Insurance Company of the West v. Wallace Investment Limited Partnership et al
Filing
70
MEMORANDUM DECISION granting 47 Motion for Partial Summary Judgment. Plaintiff is ordered to provide a detailed account of the losses and expenses it has incurred in enforcing the Set Aside Agreement and the Indemnity Agreement to assist the court in calculating the exact amount of damages. The parties are hereby ordered to contact the court within ten (10) days from the date of thisorder to establish the schedule for plaintiffs disclosures. Signed by Judge David Sam on 8/29/13. (jmr)
THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
INSURANCE COMPANY OF THE WEST
,
)
Case No.2:11CV500 DS
Plaintiff,
)
vs.
)
WALLACE INVESTMENT LIMITED
PARTNERSHIP; WILLIAM DEAN
)
WALLACE;DEANNE H. WALLACE;
WILLIAM DEAN WALLACE, AS
)
TRUSTEE OF THE WILLIAM DEAN
WALLACE REVOCABLE TRUST DATED
)
1/28/94; LONE PEAK DEVELOPMENT
PARTNERS, LLC; LEGACY INVESTMENT
GROUP, LLC; BP BUILDERS, INC.;
GLADE BENTON TUCKETT; MARIELLEN )
PYPER TUCKETT; STEVE EZELL;
SHARON EZELL; JARED L. BISHOP; )
and ANDREA BISHOP,
)
Defendants.
MEMORANDUM DECISION
)
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
Plaintiff INSURANCE COMPANY OF THE WEST (“ICW”) seeks partial
summary judgment for breach of contract against Defendants WALLACE
INVESTMENT LIMITED PARTNERSHIP; WILLIAM DEAN WALLACE; DEANNE H.
WALLACE; WILLIAM DEAN WALLACE, AS TRUSTEE OF THE WILLIAM DEAN
WALLACE REVOCABLE
Defendants”);
LONE
TRUST
PEAK
DATED
1/28/94
DEVELOPMENT
(collectively, “Wallace
PARTNERS,
LLC;
LEGACY
INVESTMENT GROUP, LLC; BP BUILDERS, INC.; GLADE BENTON TUCKETT;
MARIELLEN PYPER TUCKETT; STEVE EZELL; SHARON EZELL;JARED L. BISHOP;
and ANDREA BISHOP (collectively, “Lone Peak Defendants”) pursuant
to Rule 56 of the Federal Rules of Civil Procedure.1
BACKGROUND
This action arises out of a failed subdivision improvement
project near Heber, Utah. Wasatch County required Wallace
Defendants, as developer, to provide two performance bonds
guaranteeing completion of the project, which Wallace Defendants
obtained from ICW. To obtain the bonds, both Wallace Defendants
and Lone Peak Defendants entered into an Indemnity Agreement with
ICW, wherein both defendants agreed to indemnify ICW against any
and all liability for losses and expenses by reason of having
executed the bonds.
Wasatch County made demand on ICW to complete the
improvements or remit the bond proceeds. ICW notified all
defendants of Wasatch County’s demand on the bonds and requested
that defendants indemnify ICW against the claims, but defendants
failed to indemnify or provide any collateral to ICW. ICW then
began investigating the claim on the bonds, including assessing
the scope of the work to complete the improvements. Wasatch
County again made demand upon ICW to complete performance of the
improvements or remit payment. ICW settled the claims on the
1
The Court was advised by counsel for plaintiff on August 26,
2013 that a settlement agreement had been reached between plaintiff
and the Wallace Defendants. Accordingly, this memorandum decision
will address plaintiff’s claims against the Lone Peak Defendants
only.
2
bonds and paid Wasatch County $180,000 for full release of the
county’s claims against ICW on the bonds. ICW again requested
that defendants propose how they would reimburse ICW for its
losses and expenses on the bonds, and, yet again all defendants
failed to reply or make payment.
As a condition of providing the bonds, ICW required that
Wallace Defendants’ lender, Centennial Bank, sign an agreement
with ICW to set aside sufficient funds for the costs of the
improvements (Set Aside Agreement), which funds were to be made
immediately available to ICW in the event Wallace Defendants
failed to complete and pay for the improvements. ICW sought to
obtain the funds covered by the Set Aside Agreement from FDIC,
Receiver for Centennial Bank. FDIC did not turn over any funds to
ICW, and, subsequently, ICW commenced action against FDIC, which
action is still pending. ICW is now seeking judgement against
Lone Peak Defendants to directly recover the $180,000 as well as
all attorney fees and expenses incurred as a result of seeking to
enforce the Set Aside Agreement and the Indemnity Agreement.
Plaintiff claims expenses totaling $339,135.94.
ANALYSIS
Plaintiff moves for partial summary judgment for breach of
contract pursuant to Rule 56 of the Federal Rules of Civil
Procedure. Lone Peak Defendants dispute liability based on
alleged promises made by ICW’s representative, David Styers
3
(“Styers”). Lone Peak Defendants argue they relied on Styer’s
alleged representations that in exchange for full cooperation
with ICW, ICW would forego enforcement of the Indemnity Agreement
against Lone Peak. Lone Peak Defendants dispute liability for the
fees in excess of the $180,000 ICW paid to Wasatch County. They
argue Plaintiff does not have a basis to recover attorney fees
and expenses based on enforcement of the Set Aside Agreement and
that Plaintiff’s attorney fees were not reasonable.
Summary judgment is appropriate “if the movant shows there
is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a).
“The party seeking summary judgment bears the initial burden of
demonstrating an absence of a genuine issue of material fact.”
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “Once the
moving party has properly supported its motion for summary
judgment, the burden shifts to the nonmoving party to go beyond
the pleadings and set forth specific facts showing that there is
a genuine issue for trial.” Sally Beauty Co., v. Beautyco. Inc.,
304 F.3d 964, 971 (10th Cir. 2002.) The Court construes “the
evidence and the reasonable inferences drawn therefrom in light
most favorable to the nonmovant.” Id. At 972.
“The elements of a prima facie case for breach of contract
are (1) a contract, (2) performance by the party seeking
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recovery, (3) breach of the contract by the other party, and (4)
damages.” Bair v Axiom Design, 20 P.3d 388, 392 (Utah 1934).
There is no material dispute as to the first element because
Lone Peak Defendants admit they entered into the Indemnity
Agreement with ICW.
There is no material dispute as to the second element
because, even in viewing “the evidence and the reasonable
inferences in light most favorable” to Lone Peak Defendants, the
Court cannot find that there was a valid modification of the
Indemnity Agreement. Sally Beauty Co. 304 F.3d at 971. The
Indemnity Agreement expressly states that any modification must
be a written amendment signed by ICW. Even though there is a
well-established rule that allows parties to a written contract
to “modify, waive, or make new terms notwithstanding terms in the
contract designed to hamper such freedom,” Lone Peak Defendants
are required to establish that there was a valid modification.
Davis v. Payne & Day, Inc., 348 P.2d 337, 339 (Utah 1960). A
valid modification of a contract “requires a meeting of the minds
of the parties, which must be spelled out, either expressly or
impliedly, with sufficient definiteness.” Richard Barton Enters.
v. Tsern, 928 P.2d 368, 373 (Utah 1996). Lone Peak Defendants
have not met their burden of “proving by clear and convincing
evidence an intent to so modify the agreement,” and their
argument for oral modification fails for indefiniteness. EDO
5
Corp. v. Beech Aircraft Corp., 911 F.2d 1447, 1454 (10th Cir.
1990). Thus, the court finds that ICW performed its obligations
under the written terms of the Indemnity Agreement by delivering
the two performance bonds.
Furthermore, there is no material dispute as to the third
element that Lone Peak Defendants breached the contract by
failing to indemnify and provide collateral to ICW pursuant to
Sections 1 and 2 of the Indemnity Agreement.
Finally, there is no material dispute as to the fourth
element of damages. Lone Peak does not dispute that ICW has in
fact suffered damages, rather they dispute that ICW has
sufficiently established the amount of damages. Lone Peak fails
on this argument because plaintiff is entitled to damages
incurred in the Set Aside Agreement. The court finds it is
reasonable to infer that Plaintiff reasonably believed “that it
was liable for the amount paid or that it was expedient under all
the circumstances to make such payment” pursuant to Section 1 of
the Indemnity Agreement, and that subsequently, ICW has provided
a reasonable estimate of the amount of damages it has incurred.
Therefore, the Court grants partial summary judgment for breach
of the Indemnity Agreement against Lone Peak Defendants, with the
exact amount of damages to be determined at a later date.
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CONCLUSION
Based upon the foregoing, the Court grants partial summary
judgment for breach of contract against Lone Peak Defendants and
concludes that Plaintiff is entitled to reasonable damages.
Plaintiff is ordered to provide a detailed account of the losses
and expenses it has incurred in enforcing the Set Aside Agreement
and the Indemnity Agreement to assist the court in calculating
the exact amount of damages. The parties are hereby ordered to
contact the court within ten (10) days from the date of this
order to establish the schedule for plaintiff’s disclosures.
SO ORDERED.
DATED this 29th day of August, 2013.
BY THE COURT:
DAVID SAM
SENIOR JUDGE
UNITED STATES DISTRICT COURT
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