Mahmood v. Ross
| Decision Date | 09 November 1999 |
| Docket Number | No. 970214.,970214. |
| Citation | 1999 UT 104,990 P.2d 933 |
| Parties | Badi MAHMOOD, Plaintiff and Appellee, v. Dorothy ROSS, in her capacity as personal representative of the Estate of Galen Ross, deceased, Defendant and Appellant. |
| Court | Utah Supreme Court |
E. Barney Gesas, Bridget K. Romano, Salt Lake City, for plaintiff.
Warren Patten, Salt Lake City, for defendant.
INTRODUCTION
¶ 1 Defendant Dorothy Ross, in her capacity as personal representative of the Estate of Galen Ross, deceased, appeals from the district court's judgment in favor of the plaintiff, Badi Mahmood. The judgment was entered pursuant to a jury verdict which found that Galen Ross had breached a settlement agreement with Mahmood, and which awarded Mahmood over $796,360.79 in direct and consequential damages.
¶ 2 In 1980, Galen Ross and William Bass introduced Badi Mahmood to a business opportunity involving the purchase of real estate in New Mexico. Thereafter, Ross, Bass, and Mahmood entered a partnership and each agreed to contribute money toward the purchase of the real estate. Mahmood made his portion of the capital contribution, but Ross and Bass claimed they would be unable to make their capital contributions without borrowing money.
¶ 3 Ross and Bass asked Mahmood if he would personally borrow the full purchase price of the real estate. Ross suggested that he could help Mahmood obtain a loan through Equitable Life & Casualty Insurance Company ("Equitable"), a company where Ross and Bass were officers, directors, and shareholders. Ross and Bass represented to Mahmood that they could not borrow from Equitable because of the positions they held, but they agreed that if Mahmood would borrow the amount of their capital contributions, they would personally repay him.
¶ 4 Subsequently, Mahmood obtained a real estate loan from Equitable in the amount of $163,000. As security for the loan, Mahmood executed a trust deed pledging approximately 633 acres of property he owned in Woodlands, Wasatch County, Utah (the "Woodlands property"). Mahmood kept $79,000 from the loan; Ross and Bass received the balance.
¶ 5 Eventually, the business opportunity involving the New Mexico real estate failed. Mahmood subsequently paid his portion of the Equitable loan, but Ross and Bass failed to make any payments. Consequently, the loan fell into default and Equitable began foreclosure proceedings on the Woodlands property. Mahmood filed an action against Equitable to block the foreclosure. He also filed suit against Ross, seeking to recoup the portion of the loan proceeds which Ross had agreed to personally pay to Mahmood.
¶ 6 Mahmood settled with Equitable in May 1989. The settlement included a renegotiation of the loan, and Mahmood signed a new five-year trust deed note requiring him to pay $263,000 to Equitable. This second trust deed note included the unpaid balance of the 1980 real estate loan, including penalty, interest, and Equitable's cost and fees. The terms of the note included monthly payments of $1,005.58 for sixty months, with a balloon payment of $258,593.58 due on May 1, 1994. This new note was also secured by Mahmood's Woodlands property.
¶ 7 In August 1990, Mahmood settled his action against Ross. Under the terms of a "Mutual Release and Settlement Agreement," Ross agreed to pay Mahmood the sum of $75,000. Ross's payments were as follows: $13,700.36 payable to Equitable on Mahmood's behalf; $21,299.64 attributable to Mahmood's litigation expenses; and the remaining $40,000 to be paid to Equitable on Mahmood's behalf in monthly installments of $1,000 for forty months.
¶ 8 Pursuant to the terms of the settlement agreement, from October 1990 to August 1991, Ross paid the majority of his $1,000 monthly installments to Equitable according to the terms of the settlement. However, Ross eventually became delinquent in his monthly payments, and Mahmood was served with a notice of default in March 1992. Under pressure from Mahmood's attorney, Ross cured the March 1992 default. However, Ross again failed to make timely payments, and in August 1992, Mahmood received another notice of default from Equitable.
¶ 9 Neither Ross nor Mahmood made any payments on the loan before the reinstatement deadline, and on December 19, 1992, Mahmood was served with a notice of trustee's sale. The trustee's sale was scheduled for January 22, 1993. Thereafter, Ross tendered the delinquent payments to Equitable, but it refused to accept the tender. Ross then tendered the delinquent payments to Mahmood, but Mahmood also refused them.
¶ 10 In January 1993, Mahmood filed a bankruptcy petition seeking a temporary restraining order to prevent the trustee's sale. He also filed this lawsuit against Ross. Because of Mahmood's bankruptcy petition, the trustee's sale scheduled for January 22, 1993, did not occur. Mahmood subsequently dismissed his bankruptcy petition. Shortly thereafter, Equitable served Mahmood with a new notice of trustee's sale set for April 29, 1993.
¶ 11 On April 28, 1993, Mahmood secured a temporary restraining order stopping the scheduled trustee's sale. On May 6, 1993, Mahmood and Equitable reached an agreement whereby Mahmood paid $18,430.35 in satisfaction of delinquent payments, penalty interest, and Equitable's reinstatement costs and attorney fees. In return, Equitable agreed to reinstate Mahmood's trust deed note and cancel the default and trustee's sale. Following this reinstatement, Mahmood made all of the monthly payments on the note. Ross did not make any further payments as required by the 1990 settlement agreement. In addition to making the monthly payments to Equitable, Mahmood attempted to market, sell, or enter into a joint venture to develop on the Woodlands property. However, these attempts failed, and on May 6, 1994, Mahmood received notice from Equitable that the balloon payment of $258,593.58 was due. On May 31, 1994, Equitable served Mahmood with a notice of default; he was served with a notice of trustee's sale ninety days later. Despite Mahmood's attempts to block the trustee's sale,1 on May 8, 1995, Equitable foreclosed on the Woodlands property.2
¶ 12 Following the sale of the Woodlands property, Mahmood amended his complaint against Ross to include a cause of action to recover his lost equity in the Woodlands property. In a grant of partial summary judgment, the trial court held that by failing to make all forty monthly payments of $1000, Ross had breached his 1990 settlement agreement with Mahmood. A jury trial on the remaining issues was held in May 1996.3
¶ 13 At the conclusion of Mahmood's case in chief, and again at the conclusion of the evidence, defendant moved for directed verdicts contending: (1) there was no evidence to sustain a finding that Ross's breach of the 1990 settlement agreement caused Mahmood to lose his equity in the Woodlands property; (2) Mahmood failed to produce evidence that Mahmood's loss of the Woodlands property was a foreseeable consequence of a breach at the time they contracted; and (3) Mahmood failed to mitigate his damages. Ross's motions were denied, and these issues were left to the jury.
¶ 14 The jury returned a verdict in favor of Mahmood, finding that (1) Ross's breach of the 1990 settlement agreement caused Mahmood damages in the amount of $6,360.99 for reinstatement of his Equitable loan in May 1993; (2) Ross's breach of the 1990 settlement agreement caused Mahmood consequential damages in the amount of $770,200 for the loss of Mahmood's equity in the Woodlands property. The jury found that Mahmood made reasonable attempts to mitigate the reinstatement costs and the loss of equity in the Woodlands property.
¶ 15 After the entry of the jury's verdict, defendant moved the court for a judgment notwithstanding the verdict ("JNOV"). She contended that she should be granted a JNOV, or in the alternative a new trial, because there was no evidence to support the jury's finding that Ross's breach had caused Mahmood direct or consequential damages in either the reinstatement costs of his Equitable loan or the loss of equity in the Woodlands property. She asserted that the evidence did not demonstrate that Mahmood had taken all reasonable steps to mitigate his damages. The motion was denied, and final orders reflecting the jury's verdict were entered. Defendant now appeals from those final orders.
¶ 16 When reviewing any challenge to a trial court's denial of a motion for directed verdict, we review "`the evidence and all reasonable inferences that may fairly be drawn therefrom in the light most favorable to the party moved against, and will sustain the denial if reasonable minds could disagree with the ground asserted for directing a verdict.'" White v. Fox, 665 P.2d 1297, 1300 (Utah 1983) (quoting Cook Assocs., Inc. v. Warnick, 664 P.2d 1161, 1165 (Utah 1983)); see also Management Comm. v. Graystone Pines, Inc., 652 P.2d 896 (Utah 1982). As "[t]his Court's standard of review of a directed verdict is the same as that imposed upon the trial court," Graystone Pines, 652 P.2d at 898, we review the trial court's decision to determine if the evidence at trial raised a question of material fact which precluded judgment as a matter of law.
¶ 17 Defendant Dorothy Ross first contends that the trial court erred in failing to grant her motion for directed verdict regarding consequential damages and mitigation of damages. Before we address this assignment of error, we must examine the law of directed verdicts.
¶ 18 "Under Utah law, a party who moves for a directed verdict has the very difficult burden of showing that no evidence exists that raises a question of material fact." Alta Health Strategies, Inc. v. CCI Mechanical Serv., 930 P.2d 280, 284 (Utah Ct.App. 1996) (citing Kleinert v. Kimball Elevator Co., 905 P.2d 297, 299 (Utah Ct.App.1995)). If there is any evidence raising a question of material fact, judgment as a...
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