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Northgate Village Development LC v. Orem City

Court of Appeals of Utah

May 17, 2018

Northgate Village Development LC, Appellant,
Orem City, Appellee.

          Fourth District Court, Provo Department The Honorable Lynn W. Davis No. 090401127

          J. Craig Smith, Kathryn J. Steffey, and Clayton H. Preece, Attorneys for Appellant

          Jody K. Burnett and Robert C. Keller, Attorneys for Appellee

          Judge David N. Mortensen authored this Opinion, in which Judges Michele M. Christiansen and Kate A. Toomey concurred.


         ¶1 Northgate Village Development LC purchased property from Orem City containing multiple stockpiles of buried garbage, including asphalt and other debris. Although the parties anticipated that some cleanup would be necessary, the amount of garbage ultimately discovered was significant, generating cleanup costs of nearly $3 million. Northgate and the City dispute who should pay for the cleanup of what garbage. The district court entered orders excluding evidence of any garbage unrelated to asphalt and excluding two of Northgate's expert witnesses from testifying. Northgate, on interlocutory appeal, contends that these rulings were in error. We agree and reverse.


         ¶2 Northgate agreed to purchase property from the City to develop it for mixed use. The City had previously used the property for its public works facility. The site had apparently also been used to dump "hundreds of thousands of tons of debris, " which included removed curb, gutter, sidewalk, asphalt, trees, tires, and transformers, among other things.

         ¶3 Before the sale, the parties anticipated the presence of at least some of the debris, and the City agreed to "complete any environmental clean-up responsibilities specified in the written action plan" for the site. As Northgate discovered more and more garbage, the parties disputed the meaning of the action plan and the specific responsibilities the City was required to perform. Northgate filed suit against the City in 2009, [1] asserting damages of close to $3 million in compensation for cleaning up garbage.

         ¶4 The litigation proceeded through discovery and the parties eventually submitted competing motions for summary judgment. The district court, in large part, granted the City's motion and denied Northgate's motion, ruling that the City was responsible only for reimbursing Northgate for removal and disposal of buried electrical transformers. Northgate appealed that order, providing this court with its first occasion to review this case. This court affirmed in part and reversed in part. See Northgate Village Dev. LC v. Orem City (Northgate I), 2014 UT App 86, ¶ 1, 325 P.3d 123. Because on remand the district court interpreted the holding of Northgate I as limiting the type of garbage the City is obligated to clean up, this court's treatment of the term "asphalt" in Northgate I is of particular importance.

         ¶5 In Northgate I, this court affirmed the district court's determination that the sale contract obligated the City to perform only those cleanup actions listed on the "Clean-Up List" attached to the contract. Id. ¶ 31. However, this court reversed the district court's first interpretation of the Clean-Up List and determined that the Clean-Up List "contains ambiguities, " specifically noting that it "does not clearly indicate how the City must deal with buried asphalt." Id. ¶¶ 36, 39. This court explained,

[I]n the section of the Clean-Up List describing the City's clean-up responsibilities in the "Soil Borrow & Landfill Area, " there are three entries:
1. Landfilling construction materials with pieces of asphalt
2. Permit required for continued landfilling
3. Site assessment and application required for closure of site
Northgate and the City ascribe contrary meanings to this section of the Clean-Up List. In the City's view, the first and second entries should be read together, allowing the City to fulfill its obligation to clean up the asphalt by simply applying for and receiving proper permits. In Northgate's view, the first and second entries impose separate requirements: the City must clean up the "construction materials with pieces of asphalt" and must also apply for and receive permits for any continued landfilling.
Both the City's reading and Northgate's are plausible. Consequently, without reference to parol evidence of the parties' intent, we see no way to select one reading of the asphalt provision over the other. The Land Sale Contract therefore contains a facial ambiguity, and resolving this facial contract ambiguity requires evidence of the parties' intent. Because the intent of the parties is a question of fact to be determined by the jury, the district court erred by determining at summary judgment that the City could fulfill its asphalt clean-up responsibilities by securing the proper permits. We therefore vacate the district court's determination on this issue.

Id. ¶¶ 37-38 (cleaned up).[2] This court ultimately concluded, "Because we recognize facial ambiguities in the Clean-Up List, we vacate the district court's determination that the City satisfied its clean-up obligations. We reverse the district court's grant of summary judgment and remand to allow the district court to hear evidence regarding the parties' intent with respect to asphalt clean-up[.]" Id. ¶ 55.

         ¶6 After remand, the case proceeded and became focused on two points of contention, which we review in detail. We first outline the facts pertaining to the City's pretrial request to preclude Northgate from introducing evidence of its remediation of certain types of buried debris. In ruling on this issue, the district court considered how this court construed the term "asphalt" in Northgate I. Second, we review the facts surrounding Northgate's attempt after remand, as required by Northgate I, to articulate its damages as limited by the geographic areas specified in the Clean-Up List and the district court's eventual exclusion of certain expert testimony.

         Exclusion of Evidence Under Rules 401 and 403

         ¶7 The City moved to exclude evidence of Northgate's removal of garbage other than asphalt from the site, arguing the evidence was improper under rule 403 of the Utah Rules of Evidence. The City argued that the "[p]resentation of such evidence, testimony, or argument will . . . unfairly prejudice the City to the extent that it unnecessarily imputes actionable conduct to the City, particularly to the extent that it may be alleged that the City violated environmental regulations." Northgate countered that the construction debris with asphalt was intermingled with the rest of the garbage-including buried transformers that the City was required to remove-and that "the ...

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