N.A.R., Inc. v. Vermillion , 284 P.3d 665 ( 2012 )

IN THE UTAH COURT OF APPEALS
‐‐‐‐ooOoo‐‐‐‐
N.A.R., Inc., ) MEMORANDUM DECISION
)
Plaintiff, ) Case No. 20101043‐CA
)
v. )
) FILED
Aubrie Vermillion, ) (July 12, 2012)
)
Defendant and Appellee. ) 2012 UT App 191____________________________________ )
)
Neil B. Baird, D.D.S., )
)
Appellant. )
‐‐‐‐‐
Third District, Salt Lake Department, 070908175
The Honorable Robert K. Hilder
Attorneys: Derek A. Coulter and Robert T. Tateoka, Draper, for Appellant
Ronald Ady, Salt Lake City, for Appellee
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Before Judges Voros, Thorne, and Christiansen.
CHRISTIANSEN, Judge:
¶1 Neil B. Baird, D.D.S., appeals the trial court’s denial of his motion for attorney
fees against Aubrie Vermillion and her counsel. Specifically, Baird challenges the trial
court’s ruling that his privity of contract with N.A.R., Inc. precluded his claim for
attorney fees associated with the collection action between N.A.R. and Vermillion that
the parties ultimately settled. We affirm.
¶2 Baird performed dental services for Vermillion; Vermillion refused to pay for
those services based upon her claim that Baird provided defective care. As a result of a
written agreement between Baird and N.A.R. (the assignment‐of‐debt agreement), Baird
assigned Vermillion’s debt to N.A.R. and N.A.R. filed a collection action against
Vermillion in an effort to collect the debt. Baird was not a party to the collection action.
In the course of the suit, Vermillion filed a counterclaim against N.A.R. asserting Utah
Consumer Sales Practices Act violations. Vermillion subsequently served a subpoena
duces tecum on Baird, seeking his deposition and production of documents, and Baird
incurred substantial attorney fees in moving the trial court to quash the subpoena and
limit the scope of his deposition. Baird also requested his attorney fees as a sanction
against Vermillion and her counsel. In its rulings on the discovery disputes between
Vermillion and Baird, the trial court granted Baird’s motion to quash but reserved the
issue of Baird’s motion for attorney fees.
¶3 Vermillion and N.A.R. settled all claims on the day of trial after a jury had been
empaneled. In particular, N.A.R. released any claims it had or that could be brought
against Vermillion, which release extended to “[N.A.R.’s] officers, agents, Dr. Baird, his
officers, agents, or their attorneys . . . .” Additionally, Vermillion and N.A.R. agreed
that “everyone bears their own attorneys fees, costs and expenses.” Baird was present,
sans counsel, during the settlement proceedings, but Baird never addressed the court or
objected to the settlement. Shortly after the settlement agreement, Baird renewed his
motion for attorney fees, which the trial court dismissed as part of its ruling enforcing
the settlement. The trial court reasoned that Baird was in privity of contract with
N.A.R. and was therefore bound by the settlement agreement.
¶4 We agree with the trial court’s reasoning and its denial of Baird’s motion for
attorney fees because Baird’s privity of contract with N.A.R. and the settlement
agreement between N.A.R. and Vermillion precluded Baird from raising further claims
against Vermillion, including any claim for attorney fees.1
1. The trial court described Baird as a privy. Pursuant to the assignment‐of‐debt
agreement between Baird and N.A.R., however, Baird was technically the
obligor/assignor, making N.A.R. the assignee/obligee. See generally Sunridge Dev. Corp.
(continued...)
20101043‐CA 2
¶5 Utah case law provides clarification of privity in a collateral estoppel context,
which is useful to an understanding of privity in this matter. Collateral estoppel is not
involved here because there was a settlement agreement rather than a judicial
determination. Nonetheless, the preclusive effect of the settlement agreement is
analogous. For example, in Searle Brothers v. Searle, 588 P.2d 689 (Utah 1978), the
supreme court explained, “The legal definition of a person in privity with another, is a
person so identified in interest with another that he represents the same legal right.
This includes a mutual or successive relationship to rights in property.” Id. at 691(applying privity to “judgments or decrees of court,” for which “privity means ‘one
whose interest has been legally represented at the time,’” and holding that privity did
not exist where the plaintiffs claimed an “independent and separate partnership
interest” in the property involved, which “arose before the commencement of the first
action, not subsequent thereto” (citation omitted)); cf. Brigham Young Univ. v. Tremco
Consultants, Inc., 2005 UT 19, ¶ 27, 110 P.3d 678 (outlining the elements of collateral
estoppel).
¶6 Unlike in Searle, where the plaintiffs did not share the same “legal right” or a
“mutual or successive relationship to rights in property” due to their “independent and
separate partnership interest,” Searle, 588 P.2d at 691, Baird and N.A.R. shared the same
legal right to any amount ultimately collected from Vermillion. As provided in their
assignment‐of‐debt agreement, Baird assigned the Vermillion debt to N.A.R., but the
dentist maintained a 50% interest in the claim. Baird’s retention of the 50% interest in
the claim demonstrates that both he and N.A.R. had the same legal right, or property
1. (...continued)
v. RB&G Eng’g, Inc., 2010 UT 6, ¶ 15, 230 P.3d 1000 (Utah 2010) (explaining that “the
relationship between the assignee and obligor is not best characterized as a form of
privity, but rather as a continuation of the rights and liabilities of the assignor as
evidenced by the assigned agreements and any further limitations stated in the
assignment itself”). Although an assignment may not be “best characterized as a form
of privity,” see id., an assignee is a fortiori in privity with an assignor. Because it does
not affect our analysis, we use the trial court’s and parties’ characterization of the
relationship.
20101043‐CA 3
interest, at stake in the collection of the debt. Further, this legal right was not affected
by the fact that Baird served as a fact witness.
¶7 Again in a collateral estoppel context, a court may evaluate whether a party has
control over the litigation in order to determine whether privity exists. See Baxter v.
Utah Dept. of Transp., 705 P.2d 1167, 1169 (Utah 1985) (stating that “[t]o establish privity,
[a] witness also must have had some control over the litigation” and holding that the
fact witness was not in privity to the preceding action because the only direct
connection he had with the suit was that he appeared as a witness). Similarly, in
Brigham Young University v. Tremco Consultants, Inc., 2005 UT 19, 110 P.3d 678, the
supreme court analyzed whether the collateral estoppel elements were met by applying
“the concept of privity based on a nonparty’s control of the litigation.” Id. ¶¶ 32‐34.
¶8 In contrast to Baxter, Baird retained some control over the litigation between
N.A.R. and Vermillion. He had a contractual right to decide whether to commence
litigation and whether to terminate N.A.R’s prosecution of the claim at any time prior to
its conclusion. Baird contends that he had no control over the litigation or the
settlement because the assignment‐of‐debt agreement granted N.A.R. the exclusive
right to compromise and settle the claim. On the contrary, the assignment‐of‐debt
agreement required N.A.R. to gain approval from Baird before settling, reducing, or
compromising a debt. Baird also argues that since he was independently represented
by counsel who was not made aware of the settlement agreement, he was not in privity
with N.A.R. But Baird’s representation was limited to his involvement in the case as a
fact witness, rather than his 50% interest in the claim.
¶9 Finally, having a statement of the settlement agreement on the record instead of a
formal written document does not negate the settlement agreement. “It is a basic and
long‐established principle of contract law that agreements are enforceable even though
there is neither a written memorialization of that agreement nor the signatures of the
parties, unless specifically required by the statute of frauds.” Murray v. State, 737 P.2d
1000, 1001 (Utah 1987) (citing 17 Am. Jur. 2d Contracts § 67 (1964)).
¶10 Because Baird maintained an interest in the collection action and control over the
litigation, he is in privity of contract with N.A.R. Thus, he is bound by the settlement
20101043‐CA 4
agreement.2 Accordingly, we conclude that the trial court correctly enforced the
settlement agreement and denied Baird’s motion for attorney fees.
¶11 Affirmed.
____________________________________
Michele M. Christiansen, Judge
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¶12 WE CONCUR:
____________________________________
J. Frederic Voros Jr.,
Associate Presiding Judge
____________________________________
William A. Thorne Jr., Judge
2. It is therefore unnecessary for us to decide whether claim preclusion barred Baird’s
motion for attorney fees.
20101043‐CA 5