Encon v. FAK

2009 UT 7
This opinion is subject to revision before final
publication in the Pacific Reporter.
IN THE SUPREME COURT OF THE STATE OF UTAH
----oo0oo----
Encon Utah, LLC, 	No. 20070557
Plaintiff and Appellee,
v.
Fluor Ames Kraemer, LLC, Fireman’s
Fund Insurance Company, and St. Paul 	F I L E D
Fire and Marine Insurance Company,
Defendants and Appellants. 	January 27, 2009
---
Third District, Salt Lake
The Honorable Tyrone E. Medley
No. 040919476
Attorneys: 	Robert F. Babcock, Justin E. Scott, Salt Lake City,
Bret Gunnell, Ronald M. Eddy, Denver, CO, for
plaintiff
Bryan H. Booth, Ryan M. Nord, Salt Lake City, for
defendants
---
DURRANT, Associate Chief Justice:
INTRODUCTION
¶1 	Utah Department of Transportation (“UDOT”) contracted
with Fluor Ames Kraemer, LLC, (“FAK”) to construct the Legacy
Parkway (“the project”). 	FAK then subcontracted with Encon Utah,
LLC, (“Encon”) to manufacture and install bridge girders for the
project. 	UDOT partially terminated the project, and, as a
result, FAK terminated Encon’s subcontract. 	Encon filed suit
against FAK and FAK’s sureties, Fireman’s Fund Insurance Company
and St. Paul Fire and Marine Insurance Company, (collectively,
“FAK parties”) to recover the amounts it claimed it was owed
under the termination provision of the subcontract. 	The FAK
parties and Encon filed motions for partial summary judgment
regarding the interpretation of that termination provision.

No. 20070557 	2
¶2 	The trial court granted Encon’s motion for partial
summary judgment and denied the FAK parties’ motion. 	After a
four-day bench trial, the court entered judgment in favor of
Encon and jointly against the FAK parties, awarding Encon
termination damages, prejudgment interest, and attorney fees and
costs. 	In total, the court awarded Encon $1,699,563.50. 	The FAK
parties timely appealed, claiming that the court erred in
(1) 	applying the termination provision of the subcontract
and interpreting that provision such that Encon
received an excessive award of compensation for early
termination;
(2) 	awarding Encon $50,000 in claim preparation costs;
(3) 	awarding Encon prejudgment interest on its termination
damages; and
(4) 	interpreting Utah Code section 63-56-38(4) such that
Encon’s bond claim was timely filed, and, as a
corollary matter, awarding attorney fees based on
Encon’s bond claim.
BACKGROUND
¶3 	In December 2000, UDOT entered into a Design-Build
Contract (“prime contract”) with FAK to construct the Legacy
Parkway. 	As the general contractor, FAK provided a payment bond
for the project; the bond was issued by Fireman’s Fund Insurance
Company and St. Paul Fire and Marine Insurance Company as co-
sureties.
¶4 	In May 2002, FAK entered into a subcontract with Encon,
under which Encon would manufacture, furnish, and install
concrete bridge girders. 	The total amount Encon was to be paid
under the subcontract was $6,842,342.
¶5 	In April 2003, UDOT partially terminated the prime
contract with FAK due to an injunction obtained by an
environmental organization enjoining the project’s construction.
In May 2003, FAK sent Encon a notice of partial termination of
the subcontract.
¶6 	The last work performed by Encon under the subcontract
was the hauling and installation of 13 precast concrete girders
in March 2004 for which Encon was paid in full in May 2004.
Encon filed a complaint in the Third District Court against the
FAK parties in September 2004. 	The complaint asserted a claim

3 	No. 20070557
for breach of contract and a claim under Utah’s payment bond
statute.
¶7 	Encon and the FAK parties filed motions for partial
summary judgment regarding the interpretation of the subcontract
provision that capped the amount of compensation Encon was
entitled to recover for early termination of the project. 	The
court granted Encon’s motion for partial summary judgment and
denied the FAK parties’ motion. 	Shortly before trial, the FAK
parties filed a motion to stay the trial to allow an
interlocutory appeal of the summary judgment issues. 	On the
first day of trial, the court denied the motion and directed the
parties to proceed with trial. 	After a four-day bench trial, the
court entered judgment in favor of Encon and jointly against the
FAK parties, awarding Encon termination damages, prejudgment
interest, and attorney fees. 	The total amount awarded to Encon
was $1,699,563.50.
¶8 	The judgment was made up of three components: 	(1)
termination damages totaling $1,260,778, consisting of
compensation for work performed by Encon totaling $1,062,901, and
termination costs totaling $197,877; the termination costs
included $50,000 in claim preparation costs; (2) prejudgment
interest totaling $337,128.30, and (3) attorney fees totaling
$101,657.20.
¶9 	On appeal, the FAK parties challenge each of these
components, claiming that the trial court erred in
(1) 	applying the termination provision of the subcontract
and interpreting that provision such that Encon
received an excessive award of compensation for early
termination;
(2) 	awarding Encon $50,000 in claim preparation costs;
(3) 	awarding Encon prejudgment interest on its termination
damages; and
(4) 	interpreting Utah Code section 63-56-38(4) such that
Encon’s bond claim was timely filed, and, as a
corollary matter, awarding attorney fees based on
Encon’s bond claim.
We affirm each of the trial court’s rulings.
¶10 	We have jurisdiction pursuant to Utah Code section 78A-
3-102(3)(j) (2008).

1 Aquagen Int’l, Inc. v. Calrae Trust, 972 P.2d 411, 413
(Utah 1998).
2 In re Estate of Bartell, 776 P.2d 885, 886 (Utah 1989)
(internal quotation marks omitted).
3 Andreason v. Aetna Cas. & Sur. Co., 848 P.2d 171, 177
(Utah Ct. App. 1993).
4 Platts v. Parents Helping Parents, 947 P.2d 658, 661 (Utah
1997).
No. 20070557 	4
STANDARDS OF REVIEW
¶11 	“We accord a trial court’s interpretation of a contract
no deference and review it for correctness.” 1 	We review a trial
court’s factual findings for clear error and will overturn a
factual finding only if it is against “the clear weight of the
evidence.” 2 	A trial court’s decision to award “prejudgment
interest presents a question of law which we review for
correctness.” 3 	“Matters of statutory construction are questions
of law that are reviewed for correctness.” 4
ANALYSIS
I. 	THE TRIAL COURT DID NOT ERR IN APPLYING OR INTERPRETING THE
TERMINATION PROVISION OF THE SUBCONTRACT
¶12 	The FAK parties first claim that the trial court erred
in applying and interpreting article 17.3, the termination
provision of the subcontract. 	They claim that the trial court
should have instead applied section 15, the termination provision
of the prime contract. 	They also claim that in interpreting the
termination provision of the subcontract, the trial court should
have capped Encon’s recovery. 	The FAK parties ask this court to
reduce Encon’s award by $1,083,335.
¶13 	We hold that while the prime contract was incorporated
into the subcontract, section 15 of the prime contract does not
govern the issue of Encon’s compensation for early termination of
the subcontract. 	Rather, article 17.3 of the subcontract
governs. 	Additionally, the court correctly applied article 17.3;
thus, no reduction in Encon’s award is warranted in this regard.
A. 	Article 17.3 of the Subcontract Governs Encon’s Compensation
for Early Termination of the Subcontract

5 See Green River Canal Co. v. Thayn, 2003 UT 50, ¶ 17, 84
P.3d 1134.
6 Id. (ellipses in original) (internal quotation marks
omitted).
7 Id. (internal quotation marks omitted).
5 	No. 20070557
¶14 	The trial court determined that article 17.3 of the
subcontract, entitled “Termination At Company’s Option,” governed
Encon’s compensation for early termination. 	The FAK parties
argue that section 15 of the prime contract, entitled
“Termination For Convenience,” governs because the prime contract
was explicitly incorporated into the subcontract.
¶15 	In interpreting a contract, we look to the language of
the document to determine its meaning and the intent of the
contracting parties. 5 	We also “consider each contract provision
. . . in relation to all of the others, with a view toward giving
effect to all and ignoring none.” 6 	Where “the language within
the four corners of the contract is unambiguous, the parties’
intentions are determined from the plain meaning of the
contractual language, and the contract may be interpreted as a
matter of law.” 7
¶16 	The question presented here is whether the language of
the subcontract provides that article 17.3 governs the issue of
Encon’s compensation for early termination. 	We hold that it
plainly does and address the following provisions that inform our
decision: 	(1) section 15 of the prime contract, entitled
“Termination For Convenience,” (2) article 17.3 of Part III of
the subcontract, entitled “Termination At Company’s Option,”
(3) article 2.0 of Part IV of the subcontract, entitled
“Incorporation Of The Prime Contract Documents Into The
Subcontract,” and (4) article 1.0 of Part I of the subcontract,
entitled “Description Of Work.”
¶17 	Section 15 of the prime contract, “Termination For
Convenience,” establishes the right of UDOT to terminate FAK’s
services at any time as well as FAK’s compensation upon such
termination. 	Specifically, subsection 15.1.1 provides that in
the event of termination for convenience, FAK may recover “out-
of-pocket cost[s]” for work performed, including reasonable
overhead, “fair and reasonable” profit on those costs, and
reasonable costs occasioned by the termination. 	Subsection
15.5.3 limits FAK’s compensation to “the value of the Work
performed.”

No. 20070557 	6
¶18 	Article 17.3 of the subcontract, “Termination At
Company’s Option,” establishes a similar right on the part of FAK
to terminate Encon’s services at any time. 	It, too, establishes
the compensation of Encon upon such termination, providing that
Encon may recover actual costs of work performed pre-termination,
reasonable overhead and profit on those costs, and reasonable
costs occasioned by the termination. 	It does not, however, limit
Encon’s recovery to the value of the work performed.
¶19 	By their terms, these provisions apply to different
relationships and establish different termination compensation
schemes. 	Where section 15 applies to UDOT and FAK and limits
FAK’s recovery to the value of work performed, article 17.3
applies to FAK and Encon and contains no such limitation. 	Our
analysis of which provision governs Encon’s compensation for
early termination, however, does not end here.
¶20 	Article 2.0, “Incorporation Of The Prime Contract
Documents Into The Subcontract,” provides, in pertinent part,
that “[t]he [prime] Contract and Appendices thereto, except as
specifically excluded, are incorporated in, and made a part of,
this Subcontract by reference. 	Except as specifically excluded
below[.]” 	The language is plain: 	the prime contract is
incorporated into the subcontract in its entirety, except for
those sections explicitly excluded. 	Section 15 is not among the
enumerated exclusions. 	Therefore, section 15 was incorporated
into the subcontract.
¶21 	The FAK parties argue that incorporation of section 15
is determinative. 	That is, they claim that once incorporated,
the provisions of the prime contract govern Encon. 	This argument
ignores the language of Article 1.0.
¶22 	Article 1.0 of the subcontract, “Description Of Work,”
provides, in pertinent part, that “[Encon] understands and agrees
to comply with the [prime] Contract, as applicable to the Scope-
of-Work of this [sub]Contract.” 	(Emphasis added.) 	Additionally,
the “[prime] Contract will govern [Encon] for its Scope-of-Work
to the same extent as it governs [FAK], and the term for [FAK] as
used in the [prime] Contract will include and refer to [Encon]
where applicable and appropriate.” 	(Emphasis added.)
¶23 	Article 1.0 plainly provides that the prime contract
governs Encon only where the provisions of the prime contract
relate to Encon’s scope of work of manufacturing, delivering, and
installing bridge girders. 	Where the provisions of the prime
contract are unrelated to that scope of work, they do not govern.

7 	No. 20070557
The question then becomes whether section 15 is related to
Encon’s scope of work such that it governs. 	It does not.
¶24 	As the trial court found, section 15 of the prime
contract, “Termination For Convenience,” is “a commercial
contract term unrelated to the scope of defined ‘Work’ undertaken
by Encon on the project.” 	That is, section 15 defines the
rights, obligations, and compensation as between UDOT and FAK in
the event of FAK’s early termination. 	Encon’s defined scope of
work of manufacturing, delivering, and installing concrete bridge
girders is entirely unrelated to FAK’s negotiated termination
provision with UDOT. 	Thus, while section 15 was incorporated, it
does not govern.
¶25 	The FAK parties contend that this interpretation is
flawed because “there would be no reason to incorporate Prime
Contract provisions if those provisions were not intended to bind
Encon and FAK.”
¶26 	There is, however, a sound business reason to
incorporate the provisions of the prime contract into the
subcontract wholesale. 	As Encon points out, incorporating the
prime contract ensured that Encon would be subject to and abide
by the governing plans and specifications of the agreement
between UDOT and FAK. 	In turn, that ensured that FAK would
deliver to UDOT “precisely the Project it . . . agreed to.”
¶27 	Not every provision incorporated, however, was intended
to govern Encon. 	This is clear from the parties’ explicit
limitation that Encon would “comply with the [prime] Contract, as
applicable to the Scope-of-Work of this [sub]Contract.”
(Emphasis added). 	UDOT and FAK protected the project’s integrity
by incorporating the prime contract into the subcontract, but
recognizing that not every provision applied to Encon, the
parties limited governance of the prime contract to Encon’s scope
of work. 	Because section 15 is unrelated to that scope of work,
it does not govern.
¶28 	Contrary to the FAK parties’ argument, this
interpretation gives effect to each party’s explicitly bargained-
for rights and harmonizes the provisions by allowing section 15
to govern the termination rights between UDOT and FAK and article
17.3 to govern the termination rights between FAK and Encon. 	The
interpretation urged by the FAK parties would nullify article
17.3, making it wholly superfluous. 	In interpreting a contract,
we look for a reading that harmonizes the provisions and avoids

8 See Fairbourn Commercial, Inc. v. Am. Hous. Partners,
Inc., 2004 UT 54, ¶ 11, 94 P.3d 292.
No. 20070557 	8
rendering any provision meaningless. 8 	The interpretation giving
effect to article 17.3 achieves both goals.
¶29 	The FAK parties also claim that there is a conflict
between section 15 of the prime contract and article 17.3 of the
subcontract that must be resolved under the order of precedence
of documents established in the subcontract. 	Under that order of
precedence, the FAK parties claim that section 15 trumps article
17.3. 	Because we hold that section 15 applies exclusively to the
relationship between UDOT and FAK, and article 17.3 applies
exclusively to the relationship between FAK and Encon, there is
no conflict in the provisions, and this claim fails.
B. 	The Pro Rata Cap in Article 17.3 of the Subcontract Applies
Only to the Second Category of Recoverable Costs: 	Overhead and
Profit
¶30 	The FAK parties next argue that the trial court erred
in applying the pro rata, dollar value cap (“pro rata cap”)
established in article 17.3 of the subcontract and thus awarded
Encon $1,083,335 in excess of the value of the work it actually
performed. 	The FAK parties contend that this result violated
article 17.3 and seek to have the judgment reduced to reflect
their interpretation of the proper amount due Encon. 	Because the
court applied the pro rata cap correctly, no reduction in the
award is warranted.
¶31 	In calculating Encon’s compensation, the court reviewed
the terms of article 17.3, which provide that in the event of
Encon’s termination for convenience, it may recover
the actual costs of all such Work
satisfactorily executed to the date of
termination, plus an allowance for reasonable
overhead and profit on such costs incurred
prior to termination (but not to exceed a pro
rata portion of such Contract Price for such
Work based on the percentage of Work properly
completed to the date of termination),
together with reasonable costs occasioned by
such termination and not previously paid for,
less such sums as [Encon] has already
received on account of the Work performed.
In no event shall total payment to [Encon]
exceed the Contract Price [of $6,842,342].

9 	No. 20070557
¶32 	There are three categories of recovery established in
article 17.3: 	(1) actual costs of work performed pre-
termination, (2) reasonable overhead and profit on those costs,
and (3) reasonable costs occasioned by the termination.
¶33 	There are also two caps on recovery: 	(1) pursuant to
the last sentence of section 17.3, Encon’s total recovery could
not exceed the contract price and (2) pursuant to the pro rata
cap in the parenthetical, Encon’s overhead and profit component
was limited.
¶34 	The trial court determined, as to each category, what
Encon was entitled to recover, applied the pro rata cap to the
second category--overhead and profit--and awarded Encon the
following: 	(1) $1,815,945 in actual costs, (2) $2,134,331 in
overhead and profit, and (3) $197,877 in termination costs. 	The
court then subtracted the total payments Encon received from FAK
under the subcontract ($2,887,375) and awarded Encon $1,260,778
in termination compensation.
¶35 	The FAK parties claim that the pro rata cap applies not
only to the second category of costs--overhead and profit--but to
the first category as well--actual costs. 	Under this approach,
the FAK parties contend that the trial court should have limited,
or “capped,” Encon’s entire recovery at $2,866,941. 	They claim
that $2,866,941 represents the total value of the work Encon
actually performed and that under article 17.3, Encon was
entitled to recover no more.
¶36 	The FAK parties’ argument rests not on the language,
grammar, or punctuation of article 17.3, but on their claim that
section 15 of the prime contract governs this issue. 	They point
to subsection 15.5.3 of the prime contract, which explicitly
provides that in no instance shall “compensation [exceed] . . .
the value of the Work performed.” 	Though article 17.3 contains
no similar limitation, the FAK parties claim that “[a]t its
essence, the pro rata [cap, when applied to the first and second
category of costs,] is the contract value of the work performed
prior to termination.” 	Thus, they argue, “[article] 17.3 imposes
the same ceiling that is imposed by [s]ection 15.”
¶37 	The FAK parties’ argument fails for two reasons.
First, section 15, though incorporated, does not govern Encon’s
compensation for early termination. 	Therefore, the limitation on
recovering only the value of the work performed as established in
section 15 of the prime contract has no bearing on the
interpretation of article 17.3 of the subcontract. 	Second, the
language, grammatical structure, and punctuation of article 17.3

9 United States v. Werner, 317 F.3d 1168, 1173 (10th Cir.
2003).
10 844 P.2d 366 (Utah Ct. App. 1992).
11 Id. at 367.
12 Id. at 370 (emphasis added).
13 Id.
14 Id.
No. 20070557 	10
demonstrate that the pro rata cap applies only to the second
category of costs--overhead and profit.
¶38 	Proper contract interpretation includes “application of
ordinary rules of grammar.” 9 	Here, the pro rata cap appears in a
sentence that contains three phrases. 	Each phrase is set off by
commas. 	The second phrase contains a parenthetical, and that
parenthetical contains the pro rata cap. 	Encon argues that,
based on the grammatical structure of article 17.3, the pro rata
cap “should be applied only to the phrase in which the language
appears.” 	They cite Goetz v. American Reliable Insurance Co. 10
as support for their claim that rules of grammar and punctuation
can inform and dictate contract interpretation.
¶39 	In Goetz, the court of appeals interpreted an insurance
policy that contained three clauses set off by commas. 	In
relevant part, the policy provided that maximum recovery was
fixed “[i]f an eligible injured person who is a named insured, a
relative, or person who is injured in an accident involving the
use of an insured motor vehicle, has other similar insurance
applicable to the accident . . . .” 11
¶40 	The court of appeals found that the provision
unambiguously fixed the maximum insurance recovery in three
situations: 	when the injured person (1) is a named insured, (2)
is a relative, and (3) is injured in an accident involving an
insured motor vehicle. 12 	The appellant argued that the
emphasized language applied to all three categories, but the
court found such an interpretation “flawed because of grammatical
oversight.” 13 	The court noted that “clearly, given normal rules
of punctuation, the clause is only part of (3).” 14
¶41 	Similarly, in article 17.3, there are three categories
of costs, each set off by commas. 	The pro rata language appears
solely within a parenthetical phrase, which in turn, is included

15 See Petersen v. Ogden Union Ry. & Depot Co., 175 P.2d
744, 750 (Utah 1946) (Larson, J., concurring in result)
(explaining that a clause set off by commas “is to be treated as
one thought and clause”).
16 Initially, FAK argued that Encon had not completed more
than 30% of the project when it terminated Encon’s services.
Using 31% completion--or any percentage under 31%--where the pro
rata cap applies only to the second category of overhead and
profit, the cap would have been triggered. 	For example, 31% of
$6,842,342 equals $2,121,126. 	That amount is lower than the
total value of overhead and profit Encon was seeking ($2,134,331)
and would have triggered the cap.
11 	No. 20070557
solely within the second category of costs. 	Normal rules of
punctuation dictate that the parenthetical applies only to the
phrase to which it is attached. 15 	The trial court correctly
found the same: 	“[B]ased on the plain meaning and punctuation of
[article] 17.3 . . . the pro rata limitation in the parenthetical
clause modifies only the preceding term, ‘an allowance for
reasonable overhead and profit on such costs incurred prior to
termination’ and therefore applies only to the calculation of
overhead and profit.”
¶42 	The FAK parties next assert that this interpretation is
incorrect because the pro rata cap could never be triggered and
therefore is not meaningful. 	That is not the case. 	Any finding
of less than 31% completion by Encon, in fact, would have
triggered the pro rata cap. 16
¶43 	Based on the foregoing discussion, we affirm the trial
court’s decisions that article 17.3 governs Encon’s compensation
for early termination, the pro rata cap applies only to the
second category of recoverable costs, and the prime contract’s
limitation on recovering only the value of the work performed
does not apply to Encon. 	Therefore, no reduction in Encon’s
award is warranted.
II. 	THE TRIAL COURT’S DECISION TO AWARD $50,000 IN CLAIM
PREPARATION COSTS WAS NOT CLEARLY ERRONEOUS
¶44 	The FAK parties next argue that the trial court erred
in “award[ing] the full $50,000 in claim preparation costs” that
Encon requested. 	In its findings of fact and conclusions of law,
the trial court found that Encon incurred “$197,877 in costs
occasioned by the termination . . . [which] consists [in part] of
$50,000 in claim preparation costs.”

17 Ockey v. Lehmer, 2008 UT 37, ¶ 34 n.32, 189 P.3d 51
(internal quotation marks omitted).
18 Id.
19 In their reply brief, the FAK parties claim that Ray’s
(continued...)
No. 20070557 	12
¶45 	The FAK parties claim that the court’s award was
against the clear weight of evidence because “even when all the
relevant evidence is marshaled and viewed in the light most
favorable to the trial court’s ruling, the evidence is not
legally sufficient to support a finding of $50,000 in claim
preparation costs.” 	However, the FAK parties fail to satisfy
their burden of marshaling the evidence.
¶46 	“To successfully attack a trial court’s findings of
fact, an appellant must first marshal all the evidence in support
of the findings and then demonstrate that the evidence, including
all reasonable inferences drawn therefrom, is insufficient to
support the findings. . . .” 17 	The FAK parties provide an
addendum of transcript and exhibit excerpts that they claim is
the full spectrum of evidence supporting the trial court’s award.
They do not, however, explain or demonstrate how that evidence,
when viewed in the light most favorable to the trial court’s
ruling, is insufficient. 	An addendum of excerpts without
explanation does not “demonstrate that the evidence, including
all reasonable inferences drawn therefrom, is insufficient to
support the findings.” 18
¶47 	The FAK parties do, however, discuss a single excerpt
of testimony in their brief. 	They cite the testimony of Mark
Helseth, Encon’s expert, in which Helseth testified that the
$50,000 figure for claim preparation was included “for analysis
sake.” 	While this testimony, standing alone, likely would be
inadequate to support the court’s award, the FAK parties fail to
marshal the evidence that was provided by their expert on the
point of Encon’s claim preparation costs.
¶48 	In his testimony, the FAK parties’ expert, Michael Ray,
agreed that “there [was nothing] wrong with th[e] numbers” Encon
presented as part of its termination proposal and that $50,000 in
claim preparation costs was “appropriate.” 	The FAK parties did
not include this testimony as an excerpt in their addendum, nor
did they include it in their brief with the required explanation
of why, when viewed in the light most favorable to the trial
court’s decision, the testimony is insufficient to support that
decision. 19

19 (...continued)
testimony “did not establish Encon’s award of claim preparation
costs,” only that he testified that it was an “appropriate
category of costs.” 	When directly asked whether $50,000 in claim
preparation costs was appropriate, however, Ray responded,
“that’s appropriate.” 	Thus, the FAK parties have not
demonstrated that all reasonable inferences drawn from Ray’s
testimony fail to support the trial court’s award.
20 The trial court determined that prejudgment interest was
appropriate under Utah Code section 15-1-1 “and that interest
accrues at 10% per annum from September 15, 2004 . . . through
March 15, 2007” with “a per diem rate of $345.42” for a total
award of $314,676.
21 Saleh v. Farmers Ins. Exch., 2006 UT 20, ¶ 28, 133 P.3d
428.
13 	No. 20070557
¶49 	Because the FAK parties have failed to meet their
burden of marshaling the evidence, they cannot demonstrate, and
are precluded from arguing, that the trial court’s decision to
award Encon $50,000 in claim preparation costs was clearly
erroneous.
III. 	THE TRIAL COURT DID NOT ERR IN AWARDING PREJUDGMENT
INTEREST TO ENCON
¶50 	The FAK parties next argue that the trial court erred
in awarding prejudgment interest to Encon. 20 	They claim that
Encon’s damages were not ascertainable to a “mathematical
certainty,” which is, they claim, a prerequisite to recovering
prejudgment interest. 	The FAK parties raise three related
arguments as support: 	(1) Encon could not determine its own
damages with consistency, (2) the trial court had to use its
“best judgment” in determining Encon’s damages, and (3) the trial
court had to determine the reasonableness of the overhead and
profit amounts that Encon claimed it was due. 	None of these
arguments is persuasive.
¶51 	“Prejudgment interest may be recovered where the damage
is complete, the amount of the loss is fixed as of a particular
time, and the loss is measurable by facts and figures.” 21
Prejudgment interest is appropriate when “the loss ha[s] been
fixed as of a definite time and the amount of the loss can be
calculated with mathematical accuracy in accordance with well-

22 Bellon v. Malnar, 808 P.2d 1089, 1097 (Utah 1991).
23 Bennett v. Huish, 2007 UT App 19, ¶ 45, 155 P.3d 917
(emphasis added); see also Fell v. Union Pac. Ry. Co., 88 P.
1003, 1006 (Utah 1907) (Establishing the standard for prejudgment
interest by explaining that it should not be awarded in cases
where the fact finder must determine damages by exercising its
broad discretion. 	We listed, for example, “all personal injury
cases, cases of death by wrongful act, libel, slander, false
imprisonment, malicious prosecution, assault and battery, and all
cases where the damages are incomplete and are peculiarly within
the province of the jury to assess at the time of the trial.”);
Shoreline Dev. v. Utah County, 835 P.2d 207, 211 (Utah Ct. App.
1992) (“If the jury must determine the loss by using its best
judgment as to valuation rather than fixed standards of
valuation, prejudgment interest is inappropriate.”).
24 Smith v. Fairfax Realty, Inc., 2003 UT 41, ¶ 22, 82 P.3d
1064.
25 Jack B. Parson Constr. Co. v. State, 552 P.2d 107, 109
(continued...)
No. 20070557 	14
established rules of damages.” 22 	The trial court adopted a
semblance of this language, ruling that prejudgment interest was
appropriate because Encon’s damages were “subject to mathematical
calculation.”
¶52 	Each of these iterations of the standard for recovering
prejudgment interest is correct. 	None suggests or requires, as
the FAK parties claim, that at the time the damages accrued, all
of the damage figures must be known and remain static throughout
the litigation. 	Rather, the standard focuses on the
measurability and calculability of the damages.
¶53 	The court of appeals has explained that “losses that
cannot be calculated with mathematical accuracy are those in
which damage amounts are to be determined by the broad discretion
of the trier of fact, such as in cases of personal injury,
wrongful death, defamation of character, and false
imprisonment.” 23 	Thus, prejudgment interest is inappropriate in
cases where the trier of fact is left to assess damages based on
“a mere description of the wrongs done or injuries inflicted.” 24
¶54 	We have held that prejudgment interest is appropriate
in cases where the “amount due under [a] contract was
ascertainable by calculation and it was only the method to be
used in making the calculation that was uncertain.” 25

25 (...continued)
(Utah 1976).
26 Bennett, 2007 UT App 19, ¶ 45 (citing Fairfax Realty,
2003 UT 41, ¶ 23).
15 	No. 20070557
¶55 	Therefore, where damage figures must be determined by
the trier of fact in its exercise of discretion, prejudgment
interest is inappropriate. 	Where damage figures are subject to
calculation, however, even if the method of calculating is
uncertain, or the damage figures change, prejudgment interest is
appropriate. 	The trial court recognized this important
distinction and noted that, “although various elements of Encon’s
termination claim may have been disputed as to amount, the claim
has been subject to mathematical calculation since the date it
was submitted.” 	The trial court was correct.
A. 	Encon Did Assert a Sufficiently Consistent Damage Claim
¶56 	First, the FAK parties contend that Encon “repeatedly
changed the amount of its claim, including a final revision on
the third day of trial,” and thus, the damage claim was not
“calculable with mathematical certainty,” and the trial court
erred in awarding prejudgment interest to Encon.
¶57 	This argument is not persuasive because, as noted by
Encon, most of the changes Encon made to its damage figures
preceded the date on which the trial court began calculating
prejudgment interest. 	The only change to Encon’s claimed damages
after the date from which the trial court began its calculation
of prejudgment interest on September 15, 2004, was a change made
on March 14, 2004, when Encon made “a voluntary reduction in the
amount [of damages] to reflect the evidence at trial.”
¶58 	Citing this court’s holding, the court of appeals has
held, “[t]he fact that the parties dispute or reduce the amount
of damages does not in and of itself mean that damages are
incomplete or cannot be calculated with mathematical accuracy.” 26
We agree and recognize that a single voluntary reduction in
claimed damages during trial does not preclude those damages from
being measurable or calculable.
¶59 	The FAK parties cite two cases as support for the
proposition that when the party claiming prejudgment interest
cannot establish “its damages consistently during the period
before trial, . . . such damages [are] not ‘calculable within a

27 Quoting Pro Axess, Inc. v. Orlux Distrib., 428 F.3d 1270,
1283 (10th Cir. 2005).
28 Id. at 1283 n.12 (emphasis added).
29 Id. at 1283.
30 Id. at 1283, 1284. 	Similarly, in Anesthesiologists
Associates v. St. Benedict’s Hospital, also cited by the FAK
parties as support, the Association sought several types of
damages, among them lost future profits. 	On this point, the
court of appeals held that “[g]iven the uncertainty inherent in
predicting lost future profits in this case, we affirm the trial
court’s denial of prejudgment interest.” 	852 P.2d 1030, 1042
(Utah Ct. App. 1993), rev’d on other grounds, 884 P.2d 1236 (Utah
1994). 	The court of appeals further explained that “the very
nature of lost future profits injects an air of uncertainty and
speculation into the calculation of damages.” 	Id.
31 The parties agreed that Encon completed 41.9% of the
contract work. 	The trial court determined the value of that work
by multiplying the contract price of $6,842,342 by 41.9% for a
total of $2,866,941.
No. 20070557 	16
mathematical certainty.’” 27 	In the cases cited, however, damages
could not be calculated with any degree of certainty, in part,
because of the inherently speculative nature of some of the
damages sought. 	Both cases involved plaintiffs seeking recovery,
at least in part, of future lost profits. 	In Pro Axess, for
example, Pro Axess sought damages for parts purchased, travel
expenses, and unrealized gross profits.28 	The Tenth Circuit
found that Pro Axess “submitted virtually no evidence” to support
its claim that it was due damages based on a “35% gross profit
margin.” 29 	Noting the absence of evidence as well as “Utah
courts’ reluctance to award prejudgment interest for unrealized
profits,” the Tenth Circuit denied Pro Axess’s claim for
prejudgment interest. 30
¶60 	Here, Encon seeks recovery of damages for a completed
percentage of work on a fixed-price contract and for profits on
that work at a rate of 10%. 31 	At trial, the FAK parties’ expert
agreed that 10% was a reasonable profit margin. 	Thus, the
profits Encon seeks are known, calculable figures and are not
similar to the speculative future profits that were at issue in
Pro Axess.
¶61 	Given that a reduction in the amount of damages does
not necessarily, and did not in this case, infringe the court’s

32 898 P.2d 1379 (Utah 1995).
33 See Fairfax Realty, 2003 UT 41, ¶ 23 (“The fact that the
parties disputed the value of the property at trial does not
change our conclusion that the jury’s determination of the
property’s value was ascertained . . . in accordance with fixed
rules of evidence and known standards of value. 	Therefore, we
uphold the trial court’s decision to award prejudgment interest.”
(alteration in original) (citation and internal quotation marks
omitted)).
34 Cornia, 898 P.2d at 1387 (internal quotation marks
omitted).
17 	No. 20070557
ability to subject those damage figures to mathematical
calculation, the FAK parties’ first argument as to prejudgment
interest fails.
B. 	The Trial Court’s Ultimate Determination of Damages Does Not
Preclude an Award of Prejudgment Interest
¶62 	The FAK parties next present two related arguments:
Encon’s damages were not subject to mathematical calculation
because (a) the trial court “was required to use its best
judgment in choosing between conflicting expert testimony” on the
issue of damages, and (b) the trial court “was required to
determine [the] reasonableness of overhead and profit.”
¶63 	The FAK parties contend that because the trial court
had to determine each of several cost categories based on
conflicting expert testimony, the court “necessarily used its
best judgment to decide between competing expert testimony.”
Citing a case from this court, Cornia v. Wilcox, 32 the FAK
parties argue that when a court exercises its discretion to
determine which expert’s valuation of damages to apply,
prejudgment interest is inappropriate.
¶64 	A dispute, even between experts, as to the precise
amount of damages does not necessarily preclude those damages
from being measurable or calculable. 33 	Additionally, Cornia is
inapposite. 	Cornia is a bailment case in which competing experts
disputed how missing cows, the product on which damages were
based, were valued. 	We upheld the trial court’s refusal to award
prejudgment interest because “[w]ithout any clear factual
information, plaintiffs’ damages could not be measured by facts
and figures or [be] calculated with mathematical accuracy.” 34 	In
that case, we highlighted the conflicting and divergent evidence

35 Id.
36 Id.
37 Crowley v. Black, 2007 UT App 245, ¶ 9, 167 P.3d 1087
(internal quotation marks omitted) (explaining the trial court’s
determination of damages as follows: 	“[T]he trial court
determined appropriate damages from lost rent and the cost of
repairs by calculating known amounts and identifying clear dates.
. . . 	The trial court reduced the damages sought for lost rent
from one month to half a month, . . . . 	The court attributed
(continued...)
No. 20070557 	18
regarding damages and the speculative nature of the damages
sought:
[T]he jury heard conflicting testimony from
experts regarding the cattle’s expected
pregnancy rates, weight range, loss rates,
and market prices. 	In addition, the jury
heard divergent evidence regarding the
calves’ expected gender, weight range,
mortality rates, and market prices.
Plaintiffs could not establish these elements
as a matter of fact, and thus the jury was
free to use its best judgment in ascertaining
and assessing the damages. 35
¶65 	In this case, the court was not left to its best
judgment to ascertain damages. 	Rather, the court reviewed the
terms of Encon’s fixed price contract, the percentage of work
Encon completed, and noted that the parties agreed that 10%
profit on that work was reasonable. 	Thus, the court based its
final decision on measurable facts and figures. 	Exercising its
discretion to determine which expert’s valuation was more
accurate does not present the same concern we raised in Cornia,
where the fact finder, “[w]ithout any clear factual information,”
was left solely to its discretion to determine damages. 36
¶66 	The FAK parties’ final argument is similarly flawed.
They claim that because the trial court determined the
reasonableness of Encon’s overhead and profit, the claim was not
subject to mathematical calculation. 	Recently, the court of
appeals has addressed the issue of a trial court’s reduction in
damages and held that “[a]lthough the trial court determined
which costs to include and which to exclude, this determination
did not render the resulting damage award less measurable by
facts and figures.” 37 	Similarly, the trial court’s single

37 (...continued)
most of the repair costs to damage caused by Defendant. 	The
court did, however, reduce the damages sought by designating
certain repairs as either normal wear and tear or as repairs
resulting from Plaintiff’s own failure to maintain the property.”
Id. ¶ 8.)
38 Carlson Distrib. Co. v. Salt Lake Brewing Co., 2004 UT
App 227, ¶ 32, 95 P.3d 1171 (citation omitted).
19 	No. 20070557
reduction in the amount of damages it awarded Encon did not
render those damages less measurable by facts and figures.
¶67 	Additionally, we note that the purpose of awarding
prejudgment interest is “to compensate a party for the
depreciating value of the amount owed over time and, as a
corollary, to deter parties from intentionally withholding an
amount that is liquidated and owing.” 38 	A party can only be
properly compensated for the “value of the amount owed over time”
if the amount owed is subject to mathematical calculation. 	This
does not require, however, that a party must demonstrate that its
damage figures are known and static from the date the claim is
filed through the final judgment.
¶68 	Were we to hold that the damage figures could never
change, we would foreclose the possibility of awarding
prejudgment interest in nearly every case. 	As Encon points out,
a prevailing party could only recover under the FAK parties’
standard if a prevailing party never changed its claimed damages,
no aspect of the damages calculation was disputed at trial, and
the court awarded the entire claim without reduction or
adjustment. 	This result does not serve the policy underlying the
availability of prejudgment interest nor is it consistent with
our standard that damages be measurable by facts and figures.
¶69 	Because Encon demonstrated that its damages were
measurable by facts and figures, and the FAK parties’ arguments
do not convince us otherwise, the trial court correctly awarded
prejudgment interest to Encon.
IV. 	THE TRIAL COURT DID NOT ERR IN DEEMING ENCON’S BOND CLAIM
TIMELY AND THEREFORE DID NOT ERR IN AWARDING ATTORNEY FEES
¶70 	The FAK parties’ final argument is that the trial court
erred in interpreting Utah Code section 63G-6-505(5) (2008), the

39 Section 63G-6-505(5) was previously numbered 63-56-38(4).
Because there are no substantive changes we refer to the current
statute.
40 In 1987, the payment bond statute provided that “[n]o
suit may be commenced after the expiration of one year after the
day on which the last of the labor was performed or material was
supplied by the person bringing the suit.” 	Utah Code Ann. § 63-
56-38(4) (1987). 	The 1989 amendment changed the wording slightly
and added the phrase, “on which the claim is based.” 	Id. (1989).
No. 20070557 	20
payment bond statute. 39 	The court concluded that Encon’s bond
was timely under the statute because “subsection [5] . . .
require[s] only that an action upon a payment bond be brought
within one year after the last work performed by the claimant
regardless of whether the claimant was paid in full for that last
work prior to the commencement of the action.” 	The FAK parties
claim that, under the correct interpretation, “Encon’s payment
bond claim was filed after the expiration of the applicable
statute of limitations, [and] the trial court erred in awarding
judgment under the payment bond claim.” 	Because the trial court
awarded attorney fees based on the bond, the FAK parties seek a
reversal of that award as well.
¶71 	Section 63G-6-505(5) provides, in pertinent part, that
“[a]n action upon a payment bond . . . is barred if not commenced
within one year after the last day on which the claimant
performed the labor or service or supplied the equipment or
material on which the claim is based.” 	(Emphasis added.) 	The
FAK parties cite the emphasized language and argue that it refers
not only to the last work performed, but to the “last work for
which the claimant seeks to recover payment.” 	(Emphasis added.)
¶72 	The FAK parties’ argument rests on the 1989 amendment
to the statute, which added the phrase, “on which the claim is
based.” 40 	They argue that this addition “made a significant
change to the limitations analysis under the . . . payment bond
statute,” namely that the one-year period begins “the day the
claimant performs the last work for which the claimant seeks to
recover payment.” 	That is, the statute of limitations begins
running on the day of the last unpaid work for which the
contractor seeks recovery. 	Encon performed its last work on the
project in March 2004. 	It was paid in full for that work on May
7, 2004. 	Encon filed its bond claim in September 2004, six
months after its last completed work on the project. 	Because
Encon was paid for its March 2004 work, the FAK parties claim
that it cannot use that date as the beginning of the limitations
period. 	Rather, they claim that the limitations period began

41 State ex rel. Z.C., 2007 UT 54, ¶ 15 n.5, 165 P.3d 1206.
42 The FAK parties cite only one Fourth Circuit case from
1970 as support for their interpretation of Utah’s payment bond
(continued...)
21 	No. 20070557
running in July 2003, the date of Encon’s last unpaid work.
Using that date, the limitations period ended in July 2004,
making Encon’s claim, filed in September 2004, untimely. 	The FAK
parties’ interpretation fails.
¶73 	When “statutory language plausibly presents the court
with two alternative readings, we prefer the reading that avoids
absurd results.” 41 	The FAK parties’ interpretation not only
creates an absurd result, it invites confusion, piecemeal
litigation, a waste of judicial resources, and gamesmanship in
the payment of claims.
¶74 	In the common scenario where a contractor pays multiple
invoices to a subcontractor on a single project, that
subcontractor would be subject to multiple statute of limitation
periods for unpaid work. 	If the subcontractor performed work in
each of the twelve months of the year and was paid for that work
monthly, a different statute of limitations would attach to each
month’s work. 	This is not only an absurd result, it would create
confusion among the parties as to when the statute of limitations
began and ended for each claim, and it would mandate piecemeal
litigation to resolve each of those claims. 	Additionally, given
that money is fungible, this result would create an unworkable
standard and waste judicial resources by forcing courts to
determine which monies applied to which invoices for the purpose
of determining when the statute of limitations began.
¶75 	Finally, this result invites gamesmanship. 	Using the
same example, if the contractor failed to pay the subcontractor
multiple invoices for several different months of work, the
contractor could avoid a claim on the bond by strategically
paying the latest invoice rather than the earliest. 	It is highly
unlikely that this is the result the legislature intended by
adding the phrase, “on which the claim is based.”
¶76 	The FAK parties have provided no legislative history to
support their interpretation, nor have they cited any case in
which a court has applied the statute according to their
interpretation. 	To the contrary, a search of Utah case law
reveals that not a single court has applied the statute, since
the 1989 amendment, according to the FAK parties’
interpretation. 42

42 (...continued)
statute. 	The case cited, however, is inapposite: 	it interprets
the 90-day notice provision of the federal Miller Act, the law
requiring contract surety bonds on federal construction projects.
No. 20070557 	22
¶77 	There is nothing in the language of the statute,
legislative history, or the nearly twenty years of case law
following the revision to suggest that the FAK parties’
interpretation is correct. 	Construing the statute according to
the FAK parties’ interpretation would create an absurd result,
invite confusion, piecemeal litigation, a waste of judicial
resources, and gamesmanship. 	Therefore, the trial court did not
err in concluding that Encon’s bond was timely. 	Accordingly, the
trial court did not err in awarding attorney fees to Encon based
on the payment bond.
CONCLUSION
¶78 	The FAK parties argue that the trial court erred in
(1) applying the termination provision of the subcontract rather
than the prime contract and interpreting the pro rata cap as
applying only to overhead and profit; (2) awarding Encon $50,000
in claim preparation costs; (3) awarding Encon prejudgment
interest; and (4) interpreting the statute of limitations in the
payment bond statute.
¶79 	We affirm each of the trial court’s decisions and hold
that (1) the termination provision of the subcontract governs
Encon’s termination compensation and the pro rata cap applies
only to overhead and profit; (2) Encon’s award of $50,000 in
claim preparation costs was not clearly erroneous given that the
FAK parties failed their burden of marshaling the evidence; (3)
Encon was entitled to prejudgment interest because its claim was
measurable by facts and figures; and (4) the statute of
limitations in Utah’s payment bond statute is not dependent on
the date of the claimant’s last unpaid work.
---
¶80 	Chief Justice Durham, Justice Wilkins, Justice Parrish,
and Justice Nehring concur in Associate Chief Justice Durrant’s
opinion.