Morningside Developers, LLC v. Copper Hills Custom Homes, LLC

2015 UT App 99THE UTAH COURT OF APPEALS
MORNINGSIDE DEVELOPERS, LLC,
Plaintiff,
v.
COPPER HILLS CUSTOM HOMES, LLC,
Defendant, Third-party Plaintiff, and Appellant,
v.
WELLS FARGO BANK, NA; BANK OF AMERICA, NA; AND MORTGAGE
ELECTRONIC REGISTRATION SYSTEMS, INC.,
Third-party Defendants and Appellees.
Memorandum Decision
No. 20130658-CA
Filed April 23, 2015
Third District Court, Salt Lake Department
The Honorable Keith A. Kelly
No. 070914123
Nate D. Ashcraft, Attorney for Appellant
Timothy Curtis, Attorney for Appellees Bank of
America, NA and Mortgage Electronic Registration
Systems, Inc.
Laura S. Scott and Nicole G. Farrell, Attorneys for
Appellee Wells Fargo Bank, NA
JUDGE JAMES Z. DAVIS authored this Memorandum Decision, in
which JUDGES GREGORY K. ORME and JOHN A. PEARCE concurred.
DAVIS, Judge:
¶1 Copper Hills Custom Homes, LLC (Copper Hills) appeals
the district court’s reinstatement of an order of dismissal for
failure to prosecute. We vacate in part and affirm in part.
¶2 Copper Hills provided construction contracting services
to Morningside Developers, LLC (Morningside) on eight
Morningside v. Copper Hills
separate parcels of real property in 2006. After Morningside
failed to pay Copper Hills for its work, Copper Hills recorded
mechanics’ liens against each of the parcels and ultimately filed
eight separate lien foreclosure actions. In October 2007,
Morningside filed suit against Copper Hills for breach of
contract, fraud, and related claims. In October 2009,
Morningside’s claims and Copper Hills’ foreclosure claims were
consolidated into a single action. Soon after, Copper Hills’
attorney withdrew.
¶3 Neither party took any further action in the case, and on
October 14, 2010, the district court issued an order to show cause
why the case should not be dismissed (the first OSC). See
generally Utah R. Jud. Admin. 4-103(2) (“If a certificate of readi-
ness for trial has not been served and filed within 330 days of the
first answer, the clerk shall mail written notification to the
parties stating that absent a showing of good cause by a date
specified in the notification, the court shall dismiss the case
without prejudice for lack of prosecution.”). New counsel for
Copper Hills appeared at the hearing on the first OSC and
indicated that Copper Hills was still interested in pursuing the
case and that he intended to file a motion to amend Copper
Hills’ foreclosure complaints to consolidate them into a single
complaint. The district court agreed to strike the first OSC
provided that Copper Hills file the motion within thirty days.
Copper Hills filed the motion within thirty days but never
actually amended the complaint or took any further action to
pursue its claims. According to Copper Hills, “extreme financial
difficulties” stemming from the recession left it “without the
resources required to aggressively pursue its claims.” The
district court never ruled on the motion to amend.
¶4 On November 18, 2011, the district court issued another
order to show cause (the second OSC). This time, neither party
appeared at the hearing, and on January 26, 2012, the district
court dismissed the case without prejudice (the January 2012
Dismissal). In June 2012, Copper Hills moved the court to set
aside the order of dismissal on the ground that notice of the
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second OSC was mailed to Copper Hills’ former counsel and
Copper Hills was therefore unaware of it. On September 25,
2012, the district court issued an order granting the motion (the
Set Aside Order) but expressed concern “about the overall
neglect of all of the parties in moving this case forward” and
warned that it would dismiss the case “if no party has submitted
a Rule 16(b) certification of readiness for trial within 90 days.”
¶5 After the district court set aside the dismissal, Copper
Hills filed an amended complaint adding twenty-five additional
parties, including Appellees, who had interests in the parcels on
which Copper Hills had filed mechanics’ liens. Copper Hills then
filed a certificate of readiness for trial on December 21, 2012. The
district court held a scheduling conference on February 15, 2013,
at which it expressed concern about Copper Hills adding so
many parties late in the litigation. In light of its concern, the
district court issued a new order to show cause (the third OSC)
ordering the parties to address whether the Set Aside Order
should be vacated and the January 2012 Dismissal reinstated.
Following a hearing, the district court issued an order in which it
vacated the Set Aside Order and dismissed the case with
prejudice (the Final Dismissal). Copper Hills appeals.
¶6 Copper Hills asserts that the district court abused its
discretion by dismissing the case with prejudice. “In reviewing a
trial court’s decision to dismiss for failure to prosecute, we
accord the trial court broad discretion and do not disturb its
decision absent an abuse of discretion and a likelihood that an
injustice has occurred.” Hartford Leasing Corp. v. State, 888 P.2d
694, 697 (Utah Ct. App. 1994).
¶7 As a threshold matter, we must determine whether the
Final Dismissal constituted a new order of dismissal pursuant to
rule 41(b) of the Utah Rules of Civil Procedure or a reinstatement
of the January 2012 Dismissal, which was entered pursuant to
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rule 4-103 of the Utah Rules of Judicial Administration.1 Rule 4-
103 permits the district court to issue an order to show cause sua
sponte regarding failure to prosecute “*i+f a certificate of
readiness for trial has not been served and filed within 330 days
of the first answer.” Utah R. Jud. Admin. 4-103(2). Dismissal
pursuant to this rule is without prejudice. Id.; see also Panos v.
Smith’s Food & Drug Ctrs., Inc., 913 P.2d 363, 364–65 (Utah Ct.
App. 1996). Under rule 41(b), on the other hand, “a trial court
has the discretion to dismiss an action with prejudice for failure
to prosecute without justifiable excuse.” Rohan v. Boseman, 2002
UT App 109, ¶ 28, 46 P.3d 753; see also Utah R. Civ. P. 41(b)
(“Unless the court in its order for dismissal otherwise specifies, a
dismissal under this subdivision . . . operates as an adjudication
upon the merits.”). Thus, dismissal with prejudice would be
appropriate only if the Final Dismissal were a new order issued
under rule 41(b).2
¶8 We conclude that the Final Dismissal was a reinstatement
of the January 2012 Dismissal rather than a new order of
dismissal pursuant to rule 41(b). In support of their argument
that the Final Dismissal was based on rule 41(b), Appellees point
out that in responding to the third OSC, they addressed the
Westinghouse factors relevant to a rule 41(b) analysis and asserted
that the case should be dismissed under rule 41(b). See
1. Because the district court made no findings in connection with
the January 2012 dismissal, the parties do not dispute that it was
a rule 4-103 dismissal rather than a rule 41(b) dismissal. See Utah
R. Civ. P. 52(a) (requiring the district court to enter findings of
fact in support of a dismissal under rule 41(b)).
2. While it may seem that we are approaching this appeal
backward by considering whether the dismissal should have
been with or without prejudice before examining whether the
dismissal was itself appropriate, we cannot examine the
propriety of the dismissal until we have determined which rule
of procedure controls.
20130658-CA 4 2015 UT App 99Morningside v. Copper Hills
Westinghouse Elec. Supply Co. v. Paul W. Larsen Contractor, Inc.,
544 P.2d 876, 879 (Utah 1975). Appellees assert that their
invocation of rule 41(b) in their response, combined with the
district court’s detailed findings regarding Copper Hills’ failure
to move the case along, indicates that the Final Dismissal was
intended to be a rule 41(b) dismissal.
¶9 Admittedly, the district court’s analysis of factors that
would be relevant to a rule 41(b) analysis and its decision to
dismiss with prejudice lend some credence to Appellees’
argument. However, the third OSC specifically directed the
parties to address whether the Set Aside Order should be
vacated and the January 2012 Dismissal reinstated, not whether
the district court should enter a new order of dismissal pursuant
to rule 41(b). Furthermore, the district court never characterized
its Final Dismissal as a dismissal under rule 41(b), and the Final
Dismissal never explicitly mentioned rule 41(b) or the
Westinghouse factors. Rather, the district court determined,
consistent with its framing of the issue in the third OSC, that the
Set Aside Order “should be vacated and the *January 2012
Dismissal] should be reinstated.” Although the district court
made findings that could have supported a dismissal for failure
to prosecute under rule 41(b), and those findings were
supported by sufficient evidence, its analysis ultimately focused
on whether the Set Aside Order should be vacated. The court’s
intent to reinstate the January 2012 Dismissal is apparent not
only in its ultimate order vacating the Set Aside Order but in its
analysis, where it concluded that Copper Hills’ motion to set
aside should never have been granted in the first place because it
was not timely and that dismissal should be reinstated because
Copper Hills failed to comply with the court’s condition that it
be ready for trial within ninety days. Because it reinstated the
January 2012 Dismissal, which was entered pursuant to rule 4-
103, rather than entering a new order of dismissal pursuant to
rule 41(b), the district court had no basis for dismissing the case
with prejudice. Further, the reinstatement of the January 2012
Dismissal presumably reinstated the entire order, which
explicitly provided that the dismissal was to be without
20130658-CA 5 2015 UT App 99Morningside v. Copper Hills
prejudice. Thus, assuming that the district court’s reinstatement
of the January 2012 Dismissal was appropriate, the dismissal
should have been without prejudice.
¶10 Having determined that the Final Dismissal reinstated the
January 2012 Dismissal, we next turn to the question of whether
the district court abused its discretion in vacating the Set Aside
Order and reinstating the January 2012 Dismissal. Because
Copper Hills did not receive notice of the second OSC, the
district court gave it an opportunity to avoid dismissal by
getting the case ready for trial in a timely manner. However, the
Set Aside Order was a conditional order, which the district court
warned it would revoke “if no party has submitted a Rule 16(b)
certification of readiness for trial within 90 days of the date of
this order.” Although Copper Hills arguably complied with this
condition by submitting the certificate of readiness on December
21, 2012, the district court found,
[T]he Certificate was incorrect because the
Consolidated Case is not ready for trial. To the
contrary, at the time the Certificate of Readiness
was filed, the recently served defendants were in
the process of filing answers to the First Amended
Complaint. No initial disclosures have been
exchanged[,] . . . no depositions have been taken
and no written discovery has been served.
Because Copper Hills failed to comply with the condition
outlined in the Set Aside Order, the district court did not abuse
its discretion by reinstating the January 2012 Dismissal.3
3. We acknowledge that vacating the Set Aside Order and
reinstating the January 2012 Dismissal may have been a more
confusing approach than simply entering a new order of
dismissal pursuant to either rule 4-103 or rule 41(b). However,
(continued…)
20130658-CA 6 2015 UT App 99Morningside v. Copper Hills
¶11 Furthermore, any injustice to Copper Hills that may have
occurred as a result of the district court’s failure to provide
notice of the second OSC was cured by the third OSC hearing, at
which Copper Hills was given a full opportunity to make “a
showing of good cause” why the case should not be dismissed.
See Utah R. Jud. Admin. 4-103(2). The district court made
extensive findings regarding whether Copper Hills’ dilatory
behavior was justified, ultimately finding that both Copper Hills
and Morningside had “adopted a conscious strategy to do as
little as possible and drag out the *case+” and that even Copper
Hills’ financial limitations did not provide a sufficient excuse for
the extensive delay in the case. The district court did not abuse
its discretion in so finding, particularly in light of the fact that
Copper Hills had also failed to promptly ready the case for trial
as directed in the Set Aside Order.
¶12 In sum, we conclude that the Final Dismissal must be
regarded as a reinstatement of the January 2012 Dismissal, which
was entered pursuant to rule 4-103, and that the district court
did not abuse its discretion in reinstating that order, so
characterized. Accordingly, we vacate the district court’s Final
Dismissal insofar as it dismisses the case with prejudice, and we
affirm the district court’s reinstatement of the January 2012 order
dismissing the case without prejudice.
(…continued)
given the conditional nature of the Set Aside Order, the district
court’s action was not an abuse of its discretion.
20130658-CA 7 2015 UT App 99