Cady v. Johnson

• Citation: 671 P.2d 149
• Decision Date: 20 September 1983
• Docket Number: No. 18373,18373
• Parties: Jon Michael CADY and Carolyn Cady, husband and wife, Telford Realty Company and Rich Edwards, dba All Seasons Realty, Plaintiffs and Appellants, v. Reta May JOHNSON and Jared L. Johnson, Defendants and Respondents.
• Court: Utah Supreme Court

Page 149

671 P.2d 149

Jon Michael CADY and Carolyn Cady, husband and wife, Telford

Realty Company and Rich Edwards, dba All Seasons

Realty, Plaintiffs and Appellants, v. Reta May JOHNSON and Jared L. Johnson, Defendants and Respondents.

No. 18373.

Supreme Court of Utah.

Sept. 20, 1983.

Melvin C. Wilson, Farmington, for plaintiffs and appellants.

C. DeMont Judd, Jr., Ogden, for defendants and respondents.

HOWE, Justice:

This appeal arises from a suit brought by plaintiffs Jon and Carolyn Cady, husband and wife, Telford Realty and Rich Edwards. On July 8, 1980, the Cadys received a written offer from defendants, Jared and Reta May Johnson, to purchase their home in Kaysville, Utah. At that time the home was being advertised for sale by Telford Realty under a listing agreement. Rich Edwards, a salesman for All Seasons Realty, prepared the offer which was signed "Reta May Johnson by Jared Johnson, son" as purchaser. Jared also gave Edwards a $500 check drawn on his mother's bank account as earnest money. The Cadys accepted the offer.

On August 19, 1980, the Cadys vacated their home. A closing date on the sale was set for August 25. Financing arrangements had been submitted and approved. On August 25, the defendants did not appear for closing. One week later, Edwards received a letter from defendants indicating their desire not to purchase the home and requesting the return of their $500 earnest money deposit. Plaintiffs refused, retained the earnest money deposit and brought suit for additional damages for breach of contract or, in the alternative, for equitable relief for failure to perform the contract.

Plaintiffs' first cause of action sought damages for expenses they incurred in having to re-sell their home. This action was dismissed at trial on their own motion on the strength of Andreasen v. Hansen, 8 Utah 2d 370, 335 P.2d 404 (1959), and has not been appealed. Their second cause of action sought damages on behalf of all plaintiffs for the lost real estate commission. They contend that Edwards, who received nothing when the home was later re-sold, should receive the value of his services under a principle of either equity or third-party beneficiary contract, despite the Cadys' election to retain the earnest money as liquidated damages. In their answer, defendants alleged that Jared Johnson was not properly authorized to enter into the agreement in behalf of Reta May Johnson, his mother. They also alleged that plaintiffs holding real estate licenses knew or should have known that the statute of frauds, U.C.A., 1953, § 25-5-1, requires written authorization from one to allow another to bind him to a contract for the purchase of real property. The trial court dismissed the second cause of action pursuant to § 25-5-1.

Defendants then asked that attorney's fees be awarded them pursuant to U.C.A., 1953, § 78-27-56, and the trial court awarded $1,592 in fees against plaintiffs. The amount was based on figures presented by defendants' attorney that he and former counsel had spent 24.5 hours at $65.00 per hour in defending the lawsuit. The trial court found this amount reasonable. In addition, the trial court entered supplemental findings of fact that plaintiffs did not have an actionable claim; yet they had assured the trial judge that there would be material issues at trial and it was not until trial that the judge found there were no such issues. It was also concluded by the trial judge that had plaintiffs researched the law, they would have known their claims were meritless and could have saved the court time in not having to go to trial.

Plaintiffs now contend that the trial court erred in summarily dismissing their second cause of action without addressing the issues of whether or not plaintiffs were donee or creditor beneficiaries. We disagree. Before considering what type of contract exists, the trial court must satisfy the most fundamental of contract law principles; that is, was there a contract? Utah law is clear that only a written power of attorney will authorize one to bind another to a contract for the sale of real property.

No estate or interest in real property ... shall be created ... otherwise than by deed or conveyance in writing subscribed by the party creating ... or by his lawful agent thereunto authorized by writing. U.C.A., § 25-5-1 (1953 as amended).

In the instant case, there was no dispute as to the absence of the written power of attorney. Therefore, no authorization was ever established. There being no authorization, there could be no contract; there being no contract, there could be no right to recover under theories of donee or creditor beneficiaries. Therefore, the trial court correctly dismissed the plaintiffs' second cause of action.

Plaintiffs also contend that the trial court erred in awarding attorney's fees to defendants pursuant to U.C.A., 1953, § 78-27-56 which was enacted in 1981 providing that:

In civil actions, where not otherwise provided by statute or agreement, the court may award reasonable attorney's fees to a prevailing party if the court determines that the action or defense to the action was without merit and not brought or asserted in good faith.

The statute is narrowly drawn. It was not meant to be applied to all prevailing parties in all civil suits. To safeguard against too broad an application, two elements are required in addition to being a prevailing party. First, the claim must be "without merit." We have not heretofore had occasion to define this term. However, under a provision of the Federal Securities Act which awards attorney's fees "if the court believes the suit or defense to have been without merit," it was stated in Can-Am Petroleum Co. v. Beck, 331 F.2d 371 (10th Cir.1964), that the term implies bordering on frivolity. The dictionary definition of "frivolous" is "of little weight or importance having no basis in law or fact." While there may be some distinction between these two terms in other areas of the law, for purposes of this statute we...