VR Utah, Inc. v. Gruber

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Ruf, Inc., a Utah corporation;
Donald M. Dudley, an individual;
and William Gruber, an individual,
Plaintiffs and Appellants,

v.

Icelandic Investments, Inc., a Utah corporation;
Robert Johnson, an individual; and VR Utah, Inc.,
dba VR Business Brokers, a Utah corporation,
Defendants and Appellees.
______________________________

VR Utah, Inc., dba VR Business
Brokers, a Utah corporation,
Third-party Plaintiff and Appellee,

v.

William J. Gruber, an individual,
Third-party Defendant and Appellant.

MEMORANDUM DECISION
(Not For Official Publication)

Case No. 971691-CA

F I L E D
April 1, 1999
  1999 UT App 103 -----

Third District, Salt Lake Department
The Honorable Stephen L. Henriod

Attorneys:
Blake S. Atkin and Jonathan Hawkins, Salt Lake City, for Appellants
Phillip W. Dyer and Kevin C. Timken, Salt Lake City,
for Appellees VR Utah and VR Business Brokers
Leslie W. Slaugh, Provo, for Appellees Icelandic and Johnson

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Before Judges Greenwood, Billings, and Jackson.

BILLINGS, Judge:

Appellants Ruf, Inc. and Donald Dudley (appellants) appeal the trial court's grant of summary judgment in favor of appellees Icelandic Investments, Inc. (seller) and VR Utah, Inc. (broker). Appellants also appeal the trial court's denial of their Motion to Amend and Motion for New Trial. We affirm.

Appellants first argue the trial court erred in granting summary judgment to broker, dismissing appellants' fraud and negligent misrepresentation claims. We disagree. To prove fraud or negligent misrepresentation, appellants must show, among other things, that they reasonably relied on the false or misleading representation. See, e.g., Crookston v. Fire Ins. Exch., 817 P.2d 789, 800 (Utah 1991); Maack v. Resource Design & Const., Inc., 875 P.2d 570, 576 (Utah Ct. App. 1994). In this case, appellants signed an agreement expressly stating that appellants would not and could not rely on any representation made by broker:

Article XX: RELEASE OF LIABILITY 1. By signing this Agreement, BUYER hereby acknowledges that BUYER is relying solely on BUYER'S own inspection of the business and the representations of SELLER and not on VR BUSINESS BROKERS [VR Utah], . . . with regard to the prior operating history of the business, the value of the assets being purchased and all other material facts of SELLER in making this offer. BUYER acknowledges that [VR Utah] has not verified, and will not verify, the representations of SELLER and should any such representations be untrue, BUYER agrees to look solely to SELLER for relief and to indemnify [VR Utah] and hold [VR Utah] harmless in connection with all losses and damages caused BUYER thereby. (emphasis added).

This clause precludes appellants from contending that they relied on any representation made by broker.(1) Absent a showing of reliance, the fraud and negligent misrepresentation claims fail. We therefore affirm the trial court's grant of summary judgment to broker.

Appellants also argue the trial court erred when it granted summary judgment to seller, denying appellants' fraud and negligent misrepresentation claims and awarding seller the balance of the purchase price. We disagree. Proof of damages is a required element of fraud or negligent misrepresentation. Moreover, "a plaintiff has a duty to mitigate his damage." Conder v. A.L. Williams & Assocs., 739 P.2d 634, 639 (Utah Ct. App. 1987). Appellants have failed to show any legitimate damages resulting from the alleged misrepresentations, therefore their claims fail.

On appeal, appellants point to the purportedly reduced value of a company involved in litigation as evidence of damages. However, appellants did not raise this issue nor present evidence of any such damages before the trial court, and we therefore refuse to consider it on appeal. See Ong Int'l (U.S.A.) v. 11TH Ave. Corp., 850 P.2d 447, 455 n.31 (Utah 1993).

Additionally, appellants argue they lost their source of financing due to the misrepresentation, and thus have demonstrated damages. However, this assertion of damage is legally insufficient to withstand summary judgment. The undisputed facts show that appellant Dudley failed to attempt to obtain financing elsewhere once his initial source fell through. Because Dudley failed to mitigate his damages, he "is not entitled to recover damages for any harm that he could have avoided by the use of reasonable effort. . . ." Conder, 739 P.2d at 639. To prove damages, Dudley must have at least attempted to get other financing. Only had he been unable to do so, could he then claim the loss of financing as legitimate damage. Thus, we affirm the trial court's grant of summary judgment to seller.

Finally, appellants argue the trial court abused its discretion when it denied their Motion to Amend. We disagree.

Utah courts should consider the following factors in determining whether to allow amendment: (1) the timeliness of the motion; (2) the justification for delay; and (3) any resulting prejudice to the responding party. Appellate courts uphold a trial court's denial of a motion to amend if the amendment is sought late in the course of litigation, if the movant was aware of the facts underlying the proposed amendment long before its filing, and if there is no adequate explanation for the delay.

Swift Stop, Inc. v. Wight, 845 P.2d 250, 253 (Utah Ct. App. 1992) (citations omitted). In this case, appellants filed their motion four years after their initiation of this litigation; appellants knew the facts underlying the proposed amendment long before filing the motion; and appellants offered no explanation for the delay. Thus, we conclude the trial court properly denied appellants' Motion to Amend.(2)

In sum, we affirm the trial court's grant of summary judgment in favor of brokers and sellers, and the trial court's denial of appellants' motions to amend and for new trial. Based on the contract language and the disposition of this case, brokers and sellers are entitled to attorney fees on appeal.
 
 
 

______________________________
Judith M. Billings, Judge

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WE CONCUR:
 
 

______________________________
Pamela T. Greenwood,
Associate Presiding Judge
 
 

______________________________
Norman H. Jackson, Judge

1. Appellants point out that clauses which release parties from liability for their own fraudulent conduct are void as against public policy. See, e.g., Ong Int'l (U.S.A.) v. 11TH Ave. Corp., 850 P.2d 447, 453 (Utah 1993)(finding general release from liability void or voidable where procured by fraud). We find such releases broadly limiting liability distinguishable from the disclaimer clause here. The clause contractually defines roles, identifies the source of any representations, highlights the obligation of the buyer to verify information, and precludes reliance on any representation made by broker. The result is not a limitation on liability even where claims can be proved, but rather that appellants cannot prove the claim because an element fails since appellants affirmatively disclaimed any reliance on broker.

2. We also conclude the trial court did not "manifestly abuse its discretion" in denying appellants' Motion for New Trial, and affirm the trial court's decision.