Chard v. Chard ( 2019 )

2019 UT App 209THE UTAH COURT OF APPEALS
STEPHANIE D. CHARD AND TRAINING TABLE RESTAURANTS INC.,
Appellants and Cross-appellees,
v.
KENT J. CHARD, PETER M. ENNENGA, DON SORENSEN, TRAINING
TABLE LAND AND HOLDING LC, AND TT THREE LC,
Appellees and Cross-appellants
THOMAS E. LOWE, LOWE HUTCHINSON & COTTINGHAM PC,
Appellees.
Opinion
No. 20180585-CA
Filed December 19, 2019
Third District Court, Salt Lake Department
The Honorable Robert P. Faust
No. 160903525
Andrew G. Deiss and John Robinson Jr., Attorneys
for Appellants and Cross-appellees
Byron G. Martin and Steven M. Edmonds, Attorneys
for Appellees and Cross-appellants Thomas E. Lowe
and Lowe Hutchison & Cottingham PC
Thomas R. Barton, Alex B. Leeman, and
Mark O. VanWagoner, Attorneys for Appellees
and Cross-appellants Kent J. Chard, Peter M.
Ennenga, Don Sorensen, Training Table Land
and Holding LC, and TT Three LC
JUDGE RYAN M. HARRIS authored this Opinion, in which
JUDGES JILL M. POHLMAN and DIANA HAGEN concurred.
Chard v. Chard
HARRIS, Judge:
¶1 Since December 2016, Utahns have no longer been able
to order a hearty plate of chili cheese fries from a restaurant
table telephone. This unfortunate circumstance resulted from
the sudden closure of the Training Table restaurants, which
had been open for business along the Wasatch Front since
the late 1970s. The closure, in turn, was the result of a
bitter intra-family dispute between a father and a daughter,
both of whom owned a 50% interest in the restaurants.
The dispute between them eventually reached the courts,
when Stephanie D. Chard sued her father Kent J. Chard and
various related individuals and entities. Kent 1 responded by
filing a counterclaim, as well as causing two of his companies—
which owned the land underneath the restaurants—to file a
separate complaint seeking to evict the restaurants for non-
payment of rent.
¶2 The landlord entities prevailed in the eviction
proceedings, resulting in the closure of the restaurants. Later,
the district court, on summary judgment, dismissed all of
Stephanie’s claims against Kent and the other defendants,
as well as all the counterclaims filed by Kent and the landlord
entities. Both sides now appeal, and seek reinstatement of
some of their dismissed claims. For the reasons set forth below,
we affirm the dismissal of many of the claims, but reverse
the district court’s dismissal of a few claims, at least one on each
side, and remand for further proceedings.
1. “As is our practice in cases where [multiple] parties share a
last name, we refer to the parties by their first name with no
disrespect intended by the apparent informality.” Smith v. Smith,
2017 UT App 40, ¶ 2 n.1, 392 P.3d 985.
20180585-CA 2 2019 UT App 209Chard v. Chard
BACKGROUND 2
¶3 Kent, along with three other partners, founded the
Training Table restaurant chain in 1977, and operated the
restaurants through Training Table Restaurants Inc. (TTR).
While TTR, at various times, had as many as ten restaurants, it
did not own the real estate that any of the restaurants occupied.
The underlying properties were owned by two limited liability
companies—TT Three LC (TT3) and Training Table Land and
Holding Company LC (TTL&H) (collectively, Landlords)—
formed by Kent and in which Kent owned a significant interest. 3
Over the years, and certainly during all relevant times,
Landlords realized most of their income from the rents that TTR
paid them, and Kent drew the bulk of his personal income from
distributions from Landlords.
¶4 Because the restaurants were the family business,
Stephanie had grown up around them, even working part-time
for the business when she was a teenager, and had grown quite
familiar with the restaurants, their locations, and their operation.
In November 2012, Stephanie was a recent college graduate
2. The facts set forth herein are largely undisputed. To the extent
they are disputed, for the purposes of this appeal we view and
describe the relevant facts in the light most favorable to the non-
moving party. See Orvis v. Johnson, 2008 UT 2, ¶ 6, 177 P.3d 600(stating that, on appeal from a district court’s summary
judgment ruling, we view “the facts and all reasonable
inferences drawn therefrom in the light most favorable to the
nonmoving party” (quotation simplified)).
3. During the relevant time period, Kent owned 49.5% of TT3
and 75% of TTL&H. Peter M. Ennenga held a 1% interest in TT3,
and the other 49.5% was owned by a profit sharing plan
affiliated with Don Sorensen’s accounting firm.
20180585-CA 3 2019 UT App 209Chard v. Chard
looking to formally enter the family business, and she used part
of an inheritance to purchase a 50% interest in TTR from a third
party for $100,000. The purchase price was derived from a
professional appraisal of the business, which pegged the value of
the entire business at $200,000. Upon completion of the
purchase, Stephanie became a director of TTR and an equal
partner with Kent in the restaurants (but acquired no interest in
the properties or Landlords).
¶5 At that point in time, Kent was TTR’s president, and
TTR’s board of directors consisted of Stephanie, Kent, Peter M.
Ennenga, and Don Sorensen. Both Ennenga and Sorensen were
longtime friends of and advisers to the Chard family, with
Ennenga acting as a legal and business advisor, and Sorensen
serving as the family accountant. Ennenga had been a licensed
attorney until he was disbarred in 2001; after that, he continued
to advise the Chard family, often through his new position as a
paralegal for the law firm Lowe Hutchinson & Cottingham PC
(LHC). For many years, LHC had served as TTR’s legal counsel,
performing extensive work on Kent’s and TTR’s behalf. The
parties agree that LHC and Ennenga represented Kent during
the 2012 purchase transaction, but the parties disagree as to
whether Ennenga also represented Stephanie for the purposes of
that transaction.
¶6 On November 16, 2012, shortly after Stephanie acquired
her interest in the restaurants, TTR’s board of directors held a
meeting to discuss certain changes to the restaurant leases that
Landlords had proposed, including an increase in the monthly
rents that TTR would owe to Landlords. Across TTR’s five then-
operating locations, the proposal would increase TTR’s monthly
rent from $29,000 per month to $30,500 per month. All four
members of TTR’s board participated in the meeting, including
Stephanie and Kent. The decision to raise the rent was based on
a recent appraisal of Landlords’ properties, and motivated by
Landlords’ desire to keep the rent consistent with nearby
20180585-CA 4 2019 UT App 209Chard v. Chard
locations. Stephanie, as a member of the board, had access to this
appraisal, and would have been aware of the underlying reasons
for the proposed rent increase. During the meeting, TTR’s board
unanimously approved the proposed changes, which were
memorialized in a series of written addenda (the Addenda) to
the leases, and were made effective as of November 1, 2012.
¶7 Thereafter, TTR paid the increased monthly rent to
Landlords, without complaint, for about three years. During this
time, Kent continued to serve as TTR’s president, and both Kent
and Stephanie continued to serve as members of its board of
directors. In 2014, however, at Stephanie’s request, she was
elevated to TTR’s chief operating officer, and assumed a greater
role in the company’s day-to-day operations. A few months
later, in January 2015, Kent stepped down as TTR’s president,
and Stephanie took his place, thereby assuming complete control
of TTR’s operations.
¶8 Soon after taking operational control of TTR, Stephanie
began consulting with a different law firm (New Firm) regarding
her family’s overall estate plan. Initially, New Firm represented
the Chard family collectively, and also provided corporate
advice to TTR through Stephanie. In December 2015, New Firm
sent a letter to Kent recommending a business succession plan
(the Succession Plan). Under the terms of the proposed
Succession Plan, Stephanie would purchase the remaining
interests in TTR and Landlords on an installment basis, thus
allowing Kent an income and eventually giving Stephanie
complete ownership and control of not only TTR, but of
Landlords as well. New Firm proposed enacting the Succession
Plan effective January 1, 2016.
¶9 After conferring with Ennenga and Sorensen, Kent
determined that the Succession Plan was not in his best interest,
and therefore rejected it. In response, Stephanie began exploring
with New Firm how to put “pressure” on Kent to accept her
20180585-CA 5 2019 UT App 209Chard v. Chard
proposal, telling New Firm to “get aggressive” and “unleash the
beast.” Stephanie and her lawyers eventually sent a letter to
LHC, with a copy to Kent, stating that New Firm (rather than
LHC) was now counsel to TTR, and requesting that Ennenga and
Sorensen step down from TTR’s board of directors. In the letter,
New Firm contended that Ennenga and Sorensen had conflicts of
interest due to their ownership interests in TT3 and that
Ennenga had been engaging in the unauthorized practice of law.
¶10 Stephanie knew that her strategy might not be well
received, because Ennenga and Sorensen had been Kent’s friends
and advisors for several decades. And, as it happened, Kent did
not respond well to Stephanie’s demand: shortly after learning of
it, Kent attempted suicide and was hospitalized for about two
weeks. While Kent was recovering, Stephanie visited Kent in the
hospital and brought documents for Kent to sign to effectuate
the removal of Ennenga and Sorensen from the board of TTR.
Kent refused to sign the documents.
¶11 In addition to sending a demand letter, Stephanie also
directed TTR to begin withholding rent payments to Landlords,
asserting generally that the rent amounts that had been
approved in November 2012 were unfairly high. Specifically, she
claimed that she had purchased her interest in TTR without
meaningful legal representation, and that the Addenda had not
been drafted and reviewed by an attorney prior to execution.
Stephanie again floated the Succession Plan as a potential
solution to these problems, and indicated that TTR would
continue to withhold rent payments until the issues identified in
the Succession Plan were resolved.
¶12 Kent was not opposed, in principle, to selling the business
entities to Stephanie, but was of the view that the price
Stephanie was offering was too low. After negotiations with
Stephanie broke down, Landlords (at Kent’s direction) began
shopping the properties to third parties. A few weeks later, after
20180585-CA 6 2019 UT App 209Chard v. Chard
locating a third-party buyer, Kent informed Stephanie that
Landlords had decided to accept a competing offer to purchase
Landlords’ properties for a higher price than Stephanie had
offered. Stephanie’s response was to file a lawsuit.
¶13 Stephanie’s lawsuit, as eventually amended, included
claims against not only Kent, but also against Landlords,
Ennenga, Sorensen, and LHC, and included claims personal to
Stephanie, as well as derivative claims she purported to assert on
behalf of TTR. The causes of action included breach of fiduciary
duty, quiet title, failure to hold court-ordered shareholders
meetings, unjust enrichment, judicial removal of directors, legal
malpractice, securities fraud, common law fraud, and negligent
misrepresentation. Though the claims varied in type, the
underlying grievance motivating most of the claims was the
asserted unfairness of the rental rates agreed upon in November
2012. In addition, soon after filing her lawsuit, Stephanie
recorded a series of lis pendens against Landlords’ properties.
¶14 Kent, Landlords, Ennenga, Sorensen, and LHC responded
to Stephanie’s lawsuit by moving to dismiss her claims; in
addition, Kent and Landlords filed counterclaims of their own
for, among other things, wrongful lien, breach of fiduciary duty,
and infliction of emotional distress. Landlords also asked the
court to release the lis pendens, which were holding up the sale
of the properties to the third-party buyer. Following a hearing in
September 2016, the district court dismissed Stephanie’s
derivative claims, and ordered the lis pendens to be released. In
addition, the court dismissed the malpractice claim against
Ennenga, reasoning that a legal malpractice claim could not lie
against a person who was not a licensed attorney.
¶15 Meanwhile, TTR (at Stephanie’s direction) continued to
withhold rent from Landlords with regard to three of the five
then-operating restaurants. In October 2016, after the district
court’s ruling on the initial motions, Landlords filed a separate
20180585-CA 7 2019 UT App 209Chard v. Chard
lawsuit seeking to evict TTR from the three locations where TTR
was still behind on its rent obligations. In response, TTR filed an
answer alleging various defenses, including its claim that the
amount of monthly rent was unfair.
¶16 Eventually, the district court consolidated Landlords’
eviction complaint into the main action brought by Stephanie.
However, the court kept the eviction action separate for
purposes of discovery and trial, limiting the scope of the eviction
action to resolution of the issue of possession of the properties as
well as damages related to Kent’s unlawful detainer claim
against TTR. But because one of TTR’s main defenses to the
eviction action was the unfairness of the rent amounts, the
district court believed that the fairness of the rents was at issue
in the eviction action as well as in the main case, noting that
litigation of that issue in connection with the eviction part of the
case could very well have preclusive effect on the remainder of
the case. Indeed, the court stated that a “determination on the
rent values and the validity of these leases” in Landlords’ favor
in the eviction proceedings would “eliminate” some of
Stephanie’s claims in the main case, and that she would not “be
able to raise and bring up again” those claims in the main case.
¶17 The eviction portion of the litigation was ready for trial
first, and the court scheduled a three-day trial on those issues to
take place in January 2017. On the first day of trial, however,
TTR announced that it was prepared to stipulate to judgment in
the eviction portion of the case. In the process of discussing the
stipulated judgment, the district court expressed its view that, by
stipulating to a judgment in the eviction case, TTR was in effect
conceding “that the leases were not inappropriate,” and that it
would not later be allowed to argue to the contrary in the main
case. In response, TTR’s counsel (who also represented
Stephanie in the main case) stated that he was “in agreement
with that,” because “all of the defenses that are asserted . . . have
been adjudicated and decided if judgment . . . is entered” in the
20180585-CA 8 2019 UT App 209Chard v. Chard
eviction case. Indeed, the district court later stated, in a written
order, that “[a]t the eviction hearing, the Court clearly barred
any claim connected to the issue of rent.” Following the eviction
hearing, the district court entered judgment against TTR and in
favor of Landlords for past due rents, in the amount of
$256,824.53 plus attorney fees. TTR appealed that judgment, and
this court entered an order affirming it.
¶18 While the eviction piece of the lawsuit was being litigated,
the parties conducted discovery in the main action. While all
parties submitted initial disclosures, as required by rule 26(a) of
the Utah Rules of Civil Procedure, neither Stephanie nor Kent 4
included a computation of damages in connection with their
disclosures. See Utah R. Civ. P. 26(a)(1)(C). Stephanie’s damages
disclosure stated simply that “Plaintiffs have not yet calculated
their damages” and that they “reserve the right to amend or
supplement their computation of damages after the completion
of all discovery in this case.” Kent’s initial disclosure was no
better, merely stating that “Defendants have not yet calculated
their damages,” and that they “reserve the right to supplement
this response.” Neither Stephanie nor Kent included in their
initial disclosures specific categories of damages or any
computation methodologies.
¶19 Stephanie later sent Kent some interrogatories regarding
damages, and Kent responded in March 2017, some five
months before the fact discovery cutoff date. Kent’s responses
4. Sometimes, when referring to action taken in the litigation or
on appeal, we use the term “Stephanie” to refer to actions taken
collectively by Stephanie and TTR, and we use the term “Kent”
to refer to actions taken collectively by Kent, Landlords,
Ennenga, and Sorensen. When use of the individual references is
necessary to convey more precise meaning, we use the
individual references.
20180585-CA 9 2019 UT App 209Chard v. Chard
included detailed information about his claimed damages,
including categories of damages, computation methodologies,
and calculations of amounts claimed. Kent did not
send Stephanie any damages interrogatories, and therefore
Stephanie did not respond to any, nor did she supplement her
initial disclosures prior to the conclusion of the fact discovery
period.
¶20 In August 2017, on or around the day fact discovery
ended, both parties filed supplemental disclosures. Kent’s
supplement included some updated dollar figures for
some categories of damages, but in the main provided
essentially the same information already set forth in his March
2017 discovery responses. Stephanie’s supplement, by contrast,
provided a lot of information that had never before been
disclosed, including categories of damages and computation
methodologies.
¶21 While Stephanie’s initial disclosures were quite spare
with regard to damages, those disclosures identified a number of
witnesses who had “information supporting [her] claims and
defenses,” and whom she “expect[ed] to call in [her] case in
chief” at trial. Two of the witnesses she listed were attorneys at
New Firm that she had consulted for advice not only regarding
TTR but also regarding issues unique to her. She disclosed that
one of the attorneys had “knowledge concerning matters in the
pleadings, including but not limited to TTR and the damages
caused to TTR by defendants’ actions.” She disclosed that the
other attorney had “knowledge concerning matters in the
pleadings, including but not limited to Ennenga’s breaches of
duty to TTR and Stephanie.”
¶22 In response to these broad disclosures that Stephanie’s
own attorneys had relevant information about “matters in the
pleadings” and that Stephanie intended to call them as trial
witnesses, Kent issued subpoenas to the attorneys and asked to
20180585-CA 10 2019 UT App 209Chard v. Chard
take their depositions. The two attorneys—but not Stephanie—
filed objections, arguing that the subpoenas would require them
to disclose information that was protected by attorney-client
privilege. Kent then filed a Statement of Discovery Issues asking
the court to overrule the attorneys’ objections, and therein made
two basic arguments: first, that because Kent was a director of
TTR, he was entitled to access all communications between TTR
and its lawyers; and second, that even if the legal advice the
attorneys had given was for Stephanie alone, Stephanie had
waived any privilege when she broadly disclosed her attorneys
as witnesses she intended to call at trial regarding “matters in
the pleadings.” The court agreed with both of Kent’s arguments,
and ruled, as relevant to the second argument, that Stephanie
had placed her attorneys’ “knowledge and the communications
they had with [her] at issue” when she disclosed them as
witnesses on all issues in the case, and that she had thereby
waived any privilege. Following the court’s ruling, the attorneys
each complied with the subpoena, produced documents, and sat
for a deposition.
¶23 About a year later, after discovery was complete,
Stephanie filed a motion asking the court to prevent Kent
from using her attorneys’ documents at trial, asserting that—
even though the court had already ruled that the privilege
had been waived—those documents were nevertheless protected
by the attorney-client privilege. The court issued a written
ruling on the motion, apparently granting the motion as to
Stephanie’s personal privilege, but denying the motion as to
documents related to TTR’s privilege. However, the court
concluded its ruling by stating that the privilege regarding “[t]he
information from [New Firm’s] attorneys has been waived . . .
when [Stephanie] named the attorneys to be witnesses in this
case.”
¶24 While discovery was ongoing in the main action,
Landlords—judgment creditors of TTR as a result of the
20180585-CA 11 2019 UT App 209Chard v. Chard
judgment entered in the eviction action—took steps to execute
on some of TTR’s assets, including any claims or causes of action
that TTR might assert in the main action. Landlords put those
claims up for auction at a sheriff’s sale, and ended up purchasing
those claims themselves.
¶25 Following the close of discovery, Kent and LHC
filed summary judgment motions, asking the court, for
various reasons, to dismiss all of Stephanie’s claims. Stephanie
opposed those motions, and filed a summary judgment
motion of her own, seeking dismissal of Kent’s counterclaims.
The district court held two hearings on the motions, and
issued two separate written decisions, eventually granting both
sides’ motions and dismissing all of Stephanie’s and Kent’s
claims. As the district court saw it, Stephanie’s claims failed for
a number of reasons, including grounds common to most or all
of her claims (such as failure to submit timely or sufficient
damages disclosures, and the preclusive effect of the eviction
judgment on claims related to fairness of the rents), as well as
grounds unique to various causes of action (such as the claims
being untimely filed or purchased by Landlords in the sheriff’s
sale). The district court applied similar principles to its analysis
of Kent’s counterclaims, determining that Kent’s damages
disclosures had likewise been untimely and insufficient, and
ruling that each of Kent’s claims had individual infirmities as
well.
¶26 With regard to Kent’s and Stephanie’s respective personal
claims against the other for breach of fiduciary duty, the
district court determined that Kent and Stephanie had agreed, in
open court, to mutually dismiss those claims against each
other. In a written ruling, the district court dismissed Stephanie’s
claims for breach of fiduciary duty, ruling that “Stephanie’s
claims are derivative because the alleged harm is the result
of financial injury to TTR,” and concluding that any derivative
claims were subject to dismissal for several reasons, including
20180585-CA 12 2019 UT App 209Chard v. Chard
the fact that any claims belonging to TTR had been sold
to Landlords at the sheriff’s sale. Following that ruling,
Stephanie protested that her claims for breach of fiduciary duty
included both derivative claims and personal claims, and
attempted to persuade the district court to reinstate her claims
insofar as they constituted personal claims.
¶27 At a later hearing, Kent’s attorney acknowledged
that Stephanie’s assertion that she pleaded personal (in addition
to derivative) claims for breach of fiduciary duty “got lost in
the shuffle” of the earlier-decided motions, and that the
court had not yet definitively ruled on the issue. Kent’s
lawyer pointed out that Kent had pleaded a mirror-image
personal claim for breach of fiduciary duty against Stephanie,
and noted that the two claims must rise and fall together:
“either we can go forward with it and they go forward with it,
or neither one of us can.” Kent’s attorney then made an offer, in
open court, to give up Kent’s claim if Stephanie would do
the same with hers. Stephanie and her attorney agreed to that
deal, and the court twice clarified that the parties were both
agreeing to dismiss their fiduciary duty claims, noting that the
deal “would leave [Stephanie] with nothing on a breach of
fiduciary duty claim” because the court had already dismissed
her derivative claims. Both Stephanie’s attorney and Kent’s
attorney twice affirmed that the court was correctly stating the
terms of the stipulation. The court then entered an order
dismissing Kent’s and Stephanie’s mutual personal claims for
breach of fiduciary duty, based on the agreement they reached in
open court.
¶28 Following these various rulings, the district court entered
a final judgment in the case, proclaiming that it “has
now adjudicated all the claims, rights[,] and liabilities of all the
parties in this action,” and specifically noted that it had
dismissed all the causes of action brought by Stephanie in her
complaint and by Kent in his counterclaim.
20180585-CA 13 2019 UT App 209Chard v. Chard
ISSUES AND STANDARDS OF REVIEW
¶29 Both parties take issue with the district court’s summary
judgment orders, and appeal the dismissal of at least some of
their claims. Stephanie appeals the dismissal of four groups of
claims: for legal malpractice, fraud, breach of fiduciary duty, and
unjust enrichment. 5 Kent cross-appeals the dismissal of his
counterclaims for wrongful lien, breach of fiduciary duty, and
intentional and negligent infliction of emotional distress.
¶30 The district court gave several reasons for dismissing the
parties’ claims. To the extent these claims were dismissed on the
merits, as a matter of law on summary judgment, we review the
district court’s decision for correctness, affording it no deference.
See Penunuri v. Sundance Partners, Ltd., 2017 UT 54, ¶ 14, 423 P.3d
1150. To the extent these claims were dismissed as a discovery
sanction, we review the district court’s decision for abuse of
discretion. See Keystone Ins. Agency, LLC v. Inside Ins., LLC, 2019
UT 20, ¶ 12, 445 P.3d 434.
¶31 In addition, Kent cross-appeals the district court’s
attorney-client privilege ruling, made pursuant to Stephanie’s
motion in limine, that he would not be allowed to use, at trial,
documents and communications concerning the two designated
attorneys’ representation of Stephanie in her individual capacity.
“The existence of a privilege is a question of law for the court,
which we review for correctness, giving no deference to the
[district] court’s determination.” Staley v. Jolles, 2010 UT 19, ¶ 9,
230 P.3d 1007 (quotation simplified).
5. Although the court dismissed all of Stephanie’s claims, she has
not appealed the dismissal of several of her claims, including her
claims for quiet title, securities fraud, failure to hold a court-
ordered shareholders meeting, and judicial removal of directors.
20180585-CA 14 2019 UT App 209Chard v. Chard
ANALYSIS
I. Stephanie’s Appeal
A. Legal Malpractice and Fraud
¶32 The district court dismissed Stephanie’s claims for
legal malpractice and fraud, giving multiple independent
reasons for its ruling, including its belief that legal malpractice
claims could not be brought against non-lawyers, and its
belief that Stephanie’s fraud claims as well as her claims against
LHC were time-barred. One of the chief bases for its
ruling, however, was that the eviction proceedings, including
the stipulation to judgment, had resolved all issues related to
the reasonableness of the increased monthly rents that TTR
had paid to Landlords after November 2012, and that Stephanie
was therefore precluded from re-litigating any claims related
to the reasonableness of the rent, including her claims for
legal malpractice and fraud, which the court interpreted as
based upon a contention that the rents were unfair. Indeed, the
court expressly rejected Stephanie’s assertion that her
malpractice and fraud claims were broader than that, stating as
follows:
While [Stephanie and TTR] also contend that the
fraud and legal malpractice claims are distinct,
everything revolves around the fairness of the rent.
The crux of the failures is that if a disclosure was
made to Stephanie, she now claims that she would
not have purchased TTR shares and would not
have suffered damage from the increased rent and
allegedly self-interested lease provisions. These are
rent related issues [that] have been resolved.
¶33 In her brief on appeal, Stephanie does take issue with
the district court’s dismissal of her claims for legal malpractice
20180585-CA 15 2019 UT App 209Chard v. Chard
and fraud, but—at least in her opening brief—she addresses
only some of the court’s independent reasons for the dismissal
of these claims. For instance, she asserts that the court erred
by concluding that legal malpractice claims cannot be brought
against non-lawyers, and by concluding that her fraud claims,
as well as her malpractice claims against LHC, were time-barred.
But she does not—at least until her reply brief—take issue
with the court’s conclusion that her legal malpractice and
fraud claims were precluded by the resolution of the eviction
case.
¶34 Appellants are not permitted to raise matters for the first
time in a reply brief. See State v. Evans, 2019 UT App 145, ¶ 28
n.9, 449 P.3d 958, petition for cert. filed, Sept. 4, 2019 (No.
20190739). Indeed, “[w]hen a party fails to raise and argue an
issue on appeal, or raises it for the first time in a reply brief, that
issue is waived and will typically not be addressed by the
appellate court.” State v. Johnson, 2017 UT 76, ¶ 16, 416 P.3d 443;
see also Kendall v. Olsen, 2017 UT 38, ¶ 13, 424 P.3d 12 (stating that
it was “too late” for an appellant to address an issue “in his reply
brief,” because it “deprives the appellee of the chance to
respond”). Thus, Stephanie waived her opportunity to appeal
the district court’s specific ruling that her legal malpractice and
fraud claims were precluded by the resolution of the eviction
part of the case.
¶35 And it is well-settled that “we will not reverse a ruling
of the district court that rests on independent alternative
grounds where the appellant challenges [fewer than all] of those
grounds.” Kendall, 2017 UT 38, ¶ 12 (quotation simplified). Here,
Stephanie has failed to timely challenge one of the independent
alternative bases for the district court’s decision. We therefore
have no choice but to affirm the district court’s dismissal of
Stephanie’s legal malpractice and fraud claims, on the basis that
Stephanie has failed to carry her burden of persuasion on appeal,
20180585-CA 16 2019 UT App 209Chard v. Chard
and “we do so without endorsing the merits of the district
court’s [preclusion] analysis.” See id. ¶ 15. 6
B. Breach of Fiduciary Duty
¶36 Stephanie brought two different types of claims asserting
breach of fiduciary duty: (a) derivative claims, for and on behalf
of TTR, asserting that Kent and others had violated fiduciary
duties owed to TTR, and (b) personal claims, on her own behalf,
which she claimed she was able to bring under a “close
corporation” exception, or on the basis that she had sustained
harm independent of any harm TTR might have sustained. The
district court dismissed Stephanie’s derivative claims on the
basis that those claims belonged to TTR and had been
transferred to Landlords in the sheriff’s sale; Stephanie does not
appeal the dismissal of her derivative claims for breach of
fiduciary duty. However, Stephanie does take issue with the
court’s dismissal of the remainder of her breach of fiduciary
duty claims, the ones she characterizes as non-derivative.
¶37 But Stephanie’s arguments overlook the fact that she and
Kent reached a stipulation, in open court, to mutually dismiss
their non-derivative claims for breach of fiduciary duty, and that
the district court accepted the stipulation and dismissed her non-
derivative claims on that basis. 7 She offers no reason why she
should be relieved of the effects of that stipulation.
6. Because we affirm the dismissal of all of Stephanie’s legal
malpractice claims, we need not address the propriety of the
district court’s ruling—also appealed by Stephanie—regarding
the admissibility of evidence of Ennenga’s disbarment.
7. Kent also argues that Stephanie’s non-derivative claims for
breach of fiduciary duty are—like her claims for fraud and legal
(continued…)
20180585-CA 17 2019 UT App 209Chard v. Chard
¶38 When parties stipulate to a resolution of specific issues,
that stipulation will generally bind the parties and the court.
Prinsburg State Bank v. Abundo, 2012 UT 94, ¶ 13, 296 P.3d 709.
Indeed, when parties forgo trial and “stipulate that a decree may
be entered in conformity thereto, such contract if lawful has all
the binding effect of findings of fact and conclusions of law
made by the court.” Id. (quotation simplified); see also id. ¶ 16(stating that, by stipulating to a particular resolution of certain
issues, “the parties stipulated away their right to challenge the
district court’s resolution of the issues in this case”). In light of
the judicial efficiency that stipulations provide, “there is an
institutional hesitancy to relieve a party from a stipulation
negotiated and entered into with the advice of counsel.” Rivera v.
State Farm Mutual Auto. Ins. Co., 2000 UT 36, ¶ 11, 1 P.3d 539(quotation simplified). However, a court has the discretion to set
aside a stipulation if certain conditions are met: (1) the party
seeking relief from the stipulation must request it by motion
from the district court; (2) any such motion must be timely filed;
(3) the motion must show that the stipulation was entered into
“inadvertently or for justifiable cause”; and (4) the district court
must state its basis for relieving the parties of the stipulation.
Yeargin, Inc. v. Auditing Div. of Utah State Tax Comm’n, 2001 UT
11, ¶ 21, 20 P.3d 287 (quotation simplified).
¶39 Stephanie made no motion before the district court to be
relieved from her stipulation, and makes no effort in her briefs to
explain why we should allow her to revive claims that she
(…continued)
malpractice—all about the allegedly unfair monthly rent, and are
therefore also resolved by Stephanie’s decision not to appeal the
district court’s preclusion ruling. But because the district court
did not appear to dismiss those claims on that basis, and because
we affirm the district court’s decision on other grounds, we do
not reach Kent’s argument in this regard.
20180585-CA 18 2019 UT App 209Chard v. Chard
agreed to jettison. 8 Accordingly, we consider Stephanie to have
stipulated away her right to challenge the district court’s
dismissal of her non-derivative claims for breach of fiduciary
duty, and we therefore affirm the district court’s dismissal of
those claims on this basis.
C. Unjust Enrichment
¶40 The only other claim whose dismissal Stephanie appeals
here is her claim for unjust enrichment, in which she asserts that
she performed $120,000 worth of work for Landlords but was
never paid for that work. The district court dismissed the unjust
enrichment claim in connection with its determination that
Stephanie’s damages disclosures were deficient. 9 Stephanie
8. At oral argument on appeal, Stephanie posited that the
stipulation should not be binding upon her because she did not
actually give up anything in the bargain, given that the district
court had already dismissed all of her breach of fiduciary duty
claims. We are not necessarily persuaded that stipulations are
any less binding in the event that one party gives nothing up,
but in any event Stephanie’s argument is factually incorrect in
this case. At the time the parties entered into the stipulation,
Stephanie was attempting to revive at least some of her breach of
fiduciary duty claims (the ones she considered non-derivative),
and, as part of the bargain, agreed to give up any right to
attempt to revive such claims.
9. It appears that the damages-disclosure issue was the sole basis
upon which the district court dismissed this claim. Stephanie did
not stipulate to its dismissal, and the district court made no
determination that it was time-barred. Moreover, the gist of this
claim has nothing to do with the monthly lease rate, and
therefore this claim was not precluded by the resolution of the
eviction proceedings.
20180585-CA 19 2019 UT App 209Chard v. Chard
asserts that the district court’s dismissal of this claim as a
sanction for insufficient damages disclosures was improper,
asserting both (a) that her damages disclosures were sufficient,
and (b) that even if they were not, the district court’s dismissal of
her unjust enrichment claim was unwarranted.
¶41 Applicable rules require litigants to include a damages
computation in their initial disclosures. See Utah R. Civ. P.
26(a)(1)(C) (stating that initial disclosures are to include “a
computation of any damages claimed and a copy of all
discoverable documents or evidentiary material on which such
computation is based, including materials about the nature and
extent of injuries suffered”). Sometimes, litigants might not
know, at the outset of the case, the precise amount of damages
they intend to seek at trial, and may need to fine-tune their
damages claims through discovery or the assistance of an expert.
See id. R. 26 advisory committee’s note (stating that “[n]ot all
information will be known at the outset of a case,” and that
“damages often require additional discovery, and typically are
the subject of expert testimony”). But litigants must “make a
good faith attempt to compute damages to the extent it is
possible to do so and must in any event provide all discoverable
information on the subject, including materials related to the
nature and extent of the damages.” Id. Such information is
important because, “[a]mong other things, it is a critical factor in
determining proportionality.” Id. At a minimum, a litigant’s
initial disclosures must include “the fact of damages,” as well as
the litigant’s “method and computation for damages.” See
Keystone Ins. Agency, LLC v. Inside Ins., LLC, 2019 UT 20, ¶ 17, 445
P.3d 434 (quotation simplified).
¶42 In her initial disclosures, Stephanie did not set forth any
categories of potential damage, or offer any methodology or
formula for computing damages. Instead, her damages
disclosure, in its entirety, stated as follows:
20180585-CA 20 2019 UT App 209Chard v. Chard
Plaintiffs have not yet calculated their damages.
Plaintiffs reserve the right to amend or supplement
their computation of damages after the completion
of all discovery in this case.
This is unquestionably insufficient. A person reading that
damages disclosure would not know whether Stephanie viewed
the case as one worth thousands or many millions of dollars, and
also would not know what types of damages Stephanie intended
to seek, or how she intended to go about computing them. The
district court committed no error in labeling Stephanie’s
damages disclosure insufficient.
¶43 Rule 26(d)(4) of the Utah Rules of Civil Procedure
prescribes the remedy in cases where a litigant’s disclosure is
insufficient: “If a party fails to disclose or to supplement timely a
disclosure . . . , that party may not use the undisclosed witness,
document or material at any hearing or trial unless the failure is
harmless or the party shows good cause for the failure.” The
district court, applying this provision, excluded all of
Stephanie’s damages evidence as untimely disclosed, and
therefore concluded that all of her causes of action—including
her claim for unjust enrichment—should be dismissed for
(among other reasons) lack of damages evidence.
¶44 Stephanie assails this ruling, at least as it pertains to her
unjust enrichment claim, by asserting that her failure to serve
adequate damages disclosures was harmless here, because
(a) she explained, in her complaint, what the basis for her unjust
enrichment claim was, and (b) she disclosed to Kent, during
discovery, the simple invoices on which her unjust enrichment
damages were based. She asserts that no “calculations” were
involved in assessing her damages with regard to this claim,
because she has only ever sought recovery of the amount on the
face of the invoices that she sent to Kent originally, and disclosed
to him again during discovery in the lawsuit. She points out that
20180585-CA 21 2019 UT App 209Chard v. Chard
Kent was fully able to conduct discovery, at least on the theory
of damages she was advancing in connection with her unjust
enrichment claim. In short, she argues that, “even assuming that
it was appropriate to exclude [her] more complicated damage
theories” as a sanction for her improper disclosure, it was
nevertheless an abuse of discretion to “exclude the simple ones.”
¶45 We agree. The key question in determining the existence
of harmlessness under this rule is whether a plaintiff’s failure to
disclose its categories and methods of computing damages
impaired the defense’s ability to “properly build a defense
against the damages claimed.” Keystone, 2019 UT 20, ¶ 20. Our
supreme court has identified several factors relevant to the
question of harmlessness, including whether the defense was
able to adequately (1) question witnesses, (2) determine the
case’s tier status under the applicable rules of civil procedure,
(3) understand the nature and quantity of the plaintiff’s claimed
damages, and (4) understand the scope and cost of the litigation
pursued. See id. ¶¶ 19–20. While Kent and Landlords may have
been prejudiced by Stephanie’s inadequate damages disclosures
with regard to some of Stephanie’s other, more complex causes
of action, we cannot see how Kent or Landlords were harmed by
Stephanie’s inadequate damages disclosures related to her
unjust enrichment claim. Kent and Landlords knew, from the
outset, that at least part of this claim was about work Stephanie
claimed to have performed for Landlords without remuneration,
and they had in their possession the invoices that Stephanie was
using to support and quantify her claim.
¶46 Because we affirm the dismissal of all of Stephanie’s other
claims on separate grounds, we need not consider here whether
the district court’s order excluding Stephanie’s damages
evidence with regard to those other claims was proper. Perhaps
it was, given the complex nature of some of Stephanie’s
undisclosed damages theories regarding some of those other
claims. But Stephanie’s claim for unjust enrichment based on
20180585-CA 22 2019 UT App 209Chard v. Chard
services she provided to Landlords was straightforward and
clear: she sought recovery for unpaid work she claimed to have
performed on their behalf, which work was the subject of
invoices she had sent to Landlords and produced in discovery.
With regard to this single claim, we conclude that Stephanie’s
inadequate damages disclosures visited no harm upon Kent or
Landlords, and we therefore reverse the district court’s order
excluding Stephanie’s damages evidence with regard to her
unjust enrichment claim based on services she provided to
Landlords, as well as the court’s related order dismissing that
claim for lack of damages evidence, and remand for further
proceedings on that claim.
II. Kent’s Cross-Appeal
A. Kent’s Damages Disclosures
¶47 Kent’s initial damages disclosures were no better than
Stephanie’s. In those disclosures, Kent stated simply that
“Defendants have not yet calculated their damages,” and that
they “reserve the right to supplement this response.” The district
court correctly recognized the inadequacy of those disclosures,
and issued an order excluding Kent’s damages evidence, an
order that resulted in the dismissal of some of Kent’s
counterclaims. Kent appeals the order excluding his damages
evidence, and therefore dismissing some of his counterclaims,
asserting that he atoned for his disclosure error by producing to
Stephanie, during the discovery phase of the case and five
months before discovery ended, damages calculations that were
not deficient, as well as all necessary supporting documentation.
In short, Kent contends that, even if his initial disclosures were
inadequate, his discovery responses rendered that initial
inadequacy harmless.
¶48 We agree. While his initial damages disclosures were
inadequate, Kent’s discovery responses were provided in March
20180585-CA 23 2019 UT App 209Chard v. Chard
2017, some five months prior to the end of fact discovery, and
more than four months before Kent’s second and third
depositions. Those responses included detailed information
about Kent’s theories of damages, computation methodologies,
and even Kent’s best estimates of the amounts of damages he
would be claiming at trial. Because Kent provided Stephanie
with damages information in his discovery responses, and
because those responses were provided relatively early during
the discovery period, Kent’s failure to provide adequate initial
disclosures with regard to damages was rendered effectively
harmless. Based on Kent’s response to Stephanie’s
interrogatories, Stephanie had all of the information she needed
to properly conduct discovery on Kent’s claims; indeed, she did
conduct such discovery, specifically marking Kent’s discovery
responses as a deposition exhibit and asking Kent about them. 10
¶49 Accordingly, we reverse the district court’s exclusion of
Kent’s damages evidence, as well as the district court’s related
order dismissing some of Kent’s counterclaims for lack of
proof. 11 None of Kent’s counterclaims should have been
dismissed on this basis.
10. Stephanie laments the fact that, in a roundabout way, she is
being punished for propounding the damages interrogatories
which prompted Kent to finally disclose the categories and
computation methodologies of his damages. In the end,
however, it does not matter what prompts a party to supplement
inadequate disclosures; what matters is that a satisfactory
supplementation occurred. Kent’s discovery responses, in this
case, constitute a sufficient supplementation.
11. One of the claims dismissed by the district court for lack of
damages evidence, and reinstated here, is Kent’s claim for
negligent infliction of emotional distress (NIED); we reinstate
(continued…)
20180585-CA 24 2019 UT App 209Chard v. Chard
B. Wrongful Lien
¶50 The district court alternatively dismissed Kent’s wrongful
lien counterclaim on its merits, in addition to dismissing it for
lack of damages evidence. Kent takes issue with the district
court’s order dismissing this claim on its merits, and we find
Kent’s arguments persuasive.
¶51 After filing suit against Kent and Landlords in June 2016,
Stephanie also recorded several lis pendens against Landlords’
properties. In the lis pendens, Stephanie gave notice that she had
filed a lawsuit against Landlords seeking “to reform the lease
agreement associated with the following real property,” and
then gave a legal description. As noted above, the purported
reformation she desired to make to the leases had to do with the
amount of the monthly rental payment; it did not have to do
with any dispute about the portion of the property TTR had the
right to occupy.
¶52 Under Utah’s lis pendens statute, “any party to an action
filed in . . . a Utah district court that affects the title to, or the
right of possession of, real property may file a notice of
pendency of action.” Utah Code Ann. § 78B-6-1303(1)(a)
(LexisNexis 2018). Interpreting this language, we have
emphasized that “a lis pendens may only be filed in connection
with an action (1) affecting the title to real property, or
(2) affecting the right of possession of real property.” Winters v.
Schulman, 1999 UT App 119, ¶ 21, 977 P.2d 1218 (quotation
simplified). “Utah law does not allow for the filing of a lis
(…continued)
that claim simply because we discern error in the district court’s
order of dismissal, and Stephanie does not ask us to—and we do
not—affirm on alternative grounds. In any event, we make no
comment on the merits of Kent’s NIED claim.
20180585-CA 25 2019 UT App 209Chard v. Chard
pendens in cases seeking a money judgment.” Id. ¶ 22 (quotation
simplified); see also Hamilton v. Smith, 808 F.2d 36, 37 (10th Cir.
1986) (per curiam) (“[U]nder Utah law a notice of lis pendens
may not be filed in anticipation of a money judgment.”); Bank of
the West v. Whitney, 301 F. Supp. 3d 1077, 1080 (D. Utah 2018)
(concluding that a lis pendens filed against a judgment debtor’s
property was unlawful, because the judgment creditor was not
asserting any interest in the debtor’s real property other than
suggesting its use to satisfy the judgment). Accordingly, it is
unlawful to file a lis pendens that does not affect title to or the
right to possess the property in question.
¶53 In this case, the lawsuit of which Stephanie was giving
notice by recording her lis pendens did not include claims
affecting title to or the right to possess Landlords’ real property.
The only manner in which Stephanie wanted to “reform the
lease” was by changing the amount of monthly rent due
thereunder. Even if Stephanie had been entirely successful in her
lawsuit, and won a judgment reforming the leases to require a
lower monthly rental payment, neither title nor her right to
possess the property would have changed. TTR would still have
occupied exactly the same square footage as it had before, and
Landlords would still have owned the real property itself. The
only thing that would have changed was the amount of monthly
rent that TTR was paying to Landlords.
¶54 While we can possibly envision situations in which a
tenant might be able to lawfully record a lis pendens on his
landlord’s property, our lis pendens statute does not permit a
tenant whose only dispute with its landlord concerns the
amount of the monthly rent payment to file a lis pendens against
the landlord’s property. Such a dispute affects neither title to nor
the right to possess the property.
¶55 Accordingly, the district court erred in determining that
Stephanie’s claimed interest in Landlords’ property was “a
20180585-CA 26 2019 UT App 209Chard v. Chard
type[] of interest for which Lis Pendens can be filed.” We
therefore reverse the court’s dismissal of Kent’s wrongful lien
claim, and remand that claim for further proceedings, including
consideration of whether all of the requirements of the wrongful
lis pendens statute are met. See Utah Code Ann. § 78B-6-1304.5
(LexisNexis 2018) (“A person is liable to the record owner of real
property . . . that is damaged by the maintenance of a notice of
pendency . . . if the person records or causes to be recorded a
notice of pendency against the real property, knowing or having
reason to know that: . . . the notice is groundless . . . .”); see also
Commercial Inv. Corp. v. Siggard, 936 P.2d 1105, 1111 (Utah Ct.
App. 1997) (“A claim of interest in real property is groundless if
it has no arguable basis or is not supported by any credible
evidence.” (quotation simplified)).
C. Intentional Infliction of Emotional Distress
¶56 The district court also dismissed Kent’s counterclaim for
intentional infliction of emotional distress (IIED) on its merits,
determining that the conduct Kent described as the basis for his
claim was not, as a matter of law, sufficiently outrageous to meet
the requirements of the cause of action. Kent appeals this
determination, and we conclude that the district court correctly
dismissed this claim on its merits.
¶57 In Utah, “a claim for IIED is actionable if: (i) the
defendant’s conduct is outrageous and intolerable; (ii) the
defendant intends to cause emotional distress; (iii) the plaintiff
suffers severe emotional distress; and (iv) the defendant’s
conduct proximately causes the plaintiff’s emotional distress.”
Wilson v. Sanders, 2019 UT App 126, ¶ 18, 447 P.3d 1240(quotation simplified), petition for cert. filed, Sept. 18, 2019 (No.
20190781). However, “it is for the court to determine, in the first
instance, whether the defendant’s conduct may reasonably be
regarded as so extreme and outrageous as to permit recovery.”
Schuurman v. Shingleton, 2001 UT 52, ¶ 23, 26 P.3d 227 (quotation
20180585-CA 27 2019 UT App 209Chard v. Chard
simplified). “Conduct is not necessarily outrageous merely
because it is tortious, injurious, or malicious, or because it would
give rise to punitive damages, or because it is illegal.” Bennett v.
Jones, Waldo, Holbrook & McDonough, 2003 UT 9, ¶ 64, 70 P.3d 17(quotation simplified). “To be considered outrageous, the
conduct must evoke outrage or revulsion; it must be more than
unreasonable, unkind, or unfair.” Id. (quotation simplified).
Indeed, in order to prevail on a claim for IIED, a plaintiff must
be able to prove that the defendant engaged in “extraordinarily
vile conduct, conduct that is atrocious, and utterly intolerable in
a civilized community.” Retherford v. AT&T Commc’ns, 844 P.2d
949, 977 n.19 (Utah 1992) (quotation simplified).
¶58 Generally, sharp negotiation tactics, including threats of
litigation, do not constitute the sort of behavior that our law
considers sufficiently “outrageous” to sustain a cause of action
for IIED. See Bennett, 2003 UT 9, ¶ 66 (“An allegation of improper
filing of a lawsuit or the use of legal process against an
individual is not redressable by a cause of action for [IIED].”).
Moreover, “an ordinary business dispute should not be the
subject of legally recognizable claims” for IIED. See 86 C.J.S. Torts
§ 57 (2019); see also Mavromatis v. Lou-Mar, Inc., 632 So. 2d 828,
835 (La. Ct. App. 1994) (holding that a dispute over control of a
family-owned business—including allegations that one party
had failed “to properly value the . . . children’s stock,” had
refused “to allow them proper access to corporate books and
records,” and had attempted “to reduce the purchase price for
their stock”—“describe[d] a perfectly ordinary business
dispute,” and that “[s]uch disputes are an everyday aspect of
commercial life and should not be the subject of legally
recognizable claims” for IIED).
¶59 In our view, even viewing the facts of this case in the light
most favorable to Kent, Stephanie’s aggressive actions in
attempting to apply “pressure” on Kent in order to gain control
of the family restaurant business are not sufficiently outrageous
20180585-CA 28 2019 UT App 209Chard v. Chard
to support a claim for IIED. We acknowledge that Kent does
appear to have actually suffered emotional distress, at least in
part as a result of the overall dispute with Stephanie; indeed, he
attempted suicide and spent time in the hospital. But even if
Stephanie’s conduct, viewed in the light most favorable to Kent,
was aggressive and not particularly reasonable, the district court
got it right when it held that Stephanie’s conduct “does not, in
itself, rise to the level of extreme and outrageous conduct so as to
permit recovery” by Kent on a claim for IIED. Delivering
strongly worded demand letters (even to people who are
hospitalized), making negotiation demands that the other side
views as unreasonable, and making corporate decisions such as
terminating board members and withholding rent payments are
not—at least not on this record—the type of “extraordinarily
vile” actions that the law views as “utterly intolerable in a
civilized community.” See Retherford, 844 P.2d at 977 n.19.
¶60 Accordingly, we affirm the district court’s order
dismissing Kent’s IIED claim. 12
D. Attorney-Client Privilege Issues
¶61 Finally, Kent takes issue with the district court’s apparent
ruling that Stephanie had not, after all, completely waived the
attorney-client privilege with regard to communications she had
12. Kent also appeals the dismissal of his claim for breach of
fiduciary duty, but does so only conditionally, asserting that his
claim for breach of fiduciary duty “should be revived if
Stephanie’s breach of fiduciary duty claim is revived.” Because,
as stated above, we are not allowing Stephanie to revive her
claim for breach of fiduciary duty due to the stipulation agreed
upon in open court, Kent’s conditional appeal is rendered moot.
Both sides agreed to dismiss their respective claims for breach of
fiduciary duty, and both sides should be held to that agreement.
20180585-CA 29 2019 UT App 209Chard v. Chard
with the two attorneys at New Firm whom Stephanie disclosed
as relevant witnesses in her initial disclosures, and that Kent
would not be allowed to use those communications at trial. 13
¶62 The attorney-client privilege operates as a way “to
encourage candor between attorney and client and to promote
the best possible representation of the client.” Terry v. Bacon,
2011 UT App 432, ¶ 14, 269 P.3d 188 (quotation simplified); see
also Utah Code Ann. § 78B-1-137(2) (LexisNexis Supp. 2019) (“An
attorney cannot, without the consent of the client, be examined
as to any communication made by the client to the attorney or
any advice given regarding the communication in the course of
the professional employment.”); Utah R. Evid. 504(b)(1) (stating
that “[a] client has a privilege to refuse to disclose . . .
confidential communications” with their counsel if those
communications “were made for the purpose . . . of obtaining or
facilitating the rendition of legal services to the client”).
¶63 However, a client may waive the privilege if he or she
“discloses or consents to the disclosure of any significant part of
the matter or communication.” Utah R. Evid. 510(a)(1). One
common way to waive the attorney-client privilege is to place
“at issue” in litigation matters that implicate attorney-client
communications. See Terry, 2011 UT App 432, ¶ 16 (“When a
13. As alluded to above, we are not sure that the district court
actually ruled that Stephanie had not waived the privilege, given
the last sentence of its second privilege ruling stating that “[t]he
information from [New Firm] attorneys has been waived by both
sides.” But Kent interprets the district court’s ruling as one
recognizing the existence of the privilege—at least insofar as
Stephanie’s own issues are concerned, and at least insofar as
regards Kent’s ability to use the privileged information at trial—
and in order to clear up any confusion on remand, we proceed to
address the district court’s ruling as Kent interprets it.
20180585-CA 30 2019 UT App 209Chard v. Chard
party places privileged matters at issue in the litigation, that
party implicitly consents to disclosure of those matters.”
(quotation simplified)); see also Krahenbuhl v. The Cottle Firm, 2018
UT App 138, ¶ 9, 427 P.3d 1216 (“The ‘at issue’ waiver is
triggered when the party seeking application of the attorney-
client privilege places attorney-client communications at the
heart of a case” (quotation simplified)); 2 Paul R. Rice, Attorney-
Client Privilege in the United States § 9:55, at 488–89 (5th ed. 2018)
(noting that, when a party places at issue matters requiring the
disclosure of attorney-client communications, the privilege is
waived in order to avoid “permitting the privilege holder from
placing the opposing party in an untenable position by injecting
an issue into the litigation and then hiding behind the privilege
to preclude its fair and complete resolution”).
¶64 Early in the case, in rejecting the two attorneys’ objections
to Kent’s subpoenas, the district court ruled that Stephanie
waived the attorney-client privilege, at least as to matters raised
in the pleadings, when she listed her attorneys as witnesses
whom she expected to call in her case-in-chief. Indeed, in her
initial disclosures, Stephanie broadly announced that both of the
listed attorneys had general “knowledge concerning matters in
the pleadings,” and stated in particular that one of them had
specific knowledge about the damages caused to TTR, and the
other had specific knowledge about “Ennenga’s breaches of duty
to TTR and Stephanie.” Although the court’s initial discovery
ruling regarding the scope of the waiver was unqualified, in its
later ruling on Stephanie’s motion in limine the court
determined that the waiver was limited, and did not necessarily
apply during the trial phase of the case.
¶65 In defending the district court’s motion in limine ruling
preventing Kent from using the privileged information at trial,
Stephanie argues that the district court’s original waiver ruling
was incorrect, and that “[n]othing in [her] disclosure suggested a
waiver of the attorney-client privilege.” But Stephanie
20180585-CA 31 2019 UT App 209Chard v. Chard
misunderstands the effect of her broad witness disclosures. In
this case, those disclosures constituted a waiver of her attorney-
client privilege as to communications with the two listed
lawyers. When Stephanie identified her two attorneys as
witnesses whom she planned to call at trial to testify about
“matters in the pleadings,” she placed the attorneys’
knowledge—about all matters raised in the pleadings—at issue
in the litigation. See Sempra Energy v. Marsh USA, Inc., No. CV
07–5431 SJO (SSx), 2008 WL 11338481, at *2 (C.D. Cal. July 25,
2008) (“If a party indicates that it intends to call its attorneys as
witnesses, the attorney-client privilege may be waived.”); Aspex
Eyewear, Inc. v. E’Lite Optik, Inc., 276 F. Supp. 2d 1084, 1094 (D.
Nev. 2003) (“[O]nce a client decides to call the attorneys as
witnesses, the [privilege] must give way to full disclosure on any
issue to which they will testify.”); Rutgard v. Haynes, 185 F.R.D.
596, 601 (S.D. Cal. 1999) (“Plaintiff has waived the attorney-client
privilege between himself and [his lawyer] by indicating the
intent to use [his lawyer] as a witness.”); cf. State v. Johnson, 2008
UT App 5, ¶ 22, 178 P.3d 915 (holding that a defendant who
stipulated to the admission of a witness statement from one of
his attorneys had waived the privilege).
¶66 Our conclusion is driven, in part, by the breadth of
Stephanie’s disclosure. It is possible, of course, to introduce an
attorney’s testimony for only one discrete purpose—for instance,
to bolster an advice of counsel defense, or to have an attorney
rebut a claim that a suit was brought in bad faith. See, e.g., Aspex
Eyewear, 276 F. Supp. 2d at 1094 (noting that the waiver applies
to “any issue to which [the attorneys] will testify”); Handgards,
Inc. v. Johnson & Johnson, 413 F. Supp. 926, 929 (N.D. Cal. 1976)
(holding that defendants waived attorney-client privilege as to
the reasons why lawsuits were brought when they called their
own attorneys as witnesses to demonstrate that the lawsuits
were initiated in good faith pursuant to competent legal advice).
But Stephanie designated her attorneys as witnesses competent
to testify about “matters in the pleadings,” and did not limit her
20180585-CA 32 2019 UT App 209Chard v. Chard
disclosure to any particular issue or issues. Based on this broad
disclosure, Kent was entitled to conduct discovery, including by
subpoena and deposition, into knowledge the attorneys might
have regarding the issues raised in the pleadings, including
discovery into communications that might otherwise have been
privileged absent Stephanie’s disclosure. Thus, in our view, the
district court’s initial discovery ruling—sustaining Kent’s
Statement of Discovery Issues and allowing discovery along
these lines—was correct.
¶67 But this does not end our analysis. The basis for
the district court’s motion in limine ruling was its apparent
belief that Stephanie’s waiver of privilege for discovery purposes
did not necessarily carry over into the trial phase of
the litigation. In this, the district court was incorrect. As Kent
points out, once the attorney-client privilege has been
waived and information is disclosed pursuant to that waiver, it
is no longer possible to undo that waiver and reassert the
privilege. See United States v. Suarez, 820 F.2d 1158, 1160 (11th
Cir. 1987) (“[I]t has long been held that once waived, the
attorney-client privilege cannot be reasserted.”); see also
Genentech, Inc. v. United States Int’l Trade Comm’n, 122 F.3d 1409,
1416 (Fed. Cir. 1997) (“Once the attorney-client privilege has
been waived, the privilege is generally lost for all purposes and
in all forums.”); Patrick v. City of Chicago, 154 F. Supp. 3d 705, 711
(N.D. Ill. 2015) (“[I]nformation once disclosed to a party
opponent waives the attorney-client privilege as to future
proceedings.”); 2 Paul R. Rice, Attorney-Client Privilege in the
United States § 9:23, at 86 (5th ed. 2018) (“Once there has been a
waiver and the confidentiality upon which the privilege is
premised has been relinquished, the privilege cannot be revived
either in subsequent stages of the action in which the waiver
occurred or in future actions.”). Thus, Stephanie’s efforts later in
the litigation—after her attorneys’ documents had been
produced and the attorneys had been deposed—to withdraw her
previous waiver of the privilege and to attempt to prevent Kent
20180585-CA 33 2019 UT App 209Chard v. Chard
from using the disclosed information at trial, was improper.
Once Stephanie waived the privilege, it remained waived for
the entirety of the case; the district court was incorrect to the
extent it concluded that a litigant can waive the privilege for
purposes of discovery, and then take back that waiver for
purposes of trial. While a different question may have been
presented had Stephanie amended her disclosures and taken the
attorneys off the witness list before discovery had even begun,
Stephanie should not have been allowed to reconsider her
waiver more than a year later, after the completion of discovery
and after Kent had already learned potentially privileged
information.
¶68 This is not to say that Stephanie’s waiver was
universal; certainly, disclosing the attorneys as witnesses
with regard to matters raised in the pleadings does not
necessarily effect a waiver as to matters not raised in the
pleadings. And this is not to say that all of the privileged matters
subject to the waiver will be admissible in the litigation to follow
upon remand; there remain only three claims to be litigated
upon remand, and much of the privileged information to which
the waiver applies may not be relevant to the remaining claims,
and other evidentiary objections may be warranted with regard
to particular documents or communications.
¶69 But these will be issues for the district court to resolve on
remand. It suffices here to clarify that Stephanie waived the
attorney-client privilege with regard to “matters raised in the
pleadings” as concerns the two listed attorneys, and that waiver
applies just as much to the trial phase of the case as it did to the
discovery phase of the case. Therefore, the attorney-client
privilege presents no bar to either side’s attempt to utilize, in
further proceedings on remand, communications between
Stephanie and the two listed lawyers that concern matters raised
in the pleadings.
20180585-CA 34 2019 UT App 209Chard v. Chard
CONCLUSION
¶70 The district court correctly dismissed most of the claims
brought by both sides in this lawsuit. In particular, we affirm the
district court’s dismissal of Stephanie’s claims for legal
malpractice, fraud, and breach of fiduciary duty, and Kent’s
claims for breach of fiduciary duty and IIED. However, we
conclude that each side has at least one claim that should not
have been dismissed on the motions filed. Specifically, we
reverse the district court’s dismissal of Stephanie’s claim for
unjust enrichment and Kent’s claims for wrongful lien and
NIED, and we remand for further proceedings on those claims.
And in those further proceedings, the attorney-client privilege
will present no bar to either side’s attempt to utilize
communications, concerning matters raised in the pleadings,
between Stephanie and the two attorneys she listed as witnesses
in her initial disclosures.
20180585-CA 35 2019 UT App 209