Mardesich v. Sun Hill Homes LC

2017 UT App 33

THE UTAH COURT OF APPEALS

JOHN MARDESICH AND MARIE MARDESICH,
Appellants,
v.
SUN HILL HOMES LC,
Appellee.

Opinion
No. 20150730-CA
Filed February 24, 2017

Fifth District Court, St. George Department
The Honorable G. Michael Westfall
No. 080502342

James L. Spendlove, Attorney for Appellants
Adam C. Dunn and Clifford V. Dunn, Attorneys
for Appellee

JUDGE J. FREDERIC VOROS JR. authored this Opinion, in which
JUDGES KATE A. TOOMEY and JILL M. POHLMAN concurred.

VOROS, Judge:

¶1 Plaintiffs John and Marie Mardesich (collectively, the
Homeowners) appeal from a trial court order granting a motion
for new trial filed by defendant Sun Hill Homes (the Builder).
We affirm.

BACKGROUND

¶2 The Builder developed the subdivision where the
Homeowners’ residential property (the Property) is located. The
Builder prepared and graded the Property according to a
grading plan created by a third-party engineer. The Builder also
retained Applied Geotechnical Engineering Consultants (the
Mardesich v. Sun Hill Homes

Engineering Firm) to conduct a geotechnical investigation of the
lots in the subdivision. The parties entered into a Real Estate
Purchase Construction Contract (the REPC) for the purchase and
sale of a newly constructed house on the Property.

¶3 The REPC allocated the risk of loss and set forth the
duties of the Builder and the Homeowners; of particular
significance here, it released the Builder from any liability with
respect to ‚*f+uture improvements by Buyer, including walls,
fencing, grading, landscaping or excavation work on the Lot
which could disrupt drainage and/or retention and cause
flooding or ponding if not correctly engineered . . . .‛ The REPC
also contained an integration clause and an attorney fee
provision.

¶4 Before the house was completed, flood waters damaged
the Property. The Builder received funding from the Natural
Resources Conservation Service, a division of the United States
Department of Agriculture to change the grading of the Property
and to add rock retaining walls to protect the subdivision from
future flooding. In making these improvements, the Builder
added soil that substantially increased the buildable size of the
Property.

¶5 In May 2006 the Homeowners closed on the sale of the
Property. Later they hired a pool builder to excavate their
backyard and build a pool and spa. During the construction, the
Engineering Firm told the pool builder that ‚the area where the
pool was being constructed was . . . outside the area that had
been treated to take care of potentially expansive soils and
potentially collapsible soils due to the proximity to the edge of
the slope.‛ The pool builder continued construction. Later the
pool and spa experienced significant settling, causing a
differential elevation exceeding the industry standard. The
Homeowners sued the pool builder; they also sued the Builder,

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alleging breach of the REPC. After a two-day bench trial, the trial
court awarded damages to the Homeowners.1

¶6 The trial court found that the Builder was aware that the
Homeowners wanted to build a pool on the Property before the
2005 flood. The trial court also found that, after the 2005 flooding
and regrading of the Property, ‚[the Builder] took no action to
investigate the effect the changed grading had on the suitability
of the Lot for the construction of a swimming pool.‛ The trial
court found that the ‚REPC imposes a duty on [the Builder] to
investigate the suitability of the soil added to [the Property] for
its intended use as a buildable lot for the construction of a
swimming pool,‛ but that the risk of loss associated with the
placement of additional soil on the Property ‚was left
unaddressed by the parties.‛ The trial court concluded that
where ‚there is no express understanding as to the changed
circumstances, the risk associated with the placement of the
additional soil is placed in the hands of [the Builder].‛ The trial
court identified no legal basis to assign the risk to the Builder.

¶7 After ruling, the trial judge retired. The Builder filed a
motion for new trial alleging an error of law and insufficient
evidence. A judge newly assigned to the case granted the
Builder’s motion, stating that he could see no ‚reasonable basis
for finding that [the Builder] had a contractual duty under the
REPC to investigate the soil’s suitability for a swimming pool.‛
The judge relied on paragraph 14 of the REPC, which releases
the Builder from any liability with respect to all future
improvements by the Homeowners, including grading and
excavation work. He concluded that ‚it is unreasonable to
circumvent this express provision by purporting to fill a void
about the risk of loss associated with placement of additional

1. The Homeowners resolved their claims against the pool
builder at trial.

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soil.‛ He also awarded attorney fees to the Builder under the
attorney fee provision in the REPC.

ISSUES

¶8 The Homeowners raise two issues on appeal. First, they
contend that the trial court exceeded its discretion in granting a
new trial. Second, they contend that the trial court erred in
awarding the Builder attorney fees under the REPC.

ANALYSIS

I. Motion for a New Trial

¶9 The Homeowners contend that the trial court exceeded its
discretion in granting a new trial because the REPC imposed a
duty on the Builder to provide soil suitable for the construction
of backyard improvements or at least to investigate the
suitability of the additional soil for backyard improvements on
the Property.2

¶10 The Builder responds that the REPC was the entire
agreement between the Builder and the Homeowners and that

2. The Homeowners also contend that the trial court exceeded its
discretion in granting a new trial because the Builder failed to
marshal the evidence in support of its motion for a new trial. In
support of this contention, the Homeowners cite case law
discussing the appellate marshaling standard. However, they
cite no authority for their assumption that the appellate
marshaling rule, which appears in the Utah Rules of Appellate
Procedure, applies to a party’s motion for new trial in the trial
court. Accordingly, we do not further address this contention.
See Utah R. App. P. 24(a)(9).

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‚the REPC was never modified by the parties.‛ The Builder
further argues that the successor judge ‚properly concluded that
the REPC imposes a contractual obligation on [the Homeowners]
to ‘properly engineer’ improvements such as the pool
constructed by [the pool builder] and that [the Homeowners]
failed to perform this obligation.‛

¶11 ‚A trial court’s decision to grant or deny a motion for a
new trial is reviewed for an abuse of discretion.‛ Clayton v. Ford
Motor Co., 2009 UT App 154, ¶ 5, 214 P.3d 865. ‚However, if the
court’s ruling is based upon a conclusion of law, we review the
decision for correctness.‛ Horrell v. Utah Farm Bureau Ins. Co., 909
P.2d 1279, 1280 (Utah Ct. App. 1996).

¶12 We first note that both judges agreed that the REPC was a
fully integrated agreement between the Homeowners and the
Builder. The original judge found that the REPC ‚entered into by
the parties with all 12 addenda is in fact the agreement between
the parties, that is basically uncontroverted.‛ The successor
judge did not disturb this finding. We accordingly look first to
the REPC to determine the parties’ rights and responsibilities.

¶13 Paragraph 7 of the REPC provides that the Builder
‚agrees to construct the Home on the Lot . . . in substantial
conformity with *the Builder’s+ Standard Plans and
Specifications as of the time of Start of Construction.‛ Paragraph
14.3 of the REPC addresses future improvements to the
Property. It places the duty to properly engineer future
improvements squarely on the Homeowners:

Buyer agrees to purchase the Property subject to
the following additional disclaimers and to release
[the Builder] from any liability, and to indemnify
[the Builder] from any liability, with respect to the
following enumerated items. . . . :

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Future improvements by Buyer, including walls,
fencing, grading, landscaping or excavation work
on the Lot which could disrupt drainage and/or
retention and cause flooding or ponding if not
correctly engineered (and Buyer hereby agrees to
correctly engineer all such future improvements).

This provision relieves the Builder of liability for future
improvements by the Homeowners. Excavating the backyard
and constructing the pool and spa qualify as future
improvements by the Homeowners. Accordingly, under the
REPC, the Builder has no liability for problems related to the
pool and spa.

¶14 However, the Homeowners maintain that the parties later
modified the REPC. They argue that, after the parties signed the
REPC, the Builder agreed to provide soil suitable for the
construction of backyard improvements or at least to investigate
the suitability of the soil for backyard improvements.
Accordingly, our inquiry focuses on the purported modification
of the REPC. The Homeowners argue that it is ‚undisputed that
the grading of [the Property] was not in conformity with the
grading plan prepared by [the Builder] at the time of the start of
construction.‛ They argue that there was an agreement ‚to
modify the grading of [the Property] which included the
suitability of the soil for the construction of improvements.‛

¶15 ‚[P]arties to a contract may, by mutual consent, modify
any or all of a contract.‛ Harris v. IES Assocs., Inc., 2003 UT App
112, ¶ 46, 69 P.3d 297 (alteration in original) (citation and
internal quotation marks omitted). ‚A valid modification of a
contract . . . requires a meeting of the minds of the parties, which
must be spelled out, either expressly or impliedly, with sufficient
definiteness.‛ Westmont Residential LLC v. Buttars, 2014 UT App
291, ¶ 15, 340 P.3d 183 (omission in original) (citation and
internal quotation marks omitted). ‚The party claiming that

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there has been a modification to a contract . . . carries the burden
of proof for showing the parties’ mutual assent to the
modification.‛ Id. (citation and internal quotation marks
omitted).3

¶16 The Homeowners argue that the parties modified
paragraph 14.3 of the REPC. They point to Mr. Mardesich’s
testimony that, following a discussion with a representative for
the Builder, it was his ‚understanding that the entire level
portion of [his] yard would be able to be used as a buildable area
for backyard improvements.‛ This ‚understanding‛ is not

3. The Builder contends that because the REPC was fully
integrated, evidence of any subsequent modification is parol
evidence and ‚is not admissible to vary or contradict clear and
unambiguous terms of *the REPC+.‛ Our supreme court has
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 the
purpose of varying or adding to the terms of an integrated
contract.‛ Tangren Family Trust v. Tangren, 2008 UT 20, ¶ 11, 182
P.3d 326 (emphasis, citation, and internal quotation marks
omitted). But the parol evidence rule ‚‘only purports to foreclose
events which precede or accompany a written or oral
integration, not those which come later.’‛ Reynolds v. Gentry Fin.
Corp., 2016 UT App 35, ¶ 18, 368 P.3d 96 (quoting Wilson v.
Gardner, 348 P.2d 931, 933 (Utah 1960)). Because a ‚subsequent
mutual agreement‛ is not a contemporaneous or prior
conversation, representation, or statement, it is not parol
evidence. Gary Porter Constr. v. Fox Constr., Inc., 2004 UT App
354, ¶ 21 n.5, 101 P.3d 371. Consequently, because the
Homeowners allege that the parties entered into a ‚subsequent
mutual agreement . . . it is not parol evidence.‛ See id.

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‚spelled out, either expressly or impliedly, with sufficient
definiteness‛ to establish a valid modification of paragraph 14.3.
See Westmont Residential LLC, 2014 UT App 291, ¶ 15 (citation
and internal quotation marks omitted). But even read
generously, this testimony does not indicate that the parties
agreed to shift to the Builder the duty to ‚correctly engineer all
such future improvements.‛ Nor does it indicate that the parties
agreed to modify paragraph 14.3, which explicitly releases the
Builder from any liability with respect to ‚*f+uture
improvements by Buyer . . . if not correctly engineered.‛ The
Homeowners have thus failed to carry ‚the burden of proof for
showing the parties’ mutual assent to the modification‛ of
paragraph 14.3 of the REPC. See id. (citation and internal
quotation marks omitted).4

¶17 Accordingly, the trial court did not err in concluding that
‚there does not appear to be any reasonable basis for finding
that [the Builder] had a contractual duty under the REPC to
investigate the soil’s suitability for a swimming pool,
particularly when paragraph 14 of the REPC expressly allocates
to [the Homeowners] the responsibility for proper engineering
of improvements involving excavation, which would include an
improvement such as the swimming pool here.‛

4. The Homeowners also contend that because the grading of the
Lot changed due to flooding after the parties signed the REPC,
the Lot was not constructed ‚in substantial conformity with the
[Builder’s] Standard Plans and Specifications‛—proof that ‚the
agreement of the parties was changed.‛ Even assuming the
Homeowners are right on this point, nothing in the record alters
the fact that the excavation and construction of the pool was a
future improvement, and paragraph 14.3 of the REPC expressly
releases the Builder from liability for future improvements.

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¶18 Finally, we address the original trial judge’s conclusion
that because ‚the risk of loss associated with the placement of as
much as fifteen feet of additional soil on [the Property] was left
unaddressed by the parties,‛ ‚the risk associated with the
placement of the additional soil is placed in the hands of [the
Builder].‛ The successor judge corrected this finding, explaining
that ‚far from being silent . . . the REPC clearly imposes on [the
Homeowners] the responsibility for proper engineering of an
improvement such as the swimming pool here.‛

¶19 We agree with the successor judge. ‚A term is implied-in-
law where the contract is silent.‛ Allstate Enters., Inc. v. Heriford,
772 P.2d 466, 468 (Utah Ct. App. 1989). ‚An implied-in-law term
will be imposed even though the parties may not have intended
it and binds the parties to a legally enforceable duty. However,
the court can only supply reasonable terms to supplement a
contract which is silent.‛ Id. (citation omitted).

¶20 Here, the REPC was far from silent on the question of
which party was responsible for the proper engineering of future
improvements. Paragraph 14.3 explicitly placed that duty on the
Homeowners. Accordingly, the trial court did not err in
concluding that ‚the Judgment should be amended to correct the
legal error that occurred when a contract duty was imposed on
[the Builder] to investigate the suitability of the soil for a
swimming pool.‛

II. Attorney Fees

¶21 Because we conclude that the trial court did not exceed its
discretion in granting the Builder’s motion for a new trial, we
need not address the Homeowners’ argument that the trial court
erred in awarding the Builder fees. ‚*W+hen a party who
received attorney fees below prevails on appeal, the party is also
entitled to fees reasonably incurred on appeal.‛ Valcarce v.
Fitzgerald, 961 P.2d 305, 319 (Utah 1998) (plurality opinion)

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(citation and internal quotation marks omitted). Accordingly, we
award the Builder reasonable attorney fees on appeal.

CONCLUSION

¶22 For the foregoing reasons, the judgment of the trial court
is affirmed.

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