Associate Chief Justice NEHRING, opinion of the Court:
¶ 1 The dispute in this case stems from the purchase of a house built in Park City, Utah. Mr. Yates built the house and lived in it for approximately two years. The Reighards then purchased the house from him. After living in the house for over two years, the Reighards discovered mold in some of the windows and walls and sued Mr. Yates.
¶ 2 The jury found in favor of the Reighards on their negligence claim but found in favor of Mr. Yates on the Reighards' negligent misrepresentation claim. The jury also found that the Reighards failed to perform all, or substantially all, of the things the contract required them to do and therefore the jury, as instructed, did not reach the question of whether Mr. Yates breached the contract. The Reighards and Mr. Yates both appeal the decisions of the trial court.
¶ 3 We hold that the economic loss rule prevents recovery of economic damages within the scope of the parties' contract but allows for recovery of damages to other property or for bodily injury. We also hold that the trial court did not err when it permitted Eugene Cole, Ph.D., to testify as an expert witness. Because Mr. Yates prevailed in his claims under the contract, which provided the only basis for awarding attorney fees, he is entitled to recover attorney fees for the breach of contract suit. We hold that the trial court did not err when it denied the Reighards' motion for judgment notwithstanding the verdict. We remand the case for further proceedings consistent with our decision.
¶ 4 Mr. Yates constructed the house at issue. He served as general contractor and resided in the house from November 2001 until approximately March 2004. The Reighards purchased the house from Mr. Yates in early 2004. The parties entered into a standard Real Estate Purchase Contract (REPC). Mr. Yates signed the REPC and a document titled "Seller's Property Condition Disclosure." The Seller's Property Condition Disclosure required Mr. Yates to disclose his "actual knowledge regarding the condition of the property." The document included sections for "mold," "other moisture conditions," and "exterior and exterior features," in which Mr. Yates represented that he was not aware of any moisture-related damage to the walls, floor, or ceiling; was not aware of any mold on the interior of the house; and was not aware of any problems with any portion of the exterior of the house like moisture damage behind stucco. The Reighards knew they were purchasing a used house, and prior to closing the sale they had an independent inspection and appraisal conducted.
¶ 5 In the summer of 2005, excavation was performed so that a deck could be installed on the corner of the house. Sprinkler modifications were also made in connection with this project. In August 2006, Ms. Reighard noticed mold in the basement. Ms. Reighard called a mold remediation company, which removed and replaced most of the stucco, windows, and drainage on the house. Ms. Reighard believed that the mold was the cause of health problems her family had been experiencing.
¶ 6 The Reighards' original complaint sought damages related to seven causes of action against Mr. Yates. After he was served by Mr. Reighard, Mr. Yates filed a third-party complaint against the stucco contractor, E. Marshall Plastering, which later settled with the Reighards for $5,000 in return for being dismissed from the case. Before the case was submitted to the jury, Mr. Yates moved for a directed verdict, and all but three of the claims against Mr. Yates — negligent misrepresentation, negligence, and breach of contract — were dismissed. Experts, including Eugene Cole, Ph.D., testified at trial about the effects the mold may have had on the Reighards.
¶ 7 The jury found for the Reighards on their negligence claim and awarded them $10,000 in property damage, $0 in medical expenses, $0 for loss of use and enjoyment of residence, $0 for other economic losses, and $2,500 in noneconomic damages, including pain and suffering. On the other hand, the jury found in favor of Mr. Yates on the Reighards' negligent misrepresentation claim. The jury also found that the Reighards failed to perform some of their contractual duties. The verdict form instructed the jury to stop deliberation on the contract claim if it determined the Reighards had not done what the contract required, so the jury did not reach the question of whether Mr. Yates breached the contract. The trial court granted Mr. Yates's posttrial motion to reduce the jury verdict by $5,000 because the Reighards had already received that amount from E. Marshall Plastering. The trial court determined that there was no prevailing party in the suit and therefore neither side should receive attorney fees.
¶ 8 The Reighards and Mr. Yates raise multiple issues on appeal and cross-appeal. We have jurisdiction to hear this appeal under Utah Code section 78A-3-102(3)(j).
¶ 9 First, Mr. Yates appeals the trial court's conclusion that, as a builder, he owed a duty to the Reighards. In a related challenge, Mr. Yates argues that the trial court erred when it determined that the economic loss rule does not bar the Reighards' recovery for property damage. "The question of whether a duty exists is a question of law" involving an "examination of the legal relationships between the parties."
¶ 10 Second, Mr. Yates argues that the trial court abused its discretion by allowing Eugene Cole, Ph.D., to testify as an
¶ 11 Third, the Reighards appeal the trial court's denial of their motion for judgment notwithstanding the verdict. On appeal, the court will "defer to the jury and evaluate the evidence in a light favorable to the verdict."
¶ 12 Fourth, both Mr. Yates and the Reighards appeal the trial court's determination that there was not a prevailing party and therefore neither side should receive attorney fees. Determination of the prevailing party is an appropriate question for the sound discretion of the trial court and depends in large measure on the context of each case.
¶ 13 Finally, Mr. Yates challenges the trial court's decision to award the Reighards costs as part of the final judgment in this matter and its decision to reduce the amount of the jury's verdict and interim judgment because of a third party settlement. We remand these issues without reaching the merits because, in light of our decision altering the total amount of damages recoverable, we permit the parties an opportunity to argue their positions on the reduction of damages and the allocation of costs.
¶ 14 The economic loss rule prevents recovery of economic damages under a theory of tort liability when a contract covers the subject matter of the dispute. Thus, we hold that under the economic loss rule the Reighards may not recover economic damages to their house but may recover damages due to bodily injury. We next address the expert testimony of Eugene Cole, Ph.D., and determine that the trial court properly admitted it. We decline to overturn the jury's verdict in this case. The contract provided the only basis for awarding attorney fees and, because Mr. Yates prevailed on the contract suit, he is entitled to recover attorney fees for his defense of that cause of action. We reverse in part and remand for further determinations regarding the appropriate award of damages.
¶ 15 Before reaching the merits of this case, we address Mr. Yates's motion to dismiss the Reighards' cross-appeal as untimely. Mr. Yates argues that the Reighards' notice of cross-appeal and motion for extension of time were not timely filed according to rule 4(d) of the Utah Rules of Appellate Procedure and that the Reighards did not demonstrate "excusable neglect" or "good cause" for an extension of time to appeal. We reject this argument. The trial court found excusable neglect and its "discretion to grant or deny a [motion for extension of time to appeal] is very broad."
The trial court signed the Amended Judgment on June 18, 2010, and entered it into the docket on June 22, 2010. The Reighards were represented by local Utah counsel as well as California counsel admitted pro hac vice. California counsel received a copy of the Amended Judgment on June 25, 2010, but the copy was not date stamped. The court did not mail a copy to Utah counsel. Mr. Yates filed his notice of appeal on July 15, 2010. Under rule 4(d), the Reighards had until July 29, 2010, fourteen days after Mr. Yates's notice of appeal, to file a notice of cross-appeal. The Reighards filed their notice of cross-appeal on August 6, 2010, simultaneously filing a motion for extension of time.
¶ 17 Utah Rule of Appellate Procedure 4(e) provides the circumstances under which the trial court may extend the time for filing a notice of appeal.
The trial court granted the Reighards' motion for extension of time because it found that the Reighards met the requirements for excusable neglect as defined in Serrato v. Utah Transit Authority,
Applying this equitable balancing approach, the trial court examined the circumstances of this case and found the following facts persuasive to the finding of excusable neglect. The Amended Judgment was not date stamped by the trial court clerk, causing confusion as to when the thirty-day deadline for filing a notice of appeal began to run. The Amended Judgment was mailed to the Reighards' counsel in California but was never mailed to local Utah counsel. The court acknowledged that it should have mailed the Amended Judgment to local counsel, "and receipt of the judgment by the local Utah counsel may have led to the timely filing of the notice of cross-appeal." Additionally, the Reighards' counsel did not receive Mr. Yates's notice of appeal until July 19 or July 20, 2010. Counsel was out of the office nine of the thirteen business days following receipt of this notice. The trial court determined that counsel's absence, combined with the court's failure to mail the Amended Judgment to local counsel, hindered the Reighards' ability to track the deadlines and file the notice of cross-appeal on time.
¶ 18 "We reemphasize that the trial court's inquiry is fundamentally equitable in nature" and merits broad deference on review.
¶ 19 A duty may arise from one of several sources.
¶ 20 The economic loss rule prevents recovery of economic damages under a theory of nonintentional tort when a contract covers the subject matter of the dispute. The economic losses covered by the economic loss rule are
Under such circumstances, the contract is the exclusive means of obtaining economic recovery. This result is compelled because a contract may alter or eliminate common law tort duties.
¶ 21 Whether the economic loss rule applies depends on "whether a duty exists independent of any contractual obligations between the parties."
¶ 22 Similarly, the economic loss rule does not apply when there is "damage to other property."
¶ 23 When interpreting a contract we must ascertain the intentions of the parties to the contract.
¶ 24 Here, the basis for our contract analysis is the REPC between the Reighards and Mr. Yates. The relevant provisions of the REPC, the contract for the sale of the house from Mr. Yates to the Reighards, read:
In a separate document titled "Seller's Property Condition Disclosure," Mr. Yates was required to disclose his "actual knowledge regarding the condition of the property."
¶ 25 The subject of the contract is the house, and the contract itself expressly addresses moisture-related damage to the house. Any tort duties that Mr. Yates owed the Reighards regarding the house therefore overlap with Mr. Yates's contract duties to the Reighards. Because the jury did not determine that Mr. Yates breached the contract and found that he had not negligently misrepresented information required under the contract, the Reighards are precluded from recovering an award for damage to the house in either contract or tort.
¶ 26 This application of the economic loss rule is consistent with Utah case law. In Maack v. Resource Design & Construction, Inc., a builder and a buyer contracted for the construction of a house. The buyer then resold the house to a second buyer.
¶ 27 Mr. Yates next contends that the Reighards' negligent construction claim should have been dismissed entirely as a matter of law. He argues that he — the builder — owed the Reighards — the homebuyers — no duty in tort, and therefore any recovery in negligence, even recovery for noneconomic damages or bodily injury, is unavailable.
¶ 28 Mr. Yates relies on Davencourt at Pilgrims Landing Homeowners Ass'n, where we held that a builder did not owe a duty to a homeowners association to act without negligence in the construction of a home.
¶ 29 This court recently examined certain considerations to be used in determining whether a duty exists in B.R. ex rel. Jeffs v. West.
¶ 30 Contrary to Mr. Yates's assertion, we have previously held that a builder does owe certain extracontractual duties to homebuyers.
¶ 31 A duty analysis in this case makes clear that Mr. Yates owed a duty to the Reighards not to expose them to an unreasonable risk of physical injury. Construction and sale of the house were affirmative acts and, furthermore, Mr. Yates and the Reighards established a legal relationship through privity of contract. The remaining considerations in Jeffs include foreseeability — "whether a category of cases includes individual cases in which the likelihood of some type of harm is sufficiently high that a reasonable person could anticipate a general risk of injury to others"
¶ 32 Mr. Yates's duties to the Reighards regarding damage to the house were subsumed within the REPC. What remains is a negligence cause of action for bodily injury. The court did not err in submitting this question to the jury. The jury was instructed on negligence. The instructions included an explanation of a person's "duty to use reasonable care to avoid injuring ... others." The jury was instructed that Mr. Yates could only be found liable if his "negligence ... played a substantial role in causing the injuries" and "a reasonable person could foresee that injury could result from the negligent behavior." Presenting the jury with the question of Mr. Yates's liability for negligently causing the Reighards' bodily injury was not error.
¶ 33 Whether the Reighards suffered bodily injury is a question of fact. Evidence of the physical symptoms the Reighards suffered combined with evidence of the presence of mold and testimony explaining mold's adverse health effects in humans raised a genuine issue of fact for the jury to decide. The jury resolved this factual issue when it awarded the Reighards $2,500 for noneconomic loss including pain and suffering, but $0 for medical expenses. Viewed in the light most favorable to the jury's verdict, the pain and suffering award related to bodily injury and was not barred by the economic loss rule.
¶ 34 Mr. Yates contends that the only evidence suggesting mold caused the Reighards' physical symptoms was inadmissible. The Reighards called Eugene Cole, Ph. D., to testify as to causation. Mr. Yates argues that because Dr. Cole is not a medical doctor he was unqualified to testify that the mold in the residence caused the Reighards' physical symptoms.
¶ 35 Utah Rule of Evidence 702 governs the admissibility of expert testimony. It permits experts to testify regarding scientific, technical, or other specialized knowledge when that knowledge will assist the trier of fact to understand the evidence or to
¶ 36 We hold that the trial court did not abuse its discretion when it allowed Dr. Cole to testify as an expert witness. The evidence before the trial court indicated that Dr. Cole was sufficiently qualified to testify. Dr. Cole has two graduate degrees in public health and his research specifically focused on the potential of microorganisms to cause adverse human health effects. He also has training in human disease and causative factors, the very issues at question in this case. Dr. Cole's testimony was admissible to assist the jury in understanding the causes and effects of mold. He examined pictures and videos of the mold and concluded that it was problematic and needed to be remediated. He also reviewed the plaintiffs' medical records and reports from the mold remediators. Furthermore, there was no serious contention that the Reighards were not exposed to the mold and experts on both sides indicated that the mold in the Reighards' home needed to be removed because of health concerns.
¶ 37 Westberry v. Gislaved Gummi AB,
¶ 38 "A trial court should grant a motion for judgment notwithstanding the verdict if, after viewing the evidence in the light most favorable to the non-movant, it finds that no competent evidence supports the verdict. In reviewing the trial court's determination ..., this Court must apply the same standard."
¶ 39 Instead of providing the court with a traditional insufficiency of the evidence argument, and meeting their obligation to marshal evidence, the Reighards have argued that the jury was improperly instructed. For the negligent misrepresentation
¶ 40 For the breach of contract claim, the Reighards argue that the most likely reason the jury found that Mr. Yates did not breach the REPC is that "the jury did not understand the Special Verdict Form as it pertained to the concept of Plaintiffs' obligations under the REPC." The Reighards now allege that the "catalyst for such jury confusion" was Mr. Yates's closing argument theory that the Reighards failed to comply with the mediation provision in the REPC. But the Reighards failed to object to the jury instructions and the record reveals no indication that they objected to closing argument at trial. Even if the closing argument and jury instructions were improper, the remedy would not be entering judgment in the Reighards' favor notwithstanding the verdict. Because the Reighards failed to show that the evidence in support of the verdict is insufficient as a matter of law, we defer to the jury and decline to reopen the judgment entered on the jury verdict.
¶ 41 The trial court abused its discretion in denying Mr. Yates attorney fees for his successful defense of the breach of contract action. "Attorney fees are generally recoverable in Utah only when authorized by statute or contract."
¶ 42 In light of our decision barring recovery for property damage, the total award to the Reighards is now $2,500. Under rule 68(b) of the Utah Rules of Civil Procedure, when a party makes an offer to resolve all claims under the rule,
¶ 43 Mr. Yates served an Offer of Judgment on the Reighards for the amount of $10,000. The Reighards have not had the opportunity to argue that an award of costs would create manifest injustice. Such an argument is plausible in light of the trial court's consistent rulings that the economic loss rule did not bar property damage and the jury's award of $12,500 in the Reighards' negligence case. We therefore remand this issue to the district court.
¶ 44 We also leave to the district court the determination of whether the $5,000 settlement with the stucco contractor would result in the Reighards receiving "double recovery for the same loss."
¶ 45 We hold that under the economic loss rule the Reighards may not recover the $10,000 awarded for damages to their house but may recover the $2,500 awarded for noneconomic damages including pain and suffering. We also hold that the trial court did not err in allowing Dr. Cole to testify as an expert witness or in upholding the jury's verdict. We therefore affirm in part and reverse in part the jury's award of damages to the Reighards. Mr. Yates is the prevailing party on the contract cause of action and therefore may recover attorney fees incurred defending the breach of contract claim. We remand to the trial court for determination of the proper allocation of costs under rule 68(b) of the Utah Rules of Civil Procedure. We also remand for determination of whether the settlement with the stucco contractor would result in double recovery for the same loss.