Desert Miriah, Inc. v. B & L AUTO, INC.

2000 UT 83, 12 P.3d 580, 407 Utah Adv. Rep. 3, 2000 Utah LEXIS 144, 2000 WL 1576477
CourtUtah Supreme Court
DecidedOctober 24, 2000
Docket990448
StatusPublished
Cited by43 cases

This text of 2000 UT 83 (Desert Miriah, Inc. v. B & L AUTO, INC.) is published on Counsel Stack Legal Research, covering Utah Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Desert Miriah, Inc. v. B & L AUTO, INC., 2000 UT 83, 12 P.3d 580, 407 Utah Adv. Rep. 3, 2000 Utah LEXIS 144, 2000 WL 1576477 (Utah 2000).

Opinion

WILKINS, Justice:

T1 Defendant Denning appeals from an order of the district court dismissing his counterclaim for unjust enrichment. We affirm.

BACKGROUND

1 2 Plaintiff Desert Miriah, Inc., was incorporated on August 21, 1991. At the time of incorporation, plaintiff was called "Lake Powell 'n Houseboats (3), Inc." Plaintiffs name was changed to Desert Miriah, Inc., on October 13, 1992. K. DeMarr Zimmerman (Zimmerman) was one of plaintiff's incorporators and its original president. When plaintiff was incorporated, and throughout the period relevant to this action, Zimmerman also operated a separate business under a d/b/a known as "Lake Powell 'n Houseboats."

T3 After incorporation, plaintiff purchased a Sumerset Mereruiser houseboat known as the "Desert Miriah" (the houseboat). To purchase the houseboat, plaintiff transferred all of its outstanding stock to Zimmerman in exchange for Zimmerman's promise to finance the purchase. On August 26, 1991, in order to meet his obligation to plaintiff, Zimmerman, individually, and in his capacity as plaintiff's president, executed a note in the amount of $100,000 in favor of Nelson Family Enterprises, LTD (the Nelson note). Zimmerman, acting in his capacity as plaintiff's president, also executed a security agreement in favor of Nelson Family Enterprises, granting Nelson Family Enterprises a security interest in the houseboat. The Nelson note was due and payable in full on or before February 25, 1992.

[4 When the Nelson note came due, Zimmerman failed to make the final payment of $50,000. After that time, the attorney for Nelson Family Enterprises contacted Zimmerman several times and informed him that if payment was not made, plaintiff's houseboat would be seized and sold in accordance with the terms of the security agreement.

T5 Sometime prior to March 26, 1992, Zimmerman approached Denning and requested that Denning loan Lake Powell 'n Houseboats $50,000 to purchase a houseboat. Denning was a shareholder in Lake Powell 'n Houseboats 1, Inc., and knew of Zimmerman's business of selling shares in corporations whose sole assets were houseboats. On March 26, 1992, Denning agreed to make the loan and delivered to Zimmerman a check in the amount of $55,000 payable to Lake Powell 'n Houseboats. Zimmerman executed a promissory note in favor of Denning (the Denning note). The Denning note declared that Zimmerman d/b/a Lake Powell 'n Houseboats promised to pay Denning $50,000 on or before April 8, 1992, and was signed "K. DeMarr Zimmerman DBA Lake Powell 'n Houseboats." Zimmerman negotiated the check by signing it as "President" of Lake Powell 'n Houseboats, and delivered the proceeds to Nelson Family Enterprises.

T6 Zimmerman defaulted on the Denning note. On August 20, 1992, Denning filed a Form UCC-1 with the State of Utah. However, the filing was not valid because it was not signed by the debtor and the serial number of the houseboat was incorrect.

T7 In 1998, Zimmerman filed a petition in bankruptcy under Chapter 7 of the Bank-ruptey Code. Denning did not pursue a claim in the bankruptey proceedings, and Zimmerman's obligation to Denning was subsequently discharged.

T8 In September and October of 1993, Denning attempted to take possession of the houseboat. As a result, the houseboat was eventually seized and impounded by the Kane County Sheriff's Office. Consequently, plaintiff brought suit against Denning in November of 1993. In July 1997, Denning filed a counterclaim, alleging that he is entitled to recover the $50,000 which he loaned to Zimmerman from plaintiff under a theory of unjust enrichment. On March 10, 1999, the district court entered an order dismissing Denning's counterclaim. Denning appeals.

*582 STANDARD OF REVIEW

19 Whether a claimant has been unjustly enriched is a mixed question of law and fact. See Jeffs v. Stubbs, 970 P.2d 1234, 1244 (Utah 1998). 'We uphold a lower court's findings of fact unless "the evidence supporting them is so lacking that we must conclude the finding is 'clearly erroneous.! " Id. Furthermore, we "afford broad discretion to the trial court in its application of unjust enrichment law to the facts." Id. at 1245.

10 Denning, however, challenges the application of this standard of review. As we said in Jeffs in determining how much discretion to give a trial court regarding unjust enrichment claims, we consider factors weighing for and against giving discretion to the district court's application of the law to the facts. See id. at 1244. We stated in Jeffs that the factors weighing in favor of broad discretion include:

(i) whether "the facts to which the legal rule is to be applied are so complex and varying that no rule adequately addressing the relevance of all these facts can be spelled out"; (i) whether "the situation to which the legal principle is to be applied is sufficiently new to the courts that appellate judges are unable to anticipate and articulate definitely what factors should be outcome determinative"; and (ii) whether "the trial judge has observed 'facts' such as a witness's appearance and demeanor, relevant to the application of the law that cannot be adequately reflected in the ree-ord available to appellate courts."

Id. (quoting State v. Pena, 869 P.2d 932, 936 (Utah 1994)). After weighing these factors in Jeffs, we concluded that the district court should be granted broad discretion in applying the law to the facts in cases involving claims of unjust enrichment. See id. at 1245.

T11 Denning urges this court to review the district court's dismissal of his unjust enrichment counterclaim for correctness, granting no discretion to the district court's application of the law to the facts in this case because the parties stipulated to the facts. Denning maintains that because the parties stipulated to the facts, the trial court did not "observe" any facts that are not presented in identical form on appeal. As a result, he claims that the third factor weighing in favor of granting discretion to the district court is absent, and therefore, we should grant no discretion to the district court in this case.

112 We disagree. Although the district court did not have the opportunity to "observe" the stipulated facts, it did have adequate opportunity to become fully acquainted with the facts. Additionally, the other reasons we described in Jeffs for granting the trial court broad discretion are still applicable in this case and weigh in favor of granting discretion to the district court. As we stated in Jeffs, the facts underlying unjust enrichment claims vary greatly from case to case, and the doctrine of unjust enrichment was specifically developed to address situations "that did not fit within a particular legal standard but which nonetheless merited judicial intervention." Id. at 1244-45. In Jeffs, we also said that an appellate court's ability to clearly articulate outcome-determinative factors in unjust enrichment cases "remains elusive," and thus favored granting the trial court broad discretion. Id. at 1245. Furthermore, we determined that there were no policy reasons outweighing the factors favoring broad discretion. As in Jeffs, we will review the district court's legal findings for correctness, granting it broad discretion in its application of unjust enrichment law to the stipulated facts.

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Cite This Page — Counsel Stack

Bluebook (online)
2000 UT 83, 12 P.3d 580, 407 Utah Adv. Rep. 3, 2000 Utah LEXIS 144, 2000 WL 1576477, Counsel Stack Legal Research, https://law.counselstack.com/opinion/desert-miriah-inc-v-b-l-auto-inc-utah-2000.