Downtown Athletic Club v. Horman

• Decision Date: 28 July 1987
• Docket Number: No. 860109-CA,860109-CA
• Citation: 740 P.2d 275
• Parties: DOWNTOWN ATHLETIC CLUB, a Utah Corporation, Plaintiff and Appellant, v. S.M. HORMAN, an individual a/k/a Sid Horman; S.M. Horman & Sons, a partnership; and S.M. Horman & Sons Company, Defendants and Respondents. S.M. HORMAN & SONS COMPANY, Counter-Plaintiff and Respondent, v. DOWNTOWN ATHLETIC CLUB, a Utah corporation, and David G. Yurth, an individual, Counter-Defendants and Appellant.
• Court: Utah Court of Appeals

Page 275

740 P.2d 275

DOWNTOWN ATHLETIC CLUB, a Utah Corporation, Plaintiff and Appellant, v. S.M. HORMAN, an individual a/k/a Sid Horman; S.M. Horman &

Sons, a partnership; and S.M. Horman & Sons

Company, Defendants and Respondents.

S.M. HORMAN & SONS COMPANY, Counter-Plaintiff and Respondent, v. DOWNTOWN ATHLETIC CLUB, a Utah corporation, and David G.

Yurth, an individual, Counter-Defendants and Appellant.

No. 860109-CA.

Court of Appeals of Utah.

July 28, 1987.

L.R. Gardiner, Jr., Thomas R. Vuksinick, Chapman and Cutler, Salt Lake City, for defendants and respondents.

Lorin N. Pace, G. Randall Klimt, William B. Parsons, Salt Lake City, Pace, Klimt, Wunderli & Parsons, for plaintiff and appellant.

Before BILLINGS, GARFF and JACKSON, JJ.

OPINION

BILLINGS, Judge:

Appellant, Downtown Athletic Club ("DAC") appeals from the district court's judgment denying its motion to continue and its motion to compel further discovery, and granting respondents' (jointly referred to as "Horman") motion for summary judgment. DAC contends that the trial court erred in ruling as a matter of law that the conditions precedent to the parties' agreement were not satisfied thus discharging Horman's obligation to perform. We affirm.

DAC executed a written agreement with S.M. Horman on May 8, 1981 entitled "Construction & Lease Agreement for the Downtown Athletic Club" ("Construction & Lease Agreement"). This agreement provided that Horman would construct athletic clubs and then sublease the clubs to DAC. The Construction & Lease Agreement delineated several conditions precedent to Horman's obligation to perform:

1. Horman would construct improvements to the Harver Warehouse Building provided that the Harver Warehouse Building could be reinforced at a price that was acceptable to both Horman and DAC, and in a manner that would satisfy the building code requirements of the Salt Lake City Building Department.

2. Horman was to commence construction only after confirmed receipt and acceptance by Horman of construction financing acceptable to Horman, and the entire lease was specifically subject to Horman being able to secure sufficient financing at a rate not to exceed 12% per annum and that DAC should pay all annual interest charges in excess of 12% per annum provided Horman did decide to pay a higher interest rate than 12%.

3. DAC had use of office space in the old Kress Building only if it paid the nominal rent of $1.00 per month.

4. Horman was obligated to construct the athletic clubs only if DAC sold a sufficient number of memberships prior to beginning construction of the athletic clubs in order to guarantee that the payments required by the Construction & Lease Agreement would be paid.

5. DAC was to assign dues income of individual membership contracts, by contract number, to a special account designated solely for the payment of monthly lease payments to verify that there were sufficient funds available.

DAC contends that the parties orally modified the Construction & Lease Agreement by including an assignment of part of Horman's leasehold interest in the Harver Warehouse Building to DAC. This oral agreement also contained conditions precedent most of which were identical to those enumerated in the Construction & Lease Agreement:

1. The owners of the Harver Warehouse Building had to completely and absolutely release Horman from all obligations under the lease and accept DAC as the new lessee in place of Horman.

2. Engineering studies had to be completed and approved by Salt Lake City for the renovation of the Harver Building.

3. Adequate financing for the completion of the construction of the athletic club(s) had to be secured.

Horman served notice on DAC to "quit the premises" after it sold some of the subject property to the Salt Lake Acquisition Group. Consequently, DAC filed suit against Horman, seeking specific performance and damages for breach of the written and oral agreements. Horman filed its answer and counterclaim for declaratory judgment, tortious waste, unlawful detainer, and slander of title on January 6, 1984.

Comprehensive discovery ensued with each party producing hundreds of documents. Discovery ended with the depositions of the two principals. David Yurth, president of DAC, was deposed on April 2, 1984 resulting in a 283 page transcript, 36 exhibits, and over 13 pages of corrections. S.M. Horman's deposition was taken April 26, 1984 resulting in a 245 page transcript and several exhibits. No further discovery was conducted by either party.

Horman filed its motion for summary judgment together with supporting affidavits and a memorandum of points and authorities on July 19, 1984, nearly two months after the last deposition was taken and when there were no outstanding discovery requests. Oral argument on the motion was scheduled for August 28, 1984. On August 22, 1984, six days before the motion was to be argued, DAC's counsel moved to withdraw and requested a 60-day extension to respond to Horman's motion. The district court granted both of these requests.

Sixty days elapsed without an appearance from DAC and without response to the motion. Consequently, on October 26, 1984, Horman served written notice on DAC pursuant to Utah Code Ann. § 78-51-36 (1978) requesting that it either appoint counsel or appear in person. On November 2, 1984, Horman renoticed its motion for summary judgment and scheduled the hearing for November 16, 1984. On November 13, 1984, DAC's new counsel entered an appearance and filed a motion for continuance, an "extraordinary request for review," and noticed nine depositions all of which were scheduled after the scheduled oral argument on Horman's summary judgment motion.

On November 16, 1984, the district court heard oral argument on DAC's motion to continue and Horman's motion for summary judgment. The district court denied DAC's motion to continue, took Horman's motion for summary judgment under advisement, and gave DAC an additional twenty days to file a written response to Horman's motion for summary judgment. On December 6, 1984, DAC filed a motion to compel discovery seeking to "continue" S.M. Horman's deposition. ¹ DAC's motion to compel was supported by an affidavit claiming the need for further discovery. After receiving several continuances, DAC filed its memorandum in opposition to Horman's motion for summary judgment on December 10, 1984 together with eight affidavits, some of which were unsworn and unsigned.

The district court denied DAC's motion to compel further deposing of S.M. Horman and granted Horman's motion for summary judgment holding that the oral agreement was void under the statute of frauds and that Horman was excused from performing under the Construction & Lease Agreement because none of the conditions precedent had been performed. This appeal followed.

Three issues are raised on appeal. First, did the lower court abuse its discretion in denying DAC's motion to continue and its motion to compel further discovery? Second, is the oral modification of the Construction & Lease Agreement void under the statute of frauds and, if not, do the uncontested facts demonstrate that Horman was excused from performing under the terms of the modification? Third, did the lower court err in granting Horman's motion for summary judgment ruling that Horman was excused from performing under the Construction & Lease Agreement as DAC failed to satisfy the requisite conditions precedent?

We will review the facts and inferences in the light most favorable to DAC, the party against whom the judgment was granted. Atlas Corp. v. Clovis Nat'l Bank, 737 P.2d 225, 229 (Utah 1987).

I.

The first issue we must address is whether the trial court erred in denying DAC the opportunity to conduct further discovery prior to the entry of summary judgment. Generally, summary judgment should not be granted if discovery is incomplete since information sought in discovery may create genuine issues of material fact sufficient to defeat the motion. Auerbach's Inc. v. Kimball, 572 P.2d 376, 377 (Utah 1977). However, a court should deny a motion to continue if the motion opposing summary judgment is dilatory or without merit. See id.

Rule 56(f) of the Utah Rules of Civil Procedure provides that a party opposing summary judgment may submit an affidavit stating the reasons why he is presently unable to present evidentiary affidavits essential to support his opposition to summary judgment. If the court finds the reasons to be adequate, the court may, among other things, order that further discovery be conducted and continue the summary judgment motion. The Utah Supreme Court, in Cox v. Winters, 678 P.2d 311, 313-14 (Utah 1984), delineated several factors to consider under Rule 56(f):

1. Were the reasons articulated in the Rule 56(f) affidavit "adequate" or is the party against whom summary judgment is sought merely on a "fishing expedition" for purely speculative facts after substantial discovery has been conducted without producing any significant evidence?

2. Was there sufficient time since the inception of the lawsuit for the party against whom summary judgment is sought to use discovery procedures, and thereby cross-examine the moving party?

3. If discovery procedures were timely initiated, was the non-moving party afforded an appropriate response?

Applying the foregoing legal principles, we find that the district court properly denied DAC's motion to compel further deposing of S.M. Horman and its motion to continue the summary judgment hearing. Both parties conducted extensive discovery. Hundreds of documents were produced. Lengthy depositions were taken. The record reveals that DAC failed to conduct further discovery although it had ample time and opportunity to do so. Discovery essentially ended on April 26, 1984. Three months elapsed before Horman filed its motion for summary judgment. During this three-month period DAC conducted no further discovery. DAC was given six weeks before...