E & H Land, Ltd. v. Farmington City

• Decision Date: 02 October 2014
• Docket Number: No. 20130288–CA.,20130288–CA.
• Citation: 336 P.3d 1077,2014 UT App 237
• Court: Utah Court of Appeals
• Parties: E & H LAND, LTD., Plaintiff and Appellant, v. FARMINGTON CITY, Defendant and Appellee.

336 P.3d 1077

2014 UT App 237

E & H LAND, LTD., Plaintiff and Appellant

v.FARMINGTON CITY, Defendant and Appellee.

No. 20130288–CA.

Court of Appeals of Utah.

Oct. 2, 2014.

Stanford P. Fitts and Casey W. Jones, Salt Lake City, for Appellant.

Jody K. Burnett and George A. Hunt, Salt Lake City, for Appellee.

Judge STEPHEN L. ROTH authored this Opinion, in which Judges MICHELE M. CHRISTIANSEN and JOHN A. PEARCE concurred.

Opinion

ROTH, Judge:

¶ 1 This case involves a contract dispute between E & H Land, Ltd. (E & H) and Farmington City. Farmington purchased a narrow strip of land that crossed E & H's property in 2011 as part of a development plan connecting two streets in Davis County—Clark Lane and Park Lane. E & H argues that the parties' real estate purchase agreement (the REPC) requires Farmington to use the land to build a roadway and an intersection. Farmington argues that the agreement allows the city to build the intersection wherever it thinks best. The district court granted Farmington's motion for summary judgment, concluding that the REPC was unambiguous and that there was no language obligating Farmington to construct an intersection in any particular location. We conclude that the REPC is ambiguous on that question, and we remand to the district court to consider extrinsic evidence of the parties' intent.

BACKGROUND¹

¶ 2 Farmington contacted E & H in May 2010 to discuss Farmington's plans to extend Park Lane west across E & H's land to connect it to Clark Lane. After some preliminary negotiations, E & H sent Farmington a proposal in July 2010 requesting “[m]ultiple guaranteed access points [to the new road] with no more than 220[ feet] of separation from road intersections.” The Mayor replied by letter in September, informing E & H that Farmington “cannot guarantee the number or location of potential property access points without knowing how the property will develop.”

¶ 3 According to E & H, city officials then met with E & H's representatives in October 2010 and agreed, in a face-to-face meeting, that the new intersection “would be centered along E & H's [e]astern property line.” This location would essentially leave both E & H and an adjacent property owner with two halves of two different intersection corners, making these areas difficult to develop. Dave Millheim, Farmington's city manager at the time, sent an email in December 2010 encouraging E & H and the neighboring property owner to “work out ... property transfers” so that each owner would “get control of the respective corners” of the intersection after the road was complete.²

¶ 4 One month later, E & H entered into the REPC with Farmington to sell the city about 1.5 acres. Exhibits A and B to the REPC contain a legal description of the conveyed parcel and a plat map of the property. The exhibits show a narrow strip of land extending northeast from Clark Lane across the southeast corner of E & H's land that abruptly flares outward to form a shape resembling half of an intersection on E & H's eastern boundary. The parties' dispute in this case hinges on the interpretation of paragraph 6 of the REPC, which provides,

6. Property Improvements. It is specifically understood by the Parties that [Farmington] is purchasing the Property with the intent that it will be used for a realignment of the future Park Lane extension. Any current or future owners of parcels abutting the Property shall be required to install any public improvements necessary to serve those parcels and [E & H] shall have no obligation to such subsequent purchaser other than those obligations customarily imposed under ordinance or common law.

The agreement also contains an integration clause, providing that the REPC, and “any exhibits incorporated by reference, constitutes the final expression of the parties' agreement and is a complete and exclusive statement of the terms of that agreement” that “supersedes all prior or contemporaneous negotiations, discussions and understandings, whether oral or written or otherwise.”

¶ 5 One year later, before any construction had occurred, Farmington began considering a proposal to “shift the location of the intersection ... further to [the] north,” entirely off E & H's property. E & H claimed that shifting the location of the intersection would decrease the value of its property by $500,000. Farmington eventually decided to move the intersection, citing an engineering report that recommended the move for safety reasons. E & H sued Farmington for fraud, negligent misrepresentation, breach of contract, breach of the covenant of good faith and fair dealing, and promissory estoppel. Its complaint also requested reformation of the REPC based on a mutual mistake. Farmington moved for summary judgment on all claims, arguing that no language in the contract required it to build the intersection in a particular location and that the integration clause prohibited the court from considering “prior or contemporaneous discussions, negotiations, or understandings” to the contrary. The district court granted Farmington's motion and denied E & H's rule 56(f) motion for additional discovery. E & H now appeals.

ISSUES AND STANDARDS OF REVIEW

¶ 6 E & H argues that the district court incorrectly granted summary judgment to Farmington on E & H's claims for breach of contract, reformation due to mutual mistake, promissory estoppel, and breach of the covenant of good faith and fair dealing.³ Summary judgment is warranted “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Utah R. Civ. P. 56(c). We review a district court's decision to grant summary judgment for correctness. Orvis v. Johnson, 2008 UT 2, ¶ 6, 177 P.3d 600.

¶ 7 The merits of several of E & H's claims hinge on the district court's interpretation of the REPC. “The interpretation of a contract is a question of law, which we review for correctness, giving no deference to the ruling of the [district] court.” McNeil Eng'g & Land Surveying, LLC v. Bennett, 2011 UT App 423, ¶ 7, 268 P.3d 854 (citation and internal quotation marks omitted). “Likewise, the determination of whether a contract is facially ambiguous is a question of law, which we review for correctness.” Id.

ANALYSIS

¶ 8 The parties' central dispute in this case boils down to the meaning of the words in paragraph 6 of the REPC: “It is specifically understood by the Parties that [Farmington] is purchasing the Property with the intent that it will be used for a realignment of the future Park Lane extension.” E & H argues that the parties used those words to refer to a roadway and an intersection that Farmington had agreed to build across E & H's land to connect Clark Lane and Park Lane. Farmington denies that the parties ever reached an agreement about the location of the intersection and argues that the language of the contract does not reasonably support any other conclusion. Paragraph 6, with our emphasis, provides,

6. Property Improvements. It is specifically understood by the Parties that [Farmington] is purchasing the Property with the intent that it will be used for a realignment of the future Park Lane extension. Any current or future owners of parcels abutting the Property shall be required to install any public improvements necessary to serve those parcels and [E & H] shall have no obligation to such subsequent purchaser other than those obligations customarily imposed under ordinance or common law.

¶ 9 The REPC does not define “Park Lane extension,” but exhibit A to the contract—which contains a legal description of the conveyed parcel—is entitled, “Park Lane Extension Over E and H Property.” And E & H points out that two drawings of the parcel in exhibit B depict a “narrow strip” of land that cuts “across E & H's property” before flaring into a “lead-off” portion on the other end of its land that is shaped like half of an intersection. E & H argues that the drawings and legal description “illustrate that Farmington purchased the exact land necessary” to build a roadway and intersection connecting Clark Lane and Park Lane on E & H's land, so paragraph 6 “obligates Farmington to use the [p]urchased [p]roperty for” both “the [r]oadway and [i]ntersection.” In the alternative, E & H argues that the parties' prior written communications demonstrate that “the REPC is at a minimum, ambiguous” about the location of the intersection. E & H urges us to consider extrinsic evidence to determine if there is a facial ambiguity even though the REPC has an integration clause. See Ward v. Intermountain Farmers Ass'n, 907 P.2d 264, 268 (Utah 1995) (“When determining whether a contract is ambiguous, any relevant evidence must be considered.”).

¶ 10 Farmington maintains that “[n]o statement, paragraph or sentence” in the REPC “contain[s] any mention of the proposed location of the intersection between Park Lane and Clark Lane.” Consequently, Farmington argues that there is unambiguously no “agreement respecting the location of the intersection ... that [Farmington] somehow breached.” Further, Farmington points out that the REPC has an integration clause, which provides that the REPC is “the final expression of the parties' agreement and is a complete and exclusive statement of the terms of that agreement.” In light of that clause, Farmington maintains, it is inappropriate to consider any extrinsic evidence that would create an obligation about which the REPC is conspicuously silent. We conclude that extrinsic evidence is not necessary to determine that the REPC is facially ambiguous with respect to whether the parties agreed to the location of the intersection. As a consequence, we also conclude that the district court inappropriately granted Farmington summary judgment on the breach of contract, breach of covenant of good faith and fair dealing, and mutual mistake...