ACC Capital Corporation v. Ace West Foam , 420 P.3d 44 ( 2018 )

2018 UT App 36THE UTAH COURT OF APPEALS
ACC CAPITAL CORPORATION,
Appellant,
v.
ACE WEST FOAM INC., ACE WEST FOAM #3 INC., ACE WEST
TRUCKING INC., AND DONALD O. ROOKS JR.,
Appellees.
Opinion
No. 20160095-CA
Filed March 1, 2018
Third District Court, Salt Lake Department
The Honorable Keith A. Kelly
No. 130900381
John A. Snow and Alex B. Leeman, Attorneys
for Appellant
Brennan H. Moss and John P. Mertens, Attorneys
for Appellees
JUDGE DIANA HAGEN authored this Opinion, in which JUDGES
MICHELE M. CHRISTIANSEN and JILL M. POHLMAN concurred.
HAGEN, Judge:
¶1 ACC Capital Corporation (ACC) appeals the district
court’s denial of its motion for summary judgment and
enforcement of a subsequent settlement agreement. The district
court did not abuse its discretion in enforcing the settlement
where the parties executed a Memorandum of Understanding
(the MOU) during mediation, the terms of which were
sufficiently definite to be enforced. Further, the district court’s
factual finding that there was no misrepresentation or mutual
mistake of fact that would render the agreement null and void
was not clearly erroneous. Accordingly, we affirm the
enforcement of the settlement agreement.
ACC Capital Corporation v. Ace West Foam
BACKGROUND
¶2 The parties entered into a lease agreement concerning the
use of “custom built trailer-mounted nitrogen generators” that
are typically utilized in the oil and gas drilling industry. ACC
sued Ace West Foam Inc. (Ace West), claiming that Ace West
had breached the lease.
¶3 The parties submitted cross-motions for summary
judgment, which the district court denied. The court determined
that there were several “material fact disputes concerning [Ace
West’s] defenses and the amount of damages that may be owing
to [ACC].”
¶4 After the court denied the summary judgment motions,
the parties participated in court-ordered mediation. At the
mediation session, the parties executed the MOU. The district
court found that the MOU outlined the following terms:
ACC will inspect and pick two of [Ace West’s]
foam compressor units, obtain possession of them,
and then sell them with the two previously leased
trailer-mounted nitrogen generators that were in
the possession of [ACC]. . . . [The MOU] sets out a
minimum sales price of $1,425,000 for the four
items (two generators with two compressors),
along with a schedule of what further
consideration will be exchanged, depending on the
ultimate sales price achieved. . . . If the units do not
sell at the minimum price “then [Ace West] will
pay ACC $125,000,” which “is intended as
damages if Ace West does not sell the four units.”
¶5 The last provision of the agreement stated that the parties
“will work in good faith and make reasonable efforts to bring
about this resolution and settlement, including the preparation
and execution of a more formal settlement agreement and
20160095-CA 2 2018 UT App 36ACC Capital Corporation v. Ace West Foam
release of all claims, as well as stipulation and order for
dismissal with prejudice.”
¶6 After the mediation session, the parties exchanged
correspondence to create a “more formal settlement agreement,”
as directed in the MOU. Ultimately, these negotiations broke
down, and ACC sent a letter to Ace West purporting to
withdraw its settlement offer.
¶7 Ace West subsequently filed a motion to enforce the
MOU. The district court determined that the MOU was an
enforceable settlement agreement, containing “proper legal
consideration because performance or a return promise was
bargained for by each of the parties.” Furthermore, there was
mutuality of agreement because “[b]oth parties executed the
agreement,” as well as mutuality of obligation because “ACC
agreed to dismiss its claims in return for payment and
performance on behalf of Ace West.” The court concluded that
the MOU contained “all of the material terms agreed to between
the parties” and was “fully enforceable.”
¶8 The court also rejected ACC’s alternative argument that
the MOU “should be set aside due to mistake, misrepresentation,
or fraud” regarding the value of the foam compressors. The
court made a specific factual finding that it did “not find credible
any assertion by ACC that Ace West warranted that the foam
compressors were worth any particular value.”
¶9 ACC now appeals the district court’s order granting the
motion to enforce as well as its prior order denying summary
judgment.
ISSUES AND STANDARDS OF REVIEW
¶10 ACC contends that the district court erred by enforcing
the MOU and dismissing the case because (1) the MOU was not
intended to be a final and enforceable agreement and (2) even if
20160095-CA 3 2018 UT App 36ACC Capital Corporation v. Ace West Foam
it was, the agreement was based on false statements or mutual
mistake concerning the value of the foam compressors.
¶11 “The existence of a contract is a question of law, to be
reviewed for correctness.” McKelvey v. Hamilton, 2009 UT App
126, ¶ 17, 211 P.3d 390. “If the language within the four corners
of the contract is unambiguous, the parties’ intentions are
determined from the plain meaning of the contractual language,
and the contract may be interpreted as a matter of law.” 1 Lebrecht
v. Deep Blue Pools & Spas Inc., 2016 UT App 110, ¶ 14, 374 P.3d
1064 (citation and internal quotation marks omitted).
Accordingly, “we review the district court’s interpretation for
correctness, according no deference to the district court.” Mid-
America Pipeline Co. v. Four-Four, Inc., 2009 UT 43, ¶ 16, 216 P.3d
352. Findings of fact regarding fraud or mutual mistake “will be
set aside only if [they are] clearly erroneous.” Vandermeide v.
Young, 2013 UT App 31, ¶ 14, 296 P.3d 787. The district court’s
ultimate decision to enforce a settlement agreement is reviewed
for abuse of discretion. McKelvey, 2009 UT App 126, ¶ 17.
ANALYSIS
I. The MOU Constituted an Enforceable Settlement Agreement.
¶12 ACC contends that the district court abused its discretion
by enforcing the MOU because that instrument was never
intended to be a final settlement agreement. “An agreement of
compromise and settlement constitutes an executory accord.
1. “When ambiguity exists, the intent of the parties becomes a
question of fact,” and we would review the district court’s
findings about such intent for clear error. WebBank v. American
Gen. Annuity Service Corp., 2002 UT 88, ¶ 22, 54 P.3d 1139(citation and internal quotation marks omitted). But in this case,
we determine that the MOU is unambiguous and therefore
interpret it as a matter of law.
20160095-CA 4 2018 UT App 36ACC Capital Corporation v. Ace West Foam
Since an executory accord constitutes a valid enforceable
contract, basic contract principles affect the determination of
when a settlement agreement should be so enforced.”
Goodmansen v. Liberty Vending Sys., Inc., 866 P.2d 581, 584 (Utah
Ct. App. 1993) (citation and internal quotation marks omitted).
“[A] binding contract exists where it can be shown that the
parties had a meeting of the minds as to the integral features of
[the] agreement and that the terms are sufficiently definite as to
be capable of being enforced.” LD III, LLC v. BBRD, LC, 2009 UT
App 301, ¶ 14, 221 P.3d 867 (second alteration in original)
(citation and internal quotation marks omitted).
¶13 Here, a binding contract exists. The district court correctly
determined that the MOU showed both that there was a meeting
of the minds and that the terms of the agreement were
sufficiently definite and capable of being enforced. First, the
district court observed that both parties had signed the MOU,
evidencing “a mutuality of agreement.” Second, the court
concluded that the terms of the agreement were sufficiently
definite as to be capable of being enforced, where the MOU
contained “a detailed settlement structure” concerning the foam
compressors, minimum sales prices for these items, as well as
further consideration to be exchanged between the parties.
¶14 ACC does not dispute that it signed the MOU, nor does it
take issue with the district court’s conclusion that the terms of
that agreement are sufficiently definite as to be capable of being
enforced. Instead, ACC argues that both extrinsic evidence and
language in the MOU itself demonstrate that ACC did not
intend to enter into a binding agreement. Neither argument
convinces us that the district court erred in concluding
otherwise.
A. Extrinsic Evidence Cannot Overcome the Parties’ Intent
Reflected in an Unambiguous Agreement.
¶15 ACC argues that the district court’s finding of mutual
agreement was clearly erroneous because the facts surrounding
20160095-CA 5 2018 UT App 36ACC Capital Corporation v. Ace West Foam
the mediation established that ACC did not intend to be bound
by the MOU. Specifically, ACC points to its “undisputed refusal
to sign a final agreement and insistence that a final agreement be
deferred to a later time” as well as “the parties’ post-mediation
conduct.”
¶16 The district court correctly ruled that the MOU was
binding based on its unambiguous language. So long as the
language within the contract is unambiguous, “a court
determines the parties’ intentions from the plain meaning of the
contractual language as a matter of law.” Bakowski v. Mountain
States Steel, Inc., 2002 UT 62, ¶ 16, 52 P.3d 1179. “Before the court
may consider extrinsic evidence of the parties’ intent, . . . it must
first conclude that the contract is facially ambiguous.” Wilson v.
Johnson, 2010 UT App 137, ¶ 8, 234 P.3d 1156.
¶17 To determine facial ambiguity, Utah courts apply a two-
part standard. Daines v. Vincent, 2008 UT 51, ¶ 26, 190 P.3d 1269.
First, the court must “review relevant and credible extrinsic
evidence offered to demonstrate that there is in fact an
ambiguity.” Id. ¶ 31. Second, after reviewing the extrinsic
evidence, the court may find “ambiguity only if the competing
interpretations are ‘reasonably supported by the language of the
contract.’” Id. (quoting Ward v. Intermountain Farmers Ass’n, 907
P.2d 264, 268 (Utah 1995)); see also Andersen v. Dep’t of Corr., 2015
UT App 63, ¶ 9, 347 P.3d 21 (“Although district courts are
required to review relevant and credible extrinsic evidence
offered to demonstrate that there is in fact an ambiguity, a
finding of ambiguity after a review of relevant, extrinsic
evidence is appropriate only when reasonably supported by the
language of the contract.” (citations and internal quotation
marks omitted)).
¶18 Under this precedent, “even though we permit admission
of extrinsic evidence to support a claim of ambiguity in
contractual language, the claim must be plausible and
reasonable in light of the language used.” Daines, 2008 UT 51,
20160095-CA 6 2018 UT App 36ACC Capital Corporation v. Ace West Foam
¶ 31 (citation and internal quotation marks omitted). In other
words, “there can be no ambiguity where evidence is offered in
an attempt to obscure otherwise plain contractual terms.” Id.¶19 Here, the district court heard extrinsic evidence regarding
the mediation and the negotiations that followed. After hearing
that evidence, the court ruled that the settlement was binding
based on the MOU’s unambiguous language, which contained
“all the elements necessary to establish a written contract.” The
district court correctly limited its ruling to the face of the MOU
because the extrinsic evidence did not support a plausible claim
of ambiguity in light of the contractual language. Specifically,
the signed MOU states that the parties “have now settled and
compromised their claims and negotiated a resolution of their
dispute . . . through the following terms.” Extrinsic evidence that
ACC did not want to enter into a final settlement agreement at
mediation “may not be used to contradict the plain language of
the contract.” Wilson, 2010 UT App 137, ¶ 8. Because the MOU’s
plain language unambiguously states that the parties have
settled their claims based on the terms it sets forth, the MOU
establishes a meeting of the minds as to the agreement’s integral
features.
B. Language Contemplating a More Formal Agreement Does
Not Preclude the Enforcement of a Settlement.
¶20 ACC argues that “the MOU itself shows that it was never
intended to be a final agreement” because it stated that the
parties would “prepare and execute a final agreement in the
future.” To be precise, the MOU does not refer to a future “final”
agreement but to a future “more formal” agreement. The last
paragraph of the MOU states:
The parties and their counsel will work in good
faith and make reasonable efforts to bring about
this resolution and settlement, including the
preparation and execution of a more formal
settlement agreement and release of all claims, as
20160095-CA 7 2018 UT App 36ACC Capital Corporation v. Ace West Foam
well as stipulation and order for dismissal with
prejudice.
¶21 This court’s recent decision in Patterson v. Knight, 2017 UT
App 22, 391 P.3d 1075, forecloses ACC’s argument that this
provision renders the settlement agreement unenforceable. In
Patterson, this court held that a settlement agreement was final
and enforceable even though it anticipated “the negotiation and
execution of further agreements, which never happened.” Id.
¶ 10. This court held that the mere fact that the parties
“contemplated the later execution of formal settlement
agreement documents” did not render the agreement reached in
mediation unenforceable. 2 Id. ¶ 13. As this court noted, “[i]t is
common for parties to later memorialize in a more formal
document agreements created in mediation. This arrangement
does not preclude the enforcement or finality of the agreement
created in mediation so long as the terms are ‘sufficiently
2. In Patterson v. Knight, 2017 UT App 22, 391 P.3d 1075, the
language of the settlement agreement stated that it was
“[s]ubject to” the drafting of a “mutually acceptable settlement
agreement.” Id. ¶ 2. The court determined that the “subject to”
language created a condition precedent that was satisfied when
Patterson sent the formal agreement to the Knights. Id. ¶ 11.
Specifically, the agreement stated that it was “[s]ubject to
drafting mutually acceptable settlement agreement w/ above
provisions and mutual non-disparagement, and [additional
agreements].” Id. ¶ 2. Here, the language in the MOU is even less
helpful to ACC. Unlike the written agreement in Patterson, the
MOU did not contain language signaling that the preparation of
such documents was a condition precedent to the finality of the
agreement. See id. ¶ 10. Instead of using words such as “subject
to,” “provided,” or “on condition that,” the MOU stated only
that the parties and their counsel would work together in good
faith to prepare a more formal settlement agreement.
20160095-CA 8 2018 UT App 36ACC Capital Corporation v. Ace West Foam
definite as to be capable of being enforced.’” Id. ¶ 12 (quoting LD
III, LLC v. BBRD, LC, 2009 UT App 301, ¶ 14, 221 P.3d 867).
¶22 Similarly, the fact that the MOU contemplated future
preparation of more formal settlement documents does not
undercut the district court’s conclusion that the agreement was
enforceable. The district court concluded that the parties reached
agreement on the essential terms of the settlement and that those
terms were set forth in sufficient detail to be enforceable.
Consistent with Patterson, we uphold the district court’s
determination that “the fact that the parties anticipated
preparing other more detailed documents does not prevent the
existing [MOU] from being enforceable.”
II. The District Court’s Factual Finding that the MOU Was Not
Based on a Misrepresentation Regarding the Value of the Foam
Compressors Is Not Clearly Erroneous.
¶23 Alternatively, ACC contends that, even if the MOU was a
final and enforceable agreement, it was based on Ace West’s
false statement regarding the value of the foam compressors.
ACC argues that the value of the compressors was a term or
condition to settlement and that the contract is null and void
because Ace West either misrepresented the value or the parties
made a mutual mistake of fact regarding their value.
¶24 When a credible contract defense is alleged, such as fraud,
courts may consider the content of the mediation in determining
whether a settlement agreement was reached. See Reese v. Tingey
Constr., 2008 UT 7, ¶ 9, 177 P.3d 605. Here, the district court
found that “the interests of justice require consideration of
mediation evidence submitted by ACC in order to determine
whether the [MOU] was induced by fraud or is unenforceable
due to a material mutual mistake of fact.”
¶25 Following an evidentiary hearing, the district court did
“not find credible any assertion by ACC that Ace West
warranted that the foam compressors were worth any particular
20160095-CA 9 2018 UT App 36ACC Capital Corporation v. Ace West Foam
value.” During the mediation session, Ace West expressed its
belief “that the foam compressors were worth between $250,000
and $275,000 each.” The district court held that this estimate was
“within a reasonable range of value given the market at the time
of the mediation” and that “Ace West reasonably believed” it
was accurate. The mediator shared Ace West’s valuation with
ACC but did not “communicate any guarantee that the foam
compressors were worth a particular value.” The district court
specifically found that “no one communicated at the mediation a
guarantee or warranty about the value of the [foam
compressors], and no one believed that Ace West had provided
such a guarantee or warranty.” To the contrary, “both sides
recognized that the foam compressors could be worth a wide
range of values.” Therefore, the court concluded that “there are
no credible facts supporting the claim that the [MOU] should be
set aside due to mistake, misrepresentation, or fraud.”
¶26 ACC argues that the district court’s findings regarding
the value of the foam compressors were not supported by the
evidence. ACC insists that the “only evidence before the district
court regarding the value of the foam compressors at the time of
the mediation” was the testimony of its expert witness, who
opined that the compressors were worth between $125,000 and
$165,000.
¶27 “Determinations regarding the weight to be given to the
testimony of expert witnesses are within the province of the
finder of fact . . . .” AmericanWest Bank v. Kellin, 2015 UT App
300, ¶ 25, 364 P.3d 1055 (citation and internal quotation marks
omitted). When making factual findings, “courts are not bound
to accept the testimony of an expert and [are] free to judge the
expert testimony as to its credibility and its persuasive influence
in light of all of the other evidence in the case.” State v. Maestas,
2012 UT 46, ¶ 200, 299 P.3d 892 (alteration in original) (citation
and internal quotation marks omitted). On appeal, “we will not
second guess a court’s decisions about evidentiary weight and
20160095-CA 10 2018 UT App 36ACC Capital Corporation v. Ace West Foam
credibility if there is a reasonable basis in the record to support
them.” Barrani v. Barrani, 2014 UT App 204, ¶ 6, 334 P.3d 994.
¶28 Here, there is a reasonable basis in the record to support
the district court’s rejection of the value calculated by ACC’s
expert. Ace West’s valuation of the foam compressors was based,
in part, on an appraisal conducted more than a year before the
mediation, which placed the value of one of the units at $250,000.
During the evidentiary hearing, the court heard expert testimony
offered by both parties as to whether that appraised value was
adversely impacted by a drop in oil and gas prices prior to the
mediation. ACC offered expert testimony that there had been a
significant decline in the demand for oil field equipment and
that the fair market value of the foam compressors at the time of
mediation was between $125,000 and $165,000.
¶29 But the court credited the testimony of Ace West’s expert,
who “persuasively explained that the values for foam
compressor units do not decline in a down oil/gas market as
much as values for oil exploration and drilling equipment.” This
expert explained that because the “foam compressor units are
used for keeping gas wells clean and efficient, which is just as
important when the prices of oil and gas are dropping, . . . there
is a demand for services involving foam compressors even when
oil and gas prices are low.” The district court found that ACC’s
expert “failed to take this critical factor into account when he
opined that foam compressors dropped in value.” It was well
within the district court’s prerogative as fact-finder to weigh the
conflicting evidence and credit the testimony of Ace West’s
expert over that of ACC’s expert.
¶30 More importantly, the district court’s factual finding that
Ace West’s valuation was reasonable was unnecessary to
support the ultimate conclusion that the value of the foam
compressors was not a term or condition of the settlement
agreement. As ACC acknowledges, the record supports the
district court’s finding that Ace West’s belief regarding the value
20160095-CA 11 2018 UT App 36ACC Capital Corporation v. Ace West Foam
of the foam compressors was communicated to ACC but that
Ace West never guaranteed or warranted the value of the
compressors. While ACC argues that there is “no legal
distinction between a warranty of value and representation of
value in this context,” it fails to address the district court’s
finding that the settlement agreement was not induced by Ace
West’s representation. The record supports the district court’s
finding that “the parties all recognized that there was
uncertainty about the value of the foam compressors” at the time
of mediation. This finding is supported by the MOU itself, which
anticipated that the foam compressors could be sold at various
prices and made the payment of damages dependent upon the
ultimate sale price. In addition, the MOU was “silent as to the
appraised or other value of the foam compressors” and there is
no evidence that the parties ever discussed “making the value of
the foam compressors a term or condition of the agreement.”
Based on this record, ACC cannot establish that the district court
clearly erred in finding that the settlement agreement was not
dependent on Ace West’s valuation.
¶31 The record supports the district court’s finding that there
was no misrepresentation or mutual mistake that would void the
otherwise enforceable settlement agreement. 3 Therefore, the
3. Relatedly, ACC asserts that Ace West should be estopped
from withdrawing its representation as to the value of the foam
compressors and that the representation should be treated as a
term of the contract. Because the equitable estoppel issue was
not raised below, it has not been preserved for our review on
appeal. See Helf v. Chevron, 2015 UT 81, ¶ 42, 361 P.3d 63 (“An
issue is preserved for appeal when it has been presented to the
district court in such a way that the court has an opportunity to
rule on [it].” (alteration in original) (citation and internal
quotation marks omitted)). We note, however, that any estoppel
argument would be undercut by the district court’s implicit
(continued…)
20160095-CA 12 2018 UT App 36ACC Capital Corporation v. Ace West Foam
district court acted within its discretion in enforcing the
settlement. 4
CONCLUSION
¶32 The district court acted within its discretion in enforcing
the settlement agreement reached during mediation.
Accordingly, we affirm.
(…continued)
factual finding that ACC did not rely to its detriment on the
representation.
4. Because we uphold the enforcement of the settlement
agreement, ACC’s challenge to the denial of its motion for
summary judgment is moot. Rather than preserving its potential
right to appeal this ruling, ACC instead chose to settle its claims
against Ace West. “[A]n appeal will be dismissed as moot where
the matter raised was settled by agreement resolving all
disputed claims between the parties[.]” 5 Am. Jur. 2d Appellate
Review § 610 (2018). As a result, “our determination that the trial
court did not err by enforcing the settlement agreement renders
the issues presented in the underlying litigation moot.” Ogden v.
Griffith, 236 P.3d 1249, 1256 (Idaho 2010) (declining to address
challenge to denial of summary judgment once settlement
agreement was held to be enforceable).
20160095-CA 13 2018 UT App 36