DeBry v. Cascade Enterprises, s. 910216
| Decision Date | 01 July 1994 |
| Docket Number | Nos. 910216,910284 and 910308,s. 910216 |
| Citation | 879 P.2d 1353 |
| Parties | Robert J. DeBRY and Joan DeBry, Plaintiffs, Appellants, and Cross-Appellees, v. CASCADE ENTERPRISES, a general partnership, Cascade Construction Company, a general partnership, Del K. Bartel, Lee Bartel, and Dale Thurgood, Defendants, Appellees, and Cross-Appellants. |
| Court | Utah Supreme Court |
Edward T. Wells, Wallace R. Bennett, Salt Lake City, for Robert J. DeBry and Joan DeBry.
Del Bartel, Lee Bartel, and Dale Thurgood, pro se.
Plaintiffs Robert and Joan DeBry appeal from a jury verdict awarding the defendants $62,500 on a promissory note and $125,000 in punitive damages for fraudulent acts committed by the DeBrys. The defendants cross-appeal.
The plaintiffs purchased an office building constructed by defendant Cascade Construction Company, a general partnership, whose partners are Del Bartel, Dale Thurgood, and Lee Bartel. The building was sold to the plaintiffs by Cascade Enterprises, a general partnership, whose sole partners are Del Bartel and Dale Thurgood. Both partnerships and all the partners were named defendants.
The DeBrys executed an earnest money agreement to purchase the office building while the building was still under construction. The parties closed the sale on December 13, 1986, even though the building was not finished and the parties disagreed about the quality of the workmanship and the cost of additions and changes made to the original building plans.
On December 10, 1985, the parties executed a nonmerger and escrow agreement that provided for the DeBrys to execute a promissory note in the amount of $62,500 in favor of Dale Thurgood and Del Bartel. The note, secured by a trust deed, represented part of the purchase price and was to be placed in escrow. The note stated that it was subject to "that certain Escrow Agreement dated December 10th, 1985." According to the DeBrys, the note was intended to fund a two-year warranty on workmanship and materials by the defendants and "to provide a fund out of which unresolved matters concerning credits, allowances, and extras [could] be resolved." However, a document entitled "Escrow Instructions," also dated December 10, 1985, stated that the note and trust deed were to be held as security to guarantee that the defendants would clear any mechanic's liens recorded against the property. The escrow instructions provided that the note and trust deed would be transferred to the defendants when the lien period expired if no liens had been filed on the property. Dale Thurgood and Del Bartel assigned the note and trust deed to Utah Title to be held in escrow. After ninety days, Utah Title returned the original note and deed to the defendants but did not reassign those documents.
Prior to closing, the defendants obtained a temporary thirty-day occupancy permit from Salt Lake County. The permit was issued with the understanding that the building would be completed and brought into compliance with the uniform building code before the temporary permit expired. After closing, the DeBrys discovered that the County had no record of having issued a building permit to the defendants. The County later refused to issue a permanent occupancy permit because the defendants had not obtained a building permit and the building did not comply with the uniform building code. The DeBrys discharged the defendants and hired other contractors to complete the work. Eventually, the County ordered the DeBrys to vacate the building because it was not in compliance with the building code.
The DeBrys sued Cascade Enterprises, Cascade Construction, Thurgood, and Del and Lee Bartel for negligence, breach of warranty, breach of contract, and fraud in constructing the building. 1 Cascade Enterprises, Thurgood, and Del Bartel counterclaimed, alleging that the promissory note held in escrow was due and owing and that the DeBrys had committed fraud against them. The defendants retained counsel to represent them during the first eleven months of the lawsuit. Because it became apparent to the defendants that the litigation would be protracted and prohibitively expensive, they discharged their attorneys. The trial court ruled that Thurgood and Bartel could not represent the partnerships. Thereafter, Thurgood and Del and Lee Bartel represented themselves and their respective partnership interests.
Largely because of the manner in which the DeBrys and their attorneys have litigated this lawsuit, a relatively simple case has been transformed into an unnecessarily protracted and complicated lawsuit. In the four and a half years preceding trial, the DeBrys amended their complaint nine times, changed attorneys several times, caused one judge to be recused and moved twice to disqualify the trial judge who ultimately sat, obtained at least one continuance of the trial date, and filed numerous motions, many of them repetitive. The court file alone now contains twenty-eight volumes with over 13,000 pages.
After a scheduling conference on August 19, 1988, two and a half years after the initial complaint had been filed, the trial court issued a scheduling order directing the DeBrys to "designate their expert witnesses on or before January 2, 1989." On October 12, 1988, the DeBrys filed a supplemental response to the defendants' interrogatories, stating that the DeBrys "had retained [eleven experts] to assist plaintiffs in the litigation." Their answer did not state which, if any, of the listed experts they intended to call as witnesses at trial. The DeBrys did not file any other document before January 2, 1989, that could be construed as a designation of their expert witnesses.
In February 1989, the DeBrys moved to designate as "additional" expert witnesses contractors who had performed emergency repair work on the roof of the building after the January 2 deadline. The motion did not name the additional witnesses or any of the expert witnesses listed in the October supplemental answers to interrogatories. On May 4, 1989, three days after the date set by the court for the completion of discovery, the DeBrys filed a supplemental designation of witnesses, listing for the first time the names of the expert witnesses that they intended to call at trial. The document also requested permission to designate additional witnesses out of time.
In a February 1990 hearing, the trial judge ruled that the DeBrys could not call expert witnesses who had not been designated prior to the January 2, 1989, deadline. Two weeks before trial, counsel for the DeBrys argued to the trial court that they had designated their expert witnesses in the supplemental answers to interrogatories filed in October 1988. The trial court held that the supplemental answers were not a proper designation and that if the DeBrys could not produce a clear written designation of expert witnesses that had been filed at least by the end of February 1989, they could not call their expert witnesses. On the second day of trial, the court again ruled that the DeBrys had not complied with the scheduling order and excluded all of the DeBrys' expert witnesses.
After a thirty-day trial, the jury, by way of jury interrogatories, found that the defendants had breached an implied warranty to construct the building in compliance with the uniform building code and awarded $5,000 to the DeBrys for repairs already made and an additional $47,625 for future repairs, including $30,000 for masonry defects. The jury also found that the defendants negligently failed to comply with the uniform building code in constructing the building. The jury rejected the DeBrys' claim that the defendants committed fraud on the DeBrys.
On the defendants' counterclaims, the jury found that the DeBrys had defaulted on the promissory note and owed the defendants the face amount of the note, plus interest; that the DeBrys hired independent contractors to perform work on the building and maintained that the independent contractors' defective work was the defective work of the defendants; and that the DeBrys conspired to defraud the defendants of payments owed them. In addition, the jury found that the DeBrys' false attribution of responsibility for work defects constituted fraud. The jury awarded the defendants no compensatory damages for fraud but did award them $125,000 in punitive damages.
On this appeal, the DeBrys assert that (1) the defendants could not sue on the promissory note because they did not own it; (2) the jury erred in finding that the DeBrys committed fraud; (3) the award of punitive damages was erroneous; (4) the trial judge erred in not directing a verdict or granting a judgment notwithstanding the verdict for the DeBrys in the amount of $685,119.20, the amount they asserted was necessary to repair the building and to compensate them for alternate office space; (5) the DeBrys' expert witnesses should have been allowed to testify; (6) the trial judge was biased against the DeBrys and should have been disqualified, and (7) Thurgood and Del Bartel should not have been permitted to represent Cascade Construction and Cascade Enterprises, the partnership defendants.
The DeBrys argue that by assigning the promissory note to Utah Title, Thurgood and Bartel transferred ownership of the note and that in the absence of a reassignment of the note, Thurgood and Bartel had no right to sue on it. The note was given to protect the DeBrys in the event the defendants failed to meet certain obligations. Payment of the promissory note was subject to the terms of "that certain Escrow Agreement dated December 10th, 1985." Because the payment of the note was subject to conditions, it is not a negotiable instrument. Utah Code Ann. § 70A-3-104(1); Calfo v. D.C. Stewart Co., 717 P.2d 697, 699-700 (Utah 1986). Rather, the note is simply a promise by the DeBrys to pay $62,500 upon the defendants' compliance with...
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