Palmer v. Hayes, 940416-CA

Citation892 P.2d 1059
Decision Date24 March 1995
Docket NumberNo. 940416-CA,940416-CA
PartiesKenneth F. PALMER, Jr., and Rebecca A. Palmer, husband and wife, Plaintiffs and Appellants and Cross-Appellees, v. Edward HAYES and Stephanie Hayes, husband and wife; Maple Hills Realty, a Utah corporation; Ronald L. Marshall; Tom Baker; and Carol D. Edgmon, Defendants and Appellees and Cross-Appellants.
CourtCourt of Appeals of Utah

Before BENCH, GARFF, 1 and JACKSON, JJ.

OPINION

BENCH, Judge:

Kenneth and Rebecca Palmer (the Palmers) appeal the trial court's grant of summary judgment in favor of Edward and Stephanie Hayes (the Hayeses). The Hayeses cross appeal from the trial court's denial of their request for attorney fees. We affirm.

FACTS

The Palmers offered their house for sale through Maple Hills Realty. On December 7, 1992, the Hayeses, also represented by Maple Hills Realty, entered into an Earnest Money Sales Agreement (Agreement) with the Palmers. The Hayeses gave Maple Hills Realty $2000 as an Earnest Money Deposit pursuant to the Agreement.

In January 1993, the Hayeses rescinded their offer. Maple Hills Realty sent the Hayeses a form that would release back to them the Earnest Money Deposit, and that would also release Maple Hills Realty from any claims of liability against the brokerage. Mr. Hayes, asserting that only the parties could put any conditions on the release of the deposit, refused to sign the release. In a letter dated February 8, 1993, the Hayeses informed Maple Hills either to return the deposit to them, or to inform them of any claim the Palmers had against the deposit. The Palmers' attorney, Michael D. Blackburn, wrote a letter to Maple Hills Realty on March 8, 1993, stating in pertinent part:

We have been informed that you retain a $2,000.00 earnest money deposit in your trust account. We also understand that Mr. and Mrs. Hayes have requested a refund of this deposit. Demand is hereby made that this money not be removed from the trust account for any reason without the prior written permission of Kenneth F. and Rebecca A. Palmer.

Several months later, the Palmers filed suit seeking damages, alleging that the Hayeses had defaulted on the Agreement. The Hayeses moved for summary judgment on the ground that, by not releasing the Earnest Money Deposit, the Palmers had elected the remedy of liquidated damages. The Hayeses also sought attorney fees under the Agreement. The trial court granted summary judgment in favor of the Hayeses but denied their claim for attorney fees.

ISSUES

The issues before this court are: 1) did the Palmers' failure to release the Earnest Money Deposit to the Hayeses before commencing their action for damages constitute, as a matter of law, an election of the remedy of liquidated damages; and 2) did the trial court properly determine that the Hayeses were not entitled to an award of attorney fees.

STANDARD OF REVIEW

In appeals from summary judgment, we review the facts in a light most favorable to the nonprevailing party. Ron Case Roofing & Asphalt Paving, Inc. v. Blomquist, 773 P.2d 1382, 1386 (Utah 1989). We review summary judgments under the "correctness" standard, affording the trial court's legal conclusions no deference. Neiderhauser Builders & Dev. Corp. v. Campbell, 824 P.2d 1193, 1196 (Utah App.1992).

ANALYSIS
Earnest Money Deposit

The Agreement that the Hayeses and the Palmers signed is a standardized form approved by the Utah Real Estate Commission, which provides that "[in] the event of default by buyer, seller may elect to either retain the earnest money as liquidated damages, or to institute suit to enforce any rights of seller." The law concerning election of remedies for breach of an Earnest Money Security Agreement is clearly stated in a series of supreme court decisions beginning with Andreasen v. Hansen, 8 Utah 2d 370, 335 P.2d 404 (1959).

The facts in Andreasen are similar to those in the present case. In Andreasen, the defendants signed an "Earnest Money Receipt and Offer to Purchase" and deposited $50 with the realty company that represented the plaintiffs. The defendants later rescinded their offer. Language in the Earnest Money Receipt and Offer to Purchase provided that

[i]n the event the purchaser fails to pay the balance of the said purchase price or complete said purchase as herein provided, the amounts paid hereon shall, at the option of the seller, be retained as liquidated and agreed damages.

335 P.2d at 406 (emphasis omitted). The plaintiffs "did not exercise their option to forfeit the defendants' $50 deposit ... [and] there was no return nor tender of return of the money." Id. at 408. The supreme court concluded that the plaintiffs could not sue for damages because the failure to tender the earnest money back to the defendants constituted "incontrovertible evidence that the plaintiffs exercised the option to keep it." Id. The supreme court held that the plaintiffs "must be deemed to have kept it for the purpose indicated in the contract, that is, as liquidated damages." Id. Andreasen therefore stands for the proposition that a seller's failure to offer to return earnest money deposits precludes the seller from pursuing other remedies. See also Dowding v. Land Funding Ltd., 555 P.2d 957, 957 (Utah 1976) (holding that because neither seller nor his agent offered to return deposit, seller's damages were limited to the deposit amount); Close v. Blumenthal, 11 Utah 2d 51, 53, 354 P.2d 856, 857 (1960) (holding sellers that did not offer to return deposit opted for liquidated damages and were precluded from seeking specific performance); McMullin v. Shimmin, 10 Utah 2d 142, 144-45, 349 P.2d 720, 721 (1960) (same).

The Palmers contend that the holdings in the Andreasen line of cases are inconsistent with the election of remedies doctrine defined in Angelos v. First Interstate Bank of Utah, 671 P.2d 772, 778 (Utah 1983). Angelos defined election of remedies as a

technical rule of procedure and its purpose is not to prevent recourse to any remedy but to prevent double redress for a single wrong. Said doctrine presupposes a choice between inconsistent remedies, and knowledgeable selection of one thereof, free of fraud or imposition, and a resort to the chosen remedy evincing a purpose to forego all others.

671 P.2d at 778 (quoting Royal Resources, Inc. v. Gibralter Fin. Corp., 603 P.2d 793, 796 (Utah 1979) (footnote omitted)).

Contrary to the Palmers' contention, the Andreasen line of cases does not conflict with Angelos. The Andreasen line does not dispute the fact that election of remedies is a procedural rule; the cases simply define the procedure for electing remedies. The cases uniformly hold that before a seller may pursue a remedy other than liquidated damages, the seller must release any claim to the deposit money. Andreasen, 335 P.2d at 408; Dowding, 555 P.2d at 957; Close, 354 P.2d at 857; McMullin, 349 P.2d at 721.

The Palmers further contend that the supreme court's holdings in Andreasen and its progeny are not dispositive in this case because the rules governing escrow accounts and agency responsibilities have changed. The Regulations of the Utah Real Estate Commission regarding release of deposits merely provide, however, that "funds may be disbursed by the principal broker only if a written release is obtained from the parties not receiving the funds." See Utah Admin.R. 162-4.2.7.3 (1994). The Palmers therefore needed only to indicate to Maple Hills Realty, in writing, that they released the deposit money to the Hayeses. Then they could have proceeded with their suit for damages. There is nothing in the record to indicate that they ever released the deposit. To the contrary, the record...

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10 cases
  • Selvig v. Blockbuster Enters., LC
    • United States
    • Supreme Court of Utah
    • 27 September 2011
    ...had a duty to release her interest in the earnest money deposit to the buyer before filing suit for damages); Palmer v. Hayes, 892 P.2d 1059, 1061–62 (Utah Ct.App.1995) (noting sellers had “an affirmative duty to release their interest in the deposit money to the [buyers] before they filed ......
  • Atcitty By and Through Atcitty v. Board of Educ. of San Juan County School Dist.
    • United States
    • Court of Appeals of Utah
    • 5 November 1998
    ..." 'In appeals from summary judgment, we review the facts in a light most favorable to the nonprevailing party.' " Palmer v. Hayes, 892 P.2d 1059, 1061 (Utah Ct.App.1995) (quoting Ron Case Roofing & Asphalt Paving, Inc. v. Blomquist, 773 P.2d 1382, 1386 (Utah On May 4, 1996, appellant, a stu......
  • Chase v. Scott
    • United States
    • Court of Appeals of Utah
    • 20 December 2001
    ...abrogation clause was not a default and contractual provision for attorney fees was only triggered by default); Palmer v. Hayes, 892 P.2d 1059, 1062-63 (Utah Ct.App.1995) (holding that dispute over whether sellers had elected their remedy was not one of default, which was contractually requ......
  • Selvig v. Blockbuster Enter. LC, 20090494
    • United States
    • Supreme Court of Utah
    • 19 July 2011
    ...seller had a duty to release her interest in the earnest money deposit to the buyer before filing suit for damages); Palmer v. Hayes, 892 P.2d 1059, 1061-62 (Utah Ct. App. 1995) (noting sellers had "an affirmative duty to release their interest in the deposit money to the [buyers] before th......
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