Thomas v. Mattena , 397 P.3d 856 ( 2017 )

2017 UT App 81THE UTAH COURT OF APPEALS
AFTON B. THOMAS,
Appellant,
v.
GEORGE TENNYSON MATTENA, JODY K. MATTENA, AND BAD LANDS
BOW HUNTERS LLC,
Appellees.
Opinion
No. 20150987-CA
Filed May 11, 2017
Third District Court, Salt Lake Department
The Honorable Ryan M. Harris
No. 130905157
Brett D. Cragun, Attorney for Appellant
John V. Mayer, Attorney for Appellees
JUDGE MICHELE M. CHRISTIANSEN authored this Opinion, in
which JUDGES GREGORY K. ORME and J. FREDERIC VOROS JR.
concurred.
CHRISTIANSEN, Judge:
¶1 This case concerns the enforceability of a promissory note
memorializing a loan made to a limited-liability company when
the promissory note does not contain personal liability terms.
We conclude that the district court did not plainly err in
determining that the note was enforceable against the company
but not the individual signers, and we therefore affirm.
¶2 Afton B. Thomas was the trustee of several trusts,
including the Kent E. Thomas Marital Trust. Jody K. Mattena is a
contingent beneficiary of that trust. She and George Tennyson
Mattena own Bad Lands Bow Hunters LLC (Bad Lands).
Thomas v. Mattena
¶3 In 2011, these parties met to discuss the use of a building
owned by the trust. The parties agreed that Bad Lands would
lease the building. The lease terms were not reduced to a writing
signed by all of the parties. However, the parties understood
that the Mattenas would be personally responsible for paying
the lease if Bad Lands did not.
¶4 Also in 2011, Thomas loaned $200,000 to Bad Lands from
the trust. This money was to be used for improvements to the
building and to fund the company’s start up costs. Later,
Thomas increased the loan to a total of $300,000. The Mattenas
executed a promissory note, but, as the district court found, the
wording was “ambiguous and was not clearly drafted to indicate
individual liability.” The disbursement checks from the trust
were made out to Bad Lands, not the Mattenas. While Thomas
believed Bad Lands and the Mattenas would be jointly liable for
repaying the loan, the Mattenas did not share that belief. Instead,
they believed liability for loan repayment would mirror the
terms of a business loan previously made by Thomas to Jody
Mattena’s half sister, which did not include any provision for
personal liability.
¶5 In 2013, Thomas brought suit on behalf of the trust
against Bad Lands and the Mattenas for missing payments on
the lease and loan. At the conclusion of the bench trial, the
district court ruled that Bad Lands and the Mattenas were jointly
liable for amounts due under the lease. But the court also ruled
that, because “there was never a meeting of the minds between
the parties as to personal liability or personal responsibility” for
the loan, only Bad Lands was responsible for repaying the loan.
¶6 On appeal, Thomas contends that no contract could exist
in the absence of a meeting of the minds on the Mattenas’s
personal liability for the loan, and thus that the district court
erred in ruling that Bad Lands was solely responsible for
repaying the loan. Whether a contract exists is a legal
20150987-CA 2 2017 UT App 81Thomas v. Mattena
determination, and we therefore review a district court’s
conclusion as to that issue for correctness. See Cea v. Hoffman,
2012 UT App 101, ¶ 9, 276 P.3d 1178.
¶7 We first address preservation. An issue is preserved for
appeal when it has been presented to the district court in such a
way that the district court had the opportunity to address it.
Wohnoutka v. Kelley, 2014 UT App 154, ¶ 4, 330 P.3d 762. When
an issue has not been so preserved, it is usually deemed waived.
Id. ¶ 3. “The preservation requirement is based on the premise
that, in the interest of orderly procedure, the trial court ought to
be given an opportunity to address a claimed error and, if
appropriate, correct it.” Id. (citation and internal quotation marks
omitted).
¶8 Here, Thomas claims the “issue was preserved for appeal
by the following: Findings of Fact and Conclusions of Law.” This
document memorializes the district court’s evidentiary findings
as to the underlying facts and the court’s legal conclusion that
Thomas “did not carry her burden of proving that any personal
liability for the Bad Lands Loan attaches to the Mattenas
individually.” But nothing in the ruling suggests that Thomas
ever argued to the district court that no loan contract existed at
all as a result of the parties’ failure to come to a meeting of the
minds on the personal-liability issue. See State v. Kennedy, 2015
UT App 152, ¶ 21, 354 P.3d 775 (noting that, to preserve an issue
for appeal, “[t]he appellant must present the legal basis for her
claim to the trial court, not merely the underlying facts or a
tangentially related claim”); see also Prime Ins. Co. v. Graves, 2016
UT App 23, ¶ 10, 367 P.3d 1029 (same); Wohnoutka, 2014 UT App
154, ¶ 8 (ruling an issue unpreserved where the appellant “takes
the evidence introduced in support of his preserved but
unsuccessful contract claim and reweaves the constituent
evidentiary threads into a new legal theory”). We therefore
conclude that Thomas did not preserve her issue for appeal.
20150987-CA 3 2017 UT App 81Thomas v. Mattena
¶9 Thomas asserts that we may nonetheless review her claim
pursuant to the plain-error doctrine. To obtain relief via the
plain-error doctrine, an appellant must “show the existence of a
harmful error that should have been obvious to the district
court.” State v. Waterfield, 2014 UT App 67, ¶ 18, 322 P.3d 1194.
¶10 Thomas’s appeal rests on her claim that the district court
failed to recognize, sua sponte, the legal significance of certain
language in the court’s own ruling as drafted by Thomas:
specifically, that “there was never a meeting of the minds
between the parties as to personal liability or personal
responsibility.” Thomas notes that Utah case law “is clear that
there must be a meeting of the minds to create a contract.” She
then asserts that “[t]he issue of personal liability for the loan is
one that is integral and important to an agreement. Because
there was no meeting of the minds on this issue, the Bad Lands
Loan was not an enforceable contract.” In short, she claims that a
failure to come to an agreement regarding personal liability for a
business loan renders the remainder of the loan contract invalid.
¶11 “It is fundamental that a meeting of the minds on the
integral features of an agreement is essential to the formation of
a contract.” Nielsen v. Gold’s Gym, 2003 UT 37, ¶ 11, 78 P.3d 600(citation and internal quotation marks omitted). “A contract may
be enforced even though some contract terms may be missing or
left to be agreed upon, but if the essential terms are so uncertain
that there is no basis for deciding whether the agreement has
been kept or broken, there is no contract.” Id. ¶ 12 (citation and
internal quotation marks omitted). We are not aware of any
authority holding that a personal-liability clause is an integral
feature or essential term of a business-loan contract, the absence
of which is fatal to the enforceability of the contract. Nor does
Thomas refer us to any.
¶12 Moreover, the absence of a personal-liability clause likely
indicates that the parties are satisfied with the default rule. See
20150987-CA 4 2017 UT App 81Thomas v. Mattena
Utah Code Ann. § 48-2c-601 (LexisNexis 2010) (providing the
general rule that “no organizer, member, manager, or employee
of a [limited-liability] company is personally liable . . . for a debt,
obligation, or liability of the company”). 1 Like the absence of
other ancillary provisions, such as arbitration and attorney-fee
clauses, the omission of a personal-liability clause does not seem
to render the contract “so uncertain that there is no basis for
deciding whether the agreement has been kept or broken.”
Nielsen, 2003 UT 37, ¶ 12. But we need not and do not decide this
question today, because our review is limited by the plain-error
doctrine.
¶13 Under the plain-error doctrine, we will only reverse when
the appellant has demonstrated “a harmful error that should
have been obvious to the district court.” Waterfield, 2014 UT App
67, ¶ 18. “To establish that the error should have been obvious to
the trial court, the appellant must show that the law governing
the error was clear at the time the alleged error was made.” State
v. Davis, 2013 UT App 228, ¶ 32, 311 P.3d 538 (brackets, citation,
and internal quotation marks omitted). “Thus, an error is not
obvious if there is no settled appellate law to guide the trial
court.” Id. (citation and internal quotation marks omitted).
¶14 On appeal, Thomas bears the burden of identifying
supporting authority for the proposition that personal-liability
clauses are integral features of business-loan contracts. See Utah
R. App. 24(a)(9). Her failure to do so suggests that none exists.
And, indeed, our independent research has also failed to
uncover any such authority. See Giles v. Mineral Resources Int’l,
1. We note that the promissory note and the disbursement
checks identified the recipient of the loan funds as Bad Lands
Bow Hunting LLC, which is a limited-liability company and, of
course, exactly the type of entity an individual would create to
avoid personal liability.
20150987-CA 5 2017 UT App 81Thomas v. Mattena
Inc., 2014 UT App 259, ¶ 12, 338 P.3d 825 (noting that an
appellate court is under no obligation to “‘save an appeal by
remedying the deficiencies of an appellant’s brief’” (citation
omitted)); cf. Cessna Fin. Corp. v. Meyer, 575 P.2d 1048, 1050–51
(Utah 1978) (holding that, where contracting parties had
included a personal-liability provision but left a blank line
instead of specifying the limit of such liability, such omission did
not affect the validity of the provision or contract). Because there
is no settled appellate law as to the dubious proposition that a
personal-liability clause is an integral feature of a business-loan
contract, Thomas cannot establish the existence of an error that
should have been obvious to the district court. See Davis, 2013
UT App 228, ¶ 32. And in the absence of an obvious error, relief
is not available via the plain-error doctrine. Waterfield, 2014 UT
App 67, ¶ 18.
¶15 In sum, Thomas brought suit against Bad Lands and the
Mattenas, asserting that they had failed to perform under a
contract. Thomas did not argue to the district court that no
contract existed due to the absence of a personal-liability clause
or that such a clause was an integral feature of a business-loan
contract. The issue was therefore not preserved for appeal. And
the plain-error exception to the preservation requirement does
not apply here, because there is no settled law on this issue.
¶16 Affirmed.
20150987-CA 6 2017 UT App 81