1600 Barberry Lane 8 v. Cottonwood Residential

2021 UT 15IN THE
SUPREME COURT OF THE STATE OF UTAH
1600 BARBERRY LANE 8 LLC, 1600 BARBERRY LANE 9 LLC,
Appellants,
v.
COTTONWOOD RESIDENTIAL O.P. LP, COTTONWOOD CAPITAL
PROPERTY MANAGEMENT II, LLC, COTTONWOOD CAPITAL
MANAGEMENT, INC., DANIEL SHAEFFER,
Appellees.
No. 20181020
Heard September 16, 2020
Filed May 27, 2021
On Direct Appeal
Third District, Salt Lake
The Honorable Robert P. Faust
No. 170904221
Attorneys:
Andrew G. Deiss, Salt Lake City, Kenneth J. Catanzarite, Eric V.
Anderton, Anaheim, CA, for appellants
Matthew L. Lalli, Dillon P. Olson, Salt Lake City, Henry H. Oh,
Los Angeles, CA, for appellees
JUSTICE PETERSEN authored the opinion of the Court, in which
CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE LEE,
JUSTICE HIMONAS, and JUSTICE PEARCE joined.
JUSTICE PETERSEN, opinion of the Court:
INTRODUCTION
¶1 Appellants sued under a contract with a choice of law
provision, which required contractual disputes to be governed by
Georgia law. Appellees prevailed on a motion to dismiss in the
district court, and the court awarded them attorney fees under a
provision of the contract. Appellants now seek reversal of that
award. The question before us is whether Georgia or Utah law
1600 BARBERRY LANE 8 LLC V. COTTONWOOD RESIDENTIAL O.P. LP
Opinion of the Court
determines the award of contractual attorney fees in this case.
This requires us to address as a threshold question whether a
claim for contractual attorney fees is a substantive matter
governed by the law of the contractually chosen jurisdiction, or a
procedural matter governed by the law of the forum.
¶2 We conclude that a claim for contractual attorney fees is
substantive in nature, governed in this case by Georgia law.
Because Appellants have not shown an error in the district court’s
award of attorney fees under Georgia law, we affirm.
BACKGROUND1
¶3 Appellants 1600 Barberry Lane 8, LLC and 1600 Barberry
Lane 9, LLC (collectively, Barberry) each own a fractional interest
in an apartment complex in Georgia as tenants in common.
Barberry entered into a Property Management Agreement (PMA)
with a company called Daymark Residential and Asset
Management and its “control person, principal, director and
officer,” Todd Mikles (collectively, Daymark). In the PMA,
Barberry agreed to pay Daymark for asset and property
management services. The PMA contains a choice of law
provision, which provides that the agreement “is governed by
and construed in accordance with the internal laws of the State
where the Property is located.” In this case, that state is Georgia.
¶4 A few years after Barberry obtained its interest in the
property, Mikles and his affiliates purchased Daymark. They
recommended to Barberry that it should allow another
company—Appellees (collectively, Cottonwood)2—to take over
asset and property management for the apartment complex.
Barberry agreed.
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1 Because the underlying action was decided on a motion to
dismiss, “we accept the factual allegations in the complaint as true
and interpret those facts, and all reasonable inferences drawn
therefrom, in a light most favorable to the plaintiff as the
nonmoving party” and “recite the facts accordingly.” Olguin v.
Anderton, 2019 UT 73, ¶ 4 n.3, 456 P.3d 760 (citation omitted).
2 Appellees include several related entities, which are the
subject of various, specific allegations in the complaint. However,
because those specifics are not relevant to the issue before us, we
refer to Appellees collectively as Cottonwood.
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¶5 After several years of this arrangement, Barberry became
dissatisfied with the fees it had been paying and filed suit in
California. But the suit was dismissed for lack of personal
jurisdiction.
¶6 Barberry then sued Cottonwood in Utah. The thrust of its
complaint was that unbeknownst to Barberry, Daymark secretly
sold the PMA to Cottonwood for $8 million and, as the assignee of
the PMA, Cottonwood became the property manager under the
agreement. Barberry alleged that Daymark and then Cottonwood
had collected above-market fees and commissions for their
services. And Barberry claimed that in so doing, Cottonwood had
breached the PMA or, in the alternative, interfered with the PMA.
And it asserted Cottonwood had breached a fiduciary duty to
Barberry arising from its role as property manager or, in the
alternative, aided and abetted Daymark’s breach of fiduciary
duty.
¶7 Cottonwood moved to dismiss. It argued, in part, that it
was not liable for breach of contract because it was not a party to
any agreement with Barberry. It asserted that it had not
purchased the PMA and become the property manager, as alleged
by Barberry. Rather, it had entered into a sub-property
management agreement with Daymark, in which Daymark
engaged Cottonwood as a subcontractor to “sub-manage” the
property. And it asserted Barberry was not a party to this sub-
agreement. Accordingly, Cottonwood argued it could not be liable
to Barberry for breach of contract because it had not entered into
any contracts with Barberry. Cottonwood attached a copy of the
sub-property management agreement as an exhibit to its motion.
¶8 The district court granted the motion to dismiss on
multiple alternative grounds. The court agreed with
Cottonwood’s breach of contract argument, concluding that
Cottonwood had entered into the sub-property management
agreement with Daymark and was a “subcontractor” that “sub-
manage[d]” the property. Additionally, the court concluded that
even if Cottonwood was the property manager under the PMA,
Barberry’s allegations did not amount to a violation of the PMA.
With regard to the claims sounding in breach of fiduciary duty,
the court concluded that the PMA did not give rise to any
fiduciary relationship between the parties under Georgia law.
¶9 After prevailing on the motion to dismiss, Cottonwood
filed a motion seeking recovery of its attorney fees. Barberry
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objected to the request for fees and contested the amount
Cottonwood sought. The court held a hearing on the matter.
¶10 Cottonwood argued that it was entitled to fees under the
attorney fee provision of the PMA, which provides:
In any action or proceeding between Property
Manager and the Tenants in Common arising from
or relating to this Agreement or the enforcement or
interpretation hereof, the party prevailing in such
action or proceeding shall be entitled to recover
from the other party all of its reasonable attorneys’
fees and other costs and expenses of the action or
proceeding.
¶11 Barberry opposed the motion, primarily arguing that
Cottonwood was not entitled to fees under the terms of this
provision. First, Barberry argued that Georgia law should govern
the attorney fee provision just as it did the rest of the PMA. And
Barberry asserted that under Georgia law, an attorney fee
provision is interpreted like any other contractual provision—by
reading the language of the agreement. Looking to the terms of
the attorney fee provision, Barberry argued that it applied only in
an “action or proceeding between the Property Manager and the
Tenants in Common.” And it reasoned that because the district
court had concluded Cottonwood was a sub-contractor rather
than the property manager, Cottonwood could not collect its fees
under this provision.
¶12 Cottonwood responded that Utah law should apply to
the provision because a claim for attorney fees presents a
procedural issue and matters of procedure are governed by the
law of the forum state. Under Utah law, Cottonwood argued that
even though it was not the property manager under the PMA, it
was entitled to its attorney fees pursuant to Utah’s Reciprocal Fee
Statute, which permits a prevailing party to recover its fees if the
underlying litigation is brought pursuant to a contract that
permits recovery of attorney fees by at least one of the parties to
the litigation. See UTAH CODE § 78B-5-826; see also Hooban v. Unicity
Int’l, Inc., 2012 UT 40, ¶¶ 28–29, 285 P.3d 766.3
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3 Barberry argued that, even if Utah law applied, Cottonwood
would not be entitled to attorney fees because Utah’s Reciprocal
Fee Statute was inapplicable.
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¶13 Alternatively, Cottonwood argued that even if Georgia
law applied, it should still prevail because Barberry could not take
a position contrary to the allegations in its complaint.4
Cottonwood asserted that since Barberry’s complaint alleged that
Cottonwood had purchased the PMA and, as assignee, become
the property manager under the agreement, Georgia’s judicial
admissions doctrine prevented Barberry from disclaiming that
position.5
¶14 The district court ruled in favor of Cottonwood and
awarded it attorney fees. The court recognized that Utah law is
unsettled as to whether an award of contractual attorney fees is
considered substantive or procedural for purposes of determining
choice of law. But it avoided ruling on the issue because it
determined Cottonwood was entitled to attorney fees under the
law of either jurisdiction. The court concluded that if Utah law
applied, Cottonwood was entitled to its fees under the Reciprocal
Fee Statute. And it determined that if Georgia law applied,
Georgia’s judicial admissions doctrine would prohibit Barberry
from taking a position contrary to the allegation in its complaint
that Cottonwood was the property manager under the PMA.
¶15 Barberry separately appealed both the district court’s
order to dismiss and its order awarding attorney fees. Both cases
were transferred to the court of appeals. But we recalled the
instant appeal involving the attorney fee order.
¶16 In its appeal of the dismissal order in the court of appeals,
Barberry argued that the district court should not have considered
the sub-property management agreement that Cottonwood
attached to its motion to dismiss because the sub-agreement was
not attached to or referenced in the complaint. 1600 Barberry Lane
8 LLC v. Cottonwood Residential OP LP, 2019 UT App 146, ¶ 8 n.5,
449 P.3d 949, cert. denied, 456 P.3d 388 (Utah 2019). The sub-
agreement was the basis of the district court’s finding that
Cottonwood had not been assigned the PMA but was merely
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4 Cottonwood also argued it was entitled to attorney fees as a
third-party beneficiary to the PMA. The district court rejected this
argument, and it is not at issue on appeal.
5 Georgia’s judicial admissions doctrine allows “either party
[to] avail himself or herself of allegations or admissions made in
the pleadings of the other.” GA. CODE ANN. § 24-8-821.
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engaged as a subcontractor to Daymark. And Barberry argued
that before considering the sub-agreement, the district court
should have converted the motion to a motion for summary
judgment and proceeded under Utah Rule of Civil Procedure 56.
Id.
¶17 But the court of appeals affirmed the order of dismissal
without addressing whether the district court’s consideration of
the sub-agreement was improper. Id. It concluded that the district
court’s alternative ground for dismissal—that Barberry’s
allegations did not make out a violation of the PMA, interference
with the PMA, or a breach of fiduciary duty even if they were
true—was a sufficient basis to dismiss the complaint. Id. ¶ 27.
Barberry then petitioned this court for certiorari, which we
denied. 1600 Barberry Lane 8 L [sic] v. Cottonwood Residential, 456
P.3d 388 (Utah 2019).
¶18 Barberry’s appeal regarding the district court’s attorney
fee award is before us. Here, Barberry argues that Cottonwood is
not entitled to attorney fees under the PMA because the
applicable provision in the agreement provides for fees only “[i]n
any action or proceeding between the Property Manager and the
Tenants in Common.” Barberry asserts that because the district
court determined on the merits that Cottonwood was not the
property manager under the PMA, Cottonwood is not entitled to
fees under the clear terms of the PMA.
¶19 Barberry contests the district court’s ruling that, despite
the language of the PMA, Cottonwood is entitled to recover its
fees under both Utah and Georgia law. As an initial matter,
Barberry asserts that Georgia law should apply because a claim
for attorney fees is substantive in nature, and thus should be
governed by the law of the parties’ contractually chosen
jurisdiction. It argues that Utah’s Reciprocal Fee Statute therefore
does not apply to equalize each party’s right to recover fees, and
Georgia has no corollary. Barberry argues in the alternative that if
we decide Utah law does govern the attorney fee question, the
Reciprocal Fee Statute should not apply under the circumstances
here.
¶20 Finally, Barberry argues that even if the district court did
not err in its award of attorney fees, the amount of the award was
unreasonable.
¶21 We exercise jurisdiction under Utah Code section 78A-3-
102(3)(j).
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STANDARDS OF REVIEW
¶22 We must determine which state’s law governs a claim for
contractual attorney fees and whether Cottonwood is entitled to
recover its attorney fees here. These are both questions of law,
which we review for correctness.6 Davis County v. Purdue Pharma,
L.P., 2020 UT 17, ¶ 7, 463 P.3d 619 (stating that “questions of law
are reviewed for correctness”); Valcarce v. Fitzgerald, 961 P.2d 305,
315 (Utah 1998) (noting that whether attorney fees are recoverable
is a question of law reviewed for correctness). We review the
reasonableness of an attorney fee award for abuse of discretion.
Valcarce, 961 P.2d at 316.
ANALYSIS
I. CHOICE OF LAW
¶23 To assess whether the district court was correct in
awarding attorney fees to Cottonwood, we must first determine
which state’s law governs this issue. This requires us to analyze
whether a claim for contractual attorney fees is substantive or
procedural in nature because, in an action based on a contract
with a choice of law provision, substantive matters are governed
by the law of the chosen jurisdiction but matters of procedure are
governed by the law of the forum. Federated Cap. Corp. v. Libby,
2016 UT 41, ¶ 13, 384 P.3d 221; Morris v. Sykes, 624 P.2d 681, 684
n.3 (Utah 1981). So here, Utah law governs matters of procedure
and we apply Georgia law to substantive matters.
¶24 “Substantive law is defined as the positive law which
creates, defines and regulates the rights and duties of the parties
and which may give rise to a cause for action.” Petty v. Clark, 192
P.2d 589, 593 (Utah 1948). Conversely, “procedural law merely
‘pertains to and prescribes the practice and procedure or the legal
machinery by which the substantive law is determined or made
effective.’” Brown & Root Indus. Serv. v. Indus. Comm’n of Utah, 947
P.2d 671, 675 (Utah 1997) (citation omitted).
¶25 To determine whether contractual attorney fees are
substantive or procedural matters, we apply Utah’s choice of law
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6 Because standards of review are “matter[s] of procedural,
rather than substantive, law,” Utah law controls the standard of
review of the issues on appeal. Waddoups v. Amalgamated Sugar
Co., 2002 UT 69, ¶ 20, 54 P.3d 1054.
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rules. See Waddoups v. Amalgamated Sugar Co., 2002 UT 69, ¶ 14, 54
P.3d 1054 (“Since Utah is the forum state, Utah’s choice of law
rules determine the outcome of the conflict.” (citation omitted));
see also Restatement (Second) of Conflict of Laws § 122 (1971)
(noting that the forum state applies its own rules to determine
“how litigation shall be conducted”).
¶26 This is an issue of first impression in Utah, and we find it
helpful to survey the reasoning employed in other jurisdictions.
See, e.g., Davencourt at Pilgrims Landing Homeowners Ass’n v.
Davencourt at Pilgrims Landing, LC, 2009 UT 65, ¶¶ 49, 52–56, 221
P.3d 234 (surveying other jurisdictions’ treatment of a cause of
action previously unrecognized in Utah). A review of other
jurisdictions reveals that this is not a settled issue. See Boswell v.
RFD-TV the Theater, LLC, 498 S.W.3d 550, 557–59 (Tenn. Ct. App.
2016) (collecting cases that demonstrate the various ways other
jurisdictions have resolved this issue).
¶27 A few jurisdictions have found an award of contractual
attorney fees to be procedural and thus governed by the law of
the forum state. For example, the Nebraska Supreme Court held
that, because an award of contractual attorney fees is a remedy, it
must be considered procedural. Neb. Nutrients, Inc. v. Shepherd, 626
N.W.2d 472, 518 (Neb. 2001), abrogated in part on other grounds by
Sutton v. Killham, 825 N.W.2d 188 (Neb. 2013). Likewise, the New
Jersey Supreme Court, relying on prior case law that found the
issue of attorney fees “a matter of practice and procedure,”
determined that even where the parties contracted for attorney
fees, “the award . . . is a procedural rather than a substantive law
issue.” N. Bergen Rex Transp., Inc. v. Trailer Leasing Co. Div. of Keller
Sys, Inc., 730 A.2d 843, 848 (N.J. 1999).
¶28 Other courts have found the issue of contractual attorney
fees to be substantive in nature because an attorney fee award is a
“substantive right[] created by the contract.” PVI, Inc. v.
Ratiopharm GmbH, 253 F.3d 320, 329 (8th Cir. 2001) (applying
Missouri law). In Oregon, because a claim for attorney fees “must
be pled and proved” and because the fees “are not merely costs
incidental to judicial administration,” an award of contractual
attorney fees is considered a substantive matter. Seattle-First Nat’l
Bank v. Schriber, 625 P.2d 1370, 1373 (Or. Ct. App. 1981) (citing
Gorman v. Boyer, 547 P.2d 123 (Or. 1976)). Likewise, the Texas
Court of Appeals noted that a “claim for attorneys’ fees for breach
of contract is not an independent cause of action,” but is instead
“part of [a] substantive claim for breach of contract.” Midwest
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Med. Supply Co., LLC v. Wingert, 317 S.W.3d 530, 537 (Tex. App.
2010). In so concluding, the court reasoned, “Because the ‘award
of attorney’s fees is inextricably intertwined with the substantive
issue of contractual liability—an issue that is [i]ndisputably
governed by the choice-of-law provision,’ . . . the award of
attorneys’ fees [i]s a substantive contractual issue governed by the
laws chosen by the parties.” Id. (citation omitted); see also Man
Indus. (India), Ltd. v. Midcontinent Express Pipeline, LLC, 407 S.W.3d
342, 353–54 (Tex. App. 2013) (recognizing that attorney fees for
breach of contract are substantive but determining a discretionary
attorney fee award under a statute to be procedural).
¶29 We find persuasive the reasoning of courts holding that
an award of contractual attorney fees is substantive in nature. In
Boswell, the Tennessee Court of Appeals held that contractual
attorney fees presented a substantive issue for choice of law
purposes. 498 S.W.3d at 560. After surveying the state of the law
in other jurisdictions, the court reasoned that “[c]ontracts
providing for attorney’s fees impose a contractual liability that
one enforces as a matter of substantive right. Rules regarding the
recovery of contractual attorney’s fees define the parties’ rights
and obligations.” Id. So the court concluded that “a state’s rules
regarding the recovery of contractual attorney’s fees are
substantive rules governing the substantive rights of the parties.”
Id.¶30 We take a similar view. As previously discussed,
substantive law is “the positive law which creates, defines and
regulates the rights and duties of the parties and which may give
rise to a cause for action.” Petty, 192 P.2d at 593. An attorney fee
provision in a contract creates the right to seek attorney fees and
defines who may seek attorney fees under the contract. And a
state’s rules about the recovery of contractual attorney fees
regulates the substantive rights of the parties. Accordingly, we
hold that a claim for contractual attorney fees presents a
substantive issue for purposes of determining choice of law.7
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7 We note that the parties framed this as a categorical
question—in other words, whether the award of attorney fees in
general is a procedural or substantive matter. And we
acknowledge that some courts have addressed the issue in this
way. See, e.g., Alaska Rent-A-Car, Inc. v. Avis Budget Group, Inc., 738
F.3d 960, 974 (9th Cir. 2013) (forecasting that the Alaska Supreme
(continued . . .)
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¶31 Here, the attorney fee provision in the PMA was “part
and parcel” of Barberry’s original claim for breach of contract, so
it “should be governed by the choice-of-law provision in that
same [c]ontract.” See Boswell, 498 S.W.3d at 560. Thus, because the
parties contracted to have Georgia law govern the PMA, we must
apply Georgia law to determine whether the district court erred in
awarding Cottonwood attorney fees.
II. THE DISTRICT COURT’S ATTORNEY FEE ORDER
¶32 The district court concluded that Cottonwood was
entitled to attorney fees under either Georgia or Utah law. As we
have determined that this is a substantive issue, we apply only
Georgia law to determine whether the district court’s ruling was
correct. See Federated Cap. Corp. v. Libby, 2016 UT 41, ¶ 13, 384 P.3d
221.
¶33 In Georgia, “in the absence of a controlling statute, a
party’s entitlement to attorney fees under a contractual provision
is determined by the usual rules of contract interpretation.”
Benchmark Builders, Inc. v. Schultz, 711 S.E.2d 639, 640 (Ga. 2011)
(citation omitted). And “[w]here the terms of a written contract
are clear and unambiguous, the court will look to the contract
Court would hold that, in a choice of law action, attorney fees
would be considered procedural in Alaska); Sentinel Indus.
Contracting Corp. v. Kimmins Indus. Serv. Corp., 743 So. 2d 954, 960
(Miss. 1999) (“In Mississippi, the law of the forum applies to all
procedural and remedial issues. That includes attorneys’ fees
. . . .” (citations omitted)); Smithco Eng’g, Inc. v. Int’l Fabricators,
Inc., 775 P.2d 1011, 1018 (Wyo. 1989) (noting that, in a choice of
law action, because Oklahoma’s attorney fee statute is located in
Oklahoma’s Civil Procedure Code, an award of attorney fees is
procedural). But we decline to paint with such a broad brush. An
award of attorney fees may be procedural in some contexts, see,
e.g., UTAH R. CIV. P. 11(c) (providing for an award of attorney fees
alongside rule 11 sanctions in certain circumstances), and
substantive in others, see, e.g., Boswell v. RFD-TV The Theater, 498
S.W.3d 550, 559 (Tenn. Ct. App. 2016) (“It is not necessary for
purposes of this appeal to broadly classify all types of claims for
attorney’s fees, and we do not purport to do so.”). Recognizing
this, we clarify that our analysis here is confined to contractual
attorney fees.
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alone to . . . find the intention of the parties.” Health Serv. Ctrs., Inc.
v. Boddy, 359 S.E.2d 659, 661 (Ga. 1987).
¶34 Accordingly, we interpret the attorney fee provision as
we would any other contractual provision, by looking to the
language of the contract. Here, the PMA specifies that:
In any action or proceeding between Property Manager
and the Tenants in Common arising from or relating to
this Agreement or the enforcement or interpretation
hereof, the party prevailing in such action or
proceeding shall be entitled to recover from the
other party all of its reasonable attorneys’ fees and
other costs and expenses of the action or proceeding.
(Emphasis added.)
¶35 No one has argued that these terms are unclear or
ambiguous. As the district court noted in its order awarding
attorney fees, “The above-fee provisions . . . do not permit
attorneys’ fees for all disputes related to the agreement[], rather
such fees are limited to disputes between the tenants in common
and the Property Manager . . . .” It is undisputed that Barberry is
included in the “Tenants in Common” referenced in the PMA.
And in its order awarding attorney fees, the district court ruled
that Cottonwood could enforce the attorney fee provision as the
property manager because Barberry had alleged in its complaint
that Cottonwood was the property manager under the PMA “and
sued for breach thereof,” and Georgia’s judicial admissions rule
prohibited Barberry from taking a contrary position.8
¶36 We agree that Georgia’s judicial admissions rule is
determinative. It provides that, “[w]ithout offering the same in
evidence, either party may avail himself or herself of allegations
or admissions made in the pleadings of the other.” GA. CODE ANN.
§ 24-8-821. In other words, a party’s allegations or admissions in
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8 We note that the judicial admissions rule is presumably one
of procedure. So Utah law should apply on this point. See
Federated Cap. Corp. v. Libby, 2016 UT 41, ¶ 13, 384 P.3d 221. But
because both parties briefed and argued this under Georgia law,
we will apply Georgia law in order to address their arguments.
This does not mean they were correct in resorting to Georgia law
with regard to this matter.
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its pleadings are considered “conclusive of the facts contained
therein” if they are not withdrawn. Georgia-Pac., LLC v. Fields, 748
S.E.2d 407, 410 (Ga. 2013). Only factual allegations, not opinions
or legal conclusions, may be deemed judicial admissions. See id.¶37 And while Georgia’s Civil Practice Act permits pleadings
in the alternative, that “does not change the rule of evidence that a
party is bound by its judicial admissions.” Loney v. Primerica Life
Ins. Co., 499 S.E.2d 385, 387 (Ga. Ct. App. 1998) (citation omitted).
So, “a party should beware of the evidentiary effect of alternative
pleadings,” Ditch v. Royal Indem. Co., 422 S.E.2d 868, 869 (Ga. Ct.
App. 1992), because “[w]here the pleading is inconsistent, the
admission, not the denial, prevails.” Johnson v. Daniel, 219 S.E.2d
579, 581 (Ga. Ct. App. 1975).
¶38 Thus, under Georgia’s judicial admissions rule, Barberry
is bound by the factual allegations made in its complaint—
specifically, that Daymark secretly sold the PMA to Cottonwood
and, as assignee of the PMA, Cottonwood took over Daymark’s
role as property manager under the agreement. It does not matter
that Barberry alleged in the alternative that Cottonwood may
have merely interfered with the PMA or aided and abetted
Daymark’s breach of fiduciary duty. Simply put, although
Barberry pleaded various claims in the alternative, this does not
change the fact that Barberry is bound by its unwithdrawn factual
allegations that Cottonwood was the property manager under the
PMA. And Barberry has made no argument that it did withdraw
these allegations. Accordingly, they are binding judicial
admissions under Georgia law and the district court was entitled
to hold Barberry to them for purposes of ruling upon
Cottonwood’s motion for attorney fees.
¶39 Barberry attacks this conclusion for two reasons.9 First, it
argues that “the same rule precludes Cottonwood from
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9 Barberry also claims that under Dillard-Winecoff, LLC v. IBF
Participating Income Fund, 552 S.E.2d 523, 525 (Ga. Ct. App. 2001),
Cottonwood is judicially estopped from claiming to be the
property manager under the PMA. But this appears to
misunderstand the judicial estoppel rule as interpreted by
Georgia courts. “Judicial estoppel is a federal doctrine that
precludes a party from asserting a position in a judicial
proceeding which is inconsistent with a position previously
successfully asserted by it in a prior proceeding.” Id. (citations
(continued . . .)
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contradicting their own pleading that they were not the Property
Manager.” But that is incorrect. Georgia’s judicial admissions rule
applies only to “allegations or admissions made in pleadings.” GA.
CODE ANN. § 24-8-821 (emphasis added). Cottonwood’s motion to
dismiss, in which it argued it was not the property manager under
the PMA, is not a pleading under Georgia law. “[A] motion is not
a pleading; pleadings are defined as seven specific filings,
including a ‘complaint’ and an ‘answer.’” Chandler v. Opensided
MRI of Atlanta, LLC, 682 S.E.2d 165, 170 n.5 (Ga. Ct. App. 2009)
(citation omitted). Accordingly, although Cottonwood can rely on
factual allegations Barberry made in its complaint, Barberry
cannot rely upon arguments Cottonwood made in its motion to
dismiss.
¶40 Second, Barberry contends that the judicial admissions
rule does not control here because the district court decided this
factual issue on the merits. Barberry is correct that in Georgia, if a
judicial admission is considered and determined on the merits,
the judicial admissions rule is no longer determinative. See
Stephens v. Tate, 249 S.E.2d 92, 94 (Ga. Ct. App. 1978) (“The order
granting summary judgment shows that the issue was considered
and determined on its merits by the trial court. ‘Therefore, we do
not consider the (answer) to be an admission in judicio that barred
the applicant from showing to the contrary.’” (quoting Summerlot
v. Crain-Daly Volkswagen, Inc., 233 S.E.2d 749, 750 (Ga. 1977))). As
we have explained, Georgia courts generally will not allow parties
to disprove judicial admissions made in their pleadings unless the
admissions are withdrawn. See also Walker v. Jack Eckerd Corp., 434
S.E.2d 63, 66 (Ga. Ct. App. 1993), superseded on other grounds by
statute as stated in Allen v. Kroger Co., 2018 WL 6729646, at *3 (M.D.
Ga. 2018). However, “if the trial court admits . . . conflicting
evidence, and either the court (e.g. when ruling on a motion for
summary judgment) or the jury (when reaching its verdict)
considers the conflicting evidence on the merits, the pleadings at
that point become amended to conform to such evidence” because
omitted) (internal quotation marks omitted). There are two
prerequisites to this doctrine: “(1) prior assertion of an
inconsistent position in another judicial proceeding; and (2)
successful assertion of the previous inconsistent position.” Id.These prerequisites are not met, as Barberry has identified no
prior judicial proceeding in which Cottonwood successfully
asserted that it was not the property manager under the PMA.
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1600 BARBERRY LANE 8 LLC V. COTTONWOOD RESIDENTIAL O.P. LP
Opinion of the Court
the court is considered to have “tacitly permitted” the party to
withdraw its admission. Id. “Basically, the rule vests the trial court
with discretion to determine whether an admission of fact made
in pleadings should be withdrawn, thereby allowing the
pleadings to be amended by conflicting evidence admitted and
considered on the merits.” Id.¶41 Barberry asserts that the district court found on the merits
that Cottonwood was not the property manager under the PMA
but instead was engaged as a subcontractor to sub-manage the
property. And it contends that it is therefore not bound by its
contrary allegations. We disagree.
¶42 For Barberry to prevail on this argument, it must
persuade us that the district court considered this factual dispute
on the merits, thereby tacitly allowing Barberry to withdraw the
relevant allegations and amending the complaint accordingly.
While the record is not entirely clear, we conclude the district
court did not do this.
¶43 We make an initial observation that it is unusual for this
question to arise at all in this procedural posture. The motion
before the district court was a motion to dismiss under civil rule
12(b)(6). It is foundational that when ruling on such a motion, a
district court must take the factual allegations in the complaint as
true. See UTAH R. CIV. P. 12(b)(6);10 Hudgens v. Prosper, Inc., 2010
UT 68, ¶ 14, 243 P.3d 1275 (“A motion to dismiss should be
granted only if, ‘assuming the truth of the allegations in the
complaint and drawing all reasonable inferences therefrom in the
light most favorable to the plaintiff, it is clear that the plaintiff is
not entitled to relief.’” (citation omitted)). The district court is not
permitted to consider dueling evidence or make findings on
disputed facts. See Oakwood Village LLC v. Albertsons, Inc., 2004 UT
101, ¶ 12, 104 P.3d 1226 (“If a court does not exclude material
outside the pleadings and fails to convert a rule 12(b)(6) motion to
one for summary judgment, it is reversible error . . . .”); Alvarez v.
Galetka, 933 P.2d 987, 989 (Utah 1997) (“Rule 12(b)(6) concerns the
sufficiency of the pleadings, not the underlying merits of a
particular case.”). So normally, a question as to whether a court
__________________________________________________________
10 We apply Utah law to our 12(b)(6) analysis because it is a
rule of procedure. The district court and the court of appeals also
(correctly) analyzed the application of 12(b)(6) under Utah law.
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CITE AS: 2021 UT 15Opinion of the Court
considered disputed facts on the merits when ruling upon a
12(b)(6) motion should be easily answered in the negative, unless
the court erred.
¶44 But here, Barberry has identified a few statements in the
order of dismissal that suggest the court may not have taken the
facts in the complaint as true. So we analyze Barberry’s argument
that the district court considered the relevant factual dispute on
the merits in contravention of rule 12(b)(6).
¶45 A review of the order of dismissal reveals that the court
did not so much intend to resolve factual disputes on the merits
but to construe the two contracts before it—the PMA and the sub-
property management agreement. We acknowledge that this was
problematic because the sub-property management agreement
was attached only to Cottonwood’s motion, not Barberry’s
complaint. However, Barberry was heard on this issue in the court
of appeals. 1600 Barberry Lane 8 LLC v. Cottonwood Residential OP
LP, 2019 UT App 146, ¶ 8 n.5, 449 P.3d 949.11 And the question
__________________________________________________________
11 In the court of appeals, Barberry argued that in viewing
Cottonwood as a subcontractor rather than an assignee of the
contract, “the district court improperly considered the [sub-
property management] contract between Daymark and
Cottonwood without converting the motion to dismiss to one for
summary judgment.” 1600 Barberry Lane 8 LLC v. Cottonwood
Residential OP LP, 2019 UT App 146, ¶ 3 n.4, 456 P.3d 949. The
court of appeals avoided this issue and affirmed the district court
on its other basis for dismissal. The court of appeals explained,
[Barberry] allege[s] that Daymark sold the
Agreement to Cottonwood and that Cottonwood
thereby “subsumed from [Daymark] all of their
obligations in the [Agreement].” In ruling on the
motion to dismiss, the district court considered the
contract between Daymark and Cottonwood, which
[Barberry] did not attach to or expressly reference in
their pleading, and concluded that Daymark did not
assign the Agreement to Cottonwood but rather
engaged Cottonwood as a subcontractor. [Barberry]
allege[s] that the district court improperly
considered the contract between Daymark and
Cottonwood without converting the motion to
dismiss to one for summary judgment. . . . We need
(continued . . .)
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1600 BARBERRY LANE 8 LLC V. COTTONWOOD RESIDENTIAL O.P. LP
Opinion of the Court
before us is solely whether the court rejected the relevant factual
allegations on the merits.
¶46 Barberry relies upon the following passages in the district
court’s order of dismissal to argue that it did. First, when
concluding that Barberry had not stated a claim for breach of
contract, the court stated that
The Sub-Property Management Agreement shows
that [Daymark] and [Cottonwood] entered into the
Sub-Property Management Agreement whereby
[Daymark] retained [Cottonwood] as a
subcontractor to sub-manage the Property. Only
[Cottonwood] and [Daymark] (not Plaintiffs) are
parties to the Sub-Property Management
Agreement.
But the court then provided an additional basis for dismissal that
accepted the allegations in the complaint and interpreted the
PMA, stating, “Indeed, even if [Cottonwood] could be deemed a
party to the PMA, Plaintiffs’ allegation that [Cottonwood]
purportedly breached the PMA by charging property and asset
management fees in excess of fair value lacks merit” and “the
Amended Complaint alleges no facts supporting such a claim,
and the language of the PMA contradicts Plaintiffs’ allegations.”
¶47 Further, when determining Barberry had failed to allege
that there was a fiduciary relationship between the parties, the
district court said that Cottonwood was “not the Property
Manager; it is a subcontractor of the Property Manager.”
However, the court provided additional bases for dismissing the
fiduciary duty claims that relied on the allegations in the
complaint and the terms of the PMA: it stated, “[Barberry’s] claim
that the PMAS were assigned to [Cottonwood] without
[Barberry’s] consent is meritless because [Barberry] admit[s] that
[it] consented to the alleged assignment,” and “as a matter of
not decide whether this was error, because we
affirm the district court without regard to the
contract between Daymark and Cottonwood. In
other words, our analysis does not depend on whether
Cottonwood was an assignee of or a subcontractor under
the Agreement.
Id. (third and fourth alterations in original) (emphasis added).
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CITE AS: 2021 UT 15Opinion of the Court
Georgia law, neither party is a fiduciary of the other because the
parties contractually agreed that their relationship was not
fiduciary in nature.”
¶48 Nowhere in the order does the district court purport to
weigh evidence or resolve factual disputes. Rather, it noted the
correct legal standard in the beginning of its order.12 And
throughout, the district court primarily interpreted the PMA and
applied Georgia law to the facts alleged in the complaint. The
portions of the order relied upon by Barberry are the result not of
factfinding but of the court interpreting the sub-property
management agreement. This was problematic because that
agreement was not part of the complaint. But while this indicates
that the court made a mistake (which the court of appeals
concluded was not determinative due to the district court’s other
grounds for dismissal, see id. ¶ 3 n.4), it does not mean that the
district court tacitly permitted Barberry to withdraw its factual
allegations by resolving disputed facts on the merits. This is
further supported by the fact that in ruling on Cottonwood’s
motion for attorney fees, the district court held Barberry to these
allegations as judicial admissions.13
¶49 Barberry has not provided any other reason that
Georgia’s judicial admissions rule should not apply here.
Accordingly, we affirm the district court’s determination that
Cottonwood is entitled to enforce the PMA’s attorney fee
provision under Georgia law.
__________________________________________________________
12 The court stated Cottonwood was arguing that “the
allegations in [Barberry’s] Amended Complaint, taken as true, fail
to state any claims against [Cottonwood].”
13 When Barberry tried to argue that the district court had
determined this factual issue, the court disclaimed any intention
of doing so. At oral argument during the hearing on attorney fees,
counsel for Barberry stated, “Your honor decided the case on the
basis of a subcontract that [Cottonwood] attached to a pleading
that they said meant they were not the property manager and
therefore, had no rights pursuant to the property management
agreement.” The court responded that it “may have made a
mistake in going that far without seeing the whole picture on this
attorney’s fees issue.”
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1600 BARBERRY LANE 8 LLC V. COTTONWOOD RESIDENTIAL O.P. LP
Opinion of the Court
III. THE REASONABILITY OF THE AWARD AMOUNT
¶50 Barberry next argues that, even if the district court did
not err in its award of attorney fees, the fees awarded were
unreasonable. But Barberry has inadequately briefed this issue.
¶51 In its original motion for attorney fees, Cottonwood
claimed it had paid over $300,000 in fees to defend itself in the
California and Utah courts. Before ruling on the motion, the
district court informed the parties that it would not consider any
fees or costs incurred in the California litigation. So Cottonwood
revised its request, claiming a reduced $94,836.62 in attorney fees
and costs. After briefing and oral argument on the matter, the
district court granted Cottonwood’s revised fee request in full.
¶52 Barberry argues that the amount awarded by the court is
unreasonable. But its briefing on this issue consists of itemizing
the billings submitted by Cottonwood and stating in conclusory
fashion that “it was unreasonable to reward Defendants an
additional $41,532.39 for unsuccessfully seeking and defending
the original fee award.” Barberry does not reference any legal
support for this argument or provide any analysis. And Barberry
fails to mention the governing abuse-of-discretion standard or
apply it to the district court’s decision.
¶53 An appellant carries the burden of persuasion to convince
the reviewing court that the district court erred in its decision.
And “an appellant who fails to adequately brief an issue ‘will
almost certainly fail to carry its burden of persuasion on appeal.’”
Bank of Am. v. Adamson, 2017 UT 2, ¶ 12, 391 P.3d 196 (citation
omitted). Although there is no bright-line rule that defines
adequate briefing, a party must, at minimum, cite to applicable
law and then apply the law to the facts. See id. ¶ 11; see also UTAH
R. APP. P. 24(a)(8) (“The argument must explain, with reasoned
analysis supported by citations to legal authority and the record,
why the party should prevail on appeal.”).
¶54 Barberry has failed to do so here. It has made conclusory
statements that the fees awarded by the district court are
unreasonable but has provided no argument or analysis as to why
that is so. And it has failed to even apply the abuse-of-discretion
standard of review. “While failure to cite to pertinent authority
may not always render an issue inadequately briefed, it does so
when the overall analysis of the issue is so lacking as to shift the
burden of research and argument to the reviewing court.” State v.
Thomas, 961 P.2d 299, 305 (Utah 1998). We decline to shoulder that
burden.
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CITE AS: 2021 UT 15Opinion of the Court
¶55 Barberry failed to adequately brief this issue and has not
met its burden of persuasion. Accordingly, we do not disturb the
amount of the district court’s fee award.
CONCLUSION
¶56 We hold that the matter of contractual attorney fees is
substantive for choice of law purposes. Applying Georgia law, we
conclude that Barberry has not shown the district court erred in
awarding Cottonwood attorney fees. And we do not disturb the
amount of the award because Barberry failed to adequately brief
the issue and accordingly did not persuade us that the award was
unreasonable. Finally, Cottonwood requests an award of costs
pursuant to rule 34 of the Utah Rules of Appellate Procedure.
Because Cottonwood is the prevailing party on appeal, we grant
its request and award costs. See UTAH R. APP. P. 34(a).
19