Coalville City v. Lundgren

• Decision Date: 09 January 1997
• Docket Number: No. 960434-CA,960434-CA
• Citation: 930 P.2d 1206
• Parties: 307 Utah Adv. Rep. 46 COALVILLE CITY, Plaintiff, Appellee, and Cross-Appellant, v. Alvin R. LUNDGREN dba Lundgren Outdoor Advertising, et al., Defendant, Appellant, and Cross-Appellee.
• Court: Utah Court of Appeals

Page 1206

930 P.2d 1206

307 Utah Adv. Rep. 46

COALVILLE CITY, Plaintiff, Appellee, and Cross-Appellant, v. Alvin R. LUNDGREN dba Lundgren Outdoor Advertising, et al Defendant, Appellant, and Cross-Appellee.

No. 960434-CA.

Court of Appeals of Utah.

Jan. 9, 1997.

Rehearing Denied Feb. 20, 1997.

John Walsh and Alvin R. Lundgren, Salt Lake City, for Defendant, Appellant, and Cross-appellee.

Grant Macfarlane, Jr., Kira E. Macfarlane, and James L. Barker, Park City, for Plaintiff, Appellee, and Cross-appellant.

Before BENCH, GREENWOOD, and ORME, JJ.

BENCH, Judge:

Defendant Alvin R. Lundgren appeals the trial court's decision upholding the parties' Stipulation, denying rescission, and awarding attorney fees against defendant pursuant to Utah Code Ann. § 78-27-56 (1996). Coalville cross-appeals the trial court's award of prejudgment interest on a judgment to defendant for Coalville's nonmaterial breach of the Stipulation. We affirm.

BACKGROUND

Defendant owns and operates an outdoor sign advertising business. In 1981, defendant paid Coalville $144 for nine outdoor advertising sign licenses or permits along Interstate 80. Defendant then erected the signs and leased sign space. At the time, the applicable city ordinance required permission from the city council or its delegated representative to erect or construct an advertising sign in Coalville. In 1982, Coalville filed a complaint alleging that defendant had not obtained the proper permits to build and operate the signs and had failed to comply with the particulars of the city ordinance.

In early 1983, the parties stipulated to a settlement and dismissal of that lawsuit. The Stipulation provided a schedule to phaseout all nine of defendant's signs. The Stipulation first required Coalville to issue defendant proper sign permits for the existing signs. These permits were then to expire over the ensuing eighteen years: one each at the end of 1985, 1987, 1989, 1991, 1993, 1995, 1997, and two at the end of 2001. Defendant agreed to remove the signs on or before the designated expiration date. The Stipulation also provided that "if [Coalville] issues sign In addition to resolving the matters raised in the lawsuit, the Stipulation stated that defendant would provide a bid and information to Coalville enabling Coalville to decide whether to lease or purchase a sign from defendant. Within sixty days of Coalville's decision to lease or purchase, defendant would provide a sign face. Coalville's sign was then to be erected at any one of defendant's nine sign locations, with the provision that defendant would move Coalville's sign face to Coalville's preferred location when it became available. The trial court found that defendant did not provide Coalville with the cost information contemplated by the Stipulation. Nonetheless, Coalville made the decision to purchase a sign as reflected in the minutes of the city council meeting dated March 24, 1983. Coalville did not communicate its decision to defendant, and later claimed this provision of the Stipulation was satisfied by the purchase of a sign by the Coalville Chamber of Commerce.

                permits in the future, the Defendant, by virtue of its existing signs, will have a priority ... and the Plaintiff agrees to take whatever steps are necessary to insure that this priority for existing signs is made a part of the published sign policy of [Coalville]."  (Emphasis added.)   Subsequent to the Stipulation, Coalville amended its ordinance to prohibit all off-premise signs, and hence no sign policy has ever been published
                

Defendant did not remove a sign at the end of 1985 as required by the Stipulation, and Coalville filed an Order to Show Cause to force defendant's compliance. Defendant claimed the Stipulation was unenforceable because he had revoked his acceptance, or alternatively, because Coalville failed to comply by leasing or purchasing a sign. The trial court ruled that the Stipulation was "binding upon the parties" and ordered defendant to remove a sign. Defendant's Motion to Alter or Amend the order was denied, and defendant appealed to the Utah Supreme Court. The supreme court granted Coalville's Motion for Summary Affirmance, stating "[t]he issues raised by appellant are so unsubstantial as not to merit further proceedings and consideration of this court." Coalville City v. All Assocs., Inc., No. 860529 (Utah Feb. 25, 1987).

Despite the previous court orders, defendant again failed to timely remove a sign at the end of 1987, and Coalville filed another Order to Show Cause to enforce the Stipulation. The trial court ordered defendant "forthwith" to remove one advertising sign that was supposed to be removed in 1987, and to timely remove a sign slated to be removed in 1989, of defendant's own choice, as long as it was not the Chamber of Commerce sign. Thereafter, defendant removed the Chamber of Commerce sign, in violation of the court's order, claiming that Coalville had admitted it had no interest in the sign.

In subsequent years, numerous motions and petitions were made to the trial court by both sides. In December of 1994, defendant asked the trial court to enforce the Stipulation and order Coalville to pay defendant for the lost income for the sign that was to be purchased by Coalville. Alternatively, defendant requested that the court declare the Stipulation unenforceable (an issue already resolved by the trial court and summarily affirmed by the supreme court), reissue the sign permits, and pay costs to reinstall the signs already removed. Both parties filed motions and supporting memoranda for summary judgment. Both motions were denied, and a bench trial was scheduled to address "all pending petitions, motions, Orders to Show Cause and other pleadings" that had accumulated over the years.

At trial, the court found that defendant did not remove any of the signs within the time required by the Stipulation, and legal action was required to force removal of the signs in 1985, 1987, 1989, and 1993. The trial court ordered defendant to pay Coalville's attorney fees in the amount of $3,542, incurred in obtaining the contempt order when defendant disobeyed the court order that he not remove the Chamber of Commerce sign.

Throughout the years of this dispute, defendant maintained that the Stipulation was unenforceable or that rescission of the entire Stipulation was warranted because Coalville did not lease or purchase a sign from him and he was therefore excused from removing his signs. Coalville responded by arguing In rejecting defendant's argument for rescission, the trial court cited several additional bases. The trial court held that defendant was not before the court with clean hands because "he has repeatedly violated the terms of the Stipulation and is in contempt of Court for willful disobedience of a direct order of the Court in these proceedings." Further, defendant was determined not to be entitled to rescission because he failed to give timely notice thereof and tender return of consideration received. Finally, the court held, "it is impossible to restore the parties to the position they were in prior to entering into the Stipulation, the Defendant having maintained the advertising signs pursuant to the Stipulation for a period of approximately 12 years."

that the Chamber of Commerce purchased a sign from defendant, thereby satisfying that provision of the Stipulation. The trial court determined that the Chamber of Commerce sign did not satisfy Coalville's obligation because Coalville and the Chamber of Commerce are different entities. The trial court found, however, that Coalville's failure to lease or purchase one of defendant's signs was not a material breach of the Stipulation. The court determined that Coalville's breach warranted damages of $3,890 at 10% per annum from January 1, 1985, but did not justify rescission because the breach was not material to the overall purpose of the Stipulation and defendant could be made whole by an award of damages.

The trial court ordered defendant to abide by the removal schedule for the remaining signs. The court found that defendant's claims and defenses in response to Coalville's enforcement of the Stipulation were without merit and not asserted in good faith pursuant to Utah Code Ann. § 78-27-56 (1996), and ordered defendant to pay Coalville's attorney fees in the amount of $16,843. ¹ Also, in response to defendant's bad faith allegations against Coalville, the trial court concluded that no further order need be made regarding publication of defendant's priority right because such signs are illegal under Coalville's present zoning ordinance and there was nothing in the Stipulation prohibiting Coalville from changing the ordinance. Defendant's Motion to Alter or Amend the trial court's judgment was denied, and this appeal followed.

ANALYSIS

I. Coalville's Breach

Defendant argues that Coalville materially breached the Stipulation by not purchasing or leasing a sign, which entitled defendant to rescission of the Stipulation and monetary damages, and excused defendant from having to remove the signs as agreed in the Stipulation.

A stipulation is construed as a contract. Deseret Sav. Bank v. Walker, 78 Utah 241, 251, 2 P.2d 609, 614 (1931). "The law is well settled that a material breach by one party to a contract excuses further performance by the non-breaching party." Holbrook v. Master Protection Corp., 883 P.2d 295, 301 (Utah App.1994). What constitutes a material breach is a question of fact. Olympus Hills Shopping Ctr., Ltd. v. Smith's Food & Drug Ctrs., Inc., 889 P.2d 445, 458 (Utah App.1994) ("Whether a party has materially breached a lease is generally a question of fact for the fact finder."), cert. denied, 899 P.2d 1231 (Utah 1995); accord McKeon v. Williams, 104 Or.App. 106, 799 P.2d 198, 200 (1990) ("Generally, whether a breach is material is a question of fact to be decided by the jury, unless the facts are undisputed; then it is a...