Willow Creek Assocs. of Grantsville LLC v. Hy Barr Inc.

501 P.3d 1179

WILLOW CREEK ASSOCIATES OF GRANTSVILLE LLC, Appellant,

v.HY BARR INCORPORATED and Hyrum Barlow, Appellees.

No. 20200260-CA

Court of Appeals of Utah.

Filed November 4, 2021

Rick N. Haderlie and Christopher W. Eckels, Attorneys for Appellant

Adam C. Dunn and Michael C. Dunn, St. George, Attorneys for Appellees

Judge Ryan D. Tenney authored this Opinion, in which Judges Gregory K. Orme and Ryan M. Harris concurred.

Opinion

TENNEY, Judge:

¶1 Willow Creek Associates hired Hy Barr Incorporated to remodel some apartments. The parties’ contract included a mandatory arbitration agreement that required them to arbitrate all claims "arising out of or related to" the contract.

¶2 After Willow Creek and Hy Barr had a falling out over some payments to subcontractors, Willow Creek made a claim against Hy Barr and Hyrum Barlow (Hy Barr's president) and submitted that claim to arbitration. But when Willow Creek later made other claims against Hy Barr and Barlow, it did so through a lawsuit. The district court dismissed those claims for failure to first submit them to arbitration as required by the contract. Willow Creek now appeals that dismissal. We affirm.

BACKGROUND¹

The Contract

¶3 Willow Creek owns an apartment complex. Hy Barr is a corporation that specializes in apartment renovations, and Hyrum Barlow is the president and owner of Hy Barr.

¶4 In 2017, Willow Creek and Hy Barr entered into a contract under which Hy Barr would remodel Willow Creek's apartment complex (the Project). Willow Creek and Hy Barr agreed that this contract "represent[ed] the entire and integrated agreement between the parties."

¶5 The contract identified Willow Creek as the "Owner" and Hy Barr as the "Contractor." It defined "Contractor" to include "the Contractor's authorized representative." And Hyrum Barlow was identified in the contract as the "Contractor's representative."

¶6 The contract also set forth the process by which the parties were required to resolve their "claims and disputes." It defined "claim" as "a demand or assertion by one of the parties seeking, as a matter of right, payment of money, or other relief with respect to the terms of the Contract." "Claim" "also include[d] other disputes and matters in question between the Owner and the Contractor arising out of or relating to the Contract." (Emphasis added.)²

¶7 Under the contract, a claim by Willow Creek or Hy Barr had to "be initiated by written notice to the other party and to the Initial Decision Maker." The contract identified the Initial Decision Maker as the "Architect," an architectural firm associated with the Project. Within ten days of receiving a claim, the Initial Decision Maker was required to approve or reject the claim. The Initial Decision Maker was also empowered to inform the parties that it was "unable to resolve the Claim" if the Initial Decision Maker thought it would be "inappropriate" to do so.

¶8 A decision by the Initial Decision Maker was "final and binding on the parties but [could be] subject to mediation." Claims that were "subject to, but not resolved by, mediation [were] subject to arbitration." Within thirty days of an initial decision, the contract allowed a party to demand that the other party request mediation. If that demand was made and the party who received the demand did not then request mediation, "both parties waive[d] their right to mediate or pursue binding dispute resolution proceedings with respect to the initial decision."³

The Initial Decision

¶9 In the contract, the parties agreed that Willow Creek would transfer money to Hy Barr, which Hy Barr would then use to pay subcontractors.

¶10 In 2019, a subcontractor filed suit against Willow Creek and Hy Barr after it did not receive payment for materials that it furnished to Hy Barr for the Project.⁴ In response to the subcontractor's suit, Willow Creek sent a letter to the Initial Decision Maker and to Barlow. This letter demanded that "Contractor Hy Barr, Inc." pay $648,734.78 to Willow Creek so that Willow Creek could pay the subcontractors.⁵ The Initial Decision Maker later agreed that "the Contractor, Hy Barr, Inc." needed to pay Willow Creek $648,734.78 (hereinafter "the Initial Decision").

The Cross-claim

¶11 After the Initial Decision, Willow Creek timely demanded that Barlow and Hy Barr request mediation. When neither did, Willow Creek filed a cross-claim in district court against them in the action brought by the subcontractor.

¶12 In this cross-claim, Willow Creek raised twelve causes of action. All twelve were made against Barlow personally and against Hy Barr. The first cause of action, titled "Confirmation of Initial Decision" (the Initial Decision Claim), was based on the claim that Willow Creek had previously submitted to the Initial Decision Maker. In that cause of action, Willow Creek alleged that it was entitled to a court order "confirming the Initial Decision and entering judgment in the amount of $648,734.78 against Contractor." Unlike the Initial Decision Claim, however, the additional eleven causes of action had not been submitted to the Initial Decision Maker.⁶

The Motion to Dismiss

¶13 Barlow and Hy Barr filed a joint motion to dismiss Willow Creek's cross-claim. With respect to the first cause of action—the Initial Decision Claim—Hy Barr agreed that Willow Creek "should be awarded a judgment against Hy Barr, Inc. as outlined by the" Initial Decision. By contrast, Barlow argued that this cause of action did not apply to him personally because "the Initial Decision Maker determined that only Hy Barr, Inc. owed money to" Willow Creek. (Emphasis in original.)

¶14 With respect to the remaining eleven causes of action, Hy Barr and Barlow jointly asked the court to dismiss them because Willow Creek had not first submitted them to the Initial Decision Maker as required by the contract.

¶15 In response to this motion to dismiss, Willow Creek argued that its cross-claim raised "claims that [were] not within and [were] completely outside of the contract." Willow Creek further argued that the Initial Decision Maker "was to only approve or reject the initial contract issue. It was not to make comprehensive legal determinations under legal causes of action."

¶16 The district court held a hearing on the motion to dismiss. There, Hy Barr and Barlow argued that all claims other than the Initial Decision Claim against Hy Barr should be dismissed because Willow Creek had not submitted them to the Initial Decision Maker. Echoing this, the court asked Willow Creek why it had not taken its claims to the Initial Decision Maker—i.e., why it should "allow [Willow Creek] to bring claims in this court outside of that process?" Willow Creek responded that its letter to the Initial Decision Maker had put Hy Barr and Barlow on "notice" that Willow Creek would be pursuing other legal claims.

¶17 The district court granted the motion to dismiss with regard to some of the claims because it was convinced that they "should have been submitted to" the Initial Decision Maker.⁷ But the court asked for supplemental briefing on whether the fraudulent-conveyance and alter-ego claims qualified as "other dispute[s] or matter[s] in question between the parties that arise[ ] out of or [are] related to the contract." The court also asked for supplemental briefing "on the extent to which Hyrum Barlow [could] be held responsible for his own tortious conduct."

¶18 In their supplemental briefing, Hy Barr and Barlow argued that the phrase "arising out of or relating to" should be interpreted broadly and that the phrase covered the fraudulent-conveyance and alter-ego claims. Barlow further argued that because he was included in the definition of "Contractor," claims against him personally were required to be submitted to the Initial Decision Maker.

¶19 Willow Creek responded that because Hy Barr and Barlow did not seek mediation or arbitration after the Initial Decision, Willow Creek could bring any claims so long as those claims were brought within "the time period specified by applicable law." Because Hy Barr had agreed that Willow Creek should be awarded a judgment against Hy Barr—but not Barlow—based on the Initial Decision, Willow Creek also asked for entry of judgment on the Initial Decision Claim against Hy Barr.

¶20 At a subsequent hearing, the court concluded that the claims against Barlow were "subject to the dispute resolution terms of the contract." This was because Barlow—the "authorized representative" of Hy Barr—was a "Contractor" under the contract. The court also concluded that the phrase "arising out of or relating to the contract" was "very broad language" that "includes, essentially, all of the claims" brought by Willow Creek. The court accordingly dismissed all claims against Hy Barr and Barlow that Willow Creek had not previously submitted to the Initial Decision Maker. The court later entered a final judgment against Hy Barr for $648,734.78 based on the Initial Decision.⁸

Willow Creek's Rule 60 Motion

¶21 After the district court's decision, Willow Creek sent another letter to the Initial Decision Maker asking it to now consider all of the claims that had been dismissed by the district court. In response, Hy Barr sent a letter to the Initial Decision Maker requesting assurances that the Initial Decision did not apply against Barlow. Hy Barr also asked the Initial Decision Maker to determine that Willow Creek did not timely request a decision on the claims it brought in its letter.

¶22 Before the Initial Decision Maker responded to these letters, Willow Creek filed a notice of appeal challenging the district court's ruling on Hy Barr and Barlow's motion to dismiss.

¶23 After Willow Creek filed its notice of appeal, the Initial Decision Maker responded to the letters from Willow Creek and Hy Barr. The Initial Decision Maker declined to issue any decision for two reasons. First, the Initial Decision Maker noted that its "contract obligations [had] expired, including any obligations to serve as...