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Bergdorf v. Salmon Electrical Contractors Inc.

Court of Appeals of Utah

July 26, 2019

Marietta Bergdorf, MEMB Ventures LLC, and Modern Health Clinic for Advanced Medicine LLC, Appellants,
v.
Salmon Electrical Contractors Inc., Appellee.

          Second District Court, Farmington Department The Honorable Thomas L. Kay No. 150700260

          Troy L. Booher, Beth E. Kennedy, and Maurice R. Mitts, Attorneys for Appellants

          Joseph E. Minnock, Attorney for Appellee.

          JUDGE DAVID N. MORTENSEN authored this Opinion, in which JUDGE JILL M. POHLMAN concurred. JUDGE RYAN M. HARRIS dissented, with opinion.

          MORTENSEN, JUDGE.

         ¶1 Appellant Marietta Bergdorf appeals the district court's grant of summary judgment in favor of Salmon Electrical Contractors Inc. (Salmon) in which the court concluded that no reasonable jury could find the existence of a valid contractual relationship between Bergdorf and Salmon. We affirm.

         BACKGROUND[1]

         ¶2 Bergdorf is a healthcare professional who, in 2012, purchased a building for use as a medical clinic. Although the building was move-in ready, Bergdorf wanted to remodel some areas of the building to better suit her needs (Project). Bergdorf reached out to Randy Krantz and asked if he was able to help her with both the financing and the construction work associated with the Project. Krantz had been involved in many construction projects as a general contractor, and he expressed a willingness to become involved with the Project, even taking Bergdorf to look at two other medical clinics he had constructed in the past. Bergdorf eventually became "comfortable" with Krantz "doing the construction" on the Project.

         ¶3 Bergdorf's initial plan was to finance the Project through a loan (Loan) with U.S. Bank (Bank). To secure the Loan, the Bank required Bergdorf and Krantz to submit, among other things, a building permit (Permit) and a contract outlining the work to be performed. But there was a problem: Krantz's contractor license was expired and he was therefore unable to obtain the Permit. So, Krantz arranged for Salmon-whom Krantz had worked with in the past, and who had a valid license-to be the general contractor.

         ¶4 Krantz thereafter acted as an intermediary between Bergdorf and Salmon, and he even visited the Project with Bergdorf and Salmon, but not with the two together, to discuss the budget and scope of the Project. Krantz testified that he "made a list of things that were going to be done in the contract . . . that identified the costs for each of the items that [Bergdorf] wanted done and the amount of . . . overhead that [Salmon] needed in the contract to do the job."

         ¶5 Krantz then prepared a proposed contract detailing Bergdorf's wishes for the property and the budget for each area of the remodel (Proposed Contract). The Proposed Contract recited that Bergdorf was the owner and that Salmon was the general contractor. Importantly, the parties never signed the Proposed Contract. Indeed, Bergdorf indicated at her deposition that she had never actually seen the Proposed Contract:

[Attorney]: Let me show you . . . the proposed contract that was prepared by Randy Krantz. I think he indicated he prepared it and he submitted it to you and [Salmon], and I'm wondering whether or not you remember ever seeing this?
[Bergdorf]: I've never seen this. I don't need to look. I have never seen it.
[Attorney]: You have not seen it?
[Bergdorf]: No.

         ¶6 Krantz also set about obtaining and gathering the other documents necessary to secure the Loan. Krantz asked Salmon to prepare certain documents, including a builder's statement, a W-9 form, and a credit authorization, that Salmon had filled out and signed in July 2012. Later that month, Krantz submitted the documents and unsigned Proposed Contract to the Bank as part of the Loan application.

         ¶7 In September 2012, while the Loan application was pending, Salmon obtained the Permit from Bountiful City for the Project. The Permit listed Bergdorf as the owner and Salmon as the general contractor. When the Permit was issued, Salmon's secretary emailed Krantz a copy of the Permit. Bergdorf never saw the Permit or the Permit application, and understood that it had been procured under Salmon's name only because Krantz told her so. The Permit expressly stated, "This [P]ermit becomes null and void if work or construction authorized is not commenced within 180 days, or if construction or work is suspended or abandoned for a period of 180 days at any time after work is commenced."

         ¶8 Sometime in the fall of 2012, while the Loan application was still pending, Krantz hired a subcontractor to perform demolition work for the Project. The subcontractor removed some carpet from the building and demolished an interior wall. Importantly, Krantz did not inform Salmon or Bergdorf that he had arranged for this work to be completed. And when Krantz was asked at his deposition about Salmon's involvement with the demolition, he indicated that Salmon had none:

[Attorney]: Okay. Because that contract was not signed, you undertook to hire [a subcontractor] to perform that work . . . ?
[Krantz]: Right. . . .
[Attorney]: Okay. So Salmon, to your knowledge, had no involvement with hiring [the subcontractor]?
[Krantz]: No.
[Attorney]: Is that correct, [Salmon] didn't have any involvement?
[Krantz]: None.
Krantz also stated that Salmon's Permit was not used for this demolition work or any work that was done on the Project, at any time:
[Attorney]: Did [Salmon] hire any general contractors?
[Krantz]: I-I don't think so.
[Attorney]: Any subcontractors?
[Krantz]: There was never-the [P]ermit was never used. There was never any work done on this [Permit]. There was a contract-a building contract was drawn up that was-[Bergdorf] had a copy, the [B]ank had a copy that has never been signed. So if the-there was never anything done because the [P]ermit-or the [Loan] had never been closed.

         Upon learning that the wall had been demolished, Bergdorf was unhappy with Krantz. Though she had spoken with Krantz about the possibility of removing the wall, she did not consider the plan finalized. After this episode, Bergdorf told Krantz to stop construction because funds were not yet available from the Loan.

         ¶9 After the demolition was performed in the fall of 2012, no additional work was completed on the Project for the next two years. Bergdorf testified that although the Loan was eventually approved, she "was very busy" and decided to "[give] up" on closing the Loan and starting work on the Project. Because construction did not commence on the Project, Salmon's Permit self-terminated.

         ¶10 In September 2013, about one year after the unauthorized demolition, Bergdorf contacted Bountiful City and, without Salmon's knowledge or consent, somehow "renewed" the Permit.[2] Neither Bergdorf nor Bountiful City contacted or otherwise notified Salmon about the renewal.

         ¶11 With a renewed Permit in hand, Bergdorf independently obtained bids from several contractors, and because Krantz submitted the low bid, Bergdorf entered into a new contract with him to act as the general contractor. Salmon was not invited to bid, nor did Krantz or Bergdorf contact Salmon about serving as the general contractor. Indeed, Bergdorf testified that when the Project resumed in 2014, she had no general contractor in place:

[Attorney]: [L]et me ask you this: Who did you view as the general contractor for that work in 2014?
[Bergdorf]: I didn't have anyone.

         Further, Bergdorf plainly stated that she never had any kind of contractual ...


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