Tangren v. Tangren

2008 UT 20
This opinion is subject to revision before final
publication in the Pacific Reporter.
IN THE SUPREME COURT OF THE STATE OF UTAH
----oo0oo----
Tangren Family Trust, by 	No. 20070097
Richard Tangren, Trustee
and Richard Tangren,
individually,
Plaintiff and Petitioner,
v.
F I L E D
Rodney Tangren,
Defendant and Respondent. 	February 29, 2008
---
Seventh District, Monticello
The Honorable Lyle R. Anderson
No. 020700046
Attorneys: 	Craig C. Halls, Blanding, for plaintiff
Matthew P. Jube, Provo, for defendant
---
On Certiorari to the Utah Court of Appeals
DURRANT, Justice:
INTRODUCTION
¶1 	We granted certiorari in this case to consider the
court of appeals’ assessment of the parol evidence rule. 	The
trial court considered extrinsic evidence in determining that the
lease at issue is invalid. 	The court of appeals reversed and
held that while the trial court properly considered extrinsic
evidence in determining whether the lease is an integrated
writing, it erred in finding the lease to be invalid. 	The court
of appeals so concluded primarily because the lease contains a
clear integration clause. 	The court of appeals concluded that
the lease is valid, integrated, and unambiguous. 	We consider the
question of when extrinsic evidence is permitted on the question
of integration where the contract at issue contains a clear
integration clause. 	We conclude that extrinsic evidence of a
separate oral agreement is not admissible in the face of such a

No. 20070097 	2
clause. 	Thus, although we affirm the court of appeals’
conclusion that the lease is valid, integrated, and unambiguous,
we disagree with the court’s assessment of the parol evidence
rule insofar as it allowed extrinsic evidence to be considered in
assessing whether the lease is an integration.
BACKGROUND
¶2 	In 1981, Richard Tangren purchased approximately 135
acres of unimproved land near the Colorado River from the State
Institutional Trust Lands and the Bureau of Land Management.
This property has since been held in trust by the Tangren Family
Trust, of which Richard is the trustee and his children,
including his son Rodney Tangren, are beneficiaries.
¶3 	Richard decided to build a dude ranch on the land. 	To
this end, he built a building with a basement and connecting
tunnels, which he intended to use for storage or guest
accommodations, by blasting an area out of the side of a
mountain. 	He also built a horseshoe pit, a tennis court, a
baseball diamond, a shooting range, an airplane runway, and horse
corrals. 	Notwithstanding these improvements, the property has
never actually operated as a dude ranch because it lacks running
water, electricity, and facilities to prepare food for guests.
¶4 	Rodney assisted his father in making these improvements
to the ranch. 	In fact, among all of Richard’s children, Rodney
was the only one who showed significant interest in the ranch.
In order to make progress on improvements at the ranch, Richard
kept Rodney on the payroll of Richard’s fencing company but
allowed Rodney to work at the ranch. 	In the early 1990s, Rodney
quit his job at the fencing company in order to work on the ranch
full-time.
¶5 	At some point, Rodney became concerned that he would
lose his investment of capital and time that he had put into the
ranch. 	Specifically, he worried that once the ranch became
profitable, his siblings, who are also beneficiaries under the
Tangren Family Trust, would attempt to take his interest in the
ranch. 	In 1992, in response to these concerns, Richard had his
attorneys prepare a lease agreement (the “Lease”). 	Under the
terms of the Lease, Richard, as trustee of the Tangren Family
Trust, agreed to lease the property to Rodney for ninety-nine
years at $275 per month, which included rent, taxes, and
insurance. 	The Lease also included an integration clause, which
reads as follows: 	“Entire Agreement: 	This Lease contains the
entire understanding between the parties with respect to its
subject-matter, the Property and all aspects of the relationship

1 Richard testified in this regard as follows:
THE COURT: 	Did you talk to Rodney about
why you were not giving him a copy [of the
Lease]?
THE WITNESS [Richard Tangren]: 	Yes.
THE COURT: 	What did you say?
THE WITNESS: 	He knew, I told him I
said, this lease, Rodney, is just a stop-gap
measure. 	It is not a lease. 	I never
intended it to be a lease. 	This is a
document that will prevent your brothers,
your sisters, six of them, ever ganging up on
you sometime in the future. . . .
. . .
THE WITNESS: 	I said this document
Rodney, will prevent your brothers and
(continued...)
3 	No. 20070097
between Lessee and Lessor.” 	The Lease was first executed in 1992
and again executed in 1994. 	The only difference between the 1992
and 1994 versions, other than a change in the dates, was the
removal of Rodney’s wife, Paula Tangren, as a lessee.
¶6 	In 2001, after Richard and Rodney’s relationship
deteriorated, Rodney recorded the Lease. 	Richard thereafter
demanded payments under the terms of the Lease from Rodney, and
Rodney tendered checks to Richard for the amount owed. 	Richard
never cashed those checks. 	Richard ultimately filed this action
against Rodney. 	In his original complaint, Richard claimed only
that Rodney breached the terms of the Lease and sought to recover
Lease payments and payment for Rodney’s alleged damage to and
removal of Richard’s personal property from the ranch. 	In his
amended complaint, filed during the course of the bench trial two
years after the original complaint, Richard claimed that Rodney
breached the Lease and that the Lease “did not form a valid
contract between the parties because the conditions upon which it
was entered into were never met.” 	Rodney counterclaimed for
damages relating to Richard’s alleged trespass on the ranch and
claimed fraud and negligent misrepresentation relating to the
execution of the Lease.
¶7 	During the bench trial, both Richard and Rodney
testified regarding the Lease. 	Richard testified that the Lease
was not intended to be a lease but rather a “stop gap” measure to
prevent Rodney’s siblings from taking Rodney’s interest in the
ranch at some point in the future. 	Richard testified that he did
not intend for the Lease to be valid and that it was only to be
used after his death. 1 	Rodney also testified that the purpose of

1 (...continued)
sisters from ever coming in and forcing you
out of the ranch. 	Basically that’s it.
THE COURT: 	Did you say anything more?
THE WITNESS: 	No. 	That was the idea of
the document. 	That’s why we prepared the
document. 	I did.
THE COURT: 	Did you explain to him why
you were not giving him the original of the
lease?
THE WITNESS: 	Yes. 	Because it was not
to be his because it wasn’t a lease. 	It was
only to be used and I had it in a place where
the people running my estate when I died,
they could bring it out and things, or
destroy it or it never happened. 	In the
meantime if there was anything that ever
happened on any of my brother, his brothers
and sisters part to come in and attempt to
ace him out of the position that he was in,
running the ranch, earning the money,
distributing according to the things that we
had set up. 	And as long as that was going on
they could not come in because this lease
would be found and I had it in a place where
it would be found, and could be executed and
he couldn’t do it. 	They couldn’t come in and
run him off. It was not intended to be a
lease, You Honor. 	It was intended to be a
stop gap measure for that very reason. 	And
that reason only.
2 Rodney testified in this regard as follows:
Q. [by attorney Craig Halls] 	. . . This
lease was prepared for what purpose?
A. [by Defendant Rodney Tangren] 	It was
to protect me from my brothers and sisters.
Q. 	And is it a fair statement to say
that it was to, didn’t you already testify
that is was going to come into effect if
something happened to your dad and your
brothers and sisters came in and tried to
take the ranch from you?
(continued...)
No. 20070097 	4
the Lease was to protect him from his siblings. 	And he testified
that this protection would be necessary only after his father’s
death. 2

2 (...continued)
A. 	Yes. 	That’s when they would
squabble because he wasn’t there to fight
them. 	But as long as he was alive they
wouldn’t do nothing.
Q. 	The anticipation, as long as he was
alive it was your anticipation that you and
he would be out there working on this thing
and it was a kind of a joint venture type
thing and the lease wasn’t required. 	It
wasn’t necessary.
A. 	No. That’s not true. 	He basically,
he would come and go, do things or whatever.
I was the one that actually got in for, since
actually before the lease. 	That’s how I got
the lease was all of the time that I’d spent
mostly, because I didn’t have any money back
then. 	I did put money into the thing and
that’s when I went to him and said Dad, I
need something to protect me. 	And that’s how
that lease got drawn up.
3 Tangren Family Trust v. Tangren, 2006 UT App 515, ¶ 1, 154
P.3d 180.
4 Id. ¶ 9.
5 	No. 20070097
¶8 	In its Findings of Fact and Order, the trial court
found that the Lease was “intended as a protection against an
incursion upon [Rodney] by his siblings and was not intended to
govern actions as between Richard Tangren and Rodney Tangren and
both parties agreed and understood that it would only take effect
if challenged by Rodney’s siblings.” 	Further, the court found
that the Lease “is not a valid document” and that Rodney “knew
the ‘Lease’ was not intended as a functioning agreement between
the Tangren Trust and [Rodney].” 	Because it found the Lease to
be invalid, the court determined that Rodney had no obligation to
pay rent to Richard. 	The court ordered Rodney off the ranch and
provided him six months to remove his personal property. 	Rodney
appealed.
¶9 	The court of appeals reversed. 3 	It explained that the
trial court properly considered extrinsic evidence in assessing
whether the Lease is an integration but that it erred in relying
on Richard’s “testimony regarding his intent in creating the
Lease . . . in the face of a clear and unambiguous integration
clause in the Lease itself.” 4 	Thus, the court of appeals
concluded that “the trial court’s findings as to integration were

5 Id.
6 Id. ¶¶ 13-14.
7 E.g., Salt Lake County v. Metro W. Ready Mix, Inc., 2004
UT 23, ¶ 11, 89 P.3d 155.
8 See State v. Levin, 2006 UT 50, ¶ 20, 144 P.3d 1096 (“[A]n
appellate court reviews the trial court’s findings of fact for
clear error.”); Bullfrog Marina, Inc. v. Lentz, 501 P.2d 266, 270
(Utah 1972) (“[T]he court must determine as a question of fact
whether the parties did in fact adopt a particular writing or
writings as the final and complete expression of their
bargain.”).
9 See Nielsen v. Gold’s Gym, 2003 UT 37, ¶ 6, 78 P.3d 600.
No. 20070097 	6
clearly erroneous.” 5 	The court of appeals found that the parties
entered into a “valid, integrated, and unambiguous lease
agreement” and remanded the case for a determination regarding
Rodney’s alleged breach of the Lease. 6 	We granted certiorari to
determine whether the court of appeals erred in its assessment of
the parol evidence rule.
STANDARD OF REVIEW
¶10 	On certiorari, we review the decision of the court of
appeals, not the trial court. 7 	Whether a contract is integrated
is a question of fact reviewed for clear error, 8 and whether a
contract is ambiguous is a question of law reviewed for
correctness. 9
ANALYSIS
¶11 	We have expounded on the parol evidence rule on a
number of occasions and explained that
as a principle of contract interpretation,
the parol evidence rule has a very narrow
application. 	Simply stated, the rule
operates, in the absence of fraud or other
invalidating causes, to exclude evidence of
contemporaneous conversations,
representations, or statements offered for

10 Hall v. Process Instruments & Control, Inc., 890 P.2d
1024, 1026 (Utah 1995) (citations omitted).
11 Id. at 1026-27.
12 Id. at 1027.
13 Id. (quoting Restatement (Second) of Contracts § 209
(1981)).
14 Bullfrog Marina, Inc. v. Lentz, 501 P.2d 266, 270 (Utah
1972) (emphasis added).
15 Id.
7 	No. 20070097
the purpose of varying or adding to the terms
of an integrated contract. 10
Thus, if a contract is integrated, parol evidence is admissible
only to clarify ambiguous terms; it is “not admissible to vary or
contradict the clear and unambiguous terms of the contract.” 11
The application of the parol evidence rule is therefore a two-
step process: 	“First, the court must determine whether the
agreement is integrated. 	If the court finds the agreement is
integrated, then parol evidence may be admitted only if the court
makes a subsequent determination that the language of the
agreement is ambiguous.” 12
¶12 	We have defined an integrated agreement as “‘a writing
or writings constituting a final expression of one or more terms
of an agreement.’” 13 	To determine whether a writing is an
integration, a court must determine whether the parties adopted
the writing “as the final and complete expression of their
bargain.” 14 	Importantly, we have explained “that when parties
have reduced to writing what appears to be a complete and certain
agreement, it will be conclusively presumed, in the absence of
fraud, that the writing contains the whole of the agreement
between the parties.” 15
¶13 	In this case, the Lease contains an integration clause
entitled “Entire Agreement” in which Richard and Rodney
explicitly agree that “[t]his Lease contains the entire
understanding between the parties with respect to its subject-
matter, the Property and all aspects of the relationship between
Lessee and Lessor.” 	Integration clauses, such as this one,
“are routinely incorporated in agreements in
order to signal to the courts that the

16 Ford v. Am. Express Fin. Advisors, Inc., 2004 UT 70,
¶ 28, 98 P.3d 15 (quoting Sec. Watch, Inc. v. Sentinel Sys.,
Inc., 176 F.3d 369, 372 (6th Cir. 1999)).
17 See Union Bank v. Swenson, 707 P.2d 663, 665 (Utah 1985);
Restatement (Second) of Contracts § 214 cmt. c.
18 See Union Bank, 707 P.2d at 665; Restatement (Second) of
Contracts § 214 cmt. c (“[I]nvalidating causes need not and
commonly do not appear on the face of the writing.”).
No. 20070097 	8
parties agree that the contract is to be
considered completely integrated. 	A
completely integrated agreement must be
interpreted on its face, and thus the purpose
and effect of including a merger clause is to
preclude the subsequent introduction of
evidence of preliminary negotiations or of
side agreements in a proceeding in which a
court interprets the document.” 16
¶14 	Richard argues that, despite the clear integration
clause to the contrary, the written Lease does not, in fact,
contain the entire understanding between the parties, but that
the parties entered into a separate oral agreement. 	Richard has
characterized this separate oral agreement in two ways. 	First,
he has argued that he and Rodney orally agreed that the Lease was
not to be a valid lease at all. 	Second, he has argued that he
and Rodney orally agreed that the effectiveness of the Lease was
to be subject to a condition precedent--specifically, an
incursion upon Rodney by his siblings after Richard’s death.
Regardless of which of these characterizations is accepted,
Richard’s argument amounts to a contention that a separate oral
understanding overrides the written Lease’s clear integration
clause. 	We reject this argument.
¶15 	Where a contract by an explicit term purports to be
integrated, we will nevertheless allow extrinsic evidence in
support of an argument that the contract is not, in fact, valid
for certain reasons that we have specified. 	We have held that
extrinsic evidence is appropriately considered, even in the face
of a clear integration clause, where the contract is alleged to
be a forgery, a joke, a sham, lacking in consideration, or where
a contract is voidable for fraud, duress, mistake, or
illegality. 17 	By their very nature, these bases for invalidation
of a contract are not necessarily provable by reference to the
contract itself. 18 	Moreover, these bases are not necessarily
inconsistent with an explicit agreement that a contract

19 See, e.g., Howard v. Perry, 106 P.3d 465, 467-68 (Idaho
2005) (“If a written contract is complete upon its face and
unambiguous, no fraud or mistake being alleged, extrinsic
evidence of prior or contemporaneous negotiations or
conversations is not admissible to contradict, vary, alter, add
to, or detract from the terms of the contract. 	A written
contract that contains a merger clause is complete upon its face.
. . . The merger clause is not merely a factor to consider in
deciding whether the agreement is integrated; it proves the
agreement is integrated.” (citations omitted)); UAW-GM Human Res.
Ctr. v. KSL Recreation Corp., 579 N.W.2d 411, 418 (Mich. Ct. App.
1998) (“[W]hen the parties include an integration clause in their
written contract, it is conclusive and parol evidence is not
admissible to show that the agreement is not integrated except in
cases of fraud that invalidate the integration clause or where an
agreement is obviously incomplete ‘on its face’ and, therefore,
parol evidence is necessary for the ‘filling of gaps.’” (citation
omitted)); Peterson v. Cornerstone Prop. Dev., LLC, 2006 WI App
132, ¶ 31, 294 Wis. 2d 800, 720 N.W.2d 716 (“The general rule is
that when a contract includes an integration clause, evidence of
contemporaneous or prior oral agreements relating to the same
subject matter are not admissible. 	In conjunction with the parol
evidence rule, an integration clause generally bars the
introduction of extrinsic evidence to vary or contradict the
terms of a writing. 	Absent claims of duress, fraud, or mutual
mistake, integration clauses are given effect.” (citations,
(continued...)
9 	No. 20070097
constitutes the complete understanding of the parties. 	In other
words, a written contract could purport to constitute the
complete understanding of the parties, yet nevertheless be
invalid because it is a forgery, a joke, a sham, or the result of
fraud, duress, mistake, or illegality.
¶16 	Richard’s argument that the Lease is not integrated
because he and Rodney entered into a separate oral agreement does
not present a circumstance under which we allow extrinsic
evidence to be considered on the question of integration in the
face of a clear integration clause. 	Richard does not argue that
the Lease is complete yet invalid on one of the above-described
bases for invalidity. 	Rather, he argues that it is incomplete
because he and Rodney entered into a separate oral agreement
either that it was invalid or subject to a condition precedent.
To argue that the Lease is not the complete agreement of the
parties is to argue in direct contradiction to the clear
integration clause. 	Thus, we will not allow extrinsic evidence
of a separate agreement to be considered on the question of
integration in the face of a clear integration clause. 19 	To the

19 (...continued)
internal quotation marks, and footnote omitted)).
20 One case explicitly states otherwise, while others could
be read to suggest otherwise. 	In Ringwood v. Foreign Auto Works,
Inc., 671 P.2d 182 (Utah 1983), we considered whether a written
agreement containing a clear integration clause superseded a
prior written agreement. 	We stated that “[i]n determining
whether an agreement was intended to supersede a prior agreement,
a court may consider extrinsic evidence as to the circumstances
of the transaction, including the purpose for which the contested
agreement was made.” 	Id. at 183. 	Notwithstanding the
integration clause, the trial court admitted extrinsic evidence
on the issue and found that the second agreement superseded the
prior agreement, and we affirmed. 	Id. at 183-84. 	Because it was
improper for the trial court to consider extrinsic evidence under
these circumstances, we overrule this case. 	We note, however,
that under the rule that we articulate today, we would have given
effect to the second agreement’s integration clause and excluded
extrinsic evidence. 	We therefore would have concluded, as did
the trial court, that the second agreement superseded the first.
In Bullfrog Marina, Inc. v. Lentz we stated, “Whether a
document was or was not adopted as an integration may be proved
by any relevant evidence.” 	501 P.2d 266, 270 (Utah 1972). 	We
also stated that “[i]n determining the issue of the completeness
of the integration in writing, evidence extrinsic to the writing
itself is admissible. 	Parol testimony is admissible to show the
circumstances under which the agreement was made and the purpose
for which the instrument was executed.” 	Id. 	We quoted this
language in Eie v. St. Benedict’s Hospital, 638 P.2d 1190, 1194
(Utah 1981), and Spears v. Warr, 2002 UT 24, ¶ 19, 44 P.3d 742.
And in Hall v. Process Instruments & Control, Inc. we cited Eie
for the proposition that “[a]ll relevant evidence is admissible
to prove integration.” 	890 P.2d 1024, 1028 (Utah 1995). 	None of
the contracts at issue in these cases included an integration
clause. 	Thus, we were not presented with the issue we face in
this case: 	whether extrinsic evidence of a separate oral
agreement regarding the contract is admissible in the face of a
clear integration clause. 	To the extent our statements in
Bullfrog Marina, Inc., Eie, Spears, and Hall suggest that
extrinsic evidence of a separate oral agreement is admissible
where the contract contains a clear integration clause, we
disavow them.
Finally, in Union Bank we stated as follows:
(continued...)
No. 20070097 	10
extent any of our prior cases provide otherwise, we overrule
those cases. 20

20 (...continued)
Protection against judicial enforcement of
writings that appear to be binding
integrations but in fact are not lies in the
provision that all relevant evidence is
admissible on the threshold issue of whether
the writing was adopted by the parties as an
integration of their agreement. 	This appears
to be so even if the writing clearly states
it to be a complete and final statement of
the parties’ agreement.
707 P.2d at 665. 	This statement is properly understood in the
context of the discussion in which it is found--a discussion
explaining that extrinsic evidence is admissible on the question
of integration when a written agreement is alleged to be invalid.
See id. 	But if read in isolation, this statement could suggest
that extrinsic evidence is always admissible on the question of
integration. 	Such a reading of this statement is inaccurate, and
one that we disavow.
21 Tangren Family Trust v. Tangren, 2006 UT App 515, ¶¶ 7,
9, 154 P.3d 180.
22 Id. ¶ 9.
23 See Hall, 890 P.2d at 1026-27.
11 	No. 20070097
¶17 	We therefore disagree, in part, with the court of
appeals’ assessment of the parol evidence rule. 	The court of
appeals explained that “[a]ny relevant evidence, including parol
evidence, is admissible in the preliminary determination of
integration” and stated that it was appropriate for the trial
court to have considered Richard’s testimony regarding the intent
of the Lease. 21 	We hold today that in the face of a clear
integration clause, extrinsic evidence of a separate oral
agreement is not admissible on the question of integration. 	The
court of appeals ultimately held, however, that “[t]he Lease is
an integrated agreement, against which parol evidence may not be
admitted absent some ambiguity in the terms of the Lease.” 22 	We
agree that the Lease is a final and complete expression of
Richard and Rodney’s bargain; thus, we affirm this holding.
¶18 	Because the Lease is integrated, we consider the second
step in assessing the applicability of the parol evidence rule:
whether the terms of the Lease are ambiguous. 	If the terms are
ambiguous, extrinsic evidence is admissible to clarify the
meaning of those terms. 23 	Neither Richard nor Rodney challenges
the Lease’s terms as ambiguous. 	For this reason, we affirm the

24 Tangren Family Trust, 2006 UT App 515, ¶ 11.
No. 20070097 	12
court of appeals’ conclusion that the Lease is unambiguous. 24
The parol evidence rule therefore bars the use of extrinsic
evidence to vary or add to the terms of the Lease because it is
valid, integrated, and unambiguous.
CONCLUSION
¶19 	Extrinsic evidence of a separate oral agreement is not
admissible on the question of integration where the contract at
issue contains a clear integration clause. 	Thus, evidence that
Richard and Rodney entered into a separate oral agreement that
the Lease is invalid or that its effectiveness is subject to a
condition precedent was improperly considered by the trial court,
given that the Lease contains a clear integration clause. 	We
conclude that the Lease is integrated and that its terms are
unambiguous. 	Thus, the parol evidence rule bars the admission of
all extrinsic evidence regarding the Lease. 	Affirmed.
---
¶20 	Chief Justice Durham, Associate Chief Justice Wilkins,
Justice Parrish, and Justice Nehring concur in Justice Durrant’s
opinion.