Moss v. Parr Waddoups Brown Gee & Loveless

• Decision Date: 06 November 2008
• Docket Number: No. 20070826-CA.,20070826-CA.
• Citation: 2008 UT App 405,197 P.3d 659
• Court: Utah Court of Appeals
• Parties: Susan I. MOSS and Jamal S. Yanaki, Plaintiffs and Appellees, v. PARR WADDOUPS BROWN GEE & LOVELESS, Clark Waddoups, Jonathan O. Hafen, Justin P. Matkin, and John Does I-XX, Defendants and Appellants.

197 P.3d 659

2008 UT App 405

Susan I. MOSS and Jamal S. Yanaki, Plaintiffs and Appellees, v. PARR WADDOUPS BROWN GEE & LOVELESS, Clark Waddoups, Jonathan O. Hafen, Justin P. Matkin, and John Does I-XX, Defendants and Appellants.

No. 20070826-CA.

Court of Appeals of Utah.

November 6, 2008.

Alan L. Sullivan, James D. Gardner, and Katherine Carreau, Salt Lake City, for Appellants.

David W. Scofield and R. Reed Pruyn Goldstein, Salt Lake City, for Appellees.

Before Judges GREENWOOD, THORNE, and BENCH.

OPINION

BENCH, Judge:

¶ 1 Defendants Parr Waddoups Brown Gee & Loveless, Clark Waddoups, Jonathan O. Hafen, and Justin P. Matkin brought this interlocutory appeal to challenge the trial court's denial of their motion for partial summary judgment on a claim brought by Plaintiffs Susan I. Moss and Jamal S. Yanaki for breach of an oral settlement agreement. Defendants contend that the trial court erred in determining that a mediation confidentiality agreement (the Confidentiality Agreement), which was signed by all parties to the present suit except Moss, is ambiguous and that it does not prohibit Plaintiffs from introducing into evidence statements made in the course of the mediation. We conclude that the Confidentiality Agreement is not facially ambiguous and that it prohibits its signatories from disclosing the contents of the mediation. Furthermore, because the testimony of the only nonsignatory to the Confidentiality Agreement—Moss—contained inadmissible hearsay, Plaintiffs' claim of breach of oral settlement agreement fails as a matter of law. Accordingly, we reverse and remand for entry of partial summary judgment.

BACKGROUND

¶ 2 In 2002, Defendants represented Iomed, Inc. (Iomed) in an action against Yanaki (the Iomed case) for misappropriation of proprietary information and violation of a noncompetition agreement. On behalf of Iomed, Defendants sought two ex parte discovery orders that authorized the seizure of certain electronically stored data and other records maintained at the home of Yanaki and his wife, Moss. The state district court granted the orders, which directed law enforcement officers to take custody of these records with the assistance of Iomed. Subsequently, Plaintiffs filed suit against Defendants and others in federal district court, alleging violations of their civil rights resulting from the seizure of records from their home (the federal civil rights case).

¶ 3 In December 2003, several months after Plaintiffs brought the federal civil rights case, the parties to the Iomed case held a mediation in California. Immediately before the mediation began, the parties and their counsel—including Yanaki and Defendants— signed a Confidentiality Agreement. The Confidentiality Agreement provided in part:

All statements made during the course of the mediation or in mediator follow-up thereafter at any time prior to a complete settlement of this matter are privileged settlement discussions, are made without prejudice to any party's legal position, and are non-discoverable and inadmissible for any purpose in any legal proceeding.

The Confidentiality Agreement further stated that "[n]o aspect of the mediation shall be relied upon or introduced into any arbitral, judicial, or other proceeding." Although it was not exhaustive, the Confidentiality Agreement included a list of three specific mediation communications that could not be introduced in another proceeding: "(a) [v]iews expressed or suggestions made with respect to a possible settlement of the dispute; (b) [a]dmissions made in the course of the mediation proceedings; and (c) [p]roposals made or views expressed by the mediator or the response of any party." Finally, the Confidentiality Agreement stated:

The mediator shall not be compelled to disclose or to testify in any proceeding as to (i) any records, reports, or other documents received or prepared by the mediator or (ii) information disclosed or representations made in the course of the mediation or otherwise communicated by or to the mediator in confidence.

¶ 4 The California mediation lasted one day, but no written settlement agreement resulted from it. Ultimately, the parties in the Iomed case executed a settlement agreement in August 2005. In the meantime, the federal district court dismissed the federal civil rights case on jurisdictional grounds. See Yanaki v. Iomed, Inc., 319 F.Supp.2d 1261 (D.Utah 2004), aff'd, 415 F.3d 1204 (10th Cir.2005).

¶ 5 In December 2005, Plaintiffs filed this suit in state court against Defendants for, among other claims, breach of contract.¹ Plaintiffs alleged that they had reached an oral agreement with Defendants to settle the federal civil rights case during the California mediation and that Defendants had breached this agreement by failing to pay them a large sum.

¶ 6 Defendants moved for partial summary judgment on the breach of contract claim, arguing that it was barred by (1) the Confidentiality Agreement executed at the California mediation, (2) California's statutory mediation privilege, and (3) Utah's statutory mediation privilege. More specifically, Defendants argued that all of the potential witnesses to the alleged oral agreement, including the mediator and Yanaki, were contractually and statutorily prohibited from testifying about events or statements made at the mediation. In the absence of such testimony, Defendants asserted, Plaintiffs could not prove their breach of contract claim.

¶ 7 In response, Plaintiffs argued that the Confidentiality Agreement was ambiguous or had been waived. Plaintiffs claimed that the signatories to the Confidentiality Agreement intended only to prohibit future disclosure of statements made during the mediation regarding the settlement of the Iomed case and not to prevent disclosure of statements made regarding the settlement of the federal civil rights case. To support their argument, Plaintiffs presented the trial court with affidavits from Moss, Yanaki, and one of the lawyers who attended the California mediation. In these affidavits, Moss, Yanaki, and the lawyer disclosed the purported contents of the mediation that related to the settlement of the federal civil rights case. The gist of these disclosures was that, during the California mediation, the parties to the Iomed case decided to try to settle the federal civil rights case along with the Iomed case. Plaintiffs allege that the parties agreed that Yanaki, Yanaki's attorney,² and the mediator could telephone Moss—who was not a party to the Iomed case, had not originally been invited to the mediation, and had not signed the Confidentiality Agreement—to ask her to make a settlement offer to resolve her claims against Defendants. In her affidavit, Moss describes statements made by Yanaki, her attorney, and the mediator regarding the potential settlement of the federal civil rights case and the position of Defendants with respect to that settlement. Moss testified that she authorized her attorney to make a settlement offer on her behalf and that she understood that Defendants accepted the offer.

¶ 8 Defendants moved to strike several paragraphs in the affidavits submitted by Plaintiffs. With respect to Moss's affidavit, Defendants argued that many of her statements either lacked foundation or contained inadmissible hearsay. In particular, Defendants asserted that Moss's statement that she understood that Defendants had accepted her settlement offer constituted inadmissible double hearsay. In response, Plaintiffs argued that Defendants' acceptance of the offer was not hearsay because it was a verbal act and that the mediator's statement reporting Defendants' acceptance was not hearsay because it was an admission by a party-opponent given by the party's duly-authorized agent, the mediator.

¶ 9 Following a hearing, the trial court denied Defendants' motion for partial summary judgment and stated: "After reviewing the record in this matter, giving particular attention to the Confidentiality Agreement at issue, the Court finds such is ambiguous with respect to its scope. Accordingly, extrinsic evidence must be considered and in this case, this evidence is greatly in dispute." The court declined to address the other disputed legal issues, such as waiver or applicability of California and Utah statutory privileges, "until the issues regarding the Confidentiality Agreement are resolved." The court also denied Defendants' motion to strike and explained its ruling by stating: "After reviewing the affidavits in question, this Court is persuaded [that] adequate foundation has been laid, that the statements are admissible under the circumstances, and that they are not offered for their truth or are subject to an exception to the hearsay rule."³ We subsequently granted Defendants' petition for interlocutory appeal.

ISSUES AND STANDARDS OF REVIEW

¶ 10 "An appellate court reviews a trial court's legal conclusions and ultimate grant or denial of summary judgment for correctness ... and views the facts and all reasonable inferences drawn therefrom in the light most favorable to the nonmoving party." Orvis v. Johnson, 2008 UT 2, ¶ 6, 177 P.3d 600 (citation and internal quotation marks omitted). "[W]hether a contract is ambiguous is a question of law reviewed for correctness." Tangren Family Trust v. Tangren, 2008 UT 20, ¶ 10, 182 P.3d 326; see also Daines v. Vincent, 2008 UT 51, ¶ 25, 190 P.3d 1269 (stating that the issue of whether a contract is facially ambiguous "presents a question of law to be determined by the judge").

¶ 11 "`The appropriate standard of review of a trial court's decision admitting or excluding evidence under rules 802 and 803 [of the Utah Rules of Evidence] depends on the particular ruling in dispute.'" TWN, Inc. v. Michel, 2006 UT App 70, ¶ 9, 131 P.3d 882 (quoting Hansen v. Heath, 852 P.2d 977, 978 (Utah 1993)). Although we generally "review a district court's ruling on the admissibility of evidence for an abuse of discretion," whe...