Val Peterson Inc. v. Tennant Metals Pty. Ltd.

537 P.3d 660

VAL PETERSON INC., Appellant,

v.TENNANT METALS PTY. LTD. and Metalcorp Group BV, Appellees.

No. 20210732-CA

Court of Appeals of Utah.

Filed September 28, 2023

Trent J. Waddoups, Salt Lake City, John D. Hanover, Los Angeles, CA, and Hannah S. Goodwin, Attorneys for Appellant

Jonathan O. Hafen, Salt Lake City, Robert S. Clark, San Francisco, CA, Anna Rotman, and Grant Jones Attorneys for Appellees

Judge John D. Luthy authored this Opinion, in which Judges Michele M. Christiansen Forster and Ryan M. Harris concurred.

Opinion

LUTHY, Judge:

¶1 This case involves the site of the Geneva Steel mill that once operated in Utah County. Sometime after the mill ceased operations, the site was acquired by Anderson Geneva LLC and Ice Castle Retirement Fund LLC (collectively, Geneva). Geneva then entered into a contract with Val Peterson Inc. (VPI) and Tennant Metals Pty. Ltd. (Tennant), under which VPI agreed to both purchase and remove about two million tons of industrial byproducts that remained on the site so that Geneva could develop the property for other uses and Tennant agreed to guarantee VPI's performance by providing funding for the project. Separately, Metalcorp Group BV (Metalcorp) guaranteed Tennant's performance.

¶2 After VPI began its removal of the industrial byproducts, Tennant and Metalcorp allegedly failed to provide the promised funding, leaving VPI unable to perform and causing Geneva to terminate the contract. VPI then sued Tennant and Metalcorp (collectively, Defendants), and Defendants moved to dismiss VPI's numerous claims for failure to state a claim upon which relief can be granted.

¶3 The district court granted Defendants’ motion and dismissed all of VPI's claims. VPI now appeals. We reverse the dismissal of VPI's breach of contract claims against Tennant, but we otherwise affirm the dismissal of VPI's claims. Accordingly, we remand this case to the district court for further proceedings.

BACKGROUND¹

The Facts

¶4 Geneva owned a decommissioned steel mill site in Utah County. The site contained approximately two million metric tons of industrial byproducts referred to as "Red Sea" and "Black Sea" (the Red Sea byproducts). Geneva wanted to hire someone to undertake the extraction of the Red Sea byproducts (the Geneva project) so that Geneva could develop the land for residential and other uses.

¶5 In August 2011, VPI's president learned of the Geneva project. Shortly thereafter, he was introduced to a general manager of Tennant, and the two discussed an arrangement whereby "VPI would extract the [Red Sea byproducts] and move those materials to ports on the West Coast ... and then Tennant would take possession of the [Red Sea byproducts] for shipment to and sale in China." VPI and Tennant thereafter completed steps to evaluate the likely success of such a venture, including by conducting a feasibility study and a resource-definition study. These studies showed that the Red Sea byproducts "could be removed and sold at a price of $145 per ton for delivery in China," that this would result in a gross value of over $136 million, and that "the cost to ship the [Red Sea byproducts] to China would be $86 per ton."

¶6 On April 24, 2012, VPI, Tennant, and Geneva entered into an agreement entitled "Contract for Purchase of Iron Byproducts" (the Purchase Contract). Under the Purchase Contract, Geneva agreed to sell the Red Sea byproducts for $5 per ton and VPI agreed to "purchase and remove" all of the Red Sea byproducts. The Purchase Contract was lengthy and detailed, not only setting forth the terms related to the financial aspects of the sale but also specifying a number of requirements related to the removal itself, such as recognizing that "time is of the essence" and that Geneva needed the Red Sea byproducts removed "as soon as possible to facilitate development of the [p]roperty"; granting a limited license to use the property during the removal process; and setting benchmarks and deadlines for the removal.

¶7 As a signatory to the Purchase Contract, Tennant "absolutely and unconditionally guarantee[d] to [Geneva] the payment and financial performance by [VPI] of all of its duties and obligations under [the Purchase Contract]" and "guarantee[d] the full and faithful payment and financial performance by [VPI]." Additionally, Metalcorp, Tennant's parent company, executed an Acknowledgment and Guarantee (the Guarantee), by which it guaranteed to Geneva the performance of Tennant's obligations under the Purchase Contract. Thus, Tennant guaranteed the performance of VPI, and Metalcorp guaranteed the performance of Tennant.

¶8 VPI and Tennant also executed a Memorandum of Understanding (the MOU). The MOU said that it was to "serve[ ] as an [a]greement for the execution of work associated with the purchase and removal of [the Red Sea byproducts] from [Geneva] ... and [the sale] and delivery of [the Red Sea byproducts] to what is anticipated to be predominantly Asian based customers." The MOU specified the portions of the Geneva project for which each party would be responsible. It also purported to "create a Joint Venture between Tennant and VPI, whereby VPI [would] receive a twenty percent interest (20%) of Tennant's net share of profits arising from [the Geneva project]." Further, the MOU spoke to future events, referencing "a strategic relationship between the [p]arties" wherein they would offer each other the first rights of refusal on future projects, and discussing an anticipated "Participation Agreement" that the parties would enter into, "some key terms" of which were listed in the MOU.²

¶9 VPI commenced performance of its obligations under the Purchase Contract in late July 2012, "including but not limited to obtaining all necessary permits for the work, obtaining required insurance coverages, and engaging subcontractors." VPI was able to finance the first six weeks of performance "with its own capital and with payments from [D]efendants," but on or about September 15, 2012, Defendants "failed and refused ... to meet their obligations to fund VPI's [p]roject performance and provided VPI with no further funding." VPI was therefore unable to meet its obligations under the Purchase Contract, and Geneva terminated the agreement.

VPI's Causes of Action

¶10 Nearly six years later, on August 22, 2018, VPI commenced this action against Defendants. Thereafter, VPI twice amended its complaint, the most recent version of which contains nine causes of action.

¶11 VPI's first cause of action contains claims against Tennant for breach of contract. Specifically, VPI alleges that Tennant breached both the Purchase Contract and the MOU by "refus[ing] and/or fail[ing] to fund [the Geneva project] operations and/or [to] perform its other contractual obligations in the Purchase Contract and the MOU."

¶12 VPI's third cause of action³ contains claims against Metalcorp for breach of contract. VPI alleges that "Metalcorp breached the Purchase Contract and the Guarantee by failing to provide funding to VPI to perform its obligations under the Purchase Contract."

¶13 VPI's fourth cause of action is a third-party beneficiary breach of contract claim against Metalcorp. For this claim, VPI alleges that if "the Purchase Contract and the Guarantee did not create enforceable contractual agreements between [VPI] and Metalcorp," then VPI is a third-party beneficiary of the Purchase Contract and of the Guarantee and was damaged when "Metalcorp breached the Purchase Contract and the Guarantee by failing to provide funding to VPI to perform its obligations under the Purchase Contract."

¶14 VPI's fifth cause of action contains breach of fiduciary duty claims against both Defendants. For this claim, VPI alleges that because of the joint venture allegedly created by the MOU, Defendants owed fiduciary duties to VPI, including the duties of good faith and loyalty, and that Defendants breached those duties.

¶15 VPI's sixth, seventh, and eighth causes of action are all equitable claims against both Defendants. The sixth is a claim of unjust enrichment based on the theory of a "contract implied in law." The seventh is a claim of unjust enrichment based on the theory of a "contract implied in fact." The eighth asserts equitable estoppel. For each of these, VPI alleges that if "the Purchase Contract and the Guarantee did not create enforceable contractual agreements between [VPI] and Defendants," then equity should intervene to prevent Defendants "from retaining the benefits they obtained from [VPI]."

¶16 Finally, VPI's ninth cause of action asserts alter ego liability. Specifically, VPI alleges that "there is a unity of interest and ownership such that there is no separation of the corporate personalities of [Tennant and Metalcorp]" and, therefore, that Metalcorp should be "liable for the conduct, actions, liabilities, and any judgments awarded" against Tennant.

Defendants’ Motion to Dismiss

¶17 Defendants responded to VPI's complaint by filing a motion under rule 12(b)(6) of the Utah Rules of Civil Procedure to dismiss each of VPI's claims against them. In their motion, Defendants argued that all of VPI's claims were barred by applicable statutes of limitations. They also argued that the MOU was not an enforceable contract, that Metalcorp owed no contractual duties to VPI, that VPI was not a third-party beneficiary of either the Purchase Contract or the Guarantee, that VPI's breach of fiduciary duty claims were barred by the economic loss rule, that VPI's equitable claims were precluded by the existence of valid contracts, and that VPI's alter ego claim is not a stand-alone cause of action.

¶18 VPI opposed the motion and argued that its various causes of action had not, as a matter of law, failed to state claims upon which relief could be granted and that dismissal would be inappropriate.

¶19 The district court held a hearing on the motion to dismiss and issued its ruling about three weeks later. The court ruled in favor of Defendants and dismissed all of...