Bad Ass Coffee v. Royal Aloha , 2020 UT App 122 ( 2020 )


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    2020 UT App 122
    THE UTAH COURT OF APPEALS
    BAD ASS COFFEE COMPANY OF HAWAII INC.,
    Appellant and Cross-appellee,
    v.
    ROYAL ALOHA INTERNATIONAL LLC
    AND FRANCOUNSEL GROUP LLC,
    Appellees and Cross-appellants.
    Opinion
    No. 20190181-CA
    Filed August 20, 2020
    Third District Court, Salt Lake Department
    The Honorable Barry G. Lawrence
    No. 130906130
    Blake T. Ostler, Attorney for Appellant
    and Cross-appellee
    Joshua R. Furman, Amy F. Sorenson, and Tanya N.
    Lewis, Attorneys for Appellees and Cross-appellants
    JUDGE JILL M. POHLMAN authored this Opinion, in which
    JUDGES GREGORY K. ORME and DIANA HAGEN concurred.
    POHLMAN, Judge:
    ¶1     Following negotiations in 2011, Bad Ass Coffee Company
    of Hawaii Inc. (BACH) and FranCounsel Group LLC
    (FranCounsel) entered into an operating agreement (the
    Operating Agreement) to form Royal Aloha International LLC
    (Royal) as well as a license agreement (the License Agreement)
    for the purpose of developing BACH’s international presence.
    The parties’ relationship eventually deteriorated, and litigation
    ensued. After the completion of two phases of trial adjudicating
    BACH’s claims related to both agreements and FranCounsel and
    Royal’s counterclaims, BACH now appeals several of the district
    court’s rulings regarding the validity of the agreements and the
    Bad Ass Coffee v. Royal Aloha
    supportability of the jury’s damages verdict in FranCounsel’s
    favor. For their part, Royal and FranCounsel cross-appeal the
    district court’s denial of their request for attorney fees and costs
    under both agreements. We affirm.
    BACKGROUND 1
    ¶2     In 2011, BACH was looking to develop an international
    presence for its established coffee business. BACH—through its
    former president and director, Harold Hill—approached
    FranCounsel, an international franchise consultancy for help
    with that effort. Eventually, BACH and FranCounsel—through
    its owner, Bachir Mihoubi—agreed to form Royal, a new entity,
    to pursue BACH’s international expansion.
    ¶3     Hill, on behalf of himself and BACH, and Mihoubi, on
    behalf of FranCounsel, executed the Operating Agreement for
    Royal. The Operating Agreement divided Royal’s membership
    interests between BACH, FranCounsel, and Hill. Specifically, the
    Operating Agreement provided Hill a 25% personal membership
    interest, BACH a 25% interest, and FranCounsel the remaining
    50% interest.
    1. This case proceeded in two phases—a bench trial followed by
    a jury trial. “On appeal from a bench trial, we view the evidence
    in a light most favorable to the trial court’s findings, and
    therefore recite the facts consistent with that standard.” Wood v.
    Salt Lake City Corp., 
    2016 UT App 112
    , ¶ 1 n.2, 
    374 P.3d 1080
    (cleaned up). Similarly, “in reviewing a jury verdict, we view the
    evidence in the light most favorable to it, and recite the facts
    accordingly. We present conflicting evidence only to the extent
    necessary to understand the issues raised on appeal.” CDC
    Restoration & Constr. LC v. Tradesmen Contractors LLC, 
    2016 UT App 43
    , n.1, 
    369 P.3d 452
     (cleaned up).
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    ¶4     As relevant to the issues raised on appeal, the Operating
    Agreement provided that FranCounsel’s initial capital
    contribution would be “its time for the day-to-day management
    and the international franchise development,” which had a “fair
    market value of approximately $500,000.00.” It also included an
    indemnification provision for its members.
    ¶5     Following Royal’s formation and the execution of the
    Operating Agreement, Hill and Mihoubi, on behalf of BACH
    and Royal respectively, executed the License Agreement. The
    agreement provided Royal rights to use and exploit BACH’s
    franchise system, in exchange for which BACH received a 25%
    interest in Royal.
    ¶6      In 2013, BACH filed suit against FranCounsel and Royal
    (collectively, Appellees), alleging that through the Operating
    Agreement and the License Agreement, Appellees conspired to
    defraud BACH of the value of its international franchising
    rights. On this basis, BACH sought a declaration from the
    district court that the Operating Agreement and the License
    Agreement were void and unenforceable, estopping Appellees
    from asserting the validity of both agreements. In response,
    Appellees asserted several counterclaims against BACH,
    including breach of contract claims arising out of the License
    Agreement and the Operating Agreement.
    ¶7     The case was tried in two phases. The first phase was
    tried to the bench, where the district court adjudicated all
    BACH’s claims in Appellees’ favor. In particular, the court
    rejected BACH’s arguments that Hill lacked authority to enter
    into the agreements on BACH’s behalf and that Mihoubi had a
    duty to further investigate Hill’s authority before entering into
    the agreements. Thus, the court ruled that the Operating
    Agreement and the License Agreement were valid and
    enforceable.
    ¶8   In the second phase, and following various rulings, only
    FranCounsel’s breach of contract claim regarding the Operating
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    Agreement was tried to the jury. The jury was asked to
    determine whether BACH had breached the Operating
    Agreement and, if so, to set the amount of damages.
    ¶9     Regarding the amount of damages, in its initial
    disclosures FranCounsel claimed $2,000,000 in damages for lost
    profits, $500,000 for the reasonable value of its marketing and
    promotion work, and $500,000 for its lost capital investment in
    Royal. However, the only damages theory FranCounsel was
    allowed to present to the jury was one based on the $500,000
    in-kind capital contribution identified in the Operating
    Agreement. 2
    ¶10 The jury found that BACH had breached the Operating
    Agreement and awarded FranCounsel $100,000 in damages.
    BACH then filed a motion for judgment notwithstanding the
    verdict (the JNOV), arguing that the jury’s damages award was
    not supported by the evidence. The district court denied the
    motion, reasoning that BACH had “failed to meet its burden of
    demonstrating” entitlement to relief.
    ¶11 Following the phase-two jury trial, Appellees filed a
    motion for attorney fees. Appellees cited provisions in both the
    Operating Agreement and the License Agreement, claiming that
    such provisions entitled them to recover all attorney fees they
    incurred in both phases of the case. 3 The court disagreed,
    2. FranCounsel voluntarily withdrew its claims for damages
    based on lost profits before trial. The district court also
    concluded before trial that FranCounsel had failed to
    demonstrate that the claim for $500,000 based on the
    “Reasonable Value of marketing and promotion work” was
    viable.
    3. Appellees also requested bad-faith attorney fees under Utah
    Code section 78B-5-825. The court denied Appellees’ request, but
    Appellees do not seek review of that decision on appeal.
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    concluding that the cited provisions did not provide a basis for
    an attorney fees award. Accordingly, the court denied Appellees’
    request for fees. 4
    ¶12 BACH appeals the district court’s resolution of its claims
    in the first phase of this case, challenging the court’s ruling
    regarding Hill’s authority to enter into the Operating
    Agreement 5 and Mihoubi’s alleged duty to have investigated
    such authority. BACH also appeals a range of decisions related
    to the damages awarded, including the court’s denial of the
    JNOV. Appellees cross-appeal the court’s denial of their request
    for attorney fees.
    ISSUES AND STANDARDS OF REVIEW
    ¶13 BACH challenges the district court’s ruling, following the
    phase-one bench trial, that the Operating Agreement is valid and
    enforceable. On appeal from a bench trial, “we review the court’s
    legal conclusions for correction of error,” and “we will not
    disturb the court’s findings of fact unless they are clearly
    4. The court granted in part Appellees’ associated request under
    rule 54 of the Utah Rules of Civil Procedure for certain
    deposition and transcript costs but denied recoupment for copy
    costs. On appeal, Appellees generally contend that they are
    entitled to all their costs, but they do not specifically address the
    court’s denial of their copy costs. Accordingly, we do not
    address the district court’s denial of Appellees’ copy costs under
    rule 54.
    5. Although the court ultimately determined that Hill had
    authority to enter into both the License Agreement and the
    Operating Agreement on BACH’s behalf, BACH appears to
    appeal the court’s conclusions only with respect to Hill’s
    authority for the Operating Agreement. We therefore similarly
    limit our analysis.
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    erroneous.” Hale v. Big H Constr. Inc., 
    2012 UT App 283
    , ¶ 13, 
    288 P.3d 1046
     (cleaned up); see also VT Holdings LLC v. My Investing
    Place LLC, 
    2019 UT App 37
    , ¶ 17, 
    440 P.3d 767
     (“On appeal from
    a bench trial, we review the findings of fact for clear error and
    give due regard to the district court’s opportunity to judge the
    credibility of the witnesses.” (cleaned up)).
    ¶14 BACH also challenges the damages award on three
    grounds. First, BACH claims that the district court erred by
    allowing FranCounsel’s breach of contract claim to be tried
    because FranCounsel did not comply with the damages
    disclosure requirement under rule 26 of the Utah Rules of Civil
    Procedure. We review a district court’s discovery decisions,
    including decisions about discovery sanctions, for abuse of
    discretion. Bodell Constr. Co. v. Robbins, 
    2009 UT 52
    , ¶ 16, 
    215 P.3d 933
    ; see also Thurston v. Workers Comp. Fund, 
    2003 UT App 438
    ,
    ¶ 11, 
    83 P.3d 391
     (“Generally, the trial court is granted broad
    latitude in handling discovery matters, and we will not find
    abuse of discretion absent an erroneous conclusion of law or
    where there is no evidentiary basis for the trial court’s rulings.”
    (cleaned up)). 6
    ¶15 Second, BACH argues that the court erred by allowing,
    through a summary judgment ruling, FranCounsel’s damages to
    be based on the value of its capital contribution to Royal.
    Summary judgment is appropriate “if the moving party shows
    that there is no genuine dispute as to any material fact and the
    moving party is entitled to judgment as a matter of law.” Utah R.
    Civ. P. 56(a). We “review a district court’s legal conclusions and
    ultimate grant or denial of summary judgment for correctness,
    viewing the facts and all reasonable inferences drawn therefrom
    in the light most favorable to the nonmoving party.” Penunuri v.
    6. Although this rule 26 discovery issue was raised in the context
    of a motion for summary judgment, given the nature of the
    challenge, both parties agree that this issue should be reviewed
    under an abuse of discretion standard.
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    Sundance Partners Ltd., 
    2017 UT 54
    , ¶ 14, 
    423 P.3d 1150
     (cleaned
    up).
    ¶16 Finally, BACH challenges the sufficiency of the evidence
    supporting the damages award, arguing that the court erred by
    denying the JNOV and that there was no basis in the evidence to
    support the fact of damages or the amount. “On a motion for
    judgment notwithstanding the verdict, we will reverse the trial
    court’s ruling only if, viewing the evidence in the light most
    favorable to the prevailing party, we conclude that the evidence
    is insufficient to support the verdict.” Pinney v. Carrera, 
    2019 UT App 12
    , ¶ 33, 
    438 P.3d 902
     (cleaned up), aff’d, 
    2020 UT 43
    .
    ¶17 In their cross-appeal, Appellees challenge the district
    court’s denial of their request for attorney fees. “Whether
    attorney fees are recoverable is a question of law, which we
    review for correctness.” Fisher v. Davidhizar, 
    2018 UT App 153
    ,
    ¶ 9, 
    436 P.3d 123
     (cleaned up).
    ANALYSIS
    I. BACH’s Appeal
    A.    The Enforceability of the Operating Agreement
    ¶18 BACH asks that we reverse the district court’s conclusion
    that the Operating Agreement is valid and enforceable. Citing
    Mihoubi’s purported knowledge about the circumstances
    surrounding the corporate opportunity Hill acquired through
    the Operating Agreement—a 25% interest in Royal—BACH
    claims that the court erred in concluding that Hill had the
    apparent authority to bind BACH to the agreement. BACH asks
    us to hold that the court erred in determining that Mihoubi had
    no obligation to further investigate Hill’s authority to enter into
    the Operating Agreement in light of Mihoubi’s alleged
    knowledge that Hill was personally benefiting from the
    transaction.
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    ¶19 “Under agency law, an agent cannot make its principal
    responsible for the agent’s actions unless the agent is acting
    pursuant to either actual or apparent authority.” Hussein v. UBS
    Bank USA, 
    2019 UT App 100
    , ¶ 30, 
    446 P.3d 96
     (cleaned up).
    “Apparent authority exists where the conduct of the principal
    causes a third party to reasonably believe that someone has
    authority to act on the principal’s behalf, and the third party
    relies on this appearance of authority and will suffer loss if an
    agency relationship is not found.” Zions Gate R.V. Resort LLC v.
    Oliphant, 
    2014 UT App 98
    , ¶ 11, 
    326 P.3d 118
     (cleaned up); see
    also Burdick v. Horner Townsend & Kent Inc., 
    2015 UT 8
    , ¶ 22, 
    345 P.3d 531
     (“The authority of an agent is not ‘apparent’ merely
    because it looks so to the person with whom he deals, but rather
    it is the principal who must cause third parties to believe that the
    agent is clothed with apparent authority.” (cleaned up)); Grazer
    v. Jones, 
    2012 UT 58
    , ¶ 11, 
    289 P.3d 437
     (“Where the principal
    does something to support a third party’s reasonable belief that
    the agent has the authority to act, that agent is vested with
    apparent authority to bind the principal.”).
    ¶20 Importantly, “a belief that results solely from the
    statements or other conduct of the agent, unsupported by any
    manifestations traceable to the principal, does not create
    apparent authority.” Burdick, 
    2015 UT 8
    , ¶ 22 (cleaned up); see
    also Bergdorf v. Salmon Elec. Contractors Inc., 
    2019 UT App 128
    ,
    ¶ 20, 
    447 P.3d 1265
     (“[A]pparent authority cannot be premised
    on the manifestations of the purported agent.”); Hussein, 
    2019 UT App 100
    , ¶ 35 (“Apparent authority can be inferred only
    from the acts and conduct of the principal.” (cleaned up)). And
    “knowledge of an agent’s lack of authority defeats a claim for
    apparent authority.” Zions Gate R.V. Resort, 
    2014 UT App 98
    , ¶ 11
    (cleaned up).
    ¶21 Additionally, a district court’s apparent authority
    determination is entitled to significant deference. As our
    supreme court has explained, such determinations are “mixed
    question[s] of law and fact of an extremely fact-sensitive nature,”
    and we therefore owe them “significant deference” because of
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    the “vast array and mix of facts” that can create apparent
    authority in the eyes of a third party. Glew v. Ohio Sav. Bank, 
    2007 UT 56
    , ¶ 19, 
    181 P.3d 791
    . This is so because apparent authority
    determinations are not made in a vacuum; they do not “lend
    [themselves] to consistent resolution by a uniform body of
    appellate precedent,” as the “particular facts and
    circumstances . . . are likely to be so complex and varying that no
    rule adequately addressing the relevance of all these facts can be
    spelled out.” See In re adoption of Baby B., 
    2012 UT 35
    , ¶¶ 42–43,
    
    308 P.3d 382
     (cleaned up).
    ¶22 Here, the district court concluded that “Mihoubi
    reasonably and justifiably relied on Mr. Hill’s apparent
    authority” “to enter into the Operating Agreement.” To support
    this conclusion, the court determined that Mihoubi’s reasonable
    reliance on Hill’s authority was supported by various indicia of
    authority vis-à-vis BACH, the principal, and Mihoubi, the third
    party, including: “Hill’s position as president, director,
    shareholder, and the ‘face’ of BACH”; “[t]he Corporate
    Resolution signed by [BACH’s current director and only other
    board member] and provided by BACH to Mr. Mihoubi”; “[t]he
    fact that BACH had already made a provision for Mr. Hill or [the
    other board member with Hill] to receive a personal interest in
    the transactions with FranCounsel,” which testimony suggested
    “was not unusual for BACH”; and a “provision in the draft
    agreement prepared by BACH’s attorneys” that also showed
    “that an arrangement where a principal of BACH received a
    personal interest in a BACH transaction is typical of how BACH
    operated.”
    ¶23 Significantly, the court also expressly determined that
    Mihoubi had no knowledge of any facts surrounding Hill’s
    conflict of interest and self-dealing to draw into question Hill’s
    authority to enter into the Operating Agreement on BACH’s
    behalf. Rather, the court determined that the “appearance of a
    conflict of interest in the transaction [did] not change Mr. Hill’s
    authority,” finding that the evidence BACH offered about the
    formation of the Operating Agreement did not demonstrate a
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    “change in circumstances that would have impacted Mr. Hill’s
    authority to negotiate for BACH.”
    ¶24 It further found that Mihoubi’s “conduct towards BACH
    on behalf of FranCounsel and Royal was at arms’ length and
    shows only a reasonable, business-like approach to the
    transactions”; that Hill’s “unauthorized conduct . . . was only the
    result of BACH’s lack of corporate formalities, diligence, and
    oversight,” and did “not implicate Mr. Mihoubi, FranCounsel, or
    Royal”; and that, given the indicia of Hill’s authority to act on
    behalf of BACH, “Mihoubi was not required to do more,” such
    as further investigate the “business relationship” between Hill
    and BACH.
    ¶25 BACH does not challenge these (and other) factual
    findings supporting the court’s ultimate determination that
    Mihoubi reasonably relied on Hill’s apparent authority in
    entering into the Operating Agreement. Indeed, while BACH
    makes numerous statements to the effect that Mihoubi “knew”
    about Hill’s self-dealing, it makes no attempt to demonstrate that
    the court’s findings to the contrary were clearly erroneous.
    Instead, BACH asks us to hold, based on its assertions that
    Mihoubi “knew” about Hill’s “conflicting interest” and
    self-dealing in proposing to take a 25% interest in Royal, that the
    district court erred when it concluded that Mihoubi had no
    obligation to further investigate Hill’s authority to enter into the
    transaction on BACH’s behalf. We are not persuaded.
    ¶26 To begin with, the obligation determination BACH urges
    us to make in this case is premised on its own characterization of
    the facts surrounding Mihoubi’s knowledge of Hill’s conflicting
    interest. But because BACH has not challenged the court’s
    clearly contrary findings on those issues, we are unable to accept
    the factual premise underlying its request. See Glew, 
    2007 UT 56
    ,
    ¶ 18 (explaining that, where the district court “act[s] as the
    fact-finder in [a] bench trial” and makes findings to support its
    apparent authority conclusions, “[w]e will not disturb the court’s
    findings of fact unless they are clearly erroneous”); R.B. v. L.B.,
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    Bad Ass Coffee v. Royal Aloha
    
    2014 UT App 270
    , ¶ 26, 
    339 P.3d 137
     (explaining that an
    appellant “bears the heavy burden of demonstrating that [a]
    finding is clearly erroneous”). See generally Grimm v. DxNA LLC,
    
    2018 UT App 115
    , ¶¶ 15–17, 
    427 P.3d 571
     (rejecting the
    appellant’s clear error argument where the appellant did “not
    discuss the evidence supporting [the court’s] findings but
    instead focuse[d] on the evidence most favorable to its
    position”).
    ¶27 Moreover, BACH has not otherwise persuaded us that
    reversal is appropriate under the significantly deferential
    standard of review we are obliged to apply to the district court’s
    apparent authority determination. See Glew, 
    2007 UT 56
    , ¶ 19.
    BACH has not shown—given the particular variety of facts and
    circumstances found by the court that BACH authorized Hill to
    enter into the Operating Agreement on its behalf and that
    Mihoubi had no knowledge of facts drawing Hill’s authority into
    question—that the court erred when it applied those (and other
    salient) facts and circumstances to conclude that Hill had
    apparent authority and that Mihoubi had no obligation to
    further investigate Hill’s authority in the manner BACH urges. 7
    While BACH cites authority for the general proposition that an
    agent cannot bind a principal in circumstances where the third
    party knows the agent lacks authority, BACH cites no authority
    with circumstances comparable to the unique circumstances
    here. And BACH does not otherwise provide a cognizable legal
    basis from which we could make the determination it seeks
    about Mihoubi’s obligation to further investigate Hill’s
    authority.
    7. For example, BACH suggests that we hold Mihoubi was
    required to investigate whether BACH’s board had voted to
    approve Hill’s interest in the Operating Agreement. But in doing
    so, BACH overlooks the fact-intensive nature of this inquiry and
    the combination of facts on which the district court relied to
    conclude that Mihoubi’s reliance was reasonable under all the
    circumstances. See supra ¶¶ 21–25.
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    ¶28 For these reasons, BACH has not demonstrated that the
    district court erred in concluding that Hill had apparent
    authority to enter into the Operating Agreement on BACH’s
    behalf. 8
    B.    The Damages Decisions
    ¶29 BACH raises several challenges to various aspects of the
    district court’s damages decisions. As set out above, during
    phase two of the case, the jury heard FranCounsel’s claim for
    breach of the Operating Agreement. The jury found that BACH
    had breached the agreement and awarded $100,000 in damages.
    BACH then filed the JNOV, arguing that the evidence was
    insufficient to support the damages award, which the court
    denied.
    ¶30 On appeal, BACH raises three challenges to the verdict
    and the district court’s resolution of the damages issue. First,
    BACH claims that the court erred by allowing FranCounsel’s
    breach of contract claim to be tried because FranCounsel did not
    comply with the requirement under rule 26 of the Utah Rules of
    Civil Procedure to disclose a calculation of its damages in its
    initial disclosures or supplemental discovery. Second, BACH
    argues that the court erred by allowing FranCounsel’s damages
    to be based on the value of its capital contribution to Royal
    8. BACH also challenges the district court’s alternative
    conclusion that Hill had actual authority to enter into the
    Operating Agreement on behalf of BACH. However, as with the
    court’s apparent authority conclusion, BACH has not persuaded
    us that the court’s actual authority conclusion was wrong. In any
    event, we have affirmed the court’s apparent authority
    determination, and affirmance on that issue is sufficient to
    uphold the enforceability of the Operating Agreement. See Grazer
    v. Jones, 
    2012 UT 58
    , ¶¶ 9–13, 
    289 P.3d 437
     (explaining that an
    agent may bind a principal to a transaction through either actual
    or apparent authority).
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    because under applicable law, BACH, as a member of Royal, is
    not liable to reimburse FranCounsel, another member of Royal,
    for its capital contribution. Finally, BACH challenges the
    sufficiency of the evidence supporting the damages award,
    arguing that the court erred by denying the JNOV and that there
    was no basis in the evidence to support the fact of damages or
    the amount. We address each issue below, ultimately affirming
    the district court’s damages decisions and the verdict. 9
    1.    Disclosure of Damages Under Rule 26
    ¶31 BACH first argues that the district court erred in allowing
    FranCounsel’s breach of the Operating Agreement claim to be
    tried because FranCounsel failed to adequately disclose its
    damages under rule 26 of the Utah Rules of Civil Procedure.
    BACH contends that the damages FranCounsel identified in its
    initial disclosures were “incomplete” where it “merely
    9. BACH also challenges the district court’s decision to instruct
    the jury that FranCounsel “may recover the value of the services
    it provided” in reliance on the promises encapsulated in the
    Operating Agreement, arguing that the instruction was
    improper because the court excluded evidence of the actual
    value of services offered by FranCounsel. We review a court’s
    jury instruction decision for correctness, and we will “affirm
    when the instructions taken as a whole fairly instruct the jury on
    the law applicable to the case.” Paulos v. Covenant Transport Inc.,
    
    2004 UT App 35
    , ¶ 10, 
    86 P.3d 752
     (cleaned up). Here, we discern
    no error in the court’s decision to so instruct the jury. During
    trial, FranCounsel argued that it had fully performed under the
    Operating Agreement by providing services toward achieving
    international franchising and that due to BACH’s breach of the
    Operating Agreement, it was entitled to the value of its own
    performance—which the parties contractually agreed had a
    value of $500,000. The court therefore did not err in instructing
    the jury that FranCounsel could recover the value of services it
    provided in reliance on the Operating Agreement.
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    provid[ed] a round figure of $500,000 . . . , without a
    computation as to how it arrived at this value,” as representative
    of the in-kind contribution of its services. In this respect, BACH
    asserts that FranCounsel did not disclose “how that value was
    calculated, derived or that it related [to] any work actually
    performed.”
    ¶32 Rule 26 of the Utah Rules of Civil Procedure, which
    governs disclosures during discovery, requires a party, “without
    waiting for a discovery request,” to serve certain initial
    disclosures on the other parties. Utah R. Civ. P. 26(a)(1). A
    “computation of any damages claimed and a copy of all
    discoverable documents or evidentiary material on which such
    computation is based, including materials about the nature and
    extent of injuries suffered,” is one of the required disclosures. 
    Id.
    R. 26(a)(1)(C). In this respect, this court has explained that “even
    if a plaintiff cannot complete its computation of damages before
    future events take place, the fact of damages and the method for
    calculating the amount of damages must be apparent in initial
    disclosures.” Williams v. Anderson, 
    2017 UT App 91
    , ¶ 18, 
    400 P.3d 1071
     (cleaned up).
    ¶33 In its counterclaims, FranCounsel alleged that BACH had
    breached the Operating Agreement and that, as a result of
    BACH’s breach, FranCounsel had lost the value of its capital
    contribution. In its initial disclosures, FranCounsel identified, as
    an element of its damages, “Lost capital investment in Royal:
    $500,000.” BACH moved for summary judgment on
    FranCounsel’s counterclaims, arguing that it had failed to,
    among other things, provide “any calculation of damages.”
    FranCounsel opposed the motion, arguing that the parties
    contractually agreed to the value of its in-kind contribution at
    $500,000, that FranCounsel claimed this amount in its initial
    disclosures, and that the Operating Agreement had “been
    produced in discovery and authenticated in depositions.”
    FranCounsel pointed out that “BACH and FranCounsel freely
    contracted for [the $500,000 figure] based on their own
    negotiations and experience” and that “[s]ince the value of
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    FranCounsel’s services is stipulated to be $500,000, the contract
    itself is adequate evidence of damages.” Accordingly,
    FranCounsel contended that it was “not required to establish
    some kind of formal calculation for the stipulated value of its
    services in the Operating Agreement because BACH . . . already
    agreed to that amount.”
    ¶34 The court denied BACH’s motion on the issue of whether
    FranCounsel adequately disclosed its damages, concluding that
    BACH had not demonstrated that it was entitled to judgment as
    a matter of law. Noting that FranCounsel “never supplemented”
    its initial disclosure on the computation of damages or
    “designated any expert to support” its theories of damages,
    following additional briefing, the court determined that
    FranCounsel’s only “possible remedy is that stated within the
    four corners of the Operating Agreement—i.e., return of its
    expressly stated $500,000 capital contribution.” Because the
    parties contractually agreed to $500,000 as the value of
    FranCounsel’s in-kind contribution, the court concluded that
    FranCounsel was not required to make further disclosures to
    support a damages theory based on that value.
    ¶35 On appeal, BACH relies heavily on this court’s decision in
    Sleepy Holdings LLC v. Mountain West Title, 
    2016 UT App 62
    , 
    370 P.3d 963
    , to support its argument of error. In that case, we
    affirmed the district court’s conclusion that Sleepy Holdings’
    initial damages disclosures were inadequate under rule 26. 10 
    Id.
    ¶¶ 16–18. Among other things, although Sleepy Holdings
    described a lost sale in its complaint, it did not “identify the
    failed sale as damages” or further “offer a computation or
    method of calculating the damages,” as required by rule 26. Id.
    ¶ 17. It also “did not supplement its disclosures within the
    discovery period.” Id. ¶ 18. BACH argues that like the appellant
    10. Sleepy Holdings applies an earlier version of the discovery
    rules, but the applicable disclosure requirement has not
    changed.
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    in Sleepy Holdings, FranCounsel failed to comply with rule 26
    when it merely disclosed the “perfectly round number of
    $500,000” as damages and did not supplement that disclosure.
    ¶36 However, our decision in Sleepy Holdings is factually
    distinguishable from the present case. While FranCounsel did
    not supplement its initial disclosures, unlike the appellant in
    Sleepy Holdings, FranCounsel identified the lost capital
    contribution consisting of in-kind services as damages in its
    counterclaim and in its initial disclosures, and it provided the
    Operating Agreement itself as a basis for damages early in the
    litigation.
    ¶37 Moreover, the $500,000 damages figure required no
    computation. FranCounsel’s theory was that the figure
    represented the entire value of its in-kind contribution to the
    parties’ venture as agreed to by the parties in the Operating
    Agreement. Cf. Williams, 
    2017 UT App 91
    , ¶¶ 17–22 (concluding
    that a damages disclosure, where the claim to damages was to be
    based on a “fixed percentage” of the price paid for the business
    at issue, was sufficient under rule 26’s computation of damages
    requirement (cleaned up)). Because FranCounsel purported to
    seek that full amount as damages for breach of the Operating
    Agreement, no further disclosure was needed. Accordingly, the
    district court did not abuse its discretion by concluding that
    FranCounsel’s damages disclosures were sufficient under rule
    26’s damages disclosure requirement.
    2.    Return of FranCounsel’s Capital Contribution
    ¶38 BACH next contends that the district court erred in
    rejecting its argument that, as a matter of law, BACH could not
    be liable to FranCounsel for the value of its capital contribution
    under the breach of contract theory FranCounsel advanced.
    Characterizing FranCounsel’s damages theory as a request for a
    return or reimbursement of its capital contribution to Royal,
    BACH asserts that, as a member of Royal, it cannot be liable to
    FranCounsel for the reimbursement of FranCounsel’s in-kind
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    contribution to Royal. Rather, BACH contends that FranCounsel
    could seek return or reimbursement of its capital contribution
    only from Royal itself, not from a member of Royal.
    ¶39 In the district court’s partial denial of BACH’s summary
    judgment motion on FranCounsel’s’ counterclaims, the court
    ruled that FranCounsel’s “claim relating to the value of its
    in-kind contribution . . . survives [the] Motion, but only to the
    extent [FranCounsel] may rely upon the contractually
    agreed-upon figure of $500,000 as its damages,” noting that
    “[t]he issue will need to be fully briefed before that claim may
    proceed to trial.” Accordingly, the court ordered the parties to
    “separately brief” before trial “the proper measure of damages
    on [FranCounsel’s] claims and whether it may rely on [the
    Operating Agreement’s contribution] provision or was required
    to make a more detailed showing.”
    ¶40 Following that briefing, the court ruled that FranCounsel
    could measure its damages according to “the value of its stated
    capital contribution” as provided in the Operating Agreement.
    As to whether FranCounsel was legally barred from recovering
    the capital contribution, the court found BACH’s argument that
    “one member of a limited liability company was not required to
    reimburse another for a debt obligation or other liability of the
    LLC” unavailing. (Cleaned up.) Noting that BACH appeared to
    be arguing that one member of an LLC cannot be personally
    liable to reimburse another member’s capital contribution and
    that the Operating Agreement precluded such reimbursement,
    the court concluded that FranCounsel was “not seeking
    reimbursement of the capital contribution, per se.” Rather, the
    court explained that FranCounsel sought “its damages
    associated with BACH’s alleged breach,” which the court
    concluded could be based on and measured by the agreed-upon
    value of its performance as stated in the Operating Agreement.
    ¶41 BACH has not persuaded us that the court’s ruling in
    allowing FranCounsel to proceed to trial on a damages theory
    based on the value of its capital contribution to Royal was in
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    error. The court determined that FranCounsel was not seeking
    reimbursement of its capital contribution from BACH, but rather
    damages based on the services it provided in reliance on the
    Operating Agreement, as measured by the contribution value
    stated in the agreement itself. BACH does not acknowledge or
    address this determination, and it does not explain how the
    court’s decision to allow the damages theory to go forward was
    wrong, given this determination. Instead, BACH argues this
    issue on appeal as though FranCounsel was indeed seeking
    reimbursement or return of its capital contribution from BACH
    as opposed to merely relying on the agreed value of
    FranCounsel’s performance as set forth in the Operating
    Agreement to measure the damages flowing from BACH’s
    breach.
    ¶42 Furthermore, our review of the record suggests that, as
    the district court determined, FranCounsel was not seeking
    reimbursement of its capital contribution from BACH. Rather,
    FranCounsel sought the value of the work it performed in
    developing BACH’s product, and it relied on the contribution
    provision in the Operating Agreement as evidence of that value.
    ¶43 For example, in its trial brief regarding damages,
    FranCounsel explained that it sought the value of its capital
    contribution to Royal as damages for BACH’s breach, which it
    claimed represented the value of services it provided in the
    venture. Likewise, at trial, FranCounsel argued to the jury that it
    was seeking to recover from BACH the value of its work and
    services, performed in reliance on the Operating Agreement, to
    develop BACH’s brand internationally—an amount it argued
    the parties themselves valued in the Operating Agreement as
    $500,000.
    ¶44 In this respect, the authority on which BACH relies to
    argue for error on this ground is not persuasive. BACH cites case
    law, statutes, and various Operating Agreement provisions to
    argue that BACH cannot be liable to FranCounsel for the return
    of its capital contribution. But such authority does not address
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    the actual issue decided by the district court—whether
    FranCounsel could rely on the agreed-upon value of its services,
    as provided in the Operating Agreement, to measure and prove
    the damages it suffered due to BACH’s breach of the Operating
    Agreement. Accordingly, we are not persuaded that reversal on
    this issue is appropriate.
    3.    The Sufficiency of the Evidence Supporting the Award
    ¶45 BACH also claims that the damages verdict cannot be
    sustained on the evidence. Contending that there was no basis in
    the evidence supporting the fact or amount of the $100,000 in
    damages awarded to FranCounsel for reliance on the Operating
    Agreement, BACH asserts that the court erred by failing to grant
    the JNOV. 11
    ¶46 Following the jury trial, BACH filed the JNOV, arguing,
    as it does on appeal, that the damages award was the product of
    speculation and that there was insufficient evidence supporting
    the fact or the amount of the $100,000 award. The district court
    denied the motion because it concluded that BACH had “failed
    to meet its burden of demonstrating that insufficient evidence
    supported the verdict.” Specifically, the court noted that the
    judgment notwithstanding the verdict standard required BACH
    11. As it did in the JNOV, BACH makes a number of arguments
    regarding the damages verdict and the lack of evidence
    supporting it. For example, BACH argues on appeal that there
    was no rational basis in the evidence to support the award, no
    evidence of the fact of damages, and no evidence of the amount
    of damages. However, having included these arguments in the
    JNOV, the operative ruling on appeal addressing these
    arguments and the sufficiency of the evidence supporting the
    jury’s damages award is the court’s denial of the JNOV.
    Accordingly, we address and resolve all BACH’s sufficiency
    arguments through our analysis of the district court’s JNOV
    ruling.
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    to show that there was “no competent evidence” to support the
    verdict, taking into account “all reasonable inferences in a light
    most favorable to the nonmoving party.” (Cleaned up.) The
    court then stated that BACH failed to meet this burden—that it
    failed to cite the record presented to the jury, to acknowledge the
    evidence potentially supporting the jury’s verdict, or to explain
    how, despite the evidence presented, the jury could not have
    reached the verdict it did.
    ¶47 A district court “may grant a JNOV motion only if there is
    no basis in the evidence, including reasonable inferences which
    could be drawn therefrom, to support the jury’s determination.”
    ASC Utah Inc. v. Wolf Mountain Resorts LC, 
    2013 UT 24
    , ¶ 18, 
    309 P.3d 201
     (cleaned up); DeBry v. Cascade Enters., 
    879 P.2d 1353
    ,
    1359 (Utah 1994) (“A directed verdict and a judgment n.o.v. are
    justified only if, after looking at the evidence and all reasonable
    inferences in a light most favorable to the nonmoving party, the
    trial court concludes that there is no competent evidence which
    would support a verdict in his favor. A motion should be denied
    if reasonable persons could reach differing conclusions on the
    issue in controversy.” (cleaned up)). Our review on appeal is
    similar: “On a motion for judgment notwithstanding the verdict,
    we will reverse the trial court’s ruling only if, viewing the
    evidence in the light most favorable to the prevailing party, we
    conclude that the evidence is insufficient to support the verdict.”
    Pinney v. Carrera, 
    2019 UT App 12
    , ¶ 33, 
    438 P.3d 902
     (cleaned
    up), aff’d, 
    2020 UT 43
    .
    ¶48 Here, BACH does not acknowledge the district court’s
    reasoning in the JNOV denial, nor does it attempt to explain why
    the court was wrong in ruling that BACH failed to carry its
    burden to show it was entitled to have the verdict set aside.
    BACH cannot persuade us that reversal is appropriate without
    acknowledging the district court’s decision and dealing with its
    reasoning. See, e.g., Living Rivers v. Executive Dir. of the Utah Dep’t
    of Envtl. Quality, 
    2017 UT 64
    , ¶¶ 41–43, 50–51, 
    417 P.3d 57
    (discussing that an appellant’s burden requires “timely”
    explaining to the appellate court why the lower tribunal was
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    Bad Ass Coffee v. Royal Aloha
    wrong, and declining to reach the “important questions”
    implicated in the case because of the appellant’s failure to do so);
    Federated Cap. Corp. v. Shaw, 
    2018 UT App 120
    , ¶ 20, 
    428 P.3d 12
    (explaining that an appellant who “does not meaningfully
    engage with the district court’s reasoning” necessarily “falls
    short of demonstrating any error on the part of the district
    court”); Duchesne Land LC v. Division of Consumer Prot., 
    2011 UT App 153
    , ¶ 8, 
    257 P.3d 441
     (“Because [the appellants] have not
    addressed the actual basis for the district court’s ruling, they
    have failed to persuade us that the district court’s ruling
    constituted error . . . .”); Golden Meadows Props. LC v. Strand, 
    2010 UT App 257
    , ¶ 17, 
    241 P.3d 375
     (explaining that when a party
    “fails to attack the district court’s reasons” for a decision, the
    party “cannot demonstrate that the district court erred” with
    respect to that decision). Stated another way, to persuade us that
    reversal of the JNOV denial is appropriate, BACH must at least
    persuade us that the court was wrong in its assessment of
    BACH’s briefing failures for the original motion. BACH has not
    done so. Accordingly, we cannot set aside the jury’s verdict on
    this basis.
    II. The Cross-Appeal
    ¶49 In their cross-appeal, Appellees argue that the
    district court erred by denying their request for approximately
    $230,000 in attorney fees. “In Utah, attorney fees are
    awardable only if authorized by statute or by contract.” Federated
    Cap. Corp. v. Haner, 
    2015 UT App 132
    , ¶ 11, 
    351 P.3d 816
     (cleaned
    up).
    ¶50 Appellees moved for an award of attorney fees, arguing
    to the district court that both the Operating Agreement and the
    License Agreement contained provisions entitling them to their
    requested fees. More specifically, Appellees pointed to an
    indemnification provision in each agreement that they claimed
    required an award of attorney fees. The Operating Agreement
    contained a provision entitled “Indemnification by Member,”
    which provides,
    20190181-CA                     21                 
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    Bad Ass Coffee v. Royal Aloha
    Any Member who is in violation of this Operating
    Agreement agrees to indemnify and hold the
    Company and the Other Members harmless from
    all costs and expenses, including reasonable
    attorneys’ fees . . . and court costs, incurred by the
    Company and/or Other Members as a result of the
    violation of this Operating Agreement. The
    Company shall fund the indemnification
    obligations provided herein in such a manner and
    to such extent as the Members may from time to
    time deem proper.
    Appellees argued that they were entitled to fees under this
    provision because BACH was a member of Royal as defined by
    this provision and a jury in phase two of the case had found in
    their favor, determining that BACH had violated the Operating
    Agreement.
    ¶51 Similarly, Appellees pointed to the Indemnification
    provision in the License Agreement as the contractual basis for
    an award of attorney fees. It provides,
    Licensor . . . agrees to indemnify and hold harmless
    the Licensee and its members, directors, officers,
    employees, affiliates, agents and assigns from and
    against any and all claims, suits, damages, attorney
    fees, cost, expenses and losses of Licensee directly
    or indirectly, as a result of, or based upon or
    arising from any inaccuracy in or breach or
    nonperformance of any of the representations,
    warranties, covenants or agreements made by
    Licensor in or pursuant to this Agreement
    (whether or not of a material nature) and/or
    damages or liability resulting from or arising out of
    a claim that Licensee’s use of the Licensed Mark
    infringes the trademark rights of any third party.
    However, Licensor shall not be liable to indemnify
    20190181-CA                    22                 
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    Bad Ass Coffee v. Royal Aloha
    the Licensee if the claims, suits, damages, attorney
    fees, cost, expenses and losses are caused by
    Licensee’s gross negligence or willful misconduct
    or by Licensee’s material breach of this Agreement.
    Appellees argued that they were entitled to attorney fees under
    this provision because a “central issue” in BACH’s complaint
    was Hill’s lack of authority to execute the License Agreement,
    which was resolved in Appellees’ favor during phase one of the
    case, pointing to another provision in the agreement
    representing and warranting that Hill had authorization to
    execute and enter into the agreement on BACH’s behalf. 12 On
    this basis, Appellees contended that BACH’s complaint was
    “based upon” or arose from a representation and warranty in the
    License Agreement, thus triggering the indemnification clause’s
    provision for attorney fees.
    ¶52 The district court denied Appellees’ request for attorney
    fees, concluding that neither agreement had fees provisions
    entitling Appellees to their requested fees. Noting that
    contractual fees are available “only in strict accordance with the
    terms of the contract,” the court determined that there was
    “nothing in either the Operating Agreement or the License
    Agreement that indicates a meeting of the minds whereby
    12. The authorization provision Appellees cited provides,
    Harold J. Hill as President/CEO, has full corporate,
    power and authority and has taken all corporate
    actions and has obtained all necessary approvals or
    authorizations from any other third party and
    government authority to represent BACH and to
    execute and perform this Agreement, which will
    not constitute or result in a violation of any
    enforceable and effective laws or former
    agreements.
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    Bad Ass Coffee v. Royal Aloha
    BACH agreed to pay the fees and costs in the event of a dispute
    with [Royal] or FranCounsel.” (Cleaned up.)
    ¶53 Regarding the Operating Agreement, the court focused on
    the second sentence of the indemnification provision, which
    provides that Royal would fund the indemnification obligations,
    concluding that the plain language demonstrated that only
    Royal would be liable for fees, not a member such as a BACH.
    For the License Agreement, the court first determined that the
    plain language of the provision “does not clearly reflect an
    agreement for fees between the parties.” The court next focused
    on the language stating that indemnification applied to “any
    inaccuracy in or breach or nonperformance of” the License
    Agreement, determining that “that issue has never been
    determined by this Court, and was never presented to the jury.”
    The court noted that during the phase-one bench trial, the court
    merely held that the License Agreement was enforceable but did
    not determine whether a breach of that agreement occurred. And
    in the second phase, the jury determined only that the Operating
    Agreement had been violated, not that the License Agreement
    had. The court further determined that, to the extent the two
    provisions at issue were indemnification provisions, Appellees
    “never ever asserted an indemnification claim” and were
    thereby barred from asserting one post-trial.
    ¶54 In their opening brief, Appellees summarily contend,
    without reference to the record or to relevant authority, that the
    district court erred in its interpretation of the indemnification
    provisions. And to support their contention, Appellees, by their
    own admission, duplicate for us the briefing from their motion
    before the district court. Appellees do not attempt to address the
    district court’s decision and reasoning until their reply brief.
    Even then, much of Appellees’ argument focuses on disproving
    BACH’s arguments in opposition, not the court’s reasoning and
    decision.
    ¶55 We therefore cannot grant Appellees the relief they seek.
    The district court denied Appellees’ motion in a well-reasoned,
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    Bad Ass Coffee v. Royal Aloha
    written ruling. Appellees, by their own admission, did not
    address the district court’s reasoning and explain why it was
    wrong in their opening brief. Rather, in their opening brief,
    Appellees essentially argued the merits of their request for
    attorney fees as though the district court had not considered the
    issue. But appeals are not do-overs. They are opportunities to
    correct error. See State v. Thornton, 
    2017 UT 9
    , ¶ 49, 
    391 P.3d 1016
    (“American courts have long followed the writ of error approach
    to appellate review. Under this framework, the appellate court
    does not review the trial record in a search for an idealized
    paradigm of justice. We ask only whether the trial court
    committed a reversible error in resolving a question presented
    for its determination.” (cleaned up)). And Appellees cannot
    persuade us that the district court erred without addressing the
    district court’s decision on its own terms. See, e.g., Living Rivers v.
    Executive Dir. of the Utah Dep’t of Envtl. Quality, 
    2017 UT 64
    ,
    ¶¶ 41–43, 50–51, 
    417 P.3d 57
    ; Federated Cap. Corp. v. Shaw, 
    2018 UT App 120
    , ¶ 20, 
    428 P.3d 12
     (explaining that an appellant who
    “does not meaningfully engage with the district court’s
    reasoning” necessarily “falls short of demonstrating any error on
    the part of the district court”). 13
    13. And this failure is not saved by Appellees’ belated attempt to
    grapple with the district court’s reasoning in their reply brief,
    especially because the timing of the attempt rendered BACH
    unable to respond to these new arguments. See Allen v. Friel, 
    2008 UT 56
    , ¶ 8, 
    194 P.3d 903
     (stating that issues not raised in the
    opening brief are considered waived, and explaining that a reply
    brief is limited to addressing matters raised in the opposing brief
    due to “considerations of fairness,” because “[i]f new issues
    could be raised in a reply brief, the appellee would have no
    opportunity to respond to those arguments”); Martin v.
    Kristensen, 
    2019 UT App 127
    , ¶ 61, 
    450 P.3d 66
     (explaining that
    the “failure to engage with the court’s reasoning until the reply
    brief is fatal”), cert. granted, 
    456 P.3d 386
     (Utah 2019); Bahnmaier
    v. Northern Utah Healthcare Corp., 
    2017 UT App 105
    , ¶ 11 n.2, 402
    (continued…)
    20190181-CA                      25                 
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    Bad Ass Coffee v. Royal Aloha
    CONCLUSION
    ¶56 Regarding BACH’s appeal, we affirm the district court’s
    conclusion that the Operating Agreement was valid and
    enforceable. We likewise affirm the various challenged
    determinations regarding damages. As to Appellees’
    cross-appeal, we affirm the district court’s decision not to award
    attorney fees.
    (…continued)
    P.3d 796 (stating that because the appellant “made no attempt to
    challenge the district court’s reasoning for rejecting” one of her
    claims “in her opening brief [on appeal], . . . we do not address
    the court’s ruling in that regard”).
    20190181-CA                    26                 
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