Bair v. Axiom Design, LLC, No. 990451.

• Court: Utah Supreme Court
• Writing for the Court: RUSSON, Associate Chief Justice
• Citation: 2001 UT 20,20 P.3d 388
• Docket Number: No. 990451.
• Decision Date: 02 March 2001
• Parties: Royce L. BAIR, dba The Stock Solution, Plaintiff and Appellant, v. AXIOM DESIGN, L.L.C., Brent Watts, and Garry Koralek, Defendants and Appellee.

20 P.3d 388
2001 UT 20

Royce L. BAIR, dba The Stock Solution, Plaintiff and Appellant,
v.
AXIOM DESIGN, L.L.C., Brent Watts, and Garry Koralek, Defendants and Appellee

No. 990451.

Supreme Court of Utah.

March 2, 2001.

20 P.3d 389

Earl D. Tanner, Sr., Earl D. Tanner, Jr., Salt Lake City, for plaintiff

Matthew W. Driggs, Salt Lake City, for defendants.

RUSSON, Associate Chief Justice:

¶ 1 Plaintiff Royce L. Bair, dba The Stock Solution ("Stock Solution"), appeals the trial court's dismissal of its breach of contract action against defendant Axiom Design, L.L.C. ("Axiom"). We reverse and remand.

BACKGROUND

¶ 2 Stock Solution is a "stock photo agency" that leases photographic transparencies produced by professional photographers for use in media advertising. Between October 1, 1994, and May 31, 1995, Stock Solution entered into four separate contracts¹ ("the contracts") with Axiom. Pursuant to the contracts, Stock Solution delivered to Axiom, and Axiom took possession of, 107 color transparencies to be used in Axiom's advertising.

¶ 3 Each of the contracts between Stock Solution and Axiom contained identical provisions concerning the use and return of the leased transparencies. Specifically, the contracts provided, inter alia, that in the event the transparencies were not returned by the

20 P.3d 390

specified "return date," Axiom would pay the following fees: (1) an initial "service charge" of $30; (2) "holding fee[s]" in the amount of "$5.00 per week per transparency"; (3) "service fees" at a rate of "one and one-half percent per month" on unpaid balances of invoices beginning thirty days after invoice; and (4) reimbursement for loss or damage of each "original transparency" in the amount of $1500. Additionally, the contracts provided that if Stock Solution undertook the enforcement of the contracts, Axiom would "pay a reasonable attorney's fee . . . together with all costs of court."

¶ 4 Axiom allegedly failed to return 37 of the 107 transparencies in breach of the contracts. Of the 37 missing transparencies, 36 were original color transparencies and 1 was a duplicate color transparency.

¶ 5 Accordingly, on November 14, 1997, after repeated telephone calls and written requests demanding return of the transparencies, Stock Solution filed a complaint in the district court against Axiom and its officers, Brent Watts² and Gary Koralek.³ In its complaint, Stock Solution alleged that it had entered into four separate contracts with Axiom for the rental of 107 transparencies; that Axiom failed or refused to return 37 of the transparencies in breach of the contracts; and that Stock Solution was therefore entitled to damages as provided for in the contracts. Specifically, Stock Solution alleged that it was entitled to the following damages: (1) for the 36 missing original transparencies, the agreed liquidated value of $54,000 plus sales tax of $3294; (2) for the 1 missing duplicate color transparency, $1 plus sales tax of $0.06; (3) holding fees on the 37 missing transparencies in the amount of $23,914.83; (4) service fees and charges as provided for in the contracts; and (5) attorney fees.

¶ 6 After Axiom filed its answer, Stock Solution served Axiom with a written request for admissions pursuant to rule 36 of the Utah Rules of Civil Procedure. The requests covered numerous aspects of Stock Solution's case including the existence of the contracts, their execution by authorized personnel, the delivery of transparencies by Stock Solution to Axiom, Axiom's failure to return the transparencies, and the reasonableness of the contracts' $1500 liquidated damages clauses. Axiom, however, did not admit or deny the requests, but rather stated: "See Brent Watts' Response to Plaintiff's First Request for Admissions." Although Stock Solution had not served requests on Brent Watts, he nevertheless responded to the requests in his capacity as an officer of Axiom, on Axiom's behalf. In his response, Brent Watts admitted some facts, but as to the pivotal requests, stated: "Defendant does not admit."

¶ 7 On October 22, 1998, the case went to trial without a jury. At the close of Stock Solution's case-in-chief and prior to Axiom's presentation of evidence, Axiom moved the trial court for a "directed verdict" pursuant to rule 50(a) of the Utah Rules of Civil Procedure on the ground that Stock Solution had failed to meet its burden of proof regarding the enforceability of the contracts' $1500 liquidated damages clauses. The trial court agreed, concluding that Stock Solution's evidence established that the actual value of the missing transparencies was "between $5.00 and $10,000.00" and that based on this evidence, Stock Solution had "failed to meet [its] burden of proof in that it ha[d] failed to produce evidence that the $1,500.00 liquidated damages provision [was] a reasonable forecast of the actual damages sustained by [Stock Solution]." Accordingly, the trial court granted the directed verdict, dismissing Stock Solution's entire complaint without giving any consideration to the other contractual damages sought by Stock Solution, i.e., service charges, holding fees, and service fees. Furthermore, as part of its judgment, the trial court awarded Axiom attorney fees in the amount of $6390 and costs in the amount of $489, for a total amount of $6879.

¶ 8 On May 12, 1999, Stock Solution appealed to this court. Stock Solution argues

20 P.3d 391

that the trial court erred in granting Axiom's motion for a directed verdict. In this regard, Stock Solution raises five arguments: first, Stock Solution argues that the trial court erred in dismissing its complaint at the close of its case-in-chief and prior to Axiom's presentation of evidence, because it had established a prima facie right to relief; second, Stock Solution argues that the trial court erred by placing the burden of proof regarding the enforceability of the contracts' $1500 liquidated damages clauses on it, rather than on Axiom; third, Stock Solution argues that the trial court erred by not holding the matters presented in its request for admissions admitted and conclusively established for all purposes of this action; fourth, Stock Solution argues that even if the trial court did not err on any of the above-mentioned grounds, its findings of fact were insufficient to sustain its conclusions and judgment; and fifth, Stock Solution argues that if the trial court's order of dismissal is reversed on any of the above-mentioned grounds, its subsequent award of attorney fees to Axiom should also be reversed

ANALYSIS

I. DIRECTED VERDICT OR INVOLUNTARY DISMISSAL

¶ 9 As an initial matter, although Axiom characterized its motion as one for a directed verdict pursuant to rule 50(a) of the Utah Rules of Civil Procedure, and although the trial court purported to grant a directed verdict, it is the substance, not the labeling, of a motion that is dispositive in determining the character of the motion. See Watkiss & Campbell v. Foa & Son, 808 P.2d 1061, 1064 (Utah 1991) (stating that an incorrect title placed upon a pleading is not a bar to a party's case); Gallardo v. Bolinder, 800 P.2d 816, 817 (Utah 1990) (same).

¶ 10 As its name implies, a motion for a directed verdict under rule 50(a) contemplates only jury trials. See Wessel v. Erickson Landscaping Co., 711 P.2d 250, 252 (Utah 1985). In the context of a bench trial, the directed verdict's procedural counterpart is a motion for involuntary dismissal under rule 41(b) of the Utah Rules of Civil Procedure. See Utah R. Civ. P. 41(b). Therefore, because this case was tried by the court without a jury, we treat Axiom's motion for a directed verdict as one for an involuntary dismissal pursuant to rule 41(b). See, e.g., 75A Am.Jur.2d Trial § 855, at 454 (1991) ("When a case is tried by the court without a jury, and a defendant moves for a judgment at the close of the plaintiff's case, the defendant is seeking an involuntary dismissal, not a directed verdict." (footnote omitted)); 9 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 2371, at 388 (1995) (stating that "[a] motion for a directed verdict in a nonjury case is treated as if it were a motion to dismiss").

II. PROPRIETY OF DISMISSAL UNDER RULE 41(b)

¶ 11 Having determined that the trial court's directed verdict is more appropriately treated as an involuntary dismissal under rule 41(b), we now address Stock Solution's first argument that the trial court erred in dismissing its complaint at the close of its case-in-chief and prior to Axiom's presentation of evidence because it had made out a prima facie right to relief.

¶ 12 Rule 41(b) provides in pertinent part: "After the plaintiff, in an action tried by the court without a jury, has completed the presentation of his evidence the defendant . . . may move for a dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief." (Emphasis added.) In Lemon v. Coates, 735 P.2d 58 (Utah 1987), this court stated that rule 41(b) "is appropriately applied when the trial judge finds that the claimant has . . . failed to make out a prima facie case or...