Can expert testimony interpret industry standard terms without violating the parol evidence rule? Richins Drilling v. Golf Services Group Explained

In Richins Drilling v. Golf Services Group, the Utah Court of Appeals clarified when expert testimony on industry standards is permissible in contract interpretation and addressed the complexities of attorney fee awards involving settled counterclaims.

Background and Facts

Richins Drilling contracted to drill a well for Golf Services Group under terms requiring adherence to “generally accepted practices and methods customary in the industry.” After a four-day bench trial, the court ruled against Richins on breach of contract, unjust enrichment, and mechanics’ lien claims. The parties had settled Golf’s counterclaim with a release covering attorney fees “relating to” the counterclaim, but disputed whether certain fees were incurred for both defense and counterclaim purposes.

Key Legal Issues

The appellate court addressed two primary issues: whether the trial court violated the parol evidence rule by considering expert testimony on industry standards, and whether attorney fees incurred for both defense and counterclaim prosecution were properly awarded after the counterclaim’s settlement.

Court’s Analysis and Holding

The court affirmed that expert testimony did not violate the parol evidence rule because it was used to interpret express contract terms rather than add new terms. The parol evidence rule excludes evidence of prior or contemporaneous agreements that vary contract terms, but expert testimony explaining industry practices helps interpret existing contractual language. The court also held that when a contract lacks a completion time, law implies performance within a reasonable time, which expert testimony may help establish.

Regarding attorney fees, the court remanded because the trial court failed to provide sufficient findings distinguishing fees for defense from those “relating to” the settled counterclaim under the release agreement.

Practice Implications

This decision reinforces that expert testimony interpreting technical contract terms does not implicate the parol evidence rule. Practitioners should carefully draft settlement releases to clearly specify whether attorney fee waivers apply only to fees incurred solely for specific claims or include mixed-purpose fees, as ambiguous language leads to costly allocation disputes requiring detailed court proceedings.