American Rural Cellular, Inc. v. Systems Communication Corp., 960335-CA

• Decision Date: 30 May 1997
• Docket Number: No. 960335-CA,960335-CA
• Parties: 318 Utah Adv. Rep. 3 AMERICAN RURAL CELLULAR, INC., a Delaware corporation, Plaintiff and Appellant, v. SYSTEMS COMMUNICATION CORPORATION, a Utah corporation; and Neal M. Sorensen, an individual, Defendants and Appellees.
• Court: Utah Court of Appeals

Page 185

939 P.2d 185

318 Utah Adv. Rep. 3

AMERICAN RURAL CELLULAR, INC., a Delaware corporation Plaintiff and Appellant, v. SYSTEMS COMMUNICATION CORPORATION, a Utah corporation; and Neal M. Sorensen, an individual, Defendants and Appellees.

No. 960335-CA.

Court of Appeals of Utah.

May 30, 1997.

Andrew W. Morse and Julianne P. Blanch, Snow, Christensen & Martineau, Salt Lake City, for Plaintiff and Appellant.

Gayle F. McKeachnie and Clark B. Allred, McKeachnie & Allred, P.C., Vernal, for Defendants and Appellees.

Before WILKINS, Associate Presiding Judge, and BENCH and JACKSON, JJ.

OPINION

JACKSON, Judge:

American Rural Cellular, Inc. (Cellcom) appeals the trial court's judgment, on remand, in favor of Systems Communication Corporation (Syscom). We affirm in part, reverse in part, and remand for further proceedings on the issue of attorney fees.

FACTS

In 1989, Cellcom, a Delaware corporation, was awarded Federal Communications Commission permits to build and operate cellular telephone systems in eastern Utah and central Pennsylvania. After obtaining the permits, Cellcom entered into an agreement with Syscom, a Utah corporation, for the construction and management of a cellular telephone system in eastern Utah. ¹ As the first phase of construction on the cellular system neared completion, a dispute arose between the parties. Cellcom questioned Syscom's compliance with certain terms of the parties' contract; Syscom responded by filing mechanics' liens on the three Cellcom properties that Syscom had improved. Cellcom then took the cellular system over from Syscom and filed this action seeking to terminate the contract and void the mechanics' liens. Syscom counterclaimed, seeking foreclosure of its mechanics' liens and damages for breach of contract. In its response to Syscom's counterclaim, Cellcom argued that Syscom was barred from bringing its counterclaim by Utah Code Ann. § 58-55-604 (1996), ² which prohibits unlicensed contractors from suing on their contracts. Cellcom asserted that because Syscom acted as a contractor and failed to comply with the licensing requirements of the Utah Construction Trades Licensing Act (the Act), Utah Code Ann. tit. 58, ch. 55, Syscom could not recover for materials and services provided under the contract.

After a two-day bench trial in October 1992, the trial court held that Cellcom had validly terminated the contract, but that Cellcom had breached the contract by not paying Syscom the amount it spent to build the cellular system. The trial court further held that Syscom was not barred by section 58-55-604 from maintaining its action, and that the mechanics' liens were valid. The court awarded Syscom its attorney fees and a judgment for $116,040.96.

Cellcom appealed the trial court's ruling to this court. In our 1995 opinion, see American Rural Cellular, Inc. v. Systems Communication Corp., 890 P.2d 1035 (Utah.Ct.App.1995), we concluded that the trial court failed to make adequate findings to support its decision that Syscom was not barred from maintaining its action by section 58-55-604. We noted that the trial court failed to make any express findings concerning the "crucial threshold issue of whether Syscom [was] a contractor under the Act." Id. at 1036. We therefore remanded for detailed findings as to whether Syscom acted as a contractor within the statutory definition. See id. at 1039. We also discussed the statutory and common law exceptions to the licensing requirement, holding that, should the trial court determine that Syscom was engaged as a contractor but that it met one or more of these statutory or common law exceptions, the trial court must make detailed factual findings supporting its conclusion. See id. at 1039-41.

On remand, the trial court again ruled for Syscom, once again finding that Syscom was not barred by the Act from recovering under the contract. The trial court specifically found that Syscom was not engaged as a contractor under the licensing statute, or, alternatively, that Syscom was exempt from the Act based on both statutory and common law exceptions. The trial court also awarded Syscom $15,000 in attorney fees incurred at trial in foreclosing its mechanics' liens, and $22,744.76 in attorney fees and costs incurred on appeal and post-appeal. Cellcom now appeals from this second judgment.

ISSUES

Cellcom argues that the trial court erred, on remand, in: (1) holding that Syscom was not a contractor under the Act, and was therefore not barred from suing for materials and services under the contract; (2) failing to find that Syscom breached various material obligations under the parties' contract, excusing Cellcom of its duty to pay or reimburse Syscom under the contract; (3) refusing to order a new trial or reopen the case based on newly discovered evidence of Syscom's breaches and Cellcom's damages; (4) awarding Syscom its attorney fees incurred in the prior appeal; and (5) failing to disqualify itself where there was the appearance of partiality.

ANALYSIS

I. Trial Court's Determination that Syscom Was Not a Contractor Under the Utah Construction Trades Licensing Act

Cellcom first argues the trial court erred in determining that Syscom was not a contractor under the Act. Cellcom asserts that there is insufficient evidence to support the trial court's determination.

In our prior opinion in this case, we found that the trial court failed to make adequate factual findings supporting its determination that Syscom was not barred by the Act from recovering for services and materials provided under the contract. See American Rural Cellular, Inc. v. Systems Communication Corp., 890 P.2d 1035, 1039 (Utah.Ct.App.1995). In that opinion, we noted that "the evidence with respect to whether Syscom was engaged as a contractor within the statutory definition, or was simply an agent or participant with Cellcom, is conflicting," id., and that "the record is replete with evidence supportive of both parties' positions," id. at 1037. Recognizing that the determination of whether Syscom was acting as a contractor within the meaning of the Act is a highly fact-dependent determination, we then ordered the trial court to make "detailed findings on whether Syscom was engaged as a contractor within the statutory definition." Id. at 1039. We further stated that "[t]he trial court's findings should resolve this issue unequivocally, stating the specific subsidiary facts supporting its ultimate factual determinations." Id.

Therefore, in challenging the trial court's ultimate determination that Syscom was not acting as a contractor under the Act, Cellcom must show that the trial court's factual findings underlying its determination are clearly erroneous. See Cal Wadsworth Constr. v. City of St. George, 898 P.2d 1372, 1378 (Utah 1995). To properly challenge the trial court's factual findings, Cellcom must " ' "marshal the evidence in support of the findings and then demonstrate that despite this evidence, the trial court's findings are so lacking in support as to be against the clear weight of the evidence." ' " Interwest Constr. v. Palmer, 923 P.2d 1350, 1358 (Utah 1996) (citations omitted).

Although the trial court did not specifically identify which of its findings on remand supported its ultimate factual determination that Syscom did not act as a contractor under the Act, the trial court did make a number of relevant factual findings on this issue. Cellcom has failed to properly challenge these findings by marshaling the evidence in support of the findings and showing that the findings are against the clear weight of the evidence. Instead, Cellcom primarily reargues the evidence supporting its position. Further, a review of the record shows that sufficient evidence existed to support the trial court's findings. Thus, we conclude the trial court did not err in determining that Syscom was not engaged as a contractor under the Act.

II. Trial Court's Failure to Find Syscom Breached Contractual Conditions Precedent

Cellcom also argues the trial court erred in failing to find that Syscom breached contractual conditions precedent, and thus that Cellcom was excused from performance under the contract. Alternatively, Cellcom argues that because Syscom breached material conditions precedent, Syscom failed to prove that it fully complied with the terms of the contract, and thus it is not entitled to payment under the contract.

Cellcom argues that Syscom breached the contract by overspending, failing to account, filing mechanics' liens, and charging for its employees' time in addition to collecting the $10,000 per month service fee which Cellcom argues was intended to cover all services performed by Syscom. ³ However, Cellcom has failed to show that the trial court's factual findings relating to these issues ⁴ are against the clear weight of the evidence by properly marshaling the evidence. See Palmer, 923 P.2d at 1358. Thus, we assume the correctness of these findings and reject Cellcom's claim that the trial court erred in failing to find Syscom breached or failed to satisfy various conditions precedent. ⁵

III. Rule 59

Request for New Trial Based on Newly Discovered Evidence

Cellcom next argues the trial court erred in refusing to order a new trial (or, alternatively, to allow consideration of additional evidence) based on newly discovered evidence. Cellcom argues that only after the trial ended and Cellcom initiated appeal could Cellcom fully account for the total amount Syscom expended and for the full extent of Cellcom's resulting damages. Cellcom asserts that it could not do a full accounting at trial because Syscom "failed and refused to turn over all bank statements and other records requested during discovery." Further, Cellcom asserts that it learned after the first appeal commenced that Cellcom employee Marie Bagshaw, Cellcom's sole witness at trial, had withheld information from Cellcom about problems with the system until after trial.

Rule 59...