Markham v. Bradley

• Citation: 2007 UT App 379,173 P.3d 865
• Decision Date: 23 November 2007
• Docket Number: No. 20061022-CA.,20061022-CA.
• Parties: Douglas J. MARKHAM and Andrea Markham, Plaintiffs and Appellees, v. John J. BRADLEY and Darby G. Bradley, Defendants and Appellants.
• Court: Court of Appeals of Utah

173 P.3d 865

2007 UT App 379

Douglas J. MARKHAM and Andrea Markham, Plaintiffs and Appellees, v. John J. BRADLEY and Darby G. Bradley, Defendants and Appellants.

No. 20061022-CA.

Court of Appeals of Utah.

November 23, 2007.

Justin D. Heideman and Justin R. Elswick, Provo, for Appellants.

Russell S. Mitchell, St. George, for Appellees.

Before Judges BILLINGS, McHUGH, and THORNE.

OPINION

McHUGH, Judge:

¶ 1 Appellants John Bradley and Darby Bradley (Sellers) appeal the trial court's judgment in favor of Appellees Douglas Markham and Andrea Markham (Buyers). After a bench trial, the trial court determined that Sellers breached the covenant of good faith and fair dealing by canceling the parties' Real Estate Purchase Contract (REPC) and ordered specific performance. We affirm.

BACKGROUND

¶ 2 This suit arises out of a disagreement over the sale of property in Dammeron Valley, located in St. George, Utah (the Property). Buyers retained real estate agents Carolyn Norton and Stuart Shumway to find properties in the Washington County area. On August 28, 2004, Norton showed the Property to Buyers. When Norton and Buyers arrived at the Property, Mr. Bradley told them that his wife, who was listed as the "owner/agent" for the Property, was out of town and that all communications regarding the Property were to be directed to him.

¶ 3 On or about August 30, 2007, Mr. Markham and Mr. Bradley orally agreed on a purchase price of $550,000, part of which would be seller-financed. Mr. Markham asked Norton to prepare the REPC, specifying that the Seller Financing Addendum (SFA) would not include a prepayment penalty. Additionally, Addendum 1 to the REPC provided that Sellers would complete construction of the home and Buyers would make a trip to St. George in mid-September to meet with Sellers to discuss unresolved details.

¶ 4 When Norton and Shumway personally delivered the REPC to Mr. Bradley, they asked how they could contact Mrs. Bradley. Mr. Bradley did not give them her contact information, instead stating that he would forward everything to Mrs. Bradley in Bellingham, Washington. He also mentioned that Mrs. Bradley was seeking a divorce.

¶ 5 Sellers made a counteroffer, which Buyers accepted. After delivering a copy of the fully executed REPC to Mr. Bradley, Norton scheduled a follow-up meeting for September 12, 2004 (the September 12 meeting). Norton selected that date because the deadline for producing Buyers' financial information to Sellers was September 13, 2004 (the September 13 deadline). Prior to the September 12 meeting, Norton had several conversations with Mr. Bradley confirming the meeting. During those discussions, Mr. Bradley asked for an extension of the contract. A few days later, when Norton delivered the extension addendum, she reconfirmed and emphasized "the critical nature of the September 12 meeting."

¶ 6 Norton instructed Buyers to "bring all [of their] financial information" to the September 12 meeting. However, Mr. Markham testified that Norton did not specifically tell him to bring a credit report. Also, Norton discovered that on September 9, the Multiple Listing Service (MLS) listing had been altered by Sellers to show a "withdrawn" status—as opposed to "pending," which is the normal practice when a property is under contract. Around 4:30 or 5:00 p.m. on September 12, Buyers and Norton went to the Property. Upon their arrival, Mr. Bradley greeted them angrily, yelling at Norton, "What in the hell are you doing here?" Mr. Bradley later testified that he did not know about the September 12 meeting. Eventually, Mr. Bradley allowed Norton and Buyers inside. When Mr. Markham entered, he removed the following documents from his briefcase: a statement from an unrelated financial transaction and bank records so he could transfer financial and other account information to a form chosen by Sellers, and a sample financial statement that Sellers could choose if they found it acceptable. Mr. Bradley refused to take, or even look at, Buyers' documentation, explaining that it was "not a good time for [him]" to discuss Buyers' financial information and that he would deal with it "in a couple of weeks." Buyers, Norton, and Shumway then left the Property.¹

¶ 7 Over the next few weeks, Norton attempted several times to schedule another meeting. Despite visiting Mr. Bradley's work sites and home, she was unable to contact Sellers. Approximately one week later, on September 20, Norton received a cancellation notice from Sellers claiming that they were "declar[ing] [the REPC] null and void" based on the fact that Buyers had failed to provide the required financial information by the September 13 deadline. When Norton called Mr. Bradley about the letter, he gave Norton Mrs. Bradley's phone number and stated that Mrs. Bradley wanted to cancel the REPC and live on the Property. When Norton called, Mrs. Bradley stated that she "never wanted to sell the Property" and would not sell it now.

¶ 8 After learning of Sellers' cancellation letter, Buyers immediately assembled their financial information, including a credit report,² and faxed it to Norton, who then forwarded it to Mrs. Bradley on September 24, 2004. Because of the rush, some of the documents were out of order, and Mr. Markham had used white-out to update an old financial statement. Norton also faxed Sellers a letter explaining that Buyers still intended to purchase Sellers' property, had obtained their own financing, and were therefore ready, willing, and able to close in accordance with the REPC.

¶ 9 Sellers received the faxed information but instructed their attorney to send another cancellation notice, which claimed that Sellers were excused from closing under the REPC due to Buyers' failure to meet the September 13 deadline and the fact that Buyers' documentation was "sloppy" and sometimes "illegible." The letter also indicated that Sellers were "concerned" with the prior bankruptcy or judgment.

¶ 10 Buyers then brought a breach of contract claim against Sellers.³ After a bench trial, the trial court entered judgment in favor of Buyers and ordered specific performance in compliance with the terms of the REPC. The trial court concluded that due to the impending divorce, Sellers changed their minds after signing the REPC. The trial court further found that Sellers prevented Buyers from meeting the September 13 deadline and rejected the subsequently provided financial information as a pretext for canceling the contract. The trial court ruled that the rejection of the financial information was objectively unreasonable, thereby breaching the covenant of good faith and fair dealing. Thus, the trial court concluded both that the subjective intent of Sellers was to create a pretext that would allow them to void the REPC and that the rejection of the financial information was objectively unreasonable. The court ordered Buyers to pay the purchase price of $550,000, less the attorney fees and costs that they had incurred.⁴

¶ 11 Sellers then filed several post-trial motions, including a motion for a new trial, which was denied. This appeal followed.

ISSUES AND STANDARDS OF REVIEW

¶ 12 First, Sellers challenge the trial court's application of an objective legal standard to the issue of whether they breached the covenant of good faith and fair dealing when they rejected the financial information provided by Buyers.⁵ We review a trial court's legal determinations for correctness, granting no deference to the trial court's conclusions of law. See State v. Deli, 861 P.2d 431, 433 (Utah 1993); Standard Fed. Sav. & Loan Ass'n v. Kirkbride, 821 P.2d 1136, 1137 (Utah 1991).

¶ 13 Second, Sellers seek review of the trial court's denial of their motions for a directed verdict and new trial on the ground that "the trial court's specific factual findings . . . are insufficient to support the legal conclusion that [Sellers'] decision to not loan money to [Buyers] breached the covenant of good faith and fair dealing." Under the Utah Rules of Civil Procedure, a motion for a directed verdict submitted during a bench trial is treated as a motion for involuntary dismissal. See Utah R. Civ. P. 41(b), 50(a); In re Trujillo, 2001 UT 38, ¶ 21 n. 13, 24 P.3d 972 ("[A] motion for a directed verdict contemplates only jury trials. In the context of a bench trial, the directed verdict's procedural counterpart is a motion for involuntary dismissal under rule 41(b) . . . ." (citation omitted)). When reviewing the denial of a motion for involuntary dismissal, an appellate court should defer to the trial court's findings and inferences under a clearly erroneous standard and review the trial court's conclusions of law for correctness. See Southern Title Guar. Co. v. Bethers, 761 P.2d 951, 954 (Utah Ct.App.1988) (citing State v. Walker, 743 P.2d 191, 193 (Utah 1987); Wessel v. Erickson Landscaping Co., 711 P.2d 250, 253 (Utah 1985)).⁶

¶ 14 Sellers also appeal the trial court's denial of their motion for a new trial. Generally, "[a] trial court has discretion in determining whether to grant or deny a motion for a new trial, and [appellate courts] will not reverse a trial court's decision absent clear abuse of that discretion." State v. Harmon, 956 P.2d 262, 266 (Utah 1998) (citing State v. Wetzel, 868 P.2d 64, 70 (Utah 1993); State v. Thomas, 830 P.2d 243, 245 (Utah 1992)); see also Mann v. Fredrickson, 2006 UT App 475, ¶ 5, 153 P.3d 768 ("Generally, [a] large measure of discretion is vested in the trial court in refusing or granting a motion for new trial on the ground that there is an insufficiency of the evidence to support the verdict and judgment. We give such discretion to the trial court because of its superior position to evaluate first-hand the witnesses' testimony and other evidence presented at trial." (alteration in original) (internal quotation marks and citation omitted)); Okelberry v. West Daniels Land Ass'n, 2005 UT App 327, ¶ 20 n. 14, 120 P.3d 34 (using abuse of...