LD III LLC v. Davis

2016 UT App 139

LD III LLC, Appellant, v. BEVERLY JEAN BLACK DAVIS, Appellee.

No. 20140926-CA

UTAH COURT OF APPEALS

July 8, 2016

Opinion

Fourth District Court, Provo Department

The Honorable Fred D. Howard

No. 080400318

Denver C. Snuffer Jr., Steven R. Paul, Daniel B. Garriott, and Tahnee L. Hamilton, Attorneys for Appellant

Michael N. Zundel and James A. Boevers, Attorneys for Appellee

JUDGE GREGORY K. ORME authored this Opinion, in which JUDGE J. FREDERIC VOROS JR. and JUSTICE JOHN A. PEARCE concurred.¹

ORME, Judge:

¶1 LD III LLC appeals the district court's finding of contempt and the associated award of damages and attorney fees. We affirm.

BACKGROUND

¶2 This case and these parties are before us for the third time. See LD III, LLC v. BBRD, LC (LD III One), 2009 UT App 301, 221 P.3d 867; LD III, LLC v. BBRD, LC (LD III Two), 2013 UT App 115, 303 P.3d 1017. This case has its origins in a real estate purchase contract entered into in 2007 and LD III's ensuing lawsuit. Early in the course of litigation, the defendants sought to enforce a settlement agreement. LD III argued that no such agreement existed because there was no meeting of the minds. LD III One, 2009 UT App 301, ¶ 1. The district court granted the defendants' "motion to enforce the settlement agreement and ordered LD III to close the real estate transaction." Id. ¶ 12. LD III appealed, and we affirmed. Id. ¶ 23.

¶3 In October 2008, prior to our resolution of LD III One, one of the defendants, Richard W. Davis,² requested that LD III be held in contempt for failure to comply with the district court's order enforcing the settlement agreement. See LD III Two, 2013 UT App 115, ¶ 2. A convoluted series of court proceedings ensued, during which our decision in LD III One issued, and at the end of which the district court indicated "that it had previously found LD III in contempt" and awarded damages in favor of Davis. LD III Two, 2013 UT App 115, ¶¶ 2-10. LD III again appealed, and we reversed, concluding that the "contempt ruling against LD III deprived LD III of its due process rights to confront witnesses and present evidence and testimony, and [that] the district court failed to enter adequate factual findings on LD III's knowledge, ability to comply with the district court's order, and intentional failure to do so." Id. ¶ 21. We remanded for further proceedings. Id.¶4 In April 2014, the district court held an evidentiary hearing, and in June 2014, the court entered findings of fact and conclusions of law in accordance with our instructions in LD III Two. See id. ¶ 20. The district court found that on September 23, 2008, it had entered a verbal order granting the motion to enforce the settlement agreement and requiring LD III to comply with that agreement (the September 23 order), which also required LD III to complete its closing obligations by September 30, 2008. The district court further found that the terms of the September 23 order were memorialized in a written order that was served on LD III on September 23, 2008.

¶5 The written order stated, "If LD III does not close the real estate transaction by September 30, 2008, the Court shall quiet title to the subject real property and water rights in Davis." The district court commented in its June 2014 findings that "[b]y advising LD III of a consequence that would follow if it failed to comply with [the district court's] Order, the Court did not mean to give LD III an option not to comply and this was made clear to LD III."

¶6 The district court's June 2014 findings also addressed LD III's knowledge and understanding of the September 23 order. LD III's attorneys received an email from opposing counsel stating, "We are assuming that LD III will close by September 30, as ordered by the Court. If not, LD III will be in contempt of court and we will seek appropriate remedies, along with the remedy set forth in the order." This was just one of several communications between the parties that addressed the requirements of the September 23 order and the consequences if LD III failed to comply.

¶7 In October 2008, LD III filed a motion to stay pending the appeal in LD III One. At a hearing that same month, the district court "observed that because LD III had been ordered to close by September 30, 2008, had failed to do so, and had not sought tostay the order until after the September 30 deadline had expired, LD III could be subject to a contempt citation." The district court, in its June 2014 findings, determined that LD III clearly understood that Davis "could be damaged by a failure to close and, if damage was later proven, that LD III would stand liable for the same" and concluded that "[t]here was no reasonable basis . . . to believe otherwise." So while the district court "granted a stay pending appeal," it "did not make the stay retroactive so as to purge LD III's contempt for earlier refusing to close as ordered."

¶8 The June 2014 findings explicitly state "that LD III knew and understood that the September 23 order required it to close by September 30, 2008." Especially in light of the fact that LD III had originally objected to the quiet title portion of the written order, the district court further found that "[t]here was no reasonable basis for doubt about the meaning of the September 23 Order, and LD III could not reasonably rely, and in fact did not actually rely, upon the quiet title provision as an alternative acceptable to this Court if LD III refused to close by September 30, 2008 as ordered."

¶9 The district court then turned its attention to LD III's ability to comply with the September 23 order. Despite evidence of the minor inconvenience that closing might bring, it found that "LD III had the ability to comply with the September 23, 2008 Order by closing by September 30, 2008 and also after that date."

¶10 Finally, the district court found that LD III's failure to comply with the September 23 order by refusing to close "was willful and intentional." It reinstated the contempt citation against LD III; confirmed the original damages award, see supra ¶ 3; and allowed Davis to augment the award with attorney fees, costs, and expenses incurred following our remand in LD III Two.¶11 LD III again appeals.

ISSUES AND STANDARDS OF REVIEW

¶12 We must decide whether the district court properly found LD III in contempt of court and appropriately awarded damages in conjunction with that finding. "An order relating to contempt of court is a matter that rests within the sound discretion of the district court. We accordingly review the sanctions imposed by the district court for an abuse of that discretion." Wolferts v. Wolferts, 2013 UT App 235, ¶ 8, 315 P.3d 448 (citations, brackets, and internal quotation marks omitted). "[W]e review [the] district court's findings of fact for clear error" and its legal determinations for correctness. Valerios Corp. v. Macias, 2015 UT App 4, ¶ 10, 342 P.3d 1127. Some of the district court's factual findings rely on its conclusion that two witnesses for LD III were not credible. "We will not reverse a trial court's credibility determination unless it is against the clear weight of the evidence or our review leads to a definite and firm conviction that a mistake has been made." Allen v. Allen, 2014 UT App 27, ¶ 11, 319 P.3d 770 (citation and internal quotation marks omitted).

ANALYSIS

¶13 We begin by noting that a finding of contempt is proper only when "the person cited for contempt knew what was required, had the ability to comply, and intentionally failed or refused to do so." Von Hake v. Thomas, 759 P.2d 1162, 1172 (Utah 1988). LD III challenges, on several grounds, the district court's order including the underlying finding of contempt and the amount of damages and attorney fees awarded. We turn now to a consideration of each of LD III's arguments.

I. The September 23 Order Did Not Give LD III the Choice Not to

Close the Real Property Sale.

¶14 LD III begins its arguments on appeal with the premise that, on remand, "[t]he District Court clarified LD III had the option to close or allow quiet title." It contends that it could not have been in contempt by choosing the latter option and allowing the district court to quiet title. The relevant portion of the September 23 order provides, "If LD III does not close the real estate transaction by September 30, 2008, the Court shall quiet title to the subject real property and water rights in Davis." LD III claims that this language was "mandatory and self effectuating." We are not persuaded.

¶15 In its June 2014 findings, the district court explicitly foreclosed any contention that the September 23 order allowed LD III the option not to close. Instead, the quoted language from the order was meant to "advis[e] LD III of a consequence that would follow if it failed to comply." Our inquiry must therefore focus on whether LD III "knew what was required." See Von Hake, 759 P.2d at 1172. The district court found that LD III knew and understood the requirements of the September 23 order, and we cannot say that this finding was clearly erroneous.

¶16 As a preliminary matter, we note that LD III has failed to properly challenge the district court's finding. In fact, LD III's briefs ignore the fact that the district court's finding on this point is contrary to LD III's position. Furthermore, LD III fails to marshal the evidence supporting this finding. See Utah R. App. P. 24(a)(9) ("A party challenging a fact finding must first marshal all record evidence that supports the challenged finding."). Instead, LD III attempts to challenge the finding by simply asserting, "It was never proven that LD III knew what was required or intentionally failed or refused to comply with the September 23 Order. Rather, LD III understood the Order mandated the Court would quiet title." But the district courtfound that this was not the case, pointing to evidence that LD III's attorney had received an email explaining that if LD III did not "close by September 30, as...