Northgate Vill. Dev. LC v. Orem City, 20160408-CA

• Decision Date: 17 May 2018
• Docket Number: No. 20160408-CA,20160408-CA
• Citation: 427 P.3d 391
• Court: Utah Court of Appeals
• Parties: NORTHGATE VILLAGE DEVELOPMENT LC, Appellant, v. OREM CITY, Appellee.

427 P.3d 391

NORTHGATE VILLAGE DEVELOPMENT LC, Appellant,

v.OREM CITY, Appellee.

No. 20160408-CA

Court of Appeals of Utah.

Filed May 17, 2018

J. Craig Smith, Kathryn J. Steffey, and Clayton H. Preece, Salt Lake City, Attorneys for Appellant

Jody K. Burnett and Robert C. Keller, Salt Lake City, Attorneys for Appellee

Judge David N. Mortensen authored this Opinion, in which Judges Michele M. Christiansen and Kate A. Toomey concurred.

Opinion

MORTENSEN, Judge:

¶ 1 Northgate Village Development LC purchased property from Orem City containing multiple stockpiles of buried garbage, including asphalt and other debris. Although the parties anticipated that some cleanup would be necessary, the amount of garbage ultimately discovered was significant, generating cleanup costs of nearly $3 million. Northgate and the City dispute who should pay for the cleanup of what garbage. The district court entered orders excluding evidence of any garbage unrelated to asphalt and excluding two of Northgate’s expert witnesses from testifying. Northgate, on interlocutory appeal, contends that these rulings were in error. We agree and reverse.

BACKGROUND

¶ 2 Northgate agreed to purchase property from the City to develop it for mixed use. The City had previously used the property for its public works facility. The site had apparently also been used to dump "hundreds of thousands of tons of debris," which included removed curb, gutter, sidewalk, asphalt, trees, tires, and transformers, among other things.

¶ 3 Before the sale, the parties anticipated the presence of at least some of the debris, and the City agreed to "complete any environmental clean-up responsibilities specified in the written action plan" for the site. As Northgate discovered more and more garbage, the parties disputed the meaning of the action plan and the specific responsibilities the City was required to perform. Northgate filed suit against the City in 2009,¹ asserting damages of close to $3 million in compensation for cleaning up garbage.

¶ 4 The litigation proceeded through discovery and the parties eventually submitted competing motions for summary judgment. The district court, in large part, granted the City’s motion and denied Northgate’s motion, ruling that the City was responsible only for reimbursing Northgate for removal and disposal of buried electrical transformers. Northgate appealed that order, providing this court with its first occasion to review this case. This court affirmed in part and reversed in part. See Northgate Village Dev. LC v. Orem City (Northgate I ), 2014 UT App 86, ¶ 1, 325 P.3d 123. Because on remand the district court interpreted the holding of Northgate I as limiting the type of garbage the City is obligated to clean up, this court’s treatment of the term "asphalt" in Northgate I is of particular importance.

¶ 5 In Northgate I , this court affirmed the district court’s determination that the sale contract obligated the City to perform only those cleanup actions listed on the "Clean–Up List" attached to the contract. Id. ¶ 31. However, this court reversed the district court’s first interpretation of the Clean–Up List and determined that the Clean–Up List "contains ambiguities," specifically noting that it "does not clearly indicate how the City must deal with buried asphalt." Id. ¶¶ 36, 39. This court explained,

[I]n the section of the Clean–Up List describing the City’s clean-up responsibilities in the "Soil Borrow & Landfill Area," there are three entries:

1. Landfilling construction materials with pieces of asphalt

2. Permit required for continued landfilling

3. Site assessment and application required for closure of site

Northgate and the City ascribe contrary meanings to this section of the Clean–Up List. In the City’s view, the first and second entries should be read together, allowing the City to fulfill its obligation to clean up the asphalt by simply applying for and receiving proper permits. In Northgate’s view, the first and second entries impose separate requirements: the City must clean up the "construction materials with pieces of asphalt" and must also apply for and receive permits for any continued landfilling.

Both the City’s reading and Northgate’s are plausible. Consequently, without reference to parol evidence of the parties’ intent, we see no way to select one reading of the asphalt provision over the other. The Land Sale Contract therefore contains a facial ambiguity, and resolving this facial contract ambiguity requires evidence of the parties’ intent. Because the intent of the parties is a question of fact to be determined by the jury, the district court erred by determining at summary judgment that the City could fulfill its asphalt clean-up responsibilities by securing the proper permits. We therefore vacate the district court’s determination on this issue.

Id. ¶¶ 37–38 (cleaned up).² This court ultimately concluded, "Because we recognize facial ambiguities in the Clean–Up List, we vacate the district court’s determination that the City satisfied its clean-up obligations. We reverse the district court’s grant of summary judgment and remand to allow the district court to hear evidence regarding the parties’ intent with respect to asphalt clean-up[.]" Id. ¶ 55.

¶ 6 After remand, the case proceeded and became focused on two points of contention, which we review in detail. We first outline the facts pertaining to the City’s pretrial request to preclude Northgate from introducing evidence of its remediation of certain types of buried debris. In ruling on this issue, the district court considered how this court construed the term "asphalt" in Northgate I . Second, we review the facts surrounding Northgate’s attempt after remand, as required by Northgate I , to articulate its damages as limited by the geographic areas specified in the Clean–Up List and the district court’s eventual exclusion of certain expert testimony.

Exclusion of Evidence Under Rules 401 and 403

¶ 7 The City moved to exclude evidence of Northgate’s removal of garbage other than asphalt from the site, arguing the evidence was improper under rule 403 of the Utah Rules of Evidence. The City argued that the "[p]resentation of such evidence, testimony, or argument will ... unfairly prejudice the City to the extent that it unnecessarily imputes actionable conduct to the City, particularly to the extent that it may be alleged that the City violated environmental regulations." Northgate countered that the construction debris with asphalt was intermingled with the rest of the garbage—including buried transformers that the City was required to remove—and that "the exclusion from evidence of all references to hazardous materials found on the ... site would be prejudicial error." The district court granted the City’s motion.

¶ 8 Although the City had moved to exclude evidence only under rule 403, the district court decided the issue almost exclusively under rule 401.³ The district court excluded under rule 401 any "evidence regarding Northgate’s removal of construction material not containing asphalt." It reasoned that "the City’s responsibility regarding landfill material not containing asphalt is not at question in this case per the Court of Appeals’ ruling; the Clean–Up List does not include a provision for such landfill material. Therefore, under the Court of Appeals’ ruling, that material has no bearing in this case." The district court further reasoned that, despite Northgate’s claim that removing asphalt without removing other garbage would be impossible, "the percentage of urban detritus excavated on the property amounted to only 5–10% of the total debris excavated, a negligible expense." The district court also reasoned that any dumping fees associated with removing garbage other than asphalt would likely be offset by the "saved costs in crushing the construction material containing asphalt and refilling the excavation site with it." Upon this analysis, the district court concluded that "evidence regarding the other construction material aside from the asphalt is not relevant."

¶ 9 The district court also ruled that the evidence of other garbage should be excluded under rule 403. The district court provided only one statement on the matter, saying, "[M]oreover, it would be more prejudicial than probative." The court no analysis of how or why that evidence would be prejudicial.

Exclusion of Expert Testimony

¶ 10 On remand, Northgate filed a motion to extend discovery to allow its experts to identify and limit its claim for damages to the geographic areas outlined in the Clean–Up List in light of the decision in Northgate I . The district court granted the motion, and Northgate timely filed supplemental disclosures and reports from its experts, Expert 1 and Expert 2.

¶ 11 Expert 1’s supplemental disclosure refers to, among other things, Greenfield, an excavation company that Northgate hired to assist in unearthing and removing garbage. The disclosure also refers to a bookkeeping and accounting employee for one of Northgate’s related entities (Northgate Employee). Expert 1 reported, "Based on work location designations for each Greenfield invoice prepared by or under the direction of [Northgate Employee], and associated underlying documentation reviewed by the project supervisor, charges by Greenfield to Northgate for site remediation were allocated by pit[.]" Expert 2’s report referenced Expert 1’s supplemental disclosure and made conclusions "[b]ased on the information provided" in Expert 1’s report.

¶ 12 After the close of the extended discovery period, the City contested the reliability of these expert reports in a motion to exclude Expert 1’s and Expert 2’s testimony, arguing that Northgate Employee’s bookkeeping, upon which the experts’ opinions were based, was unreliable. Northgate Employee had testified, in reference to an "apportionment document" that she had prepared—which demonstrated an allocation of excavation costs to particular areas—that she "[did not]...