Arlington Mgmt. Assocs., Inc. v. Urology Clinic of Utah Valley, LLC

496 P.3d 719

ARLINGTON MANAGEMENT ASSOCIATES, INC., Appellant,

v.UROLOGY CLINIC OF UTAH VALLEY, LLC, Appellee.

No. 20190503-CA

Court of Appeals of Utah.

Filed July 9, 2021

R. Stephen Marshall and Kevin Paulsen, Salt Lake City, Attorneys for Appellant

Rodney R. Parker, Salt Lake City, and Todd E. Zenger, Attorneys for Appellee

Judge Diana Hagen authored this Opinion, in which Judges Jill M. Pohlman and Ryan M. Harris concurred.

Opinion

Hagen, Judge:

¶1 Arlington Management Associates Inc. (Arlington) appeals the district court's order granting summary judgment to Urology Clinic of Utah Valley LLC (the Clinic). Arlington sued for breach of contract, alleging that the Clinic had failed to pay for management services that Arlington had provided pursuant to the parties’ written management agreement (the Management Agreement). The Clinic moved for summary judgment, in part, because Arlington had failed to withdraw its compensation from the Clinic's operating account on a monthly basis as contemplated by the contract. In response, Arlington claimed that the Clinic had modified the contract by asking Arlington not to withdraw its monthly compensation and promising to pay "at a later date." Accepting these facts as true for purposes of the motion, the district court ruled that the Clinic was nonetheless entitled to judgment for two reasons: (1) Arlington was the first to breach the contract by failing to either pay itself monthly or reserve the payment as contemplated by the Management Agreement, and (2) the Clinic's promise to pay at a later date was not specific enough to be enforced. Arlington now appeals the district court's order granting summary judgment to the Clinic.

¶2 Arlington also appeals the district court's denial of its cross-motion for partial summary judgment. The court denied that motion "for the same reasons that [the Clinic's] motion for summary judgment [was] granted" and because there were "several disputes of material fact."

¶3 Because issues of material fact precluded the district court from granting either the Clinic's or Arlington's motion for summary judgment, we vacate the district court's order and remand for further proceedings consistent with this opinion.

BACKGROUND

¶4 The Clinic and Arlington entered into the Management Agreement in 2009. At that time, the Clinic's executive manager, Dr. Stewart Landau, and Arlington's president, Rebecca Landau, were married. Dr. Landau signed the agreement on behalf of the Clinic,¹ and Ms. Landau signed the agreement on behalf of Arlington. Under the agreement, Arlington would provide the Clinic with management services in exchange for monthly payments of $10,000. Relevant to this appeal, the agreement contained the following provisions:

Section 6.3 Expenditures. [The Clinic] shall establish a separate bank account (the "[O]perating Account") for the Practice, on which [Arlington] or its designated employee(s) shall have exclusive signature authority. The funds in the Operating Account shall be, and shall remain at all times, [the Clinic's] property. Within twenty (20) working days after the end of each month, [Arlington] shall submit to [the Clinic] an accounting of the expenditures for the previous calendar month. From the Operating Account, [Arlington] shall pay or reserve each month the following items:

(a) Operating Expenses . All operating expenses of the Practice including, but not limited to, all amounts for salaries and wages, employee fringe benefits, payroll taxes, supplies, materials, repairs, maintenance, all utility charges, real property taxes and assessments on the Practice and insurance and bond premiums with respect to the operations of the Practice.

(b) Management Fees . All management fees owed to [Arlington] pursuant to this Agreement.

....

Section 12.2 Unpaid Sums. On termination of this Agreement, [the Clinic] promptly shall pay to [Arlington] any unpaid sums due under this Agreement, prorated through the effective date of such termination.

¶5 For the first four months after signing the Management Agreement, Arlington paid itself $10,000 per month from the operating account. Thereafter, Arlington stopped withdrawing its compensation from the operating account but accrued the Clinic's obligation to Arlington on the Clinic's accounting records each month. Thus, after the first four months, Arlington did not receive any payment from the Clinic. Years later, the Clinic terminated the agreement but refused to pay Arlington for the months Arlington received no payment for its services. Arlington then filed suit against the Clinic for breach of contract, alleging that Arlington was entitled to the remaining payments.

¶6 The Clinic moved for summary judgment on the grounds that Arlington had caused its own damages by not withdrawing its monthly payment, failed to mitigate damages by not reserving the funds, and waived the Clinic's obligation to pay Arlington for its services. In opposition to the Clinic's motion, Arlington argued that the parties had orally modified the terms of the Management Agreement. In support, it submitted a declaration from Ms. Landau swearing that Dr. Landau, on behalf of the Clinic, had "approached [her] and requested that Arlington not withdraw its monthly compensation" but promised that "Arlington would receive full compensation for its provision of management services at a later date." For purposes of the motion only, the Clinic did not contest these facts but argued that the oral modification failed as a matter of law.

¶7 After filing its opposition, Arlington filed its own motion for partial summary judgment on its breach of contract claim. The Clinic opposed the motion, arguing that Arlington had no right to enforce the agreement because it was the first to breach. Specifically, the Clinic argued that Arlington had failed to provide exclusive management services to the Clinic as required by the Management Agreement.

¶8 The district court granted the Clinic's motion for summary judgment, concluding that the asserted oral modification "lacked enforceable terms regarding the time for payment to Arlington" and therefore could not operate to modify the Management Agreement. It also concluded that Arlington had "breached the agreement first" when it failed to "pay itself as directed to do within the agreement" and "failed to set aside money to pay itself later." Based on these conclusions, the court determined that "[a]s the party that breached first, Arlington [could not] sue for enforcement of the very term it breached." The court denied Arlington's motion for partial summary judgment for the same reasons but also ruled, in the alternative, that "several disputes of material fact would have prevented the court from granting [Arlington's] motion for summary judgment, including the issue of whether Arlington actually did perform its duties under the Management Agreement." The court then dismissed Arlington's complaint in its entirety and entered final judgment in favor of the Clinic.

ISSUES AND STANDARD OF REVIEW

¶9 Arlington appeals the district court's ruling granting summary judgment in favor of the Clinic and denying Arlington's motion for partial summary judgment on its breach of contract claim. In reviewing a district court's summary judgment ruling, we review its "legal conclusions and ultimate grant or denial of summary judgment for correctness." Cochegrus v. Herriman City , 2020 UT 14, ¶ 14, 462 P.3d 357 (cleaned up). We review "the facts and all reasonable inferences in a light most favorable to the party opposing the motion." Rusk v. Harstad , 2017 UT App 27, ¶ 3, 393 P.3d 341 (per curiam) (cleaned up).

ANALYSIS

¶10 Neither party is entitled to summary judgment in this case. "Summary judgment is only appropriate ‘if the moving party shows that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law.’ " Arnold v. Grigsby , 2018 UT 14, ¶ 8, 417 P.3d 606 (quoting Utah R. Civ. P. 56(a) ). Accordingly, the "district court must deny a motion for summary judgment if it finds that there is a genuine issue of material fact that bears on its legal determination or if it finds, as a matter of law based on the undisputed facts, that the moving party is not entitled to a legal ruling in its favor." Normandeau v. Hanson Equip. Inc. , 2009 UT 44, ¶ 9, 215 P.3d 152. To determine whether a genuine factual dispute exists, we ask "whether reasonable jurors, properly instructed, would be able to come to only one conclusion, or if they might come to different conclusions, thereby making summary judgment inappropriate."

Cochegrus , 2020 UT 14, ¶ 14, 462 P.3d 357 (cleaned up).

¶11 The district court granted the Clinic's motion for summary judgment and denied Arlington's cross-motion for partial summary judgment. We first address the Clinic's motion for summary judgment and reverse the court's determination that the Clinic was entitled to judgment as a matter of law. We then address the court's denial of Arlington's cross-motion and affirm the court's ruling that genuine issues of material fact precluded summary judgment on Arlington's breach of contract claim.

I. The Clinic's Motion for Summary Judgment

¶12 Arlington argues that the district court erred in granting the Clinic's motion for summary judgment. For purposes of the motion, the court assumed that the oral modification occurred but concluded that the Clinic was nonetheless entitled to judgment as a matter of law for two reasons relevant to this appeal. First, the court ruled that Arlington breached the Management Agreement by failing to either pay itself or set aside the amount owed on a monthly basis and that Arlington's first breach excused the Clinic's non-performance. Second, the court concluded that, even if the alleged oral modification of the agreement excused Arlington from making monthly withdrawals, the terms of that modified agreement were not specific enough to be enforceable.² We disagree with the court's...