Embassy Group, Inc. v. Hatch, 920427-CA

• Decision Date: 07 December 1993
• Docket Number: No. 920427-CA,920427-CA
• Citation: 865 P.2d 1366
• Parties: EMBASSY GROUP, INC., Plaintiff and Appellant, v. T. Daryl and Maureen E. HATCH, Defendants and Appellees.
• Court: Utah Court of Appeals

Page 1366

865 P.2d 1366

EMBASSY GROUP, INC., Plaintiff and Appellant, v. T. Daryl and Maureen E. HATCH, Defendants and Appellees.

No. 920427-CA.

Court of Appeals of Utah.

Dec. 7, 1993.

Heinz J. Mahler and Kirk G. Gibbs, Salt Lake City, for plaintiff and appellant.

Kent L. Christiansen, Salt Lake City, for defendants and appellees.

Before BILLINGS, DAVIS and GREENWOOD, JJ.

OPINION

BILLINGS, Presiding Judge:

Plaintiff/appellant Embassy Group, Inc. appeals from a judgment denying its claims for breach of contract, fraud, mutual mistake, and unjust enrichment and quieting title to property in defendants/appellees Daryl and Maureen Hatch. We affirm.

FACTS

This dispute centers on the purchase price of Lot 33 of Bridlewood Subdivision in Bountiful, Utah. Embassy argues that the asking price was $99,000, but that its predecessor accepted the Hatches' offer to purchase Lot 33 for $80,000. Daryl Hatch, on the other hand, contends he agreed to purchase Lot 33 for $40,000.

"We recite the facts in a light favorable to the decision of the fact finder." Grahn v. Gregory, 800 P.2d 320, 322 (Utah App.1990), cert. denied, 843 P.2d 516 (Utah 1991). In early 1986, Shim Investments, Embassy's predecessor in interest, ¹ obtained three Bridlewood Subdivision lots totalling approximately two acres. At the time of acquisition, the property was valued at approximately $99,000. The three lots were subsequently combined into one lot known as Bridlewood Subdivision Lot 33. During the summer of 1986, Daryl Hatch negotiated the purchase of Lot 33 with Mark Wahlquist, Shim's agent. Wahlquist was employed by Granada, Inc., a real estate acquisition and development company.

Two standard Earnest Money Agreement and Offer to Purchase forms (Agreements), memorializing the arrangement between the parties, were introduced into evidence at trial. The first, signed only by Maureen Hatch and dated September 12, 1986, describes the property as "a portion of Bridlewood Subdivision Lot # 33 See exhibit A." No such exhibit was attached. The total purchase price is indicated as $40,000, with $100 as the earnest money deposit and $39,900 as the balance to be paid through a trust deed note. The second Agreement, bearing the same date, differs materially from the first only in its payment terms. The breakdown of the $40,000 purchase price is as follows: $100 as the earnest money deposit, $20,000 as the cash down payment at closing, and $19,900 as the balance to be paid "from the long term loan on the home to be built on the lot." Both Agreements contain two clauses relevant to the resolution of this dispute. With respect to the vesting of title, they provide, "Title shall vest in Buyer as follows: As specified at closing." Additionally, both contain an abrogation clause indicating, "Execution of a final real estate contract, if any, shall abrogate this Agreement."

Closing on the property occurred on November 25, 1986. Wahlquist directed the preparation of the closing documents. The Hatches paid the $20,000 down payment and executed a Trust Deed Note for $20,000 in which they promised to pay that amount upon obtaining long-term financing or on November 25, 1987, whichever came first. To secure the $20,000 indebtedness, the Hatches executed a Deed of Trust naming Associated Title Co. as the trustee for all of Lot 33. Keith Sorenson, Vice President of Granada, executed a Special Warranty Deed conveying all of Lot 33 to the Hatches for the sum of $10, which was held in escrow by Associated Title. After the closing, the Hatches proceeded to build a home on Lot 33.

In July 1987, the Hatches' lender paid the $20,000 Trust Deed Note. That same day, at Granada's behest, Associated Title transferred the Deed of Trust for all of Lot 33 to the Hatches.

Embassy later became the successor in interest to Shim Investments, retaining C. Dean Larsen as its president. Larsen contacted the Hatches requesting payment of $40,000, the amount he claimed they owed on the purchase of the lot. The Hatches refused, arguing they agreed to purchase the lot for $40,000 and had paid the full purchase price. Consequently, Embassy commenced this action seeking recovery for breach of contract, fraud, mutual mistake, and unjust enrichment.

At trial, Embassy's witnesses testified the arrangement intended by the parties was a two-step purchase of all of Lot 33 for $80,000. Wahlquist testified that the Agreements conveyed only a portion of Lot 33 for $40,000, and that this two-step purchase was arranged to accommodate the Hatches. The completed Agreements purportedly memorialized only the first portion of the arrangement. Larsen testified he approved the sale for $80,000.

Daryl Hatch denied any such two-step arrangement existed. He testified that he had agreed to purchase the entire lot for $40,000 and knew nothing of the $80,000 agreement described by Wahlquist. Maureen Hatch testified that she was not involved with the negotiations and that she did not know of any terms or agreements other than those she and her husband signed.

The trial court found all of the witnesses credible. Nevertheless, the court concluded that Embassy had not met its burden of proof and denied all of its claims for relief. In its findings, the court focused on the closing documents to support its denial of relief:

7. All of the written documentation concerning the sale of Lot 33 to the Defendants indicates that the purchase price was $40,000.

....

14. The Earnest Money Agreement and all of the loan and closing documents prepared by the Plaintiffs indicate that the purchase price of Lot 33 was $40,000.

Therefore, the court ordered legal and equitable title to Lot 33 to vest solely in the Hatches. This appeal followed.

Embassy argues that the trial court: (1) abused its discretion in failing to grant relief on Embassy's unjust enrichment claim based on the theory that there was no meeting of the minds as to the terms of the sale; (2) failed to make adequate findings of fact; and (3) made four findings of fact that are clearly erroneous. ²

STANDARD OF REVIEW

If a trial court interprets the plain language of a written contract as a matter of law, "we accord its construction no particular weight and review its actions under a correction-of-error standard." Buehner Block Co. v. UWC Assoc., 752 P.2d 892, 895 (Utah 1988). However,

if the contract is not an integration or is ambiguous and the trial court proceeds to find facts respecting the intentions of the parties based on extrinsic evidence, then [the appellate court's] review is strictly limited ... "to review the evidence and all inferences that may be drawn therefrom in a light most supportive of the findings of the trier of fact."

Kimball v. Campbell, 699 P.2d 714, 716 (Utah 1985) (quoting Car Doctor, Inc. v. Belmont, 635 P.2d 82, 83 (Utah 1981)).

In undertaking our review, we are also guided by the principle that this court may affirm a trial court's decision on any proper ground, even though the trial court may have premised its ruling on a different ground. Buehner Block, 752 P.2d at 895; see also Branch v. Western Petroleum, Inc., 657 P.2d 267, 276 (Utah 1982); Trimble Real Estate v. Monte Vista Ranch, Inc., 758 P.2d 451, 456 (Utah App.), cert. denied, 769 P.2d 819 (Utah 1988).

I. THE DOCTRINE OF MERGER

The precise legal basis of the trial court's decision to vest title to all of Lot 33 in the Hatches is not clearly stated. However, the court's underlying findings of fact and the undisputed facts in the record allow us to affirm the court's decision based on the doctrine of merger. ³

The Utah Supreme Court has explained the doctrine of merger as follows:

The doctrine of merger ... is applicable when the acts to be performed by the seller in a contract relate only to the delivery of title to the buyer. Execution and delivery of a deed by the seller then usually constitute full performance on his [or her] part, and acceptance of the deed by the buyer manifests his [or her] acceptance of that performance even though the estate conveyed may differ from that promised in the antecedent agreement. Therefore, in such a case, the deed is the final agreement and all prior terms, whether written or verbal, are extinguished and unenforceable.

Stubbs v. Hemmert, 567 P.2d 168, 169 (Utah 1977) (footnotes omitted). In Stubbs, the seller's obligation was only to convey the property, and the buyer's acceptance of the deed constituted acceptance of the seller's performance "even though the estate conveyed may [have] differ[ed] from that promised in the antecedent agreement." Id.

The supreme court revisited the merger doctrine in Secor v. Knight, 716 P.2d 790 (Utah 1986). Relying largely on the Stubbs exposition of the doctrine, the court in Secor noted that merger may seem harsh but serves the purpose of "preserv[ing] the integrity of the final document of conveyance and encourag[ing] the diligence of the parties." Id. at 795. Underlying these expressions of the doctrine is the basic premise that

[o]rdinarily, a final contract does represent the final meeting of the minds, and in it are merged all the terms expressing the final intentions of the parties and any augmentations. If there are inconsistencies between the terms of the preliminary and final contracts, those of the latter will ordinarily govern.

Mawhinney v. Jensen, 120 Utah 142, 150, 232 P.2d 769, 774 (1951).

The merger doctrine has been routinely applied when an antecedent agreement contains an abrogation clause. For example, in applying merger in the Secor case, the court considered, inter alia, a clause providing that "execution of the final contract shall abrogate this Earnest Money Receipt and Offer to Purchase." Secor, 716 P.2d at 792. Furthermore, the supreme court has recognized that a deed is tantamount to a final real estate contract and usually abrogates a preliminary earnest money agreement containing an abrogation clause. Espinoza v. Safeco Title Ins. Co., 598 P.2d 346, 348 (Uta...