Larson v. Stauffer
| Decision Date | 01 September 2022 |
| Docket Number | 20190759-CA |
| Parties | Denise Larson and Brook Larson, Appellants and Cross-appellees, v. Corey Stauffer and Nicola Stauffer, Appellees and Cross-appellants. |
| Court | Utah Court of Appeals |
Second District Court, Ogden Department The Honorable Jennifer L Valencia No. 160905860
Ryan P. Atkinson, Ron W. Haycock Jr., and Scarlet R. Smith Attorneys for Appellants and Cross-appellees
Justin D. Heideman and Justin R. Elswick, Attorneys for Appellees and Cross-appellants
[1]
OPINION
¶1 Whether a party has performed under a contract is generally a question for the fact finder. Here, however, the district court granted summary judgment-in favor of Appellees Corey and Nicola Stauffer and against Appellant Denise Larson-based on its determination that Denise necessarily failed as a matter of law to perform under her contract with the Stauffers. We reverse because that determination was for the fact finder to make. We also reverse the district court's conclusion that the economic loss rule barred tort claims brought by Denise's husband, Appellant Brook Larson, and remand for further proceedings.
BACKGROUND[2]
¶2 The Larsons and the Stauffers are neighbors who, for several years, have fought over the location of the Larsons' backyard shed. The Stauffers commissioned a land survey in 2014, which revealed that the Larsons' shed rested two feet over the property line. Consequently, the Stauffers brought an ejection action against Denise, requesting that she remove the shed from their property.
¶3 After mediation, Denise and the Stauffers signed a written "Stipulation and Settlement Agreement" (the Settlement). The Settlement contains a release of claims, under which the parties agreed to resolve all claims "assertable by, between, among[,] or against" each other up to the date of signing.
¶4 Denise and the Stauffers also agreed to additional obligations "[a]s further consideration for the . . . release." For instance, they agreed to "rely upon the survey commissioned by the [Stauffers] to determine and confirm the deeded property line" and to "take all necessary steps to ensure the dismissal with prejudice of the" underlying suit-"each party to bear its own costs and fees." Denise also agreed to reimburse the Stauffers for "one half of the cost of the survey."
¶5 This case mainly concerns two additional obligations under the Settlement: the shed and harassment provisions. Under the shed provision, Denise agreed to "remodel her shed in order to remove [it] from the [Stauffers'] property" "[w]ithin six months." "The parties underst[ood] and agree[d] that" Denise would "need to access and cross over the [Stauffers'] property" to remodel the shed. Accordingly, to "facilitate" the remodel, the Stauffers agreed to "move their fence back from the shed to allow [Denise] access."
¶6 The harassment provision contains several "restraining orders." Relevant here, "[t]he parties [were] mutually restrained from bothering, harassing, annoying, threatening, stalking, or harming the other party." They were also "mutually restrained from disparaging the other party."
¶7 Nearly one month later, the ejection action was dismissed at Denise and the Stauffers' request. To clarify, Denise's husband Brook was not a named party in that action. He is not named in the Settlement, and he did not sign it.
¶8 Six months and one day after the date of signing the Settlement, the Stauffers complained that Denise had yet to remove her shed as required. And three days later (six months plus four days), Denise "scrambled to remove the [s]hed as quickly as possible," forgoing the remodel she had originally anticipated. The Stauffers then argued that several of the shed's "structural poles" remained on their side of the property line, and they demanded that Denise remove them.
¶9 Later that year, the Larsons-Denise and Brook-sued the Stauffers for breach of contract. They also raised claims for intentional infliction of emotional distress, negligent infliction of emotional distress, private nuisance, and trespass (requesting punitive damages under a separate cause of action). The gist of the allegations was that the Stauffers had engaged in a pattern of conduct that not only violated the Settlement's harassment provision but also gave rise to tort claims.
¶10 The Stauffers moved for summary judgment. With respect to the breach of contract claim, they argued that it was barred under the first breach rule. In other words, because the Larsons had failed to remove their shed "within six months" of signing the Settlement, they "lack[ed] all capacity to demand performance" under the harassment provision. As for the tort claims, the Stauffers argued that they arose "out of the very basis of the [Settlement]" and were therefore precluded by the economic loss rule.
¶11 The Larsons responded by arguing that the Stauffers had waived their first breach argument by failing to raise it in their pleadings. See generally Utah R. Civ. P. 12(h). They also argued that the Settlement was ambiguous regarding the date the shed had to be removed. But they argued that, in any event, there remained genuine issues of fact regarding whether the four-day delay was a substantial or material breach of the Settlement. As for the tort claims, the Larsons argued that Brook had not been a party to the contract; thus, the economic loss rule was inapplicable, at least insofar as the tort claims belonged to Brook.
¶12 The Stauffers disagreed. And, as to the Larsons' waiver argument, they pointed out that performance by the plaintiff was still "the second element of a prima facie case for breach of contract." Accordingly, even if they had been required to affirmatively raise first breach in the pleadings, the breach of contract claim necessarily failed because Denise could not show that she had performed by removing the shed "within six months" of signing.
¶13 The district court agreed with the Stauffers. As a preliminary matter, the court determined that the Settlement was enforceable against both Denise and Brook-the latter based on language indicating that the release applied to claims previously assertable not just by the named parties, but also by "their respective heirs, legal representatives, and assigns." The Settlement therefore "applie[d] to Brook."
¶14 The court then concluded that the breach of contract claim against the Stauffers for violating the Settlement's harassment provision failed as a matter of law because the Larsons could not prove that they had performed under the shed provision. It held that the shed provision unambiguously required the Larsons to have removed the shed "within six months" of signing. And because it was undisputed that the shed remained on the Stauffers' property one day after that deadline, the court held that the Larsons had "not perform[ed] under the contract," which necessarily prevented them from "establish[ing] a prima facie case for breach of contract."
¶15 Finally, the court agreed with the Stauffers' argument that the economic loss rule barred Brook's tort claims. "Aside from the fact that the tort claims [did] not appear . . . to be independent from the breach of contract claim," the court added that the Larsons had failed to allege whether the Stauffers had breached "a legally recognized duty under tort law." As the court saw it, "[t]he legal relationship between the parties [was] that of neighbors" and the Larsons needed to have alleged more than just "poor behavior . . . to sustain a legal claim for tortious conduct." Based on this reasoning, the court granted summary judgment to the Stauffers on all claims.
¶16 Following the court's decision, the Stauffers requested attorney fees based on the Settlement's attorney fees provision. Paragraph 6 of the Settlement contains the following language:
In any action to enforce any of the provisions of this Stipulation, Settlement, Waiver & Release Agreement, the prevailing party shall be entitled to recover his or her costs and attorney's fees thus incurred.
The court denied the Stauffers' request, concluding that the provision allowed a prevailing party to recover attorney fees only if that party had initiated the action. As defendants, the Stauffers were therefore not entitled to attorney fees under the Settlement.
¶17 The parties now cross appeal the district court's decisions.
¶18 The Larsons appeal the district court's decision to grant summary judgment in favor of the Stauffers. "We review a district court's grant of summary judgment for correctness." Patterson v. State, 2021 UT 52, ¶ 27, 504 P.3d 92. Summary judgment is appropriate "only when, viewing all facts and reasonable inferences therefrom in the light most favorable to the nonmoving party, there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law." Id. (cleaned up); see also Utah R. Civ. P. 56(a).
¶19 The Stauffers cross appeal, arguing that the court erred in concluding that attorney fees were unavailable to them under the Settlement. "Whether attorney fees are recoverable in an action is a question of law, which we review for correctness." Express Recovery Services Inc. v. Olson, 2017 UT App 71, ¶ 5, 397 P.3d 792 (cleaned up).
¶20 The Larsons make two arguments on appeal. They argue that the district court erred in determining, as a matter of law, that (1) Denise could not maintain a breach of contract claim against the Stauffers and (2) Brook's tort claims were barred by the economic loss rule. We address these arguments then turn to the issue of...
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