Ld III, LLC v. Bbrd, Lc

• Decision Date: 22 October 2009
• Docket Number: No. 20080839-CA.,20080839-CA.
• Citation: 221 P.3d 867,2009 UT App 301
• Parties: LD III, LLC, Plaintiff and Appellant, v. BBRD, LC, a Utah limited liability company; Richard W. Davis, an individual; Mountain West Title Company; and BBRD, Inc., Defendants and Appellees.
• Court: Utah Court of Appeals

221 P.3d 867

2009 UT App 301

LD III, LLC, Plaintiff and Appellant, v. BBRD, LC, a Utah limited liability company; Richard W. Davis, an individual; Mountain West Title Company; and BBRD, Inc., Defendants and Appellees.

No. 20080839-CA.

Court of Appeals of Utah.

October 22, 2009.

Denver C. Snuffer Jr., Steven R. Paul, and Daniel B. Garriott, Sandy, for Appellant.

Michael N. Zundel, James A. Boevers, and M. David Eckersley, Salt Lake City, for Appellees.

Before Judges THORNE, BENCH, and ORME.

BENCH, Judge:

¶ 1 Plaintiff LD III, LLC (LD III) appeals the trial court's order granting Defendants' motion to enforce a settlement agreement. LD III claims that the trial court abused its discretion in granting the motion because a binding settlement agreement was never created due to the lack of a meeting of minds and the lack of an adequate writing as required by the statute of frauds. We affirm.

BACKGROUND

¶ 2 In August 2007, Defendant Richard W. Davis offered to purchase real property and water rights from LD III. The parties had a real estate purchase contract (the REPC) prepared, which listed the purchaser as "BBRD, Inc. and or Richard Davis."¹ Claiming that Davis had failed to comply with a requirement of the REPC, LD III refused to go through with the sale. Mr. Davis subsequently recorded a notice of interest against the subject property, and LD III initiated an action to remove the lien.

¶ 3 After several months of litigation, the parties began to discuss settlement of LD III's wrongful lien action. On July 9, 2008, counsel for both parties participated in a telephone conference regarding this settlement. According to affidavits submitted to the trial court by Defendants, a settlement was reached during that telephone conference. Three days after the telephone conference, Defendants' counsel sent an email to LD III's counsel regarding the terms of the settlement agreement. The email stated,

As [we] discussed with you on Wednesday, the parties to the LDIII v. Davis, et al. case have agreed to settle the case by completing the sale of the real property and water rights to [Mr. Davis] or his designee for the 1.2 million remaining owing under the purchase contract. Accordingly, the settlement agreement will consist of the escrow instructions and title company settlement statement for closing the transaction, along with a stipulation and order dismissing the lawsuit with prejudice, each party to bear its own attorney fees and costs.

¶ 4 Defendants' counsel subsequently sent LD III another email, which included drafts of the new closing documents. In this second email, Defendants' counsel explained that "Mr. Davis desires to have the different parcels conveyed to affiliated companies and designees as shown in the deed." The attached deed listed the grantees of the real property and water rights as five separate entities or groups of people: three limited liability companies affiliated with Mr. Davis; Mr. Davis and his wife as trustees of the R.W. Davis Family Protection Trust; and Stephen and Jennifer Sandstrom. Defendants' counsel later sent a third email to LD III's counsel inquiring about the time frame in which LD III intended to review the closing documents and the status of the litigation's remaining discovery.

¶ 5 After receiving these emails, LD III's counsel responded through email, writing, "[W]e also have a settlement which will make it unnecessary to waste time on discovery I believe. I cannot imagine a problem will occur which we cannot resolve in papering the settlement of this case." The parties agreed to extend the time for Defendants' responses to certain discovery requests, pending completion of the paperwork associated with the settlement. A day later, LD III's counsel sent another email to Defendants' counsel indicating that LD III's principal wanted another attorney to review the closing documents. In the same email, LD III's counsel stated, "However, I still retain the view that further discovery is unnecessary."

¶ 6 Despite additional inquiries, LD III's counsel did not respond to Defendants regarding the closing documents for three weeks. At that point, LD III's counsel sent another email to Defendants' counsel that stated, "[T]he terms of the proposed settlement are not acceptable to our client." The email also requested that the parties move toward completing discovery. LD III's counsel did not give Defendants a specific reason as to why LD III found the terms unacceptable.

¶ 7 When LD III did not respond to Defendants' requests to identify the unacceptable terms, Defendants filed a motion to enforce the settlement agreement with the trial court. In connection with this motion, Defendants filed affidavits from three attorneys who either represented them in the settlement discussions or drafted the closing documents for the real estate transaction associated with the settlement. In these affidavits and accompanying documents, Defendants set forth evidence that the parties had reached a binding settlement agreement containing the terms that were summarized in the first email. These affidavits also explained that the $1,200,000 purchase price reflected a $300,000 credit for LD III's previous sale of a parcel of land to an entity designated by Mr. Davis.

¶ 8 LD III opposed Defendants' motion and asserted that Defendants had changed the terms of the settlement agreement when they prepared the written documents and that this change thereby precluded a meeting of the minds between the parties. In response to Defendants' statement of facts, LD III admitted to Defendants' account of the July 9 telephone conference and the terms of the settlement that were agreed upon during that conference. LD III noted only that "[t]he Defendants changed these terms in the language of the documents they drafted and created a wholly different set of risks and problems." In response to Defendants' statement regarding the delivery of the closing documents, LD III stated that it "[is a]dmitted that drafts of closing documents and related materials were sent, however, it is not admitted the documents provided were in fact in conformity with either the original agreement or the agreement of the parties to settle the matter." In response to Defendants' contentions regarding LD III's counsel's statement that further discovery was unnecessary, LD III stated, "Admitted. At the time, it was not discovered that Defendants had attempted to materially alter the agreement. As soon as that was discovered, notice was provided that the deal was off. Plaintiff has considered the additional terms to be a counteroffer."

¶ 9 At the hearing regarding the motion to enforce the settlement agreement, the trial court framed the issue to be resolved in this way: "I guess the question I have is if you concede or agree that you had a settlement but the documents don't conform to your settlement, do you intend to have the document, the closing documents conform to your settlement." LD III's counsel began his argument by stating, "We, we reached what we thought was an agreement that was going to be written up."² LD III's counsel later went on to say, "In the papering of the settlement we got a counteroffer that ... was rejected."

¶ 10 LD III's main contention before the trial court was that Defendants' substitution of the five separate entities as the purchaser constituted a material change from the original terms of the REPC and created a risk that LD III would be implicated in a tax evasion scheme. LD III repeatedly characterized this change in the purchaser as a counteroffer that LD III had rejected, which precluded the formation of an agreement. LD III also urged that the settlement agreement failed to satisfy the statute of frauds.

¶ 11 Upon learning about LD III's concern regarding the designated purchasers, Mr. Davis expressed his willingness to be the sole purchaser of the property. Defendants' counsel revised the closing documents to replace the five entities with Mr. Davis's name alone. Even though this would appear to have resolved LD III's expressed concern, LD III nonetheless refused to go through with the transaction.

¶ 12 Ultimately the trial court granted Defendants' motion to enforce the settlement agreement and ordered LD III to close the real estate transaction. In doing so, it found that

Defendant Richard W. Davis ... made no change to the settlement agreement with plaintiff [LD III] ..., material or otherwise. The settlement agreement is and always was that [LD III] would convey the subject parcels of real property and water rights to Davis or his designee. However, Davis has agreed to take title in his own name because the issue is not a material one.

(Emphasis added.) This appeal followed.

ISSUES AND STANDARDS OF REVIEW

¶ 13 "The decision of a trial court to summarily enforce a settlement agreement will not be reversed on appeal unless it is shown that there was an abuse of discretion." Goodmansen v. Liberty Vending Sys., Inc., 866 P.2d 581, 584 (Utah Ct.App.1993) (internal quotation marks omitted). "Issues of formation, construction, and enforceability of a settlement agreement are governed by state contract law," Brighton Corp. v. Ward, 2001 UT App 236, ¶ 12, 31 P.3d 594, and "[t]he [underlying] issue of whether a contract exists may present both questions of law and fact, depending on the nature of the claims raised," Cal Wadsworth Constr. v. City of St. George, 865 P.2d 1373, 1375 (Utah Ct.App.1993), aff'd, 898 P.2d 1372 (Utah 1995). Whether the parties had a meeting of the minds sufficient to create "a binding contract is ... an issue of fact," O'Hara v. Hall, 628 P.2d 1289, 1291 (Utah 1981), which "[w]e review ... for clear error, reversing only where the finding is against the clear weight of the evidence, or if we otherwise reach a firm conviction that a mistake has been made," Cowley v. Porter, 2005 UT App 518, ¶ 42, 127 P.3d 1224 (internal quotation marks omitted). On the other hand, "[t]he...