The Utah Supreme Court has ruled that two would-be homebuyers were entitled to collect attorney fees from the owners who backed out of a sale.
The high court affirmed last month that Terri and Allen Foote were entitled to attorney fees from Blaine and Katherine Clark, who backed out of the sale of the Utah County home although the Footes had paid $1,000 in earnest money.The justices also reduced the $100 damages awarded by the trial court to $1.
"The message is that if you breach a contract, even if there are only nominal damages, you may have to pay attorney's fees," said the Footes' attorney, Marlon Bates.
Bates had claimed $14,100 in attorney fees. The amount was approved by District Judge Boyd Bunnell. The high court ordered Bunnell to recalculate those costs, saying the judge had rubber-stamped Bates' fee request without a meaningful evaluation.
That raises the hopes of Spencer Hatch, attorney for the Clarks. "We expect the trial court will lower the fees drastically," Hatch said.
The case originated from a 1993 home-sale negotiation in which the Footes put down $1,000 in earnest money on a Pleasant Grove home owned by the Clarks.
While the Footes were arranging financing and before the 30-day earnest-money contract period elapsed, the Clarks reneged on the deal and sold the house to another party.
The Footes sued, saying they suffered monetary damage, as well as emotional trauma.
The Pleasant Grove home was in Terri Foote's childhood neighborhood, it was close to her elderly mother and it had a fenced yard and finished basement. The color scheme matched the Footes' furniture.
When the Clarks sold the home to a California couple who paid the same price the Footes had offered, the Footes settled for a less attractive and more expensive home in Lehi, the couple said.
Bunnell found the Clarks had breached the purchase agreement, but he found no monetary damage was incurred. He said an aggrieved party generally cannot recover damages for "mere disappointment or mental distress" in a land-sale contract.
Consequently, the judge awarded the Footes nominal damages of $100, plus attorney fees.
The Utah Supreme Court said the damage award was more than nominal.
In a partially dissenting opinion, Chief Justice Richard Howe said he would award the Footes an attorney fee of only $1, based on the finding of nominal damages.
"I would not promote the filing of this type of case where there is no chance of recovery of compensatory damages," Howe wrote.