Long v. Stutesman

• Decision Date: 22 December 2011
• Docket Number: No. 20090974–CA.,20090974–CA.
• Citation: 2011 UT App 438,269 P.3d 178,698 Utah Adv. Rep. 29
• Parties: Darrell LONG, Plaintiff, Appellee, and Cross-appellant, v. J.D. STUTESMAN and Allan Hatz, Defendants, Appellant, and Cross-appellee.
• Court: Utah Court of Appeals

2011 UT App 438

269 P.3d 178

698 Utah Adv. Rep. 29

Darrell LONG, Plaintiff, Appellee, and Cross-appellant,

v.J.D. STUTESMAN and Allan Hatz, Defendants, Appellant, and Cross-appellee.

No. 20090974–CA.

Court of Appeals of Utah.

Dec. 22, 2011.

Nathan E. Burdsal and Hutch U. Fale, Orem, for Appellant and Cross-appellee.

Denver C. Snuffer Jr., Sandy, for Appellee and Cross-appellant.

Before Judges THORNE, VOROS, and CHRISTIANSEN.

OPINION

CHRISTIANSEN, Judge:

¶ 1 This case arises from defendant J.D. Stutesman's sale of an airplane to plaintiff Darrell Long. After a two-day bench trial in February 2009, the trial court concluded, inter alia, that Long succeeded in proving fraud against Stutesman but failed to prove the same against defendant Allan Hatz. The trial court entered a judgment against Stutesman for $32,468.35, including costs but not including attorney fees or punitive damages. On appeal, Stutesman challenges the trial court's conclusion that he defrauded Long. He also challenges the trial court's award of damages and costs to Long. On cross-appeal, Long challenges the trial court's denial of attorney fees and punitive damages, as well as the trial court's conclusion that he failed to present sufficient evidence to prove that Hatz defrauded him. We affirm in part, reverse in part, and remand for further proceedings.

BACKGROUND ¹

¶ 2 In 2006, Stutesman advertised the sale of his 1960 Bellanca aircraft. In the advertisements, Stutesman represented that he would sell his aircraft with a “fresh annual” inspection, meaning that it would undergo an annual Federal Aviation Administration (FAA) airworthiness inspection. Long became interested in purchasing the aircraft after he saw one of the advertisements. In August 2006, Stutesman and Long agreed upon a $28,000 purchase price, and Long paid Stutesman a ten percent deposit.

¶ 3 Hatz, a certified aircraft mechanic and inspector, performed an annual inspection on the aircraft in two phases over three months, which he ultimately completed on September 13, 2006. Although Hatz certified that the aircraft was airworthy, he admitted during his trial testimony that he “knew at the time the aircraft was not airworthy.” Because the FAA determined that Hatz's airworthiness certification did not meet FAA standards, it later suspended Hatz's inspection certification for six months.

¶ 4 On September 29, 2006, Stutesman disclosed to Long that the aircraft had a cracked windshield and was missing an oil inspection hatch cover. Hatz had discovered these defects during the inspection, and Stutesman had not fixed them. Stutesman also gave Long the aircraft's logbooks in which Hatz had certified the airworthiness of the aircraft. The next day, Stutesman and Long entered into an agreement for the sale and purchase of the aircraft for $27,700. Later that day, Long was attempting to land his newly-purchased aircraft for a second time when the landing gear malfunctioned and caused the aircraft to crash.

¶ 5 Long filed an action against Stutesman and Hatz, alleging conversion, breach of contract, and fraud. The trial court partially granted Hatz's summary judgment and dismissed Long's conversion and breach of contract claims against Hatz. A two-day bench trial ensued on Long's three claims against Stutesman and on Long's fraud claim against Hatz.

¶ 6 At trial, Long testified that he relied on Stutesman's advertisements, the aircraft's logbooks, and the fresh annual inspection in deciding to purchase the aircraft. In the advertisements, Stutesman represented that a fresh annual inspection would occur, and in the logbooks he represented that a fresh annual inspection had occurred. Long testified that Stutesman never disclosed to him that two days before the sale Stutesman had replaced the aircraft battery with a car battery. Long's expert witness testified that a proper fresh annual inspection would have uncovered the defect that caused the landing gear to malfunction, which the parties had stipulated was the cause of the crash. Finally, Long's expert witness testified that the cost to repair the aircraft after the crash exceeded the value of the aircraft.

¶ 7 Stutesman testified at trial that he intended for potential buyers to rely on his representation in the advertisements that the aircraft would have a fresh annual inspection before being sold. Stutesman also testified that he gave Long the logbooks with the intention of inducing Long to rely on the representations therein, including the fact that the aircraft had been certified with a fresh annual inspection as of September 13, 2006. Stutesman admitted that he replaced the aircraft battery with a car battery two days before he sold it to Long, that the aircraft was not airworthy because of this, and that he knew it was a crime or an FAA violation to sell an aircraft that was not airworthy.

¶ 8 Following trial, the court concluded that (1) Long failed to present sufficient evidence to establish a breach of contract claim, (2) Long failed to present sufficient evidence to establish his fraud claim against Hatz, and (3) Long successfully proved his fraud claim against Stutesman.² Based on its fraud determination, the trial court entered a judgment against Stutesman for a total of $32,468.35, which award was comprised of $27,700 in principal and $4,768.35 in costs. Stutesman now appeals; Long cross-appeals.

ISSUES AND STANDARDS OF REVIEW

¶ 9 First, Stutesman challenges the trial court's determination that he was liable for fraud. “ ‘The findings and judgment should not be disturbed unless this court can say affirmatively and with some degree of assurance that there is no reasonable basis in the evidence that could fairly and rationally support the requisite degree of proof, i.e., by clear and convincing evidence.’ ” Armed Forces Ins. Exch. v. Harrison, 2003 UT 14, ¶ 26, 70 P.3d 35 (quoting Lamb v. Bangart, 525 P.2d 602, 609 (Utah 1974)).

¶ 10 Second, Stutesman challenges the adequacy of the trial court's factual findings as to the reasonableness element of fraud. “We review this issue only if it was presented to the trial court in such a way that the trial court had an opportunity to correct any deficiencies in the adequacy of the detail of the findings of fact.” Interstate Income Props., Inc. v. La Jolla Loans, Inc., 2011 UT App 188, ¶ 12, 257 P.3d 1073.

¶ 11 Third, Stutesman argues that the trial court erred in its calculation of damages. “Whether the [trial] court applied the correct rule for measuring damages is a question of law that we review for correctness.” Mahana v. Onyx Acceptance Corp., 2004 UT 59, ¶ 25, 96 P.3d 893. As part of his damages argument, Stutesman also challenges the trial court's finding that he fraudulently caused any damages. Assessing causation is a question of fact, see Sampson v. Richins, 770 P.2d 998, 1006 (Utah Ct.App.), cert. denied, 776 P.2d 916 (Utah 1989), and “[a] trial court's findings of fact will not be set aside unless clearly erroneous,” Chen v. Stewart, 2004 UT 82, ¶ 19, 100 P.3d 1177.

¶ 12 Fourth, Stutesman challenges the trial court's award of costs in the amount of $4,768.35. “ ‘[A] trial court's decision to award the prevailing party its costs will be reviewed under an abuse of discretion standard.’ ” Armed Forces, 2003 UT 14, ¶ 41, 70 P.3d 35 (alteration in original) (quoting Young v. State, 2000 UT 91, ¶ 4, 16 P.3d 549).

¶ 13 On cross-appeal, Long first argues that the trial court erred in denying him attorney fees under Utah Code section 78B–5–825. See Utah Code Ann. § 78B–5–825(1) (2008) (“In civil actions, the court shall award reasonable attorney fees to a prevailing party if the court determines that the action or defense to the action was without merit and not brought or asserted in good faith, except under Subsection (2).”). “[W]hether ... a claim was brought in bad faith is a question of fact [that] we review ... under a clearly erroneous standard.” Edwards v. Powder Mountain Water & Sewer, 2009 UT App 185, ¶ 13, 214 P.3d 120 (alterations and omissions in original) (internal quotation marks omitted).

¶ 14 Long also challenges the trial court's denial of punitive damages. “Whether punitive damages [should be] awarded is generally a question of fact within the sound discretion of the [fact finder], and will not be disturbed absent an abuse of discretion.” Burton Lumber & Hardware Co. v. Graham, 2008 UT App 207, ¶ 10, 186 P.3d 1012 (alterations in original) (internal quotation marks omitted).

¶ 15 Finally, Long argues that the trial court erred in determining that he failed to present sufficient evidence to prove that Hatz defrauded him. Again, we will not disturb the trial court's findings and judgment unless we “can say affirmatively and with some degree of assurance that there is no reasonable basis in the evidence that could fairly and rationally support the requisite degree of proof, i.e., by clear and convincing evidence.' ” Armed Forces Ins. Exch. v. Harrison, 2003 UT 14, ¶ 26, 70 P.3d 35 (quoting Lamb v. Bangart, 525 P.2d 602, 609 (Utah 1974)).

ANALYSIS

I. Fraud Claim Against Stutesman

¶ 16 To establish fraud against Stutesman, Long

must prove by clear and convincing evidence each of the following elements: “(1) That a representation was made; (2) concerning a presently existing material fact; (3) which was false; (4) which the representor either (a) knew to be false, or (b) made recklessly, knowing that he had insufficient knowledge upon which to base such representation; (5) for the purpose of inducing the other party to act upon it; (6) that the other party, acting reasonably and in ignorance of its falsity; (7) did in fact rely upon it; (8) and was thereby induced to act; (9) to his injury and damage.”

Franco v. Church of Jesus Christ of Latter-day Saints, 2001 UT 25, ¶ 33, 21 P.3d 198 (emphasis omitted) (quoting Mikkelson v. Quail Valley Realty, 641 P.2d 124, 126 (Utah 1982)).

A. Stutesman Failed to Marshal the Evidence in Support of the Trial Court's...