Larry J. Coet Chevrolet v. Labrum

• Decision Date: 06 March 2008
• Docket Number: No. 20070005-CA.,20070005-CA.
• Citation: 2008 UT App 69,180 P.3d 765
• Parties: LARRY J. COET CHEVROLET, Pontiac, Buick, Inc., Plaintiff and Appellant, v. Danny R. LABRUM, individually; Labrum Chevrolet, Pontiac, Buick, Inc.; and Ronald L. Covey, individually and as personal guarantor, Defendants and Appellees.
• Court: Utah Court of Appeals

180 P.3d 765

2008 UT App 69

LARRY J. COET CHEVROLET, Pontiac, Buick, Inc., Plaintiff and Appellant, v. Danny R. LABRUM, individually; Labrum Chevrolet, Pontiac, Buick, Inc.; and Ronald L. Covey, individually and as personal guarantor, Defendants and Appellees.

No. 20070005-CA.

Court of Appeals of Utah.

March 6, 2008.

Gary R. Howe and Thomas B. Price, Salt Lake City, for Appellant.

Keith A. Call, Salt Lake City, for Appellees.

Before GREENWOOD, P.J., THORNE, Associate P.J., and McHUGH, J.

OPINION

GREENWOOD, Presiding Judge:

¶ 1 In this case involving the sale of an automobile dealership, Larry J. Coet Chevrolet, Pontiac, Buick, Inc. (Coet), appeals the trial court's grant of partial summary judgment in favor of Danny R. Labrum, individually, and Labrum Chevrolet, Pontiac, Buick, Inc. (collectively, Labrum). Coet argues that the trial court erred in granting Labrum's motion for partial summary judgment because Coet did not waive its right to attorney fees and prejudgment interest as part of a partial settlement between the parties. Coet also argues that the trial court erred in concluding that Labrum was the prevailing party after trial on the parties' remaining claims and in awarding Labrum attorney fees and prejudgment interest based on that conclusion. Finally, Coet claims that the trial court erred in finding that Coet was liable to Labrum for obsolete parts and that a 1992 Ford truck was included in the used vehicles purchased by Labrum. We affirm.

BACKGROUND

¶ 2 In August 2001, Coet and Labrum executed an Asset Sale Agreement, whereby Labrum agreed to purchase Coet's car dealership in Heber, Utah. The purchase included, inter alia, new vehicle inventory, used vehicle inventory, and parts.¹ Prior to closing on the sale, disputes arose between Coet and Labrum and on November 13, 2001, Coet filed suit against Labrum, alleging that Labrum had not abided by the terms of the Asset Sale Agreement and that Labrum had not paid for a 1992 Ford truck included in the used car inventory. Coet also sought attorney fees and costs pursuant to the Asset Sale Agreement.² Labrum counter claimed, asserting, inter alia, a claim for fraud and misrepresentation regarding a statement Coet made about obsolete parts.

¶ 3 Notwithstanding the lawsuit, the parties formally closed on the transaction on November 14, 2001. Almost two years later, after attempts to negotiate the lawsuit had failed, the parties agreed to submit certain claims to an accountant evaluation team (the Accounting Team). The trial court acknowledged this agreement in a Stipulated Case Management Order, which stated, in part, "Submission of Accounting Disputes to Accounting Evaluation Team. The parties shall submit all of the accounting disputes, including all accounting issues raised as part of the claims or counterclaims in this lawsuit, to an accounting evaluation team, consistent with the terms of the parties' letter agreement. . . ." The specific terms of the agreement to submit issues to the Accounting Team were memorialized in a letter dated February 9, 2005, (Letter of Understanding), executed on behalf of both parties.

¶ 4 In accordance with the Letter of Understanding, the Accounting Team settled the majority of the accounting claims. After calculating various sums each party owed to the other, the team found that Labrum owed Coet $59,384.79, which Labrum promptly paid. The Accounting Team was unable to reach a unanimous conclusion on the value of obsolete parts, how to characterize a $9000 payment, Coet's claim for $4300 for a 1992 Ford truck, and Coet's claim for payment for oil and gas inventory. The $9000 claim was dismissed; however, pursuant to the Stipulated Case Management Order, the remaining claims proceeded to trial. The following circumstances gave rise to the 1992 Ford truck and the obsolete parts disputes.

The 1992 Ford Truck

¶ 5 Approximately one week before closing, Gary Robinson purchased a new Chevrolet truck from Coet. As part of the purchase, Robinson agreed to trade in his 1991 Chevrolet pickup. However, Robinson's friend, Johnny Jessen, who owned a 1992 Ford pickup, wanted Robinson's 1991 Chevrolet. After some discussion, the parties agreed that Robinson would buy the new Chevrolet truck, Jessen would take Robinson's 1991 Chevrolet pickup, and Coet would take Jessen's 1992 Ford truck as a trade in on Robinson's purchase. On that same day, Robinson drove away in the new Chevrolet and left his 1991 Chevrolet truck at the dealership. Robinson owed a credit union approximately $2300 on the 1991 truck.

¶ 6 On November 13, 2001, Jessen delivered his 1992 Ford truck to Coet and took possession of the 1991 Chevrolet. On December 12, Coet paid $2300 to the credit union with the lien on the 1991 Chevrolet; a notation on the business record states, "Gary Robinson Pay off." A few months later, Labrum sold the 1992 vehicle. Although the 1992 Ford truck was included in the used car inventory at closing, Coet alleges that its value was not reflected in the used car inventory price.

The Obsolete Parts Issue

¶ 7 As per the terms of the Asset Sale Agreement, there was to be a physical inventory taken "immediately prior to Closing." If, at the time of the inventory, the value of the parts not including obsolete parts was less than $68,000, the purchase price would be adjusted downward to reflect the difference between $68,000 and the actual value of the parts. If the parts value, not including obsolete parts, was over $68,000, no adjustment would be made.

¶ 8 On or about November 12, 2001, Danny Labrum, Rachel Labrum, Kyle Labrum, and Larry Coet met at the dealership to conduct an inventory of parts in the service department. Sometime during the inventory Mr. Labrum and Mr. Coet "agreed to . . . quit counting the inventory." Mr. Labrum asked Mr. Coet "if there was [sic] any obsolete parts" and Mr. Coet said, "I don't have an obsolescence problem." After the closing, Mr. Labrum determined that the dealership had approximately $79,000 in parts, including roughly $18,000 worth of obsolete parts.

Partial Summary Judgment

¶ 9 Labrum filed a motion for partial summary judgment, arguing that Coet's claims for attorney fees and prejudgment interest that were advanced in the original complaint "[were] completely barred by an unambiguous release signed by Plaintiff (through his attorney), and by Plaintiff's acceptance of the benefits paid pursuant to that release." Relying on the Letter of Understanding, Labrum argued that paragraph nine's release language is clear and unambiguous, and because attorney fees and prejudgment interest were not expressly excepted from the release, such claims were barred. The release language that Labrum was referring to states:

9. Binding Effect; Admissibility of Evaluation; [and] Release of Claims: Upon payment by Labrum of any such sum (if any), Coet, for and on behalf of himself, itself and its owners . . . releases and forever discharges Labrum and its owners, principals, . . . successors and assigns, from any and all claims, demands, suits, causes of action or obligations of whatever nature, known or unknown, contingent or non-contingent, that anyone claiming through or under Coet may have or believe to have against Labrum, including without limitation all claims that relate in any way to the lawsuit with Civil Number 030500537, currently pending in the Fourth Judicial District Court of Wasatch County, State of Utah (the "Lawsuit"), and any claims asserted or that could have been asserted in that lawsuit, excepting from this release only such claims as to which there is not a unanimous decision by the Evaluation Team.³

(Emphasis added.)

¶ 10 Labrum further argued that per paragraph three of the Letter of Understanding, the only legal claim excepted from paragraph nine's broad release language was the obsolete parts issue. Paragraph three states:

3. Objective of Evaluation. The Evaluation is intended by Coet and Labrum to be, and shall be conducted by the [Accounting] Team as, an independent examination, assessment, and application of the relevant provisions of the Asset Sale Agreement and related documents, for the purpose of resolving all of the respective claims between the parties, with the exception of whether either party is legally responsible to the other party for parts obsolescence.

(Emphasis added.)

¶ 11 And finally, Labrum asserted that paragraph ten of the Letter of Understanding precluded the parties from seeking fees and prejudgment interest because those claims were not expressly preserved. Paragraph ten states:

10. Preclusive Effect of Additional Claims: The parties acknowledge and agree that the claims raised in this letter agreement constitute all of the accounting-type claims for damages related to the Asset Sale Agreement and closing. The parties shall be precluded from raising or asserting (in the Lawsuit or otherwise) any claims for damages related to the Asset Sale Agreement and the Closing, except for: (i) any accounting issues that are not resolved by the Evaluation Team and (ii) any legal issues that must be resolved in order to achieve a complete resolution of the accounting issues specifically addressed in this Agreement.

(Emphasis added.)

¶ 12 Coet opposed the motion, arguing, as it does on appeal, that the release language and the Letter of Understanding referred only to accounting issues, and that legal claims—including attorney fees and prejudgment interest—were to be determined by the trial court. Coet also argued that the Stipulated Case Management Order, drafted after the Letter of Understanding, narrowed the Accounting Team's scope. The trial court agreed with Labrum and granted its motion for partial summary judgment.

¶ 13 The remaining claims proceeded to a bench trial, at the conclusion of which the trial court dismissed all of Coet's claims with prejudice and awarded Labrum $11,455.26 for obsolete parts. The trial court further concluded that Labrum was...