Foote v. Clark

Decision Date14 July 1998
Docket NumberNo. 970091,970091
Citation962 P.2d 52
Parties347 Utah Adv. Rep. 36 Allen J. FOOTE and Terri J. Foote, Plaintiffs and Respondents, v. Blaine CLARK and Katherine Clark, Defendants and Petitioners.
CourtUtah Supreme Court

Marlon L. Bates, Salt Lake City, for plaintiffs.

Spencer F. Hatch, Bountiful, for defendants.

On Certiorari to the Utah Court of Appeals

STEWART, Justice:

We granted certiorari to review a court of appeals decision affirming an award of nominal damages and attorney fees arising from a breach of a real estate sales contract. We affirm the award of attorney fees but remand for a recalculation of the amount awarded. We also reduce the amount of nominal damages awarded.

I. FACTS

In the Spring of 1993, defendants Blaine and Katherine Clark listed their home in Pleasant Grove, Utah, with real estate agent Howard Hatch. Plaintiffs Allen and Terri Foote made an offer on the home, and the parties eventually entered into a standard real estate purchase agreement. Disputes arose about certain of the agreement's provisions. When the parties failed to resolve their differences, the Clarks sold their home to other buyers for the same price offered by the Footes. Disappointed at losing the chance to purchase the home, the Footes brought suit against the Clarks, agent Hatch, and Hatch's brokers, alleging breach of the purchase agreement by the Clarks and fraudulent interference with the contract by Hatch and his brokers.

Hatch's brokers settled with the Footes for $4000 and were dismissed from the suit. The district court ordered the settling parties, in accordance with their agreement, to "bear their own costs and attorneys fees." At trial, the court ruled that the Footes had no cause of action against Hatch but found that the Clarks materially breached their purchase agreement by selling their home to third party buyers. The court found, however, that the Footes failed to advance any credible evidence of damages from the breach. The Footes expended nothing out of pocket in entering the contract, and the market value of the home (i.e. the price paid by the third-party buyers) mirrored exactly the price offered by the Footes. The district court correctly noted that an aggrieved party cannot, in general, recover damages for mere disappointment or mental distress in an action for the breach of a land sales contract. Consequently, the court assessed only nominal damages against the Clarks. The court set the amount of nominal damages awarded at $100.00.

Pursuant to a provision in the purchase agreement signed by the parties, the district court also ordered the Clarks to pay the attorney fees and costs incurred by the Footes. The contract states:

Both parties agree that should either party default in any of the covenants or agreements contained herein, the defaulting party shall pay all costs and expenses, including a reasonable attorney's fee, which may arise or accrue from enforcing or terminating this Agreement or in pursuing any remedy provided hereunder or by applicable law, whether such remedy is pursued by filing suit or otherwise.

Counsel for the Footes requested fees totaling $14,100.00. Relying solely on counsel's affidavit and trial testimony and without making any findings of fact regarding the particular fees billed or the quality of work done in remedying the breach of contract, the court adjudged the fee request reasonable and ordered the Clarks to pay the full amount requested. The court of appeals affirmed the award.

II. ATTORNEY FEES

The Clarks contest both the award of attorney fees and the amount of fees awarded. First, they argue that fees should not be awarded because plaintiffs failed to put forth evidence of compensable injury from the breach and thus recovered only nominal damages at trial. We disagree. Generally, attorney fees in Utah are awarded only as a matter of right under a contract or statute. See Cabrera v. Cottrell, 694 P.2d 622, 625 (Utah 1985); but see Stewart v. Utah Public Service Comm'n, 885 P.2d 759, 782-83 (Utah 1994) (awarding fees under this court's equitable powers in original proceeding challenging telephone rate increase where petitioner acted "as a private attorney general"). Fees provided for by contract, moreover, are allowed only in strict accordance with the terms of the contract. See Dixie State Bank v. Bracken, 764 P.2d 985, 988 (Utah 1988); Turtle Management, Inc. v. Haggis Management, Inc., 645 P.2d 667, 671 (Utah 1982).

The real estate purchase agreement signed by the parties in this case provides that "the defaulting party shall pay all costs and expenses, including a reasonable attorney's fee, which may arise or accrue ... in pursuing any remedy provided ... by applicable law." The amount of plaintiffs' recovery in this case is irrelevant under the language of the contract. Unlike contracts in other cases relied on by the Clarks, this contract does not require any evaluation of the parties' respective success in an action brought to remedy a default. Cf. Fashion Place Associates v. Glad Rags, Inc., 754 P.2d 940, 942 (Utah 1988) (holding that party recovering only nominal damages was not "successful" for purposes of an attorney fees contract clause providing: "[T]he unsuccessful party in such action or proceeding agrees to reimburse the successful party for the reasonable expense of attorney fees...."). Rather, the sole criterion for the plaintiff to obtain attorney fees in a remedial action pursuant to this contract is to show default by the other contract party. The district court's ruling that the Clarks "materially breached the contract by selling their home to a third party" is tantamount to a holding that they defaulted in their agreement to sell the home to plaintiffs. The award of attorney fees under the contract is therefore affirmed.

The Clarks also dispute the amount of fees awarded. They argue that the fee award is disproportionate to the amount of nominal damages actually awarded, does not reflect the Footes' failure to prove compensatory damages, and includes fees incurred in pursuing noncontract claims against Howard Hatch and his brokers.

"An award of attorney fees must be based on the evidence and supported by findings of fact." Cottonwood Mall Co. v. Sine, 830 P.2d 266, 268 (Utah 1992). One who seeks an award of attorney fees, therefore, has the burden of producing evidence to buttress the requested award. See id. at 268; Hal Taylor Assoc. v. Unionamerica, Inc., 657 P.2d 743, 750-51 (Utah 1982). When the evidence presented is insufficient, an award of attorney fees cannot stand. See Dixie State Bank, 764 P.2d at 989. In this regard, we have mandated that a party seeking fees must allocate its fee request according to its underlying claims. See Cottonwood Mall, 830 P.2d at 269-70. Indeed, the party must categorize the time and fees expended for "(1) successful claims for which there may be an entitlement to attorney fees, (2) unsuccessful claims for which there would have been an entitlement to attorney fees had the claims been successful, and (3) claims for which there is no entitlement to attorney fees." Id. at 269-70; see also Valcarce v. Fitzgerald, 961 P.2d 305, 317 (Utah 1998) (petition for rehearing pending). Claims must also be categorized according to the various opposing parties. See Turtle Management, 645 P.2d at 671.

The trial court, in turn, must make an independent evaluation of the reasonableness of the requested fees in light of the parties' evidentiary submissions. See Cottonwood Mall, 830 P.2d at 269. In several recent opinions we have listed numerous factors that, as a practical matter, should inform the court's meaningful appraisal. See id.; Dixie State Bank, 764 P.2d at 989-90; Cabrera, 694 P.2d at 625; Trayner v. Cushing, 688 P.2d 856, 858 (Utah 1984); Wallace v. Build, Inc., 16 Utah 2d 401, 405, 402 P.2d 699 (Utah 1965).

The trial court should also document its evaluation of the requested fees' reasonableness through findings of fact. See Cabrera, 694 P.2d at 624. These findings should mirror the requesting party's allocation of fees per claims and parties and should support any award issued. See id.; Valcarce, 961 P.2d at 317. They enable the reviewing court to make an independent review of the fee award, and whether the findings are sufficient to support the award is a question of law reviewed for correctness. See id. at 315, 317. The findings of fact, furthermore, should detail the factors considered dispositive by the trial court in calculating the award. See Cabrera, 694 P.2d at 624.

In this case, plaintiffs requested attorney fees at trial, submitting an affidavit by their counsel in support. Counsel also testified at trial concerning the fees he charged plaintiffs for work on their case. Counsel's affidavit did not, as it should have, categorize the fee request according to the plaintiffs' successful and unsuccessful claims and the opposing parties involved in the action. Notwithstanding, the trial court relied totally on the affidavit and counsel's supporting trial testimony in ordering the Clarks to pay the entire $14,100.00 of fees requested by the plaintiffs.

Even a cursory look at counsel's affidavit reveals counsel's failure to properly categorize the fee request and raises questions about the reasonableness of the fees related to the breach of contract claim. The contract only authorizes fees to be collected for time expended in remedying a default in the purchase agreement. The affidavit, however, includes several entries of fees for services relating to the noncontract, tortious interference claims against agent Howard Hatch and his real estate brokers. 1

The language of the contract does not permit assessing fees against the Clarks that relate to the noncontract claims against either Hatch or the brokers. These tort-based actions were not brought to "remedy" a default in the purchase agreement by the "defaulting party," as required by the contract, but to recover the alleged...

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