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Sackler v. Savin

LEXSEE 897 p.2d 1217

Tani Sackler, Plaintiff and Appellant, v. Robert Savin,
Defendant and Appellee.

No. 940258

SUPREME COURT OF UTAH

897 P.2d 1217; 1995 Utah LEXIS 39; 267 Utah Adv. Rep. 22

June 16, 1995, Filed

SUBSEQUENT HISTORY:
[**1] Released for Publication July 14, 1995.

PRIOR HISTORY:
Third District, Summit County. The Honorable David S. Young.

COUNSEL:
Blake S. Atkin, Jonathan Hawkins, Salt Lake City, for plaintiff.

Gordon Strachan, Todd D. Wakefield, Park City, for defendant.

JUDGES:
DURHAM, Justice: Michael D. Zimmerman, Chief Justice, I. Daniel Stewart,
Associate Chief Justice, Richard C. Howe, Justice, Leonard H. Russon, Justice.

OPINIONBY:
DURHAM

OPINION:

[*1218] DURHAM, Justice:

We granted an interlocutory appeal from a Third District Court order denying
plaintiff Tani Sackler's motion to enforce a settlement agreement reached
between Sackler and defendant Robert Savin. We affirm.

This case arises out of a 1986 oral partnership agreement entered into by
Sackler and Savin for the purpose of acquiring a condominium unit in Deer
Valley, which they planned to rent to skiers for profit. The parties contributed
equal sums to the investment and agreed to divide the return equally.

In 1993, Savin began personally occupying the unit on occasion, and a dispute
arose over how much Savin should pay for his personal use. On June 17, 1993,
Sackler wrote Savin, demanding that he pay her one-half of [**2] the estimated
owner usage value. On August 19, 1993, in a letter from Savin's counsel, Savin
presented Sackler with a proposal. Savin's proposal expressly stated that
"should the general terms of this letter be acceptable," then the parties could
"proceed to a formal agreement." Savin's proposal provided in pertinent part:

[Savin] is fully prepared to pay for his personal use of the unit. That
compensation to [Sackler] would be based on the following basic criteria:

PAGE 2
897 P.2d 1217, *1218; 1995 Utah LEXIS 39, **2;
267 Utah Adv. Rep. 22

1. [Savin] would be charged the "rack rate"[ n1 ] applicable to each period
during which [Savin] personally occupied the unit. [Savin] would be given a 10%
discount from the applicable "rack rate". That discount represents the standard
discount that would be given to a travel agency for having placed guests in the
unit.

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n1 "Rack rate" means full rental rate.

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2. For any periods in which the unit was not otherwise booked for guest use,
but was used by [Savin] (due to lack of seasonal use, etc.) [Savin] would [**3]
pay the rate of $ 50.00 per night for use of the suite; and $ 25.00 per night
for use of an individual bedroom, as is customary for unit owners.

The letter also included a proposal regarding the sale of the unit.

Sackler's counsel responded to Savin's proposal with an October 18, 1993,
letter which provided in part:

Now, with respect to settlement, my client accepts your proposal that [Savin] be
charged the "rack rate" less 10 percent for any personal use of the unit. That
amount will be deducted from [Savin's] 50 percent rental income and [Sackler's]
rental income shall be increased by that amount.

The letter also proposed additional terms regarding the sale of the unit and the
handling of partnership checks and then stated, [*1219] "Please review our
counter proposals with your client and, if he finds them acceptable, please call
me so that I can prepare an agreement."

The next correspondence is a letter dated November 24, 1993, from Sackler's
counsel to Savin's counsel, which memorializes a conversation between counsel
for the parties:

When we last spoke on November 3, 1993 . . . we had agreed to resolve this
matter on the basis set forth in my last [**4] letter to you with the exception
that we were unable to agree on a purchase price net to the owners . . . .

Sackler's counsel then sent two letters to Savin's counsel, dated December 10,
1993, and January 13, 1994, calculating the amounts Savin allegedly owed Sackler
under Sackler's understanding of the parties' alleged agreement. In both
letters, the calculations showed the ninety percent rack rate being paid
directly to Sackler, not to the partnership.

Savin's counsel responded with a letter of January 18, 1994, expressing
surprise that the accounting questions were not separated from the sale of the
condominium. The letter further stated, "Even if your client were to prevail on
all her claims totalling $ 14,360," as set out in Sackler's letter of January
13, "that is only 2.2% of the sale price. . . . Should this potential purchase
for immediate all cash sale of $ 635,000 be lost because of your client's bad
faith refusal to separate, escrow, or resolve independently the modest
accounting question as her fiduciary duties require, my client's counterclaim
PAGE 3
897 P.2d 1217, *1219; 1995 Utah LEXIS 39, **4;
267 Utah Adv. Rep. 22

will seek substantial damages."

The next written correspondence is a letter of January 20, 1994, in which
Savin's counsel [**5] states that Savin is still willing to reimburse Sackler
"according to the formula agreed upon by the parties back in October--90% of
the rack rate." The letter further stated, "At this time, we neither agree nor
disagree with the dollar figure set forth in your letter of January 13, 1994
because we have not yet been able to confirm the dates of usage of the unit."

In a letter of January 27, 1994, Savin's counsel wrote Sackler's counsel that
if Sackler would allow the sale of the condominium, "Savin [would] pay from his
portion of the proceeds all of the $ 14,360.00 amount demanded in [the] letter
of January 13, 1994 for his personal use of the condominium." In a letter of
January 31, 1994, Savin's counsel again wrote Sackler's counsel that if Sackler
would cooperate in the sale of the unit to the procured buyer, Savin would pay
Sackler $ 17,915 in full settlement for Savin's use of the unit.

Sackler's counsel responded with a February 4, 1994, letter demanding $
39,920 for Savin's use of the unit. The computations laid out in the letter made
clear that Sackler intended the ninety percent rack rate be paid directly to
her, not to the partnership. Savin's counsel responded in a [**6] letter of
February 4, 1994, n2 that the parties were operating under a misunderstanding:

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n2 In their briefs, the parties refer to this letter as the letter of
February 8, 1994. However, this letter was merely received on February 8, 1994.
It is dated January 29, 1994, on page one and February 4, 1994, on page two.
Because the letter references Sackler's letter of February 4, 1994, as "today,"
we refer to this letter as the letter of February 4, 1994.

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Until today, our clients had agreed that "[Savin] be charged the 'rack rate'
less 10 percent for any personal use of the unit." See Your letter of October
18, 1993. My client had agreed to this approach because it would have placed
your client in the same position she would have been in had the unit been rented
to a regular paying guest (i.e., she would have received her half of the rack
rate minus the 10 per cent which a travel agent would have taken off the top, or
approximately $ 17,000).

Today you expressed for the first time that Ms. Sackler's [**7] intention
since the outset has been that she receive the full 90% of the rack rate. Under
such a proposal, Ms. Sackler would receive twice the amount to which she would
have been entitled if the room had been rented to a regular paying guest--a
windfall to Ms. Sackler at Mr. Savin's expense of almost $ 20,000 according to
your calculations. Your client's position is unreasonable, unfair [*1220] and
unacceptable and we, therefore, reject her proposal.

Despite Mr. Savin's repeated efforts to compromise and offer reasonable
solutions, Ms. Sackler continues to deal in apparent bad faith. It is clear from
our conversation this afternoon . . . that further efforts to negotiate with Ms.
Sackler would be futile. Therefore, all previous offers of settlement and
compromise to Ms. Sackler are hereby revoked.
PAGE 4
897 P.2d 1217, *1220; 1995 Utah LEXIS 39, **7;
267 Utah Adv. Rep. 22

In response to this letter, Sackler's counsel wrote Savin's counsel in a letter
of February 8, 1994, claiming that Savin was "reneging" on his proposal. The
February 8 letter claims that "the correspondence has always contemplated that
Ms. Sackler would receive the full 90 percent of the rack rate for the
inappropriate personal use of the unit by Mr. Savin." The letter further states
[**8] that the proposal to pay ninety percent of the rack rate to Sackler
seemed reasonable and fair because paying ninety percent of the rack rate to
the partnership would not put Ms. Sackler in the position she would have been
had Savin not inappropriately used the unit. The letter alleges that if Savin
had not been using the unit, the full rack rate would have been collected.
Moreover, Savin's use of the unit allegedly "took it off the market, therefore
causing consequential losses unrelated to his own personal use of the unit."
This letter concluded the parties' correspondence regarding a settlement
agreement.

In January 1994, during the course of the parties' correspondence, Sackler
brought an action against Savin, alleging breach of contract, forgery and
conversion, n3 injunctive relief, and an accounting. In April 1994, Sackler
moved to enforce the settlement agreement. Judge Young ruled that no settlement
agreement had been reached and therefore denied the motion. Sackler appeals.

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n3 Sackler alleges in her complaint that Savin forged her name on several
joint income payment checks.

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[**9]

We first state the proper standard of review. "Questions of contract
interpretation not requiring resort to extrinsic evidence are matters of law,
and on such questions we accord the trial court's interpretation no presumption
of correctness." Zions First Nat'l Bank, N.A. v. National Am. Title Ins. Co.,
749 P.2d 651, 653 (Utah 1988). In refusing to enforce the settlement agreement,
the trial court based its decision solely on the documents constituting the
correspondence between the parties. Because the trial court took no extrinsic
evidence, we review for correctness.

Settlement agreements are favored by law and may be summarily enforced if
there is a binding settlement agreement and the excuse for nonperformance is
comparatively insubstantial. Zions First Nat'l Bank v. Barbara Jensen Interiors,
Inc., 781 P.2d 478, 479 (Utah Ct. App. 1989). Settlement agreements are governed
by the rules applied to general contract actions. Butcher v. Gilroy, 744 P.2d
311, 312 (Utah Ct. App. 1987). Under the principles of basic contract law, a
contract is not formed unless there is a meeting of the minds. Pingree v.
Continental Group of Utah, Inc., 558 P.2d 1317, 1321 (Utah 1976). [**10]

Sackler contends that the correspondence between the parties shows a meeting
of the minds that created a binding settlement agreement. Sackler directs us to
statements in the correspondence between the parties that might indicate a
meeting of the minds. In particular, Sackler points out Savin's proposal in the
August 19 letter to pay her ninety percent of the rack rate for his personal use
of the property, as well as her response accepting his proposal. Sackler's
PAGE 5
897 P.2d 1217, *1220; 1995 Utah LEXIS 39, **10;
267 Utah Adv. Rep. 22

response stated that the compensation would be deducted from Savin's rental
income and added to Sackler's rental income. Sackler asserts that the parties
clearly understood and agreed that Savin would make the ninety percent rack rate
payments directly to Sackler, not to the partnership.

Savin, on the other hand, claims that the trial court was correct in finding
that "no settlement agreement was reached." Savin claims that at no point during
the negotiations did the parties reach a meeting of the minds. Although both
parties agreed on the ninety percent rack rate formula, there was a [*1221]
dispute as to who would be compensated: the partnership or Sackler alone. Savin
alleges it was his understanding that he would compensate [**11] the
partnership, meaning that both Sackler and he would receive half of the
compensation. According to Savin, he never intended to compensate Sackler
directly, in which case she would retain the full payment.

Savin also claims there was a dispute as to the precise amount he would pay
Sackler. In response, Sackler argues that although the parties never agreed on
an exact figure, they agreed on an exact formula with which specific dollar
figures could be calculated at some later point.

An examination of the correspondence between the parties leads us to agree
with the trial court's conclusion that a settlement agreement was never reached.
Savin's August 19 letter indicates that even if Sackler found the terms of
Savin's proposal acceptable, Savin contemplated that the parties would not enter
an agreement until sometime in the future. Savin's proposal clearly provided
that if the terms of the letter were acceptable, then the parties could "proceed
to a formal agreement." Although Sackler refers to Savin's proposal as an
"offer," the characterization is not determinative.

The Restatement of Contracts on preliminary negotiations states:

A manifestation of willingness to enter [**12] into a bargain is not an offer
if the person to whom it is addressed knows or has reason to know that the
person making it does not intend to conclude a bargain until he has made a
further manifestation of assent.

Restatement (Second) of Contracts @ 26 (1981); see also DeBry & Hilton Travel
Servs., Inc. v. Capitol Int'l Airways, 583 P.2d 1181, 1186 (Utah 1978) (quoting
favorably a prior version of section 26). Sackler's response to Savin's August
19 proposal further indicates that both parties understood a binding contract
would not be entered until some point in the future. Sackler's October 18 letter
stated that if Savin found the counterproposals acceptable, to please call "so
that I can prepare an agreement." These letters indicate that both parties
understood they had not yet formed a binding settlement agreement.

The Restatement of Contracts on the existence of a contract where a written
memorial is contemplated provides:

Manifestations of assent that are in themselves sufficient to conclude a
contract will not be prevented from so operating by the fact that the parties
also manifest an intention to prepare and adopt a written memorial thereof; but
the [**13] circumstances may show that the agreements are preliminary
negotiations.

PAGE 6
897 P.2d 1217, *1221; 1995 Utah LEXIS 39, **13;
267 Utah Adv. Rep. 22

Restatement (Second) of Contracts @ 27 (1981) (emphasis added); see also DeBry,
583 P.2d at 1186. Comment c to section 27 states:

Among the circumstances which may be helpful in determining whether a contract
has been concluded are the following: the extent to which express agreement has
been reached on all the terms to be included, whether the contract is of a type
usually put in writing, whether it needs a formal writing for its full
expression, whether it has few or many details, whether the amount involved is
large or small, whether it is a common or unusual contract, whether a standard
form of contract is widely used in similar transactions, and whether either
party takes any action in preparation for performance during the negotiations.
Such circumstances may be shown by oral testimony or by correspondence or other
preliminary or partially complete writings.

Restatement (Second) of Contracts @ 27 cmt. c (1981). The correspondence between
the parties demonstrates that the parties were still in preliminary negotiations
.

Most notably, the parties had not come to an agreement [**14] on the
essential terms of the contract. First, there was an apparent misunderstanding
as to the substance of the agreement, i.e., the so-called "rack rate formula."
Sackler's letter of June 17 demanded that Savin pay her one-half of the
estimated owner usage value. Consistent with Sackler's demand, Savin proposed
that he be charged ninety percent of the rack rate, apparently understanding
that he would be compensating the partnership, not Sackler [*1222] directly.
Under Savin's alleged understanding, Sackler would receive one-half of ninety
percent of the rack rate, a proposal entirely consistent with Sackler's June 17
demand. Subsequent to this correspondence, Sackler began setting out a
different formula. Her October 18 letter stated that the ninety percent rack
rate would be deducted from Savin's rental income and added to her rental income
. Her calculations in the letters of December 10 and January 13 further
demonstrate this new formula. Because neither party pointed out this radical
change in "understanding," we find it difficult to conclude that there was any
such understanding. Sackler has failed to convince us that there was a meeting
of the minds as to the general formula the parties [**15] would use in a
settlement agreement. n4

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n4 Sackler also argues that Savin's verified pleadings demonstrate that he
agreed to pay her directly. We find this argument without merit. In his answer
and verified counterclaim, Savin merely reiterates what Sackler agreed to in her
letters. Such a recitation of Sackler's communications is in no way an admission
that Savin agreed to these terms.

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The parties' correspondence demonstrates that they did not reach a meeting of
the minds as to the essential terms of a settlement agreement. Sackler as the
plaintiff has the burden of showing that an offer and acceptance were more
probable than not. See R.J. Daum Constr. Co. v. Child, 122 Utah 194, 247 P.2d
817, 821 (Utah 1952). Sackler has failed to convince us that the parties
proceeded beyond preliminary negotiations for a settlement agreement.

PAGE 7
897 P.2d 1217, *1222; 1995 Utah LEXIS 39, **15;
267 Utah Adv. Rep. 22

Accordingly, we affirm the trial court's denial of Sackler's motion for
summary enforcement. The case is remanded for trial.

CONCURBY:
MICHAEL D. ZIMMERMAN; I. DANIEL STEWART; RICHARD C. HOWE; LEONARD [**16] H.
RUSSON

CONCUR:

WE CONCUR:

Michael D. Zimmerman, Chief Justice

I. Daniel Stewart, Associate Chief Justice

Richard C. Howe, Justice

Leonard H. Russon, Justice

   

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