Larson v. Overland Thrift and Loan
| Decision Date | 17 October 1991 |
| Docket Number | No. 900411-CA,900411-CA |
| Citation | 818 P.2d 1316 |
| Parties | Dale L. LARSON; Grethe Larson; and Systematic Builders, Inc., Plaintiffs and Appellants, v. OVERLAND THRIFT AND LOAN; Linda D. Milne; and Western Surety Company, Defendants and Appellees. |
| Court | Utah Court of Appeals |
Joseph H. Bottum and David W. Brown, Salt Lake City, for plaintiffs and appellants.
Jeffrey M. Jones, Michael L. Dowdle, and Robert Payne, Salt Lake City, for defendant and appellee Overland Thrift and Loan.
Joseph Dunbeck, Salt Lake City, for defendants and appellees Milne, and Western Sur.
Before BENCH, GREENWOOD and JACKSON, JJ.
A deed of trust was recorded on the Larsons' home in favor of Overland Thrift and Loan (Overland) as additional security for the lease financing of industrial equipment. The lease went into default and Overland repossessed the equipment and initiated foreclosure on the home. The Larsons sued to rescind the trust deed and to enjoin the foreclosure sale. The district court granted summary judgment in favor of the defendants and the Larsons appeal following final certification of judgment under Utah Rules of Civil Procedure 54(b). We affirm in part and reverse in part.
On November 27, 1984, a lease financing agreement was entered into between PFC, a lease broker, as lessor; and, Dale L. Larson and Robert J. Lucking, partners in L & L Wire EDM, as lessees, for the five-year lease of industrial equipment. The agreement specifically referred to a home owned by Dale Larson and Grethe Larson as additional security pledged for the leased equipment that had been supplied by Intermountain Machine Tool (Intermountain). In connection with the lease financing agreement, Dale Larson and Robert Lucking also signed an equipment lease guaranty as co-guarantors.
On November 20, 1984, PFC employee Ray Welling delivered to the Larsons a trust deed prepared for their signatures. The trust deed named the Larsons as grantors of the trust deed on their home owned in joint tenancy, and Overland as beneficiary. The trust deed expressly stated it was "being recorded for additional securing [sic] on a lease for Robert J. Lucking & Dale L. Larson dba L & L Wire EDM in the amount of $112,185.92 on lease number 312 401 Dated November 7, 1984." After the trust deed was executed, Linda Milne notarized and recorded it.
The day after the lease financing agreement was signed, PFC formally assigned its interest in the lease to Overland. Monthly lease payments were made until September 2, 1986, when the lease went into default. A flurry of activity then followed. The Larsons gave Systematic Builders a warranty deed on their home on January 21, 1987. Two days later, Overland recorded a Notice of Breach and Election to sell the Larson home and a trustee's sale was set for May 27, 1987. Systematic Builders subsequently recorded its warranty deed on February 5, 1987. Overland repossessed the equipment on February 15, 1987, and sold it for $10,750 over a year later.
In order to save their home from foreclosure, the Larsons filed suit on May 19, 1987, to rescind the trust deed as a consumer credit transaction under 15 U.S.C. § 1635(b), and to enjoin the trustee's sale. Although Dale Larson denied ever signing the trust deed, Grethe Larson admitted responsibility for placing both his and her signatures on the deed and the lease, but claimed she did so because of fraud and coercion. Grethe Larson also alleged the notary Linda Milne was not present when the documents were signed. The district court denied the Larsons' application for a preliminary injunction and the real property was sold to Overland for $51,864.90.
The Larsons requested leave to file an amended complaint and, by August 1, 1988, had filed four more amended complaints due, in large part, to their failure adequately to plead fraud. Counterclaims were filed and, after discovery and depositions, Milne and Western Surety moved for summary judgement. Overland soon followed with two separate motions for partial summary judgment.
The district court granted the motion for summary judgment filed by Milne and Western Surety and dismissed with prejudice the Larsons' fraud claims against the notary and the bond company. The court next granted Overland's motion for partial summary judgment, and dismissed all claims asserted by Systematic Builders. At the same time, the court dismissed the Larsons' claims against Overland for "fraud, duress and so on"; ordered the transfer of Grethe Larson's one-half interest in the Larsons' home to Overland; determined that the "lease" was, as a matter of law, a true lease and not a security agreement; ordered that Dale Larson was fully obligated on the guaranty; entered judgment against Dale Larson on the lease due to his status as a partner in L & L Wire; and, denied the Larsons' claims that enforcement of the lease allowed double recovery and penalty because Overland only sought to recover amounts due after offset from sale proceeds.
The district court later granted Overland's second motion for partial summary judgment on the remaining counts: that the sale of the equipment by Overland was made in good faith; and, that Dale Larson was liable under the lease for $69,883.80. The court then certified the judgments as final under Utah Rule of Civil Procedure 54(b).
Summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. LMV Leasing, Inc. v. Conlin, 805 P.2d 189, 192 (Utah App.1991). In determining whether the trial court correctly found that there was no genuine issue of material fact, we review the facts and inferences from them in the light most favorable to the losing party. Ron Case Roofing & Asphalt Paving, Inc. v. Blomquist, 773 P.2d 1382, 1385 (Utah 1989). We review conclusions of law for correctness and give no deference to the trial court. Blue Cross & Blue Shield of Utah v. State of Utah, 779 P.2d 634, 636-37 (Utah 1989).
The interpretation of a contract can present either a question of law, to be determined by the words of the agreement, or a question of fact, to be determined by extrinsic evidence. Kimball v. Campbell, 699 P.2d 714, 716 (Utah 1985). Interpretation of an unambiguous contract is a question of law and does not require any deference to the conclusions of the trial court. LMV Leasing, 805 P.2d at 192. If the terms of an agreement are clear and unambiguous, we interpret them according to their plain and ordinary meaning and extrinsic or parol evidence is generally not admissible to explain the intent of the parties. Faulkner v. Farnsworth, 665 P.2d 1292, 1293 (Utah 1983); Valley Bank & Trust Co. v. U.S. Life Title Ins. Co., 776 P.2d 933, 936 (Utah App.1989).
Language is ambiguous if the words used to express the intent of the parties are insufficient so that the contract may be understood to reach two or more plausible meanings. Property Assistance Corp. v. Roberts, 768 P.2d 976, 977 (Utah App.1989). When a contract is ambiguous because of uncertainty in the meaning of terms, the absence of terms or other facial deficiencies, parol evidence is admissible to explain the intent of the parties. Faulkner, 665 P.2d at 1293. Whether an ambiguity exists is a question of law to be decided before parol evidence may be admitted. Id. The language of a contract is not necessarily ambiguous merely because a party urges a different meaning that is more in accordance with its own interests. Village Inn Apartments v. State Farm Fire & Cas. Co. 790 P.2d 581, 583 (Utah App.1990).
The Larsons cite Colonial Leasing Co. of New England v. Larsen Bros. Const. Co., 731 P.2d 483, 487 (Utah 1986), for the proposition that the character of a transaction, as a lease or a security agreement, "may be" ambiguous when taken as a whole even though specific terms are not. 1 The supreme court identified numerous factors in Colonial Leasing that may bear upon whether a lease or a security agreement was intended. 2
In addition to the presence of several lease terms that were identified as factors in Colonial Leasing, the Larsons note the existence of an option to purchase the equipment, and the treatment of their home as "additional security" as indications that the parties intended a security agreement. In LMV Leasing, 805 P.2d at 196, this court identified ownership (or its functional equivalent) and the means to transfer ownership (such as a purchase option) as a key distinction between a lease and a security agreement.
Under the express language of the lease, however, Dale Larson and Robert Lucking acquired no ownership interest, right or title in the equipment other than a leasehold:
9. OWNERSHIP, PERSONAL PROPERTY: Equipment is and shall at all times remain, the property of Lessor; and Lessee shall have no right, title or interest therein or thereto except as expressly set forth in this Lease[.] Equipment is, and shall at all times be and remain, personal property notwithstanding that Equipment or any part thereof may now be, or hereafter become, in any manner affixed or attached to real property or any building thereon.
Dale Larson and Robert Lucking were, however, granted an option to purchase the equipment for fair market value at the end of the lease period:
11. OPTION TO PURCHASE: Lessee shall have an option to purchase Equipment at the end of the lease period for FAIR MARKET VALUE at the time plus all obligations remaining due under this Lease. Notice of exercise of this option must be given in writing to Lessor or Lessor's assignee at least thirty (30) days prior to the expiration of the Lease. This option shall terminate and be avoid [sic] upon termination of this lease by reason of Lessee's default.
The issue thus presented is whether an option to purchase leased equipment for fair market value is indicative of a lease or a...
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