PC Crane Serv., LLC v. McQueen Masonry, Inc.

Decision Date01 March 2012
Docket NumberNo. 20090791–CA.,20090791–CA.
Citation2012 UT App 61,273 P.3d 396,703 Utah Adv. Rep. 22
PartiesPC CRANE SERVICE, LLC, a Utah limited liability company; Lacy, LLC, a Utah limited liability company; David Paul Belcher, Vernon Belcher, and Paul David Belcher, individuals, Plaintiffs, Appellees, and Cross-appellants, v. McQUEEN MASONRY, INC., a Utah corporation; Central Equipment, LC, a Utah limited liability company; McQueen Crane Services, LC, a Utah limited liability company; and James McQueen, an individual, Defendants, Appellants, and Cross-appellees.
CourtUtah Court of Appeals


Bruce A. Maak, Salt Lake City, for Appellants and Cross-appellees.

Matthew C. Barneck and Paul P. Burghardt, Salt Lake City, for Appellees and Cross-appellants.

Before Judges VOROS, THORNE, and ROTH.


ROTH, Judge:

¶ 1 McQueen Masonry, Inc.; Central Equipment, LC; McQueen Crane Services, LC; and James McQueen (collectively, McQueen) appeal two orders of the district court. First, McQueen contends that the district court erred in denying its motions for attorney fees and costs. Second, it argues that the district court's order that PC Crane Service, LLC; Lacy, LLC; David Paul Belcher; Vernon Belcher; and Paul David Belcher (collectively, PC Crane) pay $7475 in sanctions for discovery abuse was inadequate. PC Crane cross-appeals the entry of sanctions against it, asserting that the district court failed to make a finding that sanctions were warranted and that the record itself does not support the entry of sanctions. PC Crane also asserts that the district court erred in awarding McQueen its deposition costs both because there were alternative means of collecting the information and because the depositions were not used at trial. We affirm the denial of attorney fees and the award of deposition costs but remand for reconsideration of the sanctions award in accordance with this opinion.


¶ 2 This appeal stems from a dispute over the purchase of goodwill associated with four construction cranes. In October 2004 and spring 2005, PC Crane, a company owned by the Belchers, entered into agreements with McQueen to purchase the four cranes and their associated goodwill (the purchase agreements). Goodwill is generally defined as [a] business's reputation, patronage, and other intangible assets that are considered when appraising the business.” Black's Law Dictionary 763 (9th ed. 2009). The most valuable component of the goodwill here was the customer base. Maintaining the customer base required the continued association of Lon Stam, a well-known and successful crane broker who had negotiated the crane-hire operations for McQueen, to attract business for PC Crane after the cranes' change in ownership. In conjunction with the purchase agreements, PC Crane executed two promissory notes, one in the amount of $228,800 and a second in the amount of $132,600, to pay the cost of the goodwill (the goodwill notes).1 Each goodwill note provided for monthly installment payments to be paid over a three-year period, followed by a lump sum payment of the balance. Both notes were secured by a deed of trust to real property owned by Lacy, LLC and were personally guaranteed by Lacy, LLC; David Belcher; and Vernon Belcher (collectively, Guarantors).

¶ 3 PC Crane filed this lawsuit in September 2006. In the complaint, PC Crane asserted that McQueen failed to deliver the goodwill contemplated in the purchase agreements. As a consequence, PC Crane sought to recover payments made under the goodwill notes and to terminate its continuing obligations under the notes and the purchase agreements. During the course of the litigation, PC Crane continued to make timely payments under the goodwill notes until October 2007, when the lump sum payment of $123,379.74 required by the first note came due. In November 2007, however, the parties entered into a stipulation under which PC Crane agreed to continue paying its monthly installments on the second goodwill note and McQueen agreed that the lump sum payments due under both notes would be deferred until final resolution of this case. As part of the stipulation, McQueen also agreed “to stay any action to ... enforce, collect, or otherwise declare [PC Crane] ... in default of [its] obligations under the [goodwill n]ote[s] while the litigation was pending. On August 27, 2008, approximately two months prior to trial, PC Crane paid in full the remaining balance on both notes.2 A jury eventually resolved all of the claims in McQueen's favor, and neither party challenges the jury verdict on appeal. Rather, the parties are concerned with the district court's orders on post-trial motions for attorney fees, sanctions, and deposition costs.

¶ 4 Following the jury trial, McQueen moved to disqualify Judge L.A. Dever, who had presided over the case to that date. Judge Dever granted the motion, and the case was reassigned to Judge Robin W. Reese. Judge Reese's only role in the litigation was to decide McQueen's post-trial motions, which included two motions for attorney fees under the contracts; its second motion for discovery-related sanctions, which had been filed before trial but never resolved; and its motion for costs. Judge Reese denied the motions for attorney fees because he concluded that a precondition to the collection of attorney fees—a default—had never occurred under the terms of any of the documents. McQueen's second motion for sanctions asked the court to award sanctions against PC Crane for conduct during discovery that had formed the subject of McQueen's first motion for sanctions, which Judge Dever did not grant because, “at th[e] time,” neither party's conduct appeared to warrant sanctions, and for subsequent pretrial conduct. McQueen characterized Judge Dever's earlier refusal to award sanctions “at this time” as a deferral of a final decision on the sanctions issue pending further proceedings, but Judge Reese concluded that Judge Dever had denied McQueen's previous request for sanctions, and he declined to disturb that decision. However, Judge Reese awarded sanctions against PC Crane for its subsequent conduct, based on his determination that in response to McQueen's repeated requests for relevant information, PC Crane took an “inconsistent[ ] position on an issue that was central to McQueen's defense and stymied the discovery of information that should have been revealed much earlier in the discovery process. Therefore, he awarded McQueen its fees incurred in bringing the second sanctions motion—$7475. Finally, Judge Reese allowed McQueen to recover certain deposition expenses as costs under rule 54(d) of the Utah Rules of Civil Procedure.

¶ 5 On appeal, McQueen asserts that Judge Reese erred in denying its motions for contractual attorney fees and that the sanctions award did not adequately compensate it for the tens of thousands of dollars it spent combating PC Crane's discovery abuse. PC Crane challenges the sanctions award as unsupported both because Judge Reese failed to make a finding that PC Crane's behavior in fact warranted sanctions and because the record demonstrates that its behavior was not sanctionable. PC Crane also cross-appeals the award of deposition costs, arguing that the award was unwarranted because the depositions were unnecessary and were not used during trial.


¶ 6 McQueen appeals the denial of its request for attorney fees, arguing that it is entitled to attorney fees under the goodwill notes, the deed of trust, and the guaranty. We review the denial of an award of attorney fees as a matter of law for correctness. See EDSA/Cloward, LLC v. Klibanoff, 2008 UT App 284, ¶ 8, 192 P.3d 296. Because we are reviewing the denial of fees under contract, we must also review the district court's interpretation of the contract language for correctness. See Encon Utah, LLC v. Fluor Ames Kraemer, LLC, 2009 UT 7, ¶ 11, 210 P.3d 263.

¶ 7 Both parties challenge the district court's award of $7475 in discovery sanctions. When reviewing the imposition of sanctions under rules 37 and 26 of the Utah Rules of Civil Procedure, appellate courts first consider whether “the district court has made a factual finding that the party's behavior merits sanctions.” Kilpatrick v. Bullough Abatement, Inc., 2008 UT 82, ¶ 23, 199 P.3d 957 (considering when rule 37 sanctions may be imposed); see also Utah R. Civ. P. 26(g) (requiring sanctions if the court finds that a certification upon a discovery response is made in violation of the rule). We will uphold any such finding unless it is clearly erroneous. See Chen v. Stewart, 2004 UT 82, ¶ 19, 100 P.3d 1177. If such a finding has been made, we will not disturb the amount of the sanction unless “abuse of discretion [is] clearly shown.” See Kilpatrick, 2008 UT 82, ¶ 23, 199 P.3d 957 (alteration in original) (emphasis omitted) (internal quotation marks omitted) (discussing rule 37); accord Bodell Constr. Co. v. Robbins, 2009 UT 52, ¶ 35, 215 P.3d 933 (discussing rule 26). “An abuse of discretion may be demonstrated by showing that the district court relied on ‘an erroneous conclusion of law’ or that there was ‘no evidentiary basis for the trial court's ruling.’ Kilpatrick, 2008 UT 82, ¶ 23, 199 P.3d 957 (quoting Morton v. Continental Baking Co., 938 P.2d 271, 274 (Utah 1997)).

¶ 8 Finally, PC Crane challenges the award of deposition costs to McQueen. We review the district court's decision awarding costs to the prevailing party for abuse of discretion. See Giusti v. Sterling Wentworth Corp., 2009 UT 2, ¶¶ 78, 84, 201 P.3d 966.

I. Attorney Fees

¶ 9 McQueen argues that the district court improperly denied its requests for attorney fees. In Utah, a district court generally may not award attorney fees unless provided for by contract or statute. See IHC Health Servs., Inc. v. D & K Mgmt., Inc., 2008 UT 73, ¶ 39, 196 P.3d 588. When awarded pursuant to a contract, attorney fees are “allowed only in accordance with the terms of the...

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