Bodell Const. Co. v. Robbins

• Citation: 215 P.3d 933,2009 UT 52
• Decision Date: 04 August 2009
• Docket Number: No. 20070951.,20070951.
• Court: Utah Supreme Court
• Parties: BODELL CONSTRUCTION COMPANY, Plaintiff and Appellant, v. Mark H. ROBBINS; Cherokee & Walker Investment Company, LLC; Cherokee & Walker, LLC; JPMorgan Chase Bank, N.A., Successor to Bank One, N.A.; and Does 1 through 50, Defendants and Appellees.

215 P.3d 933

2009 UT 52

BODELL CONSTRUCTION COMPANY, Plaintiff and Appellant, v. Mark H. ROBBINS; Cherokee & Walker Investment Company, LLC; Cherokee & Walker, LLC; JPMorgan Chase Bank, N.A., Successor to Bank One, N.A.; and Does 1 through 50, Defendants and Appellees.

No. 20070951.

Supreme Court of Utah.

August 4, 2009.

James S. Jardine, Matthew R. Lewis, Erin Bergeson Hull, Salt Lake City, for plaintiff Andrew G. Deiss, Billie J. Siddoway, Salt Lake City, for defendant Mark H. Robbins.

John A. Beckstead, Romaine C. Marshall, Salt Lake City, for defendants Cherokee & Walker Investment Company, LLC, and Cherokee & Walker, LLC John A. Beckstead, H. Douglas Owens, Romaine C. Marshall, Salt Lake City, for defendant JPMorgan Chase Bank.

DURRANT, Associate Chief Justice:

INTRODUCTION

¶ 1 In this case, we must determine the scope of a settlement agreement between Michael Bodell and his company Bodell Construction Company (collectively, "Bodell"), on the one hand, and Marc Jenson and his company MSF Properties (collectively, "Jenson"), on the other. More specifically, we must determine whether Bodell and Jenson intended their settlement agreement to settle only the claims between themselves or whether they intended the settlement agreement to also settle related claims involving third parties, specifically Bank One and Mark Robbins.

¶ 2 Bank One and Robbins argued before the district court that the settlement agreement between Bodell and Jenson was an "accord and satisfaction," meaning that the agreement was not limited to the claims between Bodell and Jenson but satisfied all related claims even those with third parties. On this basis, Bank One and Robbins moved for summary judgment regarding claims that Bodell asserted against them. In response, Bodell argued that the agreement was not an accord and satisfaction but rather a "release," meaning that the agreement only released the named parties from the claims that they had against one another. The district court granted the summary judgment motion filed by Bank One and Robbins.

¶ 3 On appeal, Bodell asserts that the district court erred when it (1) granted summary judgment on the ground that the settlement agreement was unambiguously an accord and satisfaction and (2) struck the report of Bodell's damages expert.

¶ 4 Because we determine that the language of the settlement agreement unambiguously demonstrates that Bodell and Jenson intended the agreement to release only the claims they had against one another, not any third-party claims, we reverse the district court's grant of summary judgment. But we affirm the district court's decision to strike the report of Bodell's damages expert because we conclude that striking the report was within the district court's discretion.

BACKGROUND

¶ 5 For purposes of the summary judgment motion, the parties did not dispute the following material facts. In January 2000, Robbins sold a 50 percent interest in his bicycle companies (collectively, "Vtrax") to Cherokee & Walker ("C & W"). Within weeks of this transaction, Robbins and C & W became dissatisfied with the business relationship. In May 2000, the parties agreed that Robbins would repurchase C & W's interest in Vtrax for $8 million. But Robbins did not have $8 million. Consequently, Robbins missed several payment deadlines over the next few months. The directors of C & W grew impatient and threatened to seize control of Vtrax.

¶ 6 Robbins did not want to lose control of Vtrax, so he continued his search for a lender. During this search, Robbins became aware of the opportunity to acquire the popular "Mongoose" bicycle brand. Robbins knew he needed complete control over Vtrax in order to pursue the Mongoose acquisition. At this point, Robbins approached Jenson, the owner of a hard-money lending business, and asked Jenson for $8 million. Robbins explained that Vtrax was pursuing the acquisition of Mongoose but that in order for the acquisition to be finalized Robbins needed $8 million to buyout C & W's interest in Vtrax. After several negotiations, Jenson agreed to loan Robbins the $8 million necessary for the C & W buyout.

¶ 7 Jenson told Robbins that $4 million of the $8 million loan would come from Jenson's own money and Jenson would borrow the other $4 million from someone else. Accordingly, Jenson approached Bodell about the possibility of borrowing $4 million. Jenson informed Bodell that the $4 million Bodell contributed would be loaned to Robbins for the C & W buyout. Jenson also informed Bodell that Robbins was pursing the acquisition of Mongoose. Jenson had known Bodell for many years, and Bodell had recently loaned Jenson $1 million in a separate transaction. Yet Bodell was hesitant about lending such a large sum of money to Jenson without knowing the stability of Vtrax.

¶ 8 Jenson relayed Bodell's concerns to Robbins. Subsequently, Robbins approached Benjamin Lightner, Robbins's private banker at Bank One, and asked Lightner to draft a letter representing the stability of Vtrax. On August 22, 2000, Lightner wrote a letter (the "Lightner Letter") addressed to "Whom It May Concern." The Lightner Letter indicated that Robbins and Jenson would be depositing $165 million into a Bank One account for MadTrax, the company created by Robbins to pursue the acquisition of Mongoose. The deposit was to come from a loan agreement between MadTrax and Arimex Investments. In actuality, there was no loan agreement between MadTrax and Arimex. Still, Robbins gave a copy of the Lightner Letter to Jenson, who in turn gave a copy to Bodell.

¶ 9 Eight days after the Lightner Letter was written, Bodell loaned $4 million to Jenson. As planned, Jenson then took the $4 million from the Bodell loan and $4 million of his own money and loaned $8 million to Robbins to buy out C & W. Robbins paid C & W the required $8 million and obtained full control of Vtrax. Two months later, Robbins's efforts to acquire Mongoose failed and Vtrax collapsed. Robbins defaulted on his loan payment to Jenson, and, subsequently, Jenson defaulted on his repayment obligation to Bodell.

¶ 10 On March 18, 2003, Bodell and Jenson entered into a settlement agreement whereby Bodell released Jenson from all tort and contract claims in exchange for $3 million. Paragraphs 1 and 2 of the settlement agreement state as follows:

1. Contemporaneous with the execution and delivery of this Agreement, [Jenson] has caused $3,000,000 in immediately available funds to be delivered to [Bodell]. [Bodell] hereby acknowledges receipt of such funds.

2. Each of Bodell and BCC, for himself, itself, their affiliates and for all persons or entities claiming by, through or under him, it or them, hereby (a) releases, acquits, waives and forever discharges MSF, its affiliates and their respective members, managers, officers, employees and agents (each, including without limitation Jenson, an "MSF Party") from any and all claims, allegations of fraud, charges, demands, losses, damages, obligations, liabilities, grievances, causes of action, or suits at law and equity of whatsoever kind and nature, expenses, costs and attorneys fees, whether known or unknown, suspected or unsuspected, liquidated or unliquidated (each, a "Claim"), arising out of all past affiliations and transactions among Bodell, BCC and any MSF Party, including, but not limited to, the Loans and all related arrangements and transactions, (b) without limiting the generality of the foregoing acknowledges and agrees that the obligations of the MSF Parties in connection with the Loans, including all principal and interest that may have been deemed to have accrued thereon, are hereby deemed fully satisfied and repaid in full. (Emphasis added.)

¶ 11 Four months after executing the settlement agreement, Bodell filed suit against Bank One and Robbins claiming four causes of action: (1) fraud, (2) civil conspiracy, (3) negligent misrepresentations, and (4) unjust enrichment.

¶ 12 On October 29, 2003, Bank One and Robbins filed a motion for summary judgment. On March 15, 2004, Judge Bohling of the district court entered an order denying the motion for summary judgment filed by Bank One and Robbins. The district court held that (1) the settlement agreement was not an accord and satisfaction, and (2) an accord and satisfaction does not operate for the benefit of third parties unless the third parties are specifically referenced in the agreement.

¶ 13 During the discovery period, the case was reassigned to Judge Kennedy. Three weeks after the close of discovery, Bodell served the expert report of Merrill Weight (the "Weight Report") on Bank One and Robbins. The Weight Report included three new damages theories that were not disclosed during discovery. Bank One and Robbins filed a motion to strike the Weight Report. The district court granted the motion because Bodell had (1) not disclosed its alternative damages theories during fact discovery, (2) failed to show good cause for its failure to timely disclose, and (3) prejudiced the defendants by failing to disclose these theories.

¶ 14 Additionally, Bank One and Robbins renewed their initial motion for summary judgment and asked Judge Kennedy to revisit the question of whether the settlement agreement was an accord and satisfaction. At a hearing on September 10, 2007, Judge Kennedy granted summary judgment for Bank One and Robbins, ruling that (1) the settlement agreement was unambiguously an accord and satisfaction, and (2) an accord and satisfaction operates for the benefit of third parties. Thus, the district court held that the settlement agreement — as an accord and satisfaction — extinguished Bodell's claims of fraud and negligent misrepresentation asserted against Bank One and the claims of fraud, civil conspiracy, and unjust enrichment asserted against Robbins.

¶ 15 Bodell timely appealed. We have jurisdiction to consider Bodell's arguments on appeal pursuant to Utah Code section 78A-3-102(3)(j) (2008).

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