Wright v. Westside Nursery

• Decision Date: 02 February 1990
• Docket Number: No. 880544-CA,880544-CA
• Citation: 787 P.2d 508
• Parties: George Ronald WRIGHT, Plaintiff, Appellant, and Cross-Respondent, v. WESTSIDE NURSERY, a Utah limited partnership, and Darrel Humphries, an individual, Defendants, Respondents, and Cross-Appellants.
• Court: Utah Court of Appeals

Page 508

787 P.2d 508

George Ronald WRIGHT, Plaintiff, Appellant, and Cross-Respondent, v. WESTSIDE NURSERY, a Utah limited partnership, and Darrel Humphries, an individual, Defendants, Respondents and Cross-Appellants.

No. 880544-CA.

Court of Appeals of Utah.

Feb. 2, 1990.

Gary W. Pendleton, St. George, for plaintiff, appellant, and cross-respondent.

Hans Q. Chamberlain, Cedar City, for defendants, respondents, and cross-appellants.

Before BENCH, BILLINGS and ORME, JJ.

ORME, Judge:

Plaintiff George Wright ("Wright") appeals from several adverse rulings made during the course of trial in this complicated case. Defendants Westside Nursery and Darrel Humphries ("Humphries") cross-appeal from two postjudgment rulings in the same case. We affirm in part, reverse in part, vacate in part, and remand to the trial court for further proceedings consistent with this opinion.

The numerous issues raised on appeal require, regrettably, a somewhat laborious presentation of the facts. Except where the discrepancies are identified, the facts as set forth are essentially undisputed.

PRETRIAL FACTS

Humphries was general partner and manager of Westside Nursery located in St. George, Utah. In 1985, Wright contracted with Westside Nursery to landscape his residence in St. George. During this time, Wright and Humphries began to discuss the possibility of Wright purchasing the nursery. At some point in the negotiations, the parties agreed Wright would exchange real estate for the nursery.

In August 1985, Humphries flew to Ogden, Weber County, where Wright owned several acres of land, and stayed the night in Wright's home. There was conflicting evidence about whether the parties were contemplating the property exchange at this time and about whether Humphries viewed the property during this visit.

In October 1985, Humphries and his wife traveled to the Ogden area. On October 4th, the parties spent several hours reviewing and revising two agreements which had been previously drafted by Wright's attorney. The first agreement, the Agreement for Purchase of Assets ("Purchase Agreement"), concerned the exchange of the property for the nursery. The second, the Contract for Management Services ("Management Agreement"), concerned Wright's employment of Humphries as nursery manager. The agreements were signed and deeds were executed conveying the Weber County property to Humphries.

Although Humphries inspected the property on the same day that the contracts were executed, the parties disagree on whether he saw it before or after the execution. Humphries testified that he saw it only afterward. While showing Mr. and Mrs. Humphries the property, Wright identified several surrounding parcels of property and the range of prices for which they had been purchased. He also pointed out that there was no sewer currently servicing the area, but informed Humphries that he expected one to be installed within a year and a half. No evidence was admitted to suggest that any of this information was false. Moreover, the sewer was in fact installed within two years.

Humphries' position throughout the trial was that Wright had represented the Weber County property as being worth at least $90,000. He alleged that Wright told him this on October 4th when they went to see the property. Wright consistently maintained that the property was indeed worth $90,000, but denied ever having made this Wright admitted during the trial that he did not know the exact value of the property. There was no evidence to suggest that an appraisal had ever been made of the property prior to this litigation. However, Wright did testify about the selling price of similar properties in the surrounding area. Moreover, he introduced evidence that the property was valued at approximately $104,000 for tax purposes. The parties each introduced expert testimony concerning the value of the property as of when the transaction was finalized. The appraisals covered a wide range, from $35,000 to $84,000. Humphries testified that he sold the property for $54,700, to a neighboring landowner, a few days before trial.

representation prior to executing the contracts.

Meanwhile, on October 15, 1985, only a few days after the transaction closed, the Weber County Commission declared a limited moratorium on the area which contained the subject parcel of land. The moratorium prevented owners from building subdivisions on the affected land without approval from the commission. Evidence was introduced demonstrating that Wright knew of the potential for this moratorium before the October 4th closing but did not disclose the possibility to Humphries. However, Wright introduced unrebutted evidence he had spoken to several governmental officials about the potential moratorium and that they had led him to believe the moratorium would probably not be declared and that, if it were, his property would probably receive approval for development anyway.

After execution of the contracts and before the end of November 1985, Humphries claims he heard rumors that the Weber County Property might not be worth $90,000. He then made some inquiries and determined that he had been defrauded. On December 10, 1985, Humphries' attorney wrote a letter to Wright expressing his suspicions and proposing to settle the dispute. On December 18, the attorney wrote a second letter informing Wright that Humphries considered the Purchase Agreement cancelled and rescinded.

On December 23, Wright initiated an action to determine the ownership of the nursery. On the same day, the trial court issued a temporary restraining order which prohibited Humphries from doing anything with the nursery inconsistent with Wright's ownership and prevented him from incurring further debt on behalf of Wright or the nursery.

From October 1985 through March 1986, Humphries managed the nursery pursuant to the Management Agreement and drew a salary of $2,500 per month. Prior to the sale of the nursery to Wright, Humphries had obtained a $15,000 loan from Zions Bank which he remained obligated to pay under the Purchase Agreement. Subsequent to the sale, Humphries signed a second promissory note for $30,000 in favor of Zions Bank. He drew $15,000 against the note on December 13, 1985, prior to the December 23 restraining order. On December 30, he drew an additional $5,000 on the note, and the remaining $10,000 on January 6, 1986. The entire $30,000 was, at least initially, deposited into the nursery account.

In March 1986, Wright sought possession of the nursery. The trial court ordered Humphries to relinquish his possession of the nursery to Wright, imposed various duties on the parties, and appointed a receiver to assist the court in monitoring the business and the parties' compliance with its order. As a condition to issuance of this second temporary restraining order, ¹ the court ordered Wright to procure a $50,000 injunction bond. Wright did so. He then discharged Humphries and took possession of the nursery.

LITIGATION FACTS

As indicated, Wright filed a complaint against Humphries in December 1985. In due course, Humphries answered the complaint and raised various counterclaims. On September 17, 1986, a hearing was held The balance of the dispute was tried to a jury in April 1988, and trial took five days to complete. Wright attempted to establish that Humphries had breached the contracts by misappropriating nursery money for his own use and borrowing funds from Zions Bank without authorization and therefore should not be reimbursed for any of those monies. Humphries attempted to establish that Wright had induced him to enter into the contract by fraudulently misrepresenting the value of the property. He also introduced evidence to suggest that Wright had tortiously failed to disclose the potential moratorium, although the jury was never instructed regarding fraudulent omission. Both parties argued for attorney fees and Humphries introduced evidence that he had incurred over $30,000 in attorney fees and costs. The case was submitted to the jury for special verdicts in accordance with Utah R.Civ.P. 49(a).

concerning several pending motions. Most significantly, the district court found that Humphries had waived his right to seek rescission of the contract and that adequate remedies existed at law. Therefore, the court dismissed Humphries' claim for rescission with prejudice.

The jury returned the following special verdicts: (1) Humphries breached the agreements between the parties and as a result should pay Wright $6,805; (2) Wright breached the agreements by terminating Humphries and should pay Humphries $15,000; (3) Wright breached the agreements in other respects but no damages resulted; (4) Wright should pay up to $5,000 in accounts payable existing prior to the transaction; (5) Humphries should pay such accounts beyond $5,000; (6) Humphries should receive the accounts receivable prior to October 4, 1985; (7) Humphries should pay the $15,000 loan acquired prior to October 4, 1985; (8) Wright should pay the $30,000 loan acquired after October 4, 1985, with interest; (9) Wright made fraudulent misrepresentations about the value of the property and should pay Humphries $38,582 in damages; (10) Wright should pay Humphries $10,000 in attorney fees.

The foreman of the jury was questioned by the court concerning the $6,805 award for Humphries' breach of the contracts. The foreman explained that the amount represented various payments Humphries had made out of the nursery account which the jury found he misappropriated to his own use.

After the trial, Wright moved for judgment notwithstanding the verdict and for the court to exonerate the injunction bond. The court denied the motions. It did, however, deny the $15,000 award to Humphries because the court found as a matter of law that Humphries had been properly terminated given the jury finding he misappropriated nursery funds. In its judgment on the verdict, the court affirmed all of...