ACC Capital Corp. v. ACE W. Foam Inc.

• Citation: 420 P.3d 44
• Decision Date: 01 March 2018
• Docket Number: No. 20160095-CA,20160095-CA
• Parties: ACC CAPITAL CORPORATION, Appellant, v. ACE WEST FOAM INC., Ace West Foam #3 Inc., Ace West Trucking Inc., and Donald O. Rooks Jr., Appellees.
• Court: Court of Appeals of Utah

420 P.3d 44

ACC CAPITAL CORPORATION, Appellant,

v.ACE WEST FOAM INC., Ace West Foam #3 Inc., Ace West Trucking Inc., and Donald O. Rooks Jr., Appellees.

No. 20160095-CA

Court of Appeals of Utah.

Filed March 1, 2018

Certiorari Denied June 8, 2018

John A. Snow and Alex B. Leeman, Attorneys for Appellant

Brennan H. Moss and John P. Mertens, Attorneys for Appellees

Judge Diana Hagen authored this Opinion, in which Judges Michele M. Christiansen and Jill M. Pohlman concurred.

Opinion

HAGEN, Judge:

¶1 ACC Capital Corporation (ACC) appeals the district court’s denial of its motion for summary judgment and enforcement of a subsequent settlement agreement. The district court did not abuse its discretion in enforcing the settlement where the parties executed a Memorandum of Understanding (the MOU) during mediation, the terms of which were sufficiently definite to be enforced. Further, the district court’s factual finding that there was no misrepresentation or mutual mistake of fact that would render the agreement null and void was not clearly erroneous. Accordingly, we affirm the enforcement of the settlement agreement.

BACKGROUND

¶2 The parties entered into a lease agreement concerning the use of "custom built trailer-mounted nitrogen generators" that are typically utilized in the oil and gas drilling industry. ACC sued Ace West Foam Inc. (Ace West), claiming that Ace West had breached the lease.

¶3 The parties submitted cross-motions for summary judgment, which the district court denied. The court determined that there were several "material fact disputes concerning [Ace West’s] defenses and the amount of damages that may be owing to [ACC]."

¶4 After the court denied the summary judgment motions, the parties participated in court-ordered mediation. At the mediation session, the parties executed the MOU. The district court found that the MOU outlined the following terms:

ACC will inspect and pick two of [Ace West’s] foam compressor units, obtain possession of them, and then sell them with the two previously leased trailer-mounted nitrogen generators that were in the possession of [ACC].... [The MOU] sets out a minimum sales price of $1,425,000 for the four items (two generators with two compressors), along with a schedule of what further consideration will be exchanged, depending on the ultimate sales price achieved.... If the units do not sell at the minimum price "then [Ace West] will pay ACC $125,000," which "is intended as damages if Ace West does not sell the four units."

¶5 The last provision of the agreement stated that the parties "will work in good faith and make reasonable efforts to bring about this resolution and settlement, including the preparation and execution of a more formal settlement agreement and release of all claims, as well as stipulation and order for dismissal with prejudice."

¶6 After the mediation session, the parties exchanged correspondence to create a "more formal settlement agreement," as directed in the MOU. Ultimately, these negotiations broke down, and ACC sent a letter to Ace West purporting to withdraw its settlement offer.

¶7 Ace West subsequently filed a motion to enforce the MOU. The district court determined that the MOU was an enforceable settlement agreement, containing "proper legal consideration because performance or a return promise was bargained for by each of the parties." Furthermore, there was mutuality of agreement because "[b]oth parties executed the agreement," as well as mutuality of obligation because "ACC agreed to dismiss its claims in return for payment and performance on behalf of Ace West." The court concluded that the MOU contained "all of the material terms agreed to between the parties" and was "fully enforceable."

¶8 The court also rejected ACC’s alternative argument that the MOU "should be set aside due to mistake, misrepresentation, or fraud" regarding the value of the foam compressors. The court made a specific factual finding that it did "not find credible any assertion by ACC that Ace West warranted that the foam compressors were worth any particular value."

¶9 ACC now appeals the district court’s order granting the motion to enforce as well as its prior order denying summary judgment.

ISSUES AND STANDARDS OF REVIEW

¶10 ACC contends that the district court erred by enforcing the MOU and dismissing the case because (1) the MOU was not intended to be a final and enforceable agreement and (2) even if it was, the agreement was based on false statements or mutual mistake concerning the value of the foam compressors.

¶11 "The existence of a contract is a question of law, to be reviewed for correctness." McKelvey v. Hamilton , 2009 UT App 126, ¶ 17, 211 P.3d 390. "If the language within the four corners of the contract is unambiguous, the parties’ intentions are determined from the plain meaning of the contractual language, and the contract may be interpreted as a matter of law."¹ Lebrecht v. Deep Blue Pools & Spas Inc. , 2016 UT App 110, ¶ 14, 374 P.3d 1064 (citation and internal quotation marks omitted). Accordingly, "we review the district court’s interpretation for correctness, according no deference to the district court." Mid-America Pipeline Co. v. Four-Four, Inc. , 2009 UT 43, ¶ 16, 216 P.3d 352. Findings of fact regarding fraud or mutual mistake "will be set aside only if [they are] clearly erroneous." Vandermeide v. Young , 2013 UT App 31, ¶ 14, 296 P.3d 787. The district court’s ultimate decision to enforce a settlement agreement is reviewed for abuse of discretion. McKelvey , 2009 UT App 126, ¶ 17, 211 P.3d 390.

ANALYSIS

I. The MOU Constituted an Enforceable Settlement Agreement.

¶12 ACC contends that the district court abused its discretion by enforcing the MOU because that instrument was never intended to be a final settlement agreement. "An agreement of compromise and settlement constitutes an executory accord. Since an executory accord constitutes a valid enforceable contract, basic contract principles affect the determination of when a settlement agreement should be so enforced." Goodmansen v. Liberty Vending Sys., Inc. , 866 P.2d 581, 584 (Utah Ct. App. 1993) (citation and internal quotation marks omitted). "[A] binding contract exists where it can be shown that the parties had a meeting of the minds as to the integral features of [the] agreement and that the terms are sufficiently definite as to be capable of being enforced." LD III, LLC v. BBRD, LC , 2009 UT App 301, ¶ 14, 221 P.3d 867 (second alteration in original) (citation and internal quotation marks omitted).

¶13 Here, a binding contract exists. The district court correctly determined that the MOU showed both that there was a meeting of the minds and that the terms of the agreement were sufficiently definite and capable of being enforced. First, the district court observed that both parties had signed the MOU, evidencing "a mutuality of agreement." Second, the court concluded that the terms of the agreement were sufficiently definite as to be capable of being enforced, where the MOU contained "a detailed settlement structure" concerning the foam compressors, minimum sales prices for these items, as well as further consideration to be exchanged between the parties.

¶14 ACC does not dispute that it signed the MOU, nor does it take issue with the district court’s conclusion that the terms of that agreement are sufficiently definite as to be capable of being enforced. Instead, ACC argues that both extrinsic evidence and language in the MOU itself demonstrate that ACC did not intend to enter into a binding agreement. Neither argument convinces us that the district court erred in concluding otherwise.

A. Extrinsic Evidence Cannot Overcome the Parties’ Intent Reflected in an Unambiguous Agreement.

¶15 ACC argues that the district court’s finding of mutual agreement was clearly erroneous because the facts surrounding the mediation established that ACC did not intend to be bound by the MOU. Specifically, ACC points to its "undisputed refusal to sign a final agreement and insistence that a final agreement be deferred to a later time" as well as "the parties’ post-mediation conduct."

¶16 The district court correctly ruled that the MOU was binding based on its unambiguous language. So long as the language within the contract is unambiguous, "a court determines the parties’ intentions from the plain meaning of the contractual language as a matter of law." Bakowski v. Mountain States Steel, Inc. , 2002 UT 62, ¶ 16, 52 P.3d 1179. "Before the court may consider extrinsic evidence of the parties’ intent, ... it must first conclude that the contract is facially ambiguous." Wilson v. Johnson , 2010 UT App 137, ¶ 8, 234 P.3d 1156.

¶17 To determine facial ambiguity, Utah courts apply a two-part standard. Daines v. Vincent , 2008 UT 51, ¶ 26, 190 P.3d 1269. First, the court must "review relevant and credible extrinsic evidence offered to demonstrate that there is in fact an ambiguity." Id. ¶ 31. Second, after reviewing the extrinsic evidence, the court may find "ambiguity only if the competing interpretations are ‘reasonably supported by the language of the contract.’ " Id. (quoting Ward v. Intermountain Farmers Ass’n , 907 P.2d 264, 268 (Utah 1995) ); see also Andersen v. Dep’t of Corr ., 2015 UT App 63, ¶ 9, 347 P.3d 21 ("Although district courts are required to review relevant and credible extrinsic evidence offered to demonstrate that there is in fact an ambiguity, a finding of ambiguity after a review of relevant, extrinsic evidence is appropriate only when reasonably supported by the language of the contract." (citations and internal quotation marks omitted) ).

¶18 Under this precedent, "even though we permit admission of extrinsic evidence to support a claim of ambiguity in contractual language, the claim must be plausible and reasonable in light of the language used." Daines , 2008 UT 51, ¶ 31, 190 P.3d 1269 (citation and internal quotation marks omitted). In other words, "there can be no ambiguity where evidence is...