UDAK PROPERTIES LLC, Appellee, v. CANYON CREEK COMMERCIAL CENTER LLC, Appellant.
No. 20190065-CA
THE UTAH COURT OF APPEALS
February 11, 2021
2021 UT App 16
Amended Opinion
The Honorable Darold J. McDade
No. 160400059
Kenneth A. Okazaki and Bruce Wycoff, Attorneys for Appellant
Greggory J. Savage and Gregory S. Roberts, Attorneys for Appellee
JUDGE DIANA HAGEN authored this Opinion, in which JUDGES GREGORY K. ORME and DAVID N. MORTENSEN concurred.
HAGEN, Judge:
¶1 This appeal stems from a disagreement as to the meaning of the term “Responsible Owner” as used in a restrictive covenant binding owners of parcels in a shopping center in Spanish Fork, Utah. Canyon Creek Commercial Center LLC appeals from the district court‘s grant of declaratory relief to UDAK Properties LLC, in which the court declared that UDAK is a Responsible Owner and entitled to exercise the privileges granted to such owners. Canyon Creek alleges that the1
BACKGROUND
¶2 In 1999, owners of parcels in a Spanish Fork, Utah shopping center recorded an amended declaration (Declaration) containing various restrictive covenants that run with the land. The Declaration designates certain property owners as “Responsible Owners” and defines that term, in relevant part, as follows:
“Responsible Owner” shall mean the Owner of a Parcel or Parcels with a combined Building Area thereon of at least forty thousand square feet (40,000 sq. ft.) of Floor Area. Responsible Owner shall also mean the lessee of a Parcel with a Building constructed thereon containing a minimum of forty thousand square feet (40,000 sq. ft.) of Floor Area . . . .
The consent of all Responsible Owners is required before constructing or modifying buildings in the shopping center.
¶3 In 2005, UDAK acquired several parcels in the shopping center. Because UDAK believed it owned parcels with a
¶4 In February 2016, UDAK filed a declaratory relief action, seeking a declaration that “it is a Responsible Owner, and that it possesses all the rights provided to Responsible Owners in the Declaration.” Canyon Creek and two co-defendants counterclaimed, seeking a declaration that UDAK was not a Responsible Owner. In Canyon Creek‘s view, UDAK‘s combined Building Area should be based on the buildings’ actual floor area rather than their allowable floor area. The actual floor area of UDAK‘s buildings equaled only 35,808 square feet, and therefore Canyon Creek maintained that UDAK was not a Responsible Owner.2 UDAK moved for summary judgment, but the district court denied that motion. The court concluded that because UDAK and Canyon Creek‘s “contrary arguments and contentions regarding the requirements for ‘Responsible Owner’ status . . . both appear reasonably supported by Declaration provisions,” the Responsible Owner provision is “facially
¶5 On June 21, 2019, following the bench trial, the district court issued a written ruling concluding that UDAK is a “Responsible Owner” (Original Judgment). Specifically, the court found that “UDAK‘s parcels have a combined allowed Floor Area of at least 40,000 sq. ft.” and that in “harmonizing all of the relevant terms of the 1999 Declaration, it is evident that UDAK is a Responsible Owner . . . as an Owner of Parcels with a combined allowed Floor Area in excess of 40,000 square feet.”
¶6 The district court further ruled that UDAK was contractually entitled to its reasonable attorney fees pursuant to the Declaration‘s attorney fee provision. In the Original Judgment, the court ruled that Canyon Creek was liable for UDAK‘s reasonable attorney fees “pursuant to Article 10.04 of the 1999 Declaration” and directed UDAK to submit an affidavit establishing the amount of attorney fees. UDAK submitted an affidavit and a declaration outlining its attorney fees. Canyon Creek did not object within the time allowed by
¶7 In an apparent effort to satisfy the judgment while still preserving its right of appeal, Canyon Creek filed a document titled “Tender of Judgment Amount Plus Accrued Interest,” to which it attached a photocopy of a check made out to UDAK in the amount of the total judgment. The actual check was never sent to UDAK. Shortly thereafter, Canyon Creek filed a document titled “Motion for Order
¶8 UDAK‘s counsel submitted an affidavit setting forth the additional attorney fees it had incurred in responding to both the motion for entry of additional findings and the motion related to the purported tender. This time Canyon Creek filed a timely objection. After further briefing, the court partially granted UDAK‘s requested additional attorney fees, awarding UDAK $27,979 in addition to the original award. On September 5, 2019, the court entered an amended judgment reflecting the additional attorney fees awarded in connection with the tender (Second Supplemental Judgment). Canyon Creek timely filed a supplemental notice of appeal.3
ISSUES AND STANDARDS OF REVIEW
¶9 Canyon Creek raises several arguments on appeal. First, Canyon Creek challenges the district court‘s interpretation of the Declaration. “Our review of a [district] court‘s interpretation of a contract begins with a question of law, reviewed for correctness: Is the contract unambiguous?” West Valley City v. Majestic Inv. Co., 818 P.2d 1311, 1313 (Utah Ct. App. 1991). “If it is, its interpretation is itself a question of law.” Id.; see also Uintah Basin Med. Center v. Hardy, 2005 UT App 92, ¶ 9, 110 P.3d 168 (“Questions of contract interpretation not requiring resort to
¶10 Second, Canyon Creek argues that the district court made multiple reversible legal errors in awarding attorney fees to UDAK. “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 (cleaned up), cert. granted, 456 P.3d 386 (Utah 2019).
¶11 Third, Canyon Creek argues that its purported tender of the money judgment was legally sufficient and that there was no basis for an award of additional attorney fees to UDAK in connection with the tender. “We review a district court‘s interpretation of our rules of civil procedure, precedent, and common law for correctness.” Keystone Ins. Agency, LLC v. Inside Ins., LLC, 2019 UT 20, ¶ 12, 445 P.3d 434 (cleaned up). Further, we review whether attorney fees are recoverable for correctness. Supra ¶ 10.
I. “Responsible Owner” Under the Declaration
¶12 The key question in this case is whether UDAK is a “Responsible Owner” under the Declaration. The district court ruled that the Declaration was ambiguous but concluded that UDAK was a Responsible Owner after considering extrinsic evidence. Although UDAK agrees with the court‘s ultimate conclusion, it contends that there was no need to resort to extrinsic evidence because the Declaration is unambiguous.5 We agree with UDAK that there is only one reasonable interpretation of the Declaration and that UDAK unambiguously qualifies as a Responsible Owner.
¶13 We reach this conclusion despite the district court‘s contrary view that the Declaration was ambiguous. Whether a contract is ambiguous is a question of law and we afford no deference to the district court‘s conclusion. See Mid-America Pipeline Co. v. Four-Four Inc., 2009 UT 43, ¶ 16, 216 P.3d 352. The district court is “in no better position than is this court to interpret the contractual language at issue here.” Level 3 Commc‘ns, LLC v. Public Service Comm‘n., 2007 UT App 127, ¶ 11, 163 P.3d 652; see also Lake v. Hermes Assocs., 552 P.2d 126, 128 (Utah 1976) (“[W]here the resolution of the controversy depends upon the meaning to be given documents, the [district] court is in no more favored position and is no better able to determine the meaning of such documents than this court.“). Further, “it is within our discretion to affirm a judgment on an alternative ground if it is apparent in the record.” Olguin v. Anderton, 2019 UT 73, ¶ 20, 456 P.3d 760 (cleaned up). Because we can determine, based on the Declaration itself, that there is no ambiguity as to whether UDAK qualifies as a Responsible Owner, we affirm on that basis.
¶14 “Restrictive covenants that run with the land and encumber subdivision lots form a contract between subdivision property owners as a whole and individual lot owners . . . .” Swenson v. Erickson, 2000 UT 16, ¶ 11, 998 P.2d 807 (cleaned up). As such, “interpretation of the [Declaration] is governed by the same rules of construction as those used to interpret contracts.” See id. The first step in contract interpretation is to look within the four corners of the agreement. See Wittingham LLC v. TNE Ltd. P‘ship, 2020 UT 49, ¶ 71, 469 P.3d 1035. “Provided that the language within the four corners of the agreement is unambiguous, we look no further than the plain meaning of the contractual language.” Mid-America Pipeline, 2009 UT 43, ¶ 19.
¶15 A court will look to extrinsic evidence only if the contract is ambiguous. Id. A contract is ambiguous if “it is capable of more than one reasonable interpretation because of uncertain meanings of terms, missing terms, or other facial deficiencies.” Brady v. Park, 2019 UT 16, ¶ 54, 445 P.3d 395 (cleaned up). “Under our caselaw a reasonable interpretation is an interpretation that cannot be ruled out, after considering the natural meaning of the words in the contract provision in context of the contract as a whole, as one [of] the parties could
¶16 The Declaration defines Responsible Owner as “the Owner of a Parcel or Parcels with a combined Building Area thereon of at least forty thousand square feet (40,000 sq. ft.) of Floor Area.” UDAK contends that it qualifies as a Responsible Owner because it owns five parcels that may be developed into buildings not to exceed a combined 42,945 square feet of Floor Area. Canyon Creek, on the other hand, argues that this provision refers not to the maximum allowable Floor Area but to the actual Floor Area of the existing or proposed buildings constructed on each parcel. If Canyon Creek‘s interpretation is correct, the combined Building Area of UDAK‘s parcels would be insufficient for it to qualify as a Responsible Owner.
¶17 The Declaration defines “Building Areas” as “the area or areas designated and set forth within each separate Parcel on the Site Plan, . . . which shall be established as Building Areas pursuant to Article 3.03.” The Site Plan shows the location of each parcel and lists the square footage of all existing or proposed buildings. Under Canyon Creek‘s interpretation, the building measurements shown on the Site Plan establish each parcel‘s Building Area for purposes of the Responsible Owner provision.
¶18 But Canyon Creek‘s interpretation would treat Building Area as synonymous with Building, a separately defined term.
¶19 Significantly, the Responsible Owner provision itself distinguishes between the Floor Area of a Building Area and the Floor Area of “a Building constructed thereon.” In addition to “the Owner of a Parcel or Parcels with a combined Building Area thereon of at least forty thousand square feet (40,000 sq. ft.) of Floor Area,” the definition of Responsible Owner includes “the lessee of a Parcel with a Building constructed thereon containing a minimum of forty thousand square feet (40,000 sq. ft.) of Floor Area.” (Emphasis added.) The Declaration thus draws a distinction between owners and lessees and the Floor Area required for each to be a Responsible Owner. If UDAK was a lessee, it would not be a Responsible Owner because the
¶20 The Declaration‘s other provisions similarly distinguish between the size of Buildings and the size of the Building Area. The Declaration contemplates that “[t]he Building Area of each Parcel may, but need not be developed to the full gross square footage of Floor Area as set forth” in the Site Plan or as allowed in other sections of the Declaration. Section 4.07 provides that each parcel “may be developed into not more than one (1) Building, which shall not exceed” a fixed square footage “of Floor Area.” Section 3.03 references the same fixed square footage for each parcel and provides that, for purposes of assigning parking spaces, “Floor Area includes the maximum” square footage “allowed for the Building located or to be located on” a particular parcel, “although the Buildings currently located thereon have not been constructed to that size as of the date of this Declaration.” Thus, the treatment each parcel receives is based on the maximum square footage of Floor Area allowed without regard to the actual square footage of Buildings.
¶21 The Declaration unambiguously sets forth the maximum square footage of Floor Area for each parcel and distinguishes that Building Area from the Floor Area of “a Building constructed thereon.” Based on the fixed square footage listed in sections 3.03 and 4.07, UDAK owns parcels with a combined Building Area of 42,945 square feet of Floor Area. Accordingly, UDAK is a Responsible Owner and possesses all rights and privileges granted to Responsible Owners under the Declaration.
¶22 Canyon Creek argues that the district court erred in several respects when awarding attorney fees in the underlying action. As an initial matter, there is no dispute that UDAK was the prevailing party in this lawsuit and thus entitled to fees under the Declaration. Instead, the parties dispute which fees were authorized by the Declaration‘s attorney fees provision.
¶23 In Utah, “attorney fees are awarded in accordance with the terms of [the] contract.” Rapoport v. Four Lakes Village Homeowners Ass‘n Inc., 2013 UT App 78, ¶ 22, 300 P.3d 327 (cleaned up). Article 10.04 of the Declaration states,
In the event that any suit is brought for the enforcement of any provision of this Declaration or as the result of any alleged breach thereof or for a declaration of rights and duties hereunder, the successful party or parties to such suit shall be entitled to collect reasonable attorneys’ fees from the losing party or parties and any judgment or decree rendered shall include an award thereof.
On appeal, Canyon Creek argues that the court made seven errors by awarding attorney fees for (1) pre-litigation work; (2) work related to administrative activities, mediation, and other settlement efforts; (3) undescribed legal work; (4) work done by a second attorney before entering an appearance; (5) settlement efforts made by UDAK‘s successor counsel; (6) work done before November 29, 2018; and (7) work done after November 29, 2018, when fees were awarded during the pendency of this appeal.
¶24 Each of Canyon Creek‘s first five arguments relates to the district court‘s award of attorney fees in the First Supplemental Judgment issued on November 1, 2018. Although Canyon Creek attempted to raise those issues below, it failed to do so in a
¶25 We turn to Canyon Creek‘s sixth and seventh attorney-fees arguments, both of which relate to the district court‘s Second Supplemental Judgment issued on September 5, 2019. First, Canyon Creek argues that “UDAK‘s request for additional attorney fees incurred before November 29, 2018 is time-barred” under the Utah Rules of Civil Procedure because
¶26 The time limits in
¶27 Canyon Creek also argues that the district court lacked jurisdiction to award attorney fees because the Second Supplemental Judgment was entered during the pendency of this appeal. Specifically, Canyon Creek alleges that “[i]t simply does not make sense that a litigant such as UDAK can submit, and a district court can enter, a judgment of attorney fees anytime during the pendency of an appeal, including after the filing of an initial brief.”
¶28 This court has previously rejected that argument. In Saunders v. Sharp, 818 P.2d 574 (Utah Ct. App. 1991), we held that “even where a [district] court is otherwise divested of jurisdiction due to an appeal, the [district] court retains the power to act on collateral matters.” Id. at 578. Further, we held that the district court has jurisdiction to award supplemental
¶29 Canyon Creek asserts, without explanation, that
¶30 Canyon Creek challenges the district court‘s conclusion that its purported tender of the money judgment was invalid and argues that the award of attorney fees to UDAK for work done in connection with the tender and corresponding motion was improper. Canyon Creek argues that its tender was legally sufficient under
¶31 “Utah courts have interpreted this provision to mean a valid tender requires an obligor to make a bona fide, unconditional, offer of payment of the amount of money due coupled with an actual production of the money or its equivalent.” Shields v. Harris, 934 P.2d 653, 655 (Utah Ct. App. 1997) (emphasis added) (cleaned up); see also Utah Res. Int‘l. Inc. v. Mark Techs. Corp., 2014 UT 60, ¶ 34, 342 P.3d 779 (“Valid tender must be (1) timely, (2) made to the person entitled to payment, (3) unconditional, (4) an offer to pay the amount of money due, and (5) coupled with an actual production of the money or its equivalent.” (cleaned up)). “A mere offer to pay generally does not constitute a valid tender.” PDQ Lube Center, Inc. v. Huber, 949 P.2d 792, 800 (Utah Ct. App. 1997); see also Washington Nat‘l Ins. Co. v. Sherwood Assocs., 795 P.2d 665, 670 (Utah Ct. App. 1990) (“Informing an obligee that you are ready and willing to perform . . . is insufficient.“). Our supreme court has noted an exception to the rule: “A party may be excused from extending actual payment of a judgment if it is obvious that the other party would reject it.” Utah Res. Int‘l, 2014 UT 60, ¶ 35. However, “there must be evidence that the debtor would actually make payment but for the creditor‘s refusal to accept it.” Id.
¶32 The district court found that Canyon Creek “never produced or delivered to [UDAK] the attorney fees or its
¶33 Canyon Creek argues that filing a photocopy of a check is “actual production” of the money or its equivalent. Canyon Creek cites
¶34 We also conclude that the district court‘s award of attorney fees in connection with Canyon Creek‘s invalid tender was proper. As an initial matter, we disagree with both parties that the district court awarded these fees pursuant to
¶35 Instead, attorney fees were authorized by section 10.04 of the Declaration. Fees incurred in connection with litigating the validity of Canyon Creek‘s purported tender are closely related to the underlying lawsuit brought by UDAK “for a declaration of rights and duties” under the Declaration. As the successful party, UDAK was entitled to an award of these fees under section 10.04.
IV. Attorney Fees on Appeal
¶36 UDAK requests an award of its attorney fees incurred in defending this appeal. “A party entitled by contract or statute to attorney fees below and that prevails on appeal is entitled to fees reasonably incurred on appeal.” Federated Cap. Corp. v. Abraham, 2018 UT App 117, ¶ 15, 428 P.3d 21 (cleaned up). Because the district court awarded UDAK attorney fees below pursuant to the Declaration, UDAK is entitled to fees as the prevailing party on appeal.
CONCLUSION
¶37 We conclude that the Declaration is unambiguous that UDAK is a Responsible Owner. We affirm the amount of attorney fees awarded in the First Supplemental Judgment because Canyon Creek failed to preserve the challenges related to that judgment. We also affirm the attorney fees awarded in the Second Supplemental Judgment as well as the court‘s conclusion that Canyon Creek‘s tender of judgment was invalid. We therefore remand to the district court only to award the attorney fees UDAK reasonably incurred on appeal.
20190065-CA
18
2021 UT App 16