Richardson v. Hart

• Decision Date: 24 December 2009
• Docket Number: No. 20080948-CA.,20080948-CA.
• Citation: Richardson v. Hart, 223 P.3d 484, 2009 UT App 387 (Utah App. 2009)
• Parties: David RICHARDSON, Plaintiff and Appellee, v. Cathleen HART, Defendant and Appellant.
• Court: Utah Court of Appeals

223 P.3d 484

2009 UT App 387

David RICHARDSON, Plaintiff and Appellee, v.Cathleen HART, Defendant and Appellant.

No. 20080948-CA.

Court of Appeals of Utah.

December 24, 2009.

Frank S. Warner, Ogden, for Appellant.

Stephen F. Noel, Ogden, for Appellee.

Before Judges BENCH, THORNE, and McHUGH.

OPINION

McHUGH, Judge:

¶ 1Cathleen Hart appeals from the trial court's judgment in favor of David Richardson, which terminated Hart's lease and option to purchase a condominium owned by Richardson.Hart contends that the trial court erred in finding that the option to purchase expired at the end of the initial term of the lease.We reverse and remand.

BACKGROUND

¶ 2 The relevant facts in this case are largely undisputed.On February 22, 2003, Hart and Richardson entered into a "Residential Lease/Purchase Agreement"(the Agreement), giving Hart both the right to lease a condominium that Richardson owned in Eden, Utah (the Property), and an option to purchase the Property (the Purchase Option).¹Under the Agreement, Hart was to receive a credit of $200 from every rent payment toward the purchase price if she exercised the Purchase Option.The Agreement had a fixed term of twelve months, which Hart could extend for an additional six months by giving Richardson written notice.After the fixed term expired, the Agreement would continue on a month-to-month basis if Richardson accepted rent.

¶ 3 When the initial twelve-month term expired in early 2004,² Hart continued to pay rent and the Agreement continued on a month-to-month basis.Both during the fixed term of the Agreement and thereafter, most of Hart's rent payments were late, sometimes by as much as several months.When Hart's payments were late, she received regular late notices from Escrow Specialists, the company Richardson employed to collect Hart's monthly payments.Upon payment, Hart received a receipt showing the amount of any past due rent and delinquent late fees, as well as an accounting of the portion of her payment that would be credited towards principal if she exercised the Purchase Option.Despite the late payments, Richardson continued to accept Hart's rent and Hart remained in possession of the Property.

¶ 4 On July 27, 2005, more than a year after the fixed term of the Agreement expired, and with Hart owing $5065.50 in back rent and late fees, Richardson served Hart with a "Three Day Notice To Pay Or Quit."Two days later, Hart paid the $5065.50 in back rent and late fees, sought to extend the Agreement for an additional six months,³ and gave Richardson written notice that she intended to exercise the Purchase Option, but Hart did not tender the purchase price at that time.⁴Richardson refused to sell the Property to Hart, stating that the Purchase Option had expired.On August 1, 2005, Richardson served Hart with a notice requiring her to vacate the Property within thirty days.Hart continued to assert her right to exercise the Purchase Option and refused to leave the Property.

¶ 5 Richardson and Hart each brought suit.Richardson alleged that Hart was in unlawful detainer of the Property, while Hart claimed that she retained a valid option to purchase it.The trial court consolidated the two cases and held a one-day bench trial.After hearing testimony from the parties and their witnesses, the trial court ruled in favor of Richardson, holding that under the unambiguous terms of the Agreement, "the lease term ... terminated along with the option one year [after the parties entered into the Agreement]."The trial court further concluded, "Because [Hart] failed to timely exercise [the Purchase O]ption pursuant to the terms of the Agreement, [Hart] is without a right to purchase the [P]roperty."The trial court ordered Hart to vacate the Property by August 1, 2008, to pay Richardson rent through that date, and to pay $14,388.87 "as compensation for [Richardson]'s attorney[] fees and costs."⁵Although Richardson also argued that the Purchase Option terminated as a result of Hart's late rent payments, the trial court did not make findings of fact or conclusions of law on that claim, nor did the trial court make any findings of fact regarding Hart's argument that Richardson failed to comply with the Agreement's notice provisions.Hart appeals from the judgment of the trial court.

ISSUES AND STANDARDS OF REVIEW

¶ 6 Hart argues that the trial court"failed to correctly interpret the plain meaning of the language of the [A]greement" when it held that the Purchase Option terminated at the conclusion of the fixed twelve-month term of the Agreement."We review a district court's interpretation of a written contract for correctness, granting no deference to the court below."Café Rio, Inc. v. Larkin-Gifford-Overton, LLC,2009 UT 27, ¶ 21, 207 P.3d 1235.

¶ 7 In addition to his contention that the trial court correctly interpreted the Agreement, Richardson urges us to affirm the trial court's ruling based on the alternate grounds that Hart's late payments terminated her right to exercise the Purchase Option and that Hart never actually exercised the Purchase Option because she failed to tender payment in full when she told Richardson that she intended to exercise it."[A]n appellate court may affirm the judgment appealed from if it is sustainable on any legal ground or theory apparent on the record,"Bailey v. Bayles,2002 UT 58, ¶ 13, 52 P.3d 1158(internal quotation marks omitted), and "the facts as found by the trial court are sufficient to sustain the decision of the trial court on the alternate ground,"id.¶ 20.

ANALYSIS

I.The Agreement Is Ambiguous with Respect to the Termination of the Purchase Option.

¶ 8We begin our analysis by first determining whether the meaning of the Agreement is apparent from the document itself or whether the contract is ambiguous.SeeGreen River Canal Co. v. Thayn,2003 UT 50, ¶ 17, 84 P.3d 1134("When interpreting a contract, we look to the writing itself to ascertain the parties' intentions....If the language within the four corners of the contract is unambiguous, the parties' intentions are determined from the plain meaning of the contractual language, and the contract may be interpreted as a matter of law."(citation and internal quotation marks omitted))."[A]mbiguity exists in a contract term or provision if it is capable of more than one reasonable interpretation because of uncertain meanings of terms, missing terms, or other facial deficiencies."Café Rio,2009 UT 27, ¶ 25, 207 P.3d 1235(internal quotation marks omitted).

¶ 9 Hart argues that the trial court was correct in finding that the Agreement was unambiguous but that the trial court erred when it found that the Purchase Option expired at the conclusion of the fixed twelve-month term.Instead, Hart maintains that "[t]he correct interpretation of the [A]greement is one which results in the [Purchase O]ption provisions surviving beyond the fixed term of the [A]greement."Hart points to several aspects of the Agreement that she maintains support her interpretation.Hart first contends that the title of the Agreement, which reads "RESIDENTIAL LEASE PURCHASE AGREEMENT," and the designation of the parties in the Agreement as "Seller/Landlord" and "Tenant/Buyer""impl[y] that the [A]greement is something different than a traditional lease containing a separate option provision."Hart next relies on the Agreement's provision that upon expiration of the fixed term, "this [A]greement shall become a month to month agreement if [Richardson] accept[s] rent from [Hart]."Rather than limiting continuation to the lease only, Hart notes that this provision extends the entire Agreement, which, she contends, includes the Purchase Option.

¶ 10 Hart further maintains that the Agreement's provisions relating to the exercise, default, and forfeiture of the Purchase Option also indicate that the Purchase Option continued beyond the fixed term.These provisions state as follows:

37.Option to Purchase:

(a)[Richardson] grants to [Hart], the right to purchase [the P]roperty conditioned upon full compliance by [Hart] with all terms of this Agreement.

(b)[Richardson] agrees that upon exercise of the option [Hart] shall be credited at close of escrow with $200.00 from each monthly rental payment.

....

41.Exercise of Option:

(a) The option may be exercised by [Hart], as long as [Hart] is not in default of the terms and conditions of this Agreement.

(b) To exercise the option, [Hart] should mail a written certified signed receipt of notice to [Richardson].

....

49.Default: The occurrence of the following shall constitute a material default and breach of Contract by [Hart].Any failure by [Hart] to pay rent on time or perform any provisions of this lease to be performed by [Hart] where such a failure continues thirty (30) days after written notice thereof by [Richardson] will constitute a material breach of this contract and forfeit the option to purchase.In addition, the term of this contract will immediately become month to month.

According to Hart, the absence of any language stating that the Purchase Option would expire at the end of the fixed term indicates that the parties intended the Purchase Option to continue.Thus, Hart claims she had the right to exercise the Purchase Option "as long as [she was] not in default of the terms and conditions of th[e] Agreement," and that Richardson was required to give her thirty days notice and an opportunity to cure before she could be found in default, thereby justifying termination of the Agreement.

¶ 11 In response, Richardson argues that the Purchase Option "runs parallel with, but independent of, the lease," and that, as the trial court held, the Purchase Option expired at the conclusion of the fixed term.In support of his argument, Richardson contends that the Agreement had "no express terms requiring or even suggesting that the [Purchase] Option should survive indefinitely during a month-to-month tenancy."...