PC River View v. Cao , 424 P.3d 162 ( 2017 )

This opinion is subject to revision before final
publication in the Pacific Reporter
2017 UT 52
IN THE
SUPREME COURT OF THE STATE OF UTAH
PC RIVERVIEW, LLC,
Respondent,
v.
XIAO-YAN CAO,
Petitioner.
No. 20160781
Filed August 23, 2017
On Certiorari to the Utah Court of Appeals
Third District, Salt Lake
The Honorable Katie Bernards-Goodman
No. 149902947
Attorneys:
Carl E. Kingston, Salt Lake City, for respondent
Russell T. Monahan, Salt Lake City, for petitioner
JUSTICE PEARCE authored the opinion of the Court, in which
CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE LEE,
JUSTICE DURHAM, and JUSTICE HIMONAS joined.
JUSTICE PEARCE, opinion of the Court:
INTRODUCTION
¶1 In 2003, L + C Unlimited Corporation (L + C) was assigned
the lease that permitted the Golden Isle Restaurant to operate in a
strip mall in Murray, Utah. Xiao-Yan Cao, L + C’s president,
personally guaranteed L + C’s performance. In 2006, the lease was
again assigned, this time to Hong G. Lin. As part of that assignment,
the lease term was extended until September 30, 2013, and both Cao
and Lin inked personal guaranties. In 2010, Lin fell behind making
rent payments. Lin and PC Riverview, the property’s landlord,
agreed to a repayment schedule to permit Lin to catch up, which he
did. In 2013, Lin defaulted on rent payments shortly before vacating
PC RIVERVIEW v. CAO
Opinion of the Court
the premises. PC Riverview sued both Lin and Cao for $5,003.50, a
sum that represented the last month’s rent and a small balance from
the penultimate month. 1 Cao resisted paying that amount, arguing
that the 2010 repayment schedule materially modified the contract
and discharged her guaranty. The district court agreed and ruled in
Cao’s favor.
¶2 The Utah Court of Appeals reversed the district court’s
order. Relying on the Restatement (Third) of Suretyship and
Guaranty, the court of appeals reasoned that merely extending the
period within which a tenant could pay its rent did not materially
modify the contract. It concluded that Cao was therefore still on the
hook for Lin’s past-due rent.
¶3 Cao seeks our review of the court of appeals’ decision. We
conclude that the court of appeals correctly determined that the 2010
repayment agreement did not materially modify the contract and
that Cao is not relieved of her responsibilities as guarantor. We
affirm the court of appeals’ decision.
BACKGROUND
¶4 In 1993, the restaurant at the heart of this matter operated as
Royal China Restaurant. Over the next decade, Royal China changed
its name, its landlord, and its owner—the latter a number of times.
¶5 The first change took place in 1997, when the lease was
assigned to new tenants. The assignment included a provision
imposing late fees and interest if rent was not paid on time. The
restaurant’s name also changed to Golden Isle Restaurant.
¶6 In 2003, the lease was again assigned to a new tenant, L + C.
Appellant, L + C’s president, Xiao-Yan Cao, personally guaranteed
to then-landlord Riverview Properties the “performance of all
covenants, conditions and obligations and duties required of Tenant
under said Lease.” That assignment also provided that, “[e]xcept as
specifically modified, altered, or changed by this Agreement, the
Lease and any amendments and/or extensions shall remain unchanged and
in full force and effect throughout the Extension Term of the Lease.”
(Emphasis added.) Those amendments and extensions included the
_____________________________________________________________
1 PC Riverview also sought interest and attorney fees.
2
Cite as: 2017 UT 52
Opinion of the Court
1997 provision detailing late fees and interest on past-due amounts
owed.
¶7 Then in 2006, Cao assigned the lease to another tenant, Hong
G. Lin. Lin took over the remaining two years of L + C’s lease and
extended the lease an additional five years—to September 30, 2013.
Both Cao and Lin signed the 2006 Lease Extension as guarantors.
The 2006 Lease Extension also adopted all terms of the original lease
and “any amendments and/or extensions”—again including the
1997 provision detailing late fees and interest on past-due amounts
owed and Cao’s 2003 personal guaranty.
¶8 A month later, in June 2006, Riverview Properties assigned
its “interest as landlord” in the strip mall that housed Golden Isle to
a new landlord, PC Riverview.
¶9 In 2008, Lin fell behind paying rent. This lapse continued
over the course of almost two years. In 2010, PC Riverview filed suit
against Lin and Cao. PC Riverview sought collection of Lin’s missed
rent plus late fees—a total of $23,951.28 from Lin and the
enforcement of the guaranty against Cao. Cao responded by asking
the district court to stanch her potential losses by evicting Lin. PC
Riverview opposed Cao’s efforts. As part of that opposition, PC
Riverview introduced evidence that, given the economic conditions,
it would be unable to find another tenant to lease the space Lin’s
business occupied. Cao also filed a motion for summary judgment.
The district court stayed Cao’s motion and ordered the parties to
mediate the matter.
¶10 Unbeknownst to Cao, PC Riverview and Lin crafted a plan
that would allow Lin to operate the restaurant while paying PC
Riverview what it owed in missed payments, interest, and late fees
(the 2010 repayment agreement). Cao learned of that agreement
when she was faxed a copy of an executed agreement. The 2010
repayment agreement provided that in addition to the regular
monthly payments that the lease required, Lin would make five
additional payments to repay past-due amounts. If Lin made each
payment when due, PC Riverview agreed to forgive seven-eighths of
the late charges that had accrued.
¶11 In light of the repayment plan, PC Riverview proposed to
Cao that she stipulate to the dismissal of the action without
prejudice. Cao refused. She wrote to PC Riverview explaining that
she believed this “side agreement” entered into “without [her] input
or knowledge” had “terminated” “her responsibilities as surety on
3
PC RIVERVIEW v. CAO
Opinion of the Court
this contract.” Cao and PC Riverview never reached an accord, and
after a year of inaction on the case, the district court dismissed the
complaint for failure to prosecute.
¶12 Meanwhile, Lin stuck to the terms of his new agreement
with PC Riverview and eventually paid back all past-due rent and
late fees. One might have thought that this would have signaled a
happy ending to this story—and, indeed, 2012 came and passed
without incident. But in 2013, as Lin’s lease was poised to expire, Lin
vacated the premises without paying the last month’s rent and a
small balance he owed for the previous month. PC Riverview sued
both Lin and Cao to recover the $5,003.50 that Lin owed (as well as
interest and attorney fees). The district court granted summary
judgment against Lin, but not Cao. The case against Cao proceeded
to trial.
¶13 At trial, PC Riverview called the president of its managing
member, Grace Mitchell, to testify about the assignment from
Riverview Properties to PC Riverview. She identified a document
that detailed an “assignment and assumption of leases that [were]
entered into when [PC Riverview] purchased the property” in 2006.
Cao objected to the document being entered into evidence because
the signatories on behalf of the seller were not present to testify that
they signed the document. Mitchell then testified that she had
witnessed Riverview Properties’ representatives sign the document.
The district court admitted the document into evidence.
¶14 In closing argument, Cao contended, first, that the evidence
was insufficient to establish that Riverview Properties had ever
properly assigned its lease to PC Riverview and, second, that the
2010 repayment agreement materially modified the 2006 contract,
thereby releasing Cao as guarantor.
¶15 The district court ruled for Cao. It determined that “there
was a material modification when [PC Riverview] had Mr. Lin’s rent
so far behind and allowed him to make changes and differences to
that and didn’t notify the guarantor of that.” The district court
reasoned that “if I’m guaranteeing something and there’s changes
like that and somebody’s way behind and they’re letting them catch
up and they’re not telling me, I would consider that a material
modification.” Because it found that Cao had been released from the
guaranty, the district court announced that it did not need to reach
the question of whether the lease had been properly assigned to PC
Riverview.
4
Cite as: 2017 UT 52
Opinion of the Court
¶16 PC Riverview appealed the district court’s ruling to the
Utah Court of Appeals. The court of appeals reversed the district
court. PC Riverview LLC v. Cao, 2016 UT App 178, ¶ 8, 381 P.3d 1185.
It concluded that Cao’s guaranty “contained no provisions spelling
out particular rights in favor of Cao, such as a right to notice or a bar
on extensions or modifications absent her consent.” Id. ¶ 5.
¶17 The court of appeals relied on section 41 of the Restatement
(Third) of Suretyship and Guaranty when it stated that as a general
rule, “a guarantor is relieved of her obligations ‘[i]f the principal
obligor and the obligee agree to a modification.’” Id. ¶ 6 (alteration in
original) (citing RESTATEMENT (THIRD) OF SUR. AND GUAR. § 41 (AM.
LAW INST. 1996)). “But,” the court continued, “the Restatement
specifically excludes ‘an extension of time’ from the modifications
that would discharge a guarantor.” Id. (citation omitted). The court
of appeals thus reasoned that
Cao was not relieved of her obligations as guarantor
because the [2010 repayment agreement] was the sole
modification to the original lease, and [it] only
modified the timing of [Lin]’s payments by extending
the time in which past due rent could be paid.
Id. ¶ 7.
¶18 Cao now seeks our review of the court of appeals’ decision.
On certiorari, she argues that the 2010 repayment agreement
materially altered the terms of the underlying agreement and that
she, therefore, should be released from her obligation under it. She
also argues that the district court improperly accepted PC
Riverview’s lease assignment into evidence and that the court of
appeals erred when it did not remand for findings on whether her
lease had expired or whether she and PC Riverview were ever in
privity of contract.
¶19 We have jurisdiction under Utah Code section 78A-3-
102(3)(a). We affirm.
STANDARD OF REVIEW
¶20 On certiorari, we review the court of appeals’ decision for
correctness. State v. Levin, 2006 UT 50, ¶ 15, 144 P.3d 1096.
5
PC RIVERVIEW v. CAO
Opinion of the Court
ANALYSIS
I. The 2010 Repayment Agreement Between Lin and
PC Riverview Did Not Materially Modify Cao’s Guaranty
¶21 Cao’s primary argument centers on the court of appeals’
holding that the district court erred when it characterized the 2010
repayment agreement between Lin and PC Riverview as a material
modification that freed Cao from her guaranty. Cao correctly notes
that a material modification to a contract will free the guarantor from
her guaranty obligations. See, e.g., DiMeo v. Nupetco Assocs., LLC,
2013 UT App 188, ¶ 9 n.2, 309 P.3d 251. But “minor alterations” to a
debtor-creditor agreement “are not of the nature or degree that
would trigger a discharge of [the sureties’] pledge of security under
suretyship law.” Id. Cao lodges two complaints against the court of
appeals’ conclusion that Lin and PC Riverview did not materially
modify their contract.
¶22 First, Cao avers that the court of appeals ignored facts
demonstrating that Lin and PC Riverview had modified the lease
through their actions even before they entered into the 2010
repayment agreement. Specifically, Cao claims that PC Riverview
materially modified the lease when it (1) allowed Lin to stay in the
property even after falling behind in the rent and (2) did not notify
Cao that Lin was delinquent in paying rent.
¶23 Cao misreads the court of appeals’ decision. The court of
appeals addressed and rejected Cao’s contentions. It noted that the
“rights and obligations of a guarantor are often defined in the terms
of the guaranty” and that “absent express terms to the contrary,
‘[t]he basic rights and duties of parties under a guaranty are
governed by common law.’” PC Riverview LLC v. Cao, 2016 UT App
178, ¶ 5, 381 P.3d 1185 (alteration in original) (quoting 38 AM. JUR. 2D
Guaranty § 53 (2016)). Cao’s guaranty provides that Cao “shall be the
Guarantor and hereby guarantees performance of all covenants,
conditions and obligations and duties required of Tenant under said
Lease.” The court of appeals reviewed the terms of the guaranty and
noted that it did not offer Cao what she wanted—notice of Lin’s
default and the right to consent to modifications. Id. (“Here, the
guaranty agreement contained no provisions spelling out particular
rights in favor of Cao, such as a right to notice or a bar on extensions
or modifications absent her consent.”). Although the court of appeals
could have been more explicit, its opinion reflects that PC Riverview
did not modify the parties’ obligations under the lease when it
6
Cite as: 2017 UT 52
Opinion of the Court
permitted Lin to continue to operate the restaurant while falling
behind in rent payments. Rather, the court of appeals concluded that
the arrangement was consistent with the terms of the lease that Cao
agreed to guarantee. Indeed, by asking the district court to find that
she had a right to notice of default and an opportunity to intervene,
it was Cao who sought to modify the parties’ agreements. 2
¶24 Second, Cao argues that the court of appeals
misapprehended the significance of the 2010 repayment agreement
when it reasoned that the agreement did not materially modify the
terms of her agreement with Lin. The court of appeals explained that
“[b]ecause the [2010 repayment agreement] only extended the time
for [Lin] to pay past due rent, it was not a material modification of
the original agreement” under section 41 of the Restatement (Third)
of Suretyship and Guaranty. PC Riverview, 2016 UT App 178, ¶ 8.
¶25 Cao contends that “an extension of time does materially
modify a lease” and that Lin and PC Riverview’s 2010 repayment
agreement materially modified her obligations as guarantor, thereby
discharging her of her personal guaranty. Cao appears to argue that
there are some extensions of time that might materially modify a
lease. We need not reach that question, however, because the record
makes plain that the 2010 repayment agreement was not a material
modification. Before the modification, Cao was potentially
responsible for Lin’s rent, interest, and late fees. And after the 2010
repayment agreement, Cao could have been responsible for Lin’s
rent, interest, and late fees.
¶26 Minor alterations to the underlying agreement do not
materially alter the risk the guarantor agreed to assume. See DiMeo,
_____________________________________________________________
2 Cao’s desire to receive notice of Lin’s failure to pay rent is
understandable. And it is natural that a party in Cao’s position
would want that notice so that she could take steps to assist Lin from
falling further behind and limit her liability under the guarantee. The
court of appeals, however, got it precisely right when it held that
Cao did not bargain for these additional protections in the guaranty.
As we have said on many occasions, it is not the judiciary’s role to
draft better agreements for parties than those they draft for
themselves. See, e.g., Rio Algom Corp. v. Jimco Ltd., 618 P.2d 497, 505
(Utah 1980) (“A court will not . . . make a better contract for the
parties than they have made for themselves.”).
7
PC RIVERVIEW v. CAO
Opinion of the Court
2013 UT App 188, ¶ 9 n.2. As noted above, section 41 of the
Restatement (Third) of Suretyship and Guaranty recognizes this
principle:
If the principal obligor and the obligee agree to a
modification, other than an extension of time or a
complete or partial release, . . . the secondary obligor is
discharged from any unperformed duties pursuant to
the secondary obligation: (i) if the modification creates
a substituted contract or imposes risks on the
secondary obligor fundamentally different from those
imposed pursuant to the transaction prior to
modification; (ii) in other cases, to the extent that the
modification would otherwise cause the secondary
obligor a loss.
RESTATEMENT (THIRD) OF SUR. AND GUAR. § 41 (AM LAW INST. 1996).
¶27 Prior to its decision in this case, the court of appeals had
analyzed section 41 of the Restatement and rejected an argument
that a time extension coupled with the ability to make interest-only
payments was a material modifications that would relieve a surety
of her obligations. See DiMeo, 2013 UT App 188, ¶ 9 n.2. Other courts
have reached a similar result. See, e.g., Sheet Metal Workers’ Local
Union No. 100 Wash., D.C. Area Pension Fund v. W. Sur. Co., 187 F.
Supp. 3d 569, 582, 583–84 (D. Md. 2016); Cent. Bldg., LLC v. Cooper, 26
Cal. Rptr. 3d 212, 217–18 (Ct. App. 2005).
¶28 Much like the modification at issue in DiMeo, the
modification Lin and PC Riverview made changed only the timing of
the payments—and did that only within the timeframe contemplated
by the terms of the original contract. Lin and PC Riverview’s 2010
repayment agreement anticipates that Lin will “follow[] [the]
payment plan . . . on the past due balance of the lease agreement.”
The agreement then sets out the repayment schedule, allowing Lin to
repay PC Riverview in five payments by January 1, 2011. 3
_____________________________________________________________
3 We assume January 1, 2011, is the correct date of the final
payment between Lin and PC Riverview. The exact dates lead from
September 1, 2010, monthly through January 1, 2010, which we
assume is a clerical error.
8
Cite as: 2017 UT 52
Opinion of the Court
¶29 The terms of the 2010 repayment agreement extend the
time within which Lin can pay back “the past due balance of the lease
agreement.” (Emphasis added.) The 1997 lease—which Cao adopted
in her 2003 assignment—contemplated just such a scenario: the
terms of that provision provide for “late fees” on “past due
amount[s]” and interest on those amounts. Moreover, the lease
permitted PC Riverview to waive the lease’s conditions and
covenants at its discretion. In other words, PC Riverview had the
contractual right to waive the late fees and interest that Lin had
allowed to accrue. Thus, the 2010 repayment agreement added no
terms to the original agreement.
¶30 The only argument Cao levels against the court of appeals’
application of Restatement section 41 focuses on Cao’s purported
status as a personal and uncompensated guarantor. 4 We recognize
that a number of courts—including ours—have drawn an analytical
distinction between compensated and uncompensated sureties.
Gratuitous sureties are “motivated by selfless generosity” in
guaranteeing another’s debt and “enter[] into guaranty agreements
for reasons involving familial or neighborly affection and [do] not
profit financially from the transaction.” Garden State Tanning, Inc. v.
Mitchell Mfg. Grp., Inc., 273 F.3d 332, 336 (3d Cir. 2001). Because
gratuitous sureties are not “otherwise interested in the transaction
leading up to the suretyship contract,” First Nat’l Bank of E. of
Conemaugh v. Davies, 172 A. 296, 298 (Pa. 1934), they sometimes play
by a set of different rules. For example, they are often discharged
“[w]here, without [their] consent, there has been a material
modification in the creditor-debtor relationship,” even without
assuming substantially greater economic risk. Reliance Ins. Co. v.
Penn Paving, Inc., 734 A.2d 833, 838 (Pa. 1999) (citation omitted); see
also WRS Inc. v. Plaza Entm’t, Inc., 285 F. App’x 872, 876 (3d Cir. 2008)
(noting that “[g]ratuitous sureties are typically discharged ‘[w]here,
without the surety’s consent, there has been a material modification
_____________________________________________________________
4 Because it does not ultimately change the outcome, we will
assume that Cao was an uncompensated guarantor. We note,
however, that she did not develop facts before the district court that
would allow her to demonstrate persuasively that she was not
“interested in the transaction leading up to the suretyship contract.”
See First Nat’l Bank v. Davies, 172 A. 296, 298 (Pa. 1934).
9
PC RIVERVIEW v. CAO
Opinion of the Court
in the creditor-debtor relationship’” but that “[c]ompensated
sureties, by contrast, . . . are discharged only when there has been a
material modification without the surety’s consent and that
modification substantially increases the surety’s risk”) (second
alteration in original) (citation omitted).
¶31 We have recognized that uncompensated sureties are
“favored by the law.” M.H. Walker Realty Co. v. Am. Sur. Co. of N.Y.,
211 P. 998, 1010 (Utah 1922) (citation omitted). They “have a right to
stand on the terms of their obligation, and, having consented to be
bound to a certain extent only, their liability must be found within
the terms of that consent, strictly construed.” Id. (citation omitted).
Thus, “if [a surety] does not assent to any variation of [the contract]
and a variation is made, it is fatal.” Id. (citation omitted). But Cao
does not persuasively argue that this line of cases cannot be
harmonized with Restatement section 41. Indeed, Cao supports her
argument with cases that recognize that “[d]ealings between the
debtor and the primary obligor which materially modify the terms of
the guarantor’s undertaking generally result in the discharge of the
guarantor’s obligation.” Carrier Brokers, Inc. v. Spanish Trail, 751 P.2d
258, 261 (Utah Ct. App. 1988) (emphasis added). And Cao concludes
by arguing, “[u]nder these principals [sic], any material alteration by
Plaintiff and Defendant Lin to the underlying obligation relieved
Defendant Cao of her surety obligation.”5 (Emphasis added).
¶32 The 2010 repayment agreement did not materially modify
the underlying obligation. As described above, before PC Riverview
and Lin entered into the 2010 repayment agreement, Cao faced the
potential of having to pay rent for the term of the lease, interest, and
late payments. And after PC Riverview and Lin entered into the 2010
repayment agreement, Cao faced the potential of having to pay rent
for the term of the lease, interest, and late payments. The 2010
repayment agreement did not expose Cao to different or new terms
than she was already exposed to under the lease. There was no
material modification. Without more, the mere extension of time at
_____________________________________________________________
5 To the extent there are arguments to be made that a materiality
requirement is inconsistent with strictissimi juris, or that adoption of
section 41 of the Restatement (Third) of Suretyship and Guaranty
requires us to overturn M.H. Walker and its progeny, we will leave
those arguments for another day and a different set of briefs.
10
Cite as: 2017 UT 52
Opinion of the Court
issue here is “not of the nature or degree that would trigger a
discharge of” Cao’s duties under her agreement. See DiMeo, 2013 UT
App 188, ¶ 9 n.2. PC Riverview is thus entitled to enforce the
guaranty Cao signed.
II. The Court of Appeals’ Error in Not Addressing
Alternative Grounds for Affirmance Was Harmless
¶33 Cao argues that the court of appeals erred when it failed to
remand for further factual findings regarding whether her guaranty
covered only the original term of the lease and not any extensions.
She also contends that the district court erred when it admitted
evidence supporting a conclusion that PC Riverview had been
properly assigned interests in the lease it sought to enforce and, if
that document been excluded, there would have been no evidence
she was ever in privity of contract with PC Riverview. Cao
specifically argues that, “[a]lthough the Trial Court is granted great
discretion in admitting evidence, [it] abused its discretion in this
case.”
¶34 We begin by noting that the court of appeals did not
address these arguments before reversing. When a party raises
alternative grounds for affirmance, an appellate court “may affirm the
judgment appealed from” on “any legal ground or theory apparent
on the record.” Bailey v. Bayles, 2002 UT 58, ¶ 10, 52 P.3d 1158
(emphasis added) (citation omitted). When the court of appeals
reverses, and the appellant has briefed grounds for affirmance that
were preserved before the district court, the court of appeals must
deal with those arguments by either addressing or remanding them.
And although we could remand to the court of appeals so it can have
a go at these arguments, we are acutely aware that this is a $5,000
dispute that has now been through a trial, an appeal, and a petition
for certiorari. Because we can easily dispose of Cao’s alternative
grounds, we will address these issues rather than remand to the
court of appeals for additional proceedings.
¶35 Cao’s first argument is unpreserved. Our rules spell out a
preservation requirement, requiring “that an appellant’s brief
contain a ‘citation to the record showing that the issue was preserved
in the trial court; or a statement of grounds for seeking review of an
issue not preserved.’” Donjuan v. McDermott, 2011 UT 72, ¶ 22, 266
P.3d 839 (quoting UTAH R. APP. P. 24(a)(5)(A)–(B)). “[I]n order to
preserve an issue for appeal[,] the issue must be presented to the trial
court in such a way that the trial court has an opportunity to rule on
11
PC RIVERVIEW v. CAO
Opinion of the Court
that issue.” Pratt v. Nelson, 2007 UT 41, ¶ 15, 164 P.3d 366 (citation
omitted). An issue “must be specifically raised” “in a timely
fashion,” in addition to being supported by “evidence or relevant
legal authority.” Brookside Mobile Home Park, Ltd. v. Peebles, 2002 UT
48, ¶ 14, 48 P.3d 968 (citation omitted).
¶36 With respect to her first argument—that her surety
obligation expired with the original lease—Cao fails to cite any place
in the record demonstrating that she preserved this argument before
the district court. And, while we are not obligated to perform this
work for a party, our review of the transcript did not reveal any
mention of this argument. We find it unpreserved, and the court of
appeals’ failure to address it is therefore harmless.
¶37 Cao next argues that the court of appeals should have
affirmed because the district court erred when it admitted the
document assigning the lease to PC Riverview. Cao contends that if
the court had excluded the assignment, there would have been no
evidence she was ever in privity of contract with PC Riverview. At
trial, Cao pressed her argument that even with the assignment in
evidence, there was an insufficient factual basis to find that the lease
had been assigned to PC Riverview. Because it ruled for Cao on the
material modification issue, the district court opined that it did not
need to reach the assignment question. Cao raised this argument
before the court of appeals, but the court of appeals neither
addressed it nor remanded to permit the district court to resolve the
issue.
¶38 The court of appeals’ decision to not address the argument
did not harm Cao because the district court did not abuse its
discretion in admitting the assignment. Rule 901(a) of the Utah Rules
of Evidence provides that a “proponent must produce evidence
sufficient to support a finding that the item is what the proponent
claims it is.” The rule further states that “Testimony of a Witness
with Knowledge” “satisfies the requirement.” Id. 901(b)–(b)(1)
(describing such evidence as “[t]estimony that an item is what it is
claimed to be”). Furthermore, “[p]roper authentication does not
require conclusive proof but, instead, requires only that the trial
court determine that there is ‘evidence sufficient to support a
finding’” that the item is what the proponent claims it is. State v.
Woodard, 2014 UT App 162, ¶ 17, 330 P.3d 1283 (citation omitted); see
also UTAH R. EVID. 901(a), (b)(1); Pahl v. Comm’r, 150 F.3d 1124, 1132
(9th Cir. 1998) (concluding no abuse of discretion to admit document
12
Cite as: 2017 UT 52
Opinion of the Court
duplicate because witness who observed taxpayer sign original
provided adequate testimony to authenticate duplicate under
Federal Rule of Evidence 901(b)(1)); see 2 GEORGE E. DIX ET AL.,
MCCORMICK ON EVIDENCE § 222 (7th ed. 2013) (“Proof of
[a]uthorship” may be authenticated through “the production of a
witness who swears that he saw a specific person write and/or sign
the proffered writing. The testimony of a percipient witness satisfies
the requirement that evidence sufficient to support a finding be
presented. The witness may be anyone—the author or signer,
acknowledging execution; a person who simply observed the event;
or, a formal subscribing or attesting witness who must be called
before other witnesses may authenticate the writing.” (footnotes
omitted)).
¶39 At trial, the president of PC Riverview’s managing
member, Grace Mitchell, testified that Riverview Properties had
assigned its rights and obligations under the contract to PC
Riverview. Mitchell testified as to the authenticity of a document
that detailed an “assignment and assumption of leases that [were]
entered into when [PC Riverview] purchased the property” in 2006.
Cao objected to the document being entered into evidence because
no one from Riverview Properties testified about signing the
contract. Mitchell then testified as to the authenticity of Riverview
Properties’ signatures, claiming that the document was signed in her
presence. Cao offered no evidence impeaching Mitchell as a witness
or casting doubt as to the credibility of her testimony. The district
court admitted the document into evidence based on Mitchell’s
testimony.
¶40 Cao is correct that the rule “places the burden of
authenticating the document on the party seeking its admission.”
But PC Riverview met its burden when it offered Mitchell’s
testimony authenticating the document. Cao offered no evidence
suggesting that the assignment was not authentic. The district court
thus did not abuse its discretion in admitting a document that a
witness testified was what PC Riverview claimed it was. While the
court of appeals erred in failing to address Cao’s two alternative
grounds for affirmance, its error was harmless. 6
_____________________________________________________________
6Cao also argues on certiorari that even if the assignment were
properly admitted, it does not mention the guaranty, and that,
(continued . . .)
13
PC RIVERVIEW v. CAO
Opinion of the Court
III. PC Riverview May Collect Attorney Fees
¶41 PC Riverview asks for “its Court costs and attorney’s fees,
including its costs and attorney’s fees incurred on appeal.” Cao’s
2003 lease assignment provided that, “[i]n the event of default under
any of the terms of this Agreement or the Lease, defaulting party
agrees to pay all costs incurred in enforcing this Agreement on the
Lease or any right arising [out] of the breach of either, and including
reasonable attorney’s fees.” Cao personally guaranteed the terms of
that contract. The 2006 lease assignment to Lin—which Cao also
personally guaranteed—contains identical language. The court of
appeals awarded attorney fees “in accordance with the terms of the
agreement entered into among [Lin], Cao, and the prior owner.” PC
Riverview LLC v. Cao, 2016 UT App 178, ¶ 8 n.4, 381 P.3d 1185. Cao
does not argue that PC Riverview is not entitled to fees if it prevails
before this court. Thus, under the terms of the contract, we award
reasonable costs and attorney fees “incurred in enforcing this
Agreement” in the district court and on appeal, and we remand to
the district court to determine what those reasonable costs are.
CONCLUSION
¶42 A guarantor is relieved of her obligations under a guaranty
if the creditor and debtor materially modify the guaranteed
agreement. Here, the 2010 repayment agreement did not materially
modify the Lease. While the court of appeals erred in not addressing
Cao’s alternative grounds for affirmance, the error was harmless. We
remand to the district court solely to determine the reasonable costs
(continued . . .)
therefore, there was no proof before the district court that the
Guaranty had been assigned. Cao ignores Utah Rule of Appellate
Procedure 24(a)(5)(A), which requires a “citation to the record
showing that the issue was preserved in the trial court,” and fails to
indicate where in the record she preserved this argument. And,
again, even though we are not obligated to comb through the record,
we did and were unable to find this argument in the district court
record. We are generally not in the business of addressing
unpreserved issues. See In re Adoption of Baby E.Z., 2011 UT 38, ¶ 25,
266 P.3d 702 (“We . . . will generally not consider arguments that
litigants have failed to raise in the proceedings below.”).
14
Cite as: 2017 UT 52
Opinion of the Court
and attorney fees incurred by PC Riverview in the district court and
on appeal. We affirm the court of appeals’ decision.
15