Haskell v. Wakefield and Associates , 2021 UT App 123 ( 2021 )

2021 UT App 123THE UTAH COURT OF APPEALS
KOURTNI HASKELL,
Appellant,
v.
WAKEFIELD & ASSOCIATES INC. AND MATTHEW FRAWLEY,
Appellees.
Opinion
No. 20200412-CA
Filed November 12, 2021
Third District Court, Salt Lake Department
The Honorable Andrew H. Stone
No. 190905612
Daniel Baczynski, Attorney for Appellant
Mark A. Nickel and David Garner, Attorneys
for Appellees
JUDGE GREGORY K. ORME authored this Opinion, in which
JUDGES DAVID N. MORTENSEN and RYAN M. HARRIS concurred.
ORME, Judge:
¶1 Kourtni Haskell appeals the district court’s dismissal of
her current action against Wakefield & Associates Inc. and its
president, Matthew Frawley (collectively, Appellees). The court
determined that the claim preclusion branch of the res judicata
doctrine barred Haskell’s complaint because a different court in
a prior action had already ruled on the merits of her claims.
Haskell argues that claim preclusion cannot bar her current
action because the prior court’s written order had dismissed her
earlier complaint “without prejudice.” We agree with Haskell
and reverse.
Haskell v. Wakefield & Assocs.
BACKGROUND 1
¶2 In 2016, Wakefield, a debt collection agency, obtained a
default judgment against Haskell for an unpaid debt. Two years
later, in 2018, Haskell filed suit against Wakefield in the Third
District Court in Tooele County (Haskell I), alleging that the
default judgment against her was void because, at the time it
initiated suit, Wakefield was not properly licensed under the
Utah Collection Agency Act (the UCAA). See Utah Code Ann.
§ 12-1-1 (LexisNexis 2013). Specifically, she alleged that
Wakefield’s engagement in unlicensed debt collection and its
failure to disclose this status “is a deceptive practice designed to
take advantage of consumers” in violation of the Utah Consumer
Sales Practices Act (the UCSPA). See generally id. §§ 13-11-1 to -23
(2013 & Supp. 2020).
¶3 Haskell later emailed Frawley proposing to settle the suit
for the “payment of $23,000.00, forgiveness of the old debt,
repayment of any monies received from [Haskell], and complete
removal from her credit report, and no other conditions.”
Frawley purportedly accepted Haskell’s settlement terms, but a
few days later sent a proposed settlement agreement to Haskell
that included an additional term: a confidentiality agreement.
Pointing to the “no other conditions” language of the offer,
Haskell rejected the additional term and sent her own proposed
settlement agreement to Frawley. Haskell does not allege that
the parties ever signed a written settlement agreement.
1. “When reviewing a motion to dismiss, we view the facts and
construe the complaint in the light most favorable to the plaintiff
and indulge all reasonable inferences in [her] favor.” Energy
Claims Ltd. v. Catalyst Inv. Group, 2014 UT 13, n.1, 325 P.3d 70(quotation simplified).
20200412-CA 2 2021 UT App 123Haskell v. Wakefield & Assocs.
¶4 A few months later, Wakefield moved for judgment on
the pleadings under rule 12(c) of the Utah Rules of Civil
Procedure. During the pendency of the motion, Haskell moved
to amend her complaint to add Frawley as a defendant and to
add claims for breach of contract and for fraud in the
inducement against him related to the settlement agreement.
¶5 During the hearing on the motions, Haskell argued for the
first time that she “was deceived or misled by” a
misrepresentation Wakefield made to her. The court rejected this
argument, ruling that under rule 9(c) of the Utah Rules of Civil
Procedure, Haskell had “not pled with particularity the
circumstances surrounding the deceit that occurred.” The court
also entered judgment dismissing the Haskell I complaint, stating
to Haskell’s counsel:
Given the Court’s ruling, particularly with the 9(c)
issue . . . it seems to me that I think it should be a
dismissal without prejudice with respect to the . . .
9(c) issue. . . . [I]f you can put together a complaint
that alleges that Ms. Haskell, in fact, . . . relied on
some statement from [Wakefield] that they were a
licensed collection agency and that that somehow
created some deception or fraud, then I think it
would be appropriate to reassert that. I’m not
going to bar you from reasserting that.
....
But on its face, at this point, I think I’ve
made clear that there’s no claim simply for . . .
operating a debt collection business without a
license in the state of Utah, and that would be . . .
law of the case or res judicata at this point. But . . .
if you want to assert some claim that she was
actually deceived by what they did, . . . I don’t
20200412-CA 3 2021 UT App 123Haskell v. Wakefield & Assocs.
think that this would necessarily bar that. So it will
be without prejudice at this point.
¶6 In May 2019, the court issued a written order, drafted by
Wakefield’s counsel and approved as to form by Haskell’s
counsel, addressing both Wakefield’s motion for judgment on
the pleadings and Haskell’s motion to amend the Haskell I
complaint. In granting Wakefield’s motion, the court stated that
Haskell’s claims failed as a matter of law because:
a. There is no private cause of action under the
[UCAA]; and there is nothing under the
UCAA that could be construed as giving a
debtor the right to sue or otherwise bring
any claim against a collection agency merely
for failing to be licensed in accordance with
the UCAA . . . .
b. The act of attempting to collect a debt
without being properly licensed under the
UCAA . . . is neither a deceptive nor
unconscionable act under the [UCSPA].
c. [The UCAA] is merely a business licensure
statute, and therefore, in an action to collect
on a debt, a debtor cannot raise as a defense
that the unlicensed debt collector lacks
standing to file or maintain that action.
Likewise, a technical violation of [the
UCAA] does not give a debtor the right or
standing to challenge or otherwise seek to
set aside a judgment entered in favor of an
unlicensed debt collector.
d. The new claim—raised for the first time
during oral argument—that Plaintiff
20200412-CA 4 2021 UT App 123Haskell v. Wakefield & Assocs.
Kourtni Haskell was deceived or misled by
something that Defendant Wakefield
represented to her, fails to comply with the
requirement under rule 9(c) . . . to plead
with particularity the circumstances
surrounding Defendant Wakefield’s alleged
deception.
e. The additional reasons stated on the record
during oral argument.
¶7 The court’s written order also denied Haskell’s motion to
amend her complaint, stating, “The proposed amendment is
futile because it does not cure the problems and deficiencies that
provided the basis for granting the Motion for Judgment on the
Pleadings and dismissing each of the claims asserted against
Defendant Wakefield.” The written order concluded by
indicating that the Haskell I complaint, “and each of the claims
asserted” therein, were “dismissed without prejudice.” Haskell
did not appeal that dismissal.
¶8 In July 2019, Haskell initiated the current action against
Appellees (Haskell II), this time in the Third District Court in Salt
Lake County. The Haskell II complaint realleged the UCSPA
claims against Wakefield and also included claims for breach of
contract and fraud in the inducement against Frawley related to
the settlement agreement.
¶9 Appellees moved to dismiss the complaint under rule
12(b)(6) of the Utah Rules of Civil Procedure, arguing that all
four claims had “already been litigated by these parties in Tooele
County.” Appellees acknowledged the Haskell I court had
dismissed that case without prejudice, but they asserted that the
court did so only because Haskell, during the hearing, “argued
for the first time that there may be some other act of deceit”
apart from Wakefield’s lack of license “that would allow [her] to
20200412-CA 5 2021 UT App 123Haskell v. Wakefield & Assocs.
prevail on [her] UCSPA claim.” With reference to that newly
raised argument, Appellees asserted that the court “held that if
[Haskell] could establish a basis—other than the failure to
register in accordance with the UCAA—then [she] may have a
valid UCSPA claim that could be brought at a later date” and,
based on that contingency, the court dismissed Haskell I without
prejudice. Appellees also argued that the Haskell I court had
already determined that the claims against Frawley related to
the settlement agreement were “futile” when it denied Haskell’s
motion to amend her complaint in that action, thereby effectively
ruling that the claims would not survive a motion to dismiss.
Appellees thus argued that the Haskell II complaint should be
dismissed because the Haskell I court had already ruled on the
claims and Haskell had “not alleged any new facts that would
provide a basis for recovery under Utah law.”
¶10 The Haskell II court agreed that res judicata—more
specifically claim preclusion—barred the action, and it granted
Appellees’ motion. The court held that “each of [Haskell’s]
claims were clearly brought or should have been brought in . . .
Haskell I” and that “the dismissal in Haskell I was clearly a final
judgment on the merits.” Accordingly, the court ruled that the
Haskell I court’s “use of the term ‘without prejudice’ has no
meaning with respect to the claim preclusion analysis for this
case” and dismissed the Haskell II complaint with prejudice.
¶11 Haskell appeals.
ISSUE AND STANDARD OF REVIEW
¶12 Haskell challenges the district court’s dismissal of her
complaint on claim preclusion grounds. “We review a district
court’s decision to grant a rule 12(b)(6) motion to dismiss a
complaint for correctness, giving no deference to the district
court’s ruling.” Van Leeuwen v. Bank of Am. NA, 2016 UT App
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212, ¶ 6, 387 P.3d 521 (quotation simplified). We likewise review
for correctness a court’s ruling on whether res judicata bars an
action. See id.ANALYSIS
¶13 “The doctrine of res judicata comprises claim preclusion
and issue preclusion, both of which serve the important policy of
preventing previously litigated issues from being relitigated.”
Kodiak Am. LLC v. Summit County, 2021 UT App 47, ¶ 14, 491
P.3d 962 (quotation simplified). Claim preclusion, the branch of
res judicata at issue in the instant appeal, “bars a party from
prosecuting in a subsequent action a claim that has been fully
litigated previously.” Peterson v. Armstrong, 2014 UT App 247,
¶ 11, 337 P.3d 1058 (quotation simplified). See Fundamentalist
Church of Jesus Christ of Latter-Day Saints v. Horne, 2012 UT 66,
¶ 12, 289 P.3d 502 (stating that claim preclusion “is premised on
the principle that a controversy should be adjudicated only
once”) (quotation simplified). For claim preclusion to apply, the
movant has to establish that (1) “both cases . . . involve the same
parties or their privies,” (2) “the claim that is alleged to be barred
must have been presented in the first suit or must be one that
could and should have been raised in the first action,” and
(3) “the first suit must have resulted in a final judgment on the
merits.” Honnen Equip. Co. v. Daz Mgmt. LLC, 2020 UT App 89,
¶ 7, 468 P.3d 565 (quotation simplified).
¶14 On appeal, Haskell challenges only the district court’s
analysis of the third prong. She contends that the Haskell I court’s
dismissal of that action “without prejudice” could not constitute
a “final judgment on the merits” because, by its very terms, “the
dismissal without prejudice did not definitively end litigation
between the parties and was not a final order.”
20200412-CA 7 2021 UT App 123Haskell v. Wakefield & Assocs.
¶15 For res judicata purposes, rule 41 of the Utah Rules of
Civil Procedure “comprehensively defines a dismissal on the
merits.” Horne, 2012 UT 66, ¶ 22 (quotation simplified). The rule
provides that “[u]nless the dismissal order otherwise states, a
dismissal under this paragraph and any dismissal not under this
rule, other than a dismissal for lack of jurisdiction, improper
venue, or failure to join a party under Rule 19, operates as an
adjudication on the merits.” See Utah R. Civ. P. 41(b). The rule
therefore “establishes a presumption that the dismissal of a case
is on the merits and thus has preclusive effect, subject to
exceptions where the court otherwise specifies or where the
decision is for lack of jurisdiction, improper venue, or for failure
to join a necessary party.” Horne, 2012 UT 66, ¶ 22 (quotation
simplified). Thus, the issue presented here is whether by
dismissing the Haskell I complaint without prejudice, the court
“otherwise state[d]” that its dismissal was not subject to the
general rule that dismissals are “on the merits.” See Utah R. Civ.
P. 41(b). We conclude that the Haskell I court, in its written order,
did “otherwise state[]” and that the court’s dismissal was
therefore not on the merits and did not have preclusive effect for
purposes of claim preclusion.
¶16 Haskell correctly notes that, “[a]s a general proposition, a
judgment which by its terms purports to be ‘without prejudice’
does not operate as a final judgment [on the merits]” in the claim
preclusion context. Indeed, although involuntary dismissals, as
defined by rule 41(b), are “presumptively . . . with prejudice,”
the rule grants district courts “discretion to dismiss without
prejudice when they choose to otherwise specify that result.”
Holmes v. Cannon, 2016 UT 42, ¶¶ 8, 10, 387 P.3d 971 (quotation
simplified). See Amundsen v. University of Utah, 2019 UT 49, ¶ 25,
448 P.3d 1224 (“A dismissal without prejudice . . . will generally
not be given preclusive effect because it is not a judgment on the
merits of the underlying action.”); Haik v. Salt Lake City Corp.,
2017 UT 14, ¶ 15, 393 P.3d 285 (stating that if the district court
20200412-CA 8 2021 UT App 123Haskell v. Wakefield & Assocs.
had “dismissed one of [the plaintiff’s] previous claims without
prejudice then he would not be barred by claim preclusion from
relitigating that claim because, on that claim, there would not be
a final judgment on the merits”); Horne, 2012 UT 66, ¶ 23 (stating
that under rule 41 of the federal rules of civil procedure, which
has been interpreted “to the same effect” as Utah’s rule 41,
“federal courts read the federal rule’s reference to ‘adjudication
upon the merits’ as the opposite of a ‘dismissal without
prejudice’”) (quotation simplified). A court thus has the option
to deprive a dismissal of preclusive effect by specifying that the
dismissal is without prejudice.
¶17 Here, in dismissing the complaint in Haskell I, the court
“otherwise state[d]” that the dismissal would be without
prejudice. The court’s written order expressly provided that the
complaint, and “each of the claims asserted” therein, was
dismissed “without prejudice.” Appellees argue that the oral
comments made by the court when considering the motion to
dismiss reflect a different objective. Indeed, the comments reflect
a bit of a mixed message. The court stated, with our emphasis,
[I]f you can put together a complaint that alleges
that Ms. Haskell, in fact, . . . relied on some
statement from [Wakefield] that they were a
licensed collection agency and that that somehow
created some deception or fraud, then I think it
would be appropriate to reassert that. I’m not going
to bar you from reasserting that.
The court continued, again with our emphasis,
[O]n its face, at this point, I think I’ve made clear
that there’s no claim simply for . . . operating a debt
collection business without a license in the state of
Utah, and that would be . . . law of the case or res
judicata at this point.
20200412-CA 9 2021 UT App 123Haskell v. Wakefield & Assocs.
¶18 We acknowledge some inconsistency between the court’s
oral ruling, which suggested a limited opportunity to refile a
particular claim, while characterizing other claims as barred by
res judicata. 2 Appellees prefer that we focus on the oral ruling
and take the plain language of the order of dismissal with a
grain of salt. But Utah appellate jurisprudence requires just the
opposite.
¶19 “Our case law is clear that where a court’s oral ruling
differs from a final written order, the latter controls.” M.F. v. J.F.,
2013 UT App 247, ¶ 6, 312 P.3d 946. See Evans v. State, 963 P.2d
177, 180 (Utah 1998) (“Regardless of the language used during
the hearing, the language in the court’s final written order
controls[.]”). If a district court’s written order is ambiguous, then
the court’s earlier oral ruling may be instructive in resolving that
ambiguity. See In re Discipline of Steffensen, 2018 UT 53, ¶ 12 n.6,
428 P.3d 1104 (“Because we find some ambiguity in the district
court’s written order . . . , we have turned to the court’s oral
ruling to resolve that ambiguity.”).
2. The written order entered after the hearing was drafted by
Wakefield’s counsel, approved as to form by Haskell’s counsel,
and submitted to the court for signature. We recognize that, due
to crowded dockets and other concerns related to judicial
economy, trial judges often ask counsel to draft orders
memorializing their rulings. This practice is appropriate and
necessary. But we also realize that, on occasion, judges sign such
orders without much scrutiny, at least where those orders are
approved as to form by both sides. We, of course, do not know
whether that is what happened here, but in any event we take
this opportunity to encourage judges to examine proposed
orders that memorialize their rulings—even when those orders
are approved as to form by both sides—before signing, to make
sure that those orders comport with the court’s rulings.
20200412-CA 10 2021 UT App 123Haskell v. Wakefield & Assocs.
¶20 Here, the language of the written order controls because
its dismissal of the Haskell I complaint, and each of its claims,
“without prejudice” is not subject to multiple interpretations. On
the contrary, because the court clearly specified in its written
order that the dismissal of all Haskell’s claims was without
prejudice, the dismissal fell squarely within a defined exception
under rule 41(b). For this reason, we reverse the Haskell II court’s
dismissal of the present action on claim preclusion grounds. 3
3. Appellees argue that regardless of whether a court dismisses
an action without prejudice, “when a court rules on the merits of
the claims, res judicata will bar further litigation.” In support of
this contention, Appellees cite Cheek v. Iron County Attorney,
2019 UT 50, 448 P.3d 1236; Haik v. Salt Lake City Corp., 2017 UT
14, 393 P.3d 285; and Mack v. Utah State Department of
Commerce, 2009 UT 47, 221 P.3d 194. But these cases are readily
distinguishable because none of them involved a dismissal
expressly characterized as being “without prejudice,” and thus
the exception to rule 41(b)’s general rule was not at issue in those
cases. See Cheek, 2019 UT 50, ¶ 16; Haik, 2017 UT 14, ¶ 15; Mack,
2009 UT 47, ¶ 6. Indeed, our Supreme Court suggested in Haik
that the result would have been different if the district court had
expressly dismissed that case without prejudice:
Things would, indeed, be different if the federal
court had not ruled on the merits of a claim that
[the plaintiff] put before it. If it had, for example,
dismissed one of [his] previous claims without
prejudice then he would not be barred by claim
preclusion from relitigating that claim because, on
that claim, there would not be a final judgment on
the merits.
2017 UT 14, ¶ 15. Contrary to Appellees’ argument, the Court
was stating that a dismissal without prejudice is necessarily not
(continued…)
20200412-CA 11 2021 UT App 123Haskell v. Wakefield & Assocs.
¶21 We note that there is possible merit to Appellees’
contention that “the dismissal ‘without prejudice’ clearly was
not intended to permit [Haskell] to disregard and ignore the . . .
adverse rulings in Haskell I and start over before a new judge.”
We do not resolve this question, however, because it implicates
issue preclusion—the other branch of the res judicata doctrine—
which was not a basis for the Haskell II court’s decision and is
therefore not before us. Nonetheless, Appellees invite us to
affirm the Haskell II court’s dismissal on several alternative
grounds, including issue preclusion. “It is within our discretion
to affirm a judgment on an alternative ground if it is apparent in
the record.” Olguin v. Anderton, 2019 UT 73, ¶ 20, 456 P.3d 760(quotation simplified). We decline to exercise this discretion here
because, even assuming that the “on the merits” prong of the
issue preclusion analysis is satisfied, the remaining prongs
require further consideration.
¶22 Specifically, for issue preclusion to apply,
(i) the party against whom issue preclusion is
asserted must have been a party to or in privity
with a party to the prior adjudication; (ii) the issue
decided in the prior adjudication must be identical
to the one presented in the instant action; (iii) the
issue in the first action must have been completely,
fully, and fairly litigated; and (iv) the first suit
must have resulted in a final judgment on the
merits.
(…continued)
on the merits because it falls under the exception to the general
rule under rule 41(b). See also Holmes v. Cannon, 2016 UT 42, ¶¶ 8,
10, 387 P.3d 971.
20200412-CA 12 2021 UT App 123Haskell v. Wakefield & Assocs.
Smith v. Hruby-Mills, 2016 UT App 159, ¶ 12, 380 P.3d 349(quotation simplified). Here, it is not immediately apparent
whether all the remaining elements for issue preclusion are
satisfied as to each of the claims Haskell brought. For example, it
is unclear whether the Haskell I court’s denial of Haskell’s
request to file an amended complaint, in which she sought to
add claims against Frawley related to the settlement agreement,
satisfies the third prong of the inquiry, i.e., that those additional
claims were “completely, fully, and fairly litigated.” See id.(quotation simplified). Accordingly, we do not further address
this potential alternative ground for affirmance. We likewise
decline to exercise our discretion to address the remaining
alternative grounds for affirmance that Appellees advance. 4
CONCLUSION
¶23 We agree with Haskell that the Haskell I court’s dismissal
of her complaint, and each of its claims, “without prejudice” did
not have preclusive effect for purposes of claim preclusion.
Accordingly, we reverse the district court’s dismissal of the
current action and remand for further proceedings consistent
with this opinion. 5
4. This should not be interpreted as a ruling on the merits of
these alternative grounds. See Scott v. Scott, 2020 UT 54, ¶ 31, 472
P.3d 897 (“Our declining to rule on an alternative ground
[should not] be construed as a ruling on the merits of the
alternative ground.”) (quotation simplified).
5. Because Haskell prevails on appeal, we deny Appellees’
request for attorney fees premised on rule 33 of the Utah Rules
of Appellate Procedure.
20200412-CA 13 2021 UT App 123