Loc. Pages of Nev. v. Plumb Line Mech., Inc.

549 P.3d 632

2024 UT App 70

The LOCAL PAGES OF NEVADA, LLC, Appellant,

v.PLUMB LINE MECHANICAL, INC., Appellee.

No. 20220339-CA

Court of Appeals of Utah.

Filed May 9, 2024

Third District Court, Salt Lake Department, The Honorable Laura Scott, No. 190901187

D. Scott Crook, Salt Lake City, Attorney for Appellant

Jordan K. Cameron, Lehi, Attorney for Appellee

Judge David N. Mortensen authored this Opinion, in which Judges Gregory K. Orme and Amy J. Oliver concurred.

Opinion

MORTENSEN, Judge:

¶1 Plumb Line Mechanical, Inc. (Plumb Line), a plumbing and HVAC company, had advertised for many years in the local phone book printed by The Local Pages of Nevada, LLC (Local Pages). In negotiating ads for the 2014 edition, Local Pages emailed a proposal to Plumb Line. The contract form, which was included as an attachment, contained a handwritten note that could be interpreted to mean the contract was for a fixed term of five years. But the text of the email to which the form was attached said that it was for a term of "up to 5 years"— arguably an option contract for five years, renewable annually. Plumb Line canceled its advertising after three years, and Local Pages sued. Since these two terms stood in direct contradiction to one another, the district court allowed extrinsic evidence to resolve the ambiguity. The jury determined that the contract was renewable annually. Alleging a number of errors, Local Pages appeals. We affirm the judgment.

BACKGROUND

¶2 Beginning around 2005, Plumb Line advertised annually in a telephone directory printed by Local Pages. Each year, Plumb Line would "go through the negotiation process" with Local Pages’ owner (Owner) about the "size and location" of ad placement in the directory.

¶3 Around 2013, Plumb Line contemplated pulling out of this advertising because it had become increasingly ineffective. Plumb Line met with Owner and said it was not "planning to advertise in [the] forthcoming issue 14," meaning the 2014 directory (Issue 14). But Owner offered "incentives to induce Plumb Line to advertise in that issue." Plumb Line claimed that Owner "dropped the price substantially and said that he would hold the pricing up to five years if [Plumb Line] advertised that year."

¶4 On April 17, 2013, Owner sent an email (April 17 Email) to Plumb Line’s service manager that stated, in relevant part, "I propose the following… Rather than the [$]1999 a month[,] … I will go [$]1499 a month and leave all ads the same as last year. I will honor this deal for up to 5 years with no increase for you also." Notably, the previous year’s contract and, indeed, all the previous contracts between Local Pages and Plumb Line were for one year and identified only one issue of the phone book. The email concluded With these terms, "A simple reply to this email will suffice[.] I trust you guys[;] we don’t need to sign contracts and all that jazz. I also attached the contract for your review."

¶5 The April 17 Email came with a three-page printed contract (Advertising Contract) attached to it.¹ The first, two pages, which were identical in every respect except for descriptions of the ads and were the same as had been used in previous years, contained details of the ads that Plumb Line would purchase, and the third page consisted of boilerplate terms and conditions. As relevant here, the Advertising Contract included the following provisions:

• A box labeled "ISSUE" that said "14," presumably in reference to the issue for the year 2014;

• A handwritten line on the second page that said, "5 year agreement at same rate each year";

• A printed box reading, "SUBTOTAL 12 PMTS OF" with nothing written next to it;

• A printed box reading, "TOTAL 12 PAYMENTS OF" with "1,499.00" handwritten next to it;

• A printed box with handwriting on the second page (as indicated here with italics) reading, "$0 Now 12 Pmts. of $1,499,00 Starting MC";² and

• On the terms and conditions page, a printed provision stating, "The advertising space specified on the face of this contract is for insertion into the next possible issue of the indicated directory as determined by publisher…. The advertiser agrees to pay the charges as indicated on the face of this contract …. Unless otherwise specified in writing, terms are payment in full upon contract signing."

¶6 On April 23, Plumb Line’s service manager responded by email, saying that the proposal "doesn’t sound bad" and asking for "the break down on all that." Owner responded by email about thirty minutes later, describing the size, location, and features of the ads. On April 24, the service manager responded by email, saying that he had printed the attachment and that he and Plumb Line’s owner would "review" the proposal and would let Owner know that morning. About an hour later, the service manager sent Owner another email (April 24 Email), writing, "We are a go in your phone book." The Advertising Contract was never signed by either party.

¶7 After these exchanges, Plumb Line paid Local Pages over the next three years for print advertising. But in June 2016, Plumb Line informed Local Pages by phone, email, and letter that it would not be renewing the contract. Local Pages responded by asserting that under the terms of the contract, Plumb Line had only three days from the date of acceptance to cancel. Since this date had long passed, Local Pages maintained that Plumb Line could not cancel the contract and continued to publish Plumb Line’s advertisements in the next two annual issues of the phonebook. Local Pages sued Plumb Line for breach of contract, asserting that the contract was for five years (2014 through 2018) and claiming damages of nearly $36,000 arising from the two unpaid years, along with a claim for attorney fees and costs.

¶8 After discovery was completed, Local Pages filed a motion for summary judgment. Local Pages argued that summary judgment was appropriate on its breach of contract claim, along with damages, because the undisputed facts established (1) that a valid contract was formed between Local Pages and Plumb Line and (2) that the contract was for five years with twelve installments of $1,499 each year. The district court largely denied the motion. The court concluded that, based on undisputed facts, the "April 24 Email was an acceptance of the offer communicated in the April 17 Email." The court also stated that "[b]ecause the attachment to the April 17 Email was not signed, the contract between the parties [could not] be understood without reference to the April 24 Email." The court concluded,

The April 24 Email and the [Advertising Contract attached] to the April 17 Email, viewed together, do not set forth unambiguous terms that the [court] can interpret and apply as a matter of law. Among other reasons, this is because the offer in the April 17 Email to "go [$]1499 a month and leave all ads the same as last year" and to "honor this deal for up to 5 years with no increase" can be reasonably interpreted to refer to a five-year option agreement which gave Plumb Line the right to renew, at the same rate each year, a one-year contract to advertise in [Local Pages’] phone book. However, the offer could also be reasonably interpreted to refer to a five-year, fixed term agreement that boundPlumb Line to advertise in [Local Pages’] phone book for a total of five years.

¶9 Moreover, the court concluded that even if the Advertising Contract formed the entire contract, it did "not set forth unambiguous terms" that could be interpreted and applied as a matter of law. Specifically, the court noted that the handwritten line that stated, " ‘5 YEAR AGREEMENT AT SAME RATE EACH YEAR,’ when viewed in light of the other terms" in the Advertising Contract, could refer to either a five-year option agreement or a five-year, fixed-term agreement.

¶10 Thus, the court concluded that

genuine issues of material fact preclude summary judgment on the critical issue of whether the parties agreed to a one-year contract which included a five-year option agreement which gave Plumb Line the right to renew, at the same rate each year, its one-year commitment (as Plumb Line contends) or whether the parties agreed to a five-year, fixed term agreement that bound Plumb Line to advertise in [Local Pages’] phone book for a total of five years (as [Local Pages] contends).

¶11 The court further concluded that "[b]ecause the written record of the parties’ contract [was] ambiguous, extrinsic evidence should be used to resolve the ambiguities if possible." This extrinsic evidence, the court stated, would include, but not be limited to, the testimony of the contracting parties.³

¶12 At a jury trial, Owner, Local Pages’ director of finance, Plumb Line’s owner, Plumb Line’s office manager, and Plumb Line’s service manager testified. Especially relevant here, Plumb Line also called a third-party witness (Customer) who had entered into a similar advertising contract with Local Pages. Local Pages had moved to exclude Customer on a variety of evidentiary grounds, but the court denied that motion, finding that Customer’s testimony "regarding the handwritten phrase ‘5 YEAR DEAL AT SAME RATE EACH YEAR’ in [Customer’s] contract [was] relevant and probative of the proper interpretation of the phrase ‘5 Year Agreement at same rate each year’ in the Plumb Line written contract under the Utah Rules of Evidence." In denying the motion, the court set strict parameters for the scope of Customer’s testimony. The court said that Customer’s testimony would consist of showing Customer the contract, having him "identify" that it was between his business and Local Pages, and asking him "whether he discussed the handwritten language on that contract" with Owner and, if so, what Owner told him about it. The court clarified that Customer’s testimony was relevant only insofar as it addressed what Owner told him the handwritten "language meant." Customer’s testimony was, in fact, brief at trial. On direct examination, Customer was asked, "Did [O...