DAVIS, Presiding Judge:
¶ 1 Plaintiff Tom Watkins appeals the judgment of the trial court resolving his contractual dispute with Defendant Henry Day Ford (Henry Day). Watkins argues that the trial court erred in several respects in its decision. We reverse and remand for further proceedings.
¶ 2 At the North American Auto Show in January 2002, Ford Motor Company (Ford) unveiled a GT40 concept car, which was designed to resemble the legendary race car of the same name that had achieved great success in the 1960s. When the concept car received an extremely positive reception at
¶ 3 Watkins and Henry Day then entered into two contracts finalizing their agreement. One contract provided for the sale of the first GT40 Henry Day received and the other provided for the sale of the second GT40 received. At this time, Watkins gave Henry Day a check for $2000, which represented a $1000 down payment on each of the anticipated cars. The contracts were amended the following day to show that the agreed-upon purchase price for the cars was the manufacturer's suggested retail price (MSRP). Because the parties did not know when the cars would be produced, there was no model year or delivery date specified in the contracts. And because it was uncertain whether Henry Day would even receive one of the cars, the parties understood that the receipt of the cars was a condition precedent to the obligations to buy and sell under the contracts, although this understanding was not incorporated into the language of the contracts.
¶ 4 Several months later, in December 2002, Henry Day's general manager called a Ford representative to determine whether Henry Day would be allocated any of the GT40s. Ford's response was that the only way Henry Day would be allocated any GT40s was by winning certain company awards, which awards Henry Day had never before won in its forty-year history. Thus, Henry Day, considering it quite unlikely that it would receive any GT40s, decided to return Watkins's deposit to him. In a letter dated December 31, 2002, Henry Day told Watkins, "We regret to inform you that our allocation is not going to allow us to receive this vehicle," and included a $2000 check for the refund of Watkins's deposit. Watkins negotiated the check without objection or any further discussion of the matter with Henry Day representatives.
¶ 5 At some point thereafter, it became clear that Ford would be calling the newly-announced car simply the GT and not the GT40. Several new GTs were manufactured in time for and used during Ford's centennial celebration in June 2003. But the first of the new cars sold to the public was a 2005 model, sold in August 2003 and delivered in late 2004.
¶ 6 Notwithstanding Henry Day's prior award history, the dealership did receive awards for the years 2003 and 2004 that ultimately resulted in Henry Day receiving three Ford GTs. The first car was allocated in December 2004 and the second was allocated in May 2005, the cars having MSRPs of $156,595 and $156,945, respectively. Shortly after the second allocation, one of Watkins's employees told Watkins that she had heard that Henry Day had received two Ford GTs. Watkins immediately went to the dealership, checkbook in hand, and insisted that Henry Day abide by the parties' contracts and sell him the two Ford GTs for MSRP. Henry Day's representative refused, insisting that the contracts were no longer in force, and offered to instead sell Watkins one of the cars for $250,000. Watkins refused the offer.
¶ 7 Watkins filed suit against Henry Day in the beginning of July 2005 for breach of contract. Toward the end of the summer of 2005, Henry Day eventually offered to sell Watkins a Ford GT for MSRP. Watkins, who argues that the market value of the cars had "dropped significantly" by this time, refused Henry Day's offer.
¶ 8 The case ultimately proceeded to a bench trial. The trial court ruled in Henry Day's favor, determining that (1) there was no breach of contract because the contracts unambiguously provided for the sale of GT40s and Henry Day never received any such cars, (2) Watkins had abandoned the contracts and waived his rights thereunder when he negotiated the $2000 check refunding his deposit, and (3) Watkins had failed to mitigate his damages when he refused Henry Day's eventual offer to sell one of the Ford GTs for MSRP. And due to Henry Day's prevailing on the issues, the trial court
¶ 9 Watkins first argues that the trial court erred in determining that the contracts between the parties were not ambiguous and in interpreting those unambiguous terms of the contracts. These are both questions of law that we review for correctness. See Home Sav. & Loan v. Aetna Cas. & Sur. Co., 817 P.2d 341, 347 (Utah Ct.App.1991) ("The interpretation of a contract normally presents a question of law.... The question of whether a contract provision is ambiguous, i.e., susceptible to two or more reasonable interpretations, is also a question of law.").
¶ 10 Watkins next argues that the trial court erred when it determined that by negotiating the $2000 check from Henry Day, he abandoned the contracts and waived his rights thereunder. "Where there is dispute as to whether [abandonment] has occurred, it is usually a question of fact, to be determined from the circumstances of the particular case...." Timpanogos Highlands, Inc. v. Harper, 544 P.2d 481, 484 (Utah 1975) (footnote omitted). Thus, "we do not reverse unless we are persuaded that the evidence clearly preponderates against the findings." Id. Likewise, "the actions or events allegedly supporting waiver are factual in nature and should be reviewed as factual determinations, to which we give a district court deference." Pledger v. Gillespie, 1999 UT 54, ¶ 16, 982 P.2d 572.
¶ 11 Finally, Watkins argues that the trial court erred in determining that he failed to mitigate any damages. "[W]e review a trial court's conclusions as to the legal effect of a given set of found facts for correctness." Jeffs v. Stubbs, 970 P.2d 1234, 1244 (Utah 1998).
¶ 12 The trial court determined that the contracts at issue here are "clear and unambiguous and were intended to be a final and complete expression of the parties' bargain."
¶ 13 The Utah Supreme Court has established "a two-part standard for determining facial ambiguity." Daines v. Vincent, 2008 UT 51, ¶ 26, 190 P.3d 1269. First, the trial court must determine whether the contract is facially ambiguous. See id.
Ward v. Intermountain Farmers Ass'n, 907 P.2d 264, 268 (Utah 1995) (omission in original) (citations and internal quotation marks omitted). Second, after considering evidence of ambiguity, the trial court "must ensure that the interpretations contended for are reasonably supported by the language of the contract." Daines, 2008 UT 51, ¶ 26, 190 P.3d 1269 (internal quotation marks omitted). If they are, "then extrinsic evidence is admissible to clarify the ambiguous terms"; otherwise, "the parties' intentions must be determined solely from the language of the contract." Ward, 907 P.2d at 268.
¶ 14 We agree with the trial court that there exists no facial ambiguity in either of the contracts at issue here. When we look, as we must, to the evidence presented regarding the facts known to the parties and the circumstances present at the time the parties were contracting, it is clear that the parties' use of the term GT40 is susceptible to only one interpretation and was intended to represent only one thing. Considering that Ford had just recently made the announcement regarding the production of a street-legal version of the GT40 and that this prompted Watkins's search for a dealership that would sell him one,
The evidence of the circumstances surrounding the contract formation and the situation of the parties at the time of contract formation simply does not indicate any other understanding on the part of either party.
¶ 15 Although we have determined that in looking at the face of the contracts there is no ambiguity with regard to the term GT40, our inquiry does not necessarily end there:
Gillmor v. Macey, 2005 UT App 351, ¶ 35, 121 P.3d 57. A latent ambiguity is "[a]n ambiguity that does not readily appear in the language of a document, but instead arises from a collateral matter when the document's terms are applied or executed." Black's Law Dictionary 93 (9th ed.2009). Thus, if a contract, "while on its face appearing to be certain, would open up an ambiguity when attempts were made to apply it to the subject-matter, then such ambiguity could be resolved by evidence of what meaning the parties themselves intended to invest such terms." Bamberger Co. v. Certified Prods., Inc., 88 Utah. 194, 48 P.2d 489, 494 (1935); see also Fox Film Corp. v. Ogden Theatre Co., 82 Utah. 279, 17 P.2d 294, 296 (1932) ("One well-recognized exception to the [parol evidence] rule is that extrinsic evidence, parol or otherwise, is admissible to explain a latent ambiguity in a writing. This does not mean that terms or conditions may be inserted into or taken out of the writing by direct oral assertions, but it does mean that the court may receive evidence of such surrounding facts as will enable it to look upon the transaction through the eyes of the parties thereto and thereby know what they understood or intended the ambiguous word or provisions to mean.").
¶ 16 We determine that there is a latent ambiguity in the contracts at issue here, created by Ford's later decision to name the anticipated car the GT instead of the GT40.
¶ 17 The trial court determined that Watkins had abandoned the contracts and waived his rights thereunder by his acceptance of Henry Day's return of his deposit. Waiver and abandonment involve the intentional relinquishment of a known right. See Soter's, Inc. v. Deseret Fed. Sav. & Loan Ass'n, 857 P.2d 935, 942 (Utah 1993) ("A waiver is the intentional relinquishment of a known right. To constitute waiver, there must be an existing right, benefit or advantage, a knowledge of its existence, and an
¶ 18 The trial court determined that Watkins demonstrated an intentional relinquishment of his known rights when he negotiated the check returning his deposit "without reservation or objection," particularly in light of Watkins's "experience in the auto dealership industry and both parties' uncertainty as to when and if defendant would receive the contracted vehicles." But even considering both Watkins's experience in the industry— assuming such experience was even relevant to the circumstances of this transaction—and the parties' initial uncertainty as to whether Henry Day would receive the subject cars, there is simply no evidence whatsoever indicating that Watkins knew he still had rights under the contracts at the time he negotiated the check refunding his deposit. The letter accompanying the check was an unequivocal representation by Henry Day that its prior uncertainty regarding allocation had been resolved and that it now knew it would not be receiving any of the subject cars. Had this representation been true, then the parties would have known that a condition precedent to the contracts was definitely not going to happen and they therefore would no longer have had any rights or obligations under the contracts.
¶ 19 Henry Day seems to argue that notwithstanding the unequivocal representation regarding the condition precedent, Watkins was still required to object to the refund of his deposit to preserve his contractual rights. But we have been referred to no legal authority for this position and can conceive of no policy reason requiring Watkins to distrust Henry Day's representation. There was nothing that would have given Watkins any reason to doubt the accuracy or truth of the information relayed by Henry Day. And the crucial information regarding nonoccurrence of the condition precedent is something that Watkins had no way of independently verifying.
¶ 20 "[U]nder the doctrine of avoidable consequences the nonbreaching party has an active duty to mitigate his damages, and he may not, either by action or inaction, aggravate the injury occasioned by the breach." Mahmood v. Ross (In re Estate of Ross), 1999 UT 104, ¶ 31, 990 P.2d 933 (internal quotation marks omitted).
¶ 21 The contracts at issue provided that Henry Day was entitled to recover "reasonable attorney[] fees, court costs, and collection fees" should it need to enforce the contracts. And the Utah Code provides a reciprocal right to recover attorney fees:
Utah Code Ann. § 78B-5-826 (2008). The trial court awarded Henry Day its reasonable attorney fees and costs due to its prevailing status below. But because we determine that Watkins has prevailed on his breach of contract claims, we reverse the award of attorney fees and costs to Henry Day and remand for the trial court to enter an appropriate award of attorney fees and costs in favor of Watkins, including those fees and costs reasonably incurred on appeal.
¶ 22 First, we determine that the trial court was correct that there was no facial ambiguity in the contracts at issue here. However, we determine the later renaming of the car created a latent ambiguity. We therefore consider evidence of the intent of the parties at the time of contracting and determine that the parties intended to buy and sell what is now referred to as a Ford GT, and thus, Henry Day breached the contracts by refusing to sell such cars upon receipt to Watkins for MSRP. Second, we reverse the trial court on the issue of abandonment and waiver because the facts simply do not support the determination that Watkins was intentionally relinquishing any known right. Thus, we remand to the trial court for a determination of the amount of
¶ 23 I CONCUR: GREGORY K. ORME, Judge.
THORNE, Judge (concurring in part and dissenting in part):
¶ 24 I concur in the analysis of Parts I and III of the majority opinion. However, I respectfully dissent from the majority's reversal of the trial court's abandonment determination in Part II and therefore dissent from Part IV as well. I do not agree with the majority's determination that Watkins's negotiation of the return of deposit check was not an intentional relinquishment of his contractual rights. See supra ¶ 19.
¶ 25 The contracts entered into between the parties gave Watkins a right to purchase two of the subject cars contingent upon allocation of the cars to Henry Day. However, "[a] contract may be [abandoned] by acts or conduct of the parties inconsistent with the continued existence of the contract." Harris v. IES Assocs., Inc., 2003 UT App 112, ¶ 37, 69 P.3d 297 (second alteration in original) (internal quotation marks omitted). In this case, both parties undertook acts inconsistent with the continued existence of the contracts.
¶ 26 Henry Day acted inconsistently with the contracts when it refunded the deposit Watkins gave as security for the performance of the contracts. Watkins acted inconsistently when he accepted the return of his deposit and negotiated the deposit check. These actions demonstrate the parties' unequivocal expressions of an intent to abandon the contracts. If Watkins, after receiving the refund check and letter from Henry Day indicating its desire to abandon the contracts, wanted to maintain rights under the contracts, he should not have taken actions that were inconsistent with the continued existence of the contracts. Instead of either seeking a clarification or asserting ongoing rights, Watkins negotiated the deposit check. The result was that both parties acted as if the contracts had been rescinded.
¶ 27 Watkins's negotiation of the deposit check indicated his agreement to "walk away" from the deal and abandon the contracts. By negotiating the returned deposit check, Watkins released Henry Day of its obligation to sell any future allocation of the subject cars to Watkins and Henry Day relinquished its right to enforce purchase at the manufacturer's suggested retail price (MSRP) of the cars if they were allocated to Henry Day. The issuance of the deposit check and Watkins's negotiation of the check without any visible attempt to claim continuing rights demonstrated an unequivocal representation of intent to abandon the contracts. See generally Lucky Seven Rodeo Corp. v. Clark, 755 P.2d 750, 753 (Utah Ct. App.1988) (stating that abandonment is the intentional relinquishment of one's right in the contract). Because Watkins abandoned the contracts, I would not permit Watkins to enforce the sale of the subject cars pursuant to those contracts. Likewise, if the situation were reversed and Henry Day was attempting to enforce the sale of the subject cars, for example if the market value dropped significantly below MSRP before delivery of the cars to Henry Day, I would not likewise permit Henry Day to enforce the contracts.
¶ 28 I also do not agree with the majority opinion that Watkins could not have relinquished his rights because Watkins was unaware, after Henry Day's negative representation regarding allocation, that there
¶ 29 Accordingly, I would affirm the trial court's abandonment determination.
Further, notwithstanding any good faith, the unequivocal statement from Henry Day was simply incorrect. See generally 31 C.J.S. Estoppel & Waiver § 218 (2008) ("A waiver may not be claimed by one whose false representation is the foundation of the waiver."). Henry Day knew that there existed some possibility, no matter how slim, that Henry Day would get one of the subject cars.