Mitchell v. Prime Commercial

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Brent D. Mitchell,
Plaintiff and Appellee,

v.

Prime Commercial, Inc., a corporation;
and Salt Lake Board of Realtors, a corporation,
Defendants and Appellant.

MEMORANDUM DECISION
(Not For Official Publication)

Case No. 980295-CA

F I L E D
December 30, 1999

1999 UT App 385 -----

Third District, Salt Lake Department
The Honorable Anne Stirba

Attorneys:
Thomas R. Karrenberg, Nathan B. Wilcox, and Stephan P. Horvat, Salt Lake City, for Appellant
Dennis K. Poole and Andrea Nuffer Godfrey, Salt Lake City, for Appellee

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Before Judges Greenwood, Bench, and Billings.

BENCH, Judge:

Appellant, Prime Commercial, Inc. (Prime), appeals the trial court's grant of summary judgment against it on its counterclaim, arguing that its interpretation of the relevant paragraphs of the parties' written agreement (the Agreement) is a reasonable interpretation, and thus ambiguity precludes the entry of summary judgment. We agree.

I. The Stipulated Judgment

Appellee Mitchell asserts that Prime waived its right to appeal by entering into a stipulated judgment without reserving the right to appeal or addressing in any way the counterclaim or the summary judgment. "A judgment by consent or stipulation is generally construed as an agreement between the parties under which the terms of the judgment are not subject to review on appeal." In re Estate of Anderson, 671 P.2d 165, 168 (Utah 1983) (emphasis added). Hence, if we determine that Prime has waived its right to appeal, we cannot proceed to consider the merits of this appeal.

The Order and Judgment incorporating the terms of the Stipulation was entered on June 3, 1998, while the Order of Summary Judgment was entered on June 5, 1998. Thus, the Order and Judgment entered on June 3 resolved only the claims of Mitchell's complaint, and not those of Prime's counterclaim. Accordingly, Prime did not waive its right to appeal the summary judgment entered on its counterclaim.

II. Paragraphs Four and Eleven

Paragraph eleven of the Agreement provides, in relevant part, that "all employment in connection with the real estate business shall be taken in [Prime's name]." Prime argues that this includes real estate development activities, and therefore Mitchell must share the proceeds of his "Fong Project." Mitchell contends that Prime's interpretation of paragraph eleven is contrary to the plain meaning of paragraph four, which provides that "[a]gent agrees to perform no other activities with Broker except to solicit and obtain listings and sales, leases, representation agreements or management contract of property." Mitchell asserts that this language limits the scope of covered activities to only those enumerated.

In granting summary judgment against Prime, the trial court concluded as a matter of law that the Agreement was an integrated and unambiguous contract, and that:

The Agreement defines the relationship and duties between the parties, specifically limiting Mitchell's duties to soliciting and obtaining listings and sales, leases, representation agreements or management contracts of property for the parties' mutual benefit. Such duties do not include development activities and do not preclude Mitchell from pursuing such activities outside the scope of the Agreement.

The trial court apparently determined that the above activities in paragraph four define "all employment in connection with the real estate business" as that phrase appears in paragraph eleven, so that any activities outside the scope of paragraph four would necessarily fall outside the scope of paragraph eleven. However, nothing in paragraph four, nor in any other paragraph of the Agreement, indicates that paragraph four was meant to limit paragraph eleven. The fact that different language was used in the two paragraphs underscores the argument that the paragraphs were likely intended to have different meanings.

In any event, because this appeal arises from a grant of summary judgment, Prime need not demonstrate that the trial court's interpretation is incorrect. Rather, Prime must only demonstrate that its own interpretation of the Agreement is tenable. See, e.g., R & R Energies v. Mother Earth Indus., 936 P.2d 1068, 1074 (Utah 1997) ("'To demonstrate ambiguity, the contrary positions of the parties must each be tenable.'") (citations omitted). Prime's interpretation of the language in paragraph four--that it is not a limitation on what the parties may do under the Agreement, but only limits what they must do under the Agreement--is tenable. Moreover, Prime's interpretation that development activities constitute "employment in connection with the real estate business" under the Agreement, and are thus covered by its terms, is also tenable. Therefore, a genuine issue of material fact exists, precluding summary judgment. See id. (stating that "'a motion for summary judgment may not be granted if a legal conclusion is reached that an ambiguity exists in the contract and there is a factual issue as to what the parties intended'") (citation omitted); see also Utah R. Civ. P. 56(c).

III. Paragraph Eighteen

Prime next argues that the trial court erred in concluding that paragraph eighteen is an unambiguous covenant not to compete that "would prohibit any competition by Mitchell" after his employment was terminated, and that it is unenforceable because it lacks time and geographic limitations. Paragraph eighteen provides, in relevant part, that after termination of the Agreement, Mitchell cannot use "any information or materials gained for or from the files or business of Broker." Prime contends that this paragraph is simply a limitation on Mitchell's personal use of specific proprietary information (such as customer lists), rather than a covenant not to compete. Mitchell counters that the very broad terms "any information" encompass everything that Mitchell learned or acquired from Prime, effectively precluding him from earning a living in the real estate industry.

To demonstrate the existence of an ambiguity, Prime needs only to show that its interpretation (i.e., a prohibition only on using customer lists) is tenable. See, e.g., R & R Energies, 936 P.2d at 1074. Paragraph eighteen reasonably could mean only to prohibit the use of specific materials, such as customer lists, and not to prohibit all competition by Mitchell nor to restrict his use of general knowledge gained during his employment with Prime. Therefore, Prime's interpretation is tenable. Because a genuine issue of material fact exists as to the scope and intended meaning of paragraph eighteen, summary judgment was improperly entered. See id.

Once it is determined that a contract is ambiguous, "'extrinsic evidence as to the parties' intent must be received and considered in an effort to glean what the parties actually agreed to.'" C.J. Realty, Inc. v. Willey, 758 P.2d 923, 929 (Utah Ct. App. 1988) (citation omitted). Accordingly, we reverse and remand for consideration of extrinsic evidence regarding the parties' intentions under paragraphs four, eleven, and eighteen. Costs to Prime, as requested. See Utah R. App. P. 34.
 
 
 

______________________________
Russell W. Bench, Judge

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WE CONCUR:
 
 
 
 

______________________________
Pamela T. Greenwood,
Associate Presiding Judge
 
 
 
 

______________________________
Judith M. Billings, Judge