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Al Syme v. Symphony Group LLC

Court of Appeals of Utah

November 8, 2018

Al Syme and Martha Syme, Appellants,
Symphony Group LLC, Appellee.

          Second District Court, Ogden Department The Honorable Ernest W. Jones No. 160901978

          Richard H. Reeve, Attorney for Appellants

          Robert E. Mansfield and Megan E. Garrett, Attorneys for Appellee

          Judge Jill M. Pohlman authored this Opinion, in which Judges Gregory K. Orme and Ryan M. Harris concurred.

          POHLMAN, JUDGE

         ¶1 Al and Martha Syme met with Symphony Group LLC to discuss the construction of a custom home. The parties signed a contract, but the Symes cancelled it before construction began. Symphony, however, retained the Symes' earnest money and construction deposits. The Symes sued to recover both deposits, and Symphony moved for summary judgment, which the district court granted. The Symes appeal. We affirm in part, reverse in part, and remand for further proceedings.


         ¶2 In the spring of 2015, the Symes met with representatives of Symphony about the construction of a new, custom home in Layton, Utah. The parties signed a written contract (the Agreement) on June 1, which set forth the basic details of the house Symphony was to construct, including its location, price, and floor plan. Some of the details, such as the color and type of brick, countertops, and floor coverings, were left to be selected in future meetings. The Agreement also set forth the obligations of each party and provided for specific remedies in the event of a breach.

         ¶3 As part of the house's purchase price, the Symes agreed to pay Symphony an earnest money deposit of $2, 000 (the Earnest Money) and a construction deposit of $43, 000 or $48, 000 (the Construction Deposit).[2] The Symes delivered the Earnest Money to Symphony when they signed the Agreement. They delivered a $48, 000 Construction Deposit to Symphony at a subsequent "Structural Review Meeting."[3]

         ¶4 Regarding the house's financing, the Agreement required the Symes "to receive written evidence of loan pre-approval within ten (10) days from" Symphony's acceptance of the Agreement, "or such longer period as [Symphony], in its sole discretion may allow." The same provision stated that if the Symes failed "timely to provide such loan approval to [Symphony]," then Symphony could elect to terminate the Agreement. If Symphony elected to terminate the Agreement under this provision, the Agreement required Symphony to return the Earnest Money to the Symes unless they were in default.[4]

         ¶5 Another provision in the Agreement required the Symes to deliver to Symphony a loan pre-approval letter "prior to or at" the "Color Selection Meeting"-a meeting the Symes were required to attend at Symphony's "reasonable request." If the Symes failed to deliver the loan pre-approval letter as required by this provision, Symphony could, "in its sole and reasonable discretion," deem the Symes "in default" and enforce its remedies "as allowed by [the] Agreement and Utah law, including but not limited to, [Symphony's] retention of [the] Earnest Money and Construction Deposit."

         ¶6 The Color Selection Meeting never took place. According to the Symes, they "waited in vain" for Symphony to "follow through on [the Color Selection Meeting]" or "request [the pre-approval letter]."

         ¶7 Before construction started or any other meetings were held, the Symes sent a letter to Symphony through their attorney purporting to cancel the Agreement. The Symes conceded in the letter that they would have to forfeit their $2, 000 Earnest Money but requested the return of their Construction Deposit. Because the Symes did not deliver the pre-approval letter and "failed to finalize other preconstruction selections at the Color Selection Meeting," Symphony refused to return the Construction Deposit.

         ¶8 The Symes brought suit for the return of the Earnest Money and Construction Deposit, seeking a declaration that no contract existed and, alternatively, seeking damages for breach of contract and breach of the implied covenant of good faith and fair dealing. Symphony moved for summary judgment on each claim.

         ¶9 The district court granted Symphony's motion. It concluded that there was an enforceable contract between the parties and determined that the Symes would be unable to prove their breach of contract claim because the Symes themselves breached the Agreement by failing to provide the pre-approval letter "within 10 days of acceptance of the contract." The court reasoned that "[e]ven if the [Color Selection Meeting] never took place, [the Symes] were still required by the contract to provide the pre-approval letter." The court also concluded that the Symes would be unable to prove their implied covenant of good faith and fair dealing claim. At the heart of that claim was the Symes' contention that the liquidated damages clause Symphony relied on to retain the Earnest Money and Construction Deposit was unconscionable. The court concluded that "expert testimony would be required" to establish unconscionability and that the Symes would ...

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