LMV Leasing, Inc. v. Conlin
| Decision Date | 16 January 1991 |
| Docket Number | No. 890504-CA,890504-CA |
| Citation | 805 P.2d 189 |
| Parties | 14 UCC Rep.Serv.2d 545 LMV LEASING, INC., Plaintiff and Appellee, v. Val CONLIN, Barbara Conlin, Tubber T. Okuda, Mary Y. Okuda, and Roy W. Mallory, Defendants and Appellants. |
| Court | Utah Court of Appeals |
Val J. Conlin and Barbara Conlin (argued), Henderson, Nev., pro se.
Steven W. Call (argued), Weston L. Harris, Paul A. Hoffman, Watkiss & Saperstein, Salt Lake City, for plaintiff and appellee.
Before BENCH, BILLINGS and GARFF, JJ.
Val and Barbara Conlin appeal from the trial court's decision finding them liable as guarantors for amounts owed to LMV Leasing, Inc. (LMV) by M.C.O., Inc. (MCO). Because MCO, as principal obligor under an agreement between it and LMV, defaulted in its obligations, LMV sued the Conlins and other individual guarantors to recover amounts owed it under the agreement. The trial court granted LMV's motion for partial summary judgment as to the liability of the individual guarantors and ultimately entered final judgment for LMV. The Conlins appeal both the trial court's decision to grant LMV's partial summary judgment motion and its final judgment. We affirm.
On December 29, 1986, LMV entered into a contract with MCO, a Utah corporation doing business as American International Rent-A-Car. The contract was entitled "PREFERRED VEHICLE LEASE AGREEMENT" and anticipated a series of transactions by which LMV would provide MCO with automobiles for use in MCO's car rental business. The agreement named LMV as lessor and MCO as lessee. According to its provisions, LMV, as lessor, retained all "right, title or interest" in the automobiles except for MCO's right to use the vehicles in accordance with the agreement.
The terms of the agreement did not give MCO an option to purchase the vehicles after the termination of the lease agreement, and neither party has alleged the existence of any oral provision to grant such an option to MCO. Under the agreement, the lease for each vehicle terminated either upon default by MCO or at the conclusion of the base lease term. MCO was obligated to return the vehicles to LMV after termination. When MCO returned the vehicles, LMV was to sell the vehicles at wholesale in a commercially reasonable manner. After sale of the vehicles, MCO was entitled to any surplus funds received from the sale after the "book value" 1 of the cars was deducted from the net selling price. Similarly, MCO was obligated to pay LMV for any deficiency resulting after the book value of the sold vehicle was subtracted from the net selling price.
The contract established a lease term of forty-eight months which could be terminated at MCO's discretion subject only to the requirement of a twelve month minimum lease term. The agreement specified that MCO could not extend the lease term for any vehicle beyond the initial forty-eight months and that all tax benefits from ownership of the vehicles was reserved to LMV. Rent payments under the lease was the sum of two factors: the Agreed Price of the vehicles divided by the forty-eight month base lease term, and a "financing" amount. 2 The agreement expressly provided that LMV made no warranty regarding the merchantability, fitness, design, or quality of the leased vehicles.
MCO had the sole responsibility for the maintenance and repair of the vehicles, as well as the obligation to pay title, licensing, registration and inspection fees. Liability for property, use, and sales taxes was also assigned to MCO. Additionally, MCO was obligated to obtain property and liability insurance and also agreed to indemnify LMV for any claim arising out of or related to the operation of vehicles rented under the lease. Finally, the agreement included detailed provisions setting forth LMV's remedies in the event of default by MCO, among which was the option to accelerate the entire balance of future rent due.
On January 26, 1987, the Conlins signed an agreement entitled "UNCONDITIONAL AND IRREVOCABLE GUARANTY OF PAYMENT" by which they agreed personally, unconditionally and irrevocably to guarantee the payment of any amounts due LMV from MCO in the event of MCO's default. In addition to the Conlins, three other individuals signed identically worded guaranty agreements. 3
MCO filed bankruptcy in August, 1987, and failed to make monthly payments as required under the lease agreement after September, 1987. On January 26, 1988, LMV's counsel notified the five guarantors that MCO had incurred an arrearage in its accounts with LMV. None of the guarantors satisfied the indebtedness or made payment that could have been applied to the indebtedness. On approximately March 11, 1988, LMV repossessed the vehicles leased to MCO. Anticipating that the proceeds from the sales of the vehicles would not be sufficient to satisfy the amount owed to it under the contract, LMV filed suit to obtain a deficiency judgment on April 1, 1988. On April 4, 1988, LMV notified MCO and the five individual guarantors that LMV would sell the repossessed vehicles commencing April 13, 1988. The notice of sale explained that the vehicles were to be sold for the highest possible price and that the vehicles were then and would continue to be located at Nate Wade Subaru, a Salt Lake City automobile dealership involved in the retail sale of used vehicles. The notice declared that the vehicles would "be sold in the same manner and fashion as other used vehicles located" at the dealership.
On May 10, 1988, Nate Wade Subaru commenced selling the fourteen vehicles that had been repossessed from MCO, with the last being sold on June 10, 1988. The vehicles were sold in the same manner employed by the dealership to sell other used cars on its lot, namely, by private sale.
After filing its complaint, LMV moved for summary judgment on both liability and damages, which motion was denied by the trial court. The court then granted LMV's subsequent motion for partial summary judgment on the issue of liability. Finding no genuine issue as to any material fact regarding the liability of defendants Val Conlin, Barbara Conlin, and the other individual guarantors based on their personal guaranties, the trial court concluded that "LMV leasing is granted judgment against [the guarantors] jointly and severally for any and all amounts owed by MCO, Inc. ... to LMV, which includes any damages LMV may have suffered in this action, pursuant to the Preferred Vehicle Lease Agreement entered into between MCO and LMV on or about December 29, 1986."
When it granted summary judgment as to liability, the trial court requested that the parties submit affidavits as to the amount of damages for which the guarantors were liable to LMV. The guarantors and LMV then submitted affidavits regarding the amount of damages incurred by LMV. The guarantors objected to LMV's affidavit setting forth attorney fees, arguing that the affidavit failed to comply with Rule 4-505(1) of the Utah Code of Judicial Administration. The trial court denied the motion to strike the affidavit and entered judgment against the Conlins and the other defendant-guarantors, jointly and severally, in the amount of $50,500, which included $13,500 in attorney fees.
On appeal, the Conlins claim the trial court erred in granting summary judgment because there were disputed factual issues as to (1) whether the Preferred Vehicle Lease Agreement was, in fact, a true lease or was a security agreement subject to the Utah Uniform Commercial Code ("UUCC"); (2) whether the sale of the repossessed collateral was executed in a commercially reasonable manner as required by the UUCC; (3) whether the sale of the repossessed vehicles was executed in a commercially reasonable manner as required by the contract; (4) whether LMV was barred from seeking recovery because it impaired the collateral prior to disposal; and (5) the amount of damages and LMV's failure to mitigate damages. The Conlins also contend the trial court erred in (a) assessing the amount of damages by directing the parties to submit affidavits and memoranda rather than by conducting a trial on the issue; and (b) awarding attorney fees when LMV's affidavit failed to comply with the requirements of Rule 4-505(1) of the Utah Code of Judicial Administration.
A trial court may render summary judgment only if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Utah State Coalition of Senior Citizens v. Utah Power & Light, 776 P.2d 632, 634 (Utah 1989); Territorial Sav. & Loan Ass'n v. Baird, 781 P.2d 452, 456 (Utah Ct.App.1989); Utah R.Civ.P. 56(c). On review of a trial court's grant of summary judgment, we view the facts presented and the inferences fairly arising therefrom in a light most favorable to the nonmoving party. Geneva Pipe Co. v. S & H Ins. Co., 714 P.2d 648, 649 (Utah 1986). In determining whether the undisputed facts of a case entitle the movant to judgment as a matter of law, this court gives no deference to the trial court's conclusions of law, which are reviewed for correctness. Blue Cross & Blue Shield v. State, 779 P.2d 634, 636 (Utah 1989); see also Bonham v. Morgan, 788 P.2d 497, 499 (Utah 1989) (); Daniels v. Deseret Fed. Sav. & Loan Ass'n, 771 P.2d 1100 (Utah Ct.App.1989).
Likewise, the interpretation of an unambiguous contract is a question of law which does not require any particular deference to the trial court's interpretation of the contract. Village Inn Apartments v. State Farm Fire and Casualty Co., 790 P.2d 581, 582 (Utah Ct.App.1990). We similarly view the determination of whether an agreement is a lease or a secured sales agreement as a question of law when our analysis is based upon the language of the agreement itself and not upon extrinsic evidence. Kimball v. Campbell, 699 P.2d 714, 716 (Utah 1985).
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