Lewis v. Nelson ( 2017 )

2017 UT App 230THE UTAH COURT OF APPEALS
REGGIE LEWIS,
Appellee,
v.
RODNEY NELSON,
Appellant.
Opinion
No. 20160807-CA
Filed December 14, 2017
Fifth District Court, St. George Department
The Honorable Eric A. Ludlow1
No. 120500402
Charles A. Schultz, Attorney for Appellant
Penrod W. Keith and Elijah L. Milne, Attorneys
for Appellee
JUDGE KATE A. TOOMEY authored this Opinion, in which JUDGES
MICHELE M. CHRISTIANSEN and RYAN M. HARRIS concurred.
TOOMEY, Judge:
¶1 This case comes before us on an interlocutory appeal from
the district court’s denial of Rodney Nelson’s motion to amend
his answer to assert a compulsory counterclaim. Nelson
contends the district court abused its discretion in denying his
motion to amend because, in his view, the court “had the
obligation” to grant his motion. We disagree and therefore
affirm.
1. During the proceedings below, three different judges were
assigned to the case. We refer to them as First Judge, Second
Judge, and Third Judge.
Lewis v. Nelson
¶2 This case arises from a contract dispute between Nelson
and Reggie Lewis, who sold Nelson the right to operate a
distribution supply route. In July 2012, Lewis filed a breach of
contract action against Nelson, complaining that Nelson missed
payments under the contract. Nelson, acting pro se, answered
the complaint and raised numerous affirmative defenses,
including breach of the covenant of good faith and fair dealing;
breach of contract; and fraud, deceit, or misrepresentation. The
answer did not include any counterclaims.
¶3 More than three months after filing his answer, and
without first seeking leave to amend it, Nelson filed
counterclaims for fraud and violation of Utah’s Business
Opportunity Disclosure Act. Because Nelson did not first seek
leave to amend his answer, Lewis filed a motion to dismiss the
counterclaims. Nelson did not file an opposing memorandum
but instead filed a belated motion to amend his answer,
explaining that, “as a pro se litigant, it has taken him additional
time to become familiar with his legal defenses, and [he] is only
now aware of his legal defenses and counterclaims.” Lewis
opposed the motion, arguing that it was untimely, that there was
no justification for Nelson’s failure to include the counterclaims
in his answer, that the counterclaims would cause undue delay,
and that the counterclaims were not well pleaded.2 In his reply
memorandum, Nelson explained, “I thought that my answer
would serve as a counterclaim . . . . [T]here will not be any new
information or discovery needed with my counterclaim. The
same facts and documents that will be central to my defense to
2. Lewis argued that the fraud claim was not pleaded with the
particularity required by rule 9(c) of the Utah Rules of Civil
Procedure and that there was no private right of action specified
under the Business Opportunity Disclosure Act. Lewis further
argued that, even if the act provided a private right of action, the
act did not apply to the sale of the distribution supply route.
20160807-CA 2 2017 UT App 230Lewis v. Nelson
[Lewis’s] complaint will be used as evidence in my
counterclaim.”
¶4 During oral argument on the two motions in September
2013, Nelson conceded that “the answer and the counterclaim
are essentially the same thing.” First Judge then announced he
was granting Lewis’s motion to dismiss the counterclaims and
denying Nelson’s motion to amend and remarked, “[B]ut it
really doesn’t impact Mr. Nelson’s defense at all.” First Judge
directed Lewis’s counsel to prepare the order. The order simply
stated that, “[b]ased upon the pleadings, motions, memoranda,
exhibits, and oral arguments of the parties,” Nelson’s motion to
amend “should be denied for the reasons set forth in” Lewis’s
opposing memorandum, and that Nelson’s counterclaims
“should be dismissed with prejudice for the reasons set forth in”
Lewis’s motion to dismiss.
¶5 In January 2014, after discovery was completed, Lewis
moved for summary judgment, which First Judge orally granted
during a March hearing and which was signed by Second
Judge.3 Nelson eventually appealed from the order of summary
judgment,4 and post-judgment execution efforts were stayed. We
reversed and remanded. See Lewis v. Nelson, 2015 UT App 262,
¶ 17, 366 P.3d 848. In a footnote of that opinion, we stated:
Nelson also challenges the trial court’s dismissal
with prejudice of his request for leave to file a
counterclaim. This issue is not adequately briefed,
and we accordingly do not consider it on appeal.
3. The basis for Lewis’s motion is not relevant here. Accordingly,
we do not further discuss it.
4. Nelson hired counsel prior to this appeal and has been
represented since then.
20160807-CA 3 2017 UT App 230Lewis v. Nelson
This decision on our part is without prejudice to
the prerogative of the trial court to reconsider the
dismissal in view of our reversal of the summary
judgment and our remand for further proceedings.
Id. ¶ 8 n.2 (citation omitted).
¶6 An order of remittitur issued in April 2016. On remand,
the case was reassigned to Third Judge.
¶7 In May 2016, Lewis filed a certificate of readiness for trial.
Two weeks later, Nelson filed a second motion to amend his
answer to assert several compulsory counterclaims, but he did
not attach his proposed counterclaim. Instead, in his supporting
memorandum, Nelson argued he had “a legal right to file a
counterclaim against Lewis for fraud, fraudulent inducement,
breach of covenant of good faith and fair dealing, breach of
contract, and other causes of action.” Nelson also argued that
First Judge abused his discretion in denying the first motion to
amend and requested that Third Judge so conclude. Lewis filed
an opposing memorandum, arguing the motion should be
denied because
(1) Nelson has not submitted a proposed amended
pleading with this motion; (2) his counterclaim was
previously dismissed with prejudice; (3) he has not
offered any excuse—let alone any justification—for
his failure to assert a claim at the commencement
of this case; (4) this lawsuit began nearly four years
ago and the parties appeared in court for trial over
two years ago; and (5) Lewis would suffer
unavoidable prejudice if Nelson were allowed to
amend his pleadings at this late stage.
Nelson attached his proposed counterclaim to his reply
memorandum. In it, he asserted claims for breach of the
20160807-CA 4 2017 UT App 230Lewis v. Nelson
covenant of good faith and fair dealing, breach of contract,
fraud, fraudulent inducement, and unjust enrichment.5
¶8 At a hearing on the motion, Lewis’s counsel explained
that Third Judge should not reach the question of whether First
Judge erred in denying Nelson’s first motion to amend, because
it was dismissed with prejudice and Nelson had not moved to
amend or alter that order.6 Lewis’s counsel then turned to the
merits of the second motion to amend and explained that, when
a party moves to amend its pleading, courts often consider the
timeliness of the motion, the justification for not including the
amended material in the initial pleading, and the prejudice to the
non-moving party. Lewis’s counsel argued that these factors
weighed in favor of denying Nelson’s second motion to amend.
In response to these arguments, Third Judge asked, “Why was a
counterclaim not brought up in the first instance?
Why . . . wasn’t one filed immediately—like four years ago?”
Nelson’s counsel responded, “I cannot answer that question. I
was not representing Mr. Nelson [at that time].” Following this
response, Lewis’s counsel stated, “I can just wind up there. I
think that if there is no showing of excusable neglect or some
showing of new evidence, there’s no showing of any real
justification at all.” Third Judge then announced he was denying
the motion, at least in part, because Nelson did not provide “any
justification for his failure to file the counterclaim in the first
instance.” The court issued a written order denying the motion
5. We emphasize that, in his second motion to amend, Nelson
attempted to assert a different counterclaim than he did in his
first motion to amend.
6. Although Lewis did not point out that the majority of the
counterclaims Nelson wished to assert in his second motion to
amend did not appear in his first motion to amend, it was
apparent from the record.
20160807-CA 5 2017 UT App 230Lewis v. Nelson
“[b]ased upon each of the grounds contained” in Lewis’s
opposing memorandum. Nelson filed a petition for permission
to appeal from the interlocutory order denying his second
motion to amend his answer, which we granted.
¶9 Nelson contends the district court erred when it denied
his motions to amend his answer to assert compulsory
counterclaims. He first argues that, because he filed his motions
before trial and because he represented himself for much of the
proceedings, the district court abused its discretion in denying
them. Second, he argues the court was obligated to grant his
motions because he was attempting to file compulsory
counterclaims before trial.7 We review a district court’s decision
to deny a party’s motion to amend its pleadings for an abuse of
discretion. Fishbaugh v. Utah Power & Light, 969 P.2d 403, 405
(Utah 1998).
¶10 As a preliminary matter, we address the scope of this
appeal. Although Nelson appeals from Third Judge’s
interlocutory order on his second motion to amend, his brief
largely focuses on alleged errors committed by First Judge in
denying his first motion to amend. Nelson’s first motion to
amend was denied more than four years ago, and he never
moved to alter or amend that order. He challenged First Judge’s
ruling in his first appeal, and we disposed of this argument
because it was inadequately briefed. Lewis, 2015 UT App 262, ¶ 8
n.2. Thus, the law of the case doctrine precludes us from
addressing this argument anew. See IHC Health Services, Inc. v.
7. Nelson also asserts, without any reasoned analysis, that the
Open Courts Clause of the Utah Constitution and rules 1 and 15
of the Utah Rules of Civil Procedure required the district court to
grant his motions to amend. But he has not adequately briefed
these arguments, and we therefore do not address them. See Bank
of America v. Adamson, 2017 UT 2, ¶ 11, 391 P.3d 196.
20160807-CA 6 2017 UT App 230Lewis v. Nelson
D & K Mgmt., Inc., 2008 UT 73, ¶¶ 27–28, 196 P.3d 588(explaining that the mandate rule, a branch of the law of the case
doctrine, “dictates that a prior decision of a district court
becomes mandatory after an appeal and remand”). But see
Blackmore v. L & D Dev. Inc., 2016 UT App 198, ¶ 30, 382 P.3d 655(stating that, “on remand from an appeal, the district court
retains discretion to decide whether to reconsider any issue
which was not expressly or impliedly disposed of on appeal”
(citation and internal quotation marks omitted)). In addition, the
first proposed counterclaim differed from the second proposed
counterclaim, in that Nelson asserted new claims, thus
necessitating a different analysis. For these reasons, we do not
address any arguments related to the first motion to amend.8 See
Utah R. App. P. 5(a).
¶11 Compulsory counterclaims are governed by rule 13 of the
Utah Rules of Civil Procedure, which provides in relevant part:
A pleading must state as a counterclaim any claim
that—at the time of its service—the pleader has
against an opposing party if the claim:
8. Nelson contends that footnote 2 in our prior decision, see Lewis
v. Nelson, 2015 UT App 262, 366 P.3d 848, requires us to review
the ruling on his first motion to amend. Nelson is mistaken.
Footnote 2 merely granted the district court discretion to revisit
the first ruling, which it elected not to do on its own. See id. ¶ 8
n.2. It did not grant him the right to challenge First Judge’s
ruling for a second time on appeal, thus thwarting the law of the
case doctrine. See IHC Health Services, Inc. v. D & K Mgmt., Inc.,
2008 UT 73, ¶¶ 27–28, 196 P.3d 588. And in any event, footnote 2
applied only to Nelson’s first proposed counterclaim, not the
second proposed counterclaim, which is the subject of this
appeal.
20160807-CA 7 2017 UT App 230Lewis v. Nelson
(A) arises out of the transaction or
occurrence that is the subject-matter of the
opposing party’s claim; and
(B) does not require adding another party
over whom the court cannot acquire
jurisdiction.9
Utah R. Civ. P. 13(a)(1). Thus, unless an exception applies, a
party wishing to assert a compulsory counterclaim must assert it
in its pleading.
¶12 Rule 15 addresses a party’s ability to amend its pleading
and provides in relevant part:
(1) A party may amend its pleading once as a
matter of course within:
(A) 21 days after serving it; or
(B) if the pleading is one to which a
responsive pleading is required, 21 days
after service of a responsive pleading or 21
days after service of a motion under Rule
12(b), (e), or (f), whichever is earlier.
(2) In all other cases, a party may amend its
pleading only with the court’s permission or the
opposing party’s written consent. The party must
attach its proposed amended pleading to the
motion to permit an amended pleading. The court
9. This rule was amended in 2016. Because the amendment was
stylistic and does not alter our analysis, we cite the current
version of the rule for convenience.
20160807-CA 8 2017 UT App 230Lewis v. Nelson
should freely give permission when justice
requires.10
Id. R. 15(a)(1)–(2). In determining whether “justice requires”
granting a motion to amend a pleading, Utah courts “have
focused on three factors: the timeliness of the motion; the
justification given by the movant for the delay; and the resulting
prejudice to the responding party.” Kelly v. Hard Money Funding,
Inc., 2004 UT App 44, ¶ 26, 87 P.3d 734 (citation and internal
quotation marks omitted).
¶13 “[M]otions to amend are typically deemed untimely when
they are filed in the advanced procedural stages of the litigation
process, such as after the completion of discovery.” Id. ¶ 29. And
“regardless of the procedural posture of the case, motions to
amend have typically been deemed untimely when they were
filed several years into the litigation.” Id. ¶ 30. “In considering
the justification prong of the analysis, Utah courts have typically
focused on whether the moving party had knowledge of the
events that are sought to be added in the amended [pleading]
before the original [pleading] was filed.” Id. ¶ 32. But courts
should also “focus[] on the reasons offered by the moving party
for not including the facts or allegations in the original
[pleading].” Id. ¶ 38. “[I]n cases where the party knew of the
events or claims earlier yet failed to plead them due to a dilatory
motive, a bad faith effort during the pleading process, or
unreasonable neglect in terms of pleading preparation, it would
follow that the motion to amend could be denied on that basis.”
Id. Although these factors are the ones courts most often
consider when deciding whether to grant a motion to amend a
pleading, they are not an exhaustive list of factors a court may
10. Stylistic changes were also made to rule 15 in 2016, and we
therefore cite the current version of the rule.
20160807-CA 9 2017 UT App 230Lewis v. Nelson
consider. See id. ¶ 39. Indeed, other factors include delay, bad
faith, or futility of the amendment. Id. ¶ 40.
¶14 In Kelly, we stressed that rule 15(a) is not governed by an
“exclusive three-part analysis” but is instead governed by “a
multi-factored, flexible inquiry that allows courts the leeway to
evaluate the factual circumstances and legal developments
involved in each particular case.” Id. ¶ 41. And although it is best
practice to consider the timeliness, justification, and prejudice of
the motion to amend, “the circumstances of a particular case
may be such that a court’s ruling on a motion to amend can be
predicated on only one or two of the particular factors.” Id. ¶ 42.
We concluded our clarification of the motion to amend analysis
in Kelly by emphasizing that,
though we have stressed . . . that a court is under
no obligation to consider any or all of the specific
factors that we have discussed above, we
nevertheless reiterate the well-accepted rule that it
is a per se abuse of discretion for a trial court to fail
to explain its decision regarding a motion to
amend with reference to the appropriate principles
of law or the factual circumstances that necessitate
a particular result.
Id. (citing Aurora Credit Services, Inc. v. Liberty West Dev., Inc., 970
P.2d 1273, 1281–82 (Utah 1998)). One exception to this per se rule
is where “the reason for denial is apparent.” Aurora Credit
Services, 970 P.2d at 1282. With these rules in mind, we address
Nelson’s arguments.11
11. Nelson does not argue that the district court’s written order
failed to adequately explain his reasoning for denying the
motion. We nevertheless recognize that the written order,
although technically sufficient, does not follow best practices. It
(continued…)
20160807-CA 10 2017 UT App 230Lewis v. Nelson
¶15 As we understand it, Nelson first contends that Third
Judge abused his discretion when he denied Nelson’s second
motion to amend because Nelson filed it before trial had actually
taken place and because he had represented himself for much of
the proceedings. Although Nelson does not mention the three
factors from Kelly, he seems to argue that, because he filed the
motion before trial—albeit more than four years after filing his
answer—it was not so untimely that denying the motion was
justified. And it appears he argues that his status as a pro se
litigant, in the proceedings below, is adequate justification for
not including his counterclaim in his answer.
¶16 Nelson’s second motion to amend was filed well after the
close of discovery, after several trial dates had been set, and
several years after he filed his answer. See Kelly, 2004 UT App 44,
¶¶ 29–30. We recognize that the stay in this case and the prior
appeal contributed to the delay, but these delays occurred after
the case was already in the advanced stages of litigation. We also
emphasize the procedural history in the present case. On the day
First Judge held oral argument on Lewis’s motion for summary
judgment, a bench trial on all the issues presented in the case
was scheduled to immediately follow. Had First Judge denied
Lewis’s motion for summary judgment, the case would have
proceeded to trial that day, and Nelson would not have had the
opportunity to file his second motion to amend. We therefore
cannot conclude it was an abuse of discretion for Third Judge to
(…continued)
would have been best had the court articulated its reasoning and
analysis in the order itself. Nevertheless, because the order
explained that the court was denying Nelson’s second motion to
amend “[b]ased upon each of the grounds contained” in Lewis’s
opposing memorandum, its reasons for denying the motion are
apparent from the record. See Aurora Credit Services, Inc. v. Liberty
West Dev., Inc., 970 P.2d 1273, 1282 (Utah 1998).
20160807-CA 11 2017 UT App 230Lewis v. Nelson
independently base his decision to deny Nelson’s second motion
to amend on the ground that it was untimely.
¶17 Third Judge also independently based his decision to
deny Nelson’s second motion to amend on the ground that
Nelson did not provide adequate justification for his delay in
asserting the counterclaims. Indeed, the only justification that
Nelson provided for not asserting his counterclaims in his
original answer is that he was unrepresented for much of the
proceedings below and did not comprehend all of the applicable
rules. But Third Judge determined this was inadequate
justification and did not afford Nelson leniency.12 We emphasize
that, although a pro se litigant is “entitled to every consideration
that may reasonably be indulged,” “[r]easonable considerations
do not include the need to interrupt proceedings to translate
legal terms, explain legal rules, or otherwise attempt to redress
the ongoing consequences of the party’s decision to function in a
capacity for which he is not trained.” Allen v. Friel, 2008 UT 56,
¶ 11, 194 P.3d 903 (citation and internal quotation marks
omitted). Thus, Nelson cannot rely on his pro se status as
adequate justification for his “unreasonable neglect” in failing to
assert his counterclaims in a timely manner. See Kelly, 2004 UT
App 44, ¶ 38. We conclude Third Judge did not abuse his
12. Although Nelson was not represented for much of the
proceedings, he filed numerous motions and objections with the
court, citing and analyzing many of the Utah Rules of Civil
Procedure. And during oral argument on Lewis’s motion for
summary judgment, First Judge even praised Nelson’s skill,
saying, “I am going to compliment you again. These are well
drafted pleadings. Your responses are very straightforward and
outline your position very clearly . . . . [Y]ou’ve put it before me
masterfully.”
20160807-CA 12 2017 UT App 230Lewis v. Nelson
discretion in independently basing his decision to deny Nelson’s
second motion to amend on the ground that it was not justified.13
¶18 Nelson next contends that, under East River Bottom Water
Co. v. Dunford, 167 P.2d 693 (Utah 1946), a district court’s broad
discretion to grant or deny a motion to amend a pleading “does
not apply to a compulsory counterclaim.” We disagree.
¶19 In Dunford, a defendant filed a compulsory counterclaim
with its answer, alleging that water shares issued in duplicate
that it had purchased from a water company were valid and that
it had been damaged by not receiving the benefit of those shares.
Id. at 694. The case proceeded to a bench trial on the issues raised
in the pleadings, including the defendant’s counterclaim. Id. at
695. The court ruled in favor of the defendant on its
counterclaim, but our supreme court reversed on appeal,
holding that the duplicate shares were void. Id. at 695–96. After
the case was remanded, the defendant sought leave to amend its
answer to demonstrate that, despite the holding that the shares
were void, it was still entitled to damages. Id. at 696. The district
13. We note that, except for the unjust enrichment claim, the
claims Nelson sought to assert in his second motion to amend—
breach of the covenant of good faith and fair dealing, breach of
contract, and fraud—merely changed Nelson’s affirmative
defenses to affirmative claims, and therefore the district court
could have exercised its discretion to deny the motion to amend
on this basis alone. See City of Grantsville v. Redevelopment Agency
of Tooele City, 2010 UT 38, ¶¶ 50–51, 233 P.3d 461 (stating that
“[a] district court does not abuse its discretion by denying a
motion to amend if the amendment does not [affect] any
substantial change in the issues as they were originally
formulated in the pleadings,” such as where the amendment
would “merely change[] [a defendant’s] affirmative defense to
an affirmative claim”).
20160807-CA 13 2017 UT App 230Lewis v. Nelson
court granted the defendant’s motion to amend, and the plaintiff
appealed that decision to our supreme court. Id. The supreme
court stated that, although the defendant had alleged in its
counterclaim that the shares were valid, “the allegations and
prayer also sufficiently show that the defendant was entitled to
damages in case the stock should be declared invalid. It would
therefore have been error for the trial court to have refused to
permit the filing of the amended counterclaim if timely tendered
prior to trial [on remand].” Id.¶20 We conclude Dunford does not stand for the broad
principle that it is an abuse of discretion to deny a party’s
motion to amend its pleading to assert a compulsory
counterclaim. The holding is narrow and fact-specific. Indeed,
the court held that, “[u]nder the facts and circumstances” of that
particular case, it would have been an abuse of discretion to
deny the motion to amend. See id. at 697. Although the fact that
the motion to amend involved a compulsory counterclaim
appeared to factor into the court’s analysis, nothing in Dunford
can be construed to mean that it is always an abuse of discretion
to deny a motion to amend a pleading to assert a compulsory
counterclaim.
¶21 We conclude the district court did not abuse its discretion
in denying Nelson’s second motion to amend his answer.
Accordingly, we affirm.
20160807-CA 14 2017 UT App 230