Hansen and Mecham Investments v. Hansen , 2022 UT App 17 ( 2022 )

2022 UT App 17THE UTAH COURT OF APPEALS
HANSEN & MECHAM INVESTMENTS LLC, MA SQUARED LLC, AND
PATRICK HENRY & ASSOCIATES LLC,
Appellees,
v.
BRIAN HANSEN,
Appellant.
Opinion
No. 20191059-CA
Filed February 3, 2022
Third District Court, Salt Lake Department
The Honorable Robert P. Faust
No. 100906073
Gregory N. Skabelund, Attorney for Appellant
Joseph Pia, Attorney for Appellees
JUDGE RYAN D. TENNEY authored this Opinion, in which JUDGES
MICHELE M. CHRISTIANSEN FORSTER and DAVID N. MORTENSEN
concurred.
TENNEY, Judge:
¶1 This case began with several hundred thousand dollars in
allegedly unpaid loans, and it has since spawned over a decade
of litigation. As this litigation has proceeded, the district court
has issued several rulings granting partial summary judgment to
the plaintiffs regarding various portions of the case.
¶2 In this appeal, defendant Brian Hansen challenges the
most recent summary judgment ruling. There, the court first
granted the plaintiffs’ request for summary judgment on a cause
of action for breach of a guaranty. But in his opposition to that
motion, Hansen had filed a sworn Declaration that created a
genuine dispute of fact as to whether the plaintiffs were entitled
Hansen & Mecham v. Hansen
to relief on this cause of action. We accordingly reverse the
district court’s decision to grant summary judgment on it. In that
same ruling, the district court also granted summary judgment
in the plaintiffs’ favor on several other causes of action. But this
ruling was also improper—this time because the plaintiffs had
not actually requested summary judgment on those causes of
action in their motion.
¶3 For the reasons set forth below, we reverse the district
court’s decisions.
BACKGROUND 1
The Loans
¶4 In 2009, Brian Hansen joined with James and Dwayne
Horsley (the Horsleys) to finance a loan to Teresa Collo. To assist
with their own financing efforts, the Horsleys engaged three
investment groups: Hansen & Mecham Investments LLC; MA
Squared LLC; and Patrick Henry & Associates LLC (collectively,
the Investors). The Horsleys received $300,000 from the Investors
in exchange for three promissory notes, one for each Investor
(the Investor Notes). Each Investor Note promised repayment of
Investor funds by October 20, 2009, and each also contained an
assignment clause in which the Horsleys “agree[d] to assign all
Rights pertaining to [the Investors’] portion of said monies, as
per agreements with Brian Hansen and Teresa [Collo]” to the
Investors. The Horsleys then used the Investors’ money and
$100,000 of their own money to loan $400,000 to Collo.
1. Because this comes to us on appeal from a decision granting
summary judgment, we recite the facts “in the light most
favorable to the nonmoving party,” which in this case is Hansen.
Orvis v. Johnson, 2008 UT 2, ¶ 6, 177 P.3d 600 (quotation
simplified).
20191059-CA 2 2022 UT App 17Hansen & Mecham v. Hansen
¶5 Hansen was not a party to the loan agreement between
the Horsleys and Collo, but he did provide the Horsleys with a
conditional guaranty agreement (the Conditional Guaranty).
Under the Conditional Guaranty, Hansen promised that if Collo
did “not repay the principal amount of $400,000 to the
Horsleys on or before October 12, 2009,” Hansen would “pay
said amount to the Horsleys in full.” The Conditional Guaranty,
however, contained a clause—commonly referred to in the
litigation below and here as “the Condition Precedent”—under
which the Conditional Guaranty would only take effect if
Hansen “close[d] his pending financing transaction with
i-Finance (or similar financial institution) for approximately $100
million.”
¶6 The repayment deadlines came and went, and the
Horsleys were never paid by either Collo or Hansen. As a result,
neither were the Investors.
The Complaint
¶7 Relying on the assignment clauses in the Investor Notes,
the Investors filed suit in 2010 against the Horsleys, Collo, and
Hansen. Their complaint pleaded seven causes of action, and it
specified which cause of action was being pleaded against which
defendant or group of defendants.
¶8 The first cause of action was for breach of contract. It only
named the Horsleys as defendants.
¶9 As for Hansen, the Investors asserted in their “General
Allegations” section that Hansen “failed to pay the Horsley
Defendants the $400,000 under the Collo/Horsley Note
pursuant to [Hansen’s] Guaranty.” But the Investors only named
Hansen as a defendant in the fourth, fifth, and seventh causes of
action, which were for fraudulent and negligent
misrepresentation, promissory estoppel and detrimental
reliance, and breach of the covenant of good faith and fair
dealing, respectively.
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¶10 In his answer, Hansen denied that he had “any obligation
to repay any amount to” the Investors or that they were entitled
to any benefits from his Conditional Guaranty with the Horsleys.
Hansen also defended himself against the three causes of action
that had been pleaded against him.
¶11 Several years of litigation ensued, during which the
Investors filed several motions for summary judgment against
the Horsleys, Collo, and Hansen. Four of these motions are
relevant to this appeal, and we discuss each in turn below.
The 2010 Motion
¶12 In August 2010, the Investors filed a motion for summary
judgment against the Horsleys. This motion alleged that the
Horsleys had “defaulted on several promissory notes/loans with
the [Investors],” that “[t]he remaining principal amount ow[ed]
under these notes [was] $300,000,” and that “the notes allow[ed]
recovery of additional costs and fees.”
¶13 The Horsleys did not respond, and the court later granted
summary judgment in the Investors’ favor. In its decision, the
district court awarded the Investors “$300,000 . . . together with
any interest, costs, and attorneys’ fees.”
The 2011 Motion
¶14 In January 2011, the Investors filed a motion for summary
judgment against both Collo and Hansen.
¶15 With respect to Hansen, this motion did not ask for
summary judgment on any of the three causes of action that the
Investors had pleaded against him in their complaint. Instead,
the 2011 Motion asked the court to grant “partial summary
judgment against” Hansen “for the following additional claim[]
asserted in their Complaint: . . . breach of guaranty against
Defendant Brian Hansen.” The Investors argued that Hansen
“personally guaranteed” payment on the “Collo/Horsley Note”
20191059-CA 4 2022 UT App 17Hansen & Mecham v. Hansen
through the Conditional Guaranty and that he had breached that
obligation by “fail[ing] to pay the Horsleys.”
¶16 In a written decision issued in May 2011, the district court
noted that the 2011 Motion was requesting judgment against
Hansen for “breach of guaranty,” and it specifically “denied”
that motion “[a]gainst Brian Hansen.”
The 2019 Motion
¶17 In 2011, the Investors entered into a stipulated agreement
with the Horsleys that settled the Investors’ claims against them
for almost $350,000. Collecting on this judgment proved difficult,
however, and after years of additional litigation that ultimately
included bankruptcy proceedings, the Investors were still left
unpaid.
¶18 In 2018, the Investors turned their focus back to Hansen,
attempting to collect on the judgment against the Horsleys from
Hansen through the Conditional Guaranty.
¶19 As the Investors pursued Hansen in court for this debt,
Hansen failed to timely respond to almost every filing the
Investors made with the district court. Hansen also impeded
their efforts to schedule his deposition—so much so that the
district court eventually authorized $7,500 in sanctions against
him. Hansen’s deposition was finally held in February 2019.
¶20 In March 2019, the Investors filed a motion for summary
judgment against Hansen. There, the Investors asked for
summary judgment on the three causes of action that they had
pleaded against him—which, again, were for fraudulent and
negligent misrepresentation, promissory estoppel and
detrimental reliance, and breach of the covenant of good faith
and fair dealing. The Investors supported this motion, in part,
with eight pages of Hansen’s deposition that they attached as an
exhibit. These are the only pages of Hansen’s deposition that are
currently in the record.
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¶21 After briefing and arguments, the court denied this
motion.
The Resubmitted 2011 Motion
¶22 At the hearing on the 2019 Motion, the court asked
Investors’ counsel “why it’s taken . . . nine years to try to seek
judgment against [Hansen].” During the ensuing discussion, the
Investors’ counsel mentioned the 2011 Motion and told the court
that it “actually ha[d] not been ruled on” and was “still
pending.”
¶23 This assertion was incorrect. As noted, the court in 2011
had specifically “denied” that motion, ruling that the Investors
were not entitled to summary judgment on a “breach of
guaranty” claim “[a]gainst Brian Hansen.” But when counsel
made this assertion during the 2019 hearing, neither the parties
nor the court seemed aware of the earlier ruling. Indeed, when
the court searched its database and found no indication that the
2011 Motion was pending, it assumed that this was a “question
on [the court’s] side of the equation.” The court “apologize[d]”
and suggested that the motion must have “slipped through the
cracks and didn’t get dealt with.” 2
¶24 The court accordingly instructed the Investors to resubmit
the 2011 Motion. It also informed the parties that they could then
file supplemental memoranda.
¶25 The Investors later resubmitted the 2011 Motion (the
Resubmitted 2011 Motion). As noted, the original motion had
sought summary judgment on a cause of action for “breach of
2. The judge who presided over the case in 2011 was not the
same judge who was presiding over the case in 2019. We also
note that when the earlier judge denied the 2011 Motion, that
ruling was docketed as a minute entry, rather than as a
judgment or memorandum decision.
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guaranty against Defendant Brian Hansen.” In their
supplemental memorandum in support of the Resubmitted 2011
Motion, the Investors alleged a series of facts relating to the
Conditional Guaranty. “Based on these additional facts and the
facts and argument presented in Plaintiffs’ 2011 Motion,” the
Investors “request[ed] that the Court grant their 2011 Motion
and enter judgment” against Hansen.
¶26 Hansen later filed an opposition memorandum,
accompanied by a sworn Declaration. In his Declaration, Hansen
averred that “[t]he i-Finance loan was never approved.” In his
memorandum, Hansen thus argued that he had no obligation to
assume the Horsleys’ debt because the Conditional Guaranty
had never been “activated.” 3
¶27 Hansen’s opposition memorandum and accompanying
Declaration were late, and the Investors moved to strike it as a
result. But the court denied that motion and instead accepted
both Hansen’s opposition and Declaration as filed.
¶28 The district court later issued a written decision granting
the Investors’ Resubmitted 2011 Motion. Relying on Webster v.
Sill, 675 P.2d 1170, 1172–73 (Utah 1983), the court generally
concluded that Hansen’s Declaration was at odds with his
3. Hansen made similar representations and arguments in his
answer to the Investors’ initial complaint, a memorandum he
filed in 2019, and two other declarations that he filed during the
course of the proceedings. In those filings, Hansen likewise
“denie[d] that he ha[d] any obligation to repay any amount to
the [Investors] or that they [were] entitled to any benefi[ts] of his
Conditional Guarant[y] Agreement . . . with the Horsleys,”
because his “obligation . . . was triggered by [his] closing on a
$100 million dollar loan from i-Finance,” and yet, according to
Hansen, “i-Finance never closed on [the] loan application.” We
further note that neither party has alleged that Hansen ever
closed a deal with a different “similar financial institution.”
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deposition and therefore did not create a genuine dispute of
material fact. The court did not, however, identify which passage
from Hansen’s deposition was actually at odds with which
passage from the Declaration.
¶29 The court thus granted the Investors’ request for
summary judgment. And in doing so, it stated that the Investors’
motion “for Partial Summary Judgment on Causes of Action IV,
V, and VII” was “well taken.”
¶30 Hansen now appeals this decision.
STANDARD OF REVIEW
¶31 “Summary judgment should be granted if the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is entitled
to judgment as a matter of law.” Smith v. Kirkland, 2017 UT App
16, ¶ 16, 392 P.3d 847 (quotation simplified). On appeal, we
review the district court’s decision to grant the Investors’
summary judgment motion for correctness. See Bahr v. Imus, 2011
UT 19, ¶ 15, 250 P.3d 56.
ANALYSIS
¶32 The Investors’ Resubmitted 2011 Motion requested
summary judgment on a cause of action for “breach of
guaranty,” and the district court granted that request. In its
ruling, the court also granted summary judgment in the
Investors’ favor on causes of action for fraudulent and negligent
misrepresentation, promissory estoppel and detrimental
reliance, and breach of the covenant of good faith and fair
dealing.
¶33 The district court erred on both fronts. First, the court
erred when it granted summary judgment on a cause of action
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for “breach of guaranty,” because a genuine dispute of fact exists
about whether the Conditional Guaranty was ever legally
activated. And second, the court also erred when it granted
summary judgment on the remaining causes of action, because
the Investors had not asked for summary judgment on them in
the Resubmitted 2011 Motion.
I. Breach of Guaranty
¶34 Hansen argues that the court should not have granted the
Investors’ request for summary judgment on a breach of
guaranty cause of action. In Hansen’s view, his Declaration
created a genuine dispute of material fact about whether the
Condition Precedent was met and, therefore, whether the
Conditional Guaranty was legally activated. We agree.
¶35 As discussed, the Conditional Guaranty contained a
clause—the Condition Precedent—under which Hansen was
only obligated to repay the debt in question if he “clos[ed] his
pending financing transaction with i-Finance (or similar financial
institution) for approximately $100 million.” In his sworn
Declaration, however, Hansen specifically averred that the
“i-Finance loan was never approved.” Hansen made a similar
assertion in two other declarations that he filed in the case, and
this was also the basis for his initial answer to the complaint
itself.
¶36 The Investors are therefore incorrect when they assert that
“[i]t is undisputed that the Condition Precedent to the Guaranty
[was] satisfied.” This is very much disputed, because Hansen’s
sworn Declaration specifically says that the Condition Precedent
was not satisfied.
¶37 Unless there is some basis for disregarding Hansen’s
Declaration, this should end the matter as far as summary
judgment is concerned. After all, “summary judgment is
improper when the facts are controverted.” Schaer v. State ex rel.
Utah Dep’t of Transp., 657 P.2d 1337, 1341 (Utah 1983); see Utah R.
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Civ. P. 56(a). And when reviewing a grant of summary
judgment, it is axiomatic that courts must view the facts and
reasonable inferences “in the light most favorable to the
nonmoving party”—which in this case is Hansen. See Drew v.
Pacific Life Ins. Co., 2021 UT 55, ¶ 35, 496 P.3d 201.
¶38 The Investors nevertheless claim that Hansen’s
Declaration “directly contradicts his deposition testimony.” Like
the district court, the Investors rely on Webster v. Sill, 675 P.2d
1170, 1172–73 (Utah 1983), wherein our supreme court held that
“when a party takes a clear position in a deposition[] that is not
modified on cross-examination,” the party “may not thereafter
raise an issue of fact by his own affidavit which contradicts his
deposition, unless he can provide an explanation of the
discrepancy.” From this, the Investors ask us to hold that the
Declaration could not defeat their request for summary
judgment.
¶39 But by its own terms, Webster requires a demonstration
that (i) the deponent took a “clear position” in his deposition and
(ii) did indeed “contradict[]” that position in a subsequent
affidavit. Id. And the Investors have not given us any basis for
concluding that this happened here. As noted, the only portion
of Hansen’s deposition that was submitted to the district court
below was an eight-page excerpt that the Investors attached to
their 2019 Motion. The district court decided summary judgment
“on the basis of a cold paper record,” Bahr v. Imus, 2011 UT 19,
¶ 15, 250 P.3d 56, so we’re limited to those eight pages too.
¶40 We have reviewed those eight pages, and there’s no place
in them in which Hansen ever says that the i-Finance deal ever
closed. In fact, the i-Finance transaction is never discussed in
those pages at all. Thus, on the record before us, there is no basis
for applying Webster or for disregarding Hansen’s sworn
Declaration.
¶41 Undeterred, the Investors seek to avoid this outcome on
three additional fronts. But none are availing.
20191059-CA 10 2022 UT App 17Hansen & Mecham v. Hansen
¶42 First, the Investors attempt to cure the record deficiency
by including Hansen’s full deposition as an addendum to their
brief. But Hansen objected to the inclusion of that addendum,
and we sustained that objection. For good reason—namely, it is
settled that an appellate court “will not consider evidence which
is not part of the record.” State v. Pliego, 1999 UT 8, ¶ 7, 974 P.2d
279. We must therefore disregard this “extraneous evidence”
that the Investors have included for the first time in their
appellate addendum. Id.; cf. Robinson v. Tripco Inv., Inc., 2000 UT
App 200, ¶ 2 n.1, 21 P.3d 219 (granting a motion to strike
portions of a brief that “referred to deposition testimony not
made part of the record on appeal”); Territorial Sav. & Loan Ass’n
v. Baird, 781 P.2d 452, 455–56 (Utah Ct. App. 1989) (denying a
motion to supplement the record with a deposition because
“[t]he trial court did not have [the] deposition before it when it
granted . . . summary judgment” and “[e]vidence not available
to the trial judge cannot be added to the record on appeal”). 4
¶43 Second, the Investors invoke a related rule under which a
“person cannot avoid being deposed and avoid answering
questions by claiming no knowledge, only to subsequently file a
self-serving affidavit in order to avoid summary judgment.”
Anderton v. Boren, 2017 UT App 232, ¶ 20, 414 P.3d 508(quotation simplified). The Investors claim that Hansen was
generally unprepared for his deposition and that he “avoided
answering questions regarding the i-Finance transaction.” From
this, they argue that his Declaration cannot defeat their request
for summary judgment.
¶44 But again, we only have eight pages of Hansen’s
deposition to work with, and there’s no mention of the i-Finance
transaction anywhere within them. So while those pages do
4. In any event, although the Investors have (improperly)
provided us with the full deposition, they still point to no place
in that full deposition in which Hansen ever said that he ever
closed on the i-Finance transaction.
20191059-CA 11 2022 UT App 17Hansen & Mecham v. Hansen
illustrate Hansen’s lack of preparation and enthusiasm for the
deposition, we see nothing in those pages in which Hansen
claimed that he had “no knowledge” of whether he had closed
on the i-Finance transaction. See id. And again, in other filings in
the case, Hansen repeatedly and affirmatively maintained that
he never closed on that transaction.
¶45 Finally, in the portion of their brief discussing the alleged
contradictions, the Investors include a citation to a 384-page
passage from the record—a passage that spans multiple
documents and filings. If, by this citation, the Investors mean to
argue that Hansen contradicted himself on this point somewhere
within those pages, their presentation of this argument to us is
insufficient. An “appellate court is not a depository in which a
party may dump the burden of argument and research.” Allen v.
Friel, 2008 UT 56, ¶ 9, 194 P.3d 903 (quotation simplified). We
decline the Investors’ apparent invitation to comb through those
384 pages ourselves to determine whether Hansen said anything
in any of those documents that contradicted his Declaration
about whether he closed on the i-Finance transaction.
¶46 In short, the breach of guaranty cause of action against
Hansen turns on the Conditional Guaranty being activated, and
the Conditional Guaranty is activated only if the Condition
Precedent is satisfied. But the Condition Precedent required
proof that Hansen closed on a financing transaction with
i-Finance or a “similar financial institution” for “approximately
$100 million,” and we don’t have any such proof.
¶47 Instead, what we have is this: Hansen swore in his
Declaration that he did not close on such a deal, and the
Investors have pointed to no place in the existing record where
Hansen ever contradicted himself on that key point. Because that
Declaration was accepted as filed by the district court, there is a
genuine dispute of material fact about whether the Conditional
Guaranty was ever legally activated and, hence, whether
Hansen’s contractual obligation to repay the Investors was ever
activated too. The district court therefore erred when it granted
20191059-CA 12 2022 UT App 17Hansen & Mecham v. Hansen
summary judgment on the breach of guaranty claim against
Hansen. We reverse that decision. 5
II. Remaining Claims
¶48 The district court also determined that the Investors’
“[Resubmitted 2011 Motion] for Partial Summary Judgment on
Causes of Action IV, V, and VII” was “well taken.” Those causes
of action, again, were for fraudulent and negligent
5. Hansen also argues that the Investors have never properly
pleaded a breach of guaranty cause of action against him.
Having reviewed the record, we note that there is indeed a
substantial question about this. There was no “breach of
guaranty” cause of action pleaded against Hansen in the
complaint, and the “breach of contract” cause of action that was
pleaded specifically identified the Horsleys—and only the
Horsleys—as the defendants on that cause of action. Moreover,
the Investors never moved to amend the complaint to add a
breach of guaranty (or breach of contract) cause of action against
Hansen.
The Investors nevertheless respond that Hansen was put
on notice that such a cause of action was pending against him
through the general assertions in the complaint regarding the
Conditional Guaranty. But the Investors’ counsel informed the
district court during the hearing on the Investors’ Resubmitted
2011 Motion that those assertions related to the three causes of
action that were pleaded against Hansen, rather than a cause of
action for breach of contract.
Hansen did not oppose the Resubmitted 2011 Motion on
this basis, however, and the sole basis for the district court’s
ruling on it was its conclusion that Hansen’s Declaration did not
create a genuine dispute of material fact. Because we reverse the
court’s ruling on its own terms, we need not also determine
whether Hansen is correct when he now argues that the
Investors have not properly pleaded a breach of guaranty claim
against him.
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misrepresentation, promissory estoppel and detrimental
reliance, and breach of the covenant of good faith and fair
dealing.
¶49 But the Investors had already sought summary judgment
on those causes of action in the 2019 Motion. And when they
did, the district court denied that motion. The Investors never
challenged that denial in any motion for reconsideration or
interlocutory appeal, nor did they ask the court to reconsider
those causes of action in the Resubmitted 2011 Motion.
¶50 Instead, the only cause of action at issue in the
Resubmitted 2011 Motion was a “breach of guaranty” cause of
action. Thus, in the ruling at issue, it appears that the district
court sua sponte granted summary judgment on causes of action
that were not before it.
¶51 This was improper. When a party moves for summary
judgment, it must “identif[y] each claim or defense—or the part
of each claim or defense—on which summary judgment is
sought.” Utah R. Civ. P. 56(a). Because the Investors only
requested summary judgment on a breach of guaranty cause of
action, the court had no basis for granting summary judgment
on any other causes of action. We accordingly reverse the court’s
decision to grant summary judgment on “Causes of Action IV,
V, and VII.”
CONCLUSION
¶52 The district court erred by granting summary judgment
on a breach of guaranty cause of action because a genuine
dispute of material fact exists regarding Hansen’s obligations
under the Conditional Guaranty. The court also erred by
granting summary judgment on other causes of action that were
not before it under the summary judgment motion at issue. We
therefore reverse both decisions.
20191059-CA 14 2022 UT App 17