Heil v. Iron County ( 2010 )

FILED
United States Court of Appeals
Tenth Circuit
April 27, 2010
UNITED STATES COURT OF APPEALS
Elisabeth A. Shumaker
Clerk of Court
FOR THE TENTH CIRCUIT
JEFFREY A. HEIL, an individual;
PAULA M. HEIL, an individual,
Plaintiffs-Appellants,
v. Nos. 09-4029 & 09-4073
(D.C. No. 2:07-CV-00598-DS)
IRON COUNTY, a political (D. Utah)
subdivision of the State of Utah,
Defendant-Appellee,
and
STATE BANK OF SOUTHERN
UTAH,
Defendant.
ORDER AND JUDGMENT *
Before LUCERO, PORFILIO, and MURPHY, Circuit Judges.
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
these appeals. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The cases are
therefore ordered submitted without oral argument. This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. It may be cited, however, for its persuasive value
consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
Jeffrey A. Heil and Paula M. Heil (the Heils), proceeding pro se, appeal the
district court’s order dismissing Claim Nine of their amended complaint filed
against Iron County, a political subdivision of the State of Utah. We affirm.
Background
We provide only a brief description of the facts necessary to our review.
The Heils filed two federal lawsuits, one against Iron County, and the other
against State Bank of Southern Utah (the Bank). The cases were later
consolidated in the district court. The Heils made various claims against both
defendants arising out of their ownership of land and water rights in Utah.
Eventually, the Heils voluntarily dismissed all claims against the Bank and all but
one claim against Iron County. That claim is based on allegations in the Heils’
amended complaint that, in 1994, they split off 20 acres from a larger parcel and
built a home on it, but Iron County failed to record this transaction and did not
register those 20 acres on the land plats or tax rolls as a separate parcel. The
single claim preserved for appeal is Claim Nine, in which the Heils alleged that
an employee of Iron County intentionally or negligently informed a potential
buyer of the Heil’s land “that the 20-acre lot split did not exist and that the Heils’
property could not be developed.” Aplee. App. at 246. The Heils claimed
damages against Iron County for their consequent economic loss.
The district court held that Claim Nine was barred by the Governmental
Immunity Act of Utah (GIAU), providing that immunity from suit is not waived
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“if the injury arises out of, in connection with, or results from: . . . a
misrepresentation by an employee whether or not it is negligent or intentional.”
Utah Code Ann. § 63G-7-301(5)(f) (2008) (formerly Utah Code Ann.
§ 63-30d-301). On appeal, the Heils argue that (1) the district court lacked
subject-matter jurisdiction so the court should have dismissed Claim Nine without
prejudice, thus permitting them to refile it in state court; (2) the district court did
not address Iron County’s failure to recognize and record the 20-acre lot split,
resulting in the loss of their property; (3) discovery would have supported their
claims concerning the 20-acre lot; and (4) the district court erred in consolidating
the two cases.
Iron County’s Motion for Sanctions
As a preliminary matter, we consider Iron County’s motion for sanctions
because it suggests that the automatic bankruptcy stay may apply to this appeal.
See 11 U.S.C. § 362. Iron County seeks sanctions against the Heils for their
failure to promptly inform it that their bankruptcy case had been reopened, which
caused Iron County to waste resources in preparing an appellate brief. Iron
County also argues that the automatic stay does not apply.
The bankruptcy stay does not apply to this appeal filed by the debtors.
“The automatic stay does not apply to the continued prosecution of actions by the
trustee or debtor in possession. Those entities may continue or pursue litigation
without leave of court (or release of stay under section 362).” Morganroth &
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Morganroth v. DeLorean, 213 F.3d 1301, 1310 (10th Cir. 2000) (quotation and
alteration omitted). Therefore, Iron County did not waste its resources in
preparing an appellee’s brief. The motion for sanctions is denied.
Discussion
The Heils have challenged the federal court’s subject-matter jurisdiction.
“[W]e have a duty to ascertain whether we have jurisdiction prior to reaching the
merits of an appeal.” Governor of Kan. v. Kempthorne, 516 F.3d 833, 841
(10th Cir. 2008). In their two original complaints and their amended complaint,
the Heils alleged that they were residents of California, Iron County was a
political subdivision of Utah, and the Bank was formed pursuant to Utah’s
banking laws and had its principal place of business in Utah. Aplee. App. at 19,
142-43, 224-25. They further alleged that the amount in controversy exceeded
$75,000. These allegations were uncontroverted. Accordingly, the federal
district court had diversity jurisdiction pursuant to 28 U.S.C. § 1332(a). This
court has jurisdiction pursuant to 28 U.S.C. § 1291.
We do not address the merits of the Heils’ remaining appellate arguments
because they were not preserved for appeal. A federal appellate court will not
consider an issue not passed upon in the district court. Singleton v. Wulff,
428 U.S. 106, 120 (1976). “Consequently, when a litigant fails to raise an issue
below in a timely fashion and the court below does not address the merits of the
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issue, the litigant has not preserved the issue for appellate review.” F.D.I.C. v.
Noel, 177 F.3d 911, 915 (10th Cir. 1999).
Claim Nine asserted only that an employee of Iron County intentionally or
negligently misrepresented to a potential buyer the status of the Heils’ 20-acre
lot, resulting in economic loss. It did not encompass the Heils’ appellate
arguments concerning Iron County’s alleged failure to recognize and record the
lot split. Moreover, the Heils did not seek discovery on this point, nor did they
object to consolidating the two cases. Accordingly, we do not address these
claims.
This court’s review is limited to the single issue of whether Claim Nine
was correctly dismissed under the GIAU. We review de novo the district court’s
order dismissing Claim Nine as barred by the GIAU. See Ordinance 59 Ass’n v.
U.S. Dep’t of Interior Sec’y, 163 F.3d 1150, 1152 (10th Cir. 1998). “Our
independent determination of the issues uses the same standard employed by the
district court. Accepting the [amended] complaint’s allegations as true, we
consider whether the complaint, standing alone, is legally sufficient to state a
claim upon which relief may be granted.” Id. (citations omitted). Based on a
review of the record, the parties’ briefs, and the applicable law, we conclude that
the district court’s order dismissing Claim Nine pursuant to the GIAU was
correct.
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Conclusion
Iron County’s motion for sanctions is DENIED. The judgment of the
district court is AFFIRMED.
Entered for the Court
Michael R. Murphy
Circuit Judge
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