Lamoreaux v. Black Diamond Holdings, LLC ( 2013 )

2013 UT App 32_________________________________________________________
THE UTAH COURT OF APPEALS
DAVID LEE LAMOREAUX,
Plaintiff and Appellant,
v.
BLACK DIAMOND HOLDINGS, LLC,
Defendant and Appellee.
Opinion
No. 20110786‐CA
Filed February 7, 2013
Fifth District, St. George Department
The Honorable Eric A. Ludlow
No. 080500885
Michael W. Park, Attorney for Appellant
David L. Elmont and R. Daren Barney,
Attorneys for Appellee
JUDGE WILLIAM A. THORNE JR. authored this Opinion,
in which JUDGES JAMES Z. DAVIS
and MICHELE M. CHRISTIANSEN concurred.
THORNE, Judge:
¶1 David Lee Lamoreaux appeals from the district court’s order
dismissing this action, which Lamoreaux originally initiated
against Black Diamond Holdings, LLC (Black Diamond) in 2008.
After a bench trial but before any ruling on the merits, Black
Diamond purchased Lamoreaux’s interest in the action at a judicial
sale and successfully moved to be substituted as the party plaintiff.
Black Diamond then filed a motion to dismiss the action in its
Lamoreaux v. Black Diamond
capacity as the plaintiff, which the district court granted. We
affirm.
BACKGROUND
¶2 In April 2006, Black Diamond entered into a real estate sales
listing agreement with Prudential Cedar City Realty (Prudential),
whereby Prudential agreed to market and sell a subdivision owned
by Black Diamond. The listing agreement named Lamoreaux as the
seller’s agent, and Lamoreaux signed the agreement as Prudential’s
“Principal/Branch Broker.” The agreement provided for a sales
commission of 8% of the selling price, and Prudential ultimately
brokered a sale for between eight and ten million dollars. When
Black Diamond failed to pay Lamoreaux the full amount that he
believed he was entitled to under the agreement, Lamoreaux
brought this action against Black Diamond for breach of contract in
March 2008 (the Black Diamond action). Lamoreaux’s complaint
sought a determination of the amount of the 8% sales commission
and a judgment for that amount, less $150,000 already paid, plus
attorney fees and prejudgment interest.1 The district court con‐
ducted a two‐day bench trial on Lamoreaux’s claim on February 16
and 17, 2011. At the conclusion of trial, the district court directed
both parties to submit proposed findings of fact and orders by
April 1, 2011, at which time it would take the matter under
advisement and issue a written decision.
¶3 In a separate action (the Fisher action), Darwin and Cheryl
Fisher obtained a judgment against Lamoreaux in February 2010 in
the amount of $16,484.96. On January 19, 2011, pursuant to their
judgment, the Fishers obtained a writ of execution against
1
The listing agreement contained an attorney fees provi‐
sion. Lamoreaux retained his counsel in the Black Diamond
action on a contingency fee basis, with counsel to be paid a
percentage of any amount ultimately recovered.
20110786‐CA 2 2013 UT App 32Lamoreaux v. Black Diamond
Lamoreaux’s interest in the Black Diamond action.2 The Fishers
publicly noticed a judicial sale and personally served Lamoreaux
with notice on February 16, 2011. Despite this notice, Lamoreaux
did not file a reply or an objection in either the Fisher action or the
Black Diamond action. Lamoreaux and his counsel attended the
March 21, 2011 sale and attempted to stop the proceedings by
declaring that Lamoreaux had transferred his interest in the Black
Diamond action. Nevertheless, the sale took place, and Black
Diamond submitted the highest bid in the amount of $17,383.78.
That same day, Black Diamond filed a motion to substitute in as
party plaintiff in the Black Diamond action.
¶4 Lamoreaux opposed Black Diamond’s motion to substitute,
alleging for the first time in any court that he had transferred his
interest in the Black Diamond action to his son prior to being
served with notice of the Fishers’ writ. Lamoreaux also argued that
Utah no longer allowed execution against choses in action
following the 2004 repeal of rule 69 of the Utah Rules of Civil
Procedure. The district court rejected Lamoreaux’s arguments and
granted the substitution on August 11, 2011, concluding that the
execution and sale of choses in action is still permitted by Utah law
and that Lamoreaux could not collaterally attack the results of the
Fisher action in the Black Diamond action. Having been substituted
as the plaintiff, Black Diamond then sought dismissal of the Black
2
The Fishers’ writ, as well as the subsequent notice of sale,
contained the following property description:
All claims, counterclaims, causes of action, choses
in action, rights to payment, and rights to
compensation and/or damages of every kind and
nature, which David Lamoreaux may have against
Black Diamond Holdings LLC, including, but not
limited to, all such claims and causes of action
asserted in the complaint dated March 31, 2008,
and filed in the Fifth Judicial District Court with
the civil case number of 080500885.
20110786‐CA 3 2013 UT App 32Lamoreaux v. Black Diamond
Diamond action, which the district court granted over Lamoreaux’s
objection on September 23. Lamoreaux appeals.
ISSUES AND STANDARDS OF REVIEW
¶5 Lamoreaux first challenges Black Diamond’s purchase of his
claim against Black Diamond, arguing that Utah law no longer
allows the execution and sale of choses in action and that he should
have been granted an evidentiary hearing on his allegation that he
had transferred his interest in the Black Diamond action prior to
the execution and sale. “The district court’s interpretations of Utah
statutes and rules of procedure are questions of law reviewed for
correctness.” In re Irrevocable Jack W. Kunkler Trust A, 2011 UT 7,
¶ 13, 246 P.3d 1184.
¶6 Next, Lamoreaux argues that the district court erred when
it allowed Black Diamond to substitute in as the plaintiff in the
Black Diamond action. We review the district court’s substitution
ruling only for an abuse of discretion. See Utah R. Civ. P. 25(c) (“In
case of any transfer of interest, the action may be continued by or
against the original party, unless the court upon motion directs the
person to whom the interest is transferred to be substituted in the
action . . . .”); cf. Lundahl v. Quinn, 2003 UT 11, ¶ 10, 67 P.3d 1000(per curiam) (“While rule 25(c) speaks in permissive rather than
mandatory terms, it is clear courts cannot be compelled to
recognize a substitution of parties at the whim of the movant.”).
¶7 Finally, Lamoreaux argues that the district court erred by
failing to render a decision on the merits and instead dismissing
the action upon Black Diamond’s motion. We review the district
court’s case management decisions and rulings on voluntary
dismissals under an abuse of discretion standard. See Murray First
Thrift & Loan Co. v. Benson, 563 P.2d 185, 186 (Utah 1977) (stating
that the district court has “reasonable discretion in the matter of
[voluntary] dismissals”); Posner v. Equity Title Ins. Agency, Inc., 2009
20110786‐CA 4 2013 UT App 32Lamoreaux v. Black Diamond
UT App 347, ¶ 23, 222 P.3d 775 (“[T]rial courts have broad
discretion in managing the cases assigned to their courts.”).
ANALYSIS
¶8 Lamoreaux’s multiple issues on appeal fall into three
distinct categories: those challenging the execution and sale of his
claim against Black Diamond, those challenging the district court’s
substitution order, and those challenging the district court’s order
of dismissal. We address Lamoreaux’s arguments within this
chronological framework.
I. Execution and Sale
¶9 On appeal, Lamoreaux raises two arguments challenging the
validity of Black Diamond’s purchase of his interest in the Black
Diamond action. First, Lamoreaux argues that rule 69 of the Utah
Rules of Civil Procedure was repealed in 2004 and that the
replacement provisions do not allow the execution and sale of
choses in action. Second, he argues that the district court erred in
failing to hold an evidentiary hearing on his claim that he had
transferred his cause of action against Black Diamond prior to the
execution and sale.
¶10 Lamoreaux first argues that, in light of the repeal of rule 69,
the execution and sale of a cause of action is no longer permitted
and that any such execution and sale is void under the Utah Rules
of Civil Procedure. The Utah Supreme Court has ruled, as recently
as 2002, that choses in action are subject to execution and sale. In
Applied Medical Technologies, Inc. v. Eames, 2002 UT 18, 44 P.3d 699,
the supreme court stated, “Given that choses in action are
amenable to execution under rule 69(f), it follows that a defendant
can purchase claims, i.e., choses in action, pending against itself
and then move to dismiss those claims.” Id. ¶ 13; see also Snow,
Nuffer, Engstrom & Drake v. Tanasse, 1999 UT 49, ¶ 9, 980 P.2d 208(“[W]e hold that a legal malpractice claim, like any other chose in
20110786‐CA 5 2013 UT App 32Lamoreaux v. Black Diamond
action, may ordinarily be acquired by a creditor through attachment
and execution.” (emphasis added)).
¶11 However, as Lamoreaux correctly points out, Applied Medical
Technologies was decided under the now‐repealed rule 69.
Lamoreaux argues that Applied Medical Technologies is no longer
good law in light of the 2004 repeal of rule 69. We disagree, as we
conclude that choses in action remain “amenable to execution”
under the current Rules of Civil Procedure. See Applied Med. Techs.,
2002 UT 18, ¶ 13. We reach this conclusion by comparing the
relevant language of rule 69 with the corresponding provisions of
the current rules.
¶12 Rule 69 governed the procedures relating to writs of
execution and provided that such writs were “available to a
judgment creditor to satisfy a judgment or other order requiring
the delivery of property or the payment of money by a judgment
debtor.” Utah R. Civ. P. 69(a) (2003). The rule contained an internal
definition of property subject to execution: “A writ of execution
may be used to levy upon all of the judgment debtor’s personal
property and real property which is not exempt from execution
under state or federal law.” Id. R. 69(b). Rule 69(f) expressly
referred to choses in action in its provisions for service of a writ,
stating that
[u]nless the execution otherwise directs, the officer
must execute the writ against the non‐exempt
property of the judgment debtor by levying on a
sufficient amount of property, if there is sufficient
property; collecting or selling the choses in action and
selling the other property in the manner set forth
herein.
Id. R. 69(f) (emphasis added).
¶13 In 2004, rule 69 was repealed and replaced by multiple new
rules, including rules 64 and 64E. See id. R. 64 (2012) (“Writs in
20110786‐CA 6 2013 UT App 32Lamoreaux v. Black Diamond
general.”); id. R. 64E (“Writ of execution.”). Rule 64E states, “A writ
of execution is available to seize property in the possession or
under the control of the defendant following entry of a final
judgment or order requiring the delivery of property or the
payment of money.” Id. R. 64E(a). “Property,” for purposes of rule
64E, “means the defendant’s property of any type not exempt from
seizure. Property includes but is not limited to real and personal
property, tangible and intangible property, the right to property
whether due or to become due, and an obligation of a third person
to perform for the defendant.” Id. R. 64(a)(9); see also id. R. 64(a)
(providing definitions for terms “[a]s used in Rules 64, 64A, 64B,
64C, 64D, 64E, 69A, 69B, and 69C”). The current rules contain no
single provision directly comparable to the former rule 69(f) and
make no express reference to choses in action, in any context.
¶14 Lamoreaux argues that the amendment of the rules to omit
the reference to choses in action indicates an intent to prohibit their
execution and sale. Lamoreaux is correct that the removal of a term
from a definition is often intended to remove the excluded term
from the definition. See T‐Mobile USA, Inc. v. Utah State Tax
Comm’n, 2011 UT 28, ¶ 27, 254 P.3d 752 (“As part of our plain
language analysis, we place significance on the removal of a term
from a piece of legislation.”); Sindt v. Retirement Bd., 2007 UT 16,
¶ 13, 157 P.3d 797 (noting that the legislature’s removal of the term
“constable” was indicative of its intent to remove “constable” from
the definition of public officer). However, the plain language of
both rule 69 and the current rules demonstrates that such a result
is not appropriate here.
¶15 Even under rule 69, the definition of executable property
never expressly included choses in action. Rather, rule 69 allowed
execution against “all of the judgment debtor’s personal property
and real property which is not exempt from execution under state
or federal law.” Utah R. Civ. P. 69(b) (2003). The supreme court has
repeatedly found that definition broad enough to include choses in
action. See Applied Med. Techs., Inc. v. Eames, 2002 UT 18, ¶ 13, 44
P.3d 699; Snow, Nuffer, Engstrom & Drake v. Tanasse, 1999 UT 49, ¶ 9,
20110786‐CA 7 2013 UT App 32Lamoreaux v. Black Diamond
980 P.2d 208. Rule 69’s only express reference to choses in action
appeared in rule 69(f), governing the service of writs of execution.
¶16 Under the current rules, the definition of property subject to
execution is even broader, encompassing “the defendant’s property
of any type not exempt from seizure” and including “real and
personal property, tangible and intangible property, the right to
property whether due or to become due, and an obligation of a
third person to perform for the defendant.” Utah R. Civ. P. 64(a)(9)
(2012). Choses in action have been identified as a type of intangible
property, which is included within the current definition. See
Bagford v. Ephraim City, 904 P.2d 1095, 1098 (Utah 1995)
(“[I]ntangible property, such as choses in action, patent rights,
franchises, charters or any other form of contract, are within the
scope of [eminent domain] . . . as fully as land or other tangible
property.” (second alteration in original) (citation and internal
quotation marks omitted)). In light of the current broad definition
of property subject to execution, we conclude that choses in action
remain “amenable to execution” under the Utah Rules of Civil
Procedure. See Applied Med. Techs., 2002 UT 18, ¶ 13. Accordingly,
we reject Lamoreaux’s argument that the repeal of rule 69
precluded Black Diamond’s purchase of his interest in the Black
Diamond action at execution sale.
¶17 We next turn to Lamoreaux’s second argument, that he was
improperly denied an evidentiary hearing on his claim that he had
transferred his cause of action against Black Diamond to his son
prior to the execution sale. We agree with the district court that any
dispute about the ownership of Lamoreaux’s interest in the Black
Diamond action was required to be litigated by Lamoreaux or his
son by replying to the writ in the Fisher action.
¶18 Rule 64E provides the procedure for a defendant to
challenge a writ of execution: “The defendant may reply to the writ
and request a hearing. The reply shall be filed and served within 10
days after service of the writ and accompanying papers upon the
defendant.” Lamoreaux failed to challenge the writ by replying to
20110786‐CA 8 2013 UT App 32Lamoreaux v. Black Diamond
it in the Fisher action. Further, to the extent that Lamoreaux’s son’s
interests are even relevant to this matter,3 third parties are also
required to assert their interests by replying to a writ. Rule 64(e)(1)
provides that
[a]ny person claiming an interest in the property has
the same rights and obligations as the defendant with
respect to the writ and with respect to providing and
objecting to security. . . . Any claimant not named by
the plaintiff and not served with the writ and
accompanying papers may exercise those rights and
obligations at any time before the property is sold or
delivered to the plaintiff.
Id. R. 64(e)(1). Thus, while Lamoreaux’s son may not have been
bound by the ten‐day limitation of rule 64E(d)(1), he was still
required to reply to the writ before Lamoreaux’s claim was sold,
and he failed to do so. We agree with the district court’s ultimate
conclusion that there is “no support for the proposition that merely
having [Lamoreaux] and his counsel appear at the public auction
and orally assert that [Lamoreaux] no longer owned the claims is
sufficient to satisfy the requirements of Rules 64 and 64E.”
¶19 We conclude that the Utah Rules of Civil Procedure
continue to allow the execution and sale of causes of action even
after the repeal of rule 69. We also agree with the district court that
Lamoreaux’s attack on the circumstances surrounding the
execution and sale of his claim against Black Diamond was
required to be raised and litigated in the Fisher action. For these
reasons, we affirm the district court’s conclusion that the execution
and sale of Lamoreaux’s cause of action was valid.
3
Lamoreaux’s son has not intervened in this action or, to
our knowledge, made any other attempt to secure his alleged
interest.
20110786‐CA 9 2013 UT App 32Lamoreaux v. Black Diamond
II. Substitution of Black Diamond as Party Plaintiff
¶20 Lamoreaux next argues that the district court erred when it
allowed Black Diamond to substitute in as the party plaintiff.
Lamoreaux acknowledges that substitution rulings are
discretionary with the district court but argues that the district
court abused its discretion in this case.4 We address this argument
in light of our conclusion that Black Diamond had validly
purchased Lamoreaux’s interest in the Black Diamond action at the
time of the substitution ruling.
¶21 Rule 25 of the Utah Rules of Civil Procedure states, “In case
of any transfer of interest, the action may be continued by or
against the original party, unless the court upon motion directs the
person to whom the interest is transferred to be substituted in the
action or joined with the original party.” Utah R. Civ. P. 25(c).
Lamoreaux argues that the plain language of the rule contemplates
that actions may be continued by the original party despite a
transfer of interest. However, the rule also clearly allows a court to
substitute the transferee into the action.
¶22 We see no abuse of the district court’s discretion here. Black
Diamond had lawfully purchased Lamoreaux’s cause of action, and
it had filed a motion as the new owner asking to be substituted into
the Black Diamond action in Lamoreaux’s place. As the Utah
Supreme Court has explained,
[a]fter claims have been sold, a new party steps into
the shoes of the former plaintiff, and the claims
remain cognizable, but the sale cuts off the former
4
Lamoreaux also argues that substitution should not have
occurred prior to the entry of a ruling on the merits of the Black
Diamond action. We address the district court’s failure to issue a
ruling on the merits in our analysis of the district court’s
dismissal order.
20110786‐CA 10 2013 UT App 32Lamoreaux v. Black Diamond
plaintiff’s right to pursue those claims. Once
acquired by another, the new litigant has the right to
determine the course and scope of the litigation of
the claims purchased, including the right to move to
dismiss the pending claims.
Applied Med. Techs., Inc. v. Eames, 2002 UT 18, ¶ 17, 44 P.3d 699(citations omitted). The district court’s substitution order merely
recognized Black Diamond’s newly‐acquired status as the owner
of Lamoreaux’s cause of action and did so within the bounds of the
authority granted by rule 25. Seeing no abuse of discretion by the
district court, we affirm its substitution of Black Diamond for
Lamoreaux as plaintiff in this case.
III. Dismissal
¶23 Finally, we turn to an examination of the district court’s
order of dismissal.5 Lamoreaux argues that the district court should
not have dismissed the case without ruling on the merits of
his—now Black Diamond’s—claims. Lamoreaux argues that the
district court failed to make a prompt decision on the merits after
taking the case under advisement on February 17, 2011, and that
the failure to enter a ruling on the merits defeated Lamoreaux’s
counsel’s contractual right to a contingency fee. We affirm the
district court’s dismissal order.
¶24 Lamoreaux first argues that the district court erred in failing
to issue a ruling on the merits of the Black Diamond action within
a reasonable time after taking the matter under advisement.
5
In light of the district court’s substitution order, we
recognize the possibility that Lamoreaux lacks standing to
challenge the district court’s dismissal order because he was no
longer a party when the dismissal order was entered. However,
Black Diamond does not argue the standing issue, and we
proceed to address Lamoreaux’s arguments on their merits.
20110786‐CA 11 2013 UT App 32Lamoreaux v. Black Diamond
Lamoreaux’s argument misreads the district court’s orders at the
February 17 conclusion of trial. The district court did not take the
matter under advisement on that day, but rather ordered the
parties to submit proposed findings and orders no later than April
1, at which time it would take the matter under advisement. Black
Diamond purchased Lamoreaux’s cause of action and filed its
motion for substitution on March 21, prior to the deadline for
proposed findings and before the district court had taken the
matter under advisement. Once the district court became aware
that Black Diamond had purchased the cause of action and was
seeking substitution—and, presumably, the ultimate dismissal of
the action— the court reasonably refrained from expending further
judicial resources on crafting a ruling. We see no abuse of the
district court’s discretion in relation to the timing of the August 11
substitution order and the September 23 dismissal order vis‐a‐vis
its failure to issue a ruling on the merits. See generally Posner v.
Equity Title Ins. Agency, Inc., 2009 UT App 347, ¶ 23, 222 P.3d 775(“[T]rial courts have broad discretion in managing the cases
assigned to their courts.”).
¶25 Lamoreaux also argues that the district court’s failure to
issue a ruling on the merits effectively precluded his counsel from
receiving compensation under counsel’s contingency fee agreement
with Lamoreaux. Lamoreaux directs us to a Louisiana case for the
proposition that a client may discharge his contingency fee counsel
at any time but must pay counsel for services actually rendered. See
Saucier v. Hayes Dairy Prods., Inc., 373 So. 2d 102 (La. 1978).
Lamoreaux further argues that Utah law provides for contingency
fee attorneys to be paid on a quantum meruit basis when the
contingency fee agreement becomes unenforceable. See Parents
Against Drunk Drivers v. Graystone Pines Homeowners’ Assoc., 789
P.2d 52, 56–58 (Utah Ct. App. 1990).
¶26 To the extent that Lamoreaux argues that his counsel has
some right to be paid for services rendered, counsel’s
client—Lamoreaux—was no longer a party to the action at the time
the district court was considering dismissal, and counsel made no
20110786‐CA 12 2013 UT App 32Lamoreaux v. Black Diamond
attempt to intervene in the action. Arguments pertaining to
counsel’s right to payment were therefore not properly before the
district court at the time of dismissal. Accordingly, we will not
disturb the district court’s dismissal order on the basis of
Lamoreaux’s argument that the court’s failure to issue a ruling on
the merits of the Black Diamond action interfered with his
counsel’s right to payment.
CONCLUSION
¶27 We reject Lamoreaux’s challenges to the execution and sale
of his cause of action against Black Diamond, the substitution of
Black Diamond into the Black Diamond action as the party
plaintiff, and the district court’s ultimate dismissal of the action on
Black Diamond’s motion. We conclude that the current Utah Rules
of Civil Procedure continue to allow execution against choses in
action. We also conclude that Lamoreaux was required to assert the
alleged divestiture of his interest by replying to the writ in the
Fisher action. Because Black Diamond’s purchase of Lamoreaux’s
cause of action was valid, the district court did not abuse its
discretion in substituting Black Diamond for Lamoreaux as plaintiff
and ultimately dismissing the action. Affirmed.6
____________________
6
Black Diamond requests that we order Lamoreaux’s
counsel to personally pay a portion of Black Diamond’s attorney
fees incurred on appeal. We decline to award any fees in this
matter.
20110786‐CA 13 2013 UT App 32