Groberg v. Housing Opportunities, Inc.

Decision Date06 March 2003
Docket NumberNo. 20010754-CA.,20010754-CA.
PartiesJohn GROBERG and Shauna Groberg, Plaintiffs and Appellants, v. HOUSING OPPORTUNITIES, INC., a Utah nonprofit corporation; Margaret M. Dahle; John L. Krueger; and Granite Credit Union, a Utah corporation, Defendants and Appellees.
CourtUtah Court of Appeals

Bryan H. Booth, Kirton & McConkie, Salt Lake City, for Appellants.

J. Bruce Reading, Scalley & Reading, Salt Lake City, and Rod Gilmore, Layton, for Appellees.

Before JACKSON, P.J., BILLINGS, Associate P.J., and THORNE, J.

OPINION

THORNE, Judge.

¶ 1 John and Shauna Groberg appeal the denial of their mechanics' lien and their claims for breach of contract and unjust enrichment. Housing Opportunities, Inc. (HOI) cross appeals, asserting that the trial court should have awarded it attorney fees. We affirm.

BACKGROUND

¶ 2 In 1996, HOI requested that the Grobergs grant it an easement over their property. The Grobergs requested compensation, but due to the nature of their business HOI was unable to pay for the easement. The parties, instead, entered into an "exchange" agreement, whereby HOI agreed to buy the Grobergs' house (house one) for $87,500.00, to sell the Grobergs a lot in an upcoming development, to move an existing house (house two) to that lot, and then to assist the Grobergs in obtaining financing to renovate house two. In exchange, the Grobergs granted HOI the easement it sought, which they agreed would stay in place even if the contract was rescinded. The parties signed a real estate purchase agreement containing the terms of the sale of house one. The real estate purchase agreement also set forth, in general terms, the agreement that the Grobergs intended to renovate house two and then purchase it.

¶ 3 Soon thereafter, HOI moved house two and the Grobergs entered into a home repair contract with a general contractor and started renovation. The Grobergs eventually encountered problems with the contractor, fired him, and began overseeing the renovation of house two themselves. Also, in an attempt to reduce costs, the Grobergs and their family members performed labor on the house. Unbeknownst to HOI, and outside the parameters of the home repair contract, the Grobergs began to install custom upgrades in the house. These custom upgrades exceeded the available financing and forced the Grobergs to use $10,285.22 of their own funds to further finance the renovation.

¶ 4 In 1998, HOI informed the Grobergs that the purchase price of house two would be $138,000. In this letter, HOI set forth the terms of the purchase of house two and warned the Grobergs that any further increase in renovation costs would increase the purchase price of house two.

¶ 5 In 1999, HOI informed the Grobergs that the purchase price of house two had increased to $156,532.72. This price included all the renovation costs that HOI had paid on behalf of the Grobergs as well as a $12,000 mechanics' lien filed by the general contractor. This price was considerably more than the Grobergs had expected. Frustrated with the delays and rising costs, HOI told the Grobergs that they needed to purchase house two or vacate it immediately. The Grobergs chose to exercise a provision in the real estate purchase agreement which provided:

As a further cooperative effort, if John and Shauna Groberg do not complete [renovations to house two] or they do not feel [house two] has equal value to [house one], [HOI] will exchange [house two] for [house one], returning each to its former estate as to ownership of properties and debt. However, the recorded easement across the west side of [house one's lot] shall be and forever remain in place.

(Emphasis added.)

¶ 6 The Grobergs returned to house one but filed a mechanics' lien on house two to recover their out-of-pocket expenses spent renovating house two. HOI eventually sold house two for $149,000. HOI had paid $173,034.52 in costs to develop, administer, and renovate house two and lost approximately $24,000.00 in the sale.

¶ 7 Subsequently, the Grobergs filed suit, seeking to foreclose their mechanics' lien and claiming breach of contract and unjust enrichment. The trial court found in favor of HOI. Specifically, the trial court found the mechanics' lien could not be foreclosed because HOI had no control over the renovation of house two and the Grobergs were equitable owners of house two with substantial control over the extent and cost of renovation. Furthermore, the court found the Grobergs "waived, released, surrendered or contracted away their [mechanics'] lien rights when they signed" the real estate purchase agreement.

¶ 8 The court next found that the real estate purchase agreement was fully integrated except as to the purchase price of house two, the parties orally agreed that the purchase price of house two was $138,000, or, in the alternative, the November 11, 1998 letter in which HOI informed the Grobergs the house would cost $138,000 constituted an amendment to the real estate purchase agreement ratified by the Grobergs. The court rejected the Grobergs' argument that the purchase price of the house was the cost of renovation and, therefore, found that HOI had not breached the real estate purchase agreement.

¶ 9 The court then concluded the Grobergs failed to prove that HOI had promised to pay additional compensation for the easement if HOI did not buy house one. Finally, the court found the Grobergs did not prove that HOI had been unjustly enriched, because it found that HOI received no benefit from the sale of house two. The Grobergs appeal.

ISSUES AND STANDARDS OF REVIEW

¶ 10 The Grobergs first argue that the trial court erred in refusing to foreclose their mechanics' lien. A determination as to whether the statutory elements of a mechanics' lien have been satisfied is a mixed question of law and fact. See Bailey v. Call, 767 P.2d 138, 139-40 (Utah Ct.App.1989)

(quotations and citation omitted). The findings of fact "shall not be set aside unless clearly erroneous," and "we review [the] trial court's conclusions of law under a correction of error standard." Id. at 139 (quotations and citations omitted).

¶ 11 The Grobergs next argue, for the first time on appeal, that HOI breached its contractual duty to sell house two for $138,000. "As a general rule, appellate courts will not consider an issue, including a constitutional argument, raised for the first time on appeal unless the trial court committed plain error or the case involves exceptional circumstances." State v. Brown, 856 P.2d 358, 359 (Utah Ct.App.1993).

¶ 12 Lastly, the Grobergs argue that HOI was unjustly enriched.

Whether a claimant has been unjustly enriched is a mixed question of law and fact. We uphold a lower court's findings of fact unless the evidence supporting them is so lacking that we must conclude the finding is clearly erroneous. Furthermore, we afford broad discretion to the trial court in its application of unjust enrichment law to the facts.

Desert Miriah, Inc. v. B & L Auto, Inc., 2000 UT 83, ¶ 9, 12 P.3d 580 (quotations and citations omitted).

¶ 13 On cross-appeal, HOI argues the trial court should have awarded it attorney fees for defeating the Grobergs' claims of breach of contract and unjust enrichment. "Attorney fees are generally recoverable in Utah only when authorized by statute or contract." Prince v. Bear River Mut. Ins. Co., 2002 UT 68, ¶ 52, 56 P.3d 524.

ANALYSIS

¶ 14 The Grobergs first argue that the trial court erred when it found they were not entitled to file a mechanics' lien against house two. Pursuant to Utah Code Ann. § 38-1-3 (2001),1 to assert a mechanics' lien, the work must have been done "at the instance of the owner or of any other person acting by his authority as agent, contractor, or otherwise."

The Utah Supreme Court, discussing an agent's authority to bind the owner/principal under the mechanics' lien statute, has stated "the facts of the transaction must be explored .... [T]he courts have often gone beyond the agreement and into the whole circumstances ... in order to find the answer." Interiors Contracting Inc., v. Navalco, 648 P.2d 1382, 1387 (Utah 1982) (quoting Utley v. Wear, 333 S.W.2d 787, 792-93 (Mo.Ct.App.1960)). In making this evaluation, "[s]o long as it can be found that the [contractor] performed the work at the instance of [the owner] under an express or implied contract ... the lien is valid." Dugger v. Cox, 564 P.2d 300, 302 (Utah 1977). If it appears the improvements are for the benefit of the owner, and performed at the instance of the owner's agent, "then it can be said with justice that the [contractor] in such case is acting for the [owner]." Zions First Nat'l Bank v. Carlson, 23 Utah 2d 395, 464 P.2d 387, 390 (1970).

Bailey, 767 P.2d at 140 (alterations in original).

¶ 15 Here, the trial court made a factual finding that HOI did not request the renovation of house two. In making its factual finding, the trial court reasoned that the renovation on house two was for the Grobergs' benefit, and that the Grobergs exerted control over who was to do the work and how the renovation was to be done. Based on these factual findings, the court concluded the Grobergs were not permitted to file a mechanics' lien, because their work had not been performed "at the instance of [HOI]." Utah Code Ann. § 38-1-3.

¶ 16 The Grobergs challenge this factual finding. "In reviewing a factual determination, we defer to the decision of the trial court...." Nu-Trend Elec. Inc., v. Deseret Fed. Sav. & Loan Ass'n Inc., 786 P.2d 1369, 1371 (Utah Ct.App.1990). Furthermore,

[t]o successfully challenge a trial court's findings of fact on appeal, [a]n appellant must marshal the evidence in support of the findings and then demonstrate that despite this evidence, the trial court's findings are so lacking in support as to be against the clear weight of the evidence, and thus making them clearly erroneous.

Valcarce v. Fitzgerald, 961 P.2d 305, 312 (Utah 1998) (...

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