Brady v. Park

This opinion is subject to revision before final

publication in the Pacific Reporter

2019 UT 16

IN THE

SUPREME COURT OF THE STATE OF UTAH

DON BRADY, SINNIKKA BRADY, DON BRADY INTERIOR DESIGN,

and FINNISH TOUCH DAY SPA,

Appellees and Cross-Appellants,

v.

KANG S. PARK, KANG SIK PARK,

and BANK OF UTAH,

Appellants and Cross-Appellees.

No. 20160425

Filed May 8, 2019

On Direct Appeal

Third District, Salt Lake

The Honorable Robert P. Faust

No. 060917206

Attorneys:

J. Michael Gottfredson, Mark F. James, Mitchell A. Stephens,

Salt Lake City, for appellees and cross-appellants

Troy L. Booher, Clemens A. Landau, Salt Lake City, for appellants

and cross-appellees

CHIEF JUSTICE DURRANT authored the opinion of the Court, in which

JUSTICE PEARCE and JUSTICE PETERSEN joined.

ASSOCIATE CHIEF JUSTICE LEE and JUDGE CONNORS joined in the

majority as to Sections II, III, IV, V, VI, and VII.

ASSOCIATE CHIEF JUSTICE LEE authored a dissenting opinion as to

Section I.B.

JUDGE CONNORS authored a dissenting opinion as to Section I.

Having Recused Himself, JUSTICE HIMONAS does not participant

herein. DISTRICT COURT JUDGE DAVID CONNORS sat.

BRADY v. PARK

Opinion of the Court

CHIEF JUSTICE DURRANT, opinion of the Court:

Introduction

¶1 This is the latest chapter in a contract dispute that began

nearly twenty years ago. The parties’ dispute stems from a

seller-financed real estate transaction in 1996. On one side are Kang

S. Park (the seller-financer), his trust (represented by Mr. Park as

trustee), and the Bank of Utah (the custodian of Mr. Park’s IRA

account) (collectively, Park Defendants). On the other side are the

Bradys (the buyers). The Bradys purchased the real estate in question

with two promissory notes. One of the notes required the Bradys to

make an installment payment each month, in the amount of

$5,923.61, from January 1, 1997 to October 1, 2006; and a final balloon

payment, consisting of the remaining unpaid principal and accrued

interest, on October 31, 2006. The note applied a 10 percent base

interest rate on the unpaid principal. And it established two

consequences in the event the Bradys missed an installment

payment: (1) a late fee (equal to 10 percent of the missed installment

payment), and (2) a bump up in the base interest rate (10 percent) to

a default interest rate (20 percent) until the note was “brought

current.”

¶2 Although the Bradys made monthly installment payments

throughout the life of the note, when the time came to pay the final

balloon payment, the parties disagreed over the amount owing. The

Bradys filed suit for declaratory relief in 2006 and have been locked

in litigation ever since.

¶3 Most of the disagreements between the parties relate to the

manner in which the amount owed is calculated. Although many

disputed issues have been resolved through two rounds of litigation

in the district court and one round in the court of appeals, the parties

now ask us to resolve seven final issues.

¶4 The first and most important issue is what the note’s

20 percent default interest provision requires in order to be “brought

current,” thereby returning the note’s interest rate back to a base

10 percent rate after a missed installment payment had bumped up

the interest rate to the 20 percent default rate. Because the currency

of the note determines when, and for how long, 20 percent default

interest accrued throughout the ten year life of the note, our

resolution of this issue will significantly affect the amounts owed

under the note.

¶5 The Bradys argue that the note’s currency is exclusively tied

to the monthly installment payments. In other words, they argue

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Opinion of the Court

that the 20 percent default interest begins accruing when an

installment payment becomes late, and it stops once the late

installment payment is paid. During a previous appeal, the Park

Defendants argued that, in addition to late installment payments, the

note also required the Bradys to pay any of the additional, accrued

default interest to bring it current. This issue was resolved by the

court of appeals in a decision upon which we denied certiorari

review.1 On remand, the Park Defendants argued that the note is not

current if there is any unpaid 10 percent penalty fee amount. But the

district court rejected this argument.

¶6 The Park Defendants now argue that the mandate rule

precluded the district court from reaching this question. We hold

that the district court was not so precluded. The Park Defendants

also argue that the district court erred in determining that the

10 percent late fee need not be paid to bring the note current. We

hold that the district court erred in deciding this issue by construing

an ambiguity in the note against the Park Defendants, as drafters,

without first considering extrinsic evidence. Accordingly, we

remand this question to the district court for a new determination

after considering relevant extrinsic evidence.

¶7 The second issue before us is whether the note’s 10 percent

late fee provision applies to the final balloon payment. The district

court, after considering extrinsic evidence, held that it did not and

that it would be unconscionable if it did. The Park Defendants

challenge both determinations. We affirm the court’s interpretation

of the note on this point because it was not clearly erroneous.

Because our resolution of this issue renders a consideration of the

unconscionability issue unnecessary, we decline to address it.

¶8 The third issue before us is whether the district court

violated the mandate rule when it applied installment payment

dates differing from the court’s previously accepted payment dates.

We hold that it did. Accordingly, we reverse the district court’s

payment date determination and remand for a new accounting in

accordance with the pre-appeal payment dates.

_____________________________________________________________

1 The court of appeals held that the note did not require the

Bradys to pay off any of the additional, 20 percent default interest

that accrued after a missed installment payment to bring the note

current. Brady v. Park, 2013 UT App 97, ¶ 36, 302 P.3d 1220.

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¶9 The fourth issue before us is whether the district court erred

when it awarded pre- and postjudgment interest to the Bradys at a

rate of 10 percent. The Park Defendants argue that this was not

authorized under the plain language of Utah Code sections 15-1-1

and 15-1-4. We agree. Accordingly, we reverse and remand to the

district court for an entry of default interest at an appropriate rate.

¶10 The fifth issue is whether the district court erred in denying

the Park Defendants’ rule 60(b) motion. The Park Defendants argue

that the district court erred by failing to remove the “joint and

several” designation from the final judgment because two of the

Park Defendants—Paul M. Halliday, as trustee of two trust deeds,2

and the Bank of Utah, as custodian of Mr. Park’s IRA account—were

in the litigation only as part of a claim for injunctive relief. We hold

that the district court’s ruling on the rule 60(b) motion was not

clearly erroneous, so we affirm.

¶11 The sixth issue on appeal is raised by both parties. After the

latest round of litigation, the district court concluded that neither

party had prevailed and, therefore, neither party was entitled to

attorney fees. Because our rulings on the other issues in this case

may have upended the basis for the court’s attorney fees decision,

we remand for a new attorney fees determination.

¶12 The seventh and final issue is raised by the Bradys. They

assert that we do not have jurisdiction over Mr. Park’s IRA, because

the Bank of Utah, as custodian of Mr. Park’s IRA, failed to file a

timely notice of appeal. We hold that even though we do not have

jurisdiction over the Bank of Utah, our jurisdiction over the IRA’s

owner and beneficiary necessarily includes jurisdiction over the IRA.

Background

¶13 Don and Sinnika Brady purchased commercial property

from Kang S. Park3 in 1996 for $755,625. The Bradys paid Mr. Park in

the form of two promissory notes. The smaller note was for $80,625

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2 Although Mr. Halliday was included as one of the Park

Defendants below, he has disclaimed his interest in these

proceedings and does not participate in this appeal.

3 Mr. Park later assigned his interest in the transaction to the

Kang Sik Park MD PC Profit Sharing Plan, which later assigned it to

the Kang Sik Park Rollover IRA. Defendant Bank of Utah is the

custodian of the IRA.

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and the larger was for $675,000. Each note was secured by two trust

deeds: one on the commercial property and one on a Summit County

investment property owned by the Bradys. Only the larger note

(Note) is at issue here. The Note bore interest at a rate of 10 percent

per year on the unpaid principal. Under the terms of the Note, the

Bradys were required to make monthly payments of $5,923.61

starting on January 1, 1997, and a final balloon payment on

October 31, 2006 consisting of “the entire principal balance together

with interest thereon.” Importantly, the Note specified two

consequences for a late payment—a 10 percent late fee and a bump

up to a 20 percent default interest rate:

If payment is not made within five (5) days of due date,

a late fee of 10 percent will be due. If payment is not

made within 5 days of due date the entire balance shall

bear interest at the rate of 20% until note is brought

current.

The Note was prepared by a title company, but the 20 percent

default interest provision was included at Mr. Park’s request.

¶14 The Bradys made the first three payments on time, but made

the April 1, 1997 payment late. On May 2, 1997, they made a double

payment comprising the April and May payments plus a 10 percent

late fee (10 percent of the late installment payment) for the April

payment. But they did not pay off any of the default interest that had

accrued from the date the payment was due until the date the late

installment payment was paid. The Bradys made other payments

late, but ultimately made every monthly installment payment.

Seeking to refinance the Note, and believing their payments had

kept the Note current, the Bradys approached Mr. Park through a

bank loan officer in 2000 to obtain a payoff amount.

¶15 According to the Bradys, Mr. Park did not respond to their

payoff request until 2002, when he provided a payoff amount

between $1.4 million and $1.5 million. That is when the Bradys first

learned that Mr. Park believed the Note had not been current, and

had been accruing interest at a 20 percent rate, since March 1997. The

Bradys disputed Mr. Park’s calculation and over the next four years

asked Mr. Park for a corrected payoff amount. They claim Mr. Park

did not respond until October 18, 2006—thirteen days before the

balloon payment was due—when he notified the Bradys that the

payoff amount was $2,585,398. Mr. Park calculated these amounts

based on his assumption that the Note had not been current since the

March 1997 payment, so it had been accruing interest at a 20 percent

rate.

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¶16 After receiving the October 2006 payoff calculation, the

Bradys sued Mr. Park to receive a judicial determination of the

amounts owed on the Note. The Bradys also alleged a number of

other claims, including a request for injunctive relief4 against the

Bank of Utah, as custodian of Mr. Park’s IRA, and Paul M. Halliday,

as trustee of two trust deeds securing the Note. They also sought

damages for Mr. Park’s alleged refusal to accept their tenders of

payment. The Park Defendants counter-sued with a number of

contract-related claims, including breach of contract.

¶17 After a bench trial, the district court ruled, among other

things, that the Note required the Bradys, in order to bring the Note

current, to pay off any default interest that accrued after late

payments. As a result, the court concluded that the 20 percent

default interest had been accruing since March 1997. The district

court also ruled that the Note called for the interest to be

compounded annually during the delinquent period, and that the

10 percent late fee for a late installment payment constituted an

unconscionable penalty.

¶18 The district court then instructed the parties to find a

third-party expert accountant to calculate the remaining amount

owed on the Note in accordance with the court’s legal conclusions. It

explained that the designated accountant should consider the

installment payment date to be the date that Mr. Park actually

received the checks. The court noted, however, that the delivery

dates for some of the checks were unclear because Mr. Park had

allowed those checks to accumulate before depositing them as a

group. So for the accumulated checks, the court instructed the

designated accountant to consider the payment date to be the date

the checks were sent.

¶19 The parties selected Rick Hoffman to perform the Note

calculations. As part of his calculations, Mr. Hoffman determined the

date of each installment payment and applied interest at a 20 percent

rate, compounding annually, from March 1997 to June 30, 2010. He

did not include any amounts for late fees.

¶20 The district court incorporated Mr. Hoffman’s findings into

its February 2, 2011 findings of fact and conclusions of law by

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4 The Bradys requested that the court prohibit the Park

Defendants “from foreclosing on the subject properties until such

time as the correct amount due under the notes is determined.”

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awarding judgment in the amount Mr. Hoffman had calculated and

stating that the “amount was determined in accordance with the

Court’s direction and the Parties’ stipulation in selecting Mr. Rick

Hoffman to perform this calculation.” The final judgment amount

was $2,440,845.

¶21 The parties appealed the district court’s determination. The

Bradys challenged the court’s conclusions that the Note called for

compound interest, that the accrued 20 percent default interest had

to be paid to stop further accrual of default interest, and that the

20 percent default interest provision was conscionable. The Park

Defendants, on the other hand, challenged the court’s rulings that

the 10 percent late fee provision was unconscionable and that the

interest compounded annually rather than monthly. Importantly,

neither party challenged the court’s legal determinations or

Mr. Hoffman’s factual findings related to the payment dates.

¶22 The court of appeals subsequently issued an opinion

deciding these issues.5 It reversed the district court’s decision on two

points. It concluded, first, that the Note called for simple rather than

compound interest6 and, second, that the Note did not require the

Bradys to pay the accrued 20 percent default interest to stop the

accrual of additional default interest.7 The court also concluded that

the district court erred when it ruled that the 10 percent late fee

provision was unconscionable because it had failed to evaluate the

provision using the standard we set out in Commercial Real Estate

Investment, L.C. v. Comcast of Utah II, Inc.8 As a result, it remanded the

case back to the district court to resolve four issues:

(1) whether the challenged provision is unconscionable

under Commercial Real Estate as applied to installment

payments, (2) if not, which installment payments

generated a late fee, (3) whether the late fee provision

applies to the [Note’s final] balloon payment, and (4) if

so, whether that application of the late fee is

unconscionable.9

_____________________________________________________________

5 Brady v. Park, 2013 UT App 97, 302 P.3d 1220.

6 Id. ¶ 21.

7 Id. ¶ 36.

8 2012 UT 49, 285 P.3d 1193.

9 Brady, 2013 UT App 97, ¶ 27.

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Opinion of the Court

¶23 On remand, the district court applied the Commercial Real

Estate test and concluded that the 10 percent late fee provision was

conscionable, that the 10 percent late fee provision did not apply to

the Note’s balloon payment, and that, even if it did, its application to

the final balloon payment would be unconscionable. It also

concluded that the district court’s pre-appeal instructions regarding

the payment dates had not been appealed and would “remain the

law applicable in this case.” Finally, it requested the parties to

submit accountings consistent with its order.

¶24 Both parties submitted proposed accountings, but their

calculations differed drastically from each other. Under the Park

Defendants’ accounting, the Bradys still owed $785,977.01, and

under the Bradys’ accounting, the Bradys’ had overpaid Mr. Park by

$256,255.00—a discrepancy of $1,042,232.01.

¶25 The wide gap between each party’s calculation was due, in

part, to a disagreement regarding whether the 10 percent late fee had

to be paid with each late installment payment or at the end with the

final balloon payment. Mr. Park argued that it became due upon

each default, so it had to be paid with the late installment payment

to bring the Note current, thereby stopping the accrual of 20 percent

default interest. The Bradys, in contrast, argued that late fees were

not due until the final balloon payment. After considering these

arguments, the district court agreed with the Bradys and held that

only the late installment payment needed to be paid to bring the

Note current.

¶26 The parties also disagreed over the dates of the installment

payments. The Park Defendants’ accountant incorporated

Mr. Hoffman’s original payment dates into his calculation, but the

Bradys’ accountant made his calculation using different dates.10 The

Park Defendants urged the district court to adopt their proposed

accounting because it was “consistent with the previous undisturbed

findings in this case,” whereas the accounting submitted by the

Bradys’ accountant contained “a number of errors inconsistent with

the record.” Although the district court considered the Park

Defendants’ arguments, it ultimately accepted the Bradys’ proposed

accounting and issued final judgment to the Bradys in the amount of

_____________________________________________________________

10 It appears that the Bradys’ accountant simply used the dates on

the face of the checks as the payment date for all of the checks—a

method the district court’s pre-appeal decision prohibited.

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$256,255.00. Additionally, the court declined to award attorney fees

to either party, but awarded pre- and postjudgment interest at the

rate of 10 percent per annum pursuant to Utah Code sections 15-1-1

and 15-1-4.

¶27 The court awarded the judgment amount joint and severally

against the Park Defendants. The Park Defendants filed a motion

pursuant to rule 60(b) of the Utah Rules of Civil Procedure to

remove the joint and several designation from the Bank of Utah and

Paul M. Halliday. The motion was brought on the ground that the

Bank of Utah—as custodian of Mr. Park’s IRA—and Mr. Halliday—

as trustee of two trust deeds securing the Note—had been joined in

the case only as defendants to the Bradys’ claim for injunctive relief.

According to the Park Defendants, the court could not now award

monetary damages against the Bank of Utah and Mr. Halliday

because the Bradys’ never alleged any monetary damages against

them in their complaint. The Bradys argued, however, that the joint

and several designation was appropriate because the Note was held

in Mr. Park’s IRA account—of which the Bank of Utah is the

custodian. They also argued that it was appropriate because the

Bank of Utah, acting on behalf of the IRA, had used the pre-appeal

judgment11 to foreclose on the Bradys’ real property. The district

court issued a two-sentence order denying the rule 60(b) motion.

¶28 The Park Defendants appeal the judgment and the district

court’s denial of the rule 60 motion. We have jurisdiction pursuant to

Utah Code section 78A-3-102(3)(j).

Standards of Review

¶29 The first and second issues require us to consider the district

court’s interpretation of a contract. We review a district court’s

interpretation of a contract for correctness.12 But if a contract term is

ambiguous, district courts should consider extrinsic evidence to

resolve the ambiguity.13 If a district court makes a determination of

_____________________________________________________________

11 This judgment was overturned by the court of appeals decision

in this case.

12 See Mind & Motion Utah Invs., LLC v. Celtic Bank Corp., 2016 UT

6, ¶ 15, 367 P.3d 994.

13See Plateau Mining Co. v. Utah Div. of State Lands & Forestry, 802

P.2d 720, 725 (Utah 1990) (“When ambiguity does exist, the intent of

the parties is a question of fact to be determined by the [fact-finder].

(Continued)

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the parties’ intent after considering extrinsic evidence, this is a

factual determination to which we grant deference.14 So if the court’s

decision hinges upon extrinsic evidence, it should be overturned

only if clearly erroneous.15

¶30 Third, we consider whether the district court violated the

mandate rule. We review a district court’s holdings regarding the

mandate rule for correctness.16

¶31 Fourth, we consider the district court’s decision to award

pre- and postjudgment interest. We review a district court’s decision

in this regard for correctness.17

¶32 Fifth, we consider the district court’s decision to award no

attorney fees. We review a district court’s determination of which

party is the prevailing party under an abuse of discretion standard. 18

But legal questions that pertain to the attorney fees issue, such as the

proper interpretation of the Note at issue here, are reviewed for

correctness.19

¶33 Sixth, we consider the district court’s rule 60(b)

determination. We conduct this review under an abuse of discretion

standard.20

¶34 Finally, we consider our jurisdiction over the Bank of Utah,

as custodian of Mr. Park’s IRA. The question of whether we have

jurisdiction over an appeal is a question of law.21

Failure to resolve an ambiguity by determining the parties’ intent

from parol evidence is error.”(citation omitted)).

14 Watkins v. Ford, 2013 UT 31, ¶ 19, 304 P.3d 841.

15 In re Adoption of Baby B., 2012 UT 35, ¶ 40, 308 P.3d 382.

16 Utah Dep’t of Transp. v. Ivers, 2009 UT 56, ¶ 8, 218 P.3d 583.

17 Encon Utah, LLC v. Fluor Ames Kraemer, LLC, 2009 UT 7, ¶ 11,

210 P.3d 263 (stating the standard of review for decisions to award

prejudgment interest); Bailey-Allen Co. v. Kurzet, 876 P.2d 421, 427

(Utah Ct. App. 1994) (“We review the award of postjudgment

interest, a question of law, under the correction of error standard.”).

18 R.T. Nielson Co. v. Cook, 2002 UT 11, ¶ 25, 40 P.3d 1119.

19 Robertson v. Gem Ins. Co., 828 P.2d 496, 499 (Utah Ct. App. 1992).

20Metro. Water Dist. of Salt Lake & Sandy v. Sorf, 2013 UT 27, ¶ 12,

304 P.3d 824.

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Analysis

¶35 The parties raise seven issues on appeal. First, the Park

Defendants argue that the district court erred in interpreting the

Note as providing that the 10 percent late fee amounts need not be

paid to bring the Note current. They argue that the court erred in

making this interpretation because it violated the mandate rule. We

disagree. They also argue that, even if it did not violate the mandate

rule, the court’s interpretation of the Note was incorrect. Although

we agree with the district court that the Note is ambiguous on this

point, we hold that the court erred in deciding this issue because it

construed the ambiguity against the Park Defendants, as drafters,

without first considering extrinsic evidence. Accordingly, we reverse

the district court’s decision on this point and remand for a new

determination after the court considers relevant extrinsic evidence.

¶36 The Park Defendants also challenge the district court’s

interpretation of the Note’s 10 percent late fee provision as it relates

to the final balloon payment. We affirm the court’s finding, because

it was not clearly erroneous, that extrinsic evidence showed that the

parties did not intend the 10 percent late fee provision to apply to

the final balloon payment.

¶37 Next, the Park Defendants argue that the district court

violated the mandate rule by accepting payment dates that differed

from payment dates accepted by the pre-appeal district court. We

agree. Accordingly, we reverse the court’s payment date

determination and remand for an accounting consistent with the

pre-appeal payment dates.

¶38 Furthermore, the Park Defendants challenge the district

court’s determination regarding pre- and postjudgment interest and

its rule 60(b) ruling. We affirm the court’s rule 60(b) ruling, but

reverse its pre- and postjudgment interest determination and

remand for an award of interest at a more appropriate interest rate.

¶39 Additionally, both parties challenge the district court’s

attorney fees determination. Because our holdings regarding the

other issues in this case may have upended the basis for the court’s

attorney fees decision, we remand for a new attorney fees

determination.

¶40 Finally, the Bradys claim that we do not have jurisdiction

over Mr. Park’s IRA, because the Bank of Utah, as custodian for

21 In re Adoption of A.B., 2010 UT 55, ¶ 21, 245 P.3d 711.

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Mr. Park’s IRA, failed to file a timely notice of appeal. We hold that

we have jurisdiction over the IRA through its owner, even though

we do not have jurisdiction over the Bank of Utah.

¶41 We discuss the merits of each issue in turn.

I. The District Court Did Not Violate the Mandate Rule by

Determining that the Note Did Not Require the 10 Percent Late

Fees to be Paid to Bring the Note Current, But Erred in Making

This Determination By Construing an Ambiguity in the

Note Against the Park Defendants Without First

Considering Relevant Extrinsic Evidence

¶42 The district court determined that the Note did not require

the Bradys to pay unpaid 10 percent late fee amounts to bring the

Note current. The Park Defendants argue that the court erred in

making this determination for two reasons. First, they assert that it

violated the mandate rule—a subcategory of the law of the case

doctrine. Second, they argue that the court’s interpretation of the

Note was incorrect. Although we hold that the district court was not

precluded by the mandate rule from deciding this issue, we hold

that the court erred in deciding this issue by construing the

ambiguity in the Note against the Park Defendants, as drafters,

without first considering relevant extrinsic evidence.

A. The district court did not violate the mandate rule when

it determined that the 10 percent late fees were not

required to be paid to bring the Note current

¶43 First, the Park Defendants argue that the district court

violated the mandate rule when it determined that the Note did not

require the 10 percent late fees to be paid to bring the Note current,

thereby stopping the accrual of the 20 percent default interest.

Because neither the pre-appeal district court nor the court of appeals

had previously decided this issue, we hold that it never became the

law of the case under the mandate rule, and so the district court on

remand was free to decide the issue.

¶44 The “[l]aw of the case terminology has been applied to a

number of distinct sets of problems, each with a separate analysis.”22

For example, “[i]n the initial stages of litigation . . . this rule has

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22 Thurston v. Box Elder Cty., 892 P.2d 1034, 1037 (Utah 1995).

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reference only to the parties to the case.”23 So “[w]hile a case remains

pending before the district court prior to any appeal, the parties are

bound by the court’s prior decision, but the court remains free to

reconsider that decision.”24

¶45 But after a “case has been appealed and remanded,” the law

of the case becomes binding upon the district court under what is

commonly referred to as the mandate rule.25 The mandate rule

“dictates that pronouncements of an appellate court on legal

issues”26 and “prior decision[s] of a district court become[]

mandatory after an appeal and remand.”27 This branch of the law of

the case doctrine “serves the dual purpose of protecting against the

reargument of settled issues and of assuring adherence of lower

courts to the decisions of higher courts.”28

¶46 The mandate rule is especially important in a case, such as

this, that involves parties locked in seemingly endless cycles of

litigation.29 For this reason, we will enforce the mandate rule if the

district court disturbed any of its pre-appeal factual findings or legal

conclusions, or a legal determination of the court of appeals. But

because neither the pre-appeal district court, nor the court of

_____________________________________________________________

23Mid-America Pipeline Co. v. Four-Four, Inc., 2009 UT 43, ¶ 12, 216

P.3d 352.

24 Id. (emphasis added) (citation omitted); see also UTAH R. CIV. P.

54(b) (“[A]ny order or other decision, however designated, that

adjudicates fewer than all the claims . . . may be changed at any time

before the entry of judgment adjudicating all the claims and the

rights and liabilities of all the parties.”).

25 Mid-America Pipeline, 2009 UT 43, ¶ 13.

26 Thurston, 892 P.2d at 1037.

27IHC Health Servs., Inc. v. D&K Mgmt., Inc., 2008 UT 73, ¶ 28, 196

P.3d 588.

28 Thurston, 892 P.2d at 1038.

29 See Gildea v. Guardian Title Co. of Utah, 2001 UT 75, ¶ 9, 31 P.3d

543 (“The doctrine was developed to promote the obedience of

inferior courts as well as ‘to avoid the delays and difficulties

involved in repetitious contentions and reconsideration of rulings on

matters previously decided in the same case.’” (citation omitted)).

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appeals, had previously determined this issue, the district court on

remand was free to reach it.

¶47 Before the first appeal, the district court never reached the

question of whether the 10 percent late fee must be paid to bring the

Note current, because it ruled that the late fee was unconscionable

and thus unenforceable. The court of appeals considered the district

court’s unconscionability determination, but because the court of

appeals held that the district court had applied the wrong legal test,

it remanded the case to the district court so that it could make a new

unconscionability determination using the test we established in

Commercial Real Estate Investment, L.C. v. Comcast of Utah II, Inc.30

Consequently, the court of appeals never discussed the effect the

payment of the 10 percent late fee would have on the accrual of

default interest.

¶48 The Park Defendants maintain, however, that at one point in

the opinion the court of appeals ruled that the payment of the

10 percent late fee would be paid “together” with late installment

payments. But when this comment is viewed in context of the

opinion as a whole, it is clear that the court was not attempting to

make a legal determination regarding the due date of the late fees or

their effect on the accrual of default interest.

¶49 The court of appeals made the comment in considering the

separate issue of whether the Note required the Bradys to pay off

any of the already accrued default interest in order to bring the Note

current, thereby stopping the accrual of additional default interest.

During this discussion, the court stated that “payment of the accrued

default interest was not required to bring the Note current,” and so

“the 20% default interest rate runs from the expiration of the

five-day grace period until the payment was made, together with the

10% late fee (if the trial court determines on remand that the 10% late

fee is enforceable).”31

¶50 The Park Defendants argue that the “together with the 10%

late fee” language constituted a determination that the 10 percent

late fee had to be paid to bring the Note current. But we disagree. It

is unlikely that by making this comment the court of appeals

_____________________________________________________________

30 2012 UT 49, 285 P.3d 1193.

Brady v. Park, 2013 UT App 97, ¶ 36, 302 P.3d 1220 (emphasis

31

added).

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intended to rule on this issue because the issue had not been

presented and briefed by the parties.32

¶51 Because the district court ruled that the 10 percent late fee

provision was unconscionable before the first appeal, it did not

decide whether a late fee incurred under that provision had to be

paid to bring the Note current. Consequently, there was no order for

the parties to challenge and, as a result, the parties did not brief this

issue for appeal. For this reason, it is unlikely that the court of

appeals intended its passing statement—that any late fees would be

paid “together” with a late installment payment—to be a binding

legal determination that any incurred 10 percent late fees must be

paid to bring the Note current.33 This inference is strengthened by

the fact that the court of appeals did not include this phrase when

summarizing the court’s legal determinations in the opinion’s

conclusion section.34 Accordingly, we hold that the court of appeals

did not make a legal determination regarding whether the 10 percent

late fee must be paid to bring the Note current, so the district court

did not violate the mandate rule when it decided this issue.

_____________________________________________________________

32See Madsen v. Wash. Mut. Bank FSB, 2008 UT 69, ¶ 26, 199 P.3d

898 (“[W]e frequently decline to rule on an issue when it has not

been fully briefed by the parties because full briefing allows this

court to carefully consider fully developed and supported

arguments.”); cf. Utah Dep’t of Transp. v. Ivers, 2009 UT 56, ¶ 19, 218

P.3d 583 (explaining that the court “would have refused to review

such an unripe or moot issue because [the] decision would have

amounted to nothing more than an advisory opinion”); State v. Ortiz,

1999 UT 84, ¶ 3, 987 P.2d 39 (“This court will not issue advisory

opinions or examine a controversy that has not yet ‘sharpened into

an actual or imminent clash of legal rights and obligations between

the parties thereto.’” (citation omitted)).

33 Judge Connors disagrees with this assertion. In his dissenting

opinion, he states that the court of appeals made a clear legal

determination regarding the due date of the late fee provision. Infra

¶ 174 (Connors, J., dissenting in part). But he also concedes that it

may not have been appropriate for the court of appeals to have done

so. Id. For the reasons already stated in this section, we disagree with

Judge Connors’ conclusion.

34 Brady, 2013 UT App 97, ¶ 58.

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B. The district court correctly concluded that the Note is

ambiguous regarding what is required to bring the note

current under the 20 percent default interest provision, but

it erred by failing to consider extrinsic evidence before

construing the ambiguity against the Park Defendants

¶52 The Park Defendants also argue that even if the district

court did not violate the mandate rule by determining this issue, it

nevertheless erred by interpreting the Note incorrectly. The court

determined that the Note was ambiguous regarding what was

required to bring the Note current. Rather than attempting to resolve

this ambiguity by considering extrinsic evidence, it decided the issue

by construing the ambiguity against the Park Defendants as the

drafters of the provision. As a result, it concluded that the Note did

not require the 10 percent late fee to be paid to stop the accrual of

interest at the 20 percent default rate. We agree that the Note is

ambiguous, but we reverse the district court’s decision and remand

for further factual findings because the district court failed to

adequately consider extrinsic evidence before construing the Note

against the Park Defendants.

¶53 When we interpret a contract “we first look at the plain

language [of the contract] to determine the parties’ meaning and

intent.”35 “If the language within the four corners of the contract is

unambiguous, the parties’ intentions are determined from the plain

meaning of the contractual language, and the contract may be

interpreted as a matter of law.”36 But where a contractual term or

provision is ambiguous as to what the parties intended, the question

becomes a question of fact to be determined by the fact-finder.37 So

_____________________________________________________________

35 Meadow Valley Contractors, Inc. v. State Dep’t of Transp., 2011 UT

35, ¶ 64, 266 P.3d 671, abrogated on other grounds by Mounteer Enters.,

Inc. v. Homeowners Ass’n for the Colony at White Pine Canyon, 2018 UT

23, 422 P.3d 809.

36 Cent. Fla. Invs., Inc. v. Parkwest Assocs., 2002 UT 3, ¶ 12, 40 P.3d

599.

37 Plateau Mining Co. v. Utah Div. of State Lands & Forestry, 802

P.2d 720, 725 (Utah 1990) (“When ambiguity does exist, the intent of

the parties is a question of fact to be determined by the jury. Failure

to resolve an ambiguity by determining the parties’ intent from parol

evidence is error.” (citation omitted)); Faulkner v. Farnsworth, 665

P.2d 1292, 1293 (Utah 1983) (“Of course, a motion for summary

(Continued)

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where parties to a contract dispute propose competing

interpretations of a contractual term or provision, we must

determine whether the contract as a whole unambiguously supports

one interpretation over the other. If “uncertain meanings of terms,

missing terms, or other facial deficiencies” prevent the court from

determining which of the “proffered alternative interpretations” the

parties intended when they entered into the contract, then the court

deems the contractual provision at issue ambiguous, and the

ambiguity must be resolved by considering extrinsic evidence of the

parties’ intent.38

¶54 In his dissent, Justice Lee argues that we have never clearly

explained when a contractual term is sufficiently ambiguous to open

the door to extrinsic evidence. But this argument brushes aside sixty

years of our caselaw in which we have repeatedly set forth the

following standard: where there are two reasonable 39 interpretations

of a contractual provision, we look to extrinsic evidence. 40 So a

judgment may not be granted if a legal conclusion is reached that an

ambiguity exists in the contract and there is a factual issue as to what

the parties intended.”).

38 See Mind & Motion Utah Invs., LLC v. Celtic Bank Corp., 2016 UT

6, ¶ 24, 367 P.3d 994 (citation omitted) (internal quotation marks

omitted).

39 Judge Connors points out that some of our previous cases have

used the term “plausible” rather than “reasonable.” Infra ¶ 178 n.121

(Connors, J., dissenting in part). In Judge Connor’s view, we should

disavow any use of the word “plausible” from our caselaw because

it suggests a lower standard than the word “reasonable.” Infra ¶ 178

n.122 (defining plausible as “superficially fair, reasonable” or

“seeming reasonable or probable (though speculative)”). But a

disavowal of the cases Judge Connors cites is unnecessary because

even where we have used the term “plausible” in the past, we have

treated it as if it had roughly the same meaning as the term

“reasonable.” See Mind & Motion, 2016 UT 6, ¶ 24 (“[T]he proffered

alternative interpretations ‘must be plausible and reasonable in light

of the language used.’” (citation omitted)); Saleh v. Farmers Ins. Exch.,

2006 UT 20, ¶ 17, 133 P.3d 428 (same); First Am. Title Ins. Co. v. J.B.

Ranch, Inc., 966 P.2d 834, 837 (Utah 1998) (same).

40 See Ephraim Theatre Co. v. Hawk, 321 P.2d 221, 223 (Utah 1958)

(explaining that a court may look to “extraneous sources” only

where the contract “is susceptible of more than one meaning”);

(Continued)

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contractual term or provision is ambiguous if “it is capable of more

than one reasonable interpretation because of uncertain meanings of

terms, missing terms, or other facial deficiencies.”41

¶55 Justice Lee argues, however, that we have never explained

“what it means for competing parties both to offer a ‘reasonable’

interpretation of the contract provision in question.”42 Although it is

Winegar v. Froerer Corp., 813 P.2d 104, 108 (Utah 1991) (“A contract

provision is ambiguous if it is capable of more than one reasonable

interpretation because of ‘uncertain meanings of terms, missing

terms, or other facial deficiencies.’” (citation omitted)).

41 Meadow Valley Contractors, 2011 UT 35, ¶ 64 (emphasis added)

(citation omitted) (internal quotation marks omitted); see also Cent.

Fla. Invs., 2002 UT 3, ¶ 12 (“In evaluating whether the plain language

is ambiguous, we attempt to harmonize all of the contract’s

provisions and all of its terms. An ambiguity exists where the

language is reasonably capable of being understood in more than

one sense.” (citations omitted) (internal quotation marks omitted));

Plateau Mining Co., 802 P.2d at 725 (“To demonstrate ambiguity, the

contrary positions of the parties must each be tenable.”). Justice Lee

makes no effort to square his proposed approach with this caselaw.

In fact, under his approach any consideration of whether both

interpretations are “reasonable” is altogether excluded from the

court’s analysis. Instead, the court would decide which

interpretation it believes is the most “plausible.” Infra ¶ 136 (Lee,

A.C.J., dissenting in part).

42 Infra ¶ 127 (Lee, A.C.J., dissenting in part). Justice Lee argues

that we have never before defined the term “reasonable” in the

context of a contract interpretation. It is on this basis that he purports

to “clarify” “what it means for competing parties to offer a

‘reasonable’ interpretation of the contract provision in question.” But

at no point in his dissent does he clarify what a reasonable

interpretation would be. Instead, he suggests that even where a court

is presented with two reasonable interpretations, neither of which

can be ruled out by examining the interpretations in context of the

contract as a whole, the court may take it upon itself to decide which

interpretation is the better one. Justice Lee does not attempt to justify

this significant departure from our longstanding approach to

contract interpretation by pointing to precedent. He does not,

because he cannot. Although we have frequently explained what it

means for a contract interpretation to be reasonable, see, e.g., Mind &

(Continued)

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true that we have used the term “reasonable” repeatedly for decades

without defining the term further—presumably under the

assumption that it is a bedrock term whose meaning was obvious—

we have provided a consistent explanation for what constitutes a

reasonable interpretation sufficient to create an ambiguity. Under

our caselaw a reasonable interpretation is an interpretation that

cannot be ruled out, after considering the natural meaning of the

words in the contract provision in context of the contract as a whole,

as one the parties could have reasonably intended.43 In other words,

if the court determines that either of the competing interpretations

could reasonably have been what the parties intended when they

entered into the contract, then the contract is ambiguous.44 Where we

Motion, 2016 UT 6, ¶ 24 (explaining that a contract is ambiguous

where there are two “plausible and reasonable” interpretations, the

existence of which prevent the court from determining “the parties’

intentions”(citation omitted) (internal quotation marks omitted));

Saleh, 2006 UT 20, ¶ 17 (explaining that a contract is ambiguous

where there are at least two interpretations that rise to “more than a

conjecture”); Cent. Fla. Invs., 2002 UT 3, ¶ 12 (“An ambiguity exists

where the language is reasonably capable of being understood in

more than one sense.” (citations omitted) (internal quotation marks

omitted)), we have never applied the standard Justice Lee proposes

in his dissent.

43 See Cent. Fla. Invs., 2002 UT 3, ¶ 12 (“An ambiguity exists where

the language is reasonably capable of being understood in more than

one sense.” (citations omitted) (internal quotation marks omitted));

Utah Valley Bank v. Tanner, 636 P.2d 1060, 1061–62 (Utah 1981)

(explaining that a contractual provision is ambiguous only where

“an ambiguity . . . cannot be reconciled by an objective and

reasonable interpretation of the contract as a whole” after the court

has examined “[e]ach contract provision . . . in relation to all of the

others”); see also Lockheed Martin Corp. v. Retail Holdings, N.V., 639

F.3d 63, 69 (2d Cir. 2011) (“When determining whether a contract is

ambiguous, it is important for the court to read the integrated

agreement ‘as a whole.’ If the document as a whole ‘makes clear the

parties’ over-all intention, courts examining isolated provisions

should then choose that construction which will carry out the plain

purpose and object of the [agreement].’” (alteration in original)

(citations omitted)).

44We have repeatedly stressed that a contractual provision is not

rendered ambiguous “just because one party gives that provision a

(Continued)

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Opinion of the Court

conclude that either of the contract interpretations could reasonably

have been what the parties intended, we will not substitute our

judgment for that of the parties by choosing what we believe to be

the better of the two interpretations.45

different meaning than another party does.” See, e.g., R&R Energies v.

Mother Earth Indus., Inc., 936 P.2d 1068, 1074 (Utah 1997) (citation

omitted) (internal quotation marks omitted). Instead, we will

conclude that the parties could reasonably have intended both of the

competing interpretations only if each interpretation is “based upon

the usual and natural meaning of the language used and [is not] the

result of a forced or strained construction” when considered in

context of the contract as a whole. Saleh, 2006 UT 20, ¶ 17 (citation

omitted) (internal quotation marks omitted).

45 See Plateau Mining Co., 802 P.2d at 725 (“Failure to resolve an

ambiguity by determining the parties’ intent from parol evidence is

error.”); id. (explaining that our approach to contract interpretation

“preserves the intent of the parties and protects the contract against

judicial revision”). By stating that a contract is ambiguous only

where two interpretations “are of equal (or at least roughly equal)

plausibility,” Justice Lee proposes an approach whereby, for the first

time ever, a Utah court could disregard one reasonable

interpretation of a contract because the court believes a competing

interpretation is preferable (or more plausible). Infra ¶ 136 (Lee,

A.C.J., dissenting in part). In other words, his approach would

expand the contract interpretation analysis by adding an additional

step—the weighing of two reasonable interpretations after the court

determines that both are objectively reasonable on their own. This is

an approach we have criticized in the past. See Meadow Valley

Contractors, 2011 UT 35, ¶ 69. In Meadow Valley Contractors, the

district court failed to consider relevant extrinsic evidence after it

“cursorily concluded” that one of the interpretations “was ‘the more

reasonable interpretation’” of the contract. Id. Although we criticized

the district court for having failed to consider extrinsic evidence

where there potentially were two reasonable interpretations of the

contract provision at issue, under Justice Lee’s proposed approach,

the district court’s acceptance of “the more reasonable

interpretation” would have been proper. Thus his approach departs

dramatically from our longstanding approach.

Additionally, Justice Lee’s approach suffers from the same

deficiency that he claims justifies his “clarification” of our

(Continued)

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longstanding approach to contract interpretation. He defines a

reasonable interpretation as the more “plausible” of two competing

interpretations. But he fails to define the term “plausible.” Instead,

he treats it as a bedrock term needing no further definition. Under

his approach, if one interpretation is more “plausible” than the other,

it is deemed a reasonable interpretation and the other interpretation

is deemed unreasonable. So “more plausible” now means

“reasonable” and “less plausible” now means “unreasonable,” even

though the less plausible interpretation may be reasonable under

any ordinary definition of the word. This approach strains the

ordinary meaning of “reasonable” beyond recognition. It is an

altogether new invention. Moreover, because he does not define the

term “plausible,” it is left to the district court’s judgment, based on

the commonly-accepted meaning of the term, to decide whether one

interpretation is more plausible than the other. So Justice Lee’s

approach does not provide district courts a more clear or transparent

standard than what is provided by our longstanding approach. The

only difference, therefore, between the two approaches is that under

Justice Lee’s approach, district courts would have new discretion to

disregard one reasonable interpretation if they believe it is less

reasonable or plausible than another. This is a dramatic departure

from the way in which we have long addressed ambiguities in

contracts. While this approach may or may not be a good idea, this is

not the case to make so monumental a change—the parties have not

asked that we revise our standard for interpreting ambiguous

contractual provisions, nor have they provided briefing on the issue.

In support of this change, Justice Lee argues that parties generally

prefer quick and inexpensive resolutions of their disputes. Infra

¶ 131 (Lee, A.C.J., dissenting in part). In support of his assertion, he

relies upon a Yale Law Review article that is addressed specifically

to contract disputes between sophisticated business entities who

tend to be frequent participants in litigation. Alan Schwartz & Robert

E. Scott, Contract Interpretation Redux, 119 YALE L.J. 926, 935 (2010)

(explaining that the “interpretive rules” they propose are reflective

of “the preferences of business firms that contract with each other”).

The idea of the article seems to be that for these sophisticated

frequent fliers, it will all wash out in the end—they are likely to win

as many as they lose under a standard that more narrowly

circumscribes extrinsic evidence. Id. at 931 (explaining that “a risk

neutral firm is indifferent to the magnitude of the variance around

the mean” so it is “unwilling to incur additional costs in order to

(Continued)

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¶56 So where a contractual term is genuinely ambiguous, “we

seek to resolve the ambiguity by looking to extrinsic evidence of the

parties’ intent.”46 A determination of the parties’ intent based on

extrinsic evidence is a factual determination that should be made by

the fact-finder.47 In the rare case where the extrinsic evidence “does

not reveal the intent of the parties,”48 a district court should then,

and only then, “resolve the ambiguity against the drafter.”49

¶57 The first step of this analysis—deciding whether the

contractual term is ambiguous—is a legal determination that we

review for correctness, but the district court’s findings regarding the

extrinsic evidence are factual determinations that deserve

further increase the accuracy of any particular finding”). So,

according to the authors of the article, efficiency and cost are more

important considerations for sophisticated business parties than an

accurate resolution of the dispute. Id. at 934 (“We argue that the

contract law that regulates transactions between firms should seek

only to maximize efficiency.”). While it is certainly true that parties

prefer quick and inexpensive resolutions of their disputes, it is not

necessarily true in every case that parties would prefer a quick and

inexpensive resolution over an accurate result—especially in cases

involving parties who do not litigate frequently. This suggests that

Justice Lee’s proposed approach may not be appropriate in every

case. Regardless, as noted, even were Justice Lee’s proposed change

to our caselaw a wise tack to take, this hardly seems the case for it

given the absence of any request to change our standard and the

absence of any adversarial briefing on the question.

46 Meadow Valley Contractors, 2011 UT 35, ¶ 64; see also Faulkner,

665 P.2d at 1293 (“[A] motion for summary judgment may not be

granted if a legal conclusion is reached that an ambiguity exists in

the contract and there is a factual issue as to what the parties

intended.”); Evans v. Famous Music Corp., 807 N.E.2d 869, 873 (N.Y.

2004) (“Faced with this ambiguity, we turn to extrinsic evidence for

guidance as to which interpretation should prevail.”).

47 See Plateau Mining Co., 802 P.2d at 725 (“When ambiguity does

exist, the intent of the parties is a question of fact to be determined

by the jury. Failure to resolve an ambiguity by determining the

parties’ intent from parol evidence is error.” (citation omitted)).

48 Meadow Valley Contractors, 2011 UT 35, ¶ 69.

49 Id. ¶ 64.

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deference.50 Accordingly, if the district court’s decision hinges upon

extrinsic evidence, it should be overturned only if it was clearly

erroneous.51

¶58 Although the district court in this case was correct in

holding that the Note is ambiguous regarding what must be paid to

bring the Note current, we hold that the court erred by deciding the

issue by construing the ambiguity against the Park Defendants

without first considering relevant extrinsic evidence.

1. The note’s plain language

¶59 First, we address the district court’s determination that the

Note is ambiguous regarding what is required to bring the Note

current under the 20 percent default interest provision. The Park

Defendants argue that any potential ambiguity in the 20 percent

default interest provision should be resolved in their favor when

considered together with their proposed interpretation of a phrase

within the Note’s 10 percent late fee provision. We hold that the

language of the 20 percent default interest provision is ambiguous

even if we interpret the 10 percent late fee provision as the Park

Defendants suggest.52

_____________________________________________________________

50 See In re Adoption of Baby B., 2012 UT 35, ¶ 40, 308 P.3d 382.

51 See id.

52 The Park Defendants argue that a 10 percent late fee, which is

imposed by the Note’s 10 percent late fee provision, must be paid

before the Note “is brought current.” The 10 percent late fee

provision states that “[i]f a payment is not made within five (5) days

of due date, a late fee of 10 per cent will be due.” They argue that

based on the plain meaning of the term “will be due,” the 10 percent

late fee becomes due immediately when it is incurred, so the Note

cannot be “brought current” until the 10 percent late fee is paid.

They further support this argument with language from two trust

deeds incorporated into the Note—which refer to the 10 percent late

fee as a fee “to cover the extra expense involved in handling

delinquent payments.” So they assert that the 10 percent late fee

must be paid with the late payment because it served “as a proxy for

the expenses incurred by Park in handling late payments.”

The Bradys, on the other hand, interpret the term “will be due” to

mean that it will be due sometime in the future. They argue that if

the parties had intended the late fees to be due immediately, they

(Continued)

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¶60 The 20 percent default interest provision states: “If payment

is not made within 5 days of due date the entire balance shall bear

interest at a rate of 20 percent until note is brought current.” So

under this provision interest accrues on “the entire balance” at

20 percent until the Note “is brought current.” Although the Park

Defendants assume that any and all outstanding debts owed under

the Note must be paid to bring the Note current, this assumption is

not expressly supported by anything in the Note. The phrase

“brought current” is not defined elsewhere in the Note and is not

used in connection with a payment type other than the monthly

installment payment. So even though it is reasonable to interpret the

phrase—as the Park Defendants suggest—to require that the Bradys

pay all late installment payments and late fees in order to bring the

Note current, we find that it is also reasonable to read the Note to

allow the Bradys to bring it current by paying only late, or missing,

installment payments.

would have stated that the fee “is due” rather than “will be due.”

They suggest that this interpretation is required when the phrase is

considered in the context of the Note as a whole because another

provision in the Note—which allows the Park Defendants to

accelerate the Note in the event of a default—refers to amounts

immediately due as “due and payable.” See Due and Payable, BLACK’S

LAW DICTIONARY (10th ed. 2014) (“(Of a debt) owed and subject to

immediate collection because a specified date has arrived or time has

elapsed, or some other condition for collectibility has been met.”).

They also support this interpretation by pointing to language in the

incorporated trust deeds. Because certain provisions in the trust

deeds indicate that obligations shall be paid “immediately,” but the

10 percent late fee provision does not, they claim that additional

language would have been added to the 10 percent late fee provision

if the parties had intended the late fees to be due immediately.

Because neither “due and payable” nor “immediately” were used in

the 10 percent late fee provision, they argue that the Note did not

require the 10 percent late fee to be paid immediately.

Although these dueling interpretations of the 10 percent late fee

provision suggest that the phrase “will be due” may be ambiguous,

we do not decide this issue on this basis because we conclude that

the language of the 20 percent default interest rate provision is

ambiguous in its own right.

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¶61 The latter interpretation is suggested by the structure of the

Note. The structure contemplates three categories of payments:

(1) monthly installment payments, (2) a final balloon payment, and

(3) a 10 percent late fee for every late installment payment. Under the

terms of the Note, a monthly installment payment of $5,923.61 is due

“on the [first] day of each and every month” for ten years. The

“entire principal balance together with interest thereon” (final

balloon payment) is due on October 31, 2006. And the 10 percent late

fees are potentially due either immediately when incurred or

together with the final balloon payment.

¶62 Importantly, of these three types of payments, it is only the

monthly installment payment that is specifically tied to the

20 percent default interest provision. The Note specifies that the

20 percent default interest will begin accruing on “the entire

balance”53 if the “[installment] payment is not made within 5 days of

due date.”54 So it is only the failure to timely pay installment

payments—and not a failure to pay the other two types of payments

contemplated in the Note—that triggers the 20 percent default

interest. In this way, the Note specifically ties the installment

payments to the 20 percent default interest provision, something it

does not do for the other types of payments. Because the monthly

installment payment is the only type of payment contemplated in the

default interest provision, it is reasonable to conclude that the phrase

“brought current” within the provision refers only to the payment of

late installment payments.

_____________________________________________________________

53 In Brady, the court of appeals held that the phrase “the entire

balance” in the 20 percent default interest provision refers only to the

“entire principal balance.” 2013 UT App 97, ¶ 20 (internal quotation

marks omitted). In other words, the failure to timely pay an

installment payment triggers the accrual of interest at a 20 percent

rate on unpaid principal amounts, but not on other amounts owed

under other provisions in the Note, including unpaid accrued

interest or unpaid 10 percent late fees.

54 Although the term “payment” could be viewed in isolation as

including both the installment payment and the final balloon

payment, when the term is considered in context of the Note as a

whole, it is clearly referring only to monthly installment payments.

See infra section II of this opinion regarding our discussion of the

10 percent late fee as applied to the final balloon payment.

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¶63 In sum, the phrase “brought current” has two reasonable

interpretations. The Note could, as the Park Defendants argue,

require the payment of the missed installment payments as well as a

payment of any 10 percent late fees that are currently due to bring

the Note current. But it could just as reasonably require only the

payment of the missed installment payments. Because the phrase

“brought current” is not defined in the Note—and this omission

leads to two contradictory but reasonable interpretations—we

conclude that the Note is ambiguous.55

2. Extrinsic evidence

¶64 Because the 20 percent default interest provision is

ambiguous, our well-established pattern of contract interpretation

would ordinarily require us to consider the district court’s factual

findings regarding relevant extrinsic evidence.56 But that is not

possible in this case because the district court failed to make the

necessary factual findings. Rather than looking to the extrinsic

evidence to resolve the ambiguity, the court instead skipped to

construing the provision against the Park Defendants as the drafters.

This was error.

¶65 By failing to consider extrinsic evidence before construing

the ambiguous provision against the Park Defendants, the district

court did what we expressly refused to do in Meadow Valley

_____________________________________________________________

55 Under the standard Justice Lee sets forth in his dissent, we

would be forced to choose between these two reasonable

interpretations. In Justice Lee’s view, the Park Defendants present

the “better interpretation,” so he would rule in their favor on this

issue. But we are not convinced. Even were we to adopt Justice Lee’s

proposed approach in this case, we might very well rule in the

Bradys’ favor. This disagreement further strengthens our conclusion

that the contractual provision at issue is ambiguous.

Judge Connors, in contrast, proposes a third approach. In his

dissent, he declines to endorse Justice Lee’s change to our

contract-interpretation standard, but he argues that under our

current approach, the contract is unambiguous because the Bradys’

interpretation is not reasonable. Because we conclude that the

Bradys’ interpretation is reasonable when considered in context of

the Note as a whole, we disagree.

56 Meadow Valley Contractors, 2011 UT 35, ¶ 64.

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Contractors.57 In that case the appellant asked us to resolve an

ambiguity in a construction contract against the appellee who

drafted the contract. We noted that by suggesting this, the appellant

was ignoring “a critical analytical step.”58 We then explained the

proper methodology a court should follow after concluding that the

text of a contract is ambiguous: “when a trial court concludes that

contractual language is ambiguous, the court will invite extrinsic

evidence bearing on the intentions of the parties to the contract

concerning the ambiguity. The court would then assess the merits of

the extrinsic evidence and reach a conclusion about the intentions of

the parties.”59 We finished by stating that “[o]nly if the court

concludes that the extrinsic evidence does not reveal the intent of the

parties and uncertainty remains will the court construe the

ambiguity against the drafter.”60 In this case, the district court failed

to assess the merits of the extrinsic evidence before construing the

ambiguity in the default interest provision against the Park

Defendants as the drafters. For this reason, we reverse the district

court’s decision and remand for a determination that considers the

relevant extrinsic evidence.

II. We Affirm the District Court’s Determination Regarding

the 10 Percent Late Fee’s Application to the Balloon Payment

¶66 Next, we consider the Park Defendants’ challenge of the

district court’s interpretation of the Note’s 10 percent late fee

provision as it relates to the final balloon payment. The district court

concluded that, under the plain language of the Note, the 10 percent

late fees did not apply to the final balloon payment. Additionally,

the court held that extrinsic evidence, in the form of a memorandum

of understanding drafted by the parties, supported this

interpretation. And, alternatively, the court held that even if the

10 percent late fee provision did apply to the final balloon payment,

it would be unconscionable and thus unenforceable. The Park

Defendants challenge each of these determinations. We hold that the

district court’s interpretation of the language of the 10 percent late

fee provision is reasonable. Therefore a determination that the Park

_____________________________________________________________

57 Id. ¶ 69.

58 Id.

59 Id. (footnote omitted).

60 Id.

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Defendants’ alternative interpretation is also reasonable would

merely render the Note ambiguous. And because we find that the

district court’s determination regarding extrinsic evidence was not

clearly erroneous, we affirm its determination on this basis.61 This

holding moots the Park Defendants’ unconscionability challenge, so

we decline to address it. As we did with the district court’s

interpretation of the 20 percent default interest provision, we first

examine the contract’s plain language. And because the Park

Defendants’ alternative interpretation could render the contract

ambiguous, we also consider the district court’s findings regarding

the extrinsic evidence.62

A. Plain meaning of the Note

¶67 We begin by interpreting the text of the 10 percent late fee

provision. The district court concluded that the provision

unambiguously did not apply the 10 percent late fee to the final

payment. The court considered the Note’s relevant text, which states

that Dr. Park would be paid $675,000:

[T]ogether with interest from date at the rate of 10 per

cent per annum on the unpaid principal, said principal

and interest payable as follows:

$5,923.61 due in [sic] the 1st day of January 1997,

and $5,923.61 on the 1st day of each and every

_____________________________________________________________

61 We note that to have prevailed on this issue, the Park

Defendants would have had to show (1) that their interpretation of

the Note was reasonable, and the district court’s interpretation was

unreasonable, see Plateau Mining Co. v. Utah Div. of State Lands &

Forestry, 802 P.2d 720, 725 (Utah 1990) (“To demonstrate ambiguity,

the contrary positions of the parties must each be tenable.”), or

(2) that their interpretation was reasonable, and the district court’s

factual findings regarding extrinsic evidence were clearly erroneous.

See R & R Energies v. Mother Earth Indus., Inc., 936 P.2d 1068, 1074

(Utah 1997) (“This court will not disturb the trial court’s factual

finding . . . unless it is clearly erroneous.”). Because the Park

Defendants fail to show that the district court’s interpretation was

unreasonable or that its factual findings were clearly erroneous, we

must affirm the district court’s determination.

62 See supra ¶¶ 53–55 (explaining our approach to contract

interpretation).

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month thereafter until October 31, 2006, at

which time the entire principal balance together

with interest thereon is paid in full.

Interest shall accrue from December 1, 1996.

The payment is based on a 30 year amortization.

Each payment shall be applied first to accrued interest

and the balance to the reduction of principal. If a

payment is not made within five (5) days of due date, a

late fee of 10 per cent will be due. If payment is not

made within 5 days of due date the entire balance shall

bear interest at the rate of 20% until note is brought

current.

The district court noted that this provision differentiates between the

$5,923.61 installment payments made “every month” from the

“entire principal balance” balloon payoff, which is due on

October 31, 2006. The court also noted that this distinction carries

through to the 10 percent late fee provision. For example, the

10 percent late fee provision applies only if “payment” is not made

within the five-day grace period and nothing in the provision

suggests that the 10 percent late fee also applies if the “entire

principal balance” payoff is not timely made. Thus, according to the

district court, the Note clearly contemplates two types of

payments—the installment payments and the balloon payment—and

the 10 percent late fee provision applies only to the installment

payments.63 This interpretation is reasonable, especially when the

entire Note is viewed in context.

¶68 That “payment” refers only to the Note’s monthly

installment payments is suggested by language in the Note’s

amortization provision. After specifying that an installment payment

in the amount of $5,923.61 is due each month, the Note states that the

“payment is based on a 30 year amortization.” Amortization is

defined as “[t]he act or result of gradually extinguishing a debt . . .

by contributing payments of principal each time a periodic interest

payment is due.”64 So when the Note states that the “payment is

_____________________________________________________________

63As we discussed above, the Note also contemplates a third type

of payment: the 10 percent late fee payment. See supra ¶¶ 61–63.

64Amortization, BLACK’S LAW DICTIONARY (10th ed. 2014); see also

amortize, MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY 39 (10th ed.

(Continued)

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based on a 30 year amortization,” it means that the $5,923.61

monthly installment payment amount was determined by

calculating how much the Bradys would need to pay each month for

a period of thirty years in order to pay off the Note’s $675,000

principal while incurring interest at a 10 percent rate. Because no

other type of payment contemplated in the Note could be “based on

a 30 year amortization,” it is reasonable to conclude that the term

“payment” in the amortization provision refers to the monthly

installment payment.

¶69 The meaning of the term “payment” in the amortization

provision is consistent with its meaning throughout the rest of the

Note. For example, the first sentence of the Note’s next paragraph

states that “[e]ach payment shall be applied first to accrued interest

and the balance to the reduction of principal.” Once again, the term

“payment”—as it is used here—could only reasonably refer to the

monthly installment payment, and not the other two types of

payments contemplated by the Note. It couldn’t reasonably refer to

the 10 percent late fee payment, because that payment would

necessarily be applied to amounts owed for late fees. And it couldn’t

reasonably refer to the final balloon payment, because the final

balloon payment, by its very nature, must be in the amount of the

total remaining balance (principal plus interest), so it would not

matter in which order it is applied. So once again the only payment

type the term “payment” could reasonably refer to in this provision

is the monthly installment payment.

¶70 Because it is reasonable to conclude that “payment,” as it is

used throughout the Note, refers only to the monthly installment

payment, it arguably maintains this meaning when it is used in the

10 percent late fee provision.65 It is reasonable, therefore, to conclude

that the 10 percent late fee provision applies only to the monthly

installment payments—and not to the final balloon payment.

1998) (“[T]o provide for the gradual extinguishment of [a debt] usu.

by contribution to a sinking fund at the time of each periodic interest

payment.”).

65See Irving Place Assocs. v. 628 Park Ave., LLC, 2015 UT 91, ¶¶ 20–

21, 362 P.3d 1241 (employing the canon of consistent meaning to

determine the meaning of a term); see also Meeker v. Mahon, 143 A.3d

1193, 1198–99 (Conn. App. Ct. 2016) (“We read similar or identical

terms and words throughout a contract to have a consistent

meaning.”).

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¶71 The Park Defendants interpret the 10 percent late fee

provision, however, as applying to the final balloon payment. They

state that the term “payment,” as it is used throughout the Note,

plainly refers to all payments due under the Note, including the final

payment on October 31, 2006. So according to them, the use of the

term “payment” in the late fee provision should be read to include

the balloon payment. But we need not address the merits of the Park

Defendants’ alternative interpretation, because even if we found it to

be reasonable, it would merely render the 10 percent late fee

provision ambiguous, thereby requiring us to consider the district

court’s factual determination regarding extrinsic evidence. And

because we conclude that the court did not clearly err when it

determined that the extrinsic evidence shows that the parties did not

intend the 10 percent late fee to apply to the final balloon payment,

we must affirm the district court’s decision even if the Park

Defendants’ alternative interpretation is reasonable.

B. Extrinsic evidence

¶72 The district court’s factual determination regarding the

10 percent late fee provision’s application to the final payment was

not clearly erroneous. When reviewing a factual determination

under a clearly erroneous standard, an “appellate court . . . does not

consider and weigh the evidence de novo.”66 Accordingly, “[t]he

mere fact that on the same evidence the appellate court might have

reached a different result does not justify it in setting the findings

aside.”67 Instead, “[i]t may regard a finding as clearly erroneous only

if the finding is without adequate evidentiary support or induced by

an erroneous view of the law.”68 In this case, the district court

considered the parties’ handwritten memorandum of understanding

before finding that the parties intended the 10 percent late fee

provision to apply only to the monthly installment payments. This

determination is adequately supported by relevant extrinsic

evidence.

_____________________________________________________________

66 State v. Walker, 743 P.2d 191, 193 (Utah 1987) (alteration in

original) (quoting CHARLES ALAN WRIGHT & ARTHUR R. MILLER,

FEDERAL PRACTICE AND PROCEDURE § 2585 (1971)).

67 Id. (citation omitted) (internal quotation marks omitted).

68 Id. (citation omitted) (internal quotation marks omitted).

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¶73 In the memorandum of understanding, the parties wrote

that “the payment will be made via monthly installments due on

[the] First of each month with 10% late fee after five days.” The

district court concluded that “nothing in that provision addressed

the balloon payment.” Rather, “the parties defined ‘payment’ as

‘monthly installments’ made ‘each month’ and further provided that

the 10% late fee applied only if those ‘monthly installments’ were

more than five days late.” Under this definition, the 10 percent late

fee would apply to every installment payment from January 1, 1997

to October 1, 2006, but not to the final balloon payment due on

October 31, 2006. We cannot say the district court clearly erred in

making this determination.

¶74 The Park Defendants argue, however, that the

memorandum of understanding shows that the 10 percent late fee

should apply to the final balloon payment, as well as the monthly

installment payments, because it treats all payments the same. In

support, they assert that the memorandum of understanding “does

not contain any separate definition of the final ‘balloon payment,’

nor does it set forth a different due date for that payment.” But this

argument fails because, as the district court pointed out, the Note

treats the monthly installment and the final balloon payment

differently, and it discusses the 10 percent late fee only in connection

with the monthly installment payment.

¶75 Most noticeably, the Note treats the payments differently by

establishing a different due date for the two payment types: each

monthly installment is due on the first day of each month, but the

due date for the final balloon payment is specifically set for October

31, 2006.

¶76 And as we have already noted, the memorandum of

understanding treats the final balloon payment differently from the

monthly installment payment by specifically establishing the

10 percent late fee for “monthly installment[]” payments without

any reference to the final balloon payment. The Park Defendants

argue that the term “monthly installments” includes the final balloon

payment. But even if we agree that the term could be interpreted in

this way, their argument would still fail because they have not

shown that the district court’s conclusions are unsupported by the

language of the memorandum of understanding.69 Accordingly, the

_____________________________________________________________

69 See supra ¶¶ 72–73.

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Park Defendants have failed to show that the extrinsic evidence does

not adequately support the district court’s factual determination, so

we cannot say the court’s determination was clearly erroneous.

¶77 For this reason, we affirm the district court’s determination

that the 10 percent late fee provision does not apply to the final

balloon payment. Because this determination renders a review of the

district court’s unconscionability determination unnecessary, we

decline to address it.

III. The District Court Violated the Mandate Rule by

Recalculating the Dates of the Bradys’ Installment Payments

¶78 The Park Defendants argue that the district court violated

the mandate rule when it accepted an accounting determination that

used payment dates that differed from the payment dates

established pre-appeal. As we stated earlier,70 under the mandate

rule when a “case has been appealed and remanded,”71

“pronouncements of an appellate court on legal issues”72 and “prior

decision[s] of a district court [that were not disturbed on appeal]

become[] mandatory” upon the district court on remand.73 So in this

case, the district court’s recalculation of the payment dates would

violate the mandate rule only if the payment dates had been decided

by the pre-appeal district court and survived appellate review. We

hold that they did.

¶79 The district court made two pre-appeal determinations

related to the payment dates: a legal determination interpreting the

meaning of the term “payment date” and a factual determination

accepting the actual payment dates established by a neutral,

third-party accountant.

¶80 The district court first made its legal determination in its

September 3, 2009 decision following the bench trial. The court

explained that “a payment should be credited on the date plaintiffs’

check was actually received by Mr. Park.” But the court also noted

_____________________________________________________________

70 See supra ¶¶ 44–46.

71Mid-America Pipeline Co. v. Four-Four, Inc., 2009 UT 43, ¶ 13, 216

P.3d 352.

72 Thurston v. Box Elder Cty., 892 P.2d 1034, 1037 (Utah 1995).

73IHC Health Servs., Inc. v. D&K Mgmt., Inc., 2008 UT 73, ¶ 28, 196

P.3d 588.

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that a smaller collection of checks had been accumulated and

deposited in the bank as a group. For these accumulated checks, the

court explained that “there is no persuasive evidence of a tardy

payment, unless the date on the face of the check is beyond the

agreed due date.”

¶81 At the court’s direction, the parties stipulated to the

appointment of Rick Hoffman to serve as a neutral, third-party

accountant who would calculate the amount owing on the Note.

Mr. Hoffman determined the date of each payment and applied the

applicable interest rates to arrive at a final payment amount. He then

submitted his expert damage calculation on August 5, 2010.

¶82 On February 2, 2011, the district court issued its findings of

fact and conclusions of law, in which it reiterated its prior legal

determination interpreting the meaning of the term “payment date.”

At paragraph eighteen, the court discussed the payments as a whole:

“Payments made by Plaintiffs under the Notes occurred on the date

Park actually received the payment, and not on the date Plaintiffs

mailed the payment or wrote a check for the payment.” And at

paragraph twenty-one, the district court discussed the smaller group

of accumulated checks: “Park accumulated a series of Plaintiffs’

payment checks and subsequently presented the series as a group for

payment at the bank. Under these circumstances, these payments are

considered received by Park when they were sent by Plaintiffs.” So

the district court reaffirmed its previous legal determination of the

meaning of the term “payment date.”

¶83 In the same February 2, 2011 decision, the district court also

made a factual determination regarding the actual dates of payment

by accepting Mr. Hoffman’s accounting: “[The sum due and owing

under the Note] was determined in accordance with the Court’s

direction and the Parties’ stipulation in selecting Mr. Rick Hoffman

to perform this calculation.”74 By expressly recognizing that

Mr. Hoffman performed his calculation “in accordance with the

[district] [c]ourt’s direction,” the district court made a factual

_____________________________________________________________

74 See In re Adoption of Baby B., 2012 UT 35, ¶ 40, 308 P.3d 382

(explaining that factual findings “entail[] the empirical, such as

things, events, actions, or conditions happening, existing, or taking

place, as well as the subjective, such as state of mind” (alteration in

original) (citation omitted) (internal quotation marks omitted)).

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determination that Mr. Hoffman’s factual findings—including the

payment dates—were correct.

¶84 Because the district court incorporated its legal and factual

determinations regarding the payment dates into its final, pre-appeal

order, those determinations became binding on the district court

upon remand as long as the court of appeals did not overturn them.

It did not.

¶85 The court of appeals did not have an opportunity to address

the legal or factual determinations regarding the payment dates,

because neither party appealed them. Although the Bradys now

argue they did challenge the district court’s “original accounting”

during the first appeal, the record clearly shows that the only parts

of the accounting they challenged were the district court’s legal

conclusions that the Note called for compound interest, that the

accrued 20 percent default interest had to be paid to bring the Note

current, and that the 20 percent default interest provision was

conscionable.75 Thus the district court’s legal and factual payment

date determinations proceeded unchallenged to the court of appeals.

¶86 Yet the Bradys argue that the court of appeals overturned

the district court’s pre-appeal payment date determinations.76 They

_____________________________________________________________

75 Although the Bradys do point out in a footnote of their brief in

the first appeal that the district court’s findings of fact and

conclusions of law “do not address how many of the monthly

payments were past due,” they did not challenge Mr. Hoffman’s

payment dates or the district court’s legal interpretation of the term

“payment date.” These payment dates were relevant to

Mr. Hoffman’s calculations—despite the fact that the district court

had ruled that the 10 percent late payment fee provision was

unconscionable—because the payment dates affected the amount of

interest that was continually accruing. For this reason, the Bradys

should have brought any challenge of the payment dates on the first

appeal if they believed the dates were clearly erroneous.

76 The Bradys also argue that the Park Defendants failed to

preserve this issue and invited the district court’s error because the

Park Defendants resubmitted evidence of the correct payment dates

and requested that the district court “look at the evidence in the

record and make specific findings as to which payments are

untimely.” But this argument fails because the Park Defendants

urged the district court to accept their proposed accounting—which

(Continued)

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Opinion of the Court

base this argument on language in the court of appeals’ opinion in

which it instructs the district court to determine “which installment

payments generated a late fee.” But this comment cannot be

interpreted as the Bradys suggest, because the court of appeals is

unlikely to have ruled on issues that were not raised and briefed,77

and the court failed to conduct the necessary “clearly erroneous”

review of the pre-appeal district court’s factual payment date

determinations.78 Rather than reading the court of appeals’

instruction to determine “which installment payments generated a

late fee” as an implicit rejection of the pre-appeal district court’s

legal and factual payment date determinations, we read it as merely

an instruction to determine which of the already established

payment dates fell beyond the due date. Accordingly, we find that

the pre-appeal district court’s legal and factual findings regarding

the payment dates were not disturbed by the court of appeals.

¶87 Consequently, the district court on remand was bound by

the pre-appeal payment dates. In fact, the court even acknowledged

this in its May 7, 2015 Memorandum Decision, when it stated that

“[t]his [payment date] ruling was not challenged on appeal and thus

this issue has been decided and will remain the law applicable in this

used the same payment dates as were used in Mr. Hoffman’s

accounting—because it was “consistent with the previous

undisturbed findings in this case,” whereas the accounting

submitted by the Bradys’ accountant contained “a number of errors

inconsistent with the record.” Because the Park Defendants argued

this and the district court ruled to disregard the Park Defendants’

proposed accounting, the Bradys’ preservation and invited error

arguments fail.

77 See Madsen v. Wash. Mut. Bank FSB, 2008 UT 69, ¶ 26, 199 P.3d

898 (“[W]e frequently decline to rule on an issue when it has not

been fully briefed by the parties because full briefing allows this

court to carefully consider fully developed and supported

arguments.”); Helper State Bank v. Crus, 81 P.2d 359, 362 (Utah 1938)

(“On appeal, all questions to be determined must be raised by

assignments of error, and in the appellate court only questions so

raised can be presented and determined.” (citation omitted) (internal

quotation marks omitted)).

78 An appellate court may overturn a district court’s factual

determination only if it decides that the factual determination was

“clearly erroneous.” See In re Adoption of Baby B., 2012 UT 35, ¶ 40.

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case.” But the court later contradicted this statement when it

misinterpreted its pre-appeal legal determination and completely

disregarded its factual one.79

¶88 In both its May 7, 2015 and October 29, 2015 memoranda

decisions, the district court quoted language from its pre-appeal,

September 3, 2009 decision, in which it stated that “there [was] no

persuasive evidence of a tardy payment, unless the date on the face

of the check is beyond the agreed due date.” But the court

apparently failed to realize that it had made this statement while

referring to the payment dates for a smaller group of accumulated

checks that had been deposited as a group, and not to the payment

dates as a whole. This was error. The language in the pre-appeal,

February 2, 2011 findings of fact and conclusions of law makes it

clear that the majority of payments “occurred on the date Park

actually received the payment, and not on the date Plaintiffs mailed

the payment or wrote a check for the payment.” By overlooking the

context in which it stated that “the date on the face of the check”

constitutes the payment date, the court incorrectly concluded that

the accounting submitted by the Bradys best conformed to its

pre-appeal ruling.80

¶89 The court also overlooked its pre-appeal factual

determination regarding the payment dates. Despite the fact that it

had recognized that Mr. Hoffman’s accounting—including the

payment dates—conformed to its directions before the appeal, on

remand the court accepted an accounting that utilized different

dates.81 This too was error.

_____________________________________________________________

79 We note that during the first round of litigation at the district

court this case was presided over by the Honorable Joseph C. Fratto,

but on remand it was presided over by the Honorable Robert

P. Faust. Accordingly, on remand Judge Faust was interpreting the

previous memoranda decisions issued by Judge Fratto.

80It appears that the Bradys’ accountant simply used the dates on

the face of the checks as the payment date for all installment

payments—a method the district court’s pre-appeal decision

prohibited.

81 In contrast to the accounting submitted by the Bradys’

accountant, the accounting submitted by the Park Defendants’

accountant used the same dates as Mr. Hoffman.

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¶90 Because the district court’s pre-appeal legal and factual

determinations regarding the payment dates became the law of the

case, the court on remand was bound by them. For this reason, the

court’s decision to accept different payment dates violated the

mandate rule.

IV. The District Court Erred When it Awarded Pre- and

Postjudgment Interest to the Bradys at a 10 Percent Rate

¶91 The Park Defendants next argue that the district court erred

when it awarded 10 percent pre- and postjudgment interest to the

Bradys. We agree.

A. The district court erred when it awarded prejudgment

interest at a 10 percent rate under Utah Code section 15-1-1

¶92 As part of its October 29, 2015 memorandum decision, the

district court awarded prejudgment interest to the Bradys at a rate of

10 percent pursuant to Utah Code section 15-1-1. The Park

Defendants challenged this in their motion to alter or amend the

final judgment,82 but the district court denied the motion because it

held that section 15-1-1 applies to any “chose in action”83 and the

Bradys’ claim was indisputably a chose in action. The Park

Defendants now challenge this legal conclusion.

¶93 The Park Defendants cite our decision in USA Power, LLC v.

PacifiCorp,84 to argue that section 15-1-1 is limited to “only those

contracts . . . for the ‘loan . . . of any money [or] goods’ or for the

‘forbearance of any . . . chose in action.’”

¶94 The Bradys argue, however, that the district court’s

prejudgment interest award was correct because the Note

_____________________________________________________________

82 The motion was made pursuant to rule 59 of the Utah Rules of

Civil Procedure.

83 Chose in action, BLACK’S LAW DICTIONARY (10th ed. 2014) (“1. A

proprietary right in personam, such as a debt owed by another

person, a share in a joint-stock company, or a claim for damages in

tort. 2. The right to bring an action to recover a debt, money, or

thing. 3. Personal property that one person owns but another person

possesses, the owner being able to regain possession through a

lawsuit.”).

84 2016 UT 20, ¶ 108, 372 P.3d 629 (second, third, and fourth

alterations in the original) (quoting UTAH CODE § 15-1-1).

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constituted a contract for a loan and, under USA Power, section 15-1-

1 still applies to any “lawful contract” for a loan. But this argument

fails because the judgment awarded to the Bradys was not for money

owed under a loan contract—it was for money owed due to an

overpayment of money owed under a loan contract. This distinction

is significant, and consequently we hold that the district court erred

by concluding that section 15-1-1 applied to the Bradys’ judgment.

¶95 Before our decision in USA Power, we had suggested—in

dicta or without analyzing “the potentially limiting ‘loan or

forbearance’ language in the statute”—that section 15-1-1 applies “to

all cases involving a contract.”85 Consequently, before our decision

in USA Power, many courts interpreted section 15-1-1 as setting “a

default interest rate” for most contracts.86 And, more importantly for

our present discussion, courts also routinely applied the default

10 percent interest rate to overpayments made in connection with

contracts.87 Although USA Power clarified that section 15-1-1 applied

_____________________________________________________________

85 Id. ¶ 107 (discussing previous cases where we suggested that

section 15-1-1 applied to any contract).

86 Consolidation Coal Co. v. Utah Div. of State Lands & Forestry, 886

P.2d 514, 524 n.13 (Utah 1994), abrogated on other grounds by State ex

rel. Sch. & Institutional Tr. Land Admin. v. Mathis, 2009 UT 85, 223 P.3d

1119; see also, e.g., Highlands at Jordanelle, LLC v. Wasatch Cty., 2015 UT

App 173, ¶ 30, 355 P.3d 1047; Whitney v. Faulkner, 2004 UT 52, ¶ 17,

95 P.3d 270 (limiting section 15-1-1 to the contract setting—not only

to contracts for loans or forbearance), abrogated by USA Power, LLC v.

PacifiCorp, 2016 UT 20, 372 P.3d 629; Francis v. Nat’l DME, 2015 UT

App 119, ¶ 44, 350 P.3d 615 (concluding that section 15-1-1 applies to

all contracts).

87 See, e.g., Highlands at Jordanelle, 2015 UT App 173, ¶¶ 30–32

(applying section 15-1-1 to a judgment issued for an overpayment of

service fees); Dale K. Barker Co. v. Sumrall, No. 2:03-cv-00903 CW,

2012 WL 2176235, at *4 (D. Utah June 13, 2012) (applying section

15-1-1 to a contract and noting that if the party had overpaid, the

interest would have applied to the overpayment); see also

Consolidation Coal, 886 P.2d at 529 n.1) (Bench, J., concurring and

dissenting) (“Prejudgment interest is designed to compensate the

nonbreaching party that finds itself, by virtue of the breach, in the

position of loaning money or forbearing what is owed by the

breaching party. Therefore, because of the underpayment of royalties

(Continued)

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Opinion of the Court

only to loan contracts, we did not expressly address its application to

overpayments made in connection with loan contracts. Today we

further clarify that section 15-1-1 does not apply to overpayments

when the overpayments were not contemplated in the underlying

contract, even when the overpayments were made in connection

with a contract for a loan or forbearance.

¶96 This interpretation is required under the plain language of

section 15-1-1. Although section 15-1-1 contains two subsections that

establish prejudgment interest rates for certain types of contracts,

neither subsection applies to the judgment awarded in this case.

¶97 Subsection (1) states that “[t]he parties to a lawful contract

may agree upon any rate of interest for the loan or forbearance of

any money, goods, or chose in action that is the subject of their

contract.”88 In other words, section 15-1-1(1) allows courts to award

prejudgment interest at a rate chosen by the parties if the parties had

previously agreed that the interest rate would be applied to the

amounts for which judgment is awarded.

¶98 The proper application of section 15-1-1(1) may be

demonstrated through a hypothetical. Imagine a typical loan

contract, in which a lender agrees to lend a specified amount of

money to a borrower, and the borrower agrees to pay the money

back with interest at a specified rate. If the borrower fails to repay

the loan and the lender prevails in an action to collect on amounts

owed under the loan contract, section 15-1-1(1) authorizes the court

to award prejudgment interest at the rate specified in the contract

because the parties had agreed to apply it to the amounts the

borrower owed the lender. But if the situation is reversed, and a

borrower prevails in an action to recover amounts it inadvertently

overpaid to the lender, it cannot be said that the lender agreed to pay

interest on that amount—unless the contract specifies that the

interest rate would apply in the event of an overpayment. So if the

parties did not previously agree that the interest rate would apply to

amounts owed due to overpayments, the contract does not contain

an “agreed upon” interest rate under section 15-1-1(1). Such is the

case here.

by Consol, the State found itself in the position of loaning or

forbearing money it was owed.” (citations omitted)).

88 UTAH CODE § 15-1-1(1).

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¶99 The Bradys’ judgment was not awarded for amounts owed

under an express provision of the Note. The purpose of the

judgment was to compensate the Bradys for loan overpayments.

And although the Note specifies that the amounts Mr. Park lent to

the Bradys would accrue interest at a 10 percent interest rate, the

Note does not contemplate the possibility of overpayments, much

less specify an interest rate for amounts owed to the Bradys in the

event of an overpayment. For this reason, we conclude that the

Bradys’ overpayments were not amounts owed under the terms of a

contract for a loan or forbearance, and so we hold that

section 15-1-1(1) did not authorize the district court to award

prejudgment interest at a rate of 10 percent.

¶100 The plain language of section 15-1-1(2) compels the same

result. Section 15-1-1(2) provides that “[u]nless parties to a lawful

contract specify a different rate of interest, the legal rate of interest

for the loan or forbearance of any money, goods, or chose in action

shall be 10% per anum.” Thus section 15-1-1(2) allows courts to

award prejudgment interest at a rate of 10 percent if the parties to a

contract for a loan or forbearance did not previously agree upon

another interest rate. Because the only difference between the two

subsections is that section 15-1-1(1) allows parties to establish any

interest rate, whereas section 15-1-1(2) establishes a standard interest

rate of 10 percent in the event the parties did not establish a specific

interest rate, we conclude that, like section 15-1-1(1), section 15-1-1(2)

applies only to amounts owed under the express terms of a contract

for a loan or forbearance.

¶101 Because the Bradys’ overpayments were not amounts

owed under the express terms of a contract for a loan or forbearance,

neither of section 15-1-1’s subsections authorized the district court to

award prejudgment interest at a 10 percent rate. Accordingly, we

reverse the court’s prejudgment interest award and remand for an

award of prejudgment interest that is consistent with this opinion.89

_____________________________________________________________

89 We note that our determination of other issues in this case will

likely affect the total damage award. In the event the district court

awards damages to the Bradys on remand, it should apply a correct

prejudgment interest rate. Unlike Utah’s postjudgment interest

statute, Utah Code section 15-1-1 does not establish a default

prejudgment interest rate. So on remand the district court will have

to determine which prejudgment interest rate is appropriate in this

case. Although we do not decide which rate that would be here, we

(Continued)

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B. The district court erred when it awarded postjudgment

interest at a 10 percent rate under Utah Code section 15-1-4

¶102 We likewise reverse the district court’s decision to award

postjudgment interest at a rate of 10 percent. The district court made

its postjudgment interest ruling pursuant to Utah Code section

15-1-4(2)(a). Section 15-1-4(2)(a) provides that “a judgment rendered

on a lawful contract shall conform to the contract and shall bear the

interest agreed upon by the parties.” The district court cited this

language and concluded that it applied to this case because “the

statute asks whether there was an interest rate ‘agreed upon by the

parties,’ not whether the terms of the contract contemplate the

specific claim presented to the Court.” We disagree with the court’s

interpretation.

¶103 A correct interpretation of section 15-1-4(2)(a) hinges on

the meaning of the phrase “interest agreed upon by the parties.”

While the district court’s interpretation focused on the words

“agreed upon” before correctly noting that the parties had agreed

upon an interest rate in the Note, its statutory analysis ended

prematurely because it failed to consider the underlying debt

obligation to which the parties agreed the interest rate would attach.

¶104 An interest rate—by its very nature—is derivative of some

other agreed upon contractual obligation.90 In other words, before

parties can agree upon an interest rate—which will be calculated as a

percentage of the amount of an underlying debt or other

obligation—the parties must reach an agreement regarding the

underlying debt or obligation. With this in mind, it is clear that

section 15-1-4(2)(a) only authorizes the court to apply an interest rate

do note that the rate described in Utah Code section 15-1-4(3)(a), for

postjudgment interest, may be an appropriate rate for a prejudgment

interest award in this case. See generally Wilcox v. Anchor Wate Co.,

2007 UT 39, ¶ 46, 164 P.3d 353 (holding that the rate in section 15-1-1

did not apply because the case did not deal with a contract for a loan

or forbearance, and instead applying a rate used in federal

bankruptcy law because it was a “more appropriate prejudgment

interest rate” for the case).

90 This is so because an interest rate is calculated as a percentage

of a principal amount. See, e.g., interest rate, BLACK’S LAW DICTIONARY

(10th ed. 2014) (“The percentage that a borrower of money must pay

to the lender in return for the use of the money, usu. expressed as a

percentage of the principal payable for a one-year period.”).

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chosen by the parties if the parties agreed that the interest rate

would apply to the contractual obligation that forms the basis for the

judgment award. In other words, section 15-1-4(2)(a) does not

authorize courts to rewrite a contract by taking an interest rate

contractually linked to one obligation and applying it to amounts

owed under a different, unrelated obligation. This is especially true

when the unrelated obligation had not been contemplated by the

parties at the time the contract was formed.

¶105 In this case, the parties agreed that the Bradys would be

obligated to repay a loan in the amount of $675,000 to Mr. Park. They

then agreed upon an interest rate—10 percent—that would attach to

that obligation. Importantly, the parties did not contemplate the

possibility of loan overpayments, and they did not agree upon an

interest rate that would attach to amounts owed to the Bradys due to

loan overpayments. The district court erred, therefore, when it

changed the terms of the parties’ agreement by applying a 10 percent

interest rate to a judicially created obligation to refund the Bradys’

overpayments. For this reason, we reverse the district court’s

postjudgment interest determination and remand for an entry of

postjudgment interest at the federal postjudgment interest rate, plus

2 percent, pursuant to Utah Code section 15-1-4(3)(a).91

V. The District Court Did Not Abuse its Discretion When

it Denied the Park Defendants’ Rule 60(b) Motion

¶106 We now consider the Park Defendants’ claim that the

district court abused its discretion when it denied their rule 60(b)

motion. Rule 60(b) of the Utah Rules of Civil Procedure authorizes a

court to “relieve a party or its legal representative from a judgment”

for a number of reasons listed in the rule.92 When considering

challenges to a court’s ruling on a rule 60(b) motion, we “grant broad

discretion” where the motions “are equitable in nature, saturated

with facts, and call upon judges to apply fundamental principles of

_____________________________________________________________

91 UTAH CODE § 15-1-4(3)(a) (“Except as otherwise provided by

law . . . all other final civil and criminal judgments of the district

court and justice court shall bear interest at the federal postjudgment

interest rate as of January 1 of each year, plus 2%.”).

92 UTAH R. CIV. P. 60(b).

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fairness that do not easily lend themselves to appellate review.”93 In

this case we decline to disturb the district court’s rule 60(b) ruling.

¶107 In their rule 60(b) motion, the Park Defendants asked the

district court to amend its judgment so that the judgment’s “joint

and several” designation no longer applied to Bank of Utah, as

custodian of the IRA, and Paul M. Halliday, as trustee.94 They

argued that the joint and several designation was a mistake under

rule 60(b)(1); that it was not equitable to give the judgment

prospective effect under rule 60(b)(5); and, alternatively, that their

requested relief was justified under rule 60(b)(6). The Park

Defendants have made the same arguments on appeal. We affirm the

district court on all counts.

¶108 Rule 60(b)(1) authorizes a court to relieve a party from a

judgment if the judgment was the product of a “mistake,

inadvertence, surprise, or excusable neglect.” The Park Defendants

argue that the joint and several designation was a mistake under

rule 60(b)(1) because the Bradys never sought monetary damages

against the Bank of Utah or Mr. Halliday in their complaint. While

the Park Defendants are correct on this point, they do not consider

the grounds on which the district court awarded judgment. The

judgment in this case was awarded based upon the Bradys’

overpayment of amounts owed under the Note. And these

overpayments were made pursuant to the district court’s pre-appeal

judgment for breach of contract, for which all of the Park Defendants

were named plaintiffs and which resulted in a judgment in the

amount of $2 million to all of the Park Defendants. Using this

judgment, the Bank of Utah, acting on behalf of the IRA, foreclosed

on some of the Bradys’ real property. With these facts in view, we

hold that the inclusion of the Bank of Utah and Mr. Halliday in an

award for reimbursement was not an abuse of the district court’s

discretion.

_____________________________________________________________

93 Fisher v. Bybee, 2004 UT 92, ¶ 7, 104 P.3d 1198.

94 The judgment was entered against the Bank of Utah in its

capacity as a custodian of the IRA and against Mr. Halliday in his

capacity as trustee to two trust deeds securing the Note.

Consequently, the judgment did not allow the Bradys to collect from

the general assets of the Bank nor from the personal assets of

Mr. Halliday.

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¶109 Similarly, the district court did not abuse its discretion by

rejecting the Park Defendants’ rule 60(b)(5) and (b)(6) arguments.

Rule 60(b)(5) authorizes a court to relieve a party from a judgment if

“it is no longer equitable that the judgment should have prospective

application.” The Park Defendants argue that relief should have

been granted under rule 60(b)(5) because “no allegations or evidence

were ever presented to support” an award of prospective relief. But

this argument is merely a rewording of their argument under rule

60(b)(1), and it fails for the same reason—the Bradys made

overpayments to all of the Park Defendants together, so an award for

reimbursement against all of the Park Defendants was within the

court’s discretion.

¶110 Finally, rule 60(b)(6) authorizes a court to relieve a party

from a judgment for “any other reason that justifies relief.” The Park

Defendants argue that rule 60(b)(6) should apply in the event its

other arguments do not succeed. Because the Park Defendants do

not express any additional reasons in support of this last argument,

it fails for the same reasons as the Park Defendants’ rule 60(b)(1) and

(b)(5) arguments.

¶111 In sum, because the Park Defendants together were

awarded a judgment against the Bradys in the district court’s first

judgment, the court did not abuse its discretion by granting a

reimbursement award against all of the Park Defendants in its

second judgment. Accordingly, we affirm the district court’s

rule 60(b) ruling.

VI. We Vacate the District Court’s Decision to Award

No Attorney Fees and Remand for a New

Attorney Fees Award Determination

¶112 Next, we consider the district court’s attorney fees

determination. Both the Bradys and the Park Defendants argue that

the district court erred when it declined to award attorney fees in

their favor. Because our rulings on the other issues in this case may

have upended the basis for the court’s attorney fees decision, we

decline to address the parties’ arguments. Instead, we vacate the

district court’s previous decision and remand for a new attorney fees

determination.

VII. We Have Jurisdiction to Consider All of the Claims

Brought by the Park Defendants

¶113 Finally, the Bradys argue that we do not have jurisdiction

over Mr. Park’s IRA on appeal because the Bank of Utah, as

custodian for the IRA, failed to file a timely notice of appeal

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pursuant to rules 3(d) and 4(a) of the Utah Rules of Appellate

Procedure. Although we agree with the Bradys that the deficiencies

in the notice of appeal deprive us of jurisdiction over the Bank of

Utah, we find that our jurisdiction over the remaining Park

Defendants necessarily includes jurisdiction over all of the Park

Defendants’ property, which in this case includes the IRA.

¶114 The omission of an IRA custodian95 does not deprive us of

jurisdiction over a self-directed IRA when we already have

jurisdiction over the IRA’s owner or beneficiary. Unlike a trust or a

business entity, a self-directed IRA is not a legal entity that is distinct

from its owner.96 Rather, it is more akin to property such as a bank

account.97 When a court has jurisdiction over the parties to a case,

the court has jurisdiction to adjudicate the parties’ interests in their

property.98 Because assets held in a self-directed IRA are property of

the IRA’s owner, jurisdiction over the owner necessarily confers

jurisdiction over the IRA and all of the assets held in the IRA. So

_____________________________________________________________

95At the outset, we must highlight the fact that the Bank of Utah

was joined to this case only in its role as custodian of the IRA.

96 See Regions Bank v. Kaplan, No. 8:16-cv-2867-T-23AAS, 2017 WL

2868413, at *1 (M.D. Fla. Apr. 10, 2017) (“The predominant weight of

authority holds that a plaintiff can sue the beneficiary of a

self-directed IRA for the IRA’s alleged wrongdoing because the

self-directed IRA ‘is not a separate legal entity from its owner.’”

(citation omitted)); United States v. Bailey, No. 1:11cr10, 2012 WL

569744, at *5, n.5 (W.D.N.C. Feb. 22, 2012) (noting that “[b]ecause an

IRA is not a separate legal entity from its owner,” the owner of the

IRA is the true beneficial owner of the property deposited therein);

Myers v. Walker, 61 S.W.3d 722, 726 n.1 (Tex. Ct. App. 2001)

(suggesting that the owner of an IRA is not distinct from the IRA).

97 See, e.g., In re Vaughan Co., Realtors, No. 10-10759, 2014 WL

271632, at *3 (Bankr. D.N.M. Jan. 23, 2014) (“A self-directed IRA, like

a savings account, is not a separate legal entity from its owner.”).

98 See, e.g., Aequitas Enters., LLC v. Interstate Inv. Grp., LLC, 2011

UT 82, ¶ 10, 267 P.3d 923 (“[W]hen a court has personal jurisdiction

over the parties to a case, the court has jurisdiction to adjudicate the

parties’ interests in real property, even if the property is not located

in that state. Here, the court unquestionably has personal jurisdiction

and therefore has the ability to order the parties to act on their

property.” (citations omitted)).

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Mr. Park and the Park Trust’s notice of appeal was sufficient to grant

us jurisdiction over them and all of their assets, including the IRA.99

¶115 Additionally, we note that a corollary of this rule is that

when we have jurisdiction over an owner of an IRA—including his

or her interest in the IRA—the owner necessarily has standing to

bring or defend claims directly implicating his or her interest in the

IRA. Accordingly, we have frequently adjudicated interests in an

IRA where the owner of the IRA, but not the IRA or the IRA’s

custodian, was joined as a party.100

¶116 This approach is followed in other jurisdictions. For

example, in FBO David Sweet IRA v. Taylor,101 a federal district court

in Alabama ruled that the owner of a self-directed IRA was a proper

party-plaintiff in a case involving assets deposited in an IRA because

“it is the owner of the Self–Directed IRA who manages, directs, and

controls the investments.”102 So the court concluded that “the owner

_____________________________________________________________

99In so holding we note that the Bank of Utah, as custodian of the

IRA, was only joined to this case as part of the Bradys’ claim for

injunctive relief, and its presence was never necessary for the other

Park Defendants to defend their interests in the IRA.

100 See Dahl v. Dahl, 2015 UT 79, ¶¶ 142–45, ---P.3d--- (adjudicating

the parties’ interest in an IRA even though the IRA and its custodian

were not included as parties); Mellor v. Wasatch Crest Mut. Ins. Co.,

2009 UT 5, ¶ 8, 201 P.3d 1004 (noting that under a federal retirement

benefit statute an IRA plan “participant or beneficiary” may bring a

civil action “to recover benefits due to him under the terms of his

plan, to enforce his rights to future benefits under the terms of the

plan, or to clarify his rights under the terms of the plan” (citation

omitted) (internal quotation marks omitted)); In re Kunz, 2004 UT 71,

¶¶ 2, 13, 99 P.3d 793 (adjudicating interests in several IRAs, even

though the IRAs and their custodians were not included as parties);

Estate of Anello v. McQueen, 953 P.2d 1143, 1145–47 (Utah 1998)

(adjudicating the parties’ interests in two IRAs, even though the

IRAs and their custodians were not listed as parties); In re Matter of

Estate of Hunt, 842 P.2d 872, 873 (Utah 1992) (noting that a

beneficiary of an estate had standing to pursue an appeal despite the

fact that the beneficiary had resigned as personal representative of

the estate after filing his notice of appeal).

101 4 F. Supp. 3d 1282 (M.D. Ala. 2014).

102 Id. at 1285.

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Opinion of the Court

or beneficiary of the IRA acts as a trustee for all intent and purposes”

whereas the bank custodian “served as merely a holding company”

of the owner’s property.103

¶117 Similarly, in Deem v. Baron104 the federal district court of

Utah held that an IRA’s custodian bank was not the proper party to

litigate issues related to IRA contracts. After acknowledging the logic

of the FBO David Sweet IRA opinion, the court explained that because

the custodian bank “ha[d] not been involved in the decision-making

process, it lack[ed] the knowledge of the facts which would allow it

to bring th[e] action [in the case].”105 In contrast, the court held that

the owners of the IRA were the “true parties in interest” in the

litigation because “they are the ones most knowledgeable of all of

the facts and circumstances surrounding those contracts” and “they

are also the ones for whose benefit all of the transactions were

performed.”106 Accordingly, the court concluded that the owners of

the IRA had standing to prosecute the case. So both FBO David Sweet

IRA and Deem illustrate that our treatment of the IRA in this case is

consistent with the treatment given to IRAs in other jurisdictions.

¶118 In sum, jurisdiction over a party also confers jurisdiction

over the party’s property. This is true even when the property in

question is an IRA. And if we have jurisdiction to adjudicate a

party’s interest in his or her IRA, that party necessarily has standing

to bring or defend claims implicating his or her interest in the IRA.

In this case, the Bradys do not challenge our jurisdiction over

Mr. Park individually or as trustee of the Park Trust. Because the

Park Trust owns the IRA, we also have jurisdiction over the IRA, and

Mr. Park—as trustee of the Park Trust—has standing to defend the

Trust’s interest in the IRA on appeal. Accordingly, we hold that

although we do not have jurisdiction over the Bank of Utah, as

_____________________________________________________________

103 Id.; see also Vannest v. Sage, Rutty & Co., 960 F. Supp. 651, 658

(W.D.N.Y. 1997) (“Because Vannest controlled the investment

decisions, he certainly was a purchaser/seller for all practical

purposes. Investors in self-directed IRAs have standing as

‘purchasers/sellers’ to assert claims under the securities laws.”).

104 No. 2:15-cv-00755-DS, 2016 WL 8230425 (D. Utah Apr. 14,

2016).

105 Id. at *2.

106 Id.

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custodian of the IRA, we nevertheless have jurisdiction over the IRA

and the Park Trust’s interest in it.

Conclusion

¶119 Although the district court was not precluded by the

mandate rule from determining that the Note does not require the

Bradys to pay any incurred 10 percent late fee amounts to bring the

Note current, we hold that the court erred in making this

determination because it did so by construing an ambiguity in the

Note against the Park Defendants, as drafters, without first

considering extrinsic evidence. Accordingly, we remand for a new

determination after the court considers relevant extrinsic evidence.

¶120 Additionally, we affirm the district court’s determination,

because it was not clearly erroneous, that extrinsic evidence showed

that the parties did not intend the Note’s 10 percent late fee to apply

to the final payment.

¶121 Further, we reverse the district court’s acceptance of

payment dates that differed from the payment dates it accepted

before the first appeal because this determination violated the

mandate rule.

¶122 We also reverse the district court’s award of pre- and

postjudgment interest at a 10 percent rate to the Bradys because Utah

Code sections 15-1-1 and 15-1-4 do not authorize an award of interest

at that rate. Accordingly, upon remand if the court awards a

judgment to the Bradys, it should apply the correct pre- and

postjudgment interest rates.

¶123 Additionally, we affirm the district court’s ruling on the

rule 60(b) motion because it was not clearly erroneous. But we

reverse the district court’s attorney fees determination and remand

for a new attorney fees determination.

¶124 Finally, we conclude that we have jurisdiction over the

IRA, through the IRA’s owner, even though we do not have

jurisdiction over Bank of Utah, as the IRA’s custodian. We

accordingly remand to the district court for proceedings consistent

with this opinion.

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A.C.J. Lee, concurring in part and dissenting in part

ASSOCIATE CHIEF JUSTICE LEE, concurring in part and dissenting in

part:

¶125 I agree with and concur in much of the majority opinion in

this complex case. But I respectfully disagree with the court’s

decision to reverse and remand to allow the parties to present

extrinsic evidence on the question of “what is required to bring the

Note current under the 20 percent default interest provision.”

Supra ¶ 59. Unlike the majority, I find no “ambiguity” in this

provision sufficient to open the door to extrinsic evidence. Instead I

would conclude that the default interest provision applies to any and

all outstanding debts under the Note and that these debts must be

paid in order for the Note to be “brought current.”

¶126 This strikes me as the better interpretation of the terms of

the parties’ agreement. And because this question can be adequately

resolved on the basis of the written agreement I would hold that

there is no basis for a remand.

¶127 My disagreement with the majority highlights an

important ambiguity lurking in the background of our analysis in a

case like this one. The ambiguity concerns the very notion of contract

ambiguity—or in other words ambiguity about what it means for

competing parties both to offer a “reasonable” interpretation of the

contract provision in question. Our cases have never been very clear

about the nature of ambiguity sufficient to open the door to extrinsic

evidence. Put differently, we have never said what it means for both

sides to have a “reasonable” interpretation. I would clarify this

important point of contract law doctrine here. I would do so by

holding that a contract is “ambiguous” enough to allow a court to

consider extrinsic evidence if and only if the parties’ competing

interpretations of a contract are equally (or at least roughly equally)

plausible. And I would conclude that the Note in this case is not

ambiguous in this sense, but is better interpreted as requiring a

default interest payment on any and all outstanding debts payable

under the Note (and thus necessary for it to be “brought current”).

¶128 In the paragraphs below I first set forth the need and basis

for the clarification in our law that I propose. Then I respond to the

majority’s criticisms of my approach, including its puzzling assertion

that the doctrine of stare decisis somehow bars my bid to clarify an

element of our law that has never been defined but leaves the

majority free to make the clarification that it prefers. See supra ¶ 54

n.39. And I conclude by explaining why I think the terms of the Note

at issue here are not sufficiently ambiguous to warrant a decision to

open the door to the presentation of extrinsic evidence.

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A.C.J. Lee, concurring in part and dissenting in part

I

¶129 We have long said that a provision of a contract is

ambiguous if “it is capable of more than one reasonable interpretation

because of uncertain meanings of terms, missing terms, or other

facial deficiencies.” Meadow Valley Contractors, Inc. v. State Dep’t of

Transp., 2011 UT 35, ¶ 64, 266 P.3d 671 (emphasis added) (quoting

Glenn v. Reese, 2009 UT 80, ¶ 10, 225 P.3d 185), abrogated on other

grounds by Mounteer Enters., Inc. v. Homeowners Ass’n for the Colony of

White Pine Canyon, 2018 UT 23, 422 P.3d 809. Yet we have never been

very clear about what this means.

¶130 We have emphasized that it is not enough that two parties

offer competing interpretations of a contract provision. R&R Energies

v. Mother Earth Indus., Inc., 936 P.2d 1068, 1074 (Utah 1997). Thus, we

have stated that each competing interpretation must be

“reasonable”—or “tenable.” See Plateau Mining Co. v. Utah Div. of

State Lands & Forestry, 802 P.2d 720, 725 (Utah 1990) (“To

demonstrate ambiguity, the contrary positions of the parties must

each be tenable.”). And we have underscored the need to consider

the “contract as a whole” in assessing this question—“[e]ach contract

provision . . . in relation to all of the others.” Utah Valley Bank v.

Tanner, 636 P.2d 1060, 1061–62 (Utah 1981). Yet we have never been

very clear about what it means for two competing interpretations to

be “reasonable” or “tenable.”

¶131 This is a significant ambiguity. A judicial determination of

ambiguity opens the door to extrinsic evidence of the intent of the

parties to a contract—and, eventually, to the possible application of a

canon of construction (like the canon of construing ambiguities

against the drafter). See supra ¶ 56 (quoting Meadow Valley

Contractors, 2011 UT 35, ¶ 64). Such a determination is likely to be a

matter of great consequence to the parties. When a court opens the

door to extrinsic evidence it substantially increases the cost of

resolving a dispute over the meaning of a contract provision. See

Omri Ben-Shahar & Lior Jacob Strahilevitz, Interpreting Contracts Via

Surveys and Experiments, 92 N.Y.U. L. REV. 1753, 1762–63, 1757–58

(2017); Alan Schwartz & Robert E. Scott, Contract Interpretation Redux,

119 YALE L.J. 926, 953, 963 (2010). And, all else being equal, we can

assume that parties to a contract will prefer quick, inexpensive

means of resolving contract disputes. Schwartz & Scott, supra at 944–

47.

¶132 All else may not be equal. The decision to open the door to

extrinsic evidence may produce not just costs but also benefits—by

enhancing the accuracy of a judicial decision (in accurately assessing

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BRADY v. PARK

A.C.J. Lee, concurring in part and dissenting in part

the contracting parties’ intent). Id. at 930 (explaining that courts can

often “minimize interpretive error by hearing all relevant and

material evidence”). And it could make good sense to open the door

to extrinsic evidence in contract cases if and when this benefit

outweighs the cost of more drawn-out litigation. See id. at 946.

¶133 This is an important policy question that drives some

points of conflict in the law of contract interpretation. When courts

embrace a hard “parol evidence rule” or “plain meaning” canon of

contract interpretation they are implicitly concluding that the

adjudication costs of opening the door to extrinsic evidence

outweigh any benefits in the form of improving accuracy of judicial

decision-making. See Ben-Shahar & Strahilevitz, supra at 1762. This is

the so-called “New York” rule of contract interpretation.107 The

contrary approach is sometimes referred to as the “California

rule.”108 It seems premised, at least in part, on a contrary

determination—that the benefits of more accurately assessing the

parties’ intent are sufficient to justify the increase in costs associated

with opening the door to extrinsic evidence.

¶134 Our Utah cases have embraced the New York approach—

at least in part. See Tangren Family Tr. v. Tangren, 2008 UT 20, ¶ 11,

182 P.3d 326 (“[I]f a contract is integrated, parol evidence is

admissible only to clarify ambiguous terms; it is ‘not admissible to

vary or contradict the clear and unambiguous terms of the

contract.’” (quoting Hall v. Process Instruments & Control, Inc., 890

P.2d 1024, 1026–27 (Utah 1995)); Daines v. Vincent, 2008 UT 51, ¶ 25,

190 P.3d 1269 (“[B]efore permitting recourse to parol evidence, a

court must make a determination of facial ambiguity.”); Peterson v.

_____________________________________________________________

107See Schwartz & Scott, supra at 959–60; see, e.g., In re Primex Int’l

Corp. v. Wal-Mart Stores, Inc., 679 N.E.2d 624, 627 (N.Y. 1997) (giving

conclusive effect to a merger clause); Intershoe, Inc. v. Bankers Tr. Co.,

571 N.E.2d 641, 644 (N.Y. 1991) (enforcing a default rule excluding

extrinsic evidence when a writing appears to embody a final

agreement).

108 See Schwartz & Scott, supra at 960–61; see, e.g., Garcia v. Truck

Ins. Exch., 682 P.2d 1100, 1104 (Cal. 1984) (en banc) (explaining that

the parol evidence rule does not exclude “evidence of the

circumstances under which the agreement was made or to which it

relates . . . or to explain an extrinsic ambiguity or otherwise interpret

the terms of the agreement” (alteration in original) (citation

omitted)).

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Sunrider Corp., 2002 UT 43, ¶ 18, 48 P.3d 918 (“If the language of the

contract is unambiguous, the intention of the parties may be

determined as a matter of law based on the language of the

agreement.”).

¶135 Notwithstanding these important holdings, we have not

yet resolved a related question that is lurking beneath the surface in

a case like this one—what do we mean by “ambiguity” or competing

“reasonable” or “tenable” interpretations?109 Our cases have used a

range of different terms in describing the operative standard. See

supra ¶ 55 n.42. Without some clarification of the nature of this

standard, we perpetuate a risk of arbitrary applications of an

important threshold standard in contract interpretation.

¶136 We can, and should, eliminate this ambiguity about

“ambiguity” in contract interpretation. I would do so by stating that

we find ambiguity sufficient to open the door to extrinsic evidence

only where the parties’ competing interpretations are of equal (or at

least roughly equal) plausibility. Put differently, I would say that we

look to extrinsic evidence only as a sort of “tie-breaker”—to resolve

very close calls on the best interpretation of the four corners of a

written contract.110

_____________________________________________________________

109 In fairness, we are not alone. I have found no court in any

other jurisdiction that has answered the important question that is

implicated here. Most all courts, it would seem, are content to reside

in a world of ambiguity about ambiguity. Stephen C. Mouritsen,

Contract Interpretation with Corpus Linguistics 5 (Aug. 30, 2018)

(unpublished manuscript) (available on SSRN) (“In spite of its

conceptual importance in the interpretation of contracts, courts lack

a coherent, shared, well-defined, objective definition of what

ambiguity actually means.”). But that is no reason to remain in this

uncertain place. Our courts generally have suffered from a startling

lack of familiarity with principles and practices of linguistics.

Thomas R. Lee & Stephen C. Mouritsen, Judging Ordinary Meaning,

127 YALE L.J. 788, 794–95 (2018). It is time we begin to remedy that

problem.

110 The majority highlights a related point of ambiguity in our

case law. It notes that we have said that we resolve ambiguities

against the drafter only where “extrinsic evidence ‘does not reveal

the intent of the parties.’” Supra ¶ 56 (quoting Meadow Valley

Contractors, 2011 UT 35, ¶ 69). But that formulation begs a parallel

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¶137 This approach would minimize the risk of arbitrary

application of the law. It would also streamline the process of

contract dispute resolution in a manner that is likely reflective of the

preferences of contracting parties. See Schwartz & Scott, supra at 944–

47.

¶138 A party who enters into a written contract will not likely

be in a position to predict whether the eventual use of extrinsic

evidence will help or hurt its cause in an anticipated dispute about

contract meaning. Contracting parties thus are likely to prefer

streamlined rules of interpretation that tend to limit review to the

four corners of the contract. This is more than a theoretical

proposition. It seems amply borne out by empirical evidence—in the

fact that parties overwhelmingly go out of their way to direct courts

to ignore extrinsic evidence and to consider only the terms of their

written agreement, and (relatedly) opt for New York law over

California law in forum-selection clauses.111

question of what degree of ambiguity warrants resort to this kind of

canon of construction. This is another important question that merits

our attention in an appropriate case. Perhaps some of the analysis I

have presented here may be of use to our clarification of this

important point in our law. I do not propose to resolve this question

here, however, as it is not necessary to the resolution of this case.

111 See Lisa Bernstein, Merchant Law in a Merchant Court:

Rethinking the Code’s Search for Immanent Business Norms, 144 U. PA. L.

REV. 1765, 1769–70, 1771–77, 1816–20 (1996) (revealing that a more

formalistic, textualist approach is favored among merchants);

Theodore Eisenberg & Geoffrey P. Miller, The Flight to New York: An

Empirical Study of Choice of Law and Choice of Forum Clauses in

Publicly-Held Companies’ Contracts, 30 CARDOZO L. REV. 1475 (2009)

(showing that parties prefer New York law to other law by

empirically reviewing choice of law and forum-selection clauses in

contracts).

The majority correctly notes that these empirical studies

examined contract disputes between sophisticated business entities.

But I see no reason why unsophisticated parties would prefer a

different approach. They are in no better position to know ex ante

whether the use of extrinsic evidence will help or hurt their cause.

And the majority has not proffered a standard that accounts for its

policy concern. See infra ¶¶ 155–59. It has opted not to provide a

standard.

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¶139 Our contract law should reflect our best assessment of the

contracting parties’ likely preferences on the governing rules of

contract interpretation. This is an important function of gap-filler

rules in contract law. See Schwartz & Scott, supra at 941, 957. If we

think it likely that contracting parties will prefer streamlined rules of

interpretation (as I do), our law should reflect this background rule.

The parties to a contract may then draft around the rule if they prefer

a different approach. Id. at 944; Ian Ayres & Robert Gertner, Filling

Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99

YALE L.J. 87, 87 (1989) (“Default rules fill the gaps in incomplete

contracts; they govern unless the parties contract around them.”).

And our law can then defer to their contrary view.

¶140 I would embrace such an approach here. And I would

accordingly adopt a clarifying—and limiting—notion of the kind of

“ambiguity” sufficient to open the door to extrinsic evidence in Utah.

II

¶141 The majority criticizes my proposed clarification of our

law on three principal grounds. First, it claims that the doctrine of

stare decisis somehow bars us from clarifying an ambiguous tenet of

our case law. Second, it asserts that my proposed standard is no

clearer than the majority’s. And third, it contends that the policy

grounds for my approach will not always hold. I find none of these

critiques persuasive.

A

¶142 The majority places great weight on the doctrine of stare

decisis. It accuses me of “brush[ing] aside sixty years of our caselaw”

and of urging a “significant departure from our longstanding

approach to contract interpretation.” Supra ¶¶ 54 & 55 n.42. But this

critique is puzzling on several counts.

¶143 First, our precedent is either silent or inconsistent on the

question that I am proposing to clarify. And nothing in the law of

stare decisis forecloses a clarification of an unclear body of case law.

¶144 The majority concedes the lack of clarity in our case law.

At one point it admits that “we have used the term ‘reasonable’

repeatedly for decades without defining the term further.” Supra

¶ 55. And elsewhere it acknowledges that we have also used an

alternative term—“plausible”—in identifying the threshold for

ambiguity in this field. Supra ¶ 54 n.39. That term has also remained

undefined in our case law.

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¶145 Our cases are at best silent on what it means for two

competing interpretations of a contract to be “reasonable” or

“plausible.” That alone should be enough to defeat the applicability

of the doctrine of stare decisis. If we have failed to define an operative

term for decades we can hardly be foreclosed from doing so as a

matter of stare decisis. That notion of stare decisis would make no

sense. It would say that our past failure to elucidate the meaning of

an undefined term in our precedent precludes us from ever doing so

going forward. That cannot be right. See In re Adoption of Baby B.,

2012 UT 35, ¶ 60 n.23, 308 P.3d 382 (explaining that a key policy

undergirding the principle of stare decisis is “reinforced by a decision

that clarifies ambiguities in past opinions”).

¶146 But silence is the lesser of the two evils present in our case

law. Our precedents are also inconsistent. As Judge Connors notes, a

standard of plausibility seems quite a bit lower than a standard of

reasonableness. Compare infra ¶ 178 n.122 (Connors, J., concurring in

part and dissenting in part) (providing definitions of the word

“plausible”), with WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY

1892 (2002) (defining “reasonable” as “being in agreement with right

thinking or right judgment; not conflicting with reason; not

absurd”). The “more than conjecture” standard used in our caselaw

seems even further removed. Infra ¶ 148 n.113; see WEBSTER’S THIRD

NEW INTERNATIONAL DICTIONARY 479 (2002) (defining “conjecture”

as “an inference or conclusion drawn or deduced by surmise or

guesswork”). If it is enough for both of two interpretations of a

contract to be “more than conjecture,” the door will be open wide to

the admissibility of extrinsic evidence.

¶147 Our law as it currently stands is a grab bag. A judge who

prefers to enforce a careful limit on the admissibility of extrinsic

evidence can do so under the notion of “reasonableness” that I have

proposed. But no judge is bound by that standard. If the judge

prefers to open a wider door to extrinsic evidence she can cite the

“more than conjecture” standard. These two notions of

reasonableness cannot peacefully coexist. And the doctrine of stare

decisis surely does not foreclose us from resolving the tension in our

case law.112

_____________________________________________________________

112See Washington Cty. Sch. Dist. v. Labor Comm’n, 2015 UT 78,

¶¶ 24–37, 358 P.3d 1091 (noting the use of different standards in our

cases and taking the opportunity to clarify the appropriate

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¶148 The majority seeks to avoid this problem by equating the

terms “plausible” and “reasonable” going forward. Citing some

language in some of our opinions, the court insists that “we have

treated” the term “plausible” as if it “had roughly the same meaning

as the term ‘reasonable.’” Supra ¶ 54 n.39. To support this assertion,

the majority notes that the terms are often used near each other in

our opinions. That’s true. But it does not follow that the two terms

are synonymous. There is good reason to believe that a plausibility

standard is lower than a reasonableness standard. Again I think that

follows from the text of our opinions and from the ordinary meaning

of “plausible.”113 See supra ¶¶ 144, 146.

¶149 The majority’s response to this problem, moreover, just

underscores the need for clarification in this area. Ultimately all the

majority is really saying is that it believes a clarification is necessary.

And the clarification it selectively chooses is that “plausible”

essentially means “reasonable.”

¶150 This leads to the second problem with the majority’s stare

decisis analysis. The court itself is proposing to clarify our law in this

field—by saying that when we use the term “plausible” we really

standard); In re Adoption of Baby B., 2012 UT 35, ¶ 60 n.23, 308 P.3d

382 (clarifying a “latent ambiguity[y]” in our precedent and

explaining that “[s]uch a decision is entirely consistent with the

principle of stare decisis”).

113 The body of Utah case law is difficult to square with the

majority’s conclusion. To date this body of law has not been viewed

as equating plausibility and reasonableness. Instead our cases have

been understood to allow for an independent showing of plausibility

as a means of proving ambiguity. See, e.g., Saleh v. Farmers Ins. Exch.,

2006 UT 20, ¶¶ 15–17, 133 P.3d 428 (discussing at length the term

“plausible” and how it is used as a standard in contract

interpretation); Bennett v. Huish, 2007 UT App 19, ¶ 21, 155 P.3d 917

(relying on a plausibility standard); Prop. Assistance Corp. v. Roberts,

768 P.2d 976, 977 (Utah Ct. App. 1989) (same). Further, this is hardly

the only point of inconsistency in our case law in this field. We have

also suggested that a contract is ambiguous where there are at least

two interpretations that rise to “more than a conjecture.” See Saleh,

2006 UT 20, ¶ 17. Elsewhere we have said that “[t]o demonstrate

ambiguity, the contrary positions of the parties must each be

tenable.” Plateau Mining Co. v. Utah Div. of State Lands & Forestry, 802

P.2d 720, 725 (Utah 1990).

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mean “reasonable” (while still stopping short of defining the latter

term). Having done so, however, the majority is in no position to

criticize me for proposing further clarification. I don’t think the law

of stare decisis forecloses the need to clarify an unclear or unworkable

legal standard. See Carter v. Lehi City, 2012 UT 2, ¶ 6, 269 P.3d 141

(explaining that “[a] decision to clarify unworkable precedent does

not undermine but advances” a key goal of stare decisis). But surely

no version of that doctrine allows the majority to advance whatever

points of clarification it favors while dismissing my further

clarification as an unceremonious “brush[ing] aside” of “sixty years

of our case law.”114

_____________________________________________________________

114 For these and other reasons I am puzzled by the majority’s

reminder that “the parties have not asked” us to revisit the standard

set forth in our cases. Supra ¶ 55 n.45. I do not see that as a barrier to

my bid for transparency. The parties have asked us to apply the

standard set forth in our cases—to decide whether the parties’

competing interpretations are both reasonable. And we can’t apply

that standard without explaining what it means. See GeoMetWatch

Corp. v. Utah State Univ. Research Found., 2018 UT 50, ¶ 31, 428 P.3d

1064 (reaffirming that courts, and not the parties, declare the

meaning of the law); First of Denver Mortg. Inv’rs v. C.N. Zundel &

Assocs., 600 P.2d 521, 527 (Utah 1979) (explaining that courts are not

bound by the parties’ stipulations “when points of law requiring

judicial determination are involved”).

The point of our writing opinions is to pull back the curtain on

the basis for our decision. My proposed approach is just a bid for

further transparency. See Winward v. State, 2012 UT 85, ¶ 44, 293 P.3d

259 (Lee, J., concurring in the judgment) (making a similar point in

the context of a concern about a lack of clarity as to the basis for or

content of a statutory standard in the Post-Conviction Remedies Act;

asserting that it is not an act of “judicial restraint” to decline to

define a standard that the court is applying, but instead “is an

effective assumption of power—an assumption in a black box

without any indication of its basis in law”). I see no basis for

foreclosing that move.

It is worth noting, moreover, that the majority sees the lack of

briefing from the parties only as a barrier to the clarification that I

seek—not the one that it favors. Further briefing could certainly be

useful. I would be open to supplemental briefing from the parties on

the proper meaning of “reasonableness” in our case law. But I am

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B

¶151 The majority also expresses confusion or frustration with

the standard that I propose. It says that I either fail to “clarify what a

reasonable interpretation would be,” supra ¶ 55 n.42, or that I

“exclude[]” “any consideration of whether” two competing

interpretations are “reasonable,” supra ¶ 54 n.41. But neither point

correctly characterizes my approach. And the majority’s critiques

reveal the circularity of its own standard.

¶152 I propose to speak directly to what I see as missing from

the standard set forth in our cases—to what it means for there to be

two “reasonable” interpretations of a contract provision. I suggest

that the clearest—and best—way to speak to that question is to say

that two interpretations of a contract are both “reasonable” when

they are of at least roughly equal plausibility. See supra ¶ 136. I

suppose it’s true that we have “never applied” this standard in our

past cases. Supra ¶ 55 n.42. But it misses my whole point to highlight

this as a bug in my theory. This is my theory’s central feature. And it

is built on the idea that we have never spoken specifically to what it

means for two interpretations to be “reasonable”—and need to do so

here.

¶153 The point is not that our courts should refuse to decide

whether two competing interpretations are “reasonable,” supra ¶ 54

n.41—much less that we should “disregard one reasonable

interpretation of a contract” in favor of an alternative interpretation

that the court deems “preferable,” supra ¶ 55 n.45. These

formulations beg the central question—of what it means for an

interpretation to be “reasonable.” And I’m saying that our courts

should define “reasonableness” in terms of roughly equal

plausibility.

¶154 Under my proposed standard, a court would determine

whether two interpretations are “reasonable” by deciding whether

both are roughly equally plausible interpretations of a contract. A

court could reject one interpretation not by deciding that the other is

“preferable” in some vague, abstract sense but by concluding that it

is much less plausible than the alternative.115 My approach thus does

not impressed by the criticism that I am doing something untoward

when it is leveled by a majority that is engaging in a similar exercise.

115The majority says that this approach is called into question by

our case law. Supra ¶ 55 n.45 (citing Meadow Valley Contractors, Inc. v.

State Dep’t of Transp., 2011 UT 35, ¶ 69, 266 P.3d 671). But Meadow

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not “expand . . . contract interpretation . . . by adding an additional

step” of analysis. Supra ¶ 55 n.45. It simply represents an effort to

clarify the first step in interpreting a contract—what constitutes a

“reasonable” interpretation.

¶155 My proposal is a move in the direction of increased

transparency. The majority, by contrast, shrouds the standard of

“reasonableness” in a question-begging formulation that perpetuates

the risk of arbitrariness and inconsistency.

¶156 The majority insists that “we have provided a consistent

explanation for what constitutes a reasonable interpretation.” Supra

¶ 55. It says that “a reasonable interpretation is an interpretation that

cannot be ruled out . . . as one the parties could have reasonably

intended.” Supra ¶ 55 (emphasis added). Yet this formulation is

circular. It defines reasonableness in terms of what is reasonable.

That leaves the matter undefined. It does not tell us how reasonable a

competing interpretation must be, or what it means to be reasonable.

¶157 Perhaps that question can never be answered with

mathematical certainty. But we can try to give it some discernible

content. That is my proposal. And a responsive critique that says

Valley does not speak to the question that I’m addressing—to the

standard of contract ambiguity, or to what it means for two

interpretations to be sufficiently “reasonable” to open the door to

extrinsic evidence. It addresses a subsequent question that goes to

the standard for choosing between two competing interpretations

after that door has been opened. Meadow Valley Contractors, 2011 UT

35, ¶ 64 (stating that after a contract is found to be ambiguous, courts

should “resolve the ambiguity by looking to extrinsic evidence of the

parties’ intent”). Certainly it’s true that at that stage we have said

that it is error to “cursorily conclude[]” that one of two

interpretations is better without considering extrinsic evidence. Id.

¶ 69. But that just means that we have been clear about the approach

courts should take once the door is opened to extrinsic evidence. The

question I’m highlighting—for many reasons a very significant

one—is at an earlier stage. And the majority has no support for its

suggestion that I’m somehow overriding existing case law on the

standard of reasonableness at this threshold stage. We have never said

what that means. We should do so here.

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reasonable means reasonable is no answer; it is a guarantee of

arbitrariness.116

¶158 As judges we are responsible to make our decisions in

accordance with the rule of law. We fail to do so when we take an “I

know it when I see it” way out. See Jacobellis v. Ohio, 378 U.S. 184, 197

(1964) (Stewart, J., concurring). Such is not law. It is an assertion of a

judicial prerogative to do what’s right on a case-by-case basis. And

when we do that we open up the possibility—or more accurately the

guarantee—that our law will mean something different in different

courts in our system.

¶159 Where possible, we should identify the legal rule that

governs our decisions. When we decline to do so we open the door

to decision-making on the basis of personal predilections or

prejudices of our judges. We can and should do better.

_____________________________________________________________

116 The majority claims that my approach “suffers from the same

deficiency” that plagues the imprecise standard now set forth in our

cases. Supra ¶ 55 n.45. In making this claim the majority highlights

the imprecision in the term “plausible,” and insists that my approach

puts all the weight on that term. But that critique misstates the

clarification I propose. I am not proposing to substitute the word

“plausible” for “reasonable.” I am proposing a precise statement of

the governing legal standard, whichever adjective we use—that “we

find ambiguity sufficient to open the door to extrinsic evidence only

where the parties’ competing interpretations are of equal (or at least

roughly equal) plausibility.” Supra ¶ 136. I am suggesting, in other

words, that we turn to extrinsic evidence only to resolve very close

calls between competing interpretations of a contract—as a sort of

tiebreaker.

Under my approach the courts would still retain some discretion

to decide whether the parties’ proffered interpretations are of equal

(or near equal) plausibility. But my approach would narrow that

range of discretion and thus limit the amount of arbitrariness and

inconsistency. Thus, I am not proposing to give district courts new

discretion to “disregard one reasonable interpretation” if they

believe it is less reasonable or plausible than another. Supra ¶ 55

n.45. I am simply suggesting that district courts and litigants should

know what constitutes a “reasonable” interpretation.

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C

¶160 The majority’s final critique is a response to a policy

argument for the tie-breaker notion of “reasonableness” that I have

identified—the logical and empirical support for the idea that

contracting parties prefer streamlined rules of interpretation that

tend to limit review to the four corners of the contract. See supra

¶¶ 137–38. While acknowledging this point, the majority insists that

“it is not necessarily true in every case that parties would prefer a

quick and inexpensive resolution over an accurate result—especially

in cases involving parties who do

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