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Gardiner v. Anderson

Court of Appeals of Utah

August 30, 2018

Richard E. Gardiner, Appellant and Cross-appellee,
v.
Nels Anderson, Appellee and Cross-appellant.

          Fourth District Court, Fillmore Department The Honorable Jennifer A. Brown No. 160700010

          Todd F. Anderson, Attorney for Appellant and Cross-appellee

          Marlin J. Grant, Attorney for Appellee and Cross-appellant

          Judge Kate A. Toomey authored this Opinion, in which Judges David N. Mortensen and Diana Hagen concurred.

          TOOMEY, JUDGE

         ¶1 Richard E. Gardiner (Landlord) appeals the district court's grant of summary judgment in favor of Nels Anderson (Tenant). Tenant cross-appeals the court's decision to award Landlord attorney fees with respect to Landlord's motions to strike and the court's denial of Tenant's request for attorney fees as the prevailing party. We affirm the district court's grant of summary judgment in favor of Tenant because Landlord's claim fails as a matter of law. We remand to the district court to provide findings of fact and conclusions of law to support its decision to award attorney fees to Landlord for the motions to strike. We reverse the district court's conclusion that the Lease did not trigger the reciprocal attorney fees statute and remand for the court to determine whether Tenant should be awarded attorney fees as the prevailing party. We further conclude Tenant is entitled to attorney fees on appeal and remand to determine the reasonable amount of fees incurred on appeal and cross-appeal.

         BACKGROUND

         ¶2 On November 1, 2013, Landlord and Tenant entered into a lease agreement (the Lease) for a warehouse building (the Warehouse) to last for two years until October 31, 2015. The Lease provided that Tenant was to "repair" the Warehouse "at [Tenant's] sole cost and expense, including, but not limited to, electrical fixtures, interior painting and decorating, and glass replacement." The agreed rent escalated gradually over time from $600 per month to $1, 000 per month. The Lease prohibited Tenant from subleasing the Warehouse without Landlord's prior written consent. The sublease provision states:

[Tenant] shall not . . . sublet or permit the leased premises or any part thereof to be used by others for any purpose, without prior written consent of [Landlord] being first obtained in each instance; provided, however, that regardless of any such assignment or sublease, [Tenant] shall remain primarily liable for the payment of the rent herein reserved and for the performance of all the other terms of this lease required to be performed by [Tenant].

         ¶3 Despite this provision, Tenant entered into an oral agreement to sublet the Warehouse to a subtenant (Subtenant), beginning November 1, 2013-the same day the Lease went into effect-without Landlord's written consent. Tenant and Subtenant orally agreed that Subtenant would pay $2, 250 per month in rent from November 1, 2013, through October 31, 2014; and $3, 000 per month from November 1, 2014, through March 31, 2015. They later signed a written agreement to sublet[1] the Warehouse for $5, 000 per month from April 1, 2015, to September 30, 2015.

         ¶4 In July 2015, Landlord discovered that Tenant was subletting the Warehouse and sent Tenant a letter in September 2015, giving Tenant written notice of his default of the sublease provision and giving him ten days to cure by paying Landlord $30, 000. Because Tenant chose not to cure the breach, Landlord terminated the Lease pursuant to its default provisions. Tenant promptly vacated the Warehouse.

         ¶5 A few months later, Landlord filed a complaint, alleging that Tenant unlawfully detained the Warehouse, breached the Lease, and was unjustly enriched by the Sublease. Landlord claimed he had been damaged by the Sublease in the amount of $53, 100, arguing that he "would have agreed to the Sublease if Tenant had paid Landlord the difference between Tenant's rent and what Tenant received from [Subtenant]." Landlord sought treble damages in the amount of $159, 300 and reasonable attorney fees, arguing that the Sublease amounted to an unlawful detainer under Utah Code section 78B-6-802(1)(d). Alternatively, he sought $53, 100 in damages for either breach of contract or unjust enrichment, stating that "it would be unjust for the Tenant to retain the benefit from the sublet rent that he received."

         ¶6 Tenant filed an answer and later a Motion to Dismiss or in the Alternative for Summary Judgment (Tenant's Motion for Summary Judgment). He attached a Verified Memorandum of Points and Authorities (the Verified Memorandum) in which he swore "under oath to tell the whole truth." In the Verified Memorandum, Tenant articulated material facts that were substantially similar to Landlord's complaint, including that Tenant breached the Lease, entered into a Sublease, chose not to cure the breach, and vacated in a timely fashion pursuant to the Lease's default provision. He referred to Landlord's complaint and the exhibits attached to it to support these facts. Tenant also argued that Landlord's unlawful detainer claim failed because Tenant returned possession of the Warehouse to Landlord before the term of the notice expired. He further argued that Landlord had no remedy for breach of contract because the Lease allowed Landlord to terminate the Lease and collect the $1, 000 rent due each month through the end of the Lease, which included lost rents from Tenant between September 14, 2015, and October 31, 2015, but, according to Tenant, nothing in the Lease entitled Landlord to the rent from the Sublease. Finally, he argued that without evidence of an unlawful detainer or a provision in the Lease that would entitle Landlord to such damages, Landlord could not claim that Tenant was unjustly enriched from the rent collected under the Sublease.

         ¶7 Landlord opposed Tenant's Motion for Summary Judgment, arguing that the Verified Memorandum did not comply with rule 56 of the Utah Rules of Civil Procedure because it did "not state that the facts set forth in the pleading were true and correct to the personal knowledge of the signer," and instead "attempt[ed] to verify the entire contents of the pleading, not just the factual assertions, and some of the facts sworn were . . . mere assumptions or conclusions."[2] Landlord also "[d]isputed" many of the facts in the Verified Memorandum, essentially claiming that the facts were not relevant to the complaint or re-characterizing the way Tenant had articulated them.[3]

         ¶8 Landlord then filed his own motion for summary judgment (Landlord's Motion for Summary Judgment), asserting that there was no dispute as to any material fact and arguing that subletting the Warehouse without Landlord's written consent was an unlawful detainer and a breach of contract, which "entitled [him] to judgment" for $153, 600[4] plus reasonable attorney fees and post-judgment interest. Shortly thereafter, Tenant filed a reply memorandum in support of his own motion for summary judgment and then a memorandum in opposition to Landlord's Motion for Summary Judgment. Landlord filed motions to strike both of these replies (the Motions to Strike), claiming they were untimely filed and failed to comply with the Utah Rules of Civil Procedure. The district court heard argument on the Motions to Strike and ultimately struck Tenant's two reply memoranda for being untimely and ordered Tenant to pay Landlord attorney fees and costs related to the Motions to Strike. But the court determined that, because Tenant filed a motion for summary judgment, Landlord's Motion for Summary Judgment was opposed and the court would therefore "consider arguments and material" from the Verified Memorandum.[5]

          ¶9 The district court considered both parties' motions for summary judgment. It concluded that nothing in the unlawful detainer statute or the Lease supported Landlord's claim for damages of $53, 100 in rent Tenant obtained from the Subtenant. The court determined that "the only remedy [Landlord] appears to be entitled to is a declaration under [the unlawful detainer statute] that the [Lease] is forfeited due to [Tenant's] failure to perform a condition or covenant therein." Tenant complied with Landlord's notice to vacate when he elected to promptly vacate the Warehouse rather than cure the breach and therefore did not unlawfully possess it. The court further concluded that even if Tenant was in "unlawful detainer" of the Warehouse under Utah Code section 78B-6-802(1)(d) for unauthorized subletting, that section "does not specifically provide for damages for unauthorized subletting" and neither did the Lease. As a result, the court granted summary judgment in favor of Tenant and denied Landlord's cross-motion.

         ¶10 In light of judgment in his favor, Tenant requested attorney fees, contending that he was the prevailing party in the lawsuit because he successfully defended against Landlord's complaint. He also argued that he was entitled to attorney fees under the unlawful detainer statute because he successfully defended against the claim of unlawful detainer. Landlord challenged the request, arguing that the Lease's enforcement provision provided for attorney fees only to the party not in breach of the Lease. The enforcement provision states:

Should either party default in the performance of any covenants or agreements contained herein, such defaulting party shall pay to the other party all costs and expenses, including but not limited to, . . . reasonable attorney's fee[s], including such fees on appeal, which the prevailing party may incur in enforcing [the Lease] or in pursuing any remedy allowed by law for breach hereof.

         ¶11 The district court denied Tenant's request, concluding that Tenant was the defaulting party and that the Lease "does not provide a basis for an award of attorney fees to . . . the party in default." The court further concluded that Landlord did not become the party in default by virtue of losing the lawsuit. The court also concluded that Tenant was not entitled to attorney fees under the unlawful detainer statute, because the provision that would have allowed for such an award was not in effect until May 2017, [6] after the complaint had been filed. Because the statute did not state that it could be applied retroactively and because the statute was not amended to clarify its meaning in response to judicial action, the court concluded Tenant was not entitled to attorney fees under that statute. (Citing Utah Code Ann. § 86-3-3 (LexisNexis 2016); Wasatch County v. Okelberry, 2015 UT App 192, ¶ 17, 357 P.3d 586.)

         ¶12 Landlord appeals the court's grant of summary judgment in favor of Tenant. Tenant cross-appeals the court's order requiring him to pay attorney fees for the Motions to Strike and for the ...


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