Fitzgerald v. Spearhead Investments

2021 UT 34IN THE
SUPREME COURT OF THE STATE OF UTAH
KEN M. FITZGERALD and FIVE C.J. PROPERTIES, LLC,
Appellants,
v.
SPEARHEAD INVESTMENTS, LLC and ALPINE EAST INVESTORS, LLC,
Appellees.1
No. 20190644
Heard February 10, 2021
Filed July 22, 2021
On Interlocutory Appeal
Fourth District, Utah County
The Honorable Thomas Low
No. 170401272
Attorneys:
Bryan H. Booth, Salt Lake City, for appellants
Thomas W. Seiler, Jared L. Anderson, Provo, for appellee
JUSTICE HIMONAS authored the opinion of the Court, in which
CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE LEE, JUSTICE
PEARCE, and JUSTICE PETERSEN joined.
JUSTICE HIMONAS, opinion of the Court:
INTRODUCTION
¶1 The Dutch have a saying that ―promises make debt, and
debt makes promises.‖ Today, we expand on this commercial
proverb to address what the law requires when a promise to pay
is not kept and the limitations period has run. Specifically, we
consider whether the equitable estoppel doctrine offers a discrete
basis for tolling a statute of limitations in Utah. We hold that it
does.
1 Only Alpine East Investors, LLC is before us as an appellee.
FITZGERALD V. SPEARHEAD INVESTMENTS, LLC
Opinion of the Court
¶2 This case comes to us as an interlocutory appeal from the
denial of Ken Fitzgerald and Five C.J. Properties, LLC‘s
(collectively, Owners) motion for summary judgment on their
claim for declaratory judgment/quiet title with respect to the
subject property (the Property). Here are the essential facts:
Owners executed a trust deed note with Alpine East Investors,
LLC for the Property, promising to pay the note in full within two
years. They didn‘t. After the foreclosure limitations period had
expired, and despite numerous promises made—and
subsequently broken—to pay the debt owed, Owners sought two
results from the district court: (1) to enjoin Alpine East from
foreclosing its trust deed on the Property, and (2) a determination
that Alpine East had no valid interest in the Property. Alpine East
responded by invoking the doctrine of equitable estoppel, which
would toll the limitations period and estop Owners from using
the statute of limitations to quiet title. Owners, however, argued
before the district court, and now on appeal to us, that equitable
estoppel is not a stand-alone basis for defeating a statute of
limitations defense because this court has incorporated it into the
equitable discovery doctrine. If Owners are right, then Alpine East
is unable to toll the foreclosure limitations period because it
cannot satisfy the elements of equitable discovery.
¶3 Our response to Owners‘ view of equitable estoppel is a
hard no. To reach our conclusion, we juxtapose equitable estoppel
with equitable discovery and find that, though similar in name
and function, they‘re separate equitable doctrines that are invoked
in distinct circumstances. As such, we hold that equitable estoppel
may be invoked as a stand-alone basis for tolling a statute of
limitations. But we clarify that a mere promise to make good on a
debt, without more, is insufficient to toll a limitations period
under the equitable estoppel doctrine, even if a party has relied
upon that promise. Still, we do not address equitable estoppel‘s
specific application to this case—we leave that to the district court
as it is better situated to make the determination in the first
instance. Accordingly, we vacate the district court‘s interlocutory
order denying summary judgment and remand for further
proceedings consistent with this opinion.
BACKGROUND
¶4 In 2008, Owners executed and made payable to Alpine
East a trust deed note for the Property. The parties also executed
and recorded a trust deed to secure the note against the Property.
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The note was due two years later. When the due date had passed,
Owners had yet to make a payment toward the note.2
¶5 Pursuant to Utah Code section 70A-3-118(1), Alpine East
had a limitations period of six years to file an action to foreclose
the trust deed or record a notice of default on the property. Seven
days before that limitations period expired, Brian Hansen, the
manager of Alpine East, spoke by telephone with Fitzgerald
regarding payment of the note. During the nearly hour-long
conversation, Hansen specifically mentioned to Fitzgerald the
possibility of foreclosing on the Property. Fitzgerald did not
dispute the amount or validity of the debt, pleaded with Hansen
not to foreclose, and gave assurances of forthcoming payment or,
alternatively, conversion of the note into equity in the company
that would develop the Property. Fitzgerald pitched that Alpine
East could earn more under this alternative proposal than what it
was owed under the note. None of Fitzgerald‘s assurances were
committed to writing. Hansen now alleges that he did not initiate
a foreclosure of the Property before the limitations period had run
because of these assurances.
¶6 Eight days after the presumed statute of limitations had
expired, Hansen again spoke over the phone with Fitzgerald for
nearly an hour. During this call, Fitzgerald recommitted to either
make payment under the note or convert the debt into equity in
one of his development companies. Fitzgerald also agreed to
―work something out‖ to extend the note. When Hansen asked
Fitzgerald to send an email confirming their plan to extend the
note, Fitzgerald indicated that he would not sign anything until
the State of Utah finished its then-current criminal investigation of
his father and family.
¶7 Over a year later and well after the presumed limitations
period had expired, Owners sought a court determination that the
note and trust deed were unenforceable and that Alpine East had
no interest in the property. Shortly thereafter, Owners filed a
motion for summary judgment against Alpine East, arguing that
the statute of limitations had expired and that Alpine East was
therefore barred from foreclosing the trust deed. The district court
2 As this matter is before us on an appeal from a motion for
summary judgment, we recite the facts and indulge reasonable
inferences in the light most favorable to Alpine East, the
nonmoving party. Herland v. Izatt, 2015 UT 30, ¶ 9, 345 P.3d 661.
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FITZGERALD V. SPEARHEAD INVESTMENTS, LLC
Opinion of the Court
granted the motion, declaring that the limitations period for
enforcing the trust deed had expired before Alpine East recorded
a notice of default or filed an action to foreclose. The district court
also entered a judgment against Alpine East, enjoining them from
foreclosing on the trust deed or otherwise enforcing the note.
With both orders, the court concluded that Alpine East had no
right, title, or interest in the Property.
¶8 Months later, however, in a separate case with related
facts and parties, the Utah Court of Appeals held that dilatory
tactics to stave off foreclosure until a limitations period had
expired could toll the limitations period under the doctrine of
equitable estoppel. Jeppesen v. Bank of Utah, 2018 UT App 234, ¶ 33,
438 P.3d 81. In so holding, the court of appeals delineated
between equitable estoppel and equitable discovery. Id. ¶¶ 30, 32.
Equitable estoppel, the court explained, tolls a limitations period
when the plaintiff had knowledge of the cause of action but was
induced by the other party to delay the action until after the
period had run; equitable discovery tolls a statute of limitations
when a plaintiff does not discover the cause of action because of
the defendant‘s concealment. Id.
¶9 Based upon the holding in Jeppesen and following the
district court‘s subsequent amended judgment granting attorney‘s
fees to appellants, Alpine East filed a Rule 59 motion to revise the
district court‘s prior ruling. Alpine East argued Owners had made
promises that raised issues of material fact that precluded
summary judgment under the doctrine of equitable estoppel.
Relying on Jeppesen, the court granted the motion because it found
a question of fact as to ―whether Fitzgerald made promises to pay
or to convert the debt which induced Alpine East not to foreclose
within the statute of limitations.‖
¶10 Owners petitioned for permission to take an interlocutory
appeal of the district court‘s ruling. We granted the appeal to
consider whether the doctrine of equitable estoppel has been
incorporated into the equitable discovery doctrine. We have
jurisdiction under Utah Code section 78A-3-102(3)(j).
STANDARD OF REVIEW
¶11 On interlocutory appeal, we review grants and denials of
summary judgment for correctness. Anderson Dev. Co. v. Tobias,
2005 UT 36, ¶ 19, 116 P.3d 323. ―Summary judgment is only
appropriate if there are no genuine issues of material fact and the
moving party is entitled to judgment as a matter of law.‖ Herland
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v. Izatt, 2015 UT 30, ¶ 9, 345 P.3d 661 (citing UTAH R. CIV. P. 56(c)).
We view the facts and indulge reasonable inferences in the light
most favorable to Alpine East, the nonmoving party. Id.ANALYSIS
¶12 Our analysis clarifies the difference between equitable
estoppel and equitable discovery. Although similar in name and
function, these equitable doctrines each apply in distinct
circumstances.
¶13 Owners argue that Jeppesen v. Bank of Utah, 2018 UT App
234, 438 P.3d 81, which the district court relied on in granting
Alpine East‘s Rule 59 Motion, is bad law because the doctrine of
equitable estoppel, as applied to statutes of limitations, has been
incorporated into the concealment prong of the equitable
discovery doctrine. For authority, Owners point to this court‘s
statement in Russell Packard Development, Inc. v. Carson that
equitable discovery has its ―genesis in estoppel‖ and is
―essentially a claim of equitable estoppel.‖ 2005 UT 14, ¶ 26, 108
P.3d 741 (citation omitted). Thus, they assert, Alpine East must
make the initial showing required under equitable discovery: that
it did not know nor reasonably should it have known of its cause
of action in time to comply with the limitations period because of
the defendant‘s concealment. So, as Owners understand it, a party
that knew the facts supporting its claim at the time the statute of
limitations began to run—like Alpine East with its foreclosure
claim—would never have the limitations period tolled.
¶14 Alpine East, on the other hand, argues that Jeppesen was
correct to hold that equitable estoppel is an independent basis for
tolling a statute of limitations. Thus, a party need not make an
initial showing that it did not know the facts underlying the cause
of action. Accordingly, Alpine East asserts, a party who had
knowledge of the cause of action but was reasonably induced by
the debtor to delay the action until after the limitations period
may use the doctrine of equitable estoppel to toll the period.
¶15 We agree with Alpine East and the Jeppeson holding. In
explaining our conclusion, we first address the difference between
the two doctrines. We then use this occasion to clarify that a mere
promise to pay, without more, even though relied upon by a
party, is insufficient to toll a statute of limitations under the
doctrine of equitable estoppel. Ultimately, we vacate the district
court‘s interlocutory order granting Alpine East‘s Rule 59 Motion,
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FITZGERALD V. SPEARHEAD INVESTMENTS, LLC
Opinion of the Court
and remand for further proceedings not inconsistent with this
opinion.
I.
A. Equitable Estoppel vs. Equitable Tolling
¶16 Though equitable estoppel and equitable discovery both
operate to toll statutes of limitations, they are distinct doctrines
with distinct applications. We clarify that equitable estoppel is
―invoked in cases where the plaintiff knew of the existence of his
cause of action but the defendant‘s conduct caused him to delay in
bringing [suit],‖ and equitable discovery is ―invoked in cases
where the plaintiff is ignorant of his cause of action because of the
defendant‘s fraudulent concealment.‖3 Ellul v. Congregation of
Christian Bros., 774 F.3d 791, 802 (2d Cir. 2014) (citation omitted).4
3 The equitable discovery doctrine may be invoked in two
situations: (1) where the plaintiff was unaware of the cause of
action due to the defendant‘s fraudulent concealment (the
―concealment prong‖), and (2) when exceptional circumstances so
require, regardless of any wrongdoing by the defendant. See
Russell Packard Dev., Inc. v. Carson, 2005 UT 14, ¶ 25, 108 P.3d 741.
This case does not address the exceptional circumstances prong.
As such, and for the ease of the reader, all references to ―equitable
discovery‖ in this opinion refer to the concealment prong.
4 For our purposes, Ellul uses the term ―equitable tolling‖
synonymously with ―equitable discovery.‖
We note that while some jurisdictions, such as the Second
Circuit, have used equitable discovery and equitable tolling
interchangeably, other jurisdictions consider equitable tolling a
narrow but independent doctrine. See, e.g., Sebelius v. Auburn Reg’l
Med. Ctr., 568 U.S. 145, 164 (2013) (Sotomayor, J., concurring)
(stating that equitable tolling applies when a party is unaware of a
cause of action due to ―circumstances outside both parties‘
control‖). Utah courts have split the difference and viewed
equitable tolling as only part of the standard equitable discovery
analysis. See Grynberg v. Questar Pipeline Co., 2003 UT 8, ¶ 65, 70
P.3d 41 (―To the extent that Utah subscribes to the principle of
equitable tolling, it has been developed almost exclusively
through application of the discovery rule to claims that were not
or could not have been discovered prior to the running of the
statute of limitations.‖).
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Yet we also note that both doctrines require an ―evaluation of the
reasonableness of a plaintiff‘s conduct in light of the defendant‘s
fraudulent or misleading conduct.‖ See Russell Packard Dev., Inc. v.
Carson, 2005 UT 14, ¶ 26, 108 P.3d 741.
¶17 The equitable estoppel doctrine comes from the ―maxim
that no man may take advantage of his own wrong.‖ Glus v.
Brooklyn E. Dist. Terminal, 359 U.S. 231, 232 (1959). This maxim is
deeply rooted in American jurisprudence, id. at 232, and guides
our statute of limitations tolling jurisprudence in Utah. See, e.g.,
Rice v. Granite Sch. Dist., 456 P.2d 159, 163 (Utah 1969). We apply
the equitable doctrines when we recognize that a defendant has
unjustly ―lull[ed] an adversary into a false sense of security
thereby subjecting his claim to the bar of limitations‖ and is then
In Russell Packard, this court limited the application of
equitable discovery to two circumstances. See supra ¶ 16 n.3. We
have seemed to acknowledge that the second circumstance—the
―unusual circumstances‖ prong—serves the purpose of equitable
tolling. See Beaver Cnty. v. Prop. Tax Div., 2006 UT 6, ¶¶ 25–26, 128
P.3d 1187. The inclusion of exceptional circumstances in the
equitable discovery analysis may have made a separate equitable
tolling analysis unnecessary. Estes v. Tibbs, 1999 UT 52, ¶ 7, 979
P.2d 823 (―Every case in which we have addressed a ‗special
circumstances exception‘ has dealt with tolling a statute of
limitations through application of the discovery rule.‖).
Although there is no nationwide consensus, Utah precedent is
closer to the Eighth Circuit than it is to the Second Circuit (which
includes concealment as part of equitable tolling). This view of
tolling as a sub-category of the discovery rule is consistent with
the Eighth Circuit‘s description of equitable tolling in Bell v. Fowler
because equitable discovery in Utah applies to one circumstance
where defendant misconduct is required (concealment), and one
where it is not required (exceptional circumstance). See 99 F.3d
262, 266 n.2 (8th Cir. 1996).
Notwithstanding the distinction among ―equitable tolling‖
and ―equitable discovery‖ in Utah, we cite to jurisdictions in
which the terms are used interchangeably in this opinion and
make note accordingly. Further, this opinion merely clarifies that
equitable discovery is distinct from equitable estoppel. This
opinion changes nothing regarding the doctrine of equitable
discovery. See generally, e.g., Russell Packard, 2005 UT 14; Berneau v.
Martino, 2009 UT 87, 223 P.3d 1128.
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Opinion of the Court
―heard to plead that very delay as a defense to the action when
brought.‖ Id. And we see no reason to stray from this guiding
principle today even though Alpine East was aware of the facts
underlying its cause of action before the limitations period had
run.5 We further acknowledge that concealment is not the only
way a defendant may induce an adversary to postpone legal
action, and so to forsake this doctrine, even absent concealment,
would be to allow parties to take advantage of their own wrong.
Obviously, we will not go there.
¶18 We begin with equitable estoppel. The doctrine operates
to toll a statute of limitations if a plaintiff can establish three
elements:
(1) a statement, admission, act, or failure to act by
one party inconsistent with a claim later asserted;
(2) reasonable action or inaction by the other party
taken on the basis of the first party‘s statement,
admission, act, or failure to act; and (3) injury to the
second party that would result from allowing the
first party to contradict or repudiate such statement,
admission, act, or failure to act.
Jeppesen v. Bank of Utah, 2018 UT App 234, ¶ 33, 438 P.3d 81(quoting Travelers Ins. Co. v. Kearl, 896 P.2d 644, 647 (Utah Ct. App.
1995)).
¶19 The most important inference we draw from these
elements for our purposes today is that equitable estoppel may be
invoked even when the plaintiff is aware of the facts giving rise to
a cause of action. This principle stands in stark contrast to the
equitable discovery doctrine, in which the plaintiff must show he
was not aware of the facts giving rise to a cause of action. Ellul,
774 F.3d at 802. Indeed, in Rice, this court made no requirement
that the plaintiff make an initial showing that she did not know
nor reasonably should she have known the facts underlying her
cause of action in order to equitably estop the defendant from
invoking a statute of limitations defense. Compare Rice, 456 P.2d at
5 We do not, however, intend to undermine the important
purposes served by statutes of limitations, which include
―preventing unfair litigation such as ‗surprise or ambush claims,
fictitious and fraudulent claims, and stale claims.‘‖ Davis v. Provo
City Corp., 2008 UT 59, ¶ 27, 193 P.3d 86 (quoting Vigos v.
Mountainland Builders, Inc., 2000 UT 2, ¶ 22, 993 P.2d 207).
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163, with Berneau v. Martino, 2009 UT 87, ¶ 23, 223 P.3d 1128(stating that ―the plaintiff must make an initial showing that he
did not know nor should have reasonably known the facts
underlying the cause of action in time to reasonably comply with
the limitations period‖ in order to invoke the equitable discovery
rule). This is because equitable estoppel merely requires that a
―party has been induced to refrain from using such means or
taking such action as lay in his power, by which he might have
retrieved his position and saved himself from loss.‖ Rice, 456 P.2d
at 162 (quoting Benner v. Indus. Accident Comm’n, 159 P.2d 24, 26
(Cal. 1945)). Thus, equitable estoppel is ―[u]nlike equitable tolling,
which is invoked in cases where the plaintiff is ignorant of his
cause of action because of the defendant‘s fraudulent
concealment.‖ Ellul, 774 F.3d at 802 (citation omitted).
¶20 We are not alone in recognizing equitable estoppel as a
discrete doctrine in the statute-of-limitations milieu. At least six
United States Circuit Courts of Appeals have recognized that
equitable estoppel is distinct from equitable discovery and doesn‘t
require a plaintiff to be unaware of the facts underlying his cause
of action. See Ellul, 774 F.3d at 802; Ramirez-Carlo v. United States,
496 F.3d 41, 48 (1st Cir. 2007) (―Equitable tolling applies when the
plaintiff is unaware of the facts underlying his cause of action,
while equitable estoppel applies when a plaintiff who knows of
his cause of action reasonably relies on the defendant‘s conduct or
statements in failing to bring suit.‖ (citations omitted)); 6 Bell v.
Fowler, 99 F.3d 262, 266 n.2 (8th Cir. 1996) (―[E]quitable tolling is
appropriate when the plaintiff, despite all due diligence, is unable
to obtain vital information bearing on the existence of his
claim. . . . Equitable estoppel presupposes that the plaintiff knows
of the facts underlying the cause of action but delayed filing suit
because of the defendant‘s conduct.‖ (citation omitted) (internal
6 The First Circuit appears to use the term ―equitable tolling‖
in a similar manner to our use of ―equitable discovery‖—both
require that the plaintiff be unaware of their cause of action while
―equitable estoppel‖ requires no such lack of knowledge. See
Ramirez-Carlo, 496 F.3d at 48 n.3 (―The doctrine of equitable tolling
suspends the running of the statute of limitations if a plaintiff, in
the exercise of reasonable diligence, could not have discovered
information essential to the suit.‖ (quoting González v. United
States, 284 F.3d 281, 291 (1st Cir. 2002))).
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Opinion of the Court
quotation marks omitted));7 Stitt v. Williams, 919 F.2d 516, 522 (9th
Cir. 1990) (―[T]he better reasoning states that equitable tolling
applies when the plaintiff is unaware of his cause of action, while
equitable estoppel applies when a plaintiff who knows of his
cause of action reasonably relies on the defendant‘s statements or
conduct in failing to bring suit.‖);8 Cook v. Deltona Corp., 753 F.2d
1552, 1563 (11th Cir. 1985) (―‗Equitable estoppel arises where the
parties recognize the basis for suit, but the wrongdoer prevails
upon the other to forego enforcing his right until the statutory
time has lapsed. The doctrine of equitable tolling, on the other
hand, is grounded in the fraudulent concealment of harm which
gives rise to the right to sue.‘‖ (quoting Aldrich v. McCulloch
Props., Inc., 627 F.2d 1036, 1043 n.7 (10th Cir. 1980));9 Aldrich, 627
F.2d at 1043 (same).
¶21 These crucial differences notwithstanding, equitable
estoppel and equitable discovery both share the need to
―evaluat[e] . . . the reasonableness of a plaintiff‘s conduct in light
of the defendant‘s fraudulent or misleading conduct.‖ Russell
Packard, 2005 UT 14, ¶ 26. For example, equitable estoppel
requires ―reasonable action or inaction by the other party taken on
the basis of the first party‘s statement, admission, act, or failure to
act,‖ Jeppesen, 2018 UT App 234, ¶ 33 (emphasis added) (citation
omitted), and equitable discovery requires that ―the plaintiff
neither knew nor reasonably should have known of the facts
underlying his or her cause of action‖ or that ―a reasonably diligent
7 The Eighth Circuit does differentiate between equitable
tolling and equitable discovery. See supra ¶ 19 n.5. Nevertheless,
like the First Circuit, the Eighth Circuit applies equitable tolling to
plaintiffs who were unaware of their cause of action while
―[e]quitable estoppel presupposes that the plaintiff knows of the
facts underlying the cause of action.‖ Bell, 99 F.3d at 266 n.2.
8 The Ninth Circuit also applies equitable tolling ―when the
plaintiff is unaware of his cause of action, while equitable
estoppel applies when a plaintiff . . . knows of his cause of action.‖
Stitt, 919 F.2d at 522.
9 The Eleventh Circuit appears to use equitable tolling
synonymously with our equitable discovery concealment prong.
As with the cases above, equitable tolling in the Eleventh Circuit
requires the plaintiff to be unaware of the cause of action. See
Cook, 753 F.2d at 1563.
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plaintiff may have delayed in filing his or her complaint.‖ Russell
Packard, 2005 UT 14, ¶ 44 (emphases added).
¶22 It was in the context of the two doctrines‘ commonality in
evaluating the reasonableness of a plaintiff‘s conduct that the
Russell Packard court noted that equitable discovery has its
―genesis in estoppel‖ and is ―essentially a claim of equitable
estoppel.‖ Id. ¶ 26. Owners claim these statements in Russell
Packard effectively merged equitable estoppel into the
concealment prong of equitable discovery. Not so. We never said
or meant that equitable discovery subsumes equitable estoppel.
Rather, we were merely highlighting a similarity between the
doctrines, not conflating them. Indeed, we mentioned equitable
estoppel as a general principle to illustrate that our law seeks to
prevent defendants from unjustly relying on a statute of
limitations; we did not go into further detail as to equitable
estoppel‘s own prima facie elements. And, ultimately and
regardless, these two sentences of dicta are insufficient to defeat
established case law.
¶23 Simply put, the doctrines are distinct. Equitable discovery
may be invoked in response to a statute of limitations defense
when the plaintiff was unaware of the facts underlying a cause of
action because of the defendant‘s fraudulent concealment (absent
exceptional circumstances, see supra ¶ 16 n.3). Equitable estoppel,
however, doesn‘t require the plaintiff to be unaware of the facts
underlying a cause of action. If we were to require this, then
defendants could use dilatory tactics to stave off an action until
after a limitations period expired and then turn around and use
the statute of limitations as a defense. We will not allow a party to
take advantage of their own wrong.
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Opinion of the Court
B. A Mere Promise to Pay is Insufficient to Invoke the Doctrine of
Equitable Estoppel
¶24 Having clarified the distinction between equitable
estoppel and equitable discovery, we now shift our focus. Though
we‘ve established that equitable estoppel may be invoked even
when the plaintiff is aware of a cause of action, the doctrine has its
own limitations. Today we take the opportunity to clarify one of
those limitations—specifically, what it means for a ―statement,
admission, act, or failure to act‖ to be ―inconsistent with a claim
later asserted.‖ Jeppesen, 2018 UT App 234, ¶ 33 (citation omitted).
We clarify that a mere promise to pay, without more, is
categorically insufficient to be considered ―inconsistent with a
claim later asserted‖ and, thus, insufficient to invoke equitable
estoppel to toll a limitations period.
¶25 The ―inconsistent with a claim later asserted‖ language,
as articulated in Jeppesen, requires clarification. While we do not
provide a definitive list of ―statement[s], admission[s], act[s], or
failure[s] to act‖ that are categorically ―inconsistent with a claim
later asserted‖—future cases will afford us the opportunity to do
so—we identify that mere promises to pay, without more, are
excluded from that list. See id. (citation omitted). We borrow this
language from an American Law Report, see Allan E. Korpela,
Promises to Settle or Perform as Estopping Reliance on Statute of
Limitations, 44 A.L.R.3d 482, 488 (1972) (stating that ―a mere
promise by a defendant to pay, without more, even though relied
upon by the plaintiffs, does not justify invoking the doctrine of
equitable estoppel‖), and are supported in our determination by
the reasonableness element of the equitable estoppel test and by
persuasive holdings in sister jurisdictions.
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¶26 We do not pretend to possess the foresight or imagination
to list every ―statement, admission, act, or failure to act‖ that is
―inconsistent with a claim later asserted,‖ but we are comfortable
drawing a line here. In a debtor-creditor relationship, the debtor
has made an initial promise to pay before the statute of limitations
runs. This initial promise to pay alone is insufficient to estop the
defendant from asserting a statute of limitations defense—if it
were sufficient, the equitable estoppel exception would swallow
the statute of limitations defense. Put another way, if the initial
promise by a debtor to pay was sufficient to invoke the equitable
estoppel doctrine, all creditors would be eligible to estop a statute
of limitations defense upon the establishment of the debtor-
creditor relationship, thus rendering the defense (and its
exceptions) useless in this context. And given the important goals
served by statutes of limitations, such as preventing surprise,
fictitious, or fraudulent claims and stale claims that are difficult to
prosecute because of lost evidence, memories, or witnesses, Davis
v. Provo City Corp., 2008 UT 59, ¶ 27, 193 P.3d 86, we are not
willing to render either the defense or its exception meaningless.
In other words, we do not find that a debtor‘s initial promise to
pay is a ―statement, admission, act, or failure to act‖ that is
―inconsistent with a claim later asserted.‖
¶27 The equitable estoppel exception to the statute of
limitations defense concerns ―statement[s], admission[s], act[s], or
failure[s] to act‖ that are made subsequent to the initial promise to
pay. And we find that a mere promise to pay, without more, is
merely a restatement of a debtor‘s initial promise to pay and does
not indicate changed circumstances following the initial promise.
A mere reiteration of a preexisting promise, much like the initial
promise, cannot be sufficient to toll a limitations period because it
would obviate the purpose of the statute of limitations defense
and its equitable estoppel exception. As such, a mere promise to
pay, without more, even though relied upon by the plaintiff, is not
―inconsistent with a claim later asserted.‖
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¶28 And while our focus is primarily on the first prong of the
equitable estoppel test, the second prong provides additional
support to our conclusion. This prong requires ―reasonable action
or inaction by the other party taken on the basis of the first party‘s
statement, admission, act, or failure to act‖—that is, a plaintiff
must show not only that she was induced into ―action or inaction‖
by the defendant‘s ―statement, admission, act, or failure to act,‖
but also that that her action or inaction was ―reasonable.‖ Jeppesen,
2018 UT App 234, ¶ 33 (citation omitted). If we are to accept the
truism that ―promises are made to be broken,‖ we can‘t imagine
that any reasonable party would accept a mere promise to pay at
face value. Thus, even if a mere promise to pay were ―inconsistent
with a claim later asserted‖ (and it is not), the reasonableness
element of the equitable estoppel test indicates that such reliance
would be insufficient.
¶29 We are not the only court to draw this line. The principle
that a mere promise to pay, without more, is insufficient to invoke
equitable estoppel has been expressed by courts in other
jurisdictions. Georgia identified this principle as early as 1939 in
Bank of Jonesboro v. Carnes, where creditors were precluded from
using equitable estoppel to toll a statute of limitations because the
debtor merely ―sat among his associates on the board of directors
and at times discussed [his debts] and stated he would pay them.‖
2 S.E.2d 495, 499 (Ga. 1939). In fact, the debtor never ―sought an
extension, or withdrawal of any suit, [nor was a] suit . . . ever
actually proposed or threatened. There was no agreement on his
part not to plead the statute, and no express request for
indulgence.‖ Id. Similarly, in Grass v. Eiker, creditors were
precluded from using equitable estoppel to toll a statute of
limitations because, when the creditors repeatedly demanded
payment, the debtor had merely replied that ―he had other uses
for the money and he just couldn‘t pay.‖ 135 A.2d 153, 154 (D.C.
Mun. Ct. 1957). The court rejected these statements as grounds for
estoppel, stating,
[a]t most it represents a bare verbal promise to pay
the debt at a vague future time with an implied
request for forbearance on the part of [the creditor]
until [the debtor] could secure more funds. [The
debtor] never agreed to waive the statute nor did he
ask [the creditor] to refrain from bringing suit.
Id.14
Cite as: 2021 UT 34Opinion for of the Court
¶30 And courts have continued to abide by similar limitations
more recently. A New York appellate court found that ―[m]ere
promises to pay in the future . . . are insufficient to support a
theory of equitable estoppel‖ without evidence showing that the
debtor ―intended to lull‖ the creditors into inaction. In re Estate of
Thomas, 124 A.D.3d 1235, 1241 (N.Y. App. Div. 2015) (quoting
Erlichman v. Ventura, 271 A.D.2d 481, 481 (N.Y. App. Div. 2000)).
Connecticut courts similarly have required evidence that the
debtor ―intended or calculated‖ inducement of inaction but
emphasized that the misrepresentation ―must relate to some
present or past fact or state of things, as distinguished from mere
promises or statements as to the future. The misrepresentation
must be one of fact and not of intention to support equitable
estoppel.‖ Wells Fargo Bank, N.A. v. Riverview E. Windsor, LLC,
2010 WL 5610864, at *3 (Conn. Super. Ct. 2010) (citation omitted)).
And on the other side of the country, California courts have
required that the promise ―be reasonably relied upon,‖ and will
consider, among other showings, ―that a promise to pay has been
related to the happening of a specific event,‖ such as upon getting
―a good start in [the debtor‘s] business‖ or ―termination of suit
against person secondarily liable.‖ CPI Advanced, Inc. v. Kong
Byung Woo Comm. Ind. Co., Ltd., 2003 WL 25783119, at *6 (C.D. Cal.
2003) (citations omitted), rev'd on other grounds and remanded, 135
F. App‘x 81 (9th Cir. 2005). Though based on different grounds,
we find the conclusions drawn by our sister courts persuasive in
clarifying the limitations of the equitable estoppel doctrine. Our
clarification today is an objective determination based on
preserving the utility of the equitable estoppel exception to the
statute of limitations defense, see supra ¶ 17, and does not require
Utah courts to consider the intent of the defendant (as in New
York and Connecticut), nor does it rely solely on the
reasonableness requirement (as in California).
¶31 By way of example, this court did find more than a mere
promise to pay in Rice v. Granite School District, 456 P.2d 159 (Utah
1969). In Rice, an insurance adjuster made several promises to the
injured plaintiff over the course of a year, including advising her
that ―she would be compensated,‖ ―she would be indemnified for
her medical expenses,‖ ―the insurance company would accept
responsibility and that she was not to worry,‖ and ―everything
was in proper order.‖ Id. at 161. Rice delayed commencing action
because she was told by the insurance adjuster that her claim
couldn‘t be processed until the adjuster had ascertained the costs
15
FITZGERALD V. SPEARHEAD INVESTMENTS, LLC
Opinion of the Court
of her damages. Id. Then, abruptly after Rice‘s limitations period
to bring a suit had expired, she was told that her claim was
denied. Id. After hearing this, Rice instigated a suit to recover for
her injuries, but the insurance company filed a motion to dismiss
on the ground that her claim was barred by the one-year
limitations period. Id. at 160. Such actions by the insurer were
enough for a reasonable trier of fact to conclude that the insurance
carrier made more than a mere promise to pay. See id. at 163.
Indeed, beyond representing to Rice that it was waiting for key
information before it could file the claim, the insurance carrier
admitted liability and promised compensation upon several
occasions. Unlike the debtor in Grass, who merely said he ―had
other uses for the money and he just couldn‘t pay,‖ the insurer
―lull[ed] [Rice] into a false sense of security,‖ by accepting
responsibility, promising payment, and telling Rice not to worry
and that everything was in order. Further, even the defendant in
Rice recognized that the facts involved more than a mere promise
to pay; rather, the question was ―whether negotiations for the
compromise of a claim or debt will give rise to an estoppel‖
defense. Id. at 163. These statements by the insurer went beyond
those of the debtor in Bank of Jonesboro, who merely stated he
would pay a debt he was already bound to pay.
¶32 In sum, a mere promise to pay—such as a bare verbal
promise to pay a debt at a vague future time with an implied
request for forbearance, or merely restating that a debt will be
paid—without more is not sufficient to invoke the doctrine of
equitable estoppel. That being said, we do not claim that this is a
complete explanation of the equitable estoppel doctrine as a
whole, particularly regarding what sufficiently constitutes a
―statement, admission, act, or failure to act . . . inconsistent with a
claim later asserted.‖ Future cases will present opportunities to
more fully define the contours of the equitable estoppel test.
II.
¶33 Now that we have clarified that equitable estoppel is a
discrete basis for tolling a limitations period and that a mere
promise to pay, without more, is insufficient to successfully
invoke the equitable estoppel doctrine, we turn to the case before
us. In reviewing Alpine East‘s Rule 59 Motion, the district court
relied on the court of appeals‘ ruling in Jeppesen v. Bank of Utah,
2018 UT App 234, 438 P.3d 81, to determine that a material issue
of fact exists as to whether Owners‘ promises reasonably induced
Alpine East to inaction under an equitable estoppel framework.
16
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¶34 We‘re taking a step back from the district court‘s position.
We agree with the court that equitable estoppel is a discrete basis
for tolling a statute of limitations. But, given our primary role
today in clarifying the law, we choose to vacate its determination
and remand for further proceedings consistent with our
clarification. On remand, the district court will be in the best
position to determine in the first instance if a material issue of fact
exists as to whether Fitzgerald‘s promises constituted more than a
mere promise to pay.
CONCLUSION
¶35 Equitable estoppel protects a creditor when she has
reasonably relied on a statement or act, made by the debtor,
inconsistent with the debtor‘s later assertion of a statute of
limitations defense. We find the doctrine is a stand-alone basis,
distinct from equitable discovery, for defeating a statute of
limitations defense. However, given the nature of debt, the
doctrine‘s reasonableness requirement, and similar conclusions in
our sister jurisdictions, we also find that a mere promise to pay,
without more, even though relied upon by a party, is insufficient
to invoke equitable estoppel. As such, we vacate the district
court‘s denial of summary judgment and remand for further
proceedings in accordance with this opinion.
17