Can an assignee recover damages that occurred after the assignment? Sunridge v. RB&G Explained

Background and Facts

Sunridge Development Corporation (SDC) contracted with RB&G Engineering for geological reports on property intended for residential development in Provo. In 1996, SDC formed Sunridge Enterprises, LLC and assigned the property and contract rights to the new entity. When the Utah Geologic Survey later determined that RB&G’s reports inadequately addressed serious geologic faults, Provo City required expanded setbacks that eliminated fourteen units from the development, causing over one million dollars in damages plus additional costs for delays and redesign.

Key Legal Issues

The primary issue was whether an assignee can recover damages that occurred after the assignment date when those damages flow from a breach of the assigned contract. The district court granted summary judgment against Sunridge Enterprises, reasoning that because RB&G had fully performed its contracts before the assignment, the assignee could only pursue remedies for existing breaches, not future damages. A secondary issue addressed whether an assignor could avoid the economic loss rule by claiming it assigned the underlying contract.

Court’s Analysis and Holding

The Utah Supreme Court rejected the temporal approach adopted by the court of appeals. While confirming that an assignee “stands in the shoes” of its assignor and cannot recover more than the assignor could have recovered, the court held that this inquiry focuses on the assignor’s contractual rights, not when damages occurred relative to the assignment date. The court distinguished SME Industries, noting it involved assignment of claims rather than assignment of all contract rights and privileges. The court also rejected SDC’s attempt to pursue negligence claims by arguing the assignment eliminated its contractual relationship with RB&G.

Practice Implications

This decision provides important clarity for assignment disputes in Utah. Practitioners representing assignees should focus on what damages the assignor could have recovered under the original contract terms rather than attempting to distinguish when specific damages accrued. The ruling also confirms that assignors cannot escape the economic loss rule by claiming an assignment eliminated their contractual relationship with the obligor. For contract drafting, parties should carefully consider whether to include anti-assignment clauses if they wish to limit potential future liability to the original contracting party.