Warner v. Sirstins

• Decision Date: 14 September 1992
• Docket Number: No. 900644-CA,900644-CA
• Parties: R.L. WARNER, d/b/a Rick Warner Truckland, Plaintiff, Appellee, and Cross-Appellant, v. Kurt F. SIRSTINS, Defendant, Appellant, and Cross-Appellee.
• Court: Utah Court of Appeals

Page 666

838 P.2d 666

R.L. WARNER, d/b/a Rick Warner Truckland, Plaintiff Appellee, and Cross-Appellant, v. Kurt F. SIRSTINS, Defendant, Appellant, and Cross-Appellee.

No. 900644-CA.

Court of Appeals of Utah.

Sept. 14, 1992.

Robert W. Hughes, Midvale, for appellant.

Kenneth A. Okazaki, Purser, Okazaki & Berrett, Salt Lake City, for appellee.

Before GARFF, GREENWOOD and RUSSON, JJ.

OPINION

GARFF, Judge:

Defendant, Kurt F. Sirstins, appeals the trial court's reformation of a contract for the sale of a truck and camper from plaintiff, R.L. Warner, d/b/a Rick Warner Truckland (Rick Warner), to Sirstins. Rick Warner cross appeals, challenging the trial court's denial of its request for attorney fees. We affirm.

FACTS

Because Sirstins challenges the court's findings of fact, we consider the evidence in a light most favorable to the trial court and recite the facts accordingly. Van Dyke v. Chappell, 818 P.2d 1023, 1024 (Utah 1991). In June 1988, Rick Warner, through its sales representative, Merrill Stillman, negotiated with Sirstins concerning the sale of a truck and camper. The parties established a purchase price of $25,484.26 for the truck and $13,055.50 for the camper. As part of the transaction, they agreed that Sirstins would trade in a Chevrolet Suburban and a motor home toward the purchase of the truck and camper. The parties set the trade-in value of the Suburban at $14,200.00 and the trade-in value of the motor home at $30,000.00. At the time of the negotiations, Sirstins indicated, and Stillman later confirmed, that Sirstins owed over $25,000.00 on the motor home. The parties agreed that Rick Warner would pay off Sirstins's remaining debt on the motor home and subtract it from the vehicle's $30,000.00 trade-in value. They further agreed that Sirstins would pay the difference between the trade-in value of the Suburban and motor home and the purchase price of the truck and camper.

On June 30, 1988, the parties executed the agreement and finalized the sale when Sirstins delivered a check to Rick Warner for $6,394.00. Under the executed agreement, Sirstins received a combined setoff for the trade-in value of both the Suburban and the motor home against the purchase price of the truck. He also received a second setoff for the trade-in value of the Suburban against the purchase price of the camper. As a result, Sirstins received a total credit of $28,400.00 for the Suburban, which was double the agreed upon trade-in value.

In December 1988, after Rick Warner discovered that it had given Sirstins a double credit for the Suburban, a representative of Rick Warner contacted Sirstins about the error and requested an additional $13,055.76, which Sirstins refused to pay. Rick Warner subsequently sued Sirstins, claiming mutual mistake and seeking the equitable remedy of reformation of the agreement.

The case was tried to the court. After taking the case under advisement, the court issued a memorandum decision in which it ruled that the parties had made a "mutual mistake of material fact" in the contract and "that the contract should be reformed to reflect the intent of the parties." The court found in its decision that Rick Warner and Sirstins had a meeting of the minds on (1) the price to be charged for both the truck and camper, and (2) the trade-in allowance for the Suburban and motor home. The court also found that neither Rick Warner nor Sirstins intended that a "double credit" be given to Sirstins for the trade-in value of his Suburban. Finally, the court found that "[t]he amount of the payoff on the motor home was clearly indicated on the contract at the time it was entered into by the parties and [Sirstins] is charged with the knowledge of those items that appear on the contract." The court concluded that the contract should be reformed to reflect a single credit to Sirstins for the trade-in value of the Suburban. Thereafter, the court entered judgment in favor of Rick Warner for $13,055.76, together with interest and costs.

Prior to the court's entering judgment, Rick Warner filed a motion in which it claimed, pursuant to the terms of the contract, that it was entitled to an award of attorney fees. Sirstins responded with a memorandum opposing the motion. The court denied the motion for "the reasons stated in [Sirstins's] memorandum."

On appeal, Sirstins claims that the trial court abused its discretion in reforming the contract for mutual mistake. He also contends that the court clearly erred in finding that the parties' intentions were not reflected in the written agreement. Additionally, he argues that the court clearly erred in finding that he knew of the remaining debt of over $25,000.00 on the motor home. In the alternative, Sirstins contends that if there was a mistake, it was a unilateral mistake made by Rick Warner in drafting the agreement.

MUTUAL MISTAKE

"A mutual mistake occurs when both parties, at the time of contracting, share a misconception about a basic assumption or vital fact upon which they based their bargain." Robert Langston, Ltd. v. McQuarrie, 741 P.2d 554, 557 (Utah App.), cert. denied, 765 P.2d 1277 (Utah 1987). To reform a contract, the party claiming mistake must prove "that the minds of both parties had been in agreement on a term which they mutually failed to incorporate into the writing." Ingram v. Forrer, 563 P.2d 181, 183 (Utah 1977). Parol evidence is admissible to show the writing did not conform to the intent of the parties. Jensen v. Manila Corp. of the Church of Jesus Christ of Latter-Day Saints, 565 P.2d 63, 64 (Utah 1977) (citing Sine v. Harper, 118 Utah 415, 429, 222 P.2d 571, 578-79 (1950)); Grahn v. Gregory, 800 P.2d 320, 327 n. 8 (Utah App.1990).

Findings of fact are not disturbed unless they are clearly erroneous, and due regard is given to the opportunity of the trial court to judge the credibility of the witnesses. Utah R.Civ.P. 52(a); Van Dyke v. Chappell, 818 P.2d 1023, 1024 (Utah 1991). Factual findings are clearly erroneous if they are without adequate evidentiary support or induced by an erroneous view of the law. Western Capital & Sec. v. Knudsvig, 768 P.2d 989, 991 (Utah App.), cert. denied, 779 P.2d 688 (Utah 1989). Conclusions of law are accorded no particular deference and are reviewed for correctness. Grayson Roper Ltd. Partnership v. Finlinson, 782 P.2d 467, 470 (Utah 1989); Scharf v. BMG Corp., 700 P.2d 1068, 1070 (Utah 1985).

To successfully attack findings of fact, a party must first marshal all the evidence in support of the trial court's findings and then demonstrate that even when viewed in the light most favorable to the findings, the evidence is insufficient to support the findings. Grayson Roper, 782 P.2d at 470; Scharf, 700 P.2d at 1070. Although Sirstins has not met his burden of marshaling the evidence in support of the trial court's findings and then demonstrating that they are clearly erroneous, we feel compelled to address the pertinent issues.

At trial, Sirstins testified that neither he nor Rick Warner intended that he receive a double credit for the Suburban. He further testified that he knew prior to executing the agreement that he would receive a trade-in value of $14,200.00 for the Suburban, not the $28,400.00 he ultimately received. The understanding that Sirstins would receive a trade-in value of $14,200.00 constituted a basic assumption or vital fact upon which the parties based their bargain. In light of this evidence, the court did not clearly err in finding that the written instrument failed to conform to what both Sirstins and Rick Warner intended, namely, that Sirstins would receive a trade-in value of $14,200.00 for the Suburban.

In support of the trial court's finding that Sirstins knew he owed over $25,000.00 on the motor home, Sirstins testified that he saw the payoff figure on the motor home when he signed the agreement. Furthermore, the court correctly disregarded Sirstins's claim that he did not understand the payoff figure in the agreement to be the amount owed by him on the motor home because Sirstins had a duty, before signing the contract, to read and understand the payoff figure as a term of the contract. John Call Eng'g, Inc. v. Manti City Corp., 743 P.2d 1205, 1207-08 (Utah 1987); Hottinger v. Jensen, 684 P.2d 1271, 1274 (Utah 1984). "A party may not sign a contract and thereafter assert ignorance or failure to read the contract as a defense." John Call Eng'g, 743 P.2d at 1208; accord Garff Realty Co. v. Better Bldgs., Inc., 120 Utah 344, 349, 234 P.2d 842, 844 (1951). Because the court's finding regarding Sirstins's knowledge of the payoff figure is supported by the evidence as well as a correct view of the law, we do not disturb it.

Based on the findings of fact, as well as our review of the record, the trial court correctly concluded that there was a mutual mistake. Having affirmed the trial court's findings of fact and conclusion regarding mutual mistake, we now consider whether the court acted within its discretion in reforming the contract for mutual mistake.

REFORMATION

"Reformation of an instrument for mutual mistake of fact is an equitable remedy that has long been recognized." Guardian State Bank v. Stangl, 778 P.2d 1, 4-5 (Utah 1989). Although a court by virtue of its equitable powers has discretion to reform an instrument, such "discretion is narrowly bounded." Cunningham v. Cunningham, 690 P.2d 549, 552 (Utah 1984); accord Briggs v. Liddell, 699 P.2d 770, 772 (Utah 1985). The power to reform a written instrument for mutual mistake exists when any one of the following circumstances is satisfactorily proved: (1) the instrument as made failed to conform to what both parties intended; (2) the claiming party was mistaken as to its actual content and the other party, knowing of the mistake, kept silent; or (3) the claiming party was mistaken as to its actual content because of fraudulent affirmative behavior by the other party. Mabey v. Kay Peterson Constr. Co., 682 P.2d...