Miller v. Martineau & Co.
Annotate this Casepublication in the Pacific Reporter.
IN THE UTAH COURT OF APPEALS
----ooOoo----
Daniel A. Miller and David M. Kimball,
Plaintiffs and Appellees,
v.
Martineau & Company, Certified
Public Accountants;
Judge Building Associates, a Utah
limited partnership;
Harold J. Hill; J. Michael Martin;
and Wilma W. Gardner,
as personal representative of the
Estate of Kenneth N. Gardner, Deceased,
Defendants and Appellant.
OPINION
(For Official Publication)
Case No. 980240-CA
F I L E D
July 1, 1999
1999 UT App 216
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Third District, Salt Lake Department
The Honorable Frank G. Noel
Attorneys:
Russell G. Workman and Bruce J.
Nelson, Salt Lake City, for Appellant
Mark R. Gaylord, Salt Lake City,
for Appellees
-----
Before Judges Bench, Davis, and Orme.
DAVIS, Judge:
¶1
Defendant Martineau & Company
(Martineau) appeals the trial court's denial of its (1) Motion to Set Aside
Default Judgment, (2) Motion to Dismiss Remaining Causes of Action, and
(3) Motion for Preliminary Injunction. We affirm in part and reverse and
remand in part.
FACTS(1)
¶2
In March 1986, Judge Building Associates
(Associates) purchased certain real property located at 8 East Broadway,
Salt Lake City, Utah. The property is commonly known as the Judge Building
(the Property). On this same day, Associates executed a Deed of Trust with
Assignment of Rents and Leases (1986 Trust Deed) in favor of Republic Savings
and Loan Association (Republic) to secure a $2,300,000 note. The 1986 Trust
Deed was promptly recorded.
¶3
On November 13, 1990, Associates
entered into a lease agreement with Martineau, whereby Martineau leased
approximately five thousand square feet on the Property's fifth floor.
Martineau's lease was negotiated between Associates's general partner,
Harold J. Hill, and Martineau's principal, Leland Martineau. The lease
terms were so favorable to Martineau that Associates and Martineau had
a "gentleman's agreement" not to discuss the terms with the other tenants.
Martineau's lease was never recorded with the Salt Lake County Recorder's
office, nor was it approved by Republic.
¶4
In the fall of 1991, Associates
became delinquent on its obligation to Republic and stopped making payments.
In December 1991, Hill told Martineau of Associates's default. In January
1992, Republic filed a complaint against Associates and its principals,
Hill and J. Michael Martin, seeking to judicially foreclose the 1986 Trust
Deed.
¶5
Republic subsequently filed an Amended
Complaint, adding Martineau as a party. Upon being served with a copy of
the Amended Complaint, Martineau consulted with and was advised by counsel
regarding its rights and obligations as a tenant of the Property. Martineau
knew its lease interest was inferior, junior, and subordinate to Republic's
lien and, in the event of foreclosure, any and all rights and/or interest
it had in the Property as a leasehold tenant would be extinguished. Martineau
never filed an answer and/or counterclaim to the Amended Complaint.
¶6
Because of Martineau's inaction,
on March 5, 1993, the trial court entered a Default Judgment against Martineau.
The Default Judgment provided, in relevant part:
1. Plaintiff [Republic]
is awarded judgment against defendant Martineau & Company, Certified
Public Accountants, in accordance with its Amended Complaint to the effect
that the lien or interest, if any, of the defendant Martineau & Company,
Certified Public Accountants is inferior, junior and subordinate to the
lien of plaintiff upon the real property at issue herein . . . .
2. The defendant Martineau & Company is not a judgment debtor in the above-entitled action, is not a creditor having a lien by judgment or mortgage on the Property and is not a successor in interest to any such person or entity, and is not entitled to redeem the Property or any part thereof from any sale of the Property pursuant to Rule 69, Utah Rules of Civil Procedure.
3. Upon any execution sale of the
Property pursuant to the order of this Court in the above entitled action[,]
any interest or lien claimed by the defendant Martineau & Company shall
be forthwith extinguished and terminated.
¶7
Knowing its interest was inferior,
junior, and subordinate to Republic's, Martineau never appealed the Default
Judgment.
¶8
After the Default Judgment was entered
against Martineau, Leland Martineau and plaintiff David M. Kimball had
oral conversations regarding the Property. Although these conversations
were informal in nature, Mr. Martineau was put on notice that Kimball intended
to purchase the property. Mr. Martineau and Kimball also spoke about Mr.
Martineau's impressions of the Property and his desire to remain as a tenant.
¶9
On March 16, 1993, on Kimball's
behalf, Hill submitted a purchase offer to Republic to purchase the Property.
This offer was never accepted. Three days later, Republic sent a letter
of intent to Leland Martineau, offering to sell the Property to him for
$850,000 in cash. Mr. Martineau never accepted this offer.
¶10
Finally on May 28, 1993, the Property
was sold to plaintiffs here, Daniel A. Miller and David M. Kimball (plaintiffs).
On this date, a Real Estate Sale and Purchase Agreement (Purchase Agreement)
was executed by Associates, plaintiffs, and Republic, which had been renamed
as "TCF Bank Wisconsin" (TCF). Under paragraph 3.4 of the Purchase Agreement,
plaintiffs bought the property subject to and conditioned upon "the entry
of a final order by the Third Judicial District Court of Salt Lake County,
State of Utah, in the foreclosure action commenced by [Republic] and entitled
Republic Capital Bank, F.S.B. v. Judge Building Associates, et al."
In addition, the parties expressly agreed to preserve and assign to plaintiffs
the right to foreclose Martineau's leasehold interest.
¶11
On June 18, 1993, TCF executed an
Assignment which assigned all TCF's right, title, and interest in the 1986
Trust Deed and the foreclosure action to plaintiffs. Also on June 18, a
Subordination Agreement was executed by plaintiffs and TCF, which had agreed
to finance plaintiffs' purchase of the Property. The Subordination Agreement
prioritized the liens on the Property, and provided that plaintiffs' "Loan
Documents shall unconditionally be and remain at all times a lien or charge
upon the Property, prior and superior to the lien or charge of the March
6, 1986 Loan Documents." The Subordination Agreement further provided,
"The Foreclosure Action initiated by [TCF] and any foreclosure of the March
6, 1986 Loan Documents shall not operate to diminish, defeat, foreclose
or in any way impair the lien of the Purchasers' Loan Documents."
¶12
On June 21, 1993, several other
transactions took place regarding the Property. First, Associates conveyed
the Property to plaintiffs by Special Warranty Deed.
¶13
Second, plaintiffs obtained a new
loan from TCF, which was secured by a Deed of Trust/Assignment of Rents
and Security Agreement. Also part of this new loan package was an Assignment
of Leases executed by plaintiffs to TCF.
¶14
Third, a letter agreement was executed
by both plaintiffs and TCF. This letter agreement specifically stated that
it was "executed as part of the loan documents evidencing the loan of TCF
. . . to [plaintiffs]." The terms in the letter agreement were "considered
to be covenants or agreements of the [plaintiffs] under the terms of the
Promissory Note, Assignment of Leases, Deed of Trust, Assignment of Rents
and Security Agreement, or other documents executed to evidence the . .
. loan." Paragraph two of the letter agreement provided:
2. Within nine (9) months
from date hereof the Borrower shall have either entered into a revised
lease with Martineau & Company in a form satisfactory to [TCF] and
[plaintiffs] or shall have used its best efforts to complete the foreclosure
of the interest of Martineau & Company in the Judge Building property
pursuant to the foreclosure action assigned by [TCF] to [plaintiffs] .
. . .
¶15
Fourth, a Stipulation was entered
into among Associates, plaintiffs, and TCF. The relevant portions of this
Stipulation provided as follows:
G. In order to implement
the terms of the Purchase Agreement [between Associates and plaintiffs],
the parties hereto have agreed to the settlement of certain claims as among
them with respect to the matters covered by the Complaint in accordance
with the terms of this Stipulation.
. . . .
2. Substitution of Plaintiff; No Deficiency. As of the date hereof [TCF] has assigned to [plaintiffs] the cause of action set forth in the Complaint and the underlying note and Trust Deed and the [plaintiffs have] agreed that [plaintiffs'] rights thereunder [are] junior and subordinate to the Trust Deed and other loan documents entered into by [TCF] and [plaintiffs] pursuant to the Purchase Agreement. Accordingly, the parties stipulate that [plaintiffs] may be substituted in the above entitled action as parties plaintiff in place of and as successor to [TCF] as plaintiff for the sole purpose of completing the foreclosure of any interest Martineau may have in the Property and on the condition that no deficiency judgment will be sought against . . . Associates . . . .
3. Completion of Foreclosure; . . . . The parties acknowledge that [plaintiffs], or their designated assignees, may proceed with the above entitled foreclosure action or proceed with the non-judicial foreclosure of the Trust Deed, provided Hill and Martin are dismissed as party defendants, [and] no deficiency judgment is sought against . . . [Associates], Hill or Martin after any sheriff's sale of the Property . . . .
. . . .
8. Entire Agreement. This Stipulation contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings oral or written pertaining to the same . . . . (Emphasis added.)
¶16
On June 22, 1993, the trial court
entered an Order Approving Stipulation and Motion Re Partial Settlement,
Assignment of Cause of Action, Substitution of Plaintiff and Dismissal
of Certain Defendants. In relevant part, the court's order provided the
following:
1. The Stipulation is approved.
2. Daniel A. Miller and David M. Kimball are substituted as parties plaintiff in the place of Republic . . . .
3. Daniel A. Miller and David M. Kimball are substituted as parties plaintiff for the sole purpose of completing the foreclosure of any interest Martineau & Company . . . may have in the property which is the subject matter of the Complaint . . . . (Emphasis added.)
¶17
On November 1, 1993, the trial court
entered a Decree of Foreclosure and a sheriff's sale was noticed and scheduled
for November 30, 1993. In the Decree of Foreclosure, the trial court found
"that the interest of . . . Martineau & Company [is] subordinate to
the interest of plaintiffs, and [this] defendant [is] foreclosed of all
right, title, and interest in the subject property."
¶18
On November 24, 1993, one week before
the sheriff's sale was to occur, Martineau filed a Motion for Temporary
Restraining Order seeking to enjoin the foreclosure sale on the Property.
At this same time, Martineau filed a Motion to Dismiss Remaining Causes
of Action seeking to "dismiss any action pending against Martineau &
Company and to cause to be canceled any further proceedings of foreclosure
in this matter." Martineau premised its motion "on the grounds and for
the reasons that the Trust Deed under which this action was brought has
been, by law or in equity, canceled and is no longer effective. Any foreclosure
sale arising out of such Trust Deed would be ineffective and invalid."
¶19
Although there is no written order
in the record, both parties agree that the trial court orally granted Martineau's
motion for a temporary retraining order; the sheriff's sale scheduled for
November 30, 1993 was therefore canceled. At this time, the parties agreed
to suspend any further legal proceedings so they could attempt to settle
the matter. Although the parties "agreed to the verbiage of a temporary
restraining order," they "waited to submit the order to the court until
[they] agreed upon a date for a one-day hearing on the preliminary injunction."
By letter, Martineau's counsel stated,
We agreed on the phone that
no formal order was necessary for signature by the court. It is my understanding
that we have agreed that the temporary restraining order remains in effect
until either (1) the parties agree otherwise, or (2) subsequent order of
the court. I have also agreed to hold the $1,000 bond in my trust account
inasmuch as the clerk will not accept the funds without a formal court
order.[(2)]
¶20
The matter was set for a later date
at which time the trial court would determine whether a preliminary injunction
should issue, thus further delaying the sale. On October 7, 1994, before
a hearing on the motions pending before the trial court was held, Martineau
filed a Motion to Set Aside Default Judgment under Utah Rules of Civil
Procedure 60(b)(5) and 60(b)(6).(3)
¶21
The parties were unable to settle
the matter and a hearing was held on Martineau's Motion for Preliminary
Injunction, Motion to Dismiss Remaining Causes of Action, and Motion to
Set Aside Default Judgment on January 19, 1995. The trial court denied
Martineau's motions.
¶22
On June 29, 1995, the trial court
ruled that plaintiffs were "entitled to recover damages which 'should be
the costs and attorneys fees incurred by plaintiffs in defending against
the temporary restraining order, and the motion for preliminary injunction.'"
The trial court entered a subsequent order awarding plaintiffs their attorney
fees in the amount of $20,000.
¶23
Martineau appeals both the trial
court's denial of its motions, and the trial court's award of attorney
fees to plaintiffs.
ISSUES AND STANDARD OF REVIEW
¶24
We must first determine whether
the trial court erred in denying Martineau's Motion to Set Aside Default
Judgment, Motion for a Preliminary Injunction, and Motion to Dismiss.
¶25
"The district court judge is vested
with considerable discretion under Rule 60(b) in granting or denying a
motion to set aside a [default] judgment." Katz v. Pierce, 732 P.2d 92, 93 (Utah 1986). "The court should be generally indulgent toward setting
a judgment aside where there is reasonable justification or excuse for
the defendant's failure to answer and when timely application is made."
Id. However, "[t]hat some basis may exist to set aside the default
does not require the conclusion that the court abused its discretion in
refusing to do so when facts and circumstances support the refusal." Id.
¶26
"When reviewing a trial court's
[denial] of an injunction, we are generally careful not to disturb the
ruling unless the court abused its discretion or rendered a decision clearly
against the weight of the evidence." Aquagen Int'l, Inc. v. Calrae Trust,
972 P.2d 411, 412 (Utah 1998). "'The trial court's discretion must be exercised
consistently with sound equitable principles, "taking into account all
the facts and circumstances of the case."'" Id. at 412-13 (quoting
Kasco Servs. Corp. v. Benson, 831 P.2d 86, 90 (Utah 1992) (quoting
System Concepts, Inc. v. Dixon, 669 P.2d 421, 425 (Utah 1983))).
¶27
"Whether the trial court properly
denied [Martineau's] motion to dismiss presents questions of law which
we review for correctness, affording no deference to the trial court."
State v. Sterkel, 933 P.2d 409, 411 (Utah Ct. App. 1997).
¶28
Martineau also argues that the trial
court erroneously awarded plaintiffs their attorney fees. "'Whether attorney
fees are recoverable in an action is a question of law, which is reviewed
for correctness.'"
Wardley Corp. v. Welsh, 962 P.2d 86, 92 (Utah
Ct. App. 1998) (citation omitted).
ANALYSIS
¶29
Martineau challenges the trial court's
denial of its motions on essentially two bases: merger and express contract.(4)
We first address Martineau's merger argument.
Merger
¶30
Martineau argues that because plaintiffs
acquired legal title to the Property and also acquired TCF's lien, the
legal title and existing lien merged into one estate.(5)
Ordinarily, a transfer of
the interest of the mortgagor in mortgaged property to the mortgagee operates
as a merger of the two estates, which effects a discharge of the mortgage
and satisfaction of the debt, whether the interest transferred by the mortgagor
to the mortgagee is a legal title or an equity of redemption.
55 Am. Jur. 2d Mortgages §
1340 (1996); accord Mid Kansas Fed. Sav. & Loan Ass'n v.
Dynamic Dev. Corp., 804 P.2d 1310, 1317 (Ariz. 1991) ("[M]erger may
occur when a mortgagee's interest and the fee title are owned by the same
person."); Altabet v. Monroe Methodist Church, 777 P.2d 544, 545
(Wash. Ct. App. 1989) ("Merger occurs when the fee interest and a charge,
such as a deed of trust or a mortgage, vests in the possession of one person.");
59 C.J.S. Mortgages § 444 (1998) ("Ordinarily, the purchase
or acquisition of the equity of redemption in mortgaged premises by the
mortgagee results in a merger of the two estates vesting the mortgagee
with the complete title, and putting an end to his rights or title under
the mortgage, thus extinguishing the mortgage lien." (footnote omitted)).
"However, mergers are presumed only when equity demands."
Federal Land
Bank v. Colorado Nat'l Bank, 786 P.2d 514, 515 (Colo. Ct. App. 1989);
accord Altabet, 777 P.2d at 545 ("'Equity does not favor
the doctrine of merger . . . .'") (citation omitted)).
¶31
There are recognized exceptions
to merger:
"Where a mortgage incumbrancer
becomes the owner of the legal title, or of the equity of redemption, a
merger will not be held to take place if it be apparent that it was not
the intention of the owner, or if, in the absence of any intention, the
merger would be against his manifest interest."
O'Reilly v. McLean, 84 Utah 551,
37 P.2d 770, 773 (1934) (citation omitted). Thus, "'if it was the intention
to keep the mortgage alive, or if it is to the interest of the mortgagee,
and it can be done without prejudice to the rights of the mortgagor or
third persons, the doctrine of merger, as between them, will not apply.'"
Id. (citation omitted).
¶32
Additionally, "[t]he doctrine of
merger does not apply if there are other intervening encumbrances on the
property." Altabet, 777 P.2d at 545.
[I]t is generally held that
the acquisition by the mortgagee of the interests of the mortgagor will
not, in the absence of a showing of an intention to the contrary, operate
as a merger of the mortgage in the fee, where the mortgage is necessary
to protect the mortgagee from intervening claims or liens of third persons.
55 Am. Jur. 2d Mortgages §
1345 (1996); accord 59 C.J.S. Mortgages § 448 (1998)
("[N]o merger will result from the mortgagee's acquisition of the equity
of redemption if the continued existence of the mortgage is necessary to
enable the mortgagee to defend his rights against intervening liens of
third persons.").
¶33
In determining whether the parties
intended merger to occur, "'[w]here such intention is not expressed, the
court must endeavor to ascertain it by the circumstances connected with
the transaction or must indulge in some presumption by which prima facie
its existence may be determined.'"
O'Reilly, 37 P.2d at 773 (citation
omitted); accord 59 C.J.S.
Mortgages § 447 (1998) (stating
issue of merger is "primarily one of intention"). "The intention of the
parties on the question of merger may be expressly declared, or it may
appear from the conduct of the parties, the circumstances of the transaction,
and the particular equities of the case. In any event, however, the intention
must be clear." 59 C.J.S. Mortgages § 447 (1998).
¶34
"[T]he intention of the party in
whom title unites is a question of fact . . . ." Federal Land Bank,
786 P.2d at 515-16; accord 59 C.J.S. Mortgages § 447
(1998) ("The question whether or not the parties intended that a merger
of estates should take place is a question of fact."). Here, the trial
court entered two relevant findings of fact that remain unchallenged by
Martineau:
25. . . . The purchase of
the Property by plaintiffs from Associates was a transaction which the
parties did not intend to be a merger of their legal title and their lien
on the Property.
26. Plaintiffs[,] Associates[,] and Republic did not intend the two interests (Associates' title and Republic's lien) to merge. Likewise, plaintiffs (the holders of both the trust deed and the Property) are benefited by keeping the estates distinct. Thus, because Martineau does not challenge the trial court's pertinent findings, we affirm the trial court's conclusion that the parties did not intend that a merger occur.
¶35
Additionally, even if there was
no clear intention to prevent merger, we note that merger would not occur
under the facts of this case because "'the merger would be against [plaintiffs']
manifest interest.'"
O'Reilly, 37 P.2d at 773 (citation omitted);
accord Federal Land Bank, 786 P.2d at 516; 55 Am. Jur. 2d
Mortgages § 1344 (1996) ("[T]he general rule is that the mortgage
is not merged if it is not to the interest of the mortgagee to have it
merged."). "[I]t must be presumed that the mortgagee intended to do that
which was most advantageous to himself, and if this is that the two estates
shall not merge, no merger will take place." 55 Am. Jur. 2d Mortgages
§ 1344 (1996). As well stated by plaintiffs, merger would have "the
effect of elevating Martineau to a senior position." Clearly, it would
be entirely disadvantageous to plaintiffs and/or their predecessor in interest
if the two estates merged.
Plaintiffs' Contractual Obligation to Martineau
¶36
Martineau also argues that plaintiffs
are contractually bound to honor its lease. Martineau relies on two documents
to support its argument. The June 21, 1993 Deed of Trust/Assignment of
Rents and Security Agreement executed by plaintiffs in favor of TCF provided
that "Borrower [plaintiffs] shall comply with and observe Borrower's obligations
as landlord under all leases of the Property or any part thereof." The
June 21, 1993 Assignment between plaintiffs and TCF provided that "Assignor
[plaintiffs] agrees: (a) to observe and perform all obligations imposed
upon the lessor under the Leases." Martineau argues that these provisions
create a duty upon plaintiffs to honor a provision in Martineau's lease,
which provides in relevant part:
So long as [Martineau] is
not in default under the terms of this Lease, . . . this Lease shall remain
in full force and effect for the full term hereof and shall not be terminated
as a result of any foreclosure (or transfer in lieu thereof) of such mortgage
or other security instrument to which [Martineau] has subordinated its
rights pursuant to this Subparagraph.
Martineau maintains that these "'fundamental'
lease obligation[s]" require plaintiffs "to allow Martineau to occupy the
premises for the time periods and for the rent amounts in the lease."
¶37
Because Martineau was not a party
to either contract, we assume it is asserting that it is somehow a third-party
beneficiary of these contracts. "To have enforceable rights under the .
. . contracts, [Martineau] had to establish that it was an intended
beneficiary of one or more of those contracts." American Towers Owners
Ass'n, Inc. v. CCI Mechanical, Inc., 930 P.2d 1182, 1188 (Utah 1996).
"'The intent of the contracting parties to confer a separate and distinct
benefit must be clear.'" Id. (quoting Ron Case Roofing &
Asphalt Paving, Inc. v. Blomquist, 773 P.2d 1382, 1386 (Utah 1989)).
"A third party who benefits only incidentally from the performance of a
contract has no right to recover under that contract."
Broadwater v.
Old Republic Sur., 854 P.2d 527, 537 (Utah 1993).
¶38
The June 1993 Deed of Trust and
June 21, 1993 Assignment did not confer a clear, separate, and distinct
benefit upon Martineau. Not only is the boilerplate language in these contracts
there to protect TCF, as opposed to Martineau, but the June 1993 letter
agreement, which was "considered to be covenants or agreements of the [plaintiffs]
under the terms of the Promissory Note, Assignment of Leases, Deed of Trust,
Assignment of Rents and Security Agreement, or other documents executed
to evidence the . . . loan," specifically provided that plaintiffs were
either going to revise the lease with Martineau or foreclose on Martineau's
leasehold interest in the Property. Thus, the parties intended to defeat
Martineau's rights as a third party, not to bestow a benefit upon Martineau.
Martineau's contractual argument therefore fails.
¶39
Because Martineau's merger and contractual
arguments fail, we hold that the trial court did not abuse its discretion
in denying Martineau's Motion to Set Aside Default Judgment or Motion for
Preliminary Injunction. It follows that the trial court correctly denied
Martineau's Motion to Dismiss Remaining Causes of Action.(6)
Attorney Fees
¶40
Lastly, Martineau argues the trial
court erred in awarding attorney fees to plaintiffs or, in the alternative,
erred by awarding an incorrect amount of attorney fees.
¶41
Martineau first contends that because
the trial court never entered a formal temporary restraining order, nor
did the trial court enter on the record reasons for extending the temporary
restraining order, plaintiffs are not entitled to attorney fees, or should
be limited to the amount plaintiffs incurred within the ten days following
the trial court's oral grant of the temporary restraining order. Martineau
relies on Rule 65A(b)(2) of the Utah Rules of Civil Procedure to support
its argument. Rule 65A(b)(2) provides, in relevant part:
The order shall expire by
its terms within such time after entry, not to exceed ten days, as the
court fixes, unless within the time so fixed the order, for good cause
shown, is extended for a like period or unless the party against whom the
order is directed consents that it may be extended for a longer period.
The reasons for the extension shall be entered of record.
Utah R. Civ. P. 65A(b)(2). Martineau
claims that although the parties stipulated to keeping the temporary restraining
order in place until a hearing could be held on the preliminary injunction,
because the reasons for the stipulated extension were not entered on the
record as required by Rule 65A(b)(2), the temporary retraining order expired
by its terms after ten days.
¶42
We reject Martineau's argument.
Martineau clearly stipulated to and had enjoyed the protection of the extended
temporary restraining order.(7) In fact,
Martineau's counsel, by letter to plaintiffs' counsel, stated, "We agreed
on the phone that
no formal order was necessary for signature by the
court. It is my understanding that we have agreed that the temporary
restraining order remains in effect until either (1) the parties agree
otherwise, or (2) subsequent order of the court." (Emphasis added.) Furthermore,
the record reflects that Martineau had prepared the necessary order but
did not submit it to the court. To hear Martineau complain now of the procedural
deficiency "smacks of invited error, which is 'procedurally unjustified
and viewed with disfavor.'" Parsons v. Barnes, 871 P.2d 516, 520
(Utah 1994) (quoting State v. Tillman, 750 P.2d 546, 560-61 (Utah
1987)). "The doctrine of invited error 'prohibits a party from setting
up an error at trial and then complaining of it on appeal.'" State v.
Perdue, 813 P.2d 1201, 1205 (Utah Ct. App. 1991) (quoting State
v. Henderson, 792 P.2d 514, 516 (Wash. 1990)). Because "'invited error
precludes judicial review,'" id. (quoting Henderson, 792
P.2d at 516), we decline to address this argument further.(8)
¶43
Martineau argues next that the trial
court failed to distinguish between fees relating to the temporary restraining
order and preliminary injunction, and fees incurred defending against the
other motions before the court. In its appellate brief, Martineau states,
"The preliminary injunction request . . . is the only matter considered
by the trial court that arguably falls within the scope of allowable attorney[]
fees under Rule 65A."
¶44
Rule 65A(c)(2) provides that attorney
fees "may be awarded to a party who is found to have been wrongfully restrained
or enjoined." Utah R. Civ. P. 65A(c)(2). A party is entitled to only those
attorney fees incurred because of "the application for, and issuance of,
the . . . injunction."
Tholen v. Sandy City, 849 P.2d 592, 597 (Utah
Ct. App. 1993). "When attorney fees are incurred in defending against wrongfully
obtained injunctive relief and also against an underlying lawsuit, it is
appropriate to determine how much of the total fees are attributable to
resisting the injunction."
Saunders v. Sharp, 793 P.2d 927, 933
(Utah Ct. App. 1990).
¶45
Given that continuation of the temporary
restraining order was stipulated to and there were not separate proceedings
on a motion for preliminary injunction, it is difficult to see how plaintiffs'
attorneys could reasonably have spent the equivalent of a month's work
in resisting the injunctive relief wrongfully entered against them. The
kind of detailed findings that might explain such a conclusion are wholly
lacking in this case. Nor can the several findings that should have been
made in calculating an appropriate award of attorney fees, see, e.g.,
Dixie State Bank v. Bracken, 764 P.2d 985, 991 (Utah 1988), be properly
implied.
¶46
A finding can be implied only when
it is irrefutable that the trial court necessarily made a finding that
it failed to state. See, e.g., Selvage v. J.J. Johnson &
Assocs., 910 P.2d 1252, 1266 (Utah Ct. App. 1996) (stating to imply
findings, "there must be clear evidence that the court 'actually considered'
and 'necessarily' made its findings") (quoting Hall v. Hall, 858 P.2d 1018, 1025 (Utah Ct. App. 1993)); Hall, 858 P.2d at 1025-26
(discussing limited circumstances in which appellate courts will imply
findings and noting "we will not imply any missing finding where there
is a 'matrix of possible factual findings'") (quoting Adams v. Board
of Review, 821 P.2d 1, 6 (Utah Ct. App. 1991)). Here the trial court
awarded "the surprisingly round sum" of $20,000,
Martindale v. Adams,
777 P.2d 514, 517 (Utah Ct. App. 1989), but this bottom line is a legal
conclusion, the correctness of which depends on findings of fact that are
simply not there and that are impossible to imply.
¶47
It is for this reason that cases
remanding conclusory attorney fee awards for the entry of adequate findings
are legion,(9) while one looks in vain for
a single case in which either Utah appellate court has implied the findings
necessary to sustain an award of attorney fees not supported by adequate
express findings.(10)
¶48
For the foregoing reasons, we remand
the case for the entry of adequate findings of fact concerning attorney
fees and such reconsideration of the award as may then be proper.
CONCLUSION
¶49
We hold that because the parties
did not intend for the Property's legal title and the mortgage lien to
merge, and because it would have been against plaintiffs' manifest interest,
merger did not occur. We also hold that Martineau has no enforceable rights
as a third-party beneficiary to the contracts among plaintiffs and third
parties. Thus, the trial court did not abuse its discretion in denying
Martineau's Motion to Set Aside Default Judgment or denying Martineau's
Motion for Preliminary Injunction. We also conclude the trial court correctly
denied Martineau's Motion to Dismiss Remaining Causes of Action.
¶50
The trial court's award of attorney
fees to plaintiffs is vacated and the matter is remanded for the entry
of adequate findings of fact. We reject Martineau's request for attorney
fees incurred on appeal. Because plaintiffs are the prevailing party on
appeal, and because they were awarded attorney fees below, we grant their
request for attorney fees incurred on appeal. SeeValcarce v. Fitzgerald,
961 P.2d 305, 319 (Utah 1998).
______________________________
James Z. Davis, Judge
-----
¶51
WE CONCUR:
______________________________
Russell W. Bench, Judge
______________________________
Gregory K. Orme, Judge
1. Because the trial court's underlying findings of fact remain unchallenged, we primarily recite the facts as entered by the trial court.
2. Utah Rule of Civil Procedure 65A(c) requires a party seeking a temporary restraining order to give some form of security "in such sum and form as the court deems proper." Utah R. Civ. P. 65A(c)(1). "The amount of security shall not establish or limit the amount of costs, including reasonable attorney fees incurred in connection with the restraining order or preliminary injunction, or damages that may be awarded to a party who is found to have been wrongfully restrained or enjoined." Utah R. Civ. P. 65A(c)(2).
3. Rules 60(b)(5) and 60(b)(6) were previously numbered 60(b)(6) and 60(b)(7) respectively. We refer to the current version.
4. Martineau does not challenge the trial court's findings of fact. Therefore, "'"we assume[] that the record supports the findings of the trial court and proceed[] to a review of the accuracy of the lower court's conclusions of law and the application of that law in the case."'" Campbell v. Box Elder County, 962 P.2d 806, 808 (Utah Ct. App. 1998) (citations omitted).
5. Because Martineau's equitable argument is a variation of its merger argument, we do not address it separately.
6. Martineau also complains that the plaintiffs and TCF improperly prioritized the 1993 Trust Deed securing payment of the loan to plaintiffs, thereby increasing the total encumbrances on the Property. Even if Martineau had standing to assert this claim, it has no merit. Martineau does not challenge the regularity of the sheriff's sale nor attempt to show what difference the subordination of the lien being foreclosed made vis-a-vis Martineau.
7. It was suggested
at oral argument that, by stipulating to the extension of the temporary
restraining order, plaintiffs may have waived their right to attorney fees
allowed under Rule 65A(c)(2). However, in order to waive a known right,
the party must have "an intention to relinquish the right. The intention
to relinquish the right may be either expressed or implied and may be implied
from action or inaction." K & T, Inc. v. Koroulis, 888 P.2d 623, 629 (Utah 1994). Here, the parties agreed that Martineau would keep
the security in place as required by Rule 65A(c)(1). The purpose of the
security is to cover damages, including attorney fees, incurred by a wrongfully
restrained party. Thus, neither party contemplated that the stipulation
included plaintiffs' intentional waiver of their potential right to attorney
fees.
Additionally, during the hearing
on plaintiffs' request for damages, the trial court asked plaintiffs' counsel
whether the stipulation "said anything about damages." Plaintiffs' counsel
indicated that it did not, without objection from Martineau's counsel.
See Smoyer Constr. Co. v. Hamrick Supply Co., 508 So. 2d 958, 959 (La. Ct. App. 1987) (holding that because stipulation to dissolve
temporary restraining order did not include stipulation to waive right
to attorney fees, "defendant still has the right to pursue its claim for
attorney fees").
8. Martineau cites Birch Creek Irrigation v. Prothero, 858 P.2d 990 (Utah 1993), to support its argument that because the reasons for an extension were not entered on the record, the temporary restraining order expired after ten days. However, Birch Creek is distinguishable on its facts. There, the party resisting the temporary restraining order maintained that the parties did not stipulate to extending the order. See id. at 995. Here, both parties agreed to extend the temporary restraining order, and Martineau was the proponent, not the opponent, of the temporary restraining order. Accordingly, Birch Creek is inapposite.
9. See, e.g., Foote v. Clark, 962 P.2d 52, 56-57 (Utah 1998); Valcarce v. Fitzgerald, 961 P.2d 305, 318 (Utah 1998); Cottonwood Mall Co. v. Sine, 830 P.2d 266, 269 (Utah 1992); A.K. & R. Whipple Plumbing & Heating v. Aspen Constr., 365 Utah Adv. Rep. 3, 6-7 (Utah Ct. App. 1999); Selvage v. J.J. Johnson & Assocs., 910 P.2d 1252, 1266 (Utah Ct. App. 1996); American Vending Servs. v. Morse, 881 P.2d 917, 926-27 (Utah Ct. App. 1994); Rappleye v. Rappleye, 855 P.2d 260, 266 (Utah Ct. App. 1993); Muir v. Muir, 841 P.2d 736, 742 (Utah Ct. App. 1992); Brown v. Richards, 840 P.2d 143, 156 (Utah Ct. App. 1992); In re Estate of Quinn, 830 P.2d 282, 287-89 (Utah Ct. App. 1992); Bell v. Bell, 810 P.2d 489, 494 (Utah Ct. App. 1991).
10. Indeed, this court, in taking liberties in an effort to affirm an inadequately explained award of attorney fees, has itself been reversed by the Utah Supreme Court, with instruction that the case be remanded for further consideration by the trial court. SeeWilley v. Willey, 951 P.2d 226, 233 (Utah 1997).
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