UDAK Props. LLC v. Canyon Creek Commercial Ctr. LLC

• Decision Date: 11 February 2021
• Docket Number: No. 20190065-CA,20190065-CA
• Citation: 482 P.3d 841
• Parties: UDAK PROPERTIES LLC, Appellee, v. CANYON CREEK COMMERCIAL CENTER LLC, Appellant.
• Court: Utah Court of Appeals

482 P.3d 841

UDAK PROPERTIES LLC, Appellee,

v.CANYON CREEK COMMERCIAL CENTER LLC, Appellant.

No. 20190065-CA

Court of Appeals of Utah.

Filed February 11, 2021

Kenneth A. Okazaki and Bruce Wycoff, Salt Lake City, Attorneys for Appellant

Greggory J. Savage and Gregory S. Roberts, Salt Lake City, Attorneys for Appellee

Judge Diana Hagen authored this Opinion, in which Judges Gregory K. Orme and David N. Mortensen concurred.

Amended Opinion¹

HAGEN, Judge:

¶1 This appeal stems from a disagreement as to the meaning of the term "Responsible Owner" as used in a restrictive covenant binding owners of parcels in a shopping center in Spanish Fork, Utah. Canyon Creek Commercial Center LLC appeals from the district court's grant of declaratory relief to UDAK Properties LLC, in which the court declared that UDAK is a Responsible Owner and entitled to exercise the privileges granted to such owners. Canyon Creek alleges that the Responsible Owner provision is ambiguous and that the ambiguity should have been construed in favor of Canyon Creek. Further, Canyon Creek alleges several errors in the court's award of attorney fees. It also argues that the court incorrectly determined that its tender of judgment to UDAK was legally insufficient and justified an award of additional attorney fees. We conclude that the Responsible Owner provision is unambiguous and dictates that UDAK is a Responsible Owner. We further conclude that the district court correctly awarded attorney fees to UDAK and that Canyon Creek's tender was invalid. Accordingly, we affirm.

BACKGROUND

¶2 In 1999, owners of parcels in a Spanish Fork, Utah shopping center recorded an amended declaration (Declaration) containing various restrictive covenants that run with the land. The Declaration designates certain property owners as "Responsible Owners" and defines that term, in relevant part, as follows:

"Responsible Owner" shall mean the Owner of a Parcel or Parcels with a combined Building Area thereon of at least forty thousand square feet (40,000 sq. ft.) of Floor Area. Responsible Owner shall also mean the lessee of a Parcel with a Building constructed thereon containing a minimum of forty thousand square feet (40,000 sq. ft.) of Floor Area ....

The consent of all Responsible Owners is required before constructing or modifying buildings in the shopping center.

¶3 In 2005, UDAK acquired several parcels in the shopping center. Because UDAK believed it owned parcels with a combined floor area of 42,945 square feet, UDAK held itself out as a Responsible Owner. In 2014, Canyon Creek acquired parcels in the shopping center. Canyon Creek disputed whether UDAK qualified as a Responsible Owner.

¶4 In February 2016, UDAK filed a declaratory relief action, seeking a declaration that "it is a Responsible Owner, and that it possesses all the rights provided to Responsible Owners in the Declaration." Canyon Creek and two co-defendants counterclaimed, seeking a declaration that UDAK was not a Responsible Owner. In Canyon Creek's view, UDAK's combined Building Area should be based on the buildings’ actual floor area rather than their allowable floor area. The actual floor area of UDAK's buildings equaled only 35,808 square feet, and therefore Canyon Creek maintained that UDAK was not a Responsible Owner.² UDAK moved for summary judgment, but the district court denied that motion. The court concluded that because UDAK and Canyon Creek's "contrary arguments and contentions regarding the requirements for ‘Responsible Owner’ status ... both appear reasonably supported by Declaration provisions," the Responsible Owner provision is "facially ambiguous as a matter of law." The court set the matter for a bench trial.

¶5 On June 21, 2019, following the bench trial, the district court issued a written ruling concluding that UDAK is a "Responsible Owner" (Original Judgment). Specifically, the court found that "UDAK's parcels have a combined allowed Floor Area of at least 40,000 sq. ft." and that in "harmonizing all of the relevant terms of the 1999 Declaration, it is evident that UDAK is a Responsible Owner ... as an Owner of Parcels with a combined allowed Floor Area in excess of 40,000 square feet."

¶6 The district court further ruled that UDAK was contractually entitled to its reasonable attorney fees pursuant to the Declaration's attorney fee provision. In the Original Judgment, the court ruled that Canyon Creek was liable for UDAK's reasonable attorney fees "pursuant to Article 10.04 of the 1999 Declaration" and directed UDAK to submit an affidavit establishing the amount of attorney fees. UDAK submitted an affidavit and a declaration outlining its attorney fees. Canyon Creek did not object within the time allowed by rule 73(d) of the Utah Rules of Civil Procedure. On November 1, 2018, the court awarded UDAK $251,498.65 in attorney fees (First Supplemental Judgment). Canyon Creek moved for entry of additional findings regarding the court's award of attorney fees, but the court denied the motion. Canyon Creek filed a timely notice of appeal.

¶7 In an apparent effort to satisfy the judgment while still preserving its right of appeal, Canyon Creek filed a document titled "Tender of Judgment Amount Plus Accrued Interest," to which it attached a photocopy of a check made out to UDAK in the amount of the total judgment. The actual check was never sent to UDAK. Shortly thereafter, Canyon Creek filed a document titled "Motion for Order Abating Interest and Declaring Money Judgment Satisfied." After both parties had briefed whether Canyon Creek's tender was legally sufficient, the court entered an order concluding that Canyon Creek had not made a valid tender and granting UDAK additional attorney fees.

¶8 UDAK's counsel submitted an affidavit setting forth the additional attorney fees it had incurred in responding to both the motion for entry of additional findings and the motion related to the purported tender. This time Canyon Creek filed a timely objection. After further briefing, the court partially granted UDAK's requested additional attorney fees, awarding UDAK $27,979 in addition to the original award. On September 5, 2019, the court entered an amended judgment reflecting the additional attorney fees awarded in connection with the tender (Second Supplemental Judgment). Canyon Creek timely filed a supplemental notice of appeal.³

ISSUES AND STANDARDS OF REVIEW

¶9 Canyon Creek raises several arguments on appeal. First, Canyon Creek challenges the district court's interpretation of the Declaration. "Our review of a [district] court's interpretation of a contract begins with a question of law, reviewed for correctness: Is the contract unambiguous?" West Valley City v. Majestic Inv. Co. , 818 P.2d 1311, 1313 (Utah Ct. App. 1991). "If it is, its interpretation is itself a question of law." Id. ; see also Uintah Basin Med. Center v. Hardy , 2005 UT App 92, ¶ 9, 110 P.3d 168 ("Questions of contract interpretation not requiring resort to extrinsic evidence are matters of law, which we review for correctness." (cleaned up)).⁴

¶10 Second, Canyon Creek argues that the district court made multiple reversible legal errors in awarding attorney fees to UDAK. "Whether attorney fees are recoverable in an action is a question of law, which we review for correctness." Martin v. Kristensen , 2019 UT App 127, ¶ 31, 450 P.3d 66 (cleaned up), cert. granted , 456 P.3d 386 (Utah 2019).

¶11 Third, Canyon Creek argues that its purported tender of the money judgment was legally sufficient and that there was no basis for an award of additional attorney fees to UDAK in connection with the tender. "We review a district court's interpretation of our rules of civil procedure, precedent, and common law for correctness." Keystone Ins. Agency, LLC v. Inside Ins., LLC , 2019 UT 20, ¶ 12, 445 P.3d 434 (cleaned up). Further, we review whether attorney fees are recoverable for correctness. Supra ¶ 10.

ANALYSIS

I. "Responsible Owner" Under the Declaration

¶12 The key question in this case is whether UDAK is a "Responsible Owner" under the Declaration. The district court ruled that the Declaration was ambiguous but concluded that UDAK was a Responsible Owner after considering extrinsic evidence. Although UDAK agrees with the court's ultimate conclusion, it contends that there was no need to resort to extrinsic evidence because the Declaration is unambiguous.⁵ We agree with UDAK that there is only one reasonable interpretation of the Declaration and that UDAK unambiguously qualifies as a Responsible Owner.

¶13 We reach this conclusion despite the district court's contrary view that the Declaration was ambiguous. Whether a contract is ambiguous is a question of law and we afford no deference to the district court's conclusion. See Mid-America Pipeline Co. v. Four-Four Inc. , 2009 UT 43, ¶ 16, 216 P.3d 352. The district court is "in no better position than is this court to interpret the contractual language at issue here." Level 3 Commc'ns, LLC v. Public Service Comm'n. , 2007 UT App 127, ¶ 11, 163 P.3d 652 ; see also Lake v. Hermes Assocs. , 552 P.2d 126, 128 (Utah 1976) ("[W]here the resolution of the controversy depends upon the meaning to be given documents, the [district] court is in no more favored position and is no better able to determine the meaning of such documents than this court."). Further, "it is within our discretion to affirm a judgment on an alternative ground if it is apparent in the record." Olguin v. Anderton , 2019 UT 73, ¶ 20, 456 P.3d 760 (cleaned up). Because we can determine, based on the Declaration itself, that there is no ambiguity as to whether UDAK qualifies as a Responsible Owner, we affirm on that basis.

¶14 "Restrictive covenants that run with the land and encumber subdivision lots form a contract between subdivision property owners as a whole and individual lot owners ...." Swenson v. Erickson , 2000 UT 16, ¶ 11, 998 P.2d 807 (cleaned up). As such, "interpretation of the [Declaration] is governed by the...