Gillett v. Brown

2017 UT App 19THE UTAH COURT OF APPEALS
DAVID K. GILLETT AND MAJESTIC AIRLINES INC.,
Appellants,
v.
BOYD J. BROWN, SENTRY FINANCIAL CORPORATION, AND SFC
AIRCRAFT CORPORATION I,
Appellees.
Opinion
No. 20140682-CA
Filed January 26, 2017
Third District Court, Salt Lake Department
The Honorable L.A. Dever
No. 080921211
Stephen G. Homer, Attorney for Appellants
Christopher M. Ault and Zachary W. Powell,
Attorneys for Appellees Boyd J. Brown and Sentry
Financial Corporation
JUDGE STEPHEN L. ROTH authored this Opinion, in which JUDGE J.
FREDERIC VOROS JR. and JUSTICE JOHN A. PEARCE concurred.1
ROTH, Judge:
¶1 This case involves claims of breach of contract and fraud.
In March 1995, after David K. Gillett—through his company
Majestic Airlines Inc. (collectively, Gillett and Majestic)—
defaulted on repayment of a loan to Sentry Financial
1. Justice John A. Pearce began his work on this case as a
member of the Utah Court of Appeals. He became a member of
the Utah Supreme Court thereafter and completed his work on
the case sitting by special assignment as authorized by law. See
generally Utah R. Jud. Admin. 3-108(3).
Gillett v. Brown
Corporation (Sentry). Sentry received a substantial partial
payment of the balance due from one of the loan’s personal
guarantors, Boyd J. Brown. Neither Sentry nor Brown disclosed
Brown’s guaranty payment to Gillett or Majestic. Sentry later
commenced an action in the district court against Majestic to
collect on the past-due loan, and after the court entered default
judgment in Sentry’s favor, Sentry liquidated Majestic’s assets
and certain personal property of Gillett’s, all of which had been
pledged as security for the loan. Sentry thereafter reimbursed
Brown for the guaranty payment he had made. Brown then
facilitated the settlement of a dispute over Sentry’s handling of
the disposition of Gillett’s and Majestic’s property in the
aftermath of the default judgment, which resulted in a mutual
release of claims by and among Sentry, Brown, Majestic, and
Gillett (the Release).
¶2 Gillett discovered Brown’s guaranty payment and
Sentry’s reimbursement in 2002. Gillett and Majestic thereafter
brought a claim of breach of contract against Sentry and claims
of fraud and breach of contract against Brown. On appeal, Gillett
and Majestic contend that the district court erred in granting
summary judgment in favor of Brown and Sentry. We affirm the
district court’s dismissal of Gillett and Majestic’s claims. Sentry
and Brown request an award of attorney fees and costs incurred
on appeal. We decline to award Sentry and Brown their attorney
fees on appeal, but Sentry and Brown are entitled to their costs.
BACKGROUND
¶3 Majestic was a Utah corporation and Gillett was its
president and sole owner.2 In 1994, Majestic found itself in a
financial predicament. It owed Textron Financial Corp. (TFC)
almost half a million dollars on a loan and was in default. In
2. The corporation was dissolved in April 1996.
20140682-CA 2 2017 UT App 19Gillett v. Brown
April 1994, Sentry entered into an agreement with Majestic (the
Loan Agreement) to pay off the balance of Majestic’s TFC loan
and provide a small additional sum to Majestic—a total principal
amount of $483,102.43. In return, Majestic agreed to make thirty-
six equal monthly payments of $15,779.57 beginning on July 1,
1994, as well as an interim payment on or before that date to
cover the period between the signing of the Loan Agreement and
July 1. The loan was secured by interests in four cargo aircraft
and four fuel trucks, all property of Majestic, as well as by
Gillett’s pledge of certain personal property of his own. Because
Majestic had previously defaulted on its loan with TFC, Sentry
required additional assurances—the personal guaranties of
Gillett himself and Brown, a mutual acquaintance of both Gillett
and Sentry’s CEO.
¶4 Majestic failed to make the interim payment as well as
several monthly payments, and by March 1995 Majestic had paid
only about $57,000 of the amount it then owed Sentry in
principal, interest, and other fees under the Loan Agreement.
Following Majestic’s default, Sentry demanded that Brown fulfill
his obligation as personal guarantor by paying $249,964.88 (the
guaranty payment) to Sentry. Brown made the guaranty
payment in March 1995, but neither Sentry nor Brown informed
Majestic of that fact. A few weeks later, Sentry obtained a default
judgment against Majestic for the ‚principal sum of $450,119.70,‛
plus interest and costs. That principal sum did not reflect
Brown’s guaranty payment. To recover on the default judgment,
Sentry arranged for a public auction in October 1995 of the assets
Majestic and Gillett had pledged as collateral for the Loan
Agreement. At the auction, Majestic bought back four aircraft,
and the parties agreed that Majestic’s obligation would be
reduced by that amount. The proceeds of the auction were
otherwise remitted to Sentry, which then reimbursed Brown for
his guaranty payment.
20140682-CA 3 2017 UT App 19Gillett v. Brown
¶5 After the auction, Gillett became concerned about Sentry’s
post-sale handling of the proceeds. He sought an accounting
from Sentry of how the auction’s proceeds had been applied to
Majestic’s indebtedness, including whether there was any
surplus due to Majestic above what Sentry was owed. In
addition, Sentry had held back the bills of sale for the
repurchased aircraft, apparently because, by its accounting,
Majestic still owed money on the default judgment. Sentry
directed Gillett to discuss the outstanding issues with Brown.
Around the same time, despite the lack of bills of sale, Gillett
and Majestic began to use the aircraft in various business
dealings. For example, Majestic disassembled two of the planes
and shipped sections of the engines out of state. It also
attempted to negotiate leases for two of the aircraft with an
aviation company operating out of Kenya.
¶6 By the summer of 1996, Gillett and Majestic still had not
received a post-auction accounting of the proceeds from the
collateral sale or the bills of sale for the planes, and Gillett
contacted Brown, as Sentry had suggested. Brown informed
Gillett that Majestic still owed Sentry $150,000 and that Sentry
would not permit Majestic to lease the two planes to the Kenyan
aviation company. According to Gillett, Majestic cancelled those
leases in reliance on Brown’s assertions.
¶7 A few months later, Sentry presented Gillett with the
Release in an effort to resolve the outstanding disputes. Gillett
sought Brown’s advice as to whether to sign the Release. Brown
informed him that, among other things, Sentry’s general counsel
wanted to criminally prosecute Gillett personally for
disassembling one of the aircraft and shipping the ‚hot parts‛ of
the aircraft out of state, which Majestic had done believing that it
owned the aircraft after the collateral foreclosure sale. As Gillett
recounts, Brown advised Gillett to sign the Release and told
Gillett that he would ‚get things worked out with Sentry.‛ In
December 1996, Gillett and Sentry signed the Release, which
20140682-CA 4 2017 UT App 19Gillett v. Brown
provided that ‚Sentry and Gillett mutually release, forever
discharge and agree to hold harmless each other, and . . . Boyd
Brown, an individual, from any and all claims, demands,
damages, actions, counts, causes of action, or suits at law of
whatever kind and nature, and from all costs and attorneys’
fees.‛
¶8 More than five years later, in March 2002, Gillett
discovered that Brown had made the guaranty payment to
Sentry and that Sentry had not reduced Majestic’s loan
obligation accordingly. In 2007, Gillett and Majestic sued Sentry
and Brown, alleging three claims for relief: breach of contract
against Sentry; breach of contract against Brown; and fraud
against Brown. The 2007 suit was dismissed without prejudice
months later for failure to serve the complaint on the defendants
within 120 days of filing. See Utah R. Civ. P. 4(b). Gillett and
Majestic then refiled essentially the same claims against Sentry
and Brown in September 2008.
¶9 In the 2008 suit, Gillett and Majestic claimed that Sentry
had breached the Loan Agreement by failing to disclose the
guaranty payment and commensurately reducing the amount
Majestic owed on the loan, by failing to provide Gillett and
Majestic with an accounting of the surplus proceeds from the
collateral auction, and by colluding with Brown to improperly
induce Gillett and Majestic to execute the Release. The 2008
complaint alleged breach of contract against Brown, as well, but
also added a fraud claim against him. Gillett and Majestic
alleged that Brown had breached the Loan Agreement by
‚failing to abide by the terms of the *agreement+‛ and violating
the implied covenant of good faith and fair dealing. In addition,
they claimed that Brown had made ‚false and fraudulent
statements concerning the status of the outstanding
delinquencies‛ on the loan, which led to the loss of the aircraft
and the auction proceeds and finally to Gillett and Majestic’s
execution of the Release. In particular, they alleged that in
20140682-CA 5 2017 UT App 19Gillett v. Brown
connection with the negotiation of the Release, Brown had made
‚intentionally misleading and false statements‛—namely, that
Gillett and Majestic ‚were still indebted‛ to Sentry at the time,
that Sentry was threatening to criminally prosecute Gillett, and
that Gillett and Majestic had no right to lease the two aircraft for
use in Africa. They asserted that Brown made these statements
to induce them to, among other things, pay Sentry additional
money and sign the Release, and that Gillett and Majestic had
acted and relied upon these statements to their detriment.3
¶10 Gillett and Majestic eventually filed a motion for partial
summary judgment ‚against Sentry . . . only‛ for ‚breach of
contract . . . committed in violation of the implied covenant of
good faith and fair dealing.‛ Sentry opposed the motion, and
Sentry and Brown filed a joint cross-motion for summary
judgment against Gillett and Majestic. Sentry and Brown
asserted that Gillett and Majestic’s claims should be dismissed
for several reasons, including that Majestic’s claims were not
within the allowable scope of the ‚winding up‛ of its business
affairs as a dissolved corporation and that Gillett and Majestic’s
claims were barred by statutes of limitation as well as by the
Release.
¶11 In response to the cross-motions for summary judgment,
the district court ‚dismiss*ed+ with prejudice all claims‛ against
Sentry and Brown, effectively denying Gillett and Majestic’s
3. In their 2008 complaint, Gillett and Majestic also requested a
judicial accounting of the auction proceeds and a declaratory
judgment interpreting certain provisions of the contractual
documents, including the Release. Because we resolve the case
by affirming the district court’s statute of limitations
determinations and Gillett and Majestic do not pursue the
accounting claims separately on appeal, we do not address them
further.
20140682-CA 6 2017 UT App 19Gillett v. Brown
motion and granting Sentry and Brown’s cross-motion. In doing
so, the court made several determinations. First, it concluded
that, because Majestic was ‚no longer a viable corporation‛ and
its ‚winding up period had expired,‛ it lacked standing to
‚assert any claims.‛ The court determined, however, that Gillett
had ‚the right to assert Majestic’s claims‛ as its successor in
interest. The court then determined that all three of the
complaint’s substantive claims—the breach of contract claim
against Sentry and the breach of contract and fraud claims
against Brown—were barred. The court concluded that the
breach of contract claims were barred on two independent
grounds. First, the court determined that the applicable statute
of limitations had run on the breach of contract claims. Applying
what the court referred to as a ‚first breach‛ approach, the court
concluded that the statute of limitations on the breach of contract
claims began to run in 1995 when Gillett and Majestic defaulted
on their obligations to Sentry under the Loan Agreement, a
default that occurred before any alleged default by Sentry in
connection with the collateral disposition or the Release. The
court then determined that the six-year statute of limitations
applicable to claims based upon written instruments had expired
in 2001, thus barring the breach of contract claims.
¶12 Second, the court determined that the Release barred the
breach of contract claims. Though Gillett and Majestic claimed
the Release was invalid, the court decided that the statute of
limitations on that claim had run its course before the first
complaint was filed. Specifically, the court found that the
limitations period for Gillett and Majestic’s fraud claim, the only
claim challenging the validity of the Release, began to run in
2002 when Gillett and Majestic first became aware of the factual
basis for their claim. Applying the three-year fraud statute of
limitations, the court determined that the fraudulent inducement
claim expired in 2005—before Gillett and Majestic filed their first
complaint—and therefore that the passage of time barred any
challenge to the validity of the Release. As a result, the still-valid
20140682-CA 7 2017 UT App 19Gillett v. Brown
Release precluded Gillett and Majestic’s contract claims against
all the defendants.
¶13 The court accordingly dismissed with prejudice all claims
in the 2008 complaint. Gillett and Majestic filed a combined rule
59(b) motion for a new trial and rule 60(b) motion to set aside the
district court’s judgment (the post-judgment motions). The
district court denied the motions and affirmed its prior ruling
granting summary judgment in favor of the defendants,
concluding that Gillett and Majestic’s ‚‘objections’ *were+ merely
a veiled attempt to take a second bite at the apple.‛
ISSUES AND STANDARD OF REVIEW
¶14 Gillett and Majestic now appeal the district court’s grant
of summary judgment in favor of Sentry and Brown. ‚We review
a district court’s grant of summary judgment for correctness.‛
IHC Health Services, Inc. v. D & K Mgmt., Inc., 2008 UT 73, ¶ 15,
196 P.3d 588. And because Gillett and Majestic’s post-judgment
motions essentially sought reconsideration of the district court’s
summary judgment decision, to the extent that they purport to
separately appeal them, the standard of review is the same. Cf.
State v. Parker, 872 P.2d 1041, 1044 (Utah 1994) (‚In determining
the character of a motion, the substance of the motion, not its
caption, is controlling.‛).
ANALYSIS
¶15 Gillett and Majestic contend that the district court made
several errors in dismissing their claims: (1) the district court
incorrectly applied the three-year fraud statute of limitations to
their breach of contract claims against Sentry and Brown when it
should have applied the six-year limitations period applicable to
claims based on a written instrument; (2) the court failed to toll
the running of the statute of limitations on the claims against
20140682-CA 8 2017 UT App 19Gillett v. Brown
Brown while he resided out of the state; (3) the court erred in
ruling that Majestic’s claims devolved to Gillett after Majestic’s
dissolution as a corporation and were not valid corporate
‚winding up‛ activities; (4) the court incorrectly applied the
‚first breach‛ doctrine to bar Gillett and Majestic’s breach of
contract claims against Sentry and Brown; and (5) the court
failed to recognize disputes of material fact that precluded
summary judgment.
¶16 Gillett and Majestic acknowledge that the ‚winding up‛
and the ‚first breach‛ issues become relevant only if we reverse
the district court’s dismissal of the breach of contract and fraud
claims as time-barred. Indeed, they characterize the district
court’s conclusions on these points as ‚peripheral,‛
‚unnecessary,‛ and ‚irrelevant‛ ‚*i+f the summary judgment on
the ‘statute of limitations’ bar is affirmed,‛ noting that they have
raised these issues on appeal ‚only to avoid future ‘law of the
case’ problems if the case is remanded for trial.‛ Accordingly, we
first consider whether the district court correctly applied the
pertinent statutes of limitation to Gillett and Majestic’s breach of
contract claims against Sentry and Brown and their fraudulent
inducement claim against Brown. Because we conclude that the
district court correctly ruled that the claims against both
defendants are time-barred and that there are no unresolved
issues of material fact that preclude summary judgment, we do
not reach the merits of either the ‚winding up‛ or the ‚first
breach‛ issue. Lastly, we address Sentry and Brown’s request for
the attorney fees and costs they have incurred on appeal.
I. Statutes of Limitation
¶17 A district court’s application of a statute of limitations is
reviewed for correctness. Gillmor v. Summit County, 2010 UT 69,
¶ 16, 246 P.3d 102. Gillett and Majestic argue that the district
court erred in applying the pertinent statutes of limitation to
dismiss their breach of contract claims against Brown and Sentry
and their fraud claim against Brown. Specifically, they argue that
20140682-CA 9 2017 UT App 19Gillett v. Brown
the court correctly tolled the breach of contract claims until the
2002 discovery of Brown’s guaranty payment, but that the court
then wrongly applied the three-year fraud statute of limitations
to those breach of contract claims. They contend that, had the
court applied the correct six-year statute of limitations for claims
based upon written instruments, see Utah Code Ann. § 78B-2-
309(2) (LexisNexis 2012), their breach of contract claims would
have been timely filed because they filed those claims in 2007,
within six years of their discovery in 2002.
¶18 Gillett and Majestic also argue that their claims against
Brown—the fraud claim and the breach of contract claim—were
timely filed, because Brown has continuously resided out of state
at all times relevant to the litigation. Thus, they assert that under
Utah Code section 78B-2-104, the section that tolls statutes of
limitation in circumstances where the defendant is out of state,
the limitation periods on the claims against Brown should never
have begun to run.
¶19 We first address the district court’s dismissal of the
breach of contract claims and then consider whether the district
court correctly rejected Gillett and Majestic’s argument that the
claims against Brown ought to have been indefinitely tolled
because he was residing out of state.
A. Breach of Contract Claims
¶20 Gillett and Majestic argue that the district court
incorrectly applied the fraud statute of limitations to their breach
of contract claims.
¶21 Utah Code sections 78B-2-305 and 78B-2-309 set out the
statutes of limitation applicable to fraud claims and claims based
upon ‚an instrument in writing,‛ respectively. An action based
on fraud or mistake ‚may be brought within three years‛ from
the date of accrual. Utah Code Ann. § 78B-2-305(3) (LexisNexis
2012). An action based ‚upon any contract, obligation, or liability
20140682-CA 10 2017 UT App 19Gillett v. Brown
founded upon an instrument in writing‛ can ‚be brought within
six years‛ of accrual. Id. § 78B-2-309(2). ‚As a general rule, a
statute of limitations begins to run ‘upon the happening of the
last event necessary to complete the cause of action.’‛ Russell
Packard Dev., Inc. v. Carson, 2005 UT 14, ¶ 20, 108 P.3d 741(quoting Myers v. McDonald, 635 P.2d 84, 86 (Utah 1981)). ‚Once
a statute has begun to run, a plaintiff must file his or her claim
before the limitations period expires or the claim will be barred.‛
Id.
¶22 In limited circumstances, however, ‚a statute of
limitations may be tolled until the discovery of facts forming the
basis for the cause of action.‛ Id. ¶ 21 (citation and internal
quotation marks omitted). Some limitation statutes contain their
own tolling provisions, establishing what our supreme court has
described as a ‚statutory discovery rule.‛ Id. For example, the
fraud statute of limitations expressly provides that ‚the cause of
action does not accrue until the discovery by the aggrieved party
of the facts constituting the fraud or mistake.‛ Utah Code Ann.
§ 78B-2-305(3). The supreme court has also recognized an
‚equitable discovery rule‛ that can apply where there is no
express statutory tolling provision. See Russell Packard, 2005 UT
14, ¶ 24. Under the equitable discovery rule, the accrual of a
claim may be tolled based upon ‚the defendant’s concealment or
misleading conduct‛ or where there are ‚exceptional
circumstances‛ making ‚the application of the general [statute of
limitations] rule . . . irrational or unjust.‛ Id. ¶ 25 (citation and
internal quotation marks omitted).
¶23 Gillett and Majestic assert that the district court correctly
tolled their claims against Brown and Sentry until 2002 based on
Sentry and Brown’s concealment of the guaranty payment but
then incorrectly applied the three-year statute of limitations for
fraud claims to their breach of contract claims. They argue that
the district court somehow conflated the fraudulent nature of the
concealment that tolled their claims with the breach of contract
20140682-CA 11 2017 UT App 19Gillett v. Brown
claims themselves and thus applied the wrong limitations
period. We disagree.
¶24 In its summary judgment ruling, the district court
dismissed all of Gillett and Majestic’s claims with prejudice and
confirmed that decision in denying the post-judgment motions.
While the logic of the district court’s summary judgment
decision is in places difficult to track, the court clarified its
reasoning in its ruling on Gillett and Majestic’s post-judgment
motion. Reading both the summary judgment and the post-
judgment rulings together, it appears that the court dismissed
the breach of contract claims against Sentry and Brown on two
independent grounds: first, that the claims were time-barred
because the six-year statute of limitations expired in 2001, and
second, that the Release barred the claims.
¶25 In deciding that the six-year limitations period barred the
contract claims, the court reasoned that Gillett and Majestic first
breached the Loan Agreement in 1995 by defaulting on their
payments to Sentry and that, according to the court’s
understanding of the ‚first breach‛ doctrine, the statute of
limitations began to run on the breach of contract claims from
the date of that default.4 In particular, the court stated that
4. Under the ‚first breach‛ doctrine, ‚a party first guilty of a
substantial or material breach of contract cannot complain if the
other party thereafter refuses to perform. He can neither insist
on performance by the other party nor maintain an action
against the other party for a subsequent failure to perform.‛
CCD, LC v. Millsap, 2005 UT 42, ¶ 29, 116 P.3d 366 (citation and
internal quotation marks omitted). Because we affirm the district
court’s dismissal of Gillett and Majestic’s claims on other
grounds, we do not reach the issue of whether the first breach
doctrine can be applied in a statute-of-limitations context as the
district court did here.
20140682-CA 12 2017 UT App 19Gillett v. Brown
‚Plaintiffs were the first party to breach the contract at issue in
1995 and therefore, the six (6) year statute of limitations expired
in 2001.‛ (Footnote omitted.) And in response to Gillett and
Majestic’s post-judgment contention that ‚the Court
misapprehended (and thus overlooked) the true ‘contractually-
based’ nature of the Plaintiffs’ claim (against *Sentry+) and
instead improperly converted Plaintiffs’ claims to allege ‘fraud,’
for which a shorter statute of limitations would apply,‛ the court
explained as follows: ‚[T]he contractual claims, i.e., [Gillett and
Majestic’s+ first and second causes of action, were barred by the
six (6) year statute of limitations‛ on the basis that ‚*Gillett and
Majestic] themselves asserted [that] they breached the terms of
the [Loan Agreement] in mid-1995 but did not file any suit until
June 2007.‛ Thus, contrary to Gillett and Majestic’s assertion, the
court did not equitably toll the limitations period for the breach
of contract claims at all. Rather, it concluded that the statute of
limitations applicable to claims based upon written instruments,
see Utah Code Ann. § 78B-2-309(2) (LexisNexis 2012), applied to
those claims, with the limitations period commencing in 1995
and expiring six years later in 2001. In so concluding, the court
noted that Gillett and Majestic alleged ‚they were unaware of
Sentry’s receipt of Mr. Brown’s $250,000 payment‛ until March
2002, when they first became aware of the guaranty payment.
But the court found that ‚the concealment *at issue+ pertains to
[the] alleged fraud inducing [Gillett and Majestic] to sign the
release in December 1996, which [Gillett and Majestic] alleged to
not have discovered until March 2002,‛ and, as a result, it
applied the discovery rule in the fraud statute of limitations to
toll only the fraud claim against Brown until March 2002.
¶26 Thus, the court did not even purport to toll the statute of
limitations on the contract claims, much less apply a fraud
limitations period to those claims. Rather the district court
seemed to simply bypass consideration of whether the equitable
discovery rule ought to toll the breach of contract claims until
discovery of the guaranty payment because it concluded that
20140682-CA 13 2017 UT App 19Gillett v. Brown
Gillett and Majestic had first breached the Loan Agreement
before the guaranty payment had even been made.
¶27 The second basis for the court’s decision to dismiss the
breach of contract claims was the operation of the Release.
Specifically, the district court concluded that even if the statute
of limitations had not expired, the Release barred both breach of
contract claims. The court reasoned that Gillett and Majestic’s
only challenge to the validity of the Release was asserted in their
fraud claim against Brown, where they alleged that he had
fraudulently induced them to execute the mutual release of all
contract claims relating to the Loan Agreement. Having assumed
for purposes of summary judgment that Gillett and Majestic did
not discover until the deposition of Sentry’s CEO that Brown
had misled them by, among other things, failing to disclose the
guaranty payment, the court tolled the fraudulent inducement
claim until March 2002. The court then applied the three-year
statute of limitations applicable to fraud claims from March 2002
and determined that, even though the fraud claim was tolled, it
had nonetheless expired in 2005, long before the 2007 case was
filed.
¶28 Thus, the district court dismissed the breach of contract
claims on two independent grounds: first, that they were barred
by the applicable statute of limitations; and second, that they
were barred by the Release. The court also ruled that the passage
of the three-year limitations period barred any challenge to the
Release.
¶29 We ‚will not reverse a ruling of the *district+ court that
rests on independent alternative grounds where [an] appellant
challenges only one of those grounds.‛ Wm. Douglas Horne
Family Revocable Trust v. Wardley/McLachlan Dev., LLC, 2013 UT
App 129, ¶ 9, 304 P.3d 99 (citation and internal quotation marks
omitted). Instead, we ‚may affirm if the [appellant] fail[s] to
challenge each of the grounds for the district court’s grant of
summary judgment.‛ Id.
20140682-CA 14 2017 UT App 19Gillett v. Brown
¶30 On appeal, Gillett and Majestic contend that the district
court incorrectly dismissed the breach of contract claims against
Brown and Sentry on statute of limitations grounds. But they do
not acknowledge that the validity of the Release was an
independent basis for the court’s decision. Indeed, Gillett and
Majestic do not even mention the Release in their opening brief,
much less challenge the district court’s interpretation of its
applicability and scope. And in their reply brief, while they
acknowledge that the allegation of fraud in the complaint ‚was
for the purpose of challenging the validity of the ‘Release’ and its
use so as to bar *Gillett and Majestic’s+ claims,‛ they simply
reassert without further analysis that the district court
‚narrowed its actual ‘summary judgment’ ruling to be on the
‘statute of limitations’ grounds.‛ Thus, Gillett and Majestic fail to
challenge the district court’s alternative conclusion that the
passage of time rendered the validity of the Release unassailable
and that the Release itself barred their breach of contract claims
against both Sentry and Brown.
¶31 Accordingly, even if the district court erred in its
application of the statute of limitations, as Gillett and Majestic
contend, we nonetheless affirm the court’s dismissal of the
breach of contract claims on the ‚unchallenged alternative
ground of [the operation of the Release] without reaching the
merits of that decision.‛ See id. ¶ 13.
B. Fraud Claim Against Brown
¶32 Gillett and Majestic argued below that former Utah Code
section 78-12-355 acted to indefinitely toll the statutes of
5. Section 78-12-35 was renumbered to 78B-2-104 in February
2008 and amended in March 2009 to read:
If a cause of action accrues against a person while
the person is out of the state and the person is not
subject to the jurisdiction of the courts of this state
(continued…)
20140682-CA 15 2017 UT App 19Gillett v. Brown
limitation on their claims against Brown because, as a resident of
Wyoming, Brown had been absent from the state of Utah since
the events that formed the basis of their claim. Section 78-12-35
provided:
Where a cause of action accrues against a person
when he is out of the state, the action may be
commenced within the term as limited by this
chapter after his return to the state. If after a cause
of action accrues he departs from the state, the time
of his absence is not part of the time limited for the
commencement of the action.
Utah Code Ann. § 78-12-35 (West 2007).
(…continued)
in accordance with Section 78B-3-205, the action
may be commenced within the term as limited by
this chapter after his return to the state. If after a
cause of action accrues the person departs from the
state, the time of his absence is not part of the time
limited for the commencement of the action unless
Section 78B-3-205 applies.
Utah Code Ann. § 78B-2-104 (LexisNexis Supp. 2009). In other
words, the references to long-arm jurisdiction under section 78B-
3-205 were not added until March 2009. Compare id. (LexisNexis
Supp. 2009), with id. (2008). Gillett and Majestic argued below
that the current section 78B-2-104 was not applicable because the
litigation commenced before the amendments. And indeed, in
their briefing on appeal, although Gillett and Majestic purport to
quote section 78B-2-104, they omit altogether the added
language that incorporated long-arm jurisdiction concepts into
the amended statute. Accordingly, we cite the former version in
our discussion.
20140682-CA 16 2017 UT App 19Gillett v. Brown
¶33 As discussed above, Gillett and Majestic asserted two
claims against Brown—one for breach of contract and one for
fraud. The district court determined in its summary judgment
ruling that the Release barred the breach of contract claim,
unless the claim alleging that the Release was fraudulently
obtained had been timely filed. It then determined that the fraud
claim was barred because the applicable statute of limitations
had expired in 2005, over two years before Gillett and Majestic
filed their 2007 case. The court accordingly dismissed all the
claims.
¶34 In their motions following entry of the summary
judgment order, Gillett and Majestic contended that the district
court’s summary judgment ruling on the fraud claim ‚fails to
consider the legal effect of [the out-of-state tolling statute] . . .
and [Brown’s+ essentially-continuous absence from Utah since
the mid-1990s.‛ They did not further analyze or explain this
contention to the court, however, as Gillett and Majestic failed to
submit a memorandum supporting their motion. Nevertheless,
in denying the motion, the district court addressed the issue and
concluded that the out-of-state tolling statute did not apply to
the circumstances in this case.
¶35 First, the court decided that it had jurisdiction to
adjudicate the claims against Brown by virtue of the forum
selection clauses found in the Loan Agreement, which Brown
signed, and Brown’s personal Guarantee and Waiver. Both
forum selection clauses stated that the parties agreed to resolve
all matters in ‚the exclusive jurisdiction of the Third Judicial
District for Salt Lake County, State of Utah.‛ Relying upon
Jacobsen Construction Co. v. Teton Builders, 2005 UT 4, 106 P.3d
719, the court discussed circumstances in which an enforceable
forum selection clause establishes personal jurisdiction over a
defendant. In Jacobsen Construction, our supreme court held that
for a court to have personal jurisdiction over a defendant by way
of a forum selection clause, there need be only ‚a rational nexus
20140682-CA 17 2017 UT App 19Gillett v. Brown
between Utah and the underlying dispute.‛ Id. ¶ 32 (citation and
internal quotation marks omitted). The district court then
determined that the forum selection clauses at issue created a
‚rebuttable presumption‛ that it had personal jurisdiction over
Brown and that the circumstances in the case established ‚the
necessary rational nexus‛ between Utah and the matter in
controversy.6 (Citing Jacobsen Constr., 2005 UT 4, ¶ 39.)
¶36 Second, the court determined that the out-of-state tolling
statute—whether the 2008 or subsequently amended version—
did not apply under the circumstances, and that Gillett and
Majestic had ‚misconstrued the statutory language and . . . the
purpose of‛ the statute. Quoting Snyder v. Clune, 390 P.2d 915(Utah 1964), a case applying the preamendment statute, the court
reasoned ‚‘that the objective of [the out-of-state tolling statute]
was to prevent a defendant from depriving a plaintiff of the
opportunity of suing him by absenting himself from the state
during the period of limitation.’‛ (Quoting id. at 916.) The
district court then observed that the supreme court, in applying
this principle in Olseth v. Larson, 2007 UT 29, 158 P.3d 532,
determined that, ‚because defendant was an out-of-state
defendant whom plaintiff was unable to locate at the time she
attempted to serve her second amended complaint, which then
was outside of the applicable statute of limitations, the statute of
limitations was tolled.‛ (Citing id. ¶¶ 2–7.)
¶37 The district court went on to compare the circumstances
in Olseth to those in the present case, observing that ‚[u]nlike the
matter in Olseth, [Gillett and Majestic] knew that [in] the mid-
1990s Mr. Brown relocated his permanent residence . . . to Teton
County, Wyoming, where he has continuously maintained his
6. We note that it is not clear whether the court viewed the
forum selection clauses as providing the court with an alternate,
independent basis not to invoke the tolling statute.
20140682-CA 18 2017 UT App 19Gillett v. Brown
permanent legal residence and domicile.‛ (Third alteration in
original) (citation and internal quotation marks omitted). The
district court also noted that Gillett and Majestic had managed to
serve Brown with their complaint in Wyoming and that they had
‚never claimed that they were unable to locate Mr. Brown in
order to appropriately serve him‛ or that Brown’s ‚absence from
Utah deprived them of their ability to timely commence the
entitled matter.‛ The court accordingly determined that ‚*t+he
fact that Mr. Brown was served in Wyoming and the alleged
inconvenience of [Gillett and Majestic] in attempting to timely
depose Mr. Brown does not invoke [the out-of-state tolling
statute+.‛ Based on this analysis, the court concluded that the
claims against Brown were not tolled due to Brown’s out-of-state
residence.
¶38 On appeal, Gillett and Majestic do not meaningfully
engage with the district court’s reasoning that the forum
selection clauses provided a basis for personal jurisdiction over
Brown and that the out-of-state tolling statute did not apply in
the circumstances. See Wing v. Still Standing Stable LLC, 2016 UT
App 229, ¶ 19 (quoting Golden Meadows Props. LC v. Strand, 2010
UT App 257, ¶ 17, 241 P.3d 375) (explaining that appellate
review is ‚confined to the trial court’s ruling*s+‛ and rejecting a
challenge where the appellant’s brief ‚‘fail*ed+ to address the
basis of the district court’s ruling’‛); State v. Cooper, 2012 UT App
211, ¶ 10, 283 P.3d 1075 (declining to reach an issue in part
because the appellant ‚fail*ed+ to address . . . the district court’s
consideration and rejection of [the issue being appealed] when it
was raised in a motion for new trial‛); Duchesne Land, LC v.
Division of Consumer Prot., 2011 UT App 153, ¶ 8, 257 P.3d 441(explaining that the appellants had ‚failed to persuade us that
the district court’s ruling constituted error‛ where the appellants
had ‚not addressed the actual basis for the district court’s
ruling‛).
20140682-CA 19 2017 UT App 19Gillett v. Brown
¶39 Gillett and Majestic begin their argument on this point by
discussing the overall applicability of the out-of-state tolling
statute to this case. Their analysis in this regard consists of
quoting the statute, reciting the apparently undisputed factual
support for the proposition that Brown resided in Wyoming
since the mid-1990s events underlying the suit, and then stating
that due to Brown’s ‚permanent absence from the state, . . . the
statute of limitations effectively never commences or runs‛ on
the breach of contract and fraud claim against Brown. They then
conclude by stating that ‚the District Court’s dismissal of *their+
claims against [Brown+ was in error.‛7
¶40 But the district court explained at some length, based on
its analysis of certain language in the statute and prior cases
7. Indeed, apart from recounting the factual basis of Brown’s
absence from the state, Gillett and Majestic’s analysis on this
point is contained in one paragraph, which reads:
In this case, Defendant Brown has not
resided in Utah on a continuous basis since the
1990s; he (in the mid-1990s or earlier) changed his
residence and domicile to the State of Wyoming
(Teton County) and has continuously resided
there. . . . Thus, due to Brown’s permanent absence
from the state due to his residence in Wyoming
(and/or lengthy half-year annual vacations in
Mexico), the statute of limitation effectively never
commences or runs. This result—that the statute
effectively never runs—is applicable to both the
fraud claim (a three-year statute, tolled until
discovery) as well as the longer (six year) statute
for the breach of contract claims. Thus, the District
Court’s dismissal of the Plaintiffs’ claims against
Defendant [Brown] was in error.
(Internal quotation marks omitted.)
20140682-CA 20 2017 UT App 19Gillett v. Brown
interpreting it, why it concluded that the statute did not apply in
the circumstances of this case. And Gillett and Majestic do not
describe, engage with, or effectively challenge the basis of the
court’s decision; they critique neither the court’s interpretation
of the statutory language nor its reading of prior cases applying
the statute. Indeed, the entirety of their response to the court’s
analysis in their opening brief consists of two sentences. After
simply noting without further description that the court’s
analysis of the applicability of the statute is found on ‚pages 6
thru 8‛of its post-judgment motions ruling, they state:
The District Court’s infusion . . . of long arm
jurisdiction concepts (namely, that the Plaintiffs
knew where Brown resided out-of-state and could
have served him, as was ultimately accomplished)
does not resolve the situation. The statute—78B-2-
[1]04—still tolls the running of the statute, because
[Brown] is out-of-state, regardless of whether the
Plaintiff knew where [Brown] was.
¶41 Such a conclusory analysis falls short of demonstrating
that the district court erred. See State v. Green, 2005 UT 9, ¶¶ 11–
12, 108 P.3d 710 (declining to address appellant’s argument
where, ‚*t+oo often, his legal analysis is little more than a
conclusory statement unsupported by analysis or authority‛).
Although Gillett and Majestic argue that, under the out-of-state
tolling statute, the claims against Brown should have been
tolled, they do not attempt to meaningfully address the district
court’s reasoning or explain why the court’s determination that
their arguments failed under both the original and the amended
versions of the out-of-state tolling statute was infirm. See Golden
Meadows Props., 2010 UT App 257, ¶¶ 17–18 (explaining that an
appellant cannot demonstrate that a district court erred if he or
she ‚fails to attack the district court’s reasons‛ for the decision it
made); see also Utah R. App. P. 24(a)(9). Rather, in order for us to
determine that the district court erred and reverse its decision,
20140682-CA 21 2017 UT App 19Gillett v. Brown
we would have to assume ‚the burden of argument and
research‛ and, in effect, act as Gillett and Majestic’s advocates.
See Hi-Country Estates Homeowners Ass’n v. Jesse Rodney Dansie
Living Trust, 2015 UT App 218, ¶ 5, 359 P.3d 655 (citation and
internal quotation marks omitted). We decline to do so. By
failing to address the district court’s reasoning, Gillett and
Majestic have ‚failed to carry their burden on appeal.‛ See id.Accordingly, we affirm the district court’s conclusion that the
out-of-state tolling statute was inapplicable in the circumstances
of this case.8
8. Gillett and Majestic also contend that all their claims against
Sentry and Brown were timely filed in a 2003 case, which the
district court overlooked. The 2003 case, they allege, was
dismissed in June 2006 and timely refiled under the savings
statute in June 2007 and again in 2008. Thus, they argue, their
claims were filed well within the statutes of limitation—whether
the three-year fraud statute applicable to the Release or the six-
year period applicable to the contract claims—under their theory
of how the court should have applied that statute. As evidence
of the alleged filing, Gillett and Majestic attach a docketing
statement for a 2003 case as an addendum to their opening brief.
The docketing statement indicates that a civil complaint was
filed in September 2003, that Brown and Sentry filed answers,
and that the case was dismissed without prejudice for failure to
prosecute in June 2006 on the court’s own motion. We will not
consider this argument. Among other things, as Sentry and
Brown point out, Gillett and Majestic did not raise the 2003
complaint in the district court proceedings; rather, they ‚alleged
to the [district] court that this matter was filed in 2007 . . . , and
the [district] court confirmed that this matter was first filed in
2007.‛ ‚*I+n order to preserve an issue for appeal[,] the issue
must be presented to the [district] court in such a way that the
[district] court has an opportunity to rule on that issue.‛ 438
(continued…)
20140682-CA 22 2017 UT App 19Gillett v. Brown
II. Issues of Fact
¶42 Gillett and Majestic contend that there were disputes of
material fact that ought to have precluded summary judgment
as a matter of law. Gillett and Majestic have identified three
questions of fact that they contend were material and disputed:
(1) whether Brown continuously resided out of state, (2) whether
Majestic’s claims against Sentry and Brown fell within the
‚‘winding up’ of its corporate affairs,‛ and (3) whether
Majestic’s ‚default in making the monthly repayments . . .
necessarily constitute*d+ ‘breach’‛ of the Loan Agreement in
terms of the ‚‘first breach’ doctrine.‛ The last two questions do
not seem entirely factual and, in any event, implicate issues that
we have already decided we do not need to reach. And because
we have resolved the question of Brown’s absence from the state
on legal grounds that do not implicate questions of fact, we do
not further address this claim.
III. Attorney Fees
¶43 Sentry and Brown request an award of attorney fees and
costs incurred to defend this appeal. They contend that Gillett
and Majestic’s brief is deficient under rule 24(k) of the Utah
(…continued)
Main Street v. Easy Heat, Inc., 2004 UT 72, ¶ 51, 99 P.3d 801 (first
and second alterations in original) (citation and internal
quotation marks omitted). Gillett and Majestic have provided no
justification for their failure to bring the 2003 litigation to the
attention of the district court; indeed, they do not even
acknowledge the omission. Further, the bare docketing
statement from the 2003 case, even if we were willing to take
judicial notice of it, does not establish that the claims filed in
2007 were originally brought in a 2003 complaint which has
never been produced.
20140682-CA 23 2017 UT App 19Gillett v. Brown
Rules of Appellate Procedure,9 and that it is also meritless and
frivolous under rule 33.10 They also contend that they should be
awarded costs under rule 34.11
¶44 We decline to award attorney fees. ‚The decision to assess
attorney fees under rule 24(k) is a matter of discretion‛ for the
appellate court. Fullmer v. Fullmer, 2015 UT App 60, ¶ 27, 347
P.3d 14 (citation and internal quotation marks omitted). And
while we are required to order fees if we determine that an
appeal is meritless or frivolous under rule 33, we have stated
that ‚*t+he imposition of rule 33 sanctions is a serious matter and
only to be used in egregious cases, lest the threat of such
9. Rule 24(k) of the Utah Rules of Appellate Procedure provides:
All briefs under this rule must be concise,
presented with accuracy, logically arranged with
proper headings and free from burdensome,
irrelevant, immaterial or scandalous matters. Briefs
which are not in compliance may be disregarded or
stricken, on motion or sua sponte by the court, and
the court may assess attorney fees against the
offending lawyer.
10. Rule 33(a) of the Utah Rules of Appellate Procedure provides
that ‚if the court determines that . . . *an+ appeal taken under
these rules is either frivolous or for delay, it shall award just
damages, which may include single or double costs, . . . and/or
reasonable attorney fees, to the prevailing party.‛
11. Rule 34(a) of the Utah Rules of Appellate Procedure provides
in part, ‚Except as otherwise provided by law, if an appeal is
dismissed, costs shall be taxed against the appellant unless
otherwise agreed by the parties or ordered by the court; if a
judgment or order is affirmed, costs shall be taxed against
appellant unless otherwise ordered . . . .‛
20140682-CA 24 2017 UT App 19Gillett v. Brown
sanctions should chill litigants’ rights to appeal lower court
decisions.‛ Tobler v. Tobler, 2014 UT App 239, ¶ 47, 337 P.3d 296(citation and internal quotation marks omitted); Cooke v. Cooke,
2001 UT App 110, ¶ 14, 22 P.3d 1249 (‚The sanction for filing a
frivolous appeal applies only in egregious cases with no
reasonable legal or factual basis.‛ (citation and internal
quotation marks omitted)).
¶45 While Gillett and Majestic ultimately did not prevail,
given the complexity of the factual and legal issues present in
this case, we ‚cannot say that [this] appeal, taken as a whole,
presents the egregious case that warrants rule 33 sanctions.‛ See
Tobler, 2014 UT App 239, ¶ 47. Accordingly, we decline to award
attorney fees under rules 24(k) or 33. However, because we have
affirmed the district court’s dismissal, Sentry and Brown are
entitled to their costs under rule 34.
CONCLUSION
¶46 We conclude that Gillett and Majestic have not
demonstrated that the district court’s summary judgment ruling
was in error. Accordingly, we affirm the district court’s dismissal
of Gillett and Majestic’s claims.
20140682-CA 25 2017 UT App 19