Wihongi v. Catania SFH LLC
| Decision Date | 30 July 2020 |
| Docket Number | No. 20180800-CA,20180800-CA |
| Citation | 472 P.3d 308 |
| Court | Utah Court of Appeals |
| Parties | Vaughn Eric WIHONGI, Appellant, v. CATANIA SFH LLC, Capital Realty Group LLC, and Nicholas Sanone, Appellees. |
Troy L. Booher, Beth E. Kennedy, Salt Lake City, Dick J. Baldwin, and Engels Tejeda, Salt Lake City, Attorneys for Appellant
Benson L. Hathaway, Ryan R. Beckstrom, and Analise Q. Wilson, Attorneys for Appellees
Opinion
¶1 Vaughn Eric Wihongi sued to recover a commission owed to him pursuant to a contract between himself and Catania SFH LLC (Catania). Catania counterclaimed for breach of contract and conversion, claiming Wihongi never returned $25,000 Catania gave to him.
The district court entered summary judgment in favor of Catania on its counterclaim, and a jury ultimately awarded Wihongi $99,929 on his breach of contract claim. Because the governing contract required an award of attorney fees to the prevailing party, Wihongi moved for attorney fees after the close of trial. The district court ruled that neither Wihongi nor Catania was the prevailing party and declined to award fees. Wihongi appeals, arguing he was the prevailing party. Because we determine that the district court acted within its discretion, we affirm.
¶2 In 2010, Wihongi and Catania entered into a contract under which Wihongi would locate foreclosed properties, purchase them on behalf of Catania, renovate them, and then sell them for a profit. Pursuant to this contract, Catania ensured that Wihongi had a $25,000 cashier's check at all times so that he would be able to make purchases as properties became available. After a property was sold, Catania would receive a 20% preferred rate of return on invested capital, and the remaining profits would be split between the parties, with 30% going to Wihongi and 70% to Catania. In 2013, this contract was modified so that Catania would receive a 12% preferred rate of return on invested capital and the remaining profits would be split evenly.
¶3 In 2010, Wihongi purchased one such property (the Millar property) on behalf of Catania. The previous owner continued to reside in the Millar property and paid Catania rent until he was able to buy it back in 2016, generating a total profit of $210,000, not including revenue from the rental payments. However, Wihongi never received a commission for the sale.
¶4 Wihongi filed a complaint seeking $105,000 in commission, equal to half of the $210,000 profit from the sale of the Millar property. Wihongi's complaint alleged breach of contract, breach of the implied covenant of good faith and fair dealing, promissory estoppel, and unjust enrichment. In response, Catania filed a counterclaim, claiming breach of contract and the contract's implied covenant of good faith and fair dealing and conversion, alleging that Wihongi failed to return a $25,000 cashier's check given to him by Catania. Wihongi then amended his complaint to include a claim for intentional interference with economic relations against Nicholas Sanone, Catania's designated broker and principal broker for Wihongi, based on many of the same facts as his claim against Catania. Wihongi sought punitive damages from Sanone. Wihongi also amended his complaint to increase the damages sought against Catania from $105,000 to $244,000, his theory being that the Millar property's rental income should have been included in his commission.
¶5 The district court entered summary judgment in favor of Catania on its breach of contract counterclaim for the $25,000 cashier's check, but Wihongi's contract claims against Catania and his tort claim against Sanone proceeded to a four-day jury trial.1 The court granted a directed verdict in favor of Sanone on the claim against him. The jury ultimately concluded that Catania breached the contract and awarded Wihongi damages totaling $99,929. The jury also found that Catania breached the implied covenant of good faith and fair dealing but awarded no additional damages for that breach.
¶6 The contract between Wihongi and Catania contained the following attorney fee provision:
In the event of a dispute between the parties arising under this Agreement, the prevailing party in such dispute shall be entitled to recover its costs, including reasonable attorney fees, from the other party.
Wihongi filed a motion to recover his attorney fees, arguing that he was the prevailing party and entitled to fees because he prevailed on his contract claims. The district court ultimately determined that neither party prevailed and declined to award attorney fees. Wihongi appeals.
¶7 The question before this court is whether the district court erred in ruling that neither party was the prevailing party under the contract's attorney fee provision. "Whether the district court applied the correct legal standard is a question of law, which we review for correctness." KB Squared LLC v. Memorial Bldg. LLC , 2019 UT App 61, ¶ 18, 442 P.3d 1168 (cleaned up). But "whether a party is the prevailing party in an action is a decision left to the sound discretion of the trial court and reviewed for an abuse of discretion." Vanderwood v. Woodward , 2019 UT App 140, ¶ 13, 449 P.3d 983 (cleaned up).
¶8 Wihongi argues that " ‘[s]ince the right [to attorney fees in this case] is contractual, the court does not possess the same equitable discretion to deny attorney's fees.’ " (Quoting Express Recovery Services Inc. v. Olson , 2017 UT App 71, ¶ 8, 397 P.3d 792 (cleaned up)). While we agree that the court was legally required to award attorney fees to the prevailing party under the terms of the contract, the question of which party prevailed "depends, to a large measure, on the context of each case, and, therefore, it is appropriate to leave this determination to the sound discretion of the trial court." R.T. Nielson Co. v. Cook , 2002 UT 11, ¶ 25, 40 P.3d 1119. Even where a contract provides that a prevailing party "shall be entitled" to fees, it is still possible that neither party should be deemed to have prevailed "in litigation where both parties obtained mixed results." See Neff v. Neff , 2011 UT 6, ¶ 70, 247 P.3d 380 (). "We therefore review the trial court's determination as to who was the prevailing party under an abuse of discretion standard."2 R.T. Nielson , 2002 UT 11, ¶ 25, 40 P.3d 1119.
¶9 In determining which party has prevailed in a lawsuit for purposes of awarding attorney fees, "district courts are advised to consider relevant factors while not abandoning their common sense." Grove Bus. Park LC v. Sealsource Int'l LLC , 2019 UT App 76, ¶ 49, 443 P.3d 764 (cleaned up). The factors relevant to that determination are: "(1) the language of the attorney fee provision, (2) the number of claims brought by the parties, (3) the importance of each claim relative to the others and their significance considering the lawsuit as a whole, and (4) the amounts awarded on the various claims." Id. In conducting this "flexible and reasoned approach," A.K. & R. Whipple Plumbing & Heating v. Guy , 2004 UT 47, ¶ 26, 94 P.3d 270, our supreme court has "specifically cautioned against considering only the net judgment in the case and stressed the importance of looking at the amounts actually sought and then balancing them proportionally with what was recovered." Jordan Constr., Inc. v. Federal Nat'l Mortgage Ass'n , 2017 UT 28, ¶ 65, 408 P.3d 296. This approach "will permit a case-by-case evaluation by the trial court, and flexibility to handle circumstances where both, or neither, parties may be considered to have prevailed." R.T. Nielson Co. v. Cook , 2002 UT 11, ¶ 25, 40 P.3d 1119.
¶10 "Accordingly, it is possible that, in litigation where both parties obtain mixed results, neither party should be deemed to have prevailed for purposes of awarding attorney fees." Neff v. Neff , 2011 UT 6, ¶ 70, 247 P.3d 380. Here, the district court determined that this was such a case. In reaching that conclusion, the court acknowledged the net judgment and considered each of the four factors our supreme court has identified as relevant to the prevailing party analysis.
¶11 First, the court noted that the contractual language showed "that the prevailing party is entitled to recover its reasonable attorneys' fees," but that the contract otherwise did not "discuss how that is determined."
¶12 As to the second factor, the court noted that while Wihongi asserted five claims, two of his claims were pled in the alternative and were not dismissed on the merits, and his fifth claim against Sanone was dismissed via directed verdict.3 Although Wihongi prevailed on his two remaining claims, "no damages were awarded for the breach of the covenant of good faith and fair dealing." Therefore, the court concluded that Wihongi "prevailed on one claim with an award of damages." Catania brought two counterclaims and similarly "prevailed on one counterclaim with an award of damage."
¶13 The court next weighed the "importance of the claims and their significance against each other." The court noted that the "claims [we]re interrelated because they ar[o]se from the same contract." Because both parties prevailed on their breach of contract claims, the court concluded that the claims were "equally weighted."
¶14 Finally, as to the last factor, the court considered the amount of damages Wihongi sought in comparison to the amount he recovered. The court found that Wihongi sought damages of $244,000 and recovered $99,929. In comparison, Catania recovered on one of its two counterclaims, but recovered the full amount it sought in damages—$25,000. The court stated that "a total victory [for Catania] would have been return of the $25,000 and defeat of all of [Wihongi's] pled claims."
¶15 The court also acknowledged the limitations of the net judgment rule and...
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