Daines v. Vincent

2008 UT 51
This opinion is subject to revision before final
publication in the Pacific Reporter.
IN THE SUPREME COURT OF THE STATE OF UTAH
----oo0oo----
Welden L. Daines, No. 20060838
Plaintiff and Appellant,
v.
Richard B. Vincent and ASC
Group, L.C., a Utah limited F I L E D
liability company,
Defendants and Appellees. July 29, 2008
---
Third District, Salt Lake
The Honorable Leslie A. Lewis
No. 030910378
Attorneys: Nick J. Colessides, John Martinez, Salt Lake City,
for plaintiff
Francis M. Wikstrom, Michael P. Petrogeorge,
Salt Lake City, for defendants
---
DURHAM, Chief Justice:
INTRODUCTION
¶1 This case comes to us on appeal from directed verdicts
granted by the trial court. Welden Daines sued the Ambulatory
Surgical Centers Group, L.C. (ASC) and Richard Vincent seeking to
enforce an alleged oral agreement. After Daines presented his
case-in-chief, the trial court granted directed verdicts against
him effectively dismissing all of his claims. Central to the
appeal before us is an agreement (Release) signed by Daines
releasing West Valley Surgical Center (WVSC) or “any of its
members,” of which ASC is one, from “any and all claims in
connection with services provided . . . for the organization,
development, and operation of an ambulatory surgical center.” We
are asked to determine whether this language is facially
ambiguous and can reasonably support contrary interpretations.
We conclude that it is not and affirm the trial court’s holding
that the language of the Release is not ambiguous as a matter of
law.

1 The Lipscomb order was entered in a different case in
which Vincent was a defendant.
No. 20060838 2
¶2 Daines also challenges the trial court’s directed
verdict on his claim of fraud and his claim against Mr. Vincent
personally. We affirm each of these directed verdicts. Daines
also appeals the trial court’s denial of his motion to admit a
trial order from the case of Lipscomb v. Vincent (Lipscomb order)
as part of his case-in-chief and to challenge Vincent’s veracity
as a witness. Findings of Fact, Conclusions of Law and Order,
Lipscomb v. Vincent, No. 970600134-CV (Utah 3d Dist. Feb. 2,
2001).1 We affirm the trial court’s decision to exclude the
Lipscomb order as impermissible character evidence.
¶3 Finally, Daines argues that the trial court’s directed
verdicts denied him his day in court. We disagree. We also find
that the trial court’s award of costs to ASC and Vincent was
appropriate and consistent with rule 54 of the Utah Rules of
Civil Procedure.
BACKGROUND
¶4 Welden Daines is a retired CPA. During his career and
into his retirement, he worked for several physicians as an
accountant and medical center manager. In early 2000, one of his
clients, Dr. Burrows, indicated that he and several other
surgeons were interested in starting a surgical center. A
surgical center is generally an outpatient surgical group co-
owned by the surgeons involved. Surgical centers provide
surgeons with greater control over their working environment and
an opportunity to enjoy higher profits from their work than
typically experienced in a traditional relationship with a
hospital.
¶5 ASC, now known as Nueterra Healthcare, is in the
business of organizing, developing, and managing surgical
centers. Vincent is the co-founder of ASC and was either a
member or chairman of the board of ASC during the relevant
period.
I. THE MEMORANDUM OF UNDERSTANDING
¶6 On September 22, 2000, Daines met with Vincent to
discuss the possibility of organizing a new surgical center in
West Valley City. Daines met Vincent through Bob Smith, a health
care consultant who had worked with ASC. Daines prepared a
Memorandum of Understanding (MOU) which he presented to Smith and
Vincent. The MOU prepared by Daines indicated that Daines would
give ASC a list of physicians from West Valley City in exchange

2 A term sheet is “[a] document setting forth all
information that is material to investors about the offering but
is not disclosed in the accompanying prospectus or confirmation.”
Black’s Law Dictionary, 1512 (8th ed. 2004). A term sheet is
also referred to as a “letter of intent.” Id. In this case, the
term sheets, which went through several revisions before being
agreed to, represent the “items discussed between the
participants” engaged in the establishment of WVSC. The term
sheets in the present case include, inter alia, a “feasibility
study for the creation of the surgical center,” “ownership rights
and privileges,” and “the persons and entities who would be able
to participate in the venture.”
3 No. 20060838
for $150,000 plus expenses. Vincent and Smith signed the MOU on
signature lines provided for them by Daines under the heading
“ASC.”
¶7 On September 27, 2000, Daines faxed a list of
physicians to Vincent and Smith. That night, Daines arranged a
meeting with Vincent, Smith, and several of the physicians on the
list, including Dr. McCray and Dr. Burrows, whom Daines referred
to as “the leaders.” During the meeting, Vincent presented the
physicians with an informational brochure detailing ASC’s process
of organizing, developing, and managing surgical centers. Based
on the success of this first meeting, ASC began preparing
feasibility studies and term sheets.2 ASC presented the first
set of term sheets to the doctors on November 21, 2000, proposing
the formation of WVSC. Section 13 of the first set of term
sheets, titled “Development Fees,” included a provision for WVSC
to pay Daines $150,000 “for the introduction of ASC to this
project.” Section 13 indicated that the fee would be paid for by
WVSC.
¶8 On November 22, 2000, a second set of term sheets was
prepared with a change in the Development Fees provision for
Daines. According to the November 22 term sheets, “Quantum
Ventures, L.L.C., of which Mr. Welden Daines is a principal” was
to receive a fee either “in the form of cash or equity in
[WVSC].” No separate fee was provided for Daines individually.
Like the fee provision for Daines in the November 21 term sheets,
WVSC was liable for the “cash or equity” provision for Quantum
Ventures in the November 22 term sheets.
II. THE FIRST ORAL AGREEMENT
¶9 Thereafter, Daines began actively negotiating with ASC
on behalf of the surgeons. At some point after beginning
negotiations with ASC, Daines told Dr. Burrows that he was
“uncomfortable” because he felt that both ASC and the surgeons

3 The term sheets indicate that the initial offering of 100
shares of ownership in WVSC would break down as follows: 20
Class II shares were reserved for ASC only, while 80 Class I
shares would be made available to participating surgeons. Class
II shares were to be sold initially for $8,500. This means that
ASC would have had to pay only $68,000 to compensate Daines under
the oral agreement, provided that such an arrangement were even
possible under the proposed term sheets. Even though the initial
value of the shares referenced in the oral agreement was worth a
little more than a third of the value of the MOU, their current
value is nearly $4 million. The oral agreement would have also
given Daines a larger interest than any of the participating
surgeons individually and would have cut ASC’s ownership interest
from twenty shares down to twelve.
No. 20060838 4
expected him to negotiate on their behalf. On December 13, 2000,
while still negotiating with ASC on behalf of the surgeons,
Daines met with Vincent. During this meeting, Daines claims that
he entered into an oral agreement with Vincent to forego his
$150,000 compensation under the MOU in exchange for 8 Class II
shares of ownership in WVSC.3
¶10 The term sheets following the December 13 meeting and
oral agreement between Daines and Vincent did not include a
provision for payment to Daines or Quantum Ventures. On January
4, 2001, Vincent made a note during a phone call with Daines that
“Welden has torn up his prior agreement and is only working for
them.” During subsequent negotiations of the term sheets, Daines
sent an email to Vincent stating “nothing for me.”
III. REAL ESTATE DEVELOPMENT AND A SECOND ORAL AGREEMENT
¶11 In February 2001, the surgeons and ASC reached an
agreement and formed WVSC. After the formation of WVSC, Daines
and Smith began working together to develop several real estate
properties for the new center. Daines testified that the
surgeons asked him to be involved in the real estate development
process. However, there is no indication that the surgeons,
WVSC, or ASC made any contractual agreements with Daines for his
services as a real estate developer. One of the sites Daines and
Smith worked on was a site located in West Valley, and controlled
by The Boyer Company (Boyer). Boyer had exclusive rights to
develop that site (Boyer site). At some point during the
development process, and at the request of Dr. Burrows, Boyer
entered into an oral agreement with Daines promising him payment
in connection with his work on the Boyer site if the site was
selected. In September, 2001, the WVSC board selected the Boyer
site as the location of the new surgical center. Following the
site selection, Daines phoned Vincent on September 25, 2001 to

5 No. 20060838
inquire about the eight shares promised in the first oral
agreement. Daines testified that Vincent responded by asking,
“What eight shares?”
IV. THE RELEASE
¶12 On October 8, 2001, Daines sent a letter to Lynn
Summerhays of Boyer requesting payment of $50,000, based on their
oral agreement, for work done in connection with the development
of the Boyer site. Summerhays responded with a letter
substantiating the oral agreement, but indicated that the offer
“came as a result of a request from Dr. Burrows” and that payment
would follow the “rental commencement of the center.” Daines
responded by sending a fax to Dr. Burrows on October 29, asking
for help in obtaining payment from Boyer. On October 30, 2001,
Dr. Burrows proposed to the WVSC board that Daines be paid
immediately since his work was “pretty well complete.” The board
determined that ASC would pay Daines $6,000 for his out-of-pocket
expenses. Boyer would subsequently reimburse ASC for the $6,000
and pay the balance of the $50,000 to Daines when the lease was
executed.
¶13 Two days after the board meeting, Daines faxed an
invoice to “ASC West Valley Surgical Center” for $6,000,
indicating that the balance of his fee for work performed for
WVSC would be paid by Boyer once the surgical center was open.
On December 10, Dr. McCray sent a letter to Daines with the
Release, stating that a check had been made out to Daines for
$6,000 and would be released when Daines signed and returned the
Release.
¶14 The Release states:
We, Welden L. Daines and Robert Smith, do
hereby conditionally release West Valley
Surgical Center, LLC or any of its members
from any and all liabilities and or claims in
connection with services provided by us for
the due diligence, acquisition of real
estate, or any other services rendered to
date for West Valley Surgical Center, or on
behalf of its members, for the organization,
development and operation of an ambulatory
surgical center in the West Valley and any
services connected with the same. This
release encompasses and satisfies any prior
agreements and discussions whether written or
verbal by the West Valley Surgical Center,
LLC or any of its members.

No. 20060838 6
This release shall be conditioned upon
the receipt of $50,000 due and payable from
the real estate developer of the West Valley
City Surgical Center. In addition, by
signing below, we agree that any partial
amounts paid against the $50,000 liability
either by West Valley Surgical Center, LLC or
by The Boyer Company, Developer of the Real
Estate for the project for amounts owed us
shall become unconditionally released by us
upon confirmed receipt of said partial
payments.
Daines and Smith signed and returned the Release on December 11,
2001. After receiving the Release, WVSC forwarded a $6,000 check
to Daines.
¶15 On March 20, 2003, Boyer made out a check to “Daines
Associates” for $50,000. Daines accepted the check and used a
portion of it to pay Smith for his efforts. On April 23, 2003,
Daines faxed Vincent another request for the eight shares
discussed in the first oral agreement. Vincent denied Daines’
request.
PROCEDURAL HISTORY
¶16 On May 8, 2003, Daines filed claims against ASC and
Vincent for breach of contract, promissory estoppel, fraudulent
inducement to contract, breach of implied covenant of good faith
and fair dealing, negligent misrepresentation, unjust
enrichment-quantum meruit, and specific performance.
¶17 Before trial, Daines made a motion to admit the
Lipscomb order as part of his case-in-chief and to challenge
Vincent’s veracity. The Lipscomb order included comments on
Vincent’s character, including a reference to Vincent’s
“convenient lapses of memory” and his lack of reliability as a
witness. The trial court rejected Daines’ motion.
¶18 Following the presentation of Daines’ case-in-chief,
the trial court granted motions by ASC and Vincent for directed
verdicts and dismissed all claims with prejudice. The first
directed verdict dismissed all of Daines’ fraud claims. The
trial court found that Daines failed to satisfy most of the
required elements to sustain a fraud claim. The second directed
verdict dismissed Daines’ claims against Vincent individually.
The court held, based on the evidence presented, that “no
reasonable jury could conclude that Vincent acted in any other
way than as a representative of ASC.” In the third directed

4 Although assuming the existence of an oral agreement, the
trial court noted that it had “serious doubts” that a jury would
in fact conclude that an oral contract had been formed and would
be able to do so only by ignoring several pieces of evidence
presented at trial.
7 No. 20060838
verdict, the court held that the Release signed by Daines was
“clear and unambiguous as a matter of law.” As part of its
analysis, the trial court assumed the existence of the alleged
December 13, 2000 oral agreement between Vincent (acting on
behalf of ASC) and Daines for eight shares in WVSC.4 Assuming
the existence of the oral agreement, the court held that by
signing the Release, which “supersede[d] any and all other
contracts, whether written or oral,” Daines “gave up any right he
may have had to pursue the claims asserted against ASC,”
including his right to claim eight shares in WVSC under the
alleged oral agreement. Thus, the court found that it was not
necessary to reach a determination as to the existence of the
oral agreement since it would be covered under the unambiguous
terms of the Release if it did exist, and therefore would not be
binding.
¶19 Daines challenges the directed verdicts and the trial
court’s denial of his motion seeking admittance of the Lipscomb
order. Daines also raises questions regarding an award of costs
and sanctions based on the ripeness of the filing of this appeal.
The trial court granted ASC and Vincent’s directed verdict
motions on August 22, 2006. ASC and Vincent served Daines a copy
of a Memorandum of Costs on September 11, 2006. On October 11,
2006, the trial court entered final judgment and awarded costs in
favor of ASC and Vincent. Before the trial court entered final
judgment and awarded costs to ASC and Vincent, Daines filed this
appeal on September 8th, 2006. After filing the appeal, Daines
filed an objection with this court asserting that the trial court
no longer had jurisdiction to make an award. In response, ASC
and Vincent filed a motion with this court to dismiss for lack of
jurisdiction as the trial court had not yet rendered a final
judgment. Daines replied with a claim that the motion filed by
ASC and Vincent was frivolous and requested sanctions. We
deferred ruling on the motions until after we ruled on the
merits. We have jurisdiction over this case pursuant to Utah
Code Section 78A-3-102(3)(j) (2008).
STANDARD OF REVIEW
¶20 We will sustain a directed verdict if after “examining
all evidence in a light most favorable to the non-moving party,
there is no competent evidence that would support a verdict in

No. 20060838 8
the non-moving party’s favor.” Merino v. Albertsons, Inc., 1999
UT 14, ¶ 3, 975 P.2d 467.
¶21 With regard to our review of the exclusion of evidence,
we grant a trial court broad discretion to admit or exclude
evidence and will disturb its ruling only for abuse of
discretion. State v. Whittle, 1999 UT 96, ¶ 20, 989 P.2d 52.
Thus, we will not reverse a trial court’s ruling on evidence
unless the ruling “was beyond the limits of reasonability.”
Jensen v. IHC Hosps., Inc., 2003 UT 51, ¶ 57, 82 P.3d 1076
(quoting State v. Hamilton, 827 P.2d 232, 239-40 (Utah 1992)).
ANALYSIS
I. DETERMINATION OF INTEGRATION
¶22 Viewing the evidence in a light most favorable to
Daines, we agree with the trial court’s finding that the Release
is an integrated agreement. Consistent with our line of contract
analysis cases, we first determine whether or not the Release
constitutes an integrated agreement before considering whether
the evidence offered by Daines supports a finding of facial
ambiguity. Hall v. Process Instruments & Control, Inc., 890 P.2d
1024, 1026, 1027 (Utah 1995), overruled on other grounds by
Tangren Family Trust v. Tangren, 2008 UT 20, 182 P.3d 326. We
have held that an integrated agreement is “a writing or writings
constituting a final expression of one or more terms of an
agreement.” Tangren Family Trust v. Tangren, 2008 UT 20, ¶ 12,
182 P.3d 326 (quoting Hall, 890 P.2d at 1027). Additionally, we
recently held in Tangren that “[e]xtrinsic evidence . . . is not
admissible on the question of integration where the contract at
issue contains a clear integration clause.” 2008 UT 20, ¶ 19.
Thus, a contract is integrated if it contains a “clear
integration clause.” Id.
¶23 Daines argues that the Release is not integrated
because it does not contain a “real integration clause” stating
that the document covers the entire agreement between the
parties. We disagree. The Release states: “This release
encompasses and satisfies any prior agreements and discussions
whether written or verbal by West Valley Surgical Center, LLC or
any of its members.” The language indicating that the Release
“satisfies any prior agreements and discussions whether written
or oral” satisfies the “clear integration clause” standard
articulated in Tangren. Therefore, we affirm the trial court’s
conclusion that the Release constitutes an integrated agreement.

9 No. 20060838
II. DETERMINATION OF AMBIGUITY
¶24 Having found that the Release is integrated, we now
turn to an analysis of ambiguity. This case gives us the
opportunity to discuss the standard for determining contractual
ambiguity. In Ward v. Intermountain Farmers Ass’n, 907 P.2d 264
(Utah 1995), we established a standard for determining ambiguity
in two separate contexts: facial ambiguity and ambiguity with
regard to intent. To the extent that our ruling in Ward has
created confusion as to the proper relationship between relevant,
extrinsic evidence reviewed by the judge in making a
determination of facial ambiguity and the plain language within
the “four corners” of the contract, we take this opportunity to
clarify. After clarifying the Ward rule, we will apply the rule
to the facts in the present case.
A. The Ward Rule
¶25 A contractual term or provision is ambiguous “if it is
capable of more than one reasonable interpretation because of
‘uncertain meanings of terms, missing terms, or other facial
deficiencies.’” WebBank v. Am. Gen. Annuity Serv. Corp., 2002 UT
88, ¶ 20, 54 P.3d 1139 (quoting SME Indus., Inc. v. Thompson,
Ventulett, Stainback & Assocs., Inc., 2001 UT 54, ¶ 14, 28 P.3d
669). In Ward, we indicated that contractual ambiguity can occur
in two different contexts: (1) facial ambiguity with regard to
the language of the contract and (2) ambiguity with regard to the
intent of the contracting parties. 907 P.2d at 268. The first
context presents a question of law to be determined by the judge.
WebBank, 2002 UT 88, ¶ 22. The second context presents a
question of fact where, if the judge determines that the contract
is facially ambiguous, “parol evidence of the parties’ intentions
should be admitted.” Winegar v. Froerer, 813 P.2d 104, 108 (Utah
1991); see also SME Indus., Inc., 2001 UT 54, ¶ 14. Thus, before
permitting recourse to parol evidence, a court must make a
determination of facial ambiguity. Ward, 907 P.2d at 268;
Winegar, 813 P.2d at 108. Because the question of ambiguity
begins with an analysis of facial ambiguity, we address Ward’s
articulation of the test for determining facial ambiguity.
¶26 In Ward we set forth a two-part standard for
determining facial ambiguity. First, we indicated that “[w]hen
determining whether a contract is ambiguous, any relevant
evidence must be considered. Otherwise, the determination of
ambiguity is inherently one-sided, namely, it is based solely on
the ‘extrinsic evidence of the judge’s own linguistic education
and experience.’” Ward, 907 P.2d at 268 (internal quotation
marks omitted) (quoting Pac. Gas & Elec. Co. v. G.W. Thomas
Drayage & Rigging Co., 442 P.2d 641, 643 (Cal. 1968)). Second,

No. 20060838 10
after a judge considers relevant and credible evidence of
contrary interpretations, the judge must ensure that “the
interpretations contended for are reasonably supported by the
language of the contract.” Ward, 907 P.2d at 268.
¶27 In articulating the Ward rule, we sought to establish a
balanced, “better-reasoned” approach to an analysis of facial
ambiguity that would allow judges to “consider the writing in the
light of the surrounding circumstances.” Id. However, we did
not intend that a judge allow surrounding circumstances to create
ambiguity where the language of a contract would not otherwise
permit. In other words, our statement that “[r]ational
interpretation requires at least a preliminary consideration of
all credible evidence,” id. (internal quotation marks omitted),
does not create a preference for that evidence over the language
of the contract. See Saleh v. Farmers Ins. Exch., 2006 UT 20,
¶ 17, 133 P.3d 428 (stating that alternative interpretations of
contractual language must be supported by the usual and natural
meaning of the language used). Thus, under Ward, a finding of
ambiguity after a review of relevant, extrinsic evidence is
appropriate only when “reasonably supported by the language of
the contract.” Ward, 907 P.2d at 268.
¶28 Our holding in Ward demonstrates the proper application
of the rule. In that case, we found ambiguity in the phrase “of
safflower.” Id. at 269. Ward contracted with Intermountain
Farmers Association (IFA) to spray his safflower field with
fertilizer and herbicide. Id. at 265. The sprayer used on
Ward’s field had previously been used to spray Velpar L, an
herbicide strong enough to kill safflower. Id. The sprayer was
not properly cleaned before it was used to spray Ward’s field.
Id. After his field was sprayed, a significant amount of Ward’s
safflower crop died. Id. In negotiating a settlement, IFA
presented Ward with a release stating that upon receipt of
payment for damages, Ward would “release and hold harmless
Intermountain Farmers Association for any and all damages caused
by the spraying of [Ward’s] nineteen acres of safflower.” Id. at
265-66. In his affidavit, Ward testified that he initially
refused to sign the release because he was concerned about the
lingering effects of the Velpar L on the field in which the
safflower was planted and not just for the damage done to his
safflower crop. Id. at 266. In his affidavit, Ward indicated
that IFA told him “not to worry” and that he should “go ahead and
plant beans in the field.” Id. The next year, Ward’s bean crop,
planted in the same field, began to die. Id. IFA did not
compensate Ward for the damages to his bean crop and Ward filed
suit for breach of contract. Id. We concluded that the language
of the agreement, specifically the phrase “of safflower,” was
susceptible to two interpretations: “Although the phrase ‘of

11 No. 20060838
safflower’ could be read to simply define the field, it could
also be construed to specify the damage subject to release.” Id.
at 269. In finding ambiguity in Ward, we considered the
extrinsic evidence offered by Ward in order to view the “writing
in light of the surrounding circumstances.” Id. at 268.
However, our analysis of the evidence offered by Ward was
ultimately circumscribed by the language of the agreement –-
specifically by the phrase “of safflower.” Id. at 269.
¶29 In addition to finding ambiguity in the express terms
of a release, we have also found ambiguity in a contract taken as
a whole, WebBank, 2002 UT 88, ¶¶ 27-29 (remanding for the
admission of parol evidence because we found “it [was] unclear
from the language and provisions contained in the security
agreement and promissory note whether [the parties] intended to
effectuate a genuine secured transaction or whether they intended
to create a sale or an assignment”); where there are missing
terms in a contract, Nielson v. Gold’s Gym, 2003 UT 37, ¶ 14, 78
P.3d 600 (finding ambiguity because a contract was silent as to
responsibility for key improvements significant to the
agreement); and in the parties’ course of conduct, Peterson v.
Sunrider Corp., 2002 UT 43, ¶¶ 22-23, 48 P.3d 918 (finding
ambiguity in contractual terms because of a history of bonus
payments even when express obligations articulated in the
agreement had not been met). In WebBank, Nielson, and Sunrider
Corp., contrary interpretations of the agreement were checked
against the plain language of the contract. Thus, each time we
found ambiguity, we found that the contrary interpretations were
“reasonably supported by the language of the contract.” Ward,
907 P.2d at 268.
¶30 Likewise, in cases where we have not found ambiguity,
the language of the contract or release was not susceptible to
“contrary, tenable interpretations.” WebBank, 2002 UT 88, ¶ 27
(quoting SME Indus., Inc., 2001 UT 54, ¶ 15); see also Saleh,
2006 UT 20, ¶ 18 (finding no ambiguity because plaintiff’s
interpretation would effectively change a key term of the
release); Peterson v. Coca-Cola USA, 2002 UT 42, ¶ 12, 48 P.3d
941 (finding “that the release [was] unambiguous because it [was]
not ‘capable of more than one reasonable interpretation’”
(quoting Winegar,813 P.2d at 108)). Since our articulation of
the Ward rule, our consideration of extrinsic evidence offered to
demonstrate ambiguity has been circumscribed by the requirement
that the interpretations argued for must be “reasonably supported
by the language of the contract.” Ward, 907 P.2d at 268. Thus,

5 While the Ward rule allows for the admission of extrinsic
evidence to uncover ambiguity, a finding of ambiguity will prove
to be the exception and not the rule. Our holding in Ward
provides for instances, though rare, where contractual terms are
subject to alternative interpretations based on usage. For
instance, to an American, the term “boot” refers to something you
wear on your foot, but a person from Britain or New Zealand might
refer to a “boot” as the storage area in the back of a car -–
what Americans would refer to as a “trunk.” Likewise, in
America, we get “braces” to straighten our teeth, whereas the
British use them to hold up their pants. When contracting
parties have a contrasting understanding of express terms due to
usage, the Ward rule provides the court with the ability to
“place itself in the same situation in which the parties found
themselves at the time of contracting.” Ward, 907 P.2d at 268
(internal quotation marks omitted). However, as stated above,
any contended for interpretation must be “reasonably supported by
the language of the contract.” Id. More simply put, a party
cannot make a successful claim of ambiguity based on usage of a
term that is not reasonable or is the product of “forced or
strained construction.” Saleh, 2006 UT 20, ¶ 17 (internal
quotation marks omitted).
No. 20060838 12
a correct application of the Ward rule to determine what the
writing means begins and ends with the language of the contract.5
¶31 As illustrated by our line of facial ambiguity cases,
the two-part Ward rule requires that a judge first review
relevant and credible extrinsic evidence offered to demonstrate
that there is in fact an ambiguity. After reviewing the evidence
offered, the Ward rule justifies a finding of ambiguity only if
the competing interpretations are “reasonably supported by the
language of the contract.” Ward, 907 P.2d at 268. Conversely,
there can be no ambiguity where evidence is offered in an attempt
to obscure otherwise plain contractual terms. See Saleh, 2006 UT
20, ¶ 17 (stating that contractual language cannot be ambiguous
because parties seek to “endow [it] with a different
interpretation according to [their] own interests” (citing Alf v.
State Farm Fire & Cas. Co., 850 P.2d 1272, 1274-75 (Utah 1993))).
Thus, even though we permit admission of extrinsic evidence to
support a claim of ambiguity in contractual language, the claim
“must be plausible and reasonable in light of the language used.”
First Am. Title Ins. Co. v. J.B. Ranch, Inc., 966 P.2d 834, 837
(Utah 1998).
¶32 We now apply the two parts of the Ward rule to the
Release in the present case.

13 No. 20060838
B. The Release Signed by Daines is Not
Ambiguous as a Matter of Law
¶33 Applying the Ward rule and examining the evidence in a
light most favorable to Daines, we affirm the trial court’s
directed verdict and find that the Release is unambiguous as a
matter of law.
¶34 The plain language of the Release states that Daines
will release “West Valley Surgical Center, LLC or any of its
members from any and all liabilities and or claims in connection
with services provided . . . for the organization, development
and operation of an ambulatory surgical center in the West Valley
and any services connected with the same” in exchange for $50,000
to be paid by the real estate developer. Consistent with the
first part of the Ward rule, we review extrinsic evidence offered
by Daines in support of his claim of ambiguity. Daines offers
evidence in the form of a series of documents and instruments
written or executed in the days before he signed the Release.
These include an invoice for $6,000 with a balance of $44,000 to
be paid by Boyer, e-mails and letters regarding the second oral
agreement, and the check for $6,000. Daines argues that this
evidence indicates that when he signed the Release, he was
considering only the amount due under the oral agreement with
Boyer. Daines argues that the Release therefore did not cover
any other obligations owed to him by WVSC or its members.
Specifically, Daines argues that the Release does not cover the
oral agreement for eight shares in WVSC. Applying the second
part of the Ward rule, we find that the language of the Release
is not reasonably susceptible to Daines’ interpretation. Under
the terms of the Release, Daines agreed to release WVSC and “any
of its members” from “any and all liabilities or claims in
connection with services provided . . . for the organization,
development and operation of an ambulatory surgical center in the
West Valley.” The language of the Release establishes two
hurdles which the evidence offered by Daines fails to clear.
¶35 First, the evidence offered by Daines fails to indicate
how ASC is not a “member” of WVSC. Conversely, Daines stipulated
that at the time he signed the Release, he knew that ASC was a
member of WVSC. Additionally, the term sheets, with which Daines
admits he was very familiar from the beginning of the process,
make it clear that ASC operated from the understanding that it
would be a member of WVSC as soon as it was formed. ASC’s
membership in WVSC was, at all times during the negotiations, a
foregone conclusion. In other words, there was never a time in
the entire process where ASC either was not a member of WVSC or
was not operating under the assumption that it would become a

6 To the contrary, the evidence submitted by Daines supports
the conclusion that the purpose of ASC’s involvement in the
transaction was to become a member of an LLC that would open a
surgical center in West Valley. Once the surgical center was
open, it is also clear that ASC would become the managing entity
of the center. ASC’s level of involvement was always a key part
of the negotiation. It is also clear from the evidence that any
“services rendered” by Daines to ASC, either before or after the
formation of the board was connected to the “organization,
development, and operation of [the] ambulatory surgical center.”
7 Daines also argues that the Release is ambiguous because
the term “members” is susceptible to “more than one reasonable
interpretation.” This argument turns on a theory offered by
Daines that there is a distinction between the legal capacity of
ASC operating in its pre-board member status and the legal
capacity of ASC as a member of the WVSC Board. However, we
cannot find in our case law any justification for recognizing a
different legal capacity where, as in this case, the legal
capacity of ASC as a member of the board was clearly a
foundational element for all agreements between ASC and Daines.
Moreover, the obligations of ASC to Daines before and after ASC
became a member of WVSC arise from the same nexus: the
organization and development of the surgical center. Therefore,
the obligations are covered under the Release.
No. 20060838 14
member of WVSC as soon as it was formed.6 To hold that ASC was
not a member for the purposes of the Release would be to impose a
meaning “not reasonably supported by the language” of the
Release.7 Ward, 907 P.2d at 268.
¶36 Second, the evidence offered by Daines fails to
demonstrate how the oral agreement for eight shares does not fall
under the clause releasing ASC from “any and all liabilities or
claims in connection with services provided . . . for the
organization, development and operation of an ambulatory surgical
center in the West Valley.” Daines admits that the oral
agreement was made in substitution for the agreement covered by
the MOU. The MOU states that Daines will provide ASC with a list
of surgeons for the purpose of “building and operating a surgical
center.” The MOU and the subsequent oral agreement both fall
under the plain language of the Release covering “any and all”
claims in connection with the “organization, development and
operation” of the surgical center. Daines’ argument for
ambiguity asks us to find that the phrase “any and all” somehow
does not encompass his claim under the MOU or the oral agreement
for the eight shares or that, conversely, his agreement to
provide a list of surgeons for the purpose of “building and
operating” a surgical center somehow does not fall under the

15 No. 20060838
phrase “organization, development and operation of an ambulatory
surgical center.” Applying the Ward rule and comparing Daines’
proposed interpretation with the contractual terms, we find that
Daines’ argument is not reasonably supported by the language of
the Release.
¶37 In accordance with the Ward rule, we affirm the trial
court’s directed verdict and find that the Release is unambiguous
as a matter of law. As a result, we do not need to resort to the
admission of parol evidence on the question of intent, because
absent a finding of facial ambiguity, “the parties’ intentions
must be determined solely from the language of the contract.”
Ward, 907 P.2d at 268. Looking at the language of the contract
releasing WVSC “or any of its members” from “any and all
liabilities and or claims in connection with services provided”
by Daines for the “organization, development, and operation” of
the surgical center, we hold that Daines unambiguously released
ASC from any claims he had against it, including his claim for
the eight shares under the first oral agreement.
III. FRAUD
¶38 Daines also appeals the trial court’s directed verdict
on his fraud claim. To prevail on a claim of fraudulent
inducement, Daines must present clear and convincing evidence
sufficient to establish as follows:
(1) that a representation was made
(2) concerning a presently existing material
fact (3) which was false and (4) which the
representor either (a) knew to be false or
(b) made recklessly, knowing that there was
insufficient knowledge upon which to base
such a representation, (5) for the purpose of
inducing the other party to act upon it and
(6) that the other party, acting reasonably
and in ignorance of its falsity, (7) did in
fact rely upon it (8) and was thereby induced
to act (9) to that party’s injury and damage.
Armed Forces Ins. Exch. v. Harrison, 2003 UT 14, ¶ 16, 70 P.3d 35
(quoting Gold Standard Inc. v. Getty Oil Co., 915 P.2d 1060,
1066-67 (Utah 1996)). Further, a party alleging fraud is
required by rule 9(b) of the Utah Rules of Civil Procedure to
state the circumstances constituting fraud “with particularity.”
Utah R. Civ. P. 9(b). Thus, “the mere recitation by a plaintiff
of the elements of fraud in a complaint does not satisfy the
particularity requirement.” Armed Forces, 2003 UT 14, ¶ 16.

No. 20060838 16
¶39 Considering the evidence in a light most favorable to
Daines, we affirm the trial court’s directed verdict on the fraud
claim. The trial court held that there was “extremely thin”
evidence of a representation made by Vincent regarding the eight
shares therefore satisfying the first element of the fraud test.
However, the court further found that Daines “has offered no
evidence that ASC group had no present intent to transfer the
eight shares to [Daines], or that the statement was knowingly
false or recklessly made.” Rather than offer evidence satisfying
the fraud standard in his appeal, Daines does little more than
color the fraud elements with conjectural allegations based on
his subjective experience of the transaction. We have held that,
“mere conclusory allegations in a pleading, unsupported by a
recitation of relevant surrounding facts, are insufficient.”
Franco v. Church of Jesus Christ of Latter-Day Saints, 2001 UT
25, ¶ 36, 21 P.3d 198. The evidence presented at trial, as noted
by the trial court, failed to meet Daines’ burden with respect to
his fraud claim.
IV. VINCENT’S LIABILITY
¶40 Daines asks us to reverse the trial court’s directed
verdict in favor of Vincent on all claims against Vincent
personally. Reviewing the evidence and testimony presented at
trial in a light most favorable to Daines, we agree with the
trial court’s ruling that Daines failed to present competent
evidence that Vincent was acting in anything other than a
representative capacity for ASC in his dealings with Daines. ASC
was, at all pertinent times for the purposes of this case, a Utah
limited liability company. The Utah Revised Limited Liability
Company Act indicates that “no organizer, member, manager, or
employee of a company is personally liable . . . for a debt,
obligation, or liability of the company.” Utah Code Ann.
§ 48-2c-601 (2007). Additionally, we have held that “where an
agent has signed a contract in a personal capacity, that is,
executed it in a manner clearly indicating that the liability is
his alone . . . he must fulfill.” Starley v. Deseret Foods
Corp., 74 P.2d 1221, 1223 (Utah 1938). It follows then that
Vincent, as the chairman of ASC during negotiations with Daines,
can be held personally liable for a signed contract only if he
executed the contract “in a manner clearly indicating that the
liability was his alone.” Id.
¶41 We begin with an analysis of the MOU, which represents
the starting point of any agreement that Daines had with ASC.
Daines drafted the MOU and included a signature line for Vincent
directly under the heading “ASC.” Because the MOU expressly
states that Vincent would sign on behalf of ASC, it is apparent
that Daines recognized that he would be dealing with ASC through

8 We recognize that Vincent may have been called as a
witness by the defense had ASC and Vincent not prevailed on their
motions for directed verdicts. However, admission of the
Lipscomb order would not have aided Daines in his claim. Daines
asked the court to admit the Lipscomb order as evidence
demonstrating that Vincent has a history of making oral
agreements and then subsequently denying them. As noted earlier,
the trial court assumed the existence of the oral contract of
(continued...)
17 No. 20060838
Vincent and not with Vincent in his individual capacity. The
initial term sheets, which include compensation for Daines in
accordance with the MOU, also indicate that Vincent was acting on
behalf of ASC. The term sheets are also clear on the fact that
any compensation that Daines would receive for his “introduction
of ASC to [the] project” would come from WVSC once formed and not
from Vincent personally. Furthermore, the agreement for eight
shares, according to Daines, came about as a renegotiation of the
terms of compensation originally considered under the MOU.
Daines’ testimony of the events of the renegotiation reflects his
continued understanding that Vincent was acting on behalf of ASC
on December 13, 2000. The pertinent section of Daines’ testimony
on direct examination reads:
Q: So what was Mr. Vincent’s reaction to
your conversation with him, to you telling
him how uncomfortable you felt?
A: His reaction was, “Well, I think we can
take care of this if you come on our side of
the table and you get a share.”
Even if we are to assume, in a light most favorable to Daines,
that Vincent’s first “we” is a reference to Vincent and Daines,
it is apparent that Vincent’s invitation to Daines to “come on
our side of the table” is a reference to ASC’s position in the
negotiations. Daines’ testimony confirms his original
understanding that Vincent was acting on behalf of ASC during
their negotiations. Therefore, we affirm the directed verdict of
the trial court.
V. THE LIPSCOMB ORDER
¶42 Daines asks us to consider the trial court’s denial of
his motion to admit the Lipscomb order. Daines sought to admit
the Lipscomb order for two purposes: (1) to impeach Vincent if
he were to testify and (2) as evidence in Daines’ case-in-chief.
We will not consider the first argument because Vincent was not
called as a witness.8 As to the second argument, Daines concedes

8 (...continued)
December 13, 2000, in spite of the court’s “serious doubts [as
to] whether there is a reasonable basis in the evidence to
support a finding that an enforceable oral contract was formed.”
Assuming the existence of the oral agreement, the trial court
found that it would not be binding due to the all-inclusive
nature of the Release. Consequently, allowing the Lipscomb order
would not have aided Daines since the point he sought, an
affirmation of the existence of the oral agreement, could not
have overcome the unambiguous language of the Release. See
discussion supra ¶¶ 33-37.
9 The order notes that Vincent has “convenient lapses of
memory” and that Vincent was “not a credible witness.”
No. 20060838 18
that the Lipscomb order constitutes character evidence; he sought
its admission under the character evidence rule exception in Utah
Rule of Evidence 404(b).
¶43 Under Utah Rule of Evidence 404(b), evidence of
“crimes, wrongs or acts is not admissible to prove the character
of a person.” Utah R. Evid. 404(b). However, such evidence may
be admissible for some other purpose such as “proof of motive,
opportunity, intent, preparation, plan, knowledge, identity, or
absence of mistake or accident.” Id. We have held that the list
provided in rule 404(b) is not exhaustive and that evidence is
admissible under rule 404(b) “so long as the evidence is offered
for a legitimate purpose other than to show the defendant’s
propensity to commit the crime charged.” State v. Allen, 2005 UT
11, ¶ 17, 108 P.3d 730. However, qualifying under rule 404(b) is
not sufficient as to proffered character evidence. In Allen, we
also held that meeting the rule 404(b) standard is only the first
in a three-part test. Id. ¶ 16. Evidence offered under 404(b)
must also meet the relevancy requirements of rule 402 and pass
the prejudicial balancing test of rule 403. Id. However, we
need not apply the last two steps of the Allen test because
Daines’ argument falters on the first step.
¶44 The Lipscomb order contains several references relevant
to Vincent’s character.9 In his brief, Daines argues that the
Lipscomb order should have been admitted as “evidence in chief of
Vincent’s prior bad acts.” Daines’ argument manifests a
fundamental misunderstanding of rule 404(b). Rule 404(b)
operates to prevent evidence of a defendant’s prior bad acts from
coming before a jury to “show conformity therewith,” which
appears to be the reason Daines wanted the Lipscomb order
admitted. Daines’ argument on this point is sufficient to affirm
the trial court’s denial. Further, Daines invites us to find
“substantive grounds” for a reversal in his memorandum submitted

10 If the trial court had held in a pretrial summary
judgment in accordance with Ward that the Release was unambiguous
as a matter of law, Daines would still have had his day in court.
As we stated previously, the elements of Daines’ claim fail to
meet the ambiguity standard we articulated in Ward. Therefore,
the trial court could have correctly held that the presentation
of extrinsic evidence to a jury on the question of ambiguity with
regard to intent would not be appropriate under Ward.
19 No. 20060838
to the trial court without further elaboration. As we have held
before, an argument merely referencing submissions to the trial
court is “inadequate and does not provide sufficient legal reason
for us to override the discretion of the trial court which had
the ability to . . . review the documentation on this issue.”
Jensen v. Sawyers, 2005 UT 81, ¶ 134, 130 P.3d 325. Finally, we
note that because the trial court assumed for purposes of its
ruling that Vincent had orally agreed to the shares Daines
claimed, Daines lost nothing by reason of the unavailability of
the order.
VI. DAINES’ DAY IN COURT
¶45 Daines claims that he was denied his “day in court” by
the trial court’s directed verdicts. We disagree. In order to
succeed in his claim, Daines must demonstrate that his claims
have not been adjudicated on the merits. See, e.g., Miller v.
USAA Cas. Ins. Co., 2002 UT 6, ¶¶ 65-66, 44 P.3d 663. The record
clearly indicates the opposite.
¶46 We have held that “a day in court means that each party
shall be afforded the opportunity to present claims and defenses,
and have them properly adjudicated on the merits according to the
facts and the law.” Id. ¶ 42 (footnote omitted). “The ‘merits’
of a case are ‘the elements or grounds of a claim or defense.’”
Blue Skies Alliance v. Tex. Comm’n on Envtl. Quality, 265 F.App’x
203, 207 (5th Cir. 2008) (quoting Black’s Law Dictionary 1010
(8th ed. 2004). With regard to a judgment on the merits, we have
clarified our standard by stating that “a judgment on the merits
may be made at any stage of the litigation, so long as the
district court rendered judgment based upon a proper application
of the relevant law to the facts of the case.”10 Miller, 2002 UT
6, ¶ 42 n.6.
¶47 Daines received rulings on the elements and grounds of
his claim based on the trial court’s proper application of the
relevant law to the facts of the case. The directed verdicts
were not rendered until after Daines presented his entire case to
the court. It was not until after Daines indicated that he would
not call any more witnesses that the court heard motions for

No. 20060838 20
directed verdicts by ASC and Vincent. The record indicates that
the court carefully listened to the testimony and evidence during
Daines’ presentation. After Daines’ presentation of evidence the
court noted, “I don’t think you’ve proven any malfeasance or
anything by way of breach of contract on Mr. Vincent.” The trial
court then allowed Daines the opportunity to address the court’s
concerns. While considering directed verdicts, the court
carefully sought through the record to identify even a “scintilla
of evidence that would support [Daines’] claim that could go to
the jury.” It was only after the court’s deliberation on Daines’
presentation and arguments on the merits that it granted the
directed verdicts based on application of the appropriate law to
each of Daines’ claims. The trial court’s directed verdicts did
not deny Daines his day in court. To the contrary, the record
indicates that the trial court was careful to ensure it applied
the appropriate law to the facts presented by Daines before
rendering its judgment.
VII. AWARD OF COSTS
¶48 We conclude that the award of costs to ASC and Vincent
is appropriate pursuant to rule 54 of the Utah Rules of Civil
Procedure. Rule 54(d)(1) indicates that “costs shall be awarded
as a matter of course to the prevailing party unless the court
directs otherwise.” Utah R. Civ. P. 54(d)(1). The trial court’s
orders are clear that ASC and Vincent prevailed on their motions
for directed verdicts.
¶49 We find also that ASC and Vincent timely complied with
rule 54(d)(2)’s requirement in serving a copy of the memorandum
of cost. The final appealable judgment awarding costs was
entered by the trial court on October 11, 2006. ASC and Vincent
had previously served a copy of the memorandum of costs to
Daines, on September 11, 2006, and Daines signed for receipt of
the memorandum on September 12, 2006. Even though it appears
from the record that the trial court failed to sign the final
order fixing the amount of costs, it is clear from the judgment
that the trial court awarded costs to ASC and Vincent. Therefore
we find that the award of costs in the amount of $3,842.11 to ASC
and Vincent is appropriate as required by rule 54 of the Utah
Rules of Civil Procedure.
CONCLUSION
¶50 In accordance with our recent ruling in Tangren, we
affirm the trial court’s finding that the Release signed by
Daines was an integrated contract. We also affirm the trial
court’s finding in accordance with Ward, that the Release was
unambiguous as a matter of law. Additionally, we affirm the

21 No. 20060838
trial court’s directed verdicts on Daines’ claims of fraud and
against Vincent individually. We also affirm the trial court’s
denial of Daines’ motion to admit the Lipscomb order. Further,
we find that Daines had his day in court as his claims were
adjudicated on the merits. Finally, in accordance with rule 54
of the Utah Rules of Civil Procedure, we affirm the award of
costs in the amount of $3,842.11 to ASC and Vincent.
---
¶51 Associate Chief Justice Durrant, Justice Wilkins,
Justice Parrish, and Justice Nehring concur in Chief Justice
Durham’s opinion.