Sdc v. Rb & G Engineering, Inc.

• Decision Date: 25 January 2008
• Docket Number: No. 20070099-CA.,20070099-CA.
• Parties: SUNRIDGE DEVELOPMENT CORPORATION; and Sunridge Enterprises, LLC, Plaintiffs and Appellants, v. RB & G ENGINEERING, INC., Defendant and Appellee.
• Court: Utah Court of Appeals

177 P.3d 644

2008 UT App 29

SUNRIDGE DEVELOPMENT CORPORATION; and Sunridge Enterprises, LLC, Plaintiffs and Appellants, v. RB & G ENGINEERING, INC., Defendant and Appellee.

No. 20070099-CA.

Court of Appeals of Utah.

January 25, 2008.

Stephen Quesenberry and Charles L. Perschon, Provo, for Appellants.

Craig C. Coburn, Zachary E. Peterson, Michael J. Howell, and Jennifer Mastrorocco, Salt Lake City, for Appellee.

Before GREENWOOD, P.J., BENCH and DAVIS, JJ.

OPINION

DAVIS, Judge:

¶ 1 Sunridge Development Corporation (SDC) and Sunridge Enterprises, LLC (SEL) appeal from the trial court's grant of summary judgment in favor of RB & G Engineering, Inc. (RB & G) on claims of negligence and breach of contract. However Plaintiffs agreed to not appeal a second summary judgment in favor of RB & G, which concluded that SDC did not present prima facie evidence of damages. We therefore affirm.

BACKGROUND

¶ 2 In 1993, SDC contracted with RB & G to perform a geologic study of 10.2 acres that would become the Alpine Brook Development (the Property). The purpose of the 1993 study was to analyze potential faults and other geologic features of the Property that could affect SDC's ability to develop the Property. In 1995, SDC contracted with RB & G to perform a geotechnical investigation of the Property, whereby RB & G was to determine whether geological hazards existed on the Property and recommend foundation designs for SDC's development plan. In the 1995 report, RB & G concluded that the small faults on the Property were expected for the area and did not present problems for development. Based on these two RB & G reports, SDC proceeded with its plan to develop eighty-six units on the Property.

¶ 3 In 1996, SDC principal Stephen Stewart formed SEL for liability purposes, and SDC conveyed the Property to SEL. The conveyance included the assignment to SEL of all of SDC's rights and claims in relation to the various engineering reports, surveys, studies, and zoning approvals.¹ In 1998, when the first stage of development was nearly complete, the Utah Geological Association recommended further testing of the Property, which RB & G performed. This additional testing uncovered substantial faults not reflected in RB & G's earlier reports, and SEL was forced to redesign its development plan around the newly uncovered faults. Because SEL could no longer safely develop the lots located over the faults and because the road location could not be moved, the number of units to be developed was reduced by fourteen. The reduction in units and the corresponding delays resulted in a claimed loss of well over one million dollars.

¶ 4 SDC and SEL both filed suit against RB & G, alleging negligence and breach of contract. In August and September of 2005, the trial court ruled in favor of RB & G on two separate motions for summary judgment. The first motion was primarily against SEL, arguing alternative rationales for prohibiting SE L from claiming damages against RB & G: the economic loss rule, see generally SME Indus., Inc. v. Thompson, Ventulett, Stainback & Assocs., Inc., 2001 UT 54, ¶¶ 32-35, 28 P.3d 669, and a lack of privity between SEL and RB & G. The second motion for summary judgment was against SDC and alleged that SDC had failed to establish a prima facie case for the claim that RB & G breached its contract with SDC. Specifically, RB & G claimed SDC failed to produce evidence of damages.²

¶ 5 The only evidence SDC presented in response to the second motion for summary judgement came in the form of sworn affidavits. The trial court denied the admission of SDC's affidavits because they were offered after the August 1, 2006 deadline for parties to file dispositive motions. "Given this case history," the trial court wrote, "the August 1, 2006 deadline presupposes an end of the discovery process." In granting the motion, the trial court specifically found: "[SDC] has failed to marshal admissible evidence as to its claim for damages. A simple statement that one has been damaged is not evidence; it is a legal conclusion."

¶ 6 On December 18, 2006, the parties then stipulated to the dismissal with prejudice of SDC's claims against RB & G for breach of contract; Plaintiffs also agreed not to appeal the trial court's second summary judgment ruling. On January 5, 2007, the trial court entered the final judgment and order thereon. Plaintiffs now challenge the trial court's grant of RB & G's first motion for summary judgment.

ISSUE AND STANDARDS OF REVIEW

¶ 7 Plaintiffs challenge the trial court's grant of summary judgment on SEL's breach of contract and negligence claims in favor of RB & G.³ Summary judgment is appropriate only when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. See Utah R. Civ. P. 56(c). Whether a party is entitled to summary judgment presents a question of law, and we grant no deference to the trial court's legal conclusions and review them for correctness. See Wilcox v. Anchor Wate Co., 2007 UT 39, ¶ 10, 164 P.3d 353; Higgins v. Salt Lake County, 855 P.2d 231, 235 (Utah 1993). Yet, "[a] trial court has broad discretion to admit or exclude evidence and its determination typically will only be disturbed if it constitutes an abuse of discretion." State v. Whittle, 1999 UT 96, ¶ 20, 989 P.2d 52; see also State v. Cruz-Meza, 2003 UT 32, ¶ 8, 76 P.3d 1165 ("Although the admission or exclusion of evidence is a question of law, we review a trial court's decision to admit or exclude specific evidence for an abuse of discretion.").

ANALYSIS

¶ 8 SEL argues that it should be allowed to pursue its breach of contract claim against RB & G beyond the summary judgment stage because the assignment of the contracts in question allows SEL, as the assignee, to assert the claims against RB & G that SDC would have been able to assert had the assignment never taken place. Under the law of assignments, "[assignees] are entitled to bring against the [obligor] any contractual action the [assignor] could have brought." Spears v. Warr, 2002 UT 24, ¶ 40, 44 P.3d 742. "[A]n assignee gains nothing more, and acquires no greater interest than had his assignor. . . ." Aird Ins. Agency v. Zions First Nat'l Bank, 612 P.2d 341, 344 (Utah 1980) (citing Cheney v. Rucker, 14 Utah 2d 205, 381 P.2d 86, 91 (1963); Tanner v. Lawler, 6 Utah 2d 84, 305 P.2d 882, 885, aff'd in part and set aside in part, 6 Utah 2d 268, 311 P.2d 791 (1957)); see also SME Indus., Inc., 2001 UT 54, ¶ 16, 28 P.3d 669 ("The assignee is subject to any defenses that would have been good against the [assignor]; the assignee cannot recover more than the assignor could recover; and the assignee never stands in a better position than the assignor.'" (alteration in original) (quoting 6 Am.Jur.2d Assignments § 144 (1999))); West v. Inter-Financial, Inc., 2006 UT App 222, n. 1, 139 P.3d 1059 ("It is well established that an assignor cannot assign rights he or she does not have."). Conversely, "an assignment does not have the effect of canceling any rights which other persons have in connection with [a contract]." Tanner, 305 P.2d at 885. However, "without a claim for damages, the [assignee] ha[s] no breach of contract action." West, 2006 UT App 222, n. 1, 139 P.3d 1059 (citing Bair v. Axiom Design, LLC, 2001 UT 20, ¶ 14, 20 P.3d 388).

¶ 9 Here, at the time of assignment, RB & G had already completed its geological surveys under its contracts with SDC. In response to the second motion for summary judgment, SDC attempted to submit affidavits into evidence regarding damages. But the trial court refused to admit the affidavits, ruling that they were not timely, and this ruling was included in the second summary judgment. Thereafter, Plaintiffs stipulated not to appeal this second summary judgment ruling. The parties entered into this stipulation on December 18, 2006, and the trial court entered the final judgment and order on January 5, 2007. Plaintiffs had thirty days to appeal the final judgment and order. See Utah R.App. P. 4(a). However, per the stipulation, they did not do so. Since assignment merely allows the assignee to stand in the shoes of the assignor, SEL is precluded from claiming damages against RB & G—an essential element of any claim, see Campbell Maack & Sessions v. Debry, 2001 UT App 397, ¶ 21, 38 P.3d 984—because SEL stipulated that SDC failed to prove damages against RB & G. SEL is similarly precluded from claiming the affidavits were improperly excluded.⁴

¶ 10 Plaintiffs argue that at the time of assignment, damages were not yet ripe because the errors in RB & G's geological surveys were not discovered until years later. Nevertheless, even after the errors were discovered, SEL never pursued a damages claim against SDC for conveying SEL a property allegedly worth over a million dollars less than SEL paid. SEL cannot be "permitted to enjoy the benefits of [its] separate corporate structure for some purposes while also claiming [that the trial court] elevate[d] form over substance in an attempt to [attach SEL's damages against SDC to RB & G]." Sachs v. Lesser, 2007 UT App 169, ¶ 51, 163 P.3d 662 (citing Utah State Rd. Comm'n v. Steele Ranch, 533 P.2d 888, 891 (Utah 1975)), cert. granted, 168 P.3d 1264 (Utah 2007).

CONCLUSION

¶ 11 SDC's assignment to SEL of all rights and claims relating to the contracts for the survey work of RB & G put SEL in the same position as SDC-without admissible evidence of damages against RB & G. Because Plaintiffs agreed not to appeal the trial court's granting of the second motion for summary judgment, both SDC and SEL are precluded from claiming any damages against RB & G, whether sounding in contract or torts. We therefore affirm the decision of the trial court.

¶ 12 I CONCUR: PAMELA T. GREENWOOD, Presiding Judge.

1. For purposes of summary judgment, the parties centered their arguments on the effect of the assignment and not on the underlying validity thereof. At trial,...