Ron Case Roofing and Asphalt Paving, Inc. v. Blomquist

• Decision Date: 11 May 1989
• Docket Number: No. 19748,19748
• Citation: 773 P.2d 1382
• Parties: RON CASE ROOFING AND ASPHALT PAVING, INC., a Utah corporation; and Ron Case and Mark Thomas, individuals, Plaintiffs and Appellees, v. Gerald V. BLOMQUIST and Bradley K. Panos, individuals, and Vesper Financial Corporation, a Utah corporation, Defendants and Appellants.
• Court: Utah Supreme Court

Page 1382

773 P.2d 1382

RON CASE ROOFING AND ASPHALT PAVING, INC., a Utah

corporation; and Ron Case and Mark Thomas, individuals, Plaintiffs and Appellees, v. Gerald V. BLOMQUIST and Bradley K. Panos, individuals, and Vesper Financial Corporation, a Utah corporation,

Defendants and Appellants.

No. 19748.

Supreme Court of Utah.

May 11, 1989.

Randall A. Mackey, Kevin N. Anderson, Salt Lake City, for defendants and appellants.

William T. Thurman, Evan A. Schmutz, Salt Lake City, for plaintiffs and appellees.

ZIMMERMAN, Justice:

Defendants Vesper Financial Corporation ("Vesper") and Gerald V. Blomquist and Bradley K. Panos, shareholders of Vesper (collectively "the Vesper group"), appeal from a grant of summary judgment that requires the Vesper group to pay $17,500 plus interest to Ron Case Roofing and Asphalt Paving, Inc. ("Ron Case"). The trial court held as a matter of law that Ron Case was entitled to recover from the Vesper group because Ron Case was a third-party beneficiary under a settlement agreement between and among Vesper Corporation and its shareholders and Robert M. Brooks Construction Company, Inc., and its shareholders. On appeal, the Vesper group claims that the trial court erred in granting summary judgment because there remained issues of material fact as to whether Ron Case had a right to recover from the Vesper group under a third-party beneficiary theory or, alternatively, that even if Ron Case had a right to recover, the Vesper group had a valid legal defense to that claim. Ron Case, on the other hand, asserts that the trial court erred in denying its request for attorney fees. We affirm the trial court in all respects.

It is necessary to provide some background. Beginning in the late 1970s, Vesper owned and developed several real estate projects in the Salt Lake City area. The general contractor for the Vesper projects was Brooks Construction, a Utah corporation. Brooks Construction hired Ron Case under subcontract to perform asphalt paving work at one of Vesper's projects, which was known as the Burton Plaza project.

Sometime in 1981, a dispute arose between Brooks Construction, Ron Case, and others working on the Burton Plaza project. As a result, Brooks Construction brought suit against Ron Case and the others. Ron Case answered and filed a counterclaim for money owed for work on the project. In March of 1983, during the course of trial between Brooks Construction and Ron Case, the parties reached a stipulated settlement under which Brooks Construction dropped its claims against Ron Case and stipulated to the entry of judgment for $17,500 in favor of Ron Case on the counterclaim. Brooks Construction never paid this judgment.

During 1982 and 1983, disputes also developed between Vesper and Brooks Construction over the various Vesper projects. At that time, the principal shareholders of Vesper were Gerald V. Blomquist, Bradley K. Panos, and Robert M. Brooks, and the principal shareholders of Brooks Construction were Robert M. Brooks, Daniel L. Smith, Gerald V. Blomquist, and Gregory K. Panos. As can be seen, both Vesper and Brooks Construction had several shareholders in common. In an attempt to resolve their disputes and restructure their relationships, Vesper and Brooks Construction and their respective shareholders entered an agreement entitled "Settlement Agreement," dated January 24, 1983. Under the terms of the agreement, the shareholders of both Vesper and Brooks Construction cross-conveyed their respective interests in the two corporations so as to eliminate any common ownership. In connection with this restructuring, the two corporations and the newly aligned shareholders of each (referred to as "the Vesper group" and "the Brooks group," respectively) also made various promises to each other concerning obligations arising from the Vesper projects.

Ron Case filed the present suit against the Vesper group in May of 1983, after unsuccessful efforts to collect the $17,500 stipulated judgment from Brooks Construction. Ron Case claimed that under the terms of the January 24, 1983, settlement agreement, the Vesper group was responsible for Brooks' obligations to Ron Case arising out of Vesper's Burton Plaza project. Ron Case moved for summary judgment.

The trial court found that no genuine issues of material fact existed and held the Vesper group liable to Ron Case. The trial court also held that although the Vesper group might have a claim against the Brooks group for breach of the January 24, 1983, settlement agreement, it could not use that claim as a defense to Ron Case's suit. Finally, the trial court denied Ron Case's request for attorney fees.

We consider first the claims of the Vesper group; we will then deal with Ron Case's claim. Our standard of review when considering challenges to a summary judgment is settled. A grant of summary judgment is appropriate only when no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Utah R.Civ.P. 56(c); see, e.g., Geneva Pipe Co. v. S & H Insurance Co., 714 P.2d 648, 649 (Utah 1986). In determining whether the trial court correctly found that there was no genuine issue of material fact, we view the facts and inferences to be drawn therefrom in the light most favorable to the losing party. E.g., id. at 649; Atlas Corp. v. Clovis National Bank, 737 P.2d 225, 229 (Utah 1987); Beck v. Farmers Ins. Exch., 701 P.2d 795, 802 (Utah 1985). And in deciding whether the trial court properly granted judgment as a matter of law to the prevailing party, we give no deference to the trial court's view of the law; we review it for correctness. E.g., Atlas Corp., 737 P.2d at 229; Kimball v. Campbell, 699 P.2d 714, 716 (Utah 1985); see also Scharf v. BMG Corp., 700 P.2d 1068, 1070 (Utah 1985).

The Vesper group's first attack on the summary judgment is a claim that the settlement agreement did not give Ron Case a right to recover from the Vesper group the unpaid judgment owed it by Brooks Construction. The Vesper group argues that it did not intend to assume any of Brooks Construction's liabilities to Ron Case and that the trial court should have permitted Vesper to introduce extrinsic evidence on that point.

The Vesper group's contention about what it really intended and its attempt to rely on extrinsic evidence in support of that contention ignores the settled rule that in interpreting a contract, we first look to the four corners of the agreement to determine the intentions of the parties. E.g., Atlas Corp., 737 P.2d at 229; Stanger v. Sentinel Sec. Life Ins. Co., 669 P.2d 1201, 1205 (Utah 1983). The use of extrinsic evidence is permitted only if the document appears to incompletely express the parties' agreement or if it is ambiguous in expressing that agreement. E.g., Atlas Corp., 737 P.2d at 229; Kimball v. Campbell, 699 P.2d at 716. Neither of these tests is met here.

First, the document does not appear to incompletely express the parties' agreement. The settlement agreement of January 24, 1983, deals in a comprehensive fashion with the relationship between the Brooks group and the Vesper group, as it relates both to their various intercorporate dealings and to the Vesper projects. This indicates that the parties' whole agreement is contained in the document. See Terry's Sales, Inc. v. Vander Veur, 618 P.2d 29, 32 (Utah 1980). This impression is confirmed by the fact that the contract contains an integration clause in paragraph 19(c) which states that the "agreement sets forth the entire understanding among the parties and shall not be amended or terminated except by a written instrument duly executed by all the parties hereto." The trial court therefore properly precluded the Vesper group from introducing extrinsic evidence on the premise that the instrument is not complete. See State Bank of Lehi v. Woolsey, 565 P.2d 413, 418 (Utah 1977).

Second, the agreement is not ambiguous in expressing the parties' agreement regarding the debts incurred by Brooks in connection with the Vesper projects. Paragraph 4 states in pertinent part:

Panos, Blomquist and Vesper, jointly and severally, agree to pay all indebtedness which is presently outstanding or in the future may arise which claims relate to the furnishing of labor, materials, equipment, tools, fuel, supplies and other items furnished to or incorporated into the Vesper Projects.

In addition, Ron Case argues that the trial court's judgment could be sustained on the basis of paragraph 2, which provides as follows:

Panos, Blomquist and Vesper, jointly and severally, hereby indemnify and hold harmless Brooks, Smith and Brooks Construction from and against any and all claims, demands, rights, causes of action or other liabilities or obligations of any kind, whether known or unknown, asserted or unasserted, by any person on account of or arising out of the Vesper Projects or the conduct of Vesper's business and affairs and the conduct of the business and affairs of Panos and Blomquist.

Whatever the legal consequences of this language, it is plain and unambiguous. And we find nothing in the other provisions of the settlement agreement that would undermine the effect of these two paragraphs. Therefore, we conclude that the trial court properly excluded from consideration the extrinsic evidence proffered by the Vesper group on the grounds of ambiguity and correctly determined the issue presented as a matter of law.

The next question is whether, under the terms of the settlement agreement, Ron Case had a legal right to proceed against the Vesper group to recover Brooks Construction's unpaid judgment. We begin by reviewing the applicable principles of third-party beneficiary law. Section 302 of the Restatement (Second) of Contracts sets forth the governing principles for determining whether a nonparty is entitled to the rights of a third-party beneficiary under a contract. See Clark v. American Standard, Inc., 583 P.2d 618, 620 (Utah 1978)...