Cheney v. Hinton Burdick Hall & Spilker, PLLC

2015 UT App 242

THE UTAH COURT OF APPEALS

CLAYTON A. CHENEY; LORNA W. CHENEY;
AND FRONTIER BUILDING PRODUCTS, LLC,
Plaintiffs and Appellants,
v.
HINTON BURDICK HALL & SPILKER, PLLC,
Defendant and Appellee.

Opinion
No. 20140316-CA
Filed September 17, 2015

Fifth District Court, Cedar City Department
The Honorable James L. Shumate
No. 110500780

Joel T. Zenger and Deborah Chandler, Attorneys
for Appellants
Bryan J. Pattison and Elijah L. Milne, Attorneys
for Appellee

JUDGE KATE A. TOOMEY authored this Opinion, in which JUDGE
JOHN A. PEARCE concurred. JUDGE GREGORY K. ORME concurred
in the result.

TOOMEY, Judge:

¶1 This case involves a transaction known as a “1031 like-
kind exchange,” which allows a business or investment property
to be sold for a profit and defer paying taxes on the gain as long
as the profit is reinvested in a similar property. See I.R.C. § 1031
(2012). Here, Clayton A. Cheney, Lorna W. Cheney, and their
business, Frontier Building Products, LLC (collectively, the
Cheneys), contracted with an accounting firm, Hinton Burdick
Hall & Spilker, PLLC (Hinton Burdick), to help them facilitate
several like-kind exchanges. But after a seller failed to convey
title to exchange properties, the Cheneys filed a suit against
Cheney v. Hinton Burdick Hall & Spilker, PLLC

Hinton Burdick, claiming breach of contract and a violation of
the implied covenant of good faith and fair dealing. The district
court subsequently granted Hinton Burdick’s motion for
summary judgment and dismissed the Cheneys’ complaint.

¶2 On appeal, the Cheneys challenge the court’s decision to
grant summary judgment. They argue there was a dispute as to
the material facts that precluded the court from granting
summary judgment and that, as a matter of law, Hinton Burdick
breached its duties under two agreements and breached the
covenant of good faith and fair dealing when it accepted
payment for exchanges without ensuring the Cheneys received
title to exchange property. Because we conclude that the parties’
agreements did not require Hinton Burdick to ensure the
Cheneys received title to the exchange properties and that the
Cheneys have failed to demonstrate that Hinton Burdick’s
actions violated the covenant of good faith and fair dealing, we
affirm and remand for calculation of attorney fees incurred on
appeal.

BACKGROUND

¶3 From August 2005 to January 2006, Hinton Burdick and
the Cheneys entered into three nearly identical contracts
(collectively, the Agreement) to facilitate like-kind exchanges. In
the Agreement, the Cheneys recognized that, after their property
was sold, Hinton Burdick “[would] be unable to deliver good
and marketable title to the Exchange Property on the date
designated for closing of this exchange transaction,” and for the
Cheneys’ tax benefit, Hinton Burdick agreed to hold any gains in
escrow until the Cheneys designated an exchange property to
purchase with the funds.

¶4 In the first of these transactions, with an agreement in
place, Mr. and Mrs. Cheney sold one of their properties and
transferred the proceeds to Hinton Burdick. Mr. and Mrs.

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Cheney decided to purchase an out-of-state renovated
condominium complex owned by Homeland Mortgage. Based
on correspondence with Homeland, Mr. and Mrs. Cheney
assumed their investment would give them ownership in the
exchange property. Hinton Burdick transferred funds to
Homeland. Hinton Burdick did not convey title of the exchange
property to Mr. and Mrs. Cheney but assumed, based on
previous transactions, that the seller would convey title directly
to Mr. and Mrs. Cheney. Although Mr. and Mrs. Cheney thought
they were on the exchange property’s title, Homeland never
conveyed it to them. Instead, Mr. and Mrs. Cheney began
receiving interest checks and correspondence addressed to
Homeland’s “shareholders” and “investors.”

¶5 Several months later, Mr. and Mrs. Cheney entered into a
second agreement with Hinton Burdick. Similar to the first
exchange, Mr. and Mrs. Cheney sold another of their properties
and Hinton Burdick held the proceeds in escrow. Mr. and Mrs.
Cheney then designated a similar property, instructed Hinton
Burdick to transfer the funds, and completed a real estate
purchase agreement with the seller. The seller conveyed title to
Mr. and Mrs. Cheney directly via warranty deed.

¶6 Finally, Frontier entered into an agreement with Hinton
Burdick to facilitate a like-kind exchange wherein the proceeds
from the sale of Frontier’s property were designated to purchase
out-of-state property owned by Homeland and oil well interests
from NG Capital Corporation. Similar to Mr. and Mrs. Cheney’s
first exchange with Homeland, Hinton Burdick wired funds to
Homeland but neither Hinton Burdick nor Frontier received title
to property. Rather, Frontier received investor correspondence.
Frontier also instructed Hinton Burdick to send some of its funds
to NG Capital as an investment in an oil and gas well. NG
Capital did not convey an interest in the well to Hinton Burdick
but transferred an interest directly to Frontier.

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¶7 After the Cheneys stopped receiving interest checks from
Homeland, they asked for the return of the money they invested;
it was not returned. They also discovered, with regard to the
Homeland exchanges, they were not on the title to any property.
The Cheneys then attempted to sue Homeland, but abandoned
suit after discovering that Homeland’s principal was in prison
and the company had gone bankrupt.

¶8 Nearly six years after the exchanges, the Cheneys sued
Hinton Burdick, alleging that it had breached the first and third
contracts with regard to the Homeland exchanges by failing to
convey title to the exchange properties. They also claimed
Hinton Burdick breached the covenant of good faith and fair
dealing by accepting payment for the exchanges and by not
ensuring they received title from Homeland. Hinton Burdick
moved for summary judgment arguing that, when read in its
entirety, the Agreement showed Hinton Burdick must first have
received title to an exchange property before it had an obligation
to deliver title to the Cheneys. Hinton Burdick also argued it did
nothing intentional to interfere with the Agreement, and thus
did not violate the covenant of good faith and fair dealing. The
district court granted Hinton Burdick’s motion, concluding that
“interpretation of the contract is as . . . urged upon the court by
[Hinton Burdick] in this action.” The Cheneys appeal.

ANALYSIS

¶9 “A district court’s grant of summary judgment is a legal
ruling that we review without deference.” Suarez v. Grand
County, 2012 UT 72, ¶ 18, 296 P.3d 688 (citation and internal
quotation marks omitted). It is proper only when “viewing all
facts and reasonable inferences therefrom in the light most
favorable to the nonmoving party, there is no genuine issue as
to any material fact and . . . the moving party is entitled to a
judgment as a matter of law.” Id. (omission in original) (citation
and internal quotation marks omitted).

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I. The Court Did Not Err in Concluding There Was No Dispute
as to the Material Facts.

¶10 The Cheneys contend “there were disputed issues of
material fact on the record.” They do not, however, dispute any
of the facts; they merely dispute whether the law, when applied
to the facts, supports judgment in favor of Hinton Burdick. For
example, the Cheneys suggest that the differing interpretations
of the Agreement create “disputed facts” that should have been
allowed to go to trial. Because they do not identify disputed facts
in the record, the Cheneys have not met their burden on appeal. 1
“Pinpointing where and how the trial court allegedly erred is the
appellant’s burden. An appellate court that assumes that burden
on behalf of an appellant distorts th[e] fundamental allocation of
benefits and burdens.” GDE Constr., Inc. v. Leavitt, 2012 UT App
298, ¶ 24, 294 P.3d 567 (alteration in original) (citation and
internal quotation marks omitted). Accordingly, we conclude the
court did not err in determining there was no dispute as to the
material facts.

II. The Court Did Not Err in Concluding Hinton Burdick Was
Entitled To Judgment as a Matter of Law.

A. Breach of Contract

¶11 The Cheneys contend “[t]he plain and clear language of
the [Agreement], when harmonized with all other provisions,
demonstrates that [Hinton Burdick] had a contractual obligation

1. We acknowledge that the Cheneys’ appellate briefs refer to a
couple of facts in the record—each regarding Hinton Burdick’s
awareness of peculiarities in the closing paperwork—but they
expressly concede those facts are undisputed. Moreover, in their
reply brief, the Cheneys state, “Although [we] do believe that
there are factual disputes as to the facts as asserted by [Hinton
Burdick], [we] are not making this appeal on those grounds.”

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to ensure that the property had been conveyed either to [itself],
or directly to [the Cheneys] prior to wiring the purchase funds.” 2
They assert that transferring the funds was “expressly
contingent upon the contemporaneous receipt of title by either
[Hinton Burdick] or [the Cheneys].” The Cheneys also argue
Hinton Burdick had a duty to inform them that “the subject
transactions would not result in [their] acquisition of real
property.”

¶12 When interpreting a contract, such as the Agreement, we
“‘first look[] to the contract’s four corners to determine the
parties’ intentions, which are controlling. If the language
within the four corners of the contract is unambiguous . . . [we]
determine[] the parties’ intentions from the plain meaning of the
contractual language as a matter of law.’” Baxter v. Saunders
Outdoor Advert., Inc., 2007 UT App 340, ¶ 11, 171 P.3d 469
(alterations and omission in original) (footnote omitted) (quoting
Fairbourn Commercial, Inc. v. American Hous. Partners, Inc., 2004
UT 54, ¶ 10, 94 P.3d 292).

¶13 The Cheneys’ argument is based on the language of two
specific provisions in the Agreement, which provide:

[4]B. The closing of the purchase wherein [the
Cheneys] acquire[] the Exchange Property shall be
contingent upon the contemporaneous conveyance
of such property by the owner to [Hinton Burdick]
or may be conveyed directly to [the Cheneys], so
long as [Hinton Burdick] executes all other papers
required in that closing;

2. We note that although the Cheneys disagree with Hinton
Burdick’s interpretation of the Agreement, they do not argue
that the Agreement is ambiguous.

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[4]C. [Hinton Burdick] shall convey the Exchange
Property to [the Cheneys] by Special Warranty
Deed, warranting only against the acts of [Hinton
Burdick] and shall convey any personal property
related thereto to [the Cheneys] by Bill of Sale
without warranties.

Looking at the two provisions together, the Agreement makes
whether the Cheneys receive the exchange property dependent
upon a contemporaneous conveyance of the property from the
seller. The Agreement then provides that the Cheneys may
receive title to the exchange property in one of two ways. And it
dictates the type of deed Hinton Burdick must convey to the
Cheneys, if necessary. In either scenario—whether a title is first
conveyed to Hinton Burdick and then conveyed to the Cheneys
or whether a title is conveyed directly to the Cheneys—the seller
would first have to produce title of the exchange property. No
provision in the Agreement requires Hinton Burdick to make the
seller produce title to the exchange property, and without
receiving the exchange property’s title, Hinton Burdick would be
incapable of conveying a special warranty deed to the Cheneys
under section 4C. Accordingly, section 4B creates a condition
precedent to Hinton Burdick’s duty to convey title to the
Cheneys: the seller’s conveyance of the exchange property. Thus,
based on the plain language of the Agreement and the
undisputed facts, Hinton Burdick’s duty to convey title was
never triggered because Homeland never conveyed a title.

¶14 Although the Cheneys assert that Hinton Burdick “was
contractually obligated to ensure that the property had been
conveyed directly to [the Cheneys] prior to wiring the purchase
funds,” no language in the Agreement restricts when Hinton
Burdick may transfer funds. Rather, the Agreement provides,
“On receipt of written instructions [from the Cheneys] which
have been approved by [Hinton Burdick] at any time before the
[acquisition of the exchange property, Hinton Burdick] shall

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apply the Escrowed Funds . . . toward the purchase of the
Exchange Property.” This provision expressly allowed Hinton
Burdick to purchase the exchange property before the Cheneys
received title.

¶15 More importantly, the Agreement expressly provides that
the Cheneys may not hold Hinton Burdick responsible for any
problems with the transfer of the exchange property. In
executing the Agreement, the Cheneys acknowledged “[their]
reliance upon [their] own tax and legal counsel as to [their]
exchange transaction involved in th[e] Agreement.” This
provision rebuts any claim that Hinton Burdick had a duty to
advise them of the risks in the transaction. And the Agreement
provides that

[the Cheneys] shall indemnify and hold harmless
[Hinton Burdick] from any or all claims, liabilities,
costs and expenses, including legal fees, in
connection with and arising out of the acquisition
of the Exchange Property and the contemporaneous
transfer of the Exchange Property to [the Cheneys].

¶16 Although the Agreement is not a model of clarity, the
only reasonable interpretation of the plain language is that
Hinton Burdick’s role in the transaction was to accommodate a
like-kind exchange for the Cheneys’ convenience. The
Agreement does not have any language compelling Hinton
Burdick to guarantee the seller’s conveyance of title to the
exchange property, and its disclaimers and indemnification
provision expressly contradict any assertion that Hinton Burdick
had some duty to advise the Cheneys of potential risks in their
investments. Accordingly, we conclude the court did not err in
granting summary judgment, because Hinton Burdick was
entitled to judgment as a matter of law.

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B. Breach of the Covenant of Good Faith and Fair Dealing

¶17 The Cheneys contend Hinton Burdick violated the
implied covenant of good faith and fair dealing when it
“accepted payments for its services under the contract[] . . . [but]
failed to perform all required services and acquire real
properties on behalf of [the Cheneys].” The implied covenant of
good faith and fair dealing inheres in most contractual
relationships and requires a party in a contract to perform
“consistent with the agreed common purpose and the justified
expectations of the other party.” Oakwood Vill. LLC v. Albertsons,
Inc., 2004 UT 101, ¶ 43, 104 P.3d 1226 (citation and internal
quotation marks omitted). This is recognized “where it is clear
from the parties’ ‘course of dealings’ or a settled custom or usage
of trade that the parties undoubtedly would have agreed to the
covenant if they had considered and addressed it.” Young Living
Essential Oils, LC v. Marin, 2011 UT 64, ¶ 10, 266 P.3d 814
(quoting Oakwood Vill., 2004 UT 101, ¶ 43). One such duty is an
“implied duty that contracting parties ‘refrain from actions that
will intentionally destroy or injure the other party’s right to
receive the fruits of the contract.’” Id. ¶ 9 (quoting Oakwood Vill.,
2004 UT 101, ¶ 43).

¶18 Although compliance with this covenant is fact sensitive
and depends on the contract and conduct between the parties,
see Republic Group, Inc. v. Won-Door Corp., 883 P.2d 285, 291 (Utah
Ct. App. 1994), the Cheneys fail to meet their burden of
persuasion on appeal. While they cite a few cases that involve
the covenant of good faith and fair dealing, their briefs contain
mere conclusory arguments that do nothing more than restate
the legal standard without an analysis demonstrating how
Hinton Burdick’s actions violated the implied covenant. For
example, the Cheneys assert that “[a]ccepting payment in
exchange for the performance of the duties while wholly failing
to perform [Hinton Burdick’s] express contractual obligations is
clearly an intentional interference [with the Cheneys’] right[] to

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receive the fruits of the contracts.” This argument merely
restates their breach of contract claim without explaining which
obligations Hinton Burdick has failed to perform or how its
actions were an intentional effort to interfere with the Cheneys’
exchanges. Thus, without a reasoned analysis, the Cheneys have
not convinced us that the court erred in granting Hinton
Burdick’s summary judgment motion on this issue. See Utah R.
App. P. 24(a)(9) (requiring an appellant’s argument to contain
“contentions and reasons of the appellant with respect to the
issues presented”).

III. Hinton Burdick Is Entitled to Attorney Fees on Appeal.

¶19 Hinton Burdick requests an award of attorney fees
incurred on appeal. “In Utah, attorney fees are awardable only if
authorized by statute or contract.” Dixie State Bank v. Bracken, 764
P.2d 985, 988 (Utah 1988); see also R.T. Nielson Co. v. Cook, 2002
UT 11, ¶ 17, 40 P.3d 1119. And, “when a party is entitled to
attorney fees below and prevails on appeal, that party is ‘also
entitled to fees reasonably incurred on appeal.’” Dillon v.
Southern Mgmt. Corp. Ret. Tr., 2014 UT 14, ¶ 61, 326 P.3d 656
(quoting Valcarce v. Fitzgerald, 961 P.2d 305, 319 (Utah 1998)); see
also R.T. Nielson Co., 2002 UT 11, ¶ 27 (awarding costs and
attorney fees to the prevailing party on appeal based on the
parties’ agreement). Here, the Agreement authorizes attorney
fees to the prevailing party; it states, “In the event any action is
instituted by a party to enforce any of the provisions contained
herein, the prevailing party shall be entitled to reasonable
attorney’s fees, costs and expenses . . . .” Relying on this
provision, the district court properly awarded Hinton Burdick
attorney fees below. Hinton Burdick has also prevailed on
appeal. Accordingly, we award Hinton Burdick reasonable
attorney fees on appeal and remand to the district court for
calculation of those fees.

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CONCLUSION

¶20 Based on the plain language of the Agreement, the district
court did not err in concluding as a matter of law that Hinton
Burdick did not breach any contractual duty. Moreover, the
Cheneys have failed to carry their burden to demonstrate Hinton
Burdick breached the implied covenant of good faith and fair
dealing. We therefore affirm the court’s decision to grant Hinton
Burdick’s summary judgment motion and remand for the
calculation and an award of attorney fees incurred on appeal.

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