s property” because “had Kelly prevailed on his claims, the foreclosure sale would have been declared invalid, and he would have regained title to the property.” And “[h]ad Kelly complied with the proper procedure” of seeking an injunction prior to the trustee’s sale, “it would have allowed [Timber Lakes] prior to the Sale to seek fees and costs for litigating Kelly’s foreclosure defenses and allegations relating to unpaid assessments.”
¶74 But the CC&Rs and bylaws do not contain language creating a contractual right to attorney fees for “any action arising from” the aforementioned collection efforts, or something similar. Instead, the attorney fee provisions in the governing documents are strictly limited to collection efforts on past due assessments, either through initiating an action against the owner or through foreclosing on the owner’s property. Indeed, the provisions grant the right to attorney fees only in collection actions or foreclosure proceedings specifically initiated as a result of assessments being more than 90 days past due. The documents are entirely silent as to attorney fees in actions that arise after the aforementioned actions or foreclosure proceedings are completed, as was the case here. For this reason, because courts must “apply the contractual attorney fee provision . . . strictly in accordance with the contract’s terms,” Express Recovery Services, 2017 UT App 71, ¶ 8 (quotation simplified), the district court did not err in denying Timber Lakes’ request for additional attorney fees based on the CC&Rs and bylaws.
C. Attorney Fees on Appeal
¶75 Lastly, Timber Lakes requests an award of attorney fees incurred 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.” Fadel v. Deseret First Credit Union, 2017 UT App 165, ¶ 38, 405 P.3d 807 (quotation simplified). This principle likewise “applies when the basis for attorney fees in the trial court is the bad faith statute.” Id. (quotation simplified). Accordingly, because Timber Lakes was awarded attorney fees below for defending against, as relevant here, Kelly’s first-to-breach argument and claim for breach of the covenant, we grant Timber Lakes’ request, but limit the award to attorney fees reasonably incurred in defending the district court’s holdings on those two issues.
CONCLUSION
¶76 We affirm the district court in every respect and remand for the sole purpose of calculating an award for Timber Lakes’ attorney fees reasonably incurred on appeal in addressing Kelly’s first-to-breach and implied covenant of good faith and fair dealing arguments.