Sumsion v. Bay Harbor Farm, LC

2018 UT App 114THE UTAH COURT OF APPEALS
STEVEN R. SUMSION,
Appellant,
v.
BAY HARBOR FARM, LC,
Appellee.
Opinion
No. 20170066-CA
Filed June 14, 2018
Fourth District Court, Provo Department
The Honorable David N. Mortensen
The Honorable Christine S. Johnson
No. 140400991
Steven R. Sumsion, Attorney for Appellant
Stephen W. Geary, Attorney for Appellee
JUDGE RYAN M. HARRIS authored this Opinion, in which JUDGES
GREGORY K. ORME and DIANA HAGEN concurred.
HARRIS, Judge:
¶1 For more than a decade, attorney Steven R. Sumsion has
tried to collect attorney fees he believes he is owed for
representing Bay Harbor Farm, LC (Bay Harbor) in a workers’
compensation case. Bay Harbor refuses to pay Sumsion’s bill,
because Bay Harbor maintains that it never hired Sumsion, and
that Sumsion only represented Donald Proctor, one of Bay
Harbor’s members, in that litigation. The dispute between these
parties has reached us once before, when we determined that an
attorney’s lien that Sumsion filed against Bay Harbor’s property
was not a “wrongful lien” under Utah’s Wrongful Lien Act. See
Bay Harbor Farm, LC v. Sumsion (Bay Harbor I), 2014 UT App 133,
329 P.3d 46. In that case, we left open the question of “[w]hether
. . . Bay Harbor was actually Sumsion’s client.” Id. ¶ 14.
Sumsion v. Bay Harbor Farm LC
¶2 That question is now squarely presented to us, and we
answer it in the negative, because we conclude that Proctor did
not have authority to retain Sumsion on behalf of Bay Harbor,
and that Bay Harbor did not otherwise retain Sumsion. This
conclusion compels the dismissal of several of Sumsion’s claims,
and we conclude that Sumsion’s remaining claim (for unjust
enrichment) is untimely filed. Accordingly, we affirm the district
court’s entry of summary judgment in favor of Bay Harbor.
BACKGROUND
¶3 In 1994, Proctor, Stan Weed, and two other individuals
formed Bay Harbor, a Utah limited liability company (LLC).
According to its Articles of Organization, the company was
formed “to engage in the business of the production and sale of
agricultural products.” Weed and Proctor each held a 45%
interest in Bay Harbor, and the other two members collectively
held a 10% interest. Substantially all of Bay Harbor’s assets
consist of real property located in Utah County. Bay Harbor
began as a member-managed company, but in 1997, the
company was changed to a manager-managed company. Bay
Harbor’s Amended Articles of Organization, filed in 1997, list
both Weed and Proctor as managers. Bay Harbor does not
have—and has never had—a written operating agreement.
¶4 Bay Harbor’s founding members intended “to operate the
real property as a farm while awaiting an opportunity to sell the
property for development, with the hope that operating income
would cover the operating and mortgage costs.” However, the
company never turned a profit, and the only time it distributed
money to its members was when it sold various portions of real
property it owned.
¶5 In 2001, Weed and Proctor had a falling-out, and Weed,
acting alone, “concluded that it was counterproductive to
continue to try to operate Bay Harbor as a farm,” and he
20170066-CA 2 2018 UT App 114Sumsion v. Bay Harbor Farm LC
“informed [Proctor] that Bay Harbor would cease operation.”
Purporting to act on behalf of Bay Harbor, Weed filed Articles of
Dissolution in an attempt to dissolve the company. That same
year, Bay Harbor leased its property to Proctor “for the nominal
cost of $1 per year, plus the obligation to pay for water shares,
insurance, mortgage payments, and related expenses for
operating the property as a farm.” According to Weed, the
company was dissolved “so that [Proctor] would be operating
independently and not under the umbrella of the LLC.”
However, even assuming that the 2001 dissolution papers are
valid, Bay Harbor has never completely wound up its
operations; indeed, to this day it continues to own real property
in Utah County. 1
¶6 In 2002, a worker was injured while assisting with the
farm operations on Bay Harbor’s property. Eventually, that
worker filed a workers’ compensation claim against both Bay
Harbor and Proctor (the Workers’ Compensation Litigation). In
2005, the Utah Labor Commission notified Weed, as registered
agent for Bay Harbor, about the Workers’ Compensation
Litigation. Weed responded by sending a letter to the Labor
Commission asserting that Bay Harbor should not bear any
liability because the company had been dissolved in 2001, prior
1. “Winding up” is the process that a company goes through
prior to dissolution, in which it pays its final debts, settles its
“activities and affairs,” and “marshal[s] and distributes” its
remaining assets. See Utah Code Ann. § 48-3a-703(2)(a)
(LexisNexis 2015). During an LLC’s winding-up period, the
company continues to retain much of its previous authority,
including the power to “settle disputes by mediation or
arbitration” and to “transfer the [LLC’s] property,” but the
company “continues after dissolution only for the purpose of
winding up.” Id. § 48-3a-703(1)–(2).
20170066-CA 3 2018 UT App 114Sumsion v. Bay Harbor Farm LC
to the worker’s injury. Weed took no other action to defend Bay
Harbor in the Workers’ Compensation Litigation.
¶7 Around that same time, Proctor retained Sumsion to
defend him personally in the Workers’ Compensation Litigation.
Sumsion believed that Proctor had authority to hire him to also
represent Bay Harbor, and therefore Sumsion entered an
appearance in the Workers’ Compensation Litigation on behalf
of both Proctor and Bay Harbor. According to his billing records,
Sumsion began performing work purportedly on Bay Harbor’s
behalf in February 2005. Sumsion’s billing entries regularly
include time he spent with Proctor and Proctor’s wife Anna
(Anna 2); the entries do not reflect any meetings with Weed.
¶8 In December 2005, some ten months after his first billing
entry, Sumsion sent an engagement letter to Proctor (the 2005
Engagement Letter). The letter was addressed to both Donald
and Anna Proctor, and listed “Donald Proctor, Manager” of Bay
Harbor, as an additional addressee. The letter referenced “Bay
Harbor Farms, LLC related activities and other personal
matters” as the subject of the retention. The letter also listed an
outstanding balance of $73,119.36. The letter did not specifically
mention the Workers’ Compensation Litigation, nor did the
letter contain any mention of Weed. Proctor counter-signed the
letter twice, once on a line above his own name, and once on a
line above the phrase “Bay Harbor Farms, LLC, Don Proctor,
Manager.” Anna also signed the letter on her own behalf.
¶9 The same day they signed the engagement letter, Proctor
and Anna also signed a promissory note (the First Promissory
Note) in favor of Sumsion. As with the 2005 Engagement Letter,
Proctor signed the First Promissory Note twice, once on a line
2. Because Donald Proctor and Anna Proctor share the same last
name, we sometimes refer to Anna Proctor by her first name,
with no disrespect intended by the apparent informality.
20170066-CA 4 2018 UT App 114Sumsion v. Bay Harbor Farm LC
above his own name, and once on a line above words
proclaiming him to be the “manager” of Bay Harbor. The First
Promissory Note contained an acknowledgement that “the
balance owing” to Sumsion’s law firm was $73,119.36, and
provided that “this Note or any payment hereunder may be
extended from time to time by the Holder hereof without in any
way affecting the liability of such parties.”
¶10 Sumsion entered his final billing entry related to the
Workers’ Compensation Litigation on July 13, 2006. On
September 13, 2006, Sumsion filed an attorney’s lien against Bay
Harbor’s property, claiming that Bay Harbor owed him
$119,168.48 for work he performed on its behalf. 3
¶11 In response, Bay Harbor filed a lawsuit seeking a judicial
declaration that Sumsion’s attorney’s lien was wrongful, and
eventually the case found its way to this court in Bay Harbor I.
There, we determined that Sumsion’s lien was not wrongful. Bay
Harbor I, 2014 UT App 133, ¶ 11. We stated that Sumsion filed an
attorney’s lien, which is “expressly authorized by statute, and it
is therefore not wrongful,” and that “[t]his is true even if it
ultimately proves unenforceable, whether because Bay Harbor
was not Sumsion’s client, because the Bay Harbor property was
unconnected to the workers’ compensation claim, or on some
other basis.” Id. We specifically declined to address the question
of whether Bay Harbor was actually Sumsion’s client, preferring
not to address that question in the context of that case. Id. ¶ 14
(stating that “[w]hether or not Bay Harbor was actually
Sumsion’s client should be evaluated in a proceeding other than
3. Sumsion’s lien, dated September 13, 2006, asserted that “the
legal work performed with respect to Bay Harbor . . . remains
unpaid more than thirty (30) days since delivery of the demand
for payment.” Thus, it appears that Sumsion demanded
payment no later than approximately August 14, 2006.
20170066-CA 5 2018 UT App 114Sumsion v. Bay Harbor Farm LC
an expedited wrongful lien hearing, upon consideration of any
relevant evidence the parties may present”).
¶12 In 2008, after Sumsion recorded his attorney’s lien,
Proctor passed away. Roughly a year later, in January 2009,
Anna—purporting to act on behalf of Bay Harbor by virtue of
her role as personal representative of Proctor’s estate—signed a
second promissory note in favor of Sumsion (the Second
Promissory Note). The Second Promissory Note explained that
the note would “become due and payable upon the sale of any of
[Bay Harbor’s] real property interests.”
¶13 In July 2014, soon after this court issued its decision in Bay
Harbor I, Sumsion initiated a separate lawsuit against Bay
Harbor, attempting to foreclose upon Bay Harbor’s property
pursuant to his lien. Sumsion also sued Bay Harbor for breach of
contract related to the 2005 Engagement Letter and the First
Promissory Note. Sumsion also brought a claim for unjust
enrichment.
¶14 Bay Harbor moved for summary judgment, asserting that
Proctor did not have authority to retain Sumsion on its behalf,
because two-thirds of the profit-sharing members of Bay Harbor
did not authorize Sumsion’s retention. Bay Harbor further
argued that Sumsion’s claims were time-barred because (1)
Sumsion’s claims accrued in August 2006; (2) he did not file this
suit until July 2014; and (3) under either the four-year or six-year
statutes of limitations, all of Sumsion’s claims were untimely.
¶15 After full briefing and a hearing, the district court granted
Bay Harbor’s summary judgment motion, agreeing with both of
Bay Harbor’s arguments. The court explained that “[w]ithout the
agreement of at least two-thirds of those holding a profits
interest in a company, a company cannot be bound by the acts of
a member on behalf of the company if those acts are outside the
ordinary course of the company’s business.” The court then
determined that “Proctor was not acting in the ordinary course
20170066-CA 6 2018 UT App 114Sumsion v. Bay Harbor Farm LC
of business” when he hired Sumsion. The court further
concluded that Weed, Bay Harbor’s other manager, did not
assent to engaging Sumsion, and therefore less than two-thirds
of Bay Harbor’s profit-sharing members assented to hiring
Sumsion. On the statute of limitations argument, the district
court determined that Sumsion’s claim accrued in August 2006,
and that, under either the four-year or six-year statute of
limitations period, Sumsion’s claims were time-barred.
ISSUE AND STANDARD OF REVIEW
¶16 Sumsion now appeals the district court’s summary
judgment ruling. “The court shall grant summary judgment if
the moving party shows that there is no genuine dispute as to
any material fact and the moving party is entitled to judgment as
a matter of law.” Utah R. Civ. P. 56(a). We review a court’s
summary judgment ruling for correctness. Lauritzen v. First Am.
Title Ins. Co., 2018 UT App 58, ¶ 9.
ANALYSIS
¶17 In order to evaluate the correctness of the district court’s
summary judgment ruling, we must confront two broad
questions: (1) whether Sumsion was properly retained by Bay
Harbor; and (2) whether Sumsion’s claims were timely filed. We
address these questions in turn.
I
¶18 Bay Harbor maintains that it did not ever properly retain
Sumsion. 4 Its version of events is that Proctor retained Sumsion
4. Bay Harbor’s current counsel maintains that he can properly
represent Bay Harbor and take litigation positions on its behalf
(continued…)
20170066-CA 7 2018 UT App 114Sumsion v. Bay Harbor Farm LC
to represent him personally in the Workers’ Compensation
Litigation—it was, after all, Proctor who was running the farm at
that point—and that Proctor had no authority to hire Sumsion to
represent Bay Harbor. To evaluate the soundness of this
argument, we must first determine which version of the Utah
LLC statute governs this situation. Next, we must examine
whether the “default” terms of that statute were ever varied by
the parties. Finally, we must determine whether two-thirds of
the voting interests of Bay Harbor assented to Sumsion’s
representation.
A
¶19 Utah statutory law governing limited liability companies
has evolved over time in many ways. Specifically relevant here
are the rules governing the types of actions a member or
manager of an LLC can take without the consent of the other
members or managers. In 1994, when Bay Harbor was created,
the governing statute provided that “[t]he management of [an
LLC], unless otherwise provided in the articles of organization,
shall be vested in its members,”and that “[i]f the management of
the [LLC] is vested in the members, any member has authority to
bind the [LLC], unless otherwise provided in the articles of
organization.” Utah Code Ann. § 48-2b-125(1) (Michie Supp.
(…continued)
because he was retained, after Proctor’s death, by Weed, who
had authority to act for and on behalf of Bay Harbor because,
after Proctor’s death, Weed owns more than 2/3 of the voting
interests of Bay Harbor and is the only remaining manager of
Bay Harbor. We are not asked to decide whether Bay Harbor’s
current counsel’s position is correct, because Sumsion does not
contest the propriety of current counsel’s representation of Bay
Harbor.
20170066-CA 8 2018 UT App 114Sumsion v. Bay Harbor Farm LC
1992). Thus, during its early years, the governing statute allowed
any member of Bay Harbor to bind it.
¶20 The legislature overhauled the governing statute in 2001,
however, and at the time Proctor retained Sumsion to work on
the Workers’ Compensation Litigation in 2005, the statute
provided that, “unless otherwise provided in the articles of
organization or operating agreement of the company,”
“approval by the requisite number of members, as well as all of
the managers, shall be required as to all matters described in
Subsections 48-2c-803(2) and (3).” Id. § 48-2c-804(6)(g)
(LexisNexis 2002). 5 Subsection 48-2c-803(3), in turn, provided
that “the affirmative vote, approval, or consent of members
holding 2/3 of the profits interests in the company shall be
required to bind the company . . . to do any act on behalf of the
company that is not in the ordinary course of the company’s
business.” Id. § 48-2c-803(3)(a). Thus, at that time, two-thirds of
Bay Harbor’s profit-sharing members, as well as all of its
managers, had to approve any action “not in the ordinary course
of the company’s business.” Id. As discussed above, Weed and
Proctor each held a 45% interest in Bay Harbor, and were both
still listed as managers. Thus, the governing statute required
both Weed and Proctor to authorize any extraordinary action;
neither, acting alone, could bind the company for any actions
taken that were “not in the ordinary course of the company’s
business.” Id.
¶21 In 2013, the legislature again amended the statutes
governing LLCs. Under the current version of the law, in a
5. We quote here the statute in effect in February 2005, when
Sumsion began work on the Workers’ Compensation Litigation.
Effective in May 2005, the statute was amended, but the 2005
amendments are not material to our analysis. See Utah Code
Ann. § 48-2c-804(6)(g)(ii) (LexisNexis Supp. 2005).
20170066-CA 9 2018 UT App 114Sumsion v. Bay Harbor Farm LC
manager-managed LLC, an act “outside the ordinary course of
the limited liability company’s activities and affairs” requires
“[t]he affirmative vote or consent of all members.” Id. § 48-3a-
407(3)(c)(ii) (LexisNexis 2015). Thus, under current law,
unanimity is required for a manager to be able to bind an LLC
for any act outside the LLC’s ordinary course of business.
¶22 Sumsion purported to start providing legal services to
Bay Harbor beginning in February 2005, and the written
contracts upon which he relies were executed in December 2005.
On appeal, both parties appear to agree that the 2005 version of
the governing statute applies, and we see no reason to view the
matter differently. See State v. Clark, 2011 UT 23, ¶¶ 11–12, 251
P.3d 829 (noting that “courts must apply the law in effect at the
time of the occurrence regulated by that law” and that “parties’
substantive rights and liabilities are determined by the law in
place at the time when a cause of action arises, not by a
subsequently enacted statute” (quotation simplified)). Thus, for
the purposes of adjudicating this appeal, we apply the law in
effect in February 2005, at the time Sumsion asserts that he
entered into a binding contract with Bay Harbor.
B
¶23 Under the version of the statute in effect in February 2005,
the support of at least two-thirds of Bay Harbor’s profit-sharing
members was required for any action that was “not in the
ordinary course of the company’s business,” Utah Code Ann.
§ 48-2c-803(3)(a) (LexisNexis 2002), unless that statutory default
rule was altered “in the articles of organization or operating
agreement of the company,” id. § 48-2c-804(6)(g).
1
¶24 The district court determined that hiring Sumsion was
“not in the ordinary course” of Bay Harbor’s farm and
agricultural business. On appeal, Sumsion does not
20170066-CA 10 2018 UT App 114Sumsion v. Bay Harbor Farm LC
meaningfully engage with the district court’s determination in
this regard. In the body of his opening brief, 6 he mentions the
issue only in passing, and even appears to concede the point,
stating simply that “[e]ven if . . . the act of engaging . . . Sumsion
to defend against a farm-hand’s workers’ compensation lawsuit
was not in the company’s ordinary course of business,” he
should nevertheless prevail because of his alternative argument
(discussed below) that Weed agreed to vary or waive the
statutory default rule. He also includes a footnote, in which he
states in rather conclusory fashion that he “should be allowed to
argue at trial that [his retention] was in the ordinary course of
business,” but even there he does not cite any fact contained in
the record, or any case law at all, that would support such an
argument. Accordingly, we conclude that any argument that Bay
Harbor’s retention of Sumsion was within the ordinary course of
Bay Harbor’s business is inadequately briefed.
¶25 Rule 24 of the Utah Rules of Appellate Procedure requires
a party to “explain, with reasoned analysis supported by
citations to legal authority and the record, why the party should
prevail on appeal.” Utah R. App. P. 24(a)(8). Our supreme court,
in discussing what it takes to carry one’s burden of persuasion
on appeal, has stated as follows:
[A]t the very least, an argument should clearly
identify the contention, cite supporting authority,
distinguish contrary authority, cite pertinent facts
in the record (and provide citations to the record so
6. Sumsion devotes two paragraphs, and slightly more analysis,
to the question in his reply brief. However, we cannot consider
matters meaningfully raised for the first time in a reply brief.
2010-1 RADC/CADC Venture, LLC v. Dos Lagos, LLC, 2017 UT 29,
¶ 33 n.10, 408 P.3d 313 (stating that “issues are not properly
presented if they are argued for the first time in a reply brief”).
20170066-CA 11 2018 UT App 114Sumsion v. Bay Harbor Farm LC
opposing counsel and the reviewing court can find
them), analyze the facts through the lens of the
cited law, and explain what the result should be.
Rose v. Office of Prof’l Conduct, 2017 UT 50, ¶ 65. Sumsion offers
no argument supported by authority, no citation to the record,
and no reasoned analysis of why Bay Harbor engaging him to
provide legal services to defend a workers’ compensation claim
arising after it no longer operated the farm was within Bay
Harbor’s ordinary course of business. Thus, on this issue,
Sumsion’s brief is inadequate, and he has failed to carry his
burden of persuasion on appeal. We therefore accept the district
court’s determination that the retention of Sumsion in the
Workers’ Compensation Litigation was outside the ordinary
course of Bay Harbor’s business. 7
2
¶26 Sumsion does vigorously argue that Proctor and Weed
agreed to vary, or waive, the two-thirds rule. As noted, the
governing statute allows companies to vary the rule, as long as
they do so “in the articles of organization or operating
agreement.” See Utah Code Ann. § 48-2c-804(6) (LexisNexis
2002). Sumsion does not contend that any such waiver occurred
in Bay Harbor’s Articles of Organization; that document contains
7. Our decision in this regard is a non-merits decision that is not
intended to have precedential value. Indeed, a company’s
retention of an attorney may often be within the ordinary course
of a company’s business. Business entities (such as LLCs) cannot
appear in court without a licensed attorney, see Mower v. Moyer,
2017 UT App 188, ¶ 2 n.3, 405 P.3d 978, and we can certainly
envision many situations where a company’s retention of an
attorney would be considered part of its ordinary course of
business.
20170066-CA 12 2018 UT App 114Sumsion v. Bay Harbor Farm LC
no language that could possibly be so construed. Rather,
Sumsion argues that Proctor and Weed made an “agreement” to
vary the two-thirds rule. We are unpersuaded.
¶27 As we have noted, Bay Harbor has never had a written
operating agreement. Sumsion acknowledges this fact, but
asserts that Proctor and Weed had an unwritten “agreement,”
characterized by their “course of dealing,” that “neither [of
them] believed the 2/3 rule to be in effect,” and that either of
them could bind the company for any matter, even matters that
may be considered outside the company’s ordinary course of
business. In support of his argument, Sumsion relies upon the
Uniform Commercial Code’s (UCC) definition of “agreement,”
which, in 2005, provided that an “agreement” is “the bargain of
the parties in fact, as found in their language or by implication
from other circumstances including course of dealing or usage of
trade or course of performance.” See id. § 70A-1a-201(3)
(LexisNexis 2001); see also id. § 70A-2-202(1) (LexisNexis 2001)
(stating that contractual terms “may be explained or
supplemented . . . by course of dealing or usage of trade . . . or by
course of performance”). We reject this argument, for two
reasons.
¶28 First, Sumsion does not explain why the UCC should
apply in this situation. If a contract is for services rather than for
goods, the UCC has little, if any, application. See id. § 70A-2-102
(LexisNexis 2009) (stating that the chapter of the UCC pertaining
to sales applies only to “transactions in goods”); see also Wirthlin
v. Mameco Int’l, Inc., 2004 UT App 16U, para. 7 n.1 (stating that
where a transaction is “exclusively for services,” the UCC is not
applicable). Sumsion makes no effort to explain how an
agreement between LLC managers to vary a statutory default
rule is a “transaction in goods” rather than a transaction for
services.
¶29 Second, and more fundamentally, Sumsion overlooks the
fact that the governing LLC statute itself contains a definition of
20170066-CA 13 2018 UT App 114Sumsion v. Bay Harbor Farm LC
“operating agreement.” “When interpreting a statute, it is
axiomatic that [the court’s] primary goal is to give effect to the
legislature’s intent in light of the purpose that the statute was
meant to achieve.” State v. Ogden, 2018 UT 8, ¶ 31, 416 P.3d 1132(quotation simplified). “The best evidence of the legislature’s
intent is the plain language of the statute itself.” Id. (quotation
simplified). We need not look to other statutes for a definition of
the relevant term when the statute in question internally defines
it. See O’Hearon v. Hansen, 2017 UT App 214, ¶ 24, 409 P.3d 85(observing that if the statute in question defined a term at issue
“we would of course look there first”); cf. Barneck v. Utah Dep’t of
Transp., 2015 UT 50, ¶ 2, 353 P.3d 140 (engaging in a plain
language analysis only after concluding that the term at issue
was not defined by the relevant statute); Hi-Country Prop. Rights
Group v. Emmer, 2013 UT 33, ¶ 18, 304 P.3d 851 (same).
¶30 Significantly here, the version of the LLC statute in effect
in 2005 unambiguously required that an “operating agreement”
be in writing. That statute defined “operating agreement” as
“any written agreement of the members,” including “any written
amendments agreed to by all members or other writing adopted
in any other manner as may be provided in the operating
agreement.” Utah Code Ann. § 48-2c-102(16) (LexisNexis 2002)
(emphasis added). 8 Under the plain terms of the governing
statute, we cannot infer an intent to vary the statutory default
rule from the LLC managers’ unwritten course of dealing. Under
8. The current statute, as amended in 2013, no longer requires
operating agreements to be in writing. See Utah Code Ann. § 48-
3a-102(16) (LexisNexis 2015) (defining “operating agreement” as
“the agreement, whether or not referred to as an operating
agreement and whether oral, implied, in a record, or in any
combination thereof, of all the members of a limited liability
company”). Sumsion makes no argument that the current
version of the statute ought to apply here.
20170066-CA 14 2018 UT App 114Sumsion v. Bay Harbor Farm LC
the operative statute, any variation from the statutory default
rule must be memorialized in an “operating agreement,” which
(at the time) was statutorily required to be in writing.
¶31 Sumsion makes no contention that there is any written
agreement between Proctor and Weed evidencing a variance
from the statutory default rule. Accordingly, the district court
correctly determined, as a matter of law, that the 2/3 rule applied
in this case.
C
¶32 Next, Sumsion argues that, even if the 2/3 rule was in
effect and required that two-thirds of Bay Harbor’s profit-
sharing interests agree to his retention, the 2/3 rule was satisfied
in this case because Weed assented to his retention. On the
record before us, we disagree.
¶33 Sumsion is unable to direct our attention to any express
assent by Weed to Sumsion’s retention, 9 or even to any
competent evidence that Weed had specific knowledge of
Sumsion’s retention. 10 Instead, Sumsion points out that Weed
9. Sumsion does assert that “Weed acknowledged that [Bay
Harbor] had retained Sumsion as legal counsel for [Bay Harbor]
concerning the [the Workers’ Compensation Litigation] and
voiced no opposition to Sumsion’s representation of [Bay
Harbor], either before or during the representation.” But the
only factual support Sumsion cites for this assertion is his own
complaint in this case. It should go without saying that bare
allegations in complaints do not constitute factual support for
the propositions they assert.
10. Sumsion attempts to argue that Weed had direct knowledge
of the fact that Proctor retained Sumsion to represent Bay Harbor
in the Workers’ Compensation Litigation. But the only evidence
(continued…)
20170066-CA 15 2018 UT App 114Sumsion v. Bay Harbor Farm LC
knew about the Workers’ Compensation Litigation, knew that
Bay Harbor was a defendant in that litigation, and knew that he
personally made no response to that lawsuit (despite having
been served with notice) other than to send a letter to the Labor
Commission. Sumsion asks us to infer from these facts that
Weed knew that Proctor must have retained an attorney to
represent the company, and that Weed’s awareness of the
litigation, coupled with his failure to raise any objection to
Proctor’s decision to retain an attorney, indicates his assent to
that retention.
¶34 In support of this contention, Sumsion argues that Bullock
v. Department of Transportation, 966 P.2d 1215 (Utah Ct. App.
1998), and Zions Gate R.V. Resort, LLC v. Oliphant, 2014 UT App
98, 326 P.3d 118, both stand for the proposition that a principal’s
(…continued)
supporting this contention to which Sumsion directs our
attention is a declaration of Anna Proctor that Sumsion attaches
to his opening brief, wherein Anna avers that “Weed knew that
we had retained . . . Sumsion . . . to represent Bay Harbor and
Don and me personally.” That declaration, however, was never
properly before the district court, and is not properly part of the
appellate record before us. That declaration was submitted to the
district court in Bay Harbor I, not in this case, and was never
made part of the record in this case. At one point, Sumsion asked
the district court to take judicial notice of the entire Bay Harbor I
record, and even went so far as to attach to his motion that entire
prior record, but the district court denied Sumsion’s motion and
declined to take judicial notice of the record from the earlier
case. Sumsion does not appeal the district court’s decision to
decline to take judicial notice of the prior record. Accordingly,
that declaration was not part of the district court record in this
case, and Sumsion’s attempt to bring it to our attention by
attaching it to his brief is improper.
20170066-CA 16 2018 UT App 114Sumsion v. Bay Harbor Farm LC
inaction in the face of full knowledge amounts to ratification of
another principal’s actions. Even assuming, without deciding,
that Sumsion has stated the correct legal standard, 11 Sumsion’s
cited cases both require that the principal have both (a) full
knowledge of the action potentially subject to ratification, and
(b) an actual intent to ratify. See Bullock, 966 P.2d at 1219 (noting
that “‘ratification requires the principal to have knowledge of all
material facts and an intent to ratify’” (quoting Zions First Nat’l
Bank v. Clark Clinic Corp., 762 P.2d 1090, 1098 (Utah 1988))); see
also Oliphant, 2014 UT App 98, ¶ 16 (stating that “[r]atification is
premised upon the knowledge of all material facts and upon an
express or implied intention on the part of the principal to
ratify” (quotation simplified)). These cases cannot carry the day
for Sumsion, because Sumsion is simply unable to point to any
competent evidence that Weed had “full knowledge of the
facts.” See Moses v. Archie McFarland & Son, 230 P.2d 571, 574
(Utah 1951).
¶35 Under these circumstances, the district court did not err
by entering summary judgment in favor of Bay Harbor on this
issue. Under rule 56 of the Utah Rules of Civil Procedure, “[t]he
11. At least some cases suggest that inaction alone is insufficient,
and that at least some sort of affirmative conduct is required in
order for a court to find that a principal has ratified another
principal’s actions. See Franklin Credit Mgmt. Corp. v. Hanney,
2011 UT App 213, ¶ 39, 262 P.3d 406 (stating that “[w]hile our
cases are clear that ‘silence with full knowledge of the facts may
manifest affirmance,’ they also require conduct . . . ‘which
indicates assent by the purported principal to become a party to
the transaction’” (emphasis added) (quoting Moses v. Archie
McFarland & Son, 230 P.2d 571, 574 (Utah 1951))); see also Dillon v.
Southern Mgmt. Corp. Ret. Trust, 2014 UT 14, ¶ 31, 326 P.3d 656(citing Moses with approval); Bradshaw v. McBride, 649 P.2d 74, 78
(Utah 1982) (same).
20170066-CA 17 2018 UT App 114Sumsion v. Bay Harbor Farm LC
court shall grant summary judgment if the moving party shows
that there is no genuine dispute as to any material fact and the
moving party is entitled to judgment as a matter of law.” Utah R.
Civ. P. 56(a). In its summary judgment motion, Bay Harbor
asserted that “Weed has never approved Sumsion’s
representation of Bay Harbor in the work giving rise to
Sumsion’s claims.” In support of this assertion, Bay Harbor cited
an affidavit from Weed where he declared, “I have never
agreed . . . to the repayment of indebtedness . . . of any Bay
Harbor property for the benefit of . . . Sumsion.” Weed further
declared that he “did not sign the engagement letter and did not
give approval for Bay Harbor to enter an agreement that could
lead to substantially all of Bay Harbor’s assets being
encumbered.” Moreover, Bay Harbor also cited deposition
testimony in which Weed testified that he did not know that
Sumsion had been retained in the Workers’ Compensation
Litigation until approximately October 2006, well after Sumsion
had completed his work on the case.
¶36 On summary judgment, “[i]t only takes one sworn
statement under oath to dispute the averments on the other side
of a controversy and create [a genuine dispute] of [material]
fact.” Zundel v. Magana, 2015 UT App 69, ¶ 10, 347 P.3d 444(quotation simplified). The evidence to which Sumsion points,
however, is simply not strong enough to create a genuine
dispute of material fact. To overcome summary judgment, a
party must do more than simply assert that a factual dispute
exists. See JENCO LC v. Perkins Coie LLP, 2016 UT App 140, ¶ 15,
378 P.3d 131 (observing that, in a summary judgment
proceeding, “the parties must submit admissible evidence,” and
stating that “unsubstantiated conclusions and opinions are
inadmissible” (quotation simplified)). Other than merely
asserting that a factual dispute exists, on appeal Sumsion has not
pointed to any evidence in this record establishing that Weed
had knowledge of Proctor engaging Sumsion, and certainly no
evidence that Weed assented to Proctor’s retention of Sumsion.
20170066-CA 18 2018 UT App 114Sumsion v. Bay Harbor Farm LC
¶37 Because the governing statute required that at least two-
thirds of Bay Harbor’s profit-sharing members approve
Sumsion’s retention, and because only Proctor actually did
approve it, Bay Harbor never properly retained Sumsion. The
district court correctly determined, on summary judgment, that
Bay Harbor was not Sumsion’s client in the Workers’
Compensation Litigation, and that therefore Bay Harbor did not
ever enter into any contract with Sumsion for the provision of
legal services. Accordingly, the district court properly dismissed
Sumsion’s breach of contract claims on summary judgment.
II
¶38 While our conclusion that Bay Harbor never actually
entered into a contract for legal services with Sumsion in
connection with the Workers’ Compensation Litigation leads to
dismissal of Sumsion’s claims for breach of contract, that
conclusion does not necessarily dispose of Sumsion’s claim for
unjust enrichment. Unjust enrichment is an “equitable tool” that,
even in the absence of an actual contract, sometimes “allows a
plaintiff to receive restitution for the reasonable value of services
provided to the defendant.” Emergency Physicians Integrated Care
v. Salt Lake County, 2007 UT 72, ¶ 10, 167 P.3d 1080. We conclude,
however, that Sumsion’s claim for unjust enrichment is barred
by the applicable statute of limitations.
¶39 A claim for unjust enrichment is subject to a four-year
statute of limitations. See Utah Code Ann. § 78B-2-307(3)
(LexisNexis 2017) (“An action may be brought within four years
. . . for relief not otherwise provided for by law.”); see also Pero v.
Knowlden, 2014 UT App 220, ¶ 16, 336 P.3d 55 (stating that the
lower court “properly employed” Utah Code section 78B-2-
307(3) “in evaluating the timeliness of [the plaintiff’s] unjust
enrichment claim”). Here, the district court found that “the
limitations period accrued no later than August 14, 2006,” thirty
days prior to when Sumsion first filed his attorney’s lien. On
20170066-CA 19 2018 UT App 114Sumsion v. Bay Harbor Farm LC
appeal, Sumsion does not challenge the district court’s
calculation of the date on which the statute of limitations began
to run. Thus, under the applicable statute of limitations, Sumsion
was required to sue Bay Harbor by no later than August 14,
2010. However, Sumsion did not sue Bay Harbor until July 10,
2014. Thus, Sumsion’s claim for unjust enrichment would appear
to be time-barred.
¶40 Sumsion resists this conclusion on three grounds. First,
Sumsion argues that the Second Promissory Note effectively
tolled any potentially applicable statute of limitations. Second,
Sumsion argues that the statute should have been tolled during
the pendency of Bay Harbor I. And finally, Sumsion asserts that
Bay Harbor’s defense on this claim is barred by the doctrine of
laches. We reject each of these arguments.
¶41 Sumsion’s first argument is that “the statute of limitations
should have stopped when . . . Sumsion graciously cancelled his
demand and signed a forbearance agreement,” 12 referring to the
Second Promissory Note that Anna signed where she purported
to agree, on behalf of Bay Harbor, to pay Sumsion “upon the sale
of any of [Bay Harbor’s] real property interests.” This argument
cannot overcome two separate infirmities. First, the Second
Promissory Note is not properly before us, because it was never
made part of the record before the district court. See supra ¶ 33
n.10. Second, and more substantively, Sumsion makes no effort
to explain how the Second Promissory Note could possibly bind
Bay Harbor, since it was signed only by Anna, an individual
who has never been a member or manager of Bay Harbor.
¶42 Sumsion next argues that Bay Harbor I’s litigation
proceedings tolled the statute of limitations. Even assuming,
12. This statement is factually inaccurate, because the document
does not purport to be a “forbearance agreement,” and it is not
actually signed by Sumsion.
20170066-CA 20 2018 UT App 114Sumsion v. Bay Harbor Farm LC
without deciding, that Bay Harbor I tolled the statute of
limitations applicable to any cause of action Sumsion might have
had, Sumsion’s unjust enrichment claim is still time-barred. As
discussed, this claim accrued on August 14, 2006, and the four-
year statute of limitations expired on August 14, 2010. See supra
¶ 39. Bay Harbor did not demand that Sumsion release his lien
until June 2011, see Bay Harbor I, 2014 UT App 133, ¶ 3, and did
not file suit against Sumsion to nullify the lien until April 2012.
Thus, the four-year statute of limitations expired before Bay
Harbor even initiated the litigation that resulted in our opinion
in Bay Harbor I.
¶43 Finally, Sumsion asserts that “[Bay Harbor] has waited
too long to challenge Sumsion’s lien” and that “the doctrines of
laches and waiver apply to the matter at hand and call for the
lien to be upheld and enforced.” Sumsion did not raise this legal
theory before the district court, and therefore this argument is
unpreserved. “We generally do not address unpreserved
arguments raised for the first time on appeal.” Pulham v. Kirsling,
2018 UT App 65, ¶ 53 (quotation simplified). Sumsion has not
asserted any reason why we should nonetheless address this
new legal theory for the first time on appeal. We therefore
decline to consider the matter further.
¶44 Accordingly, we conclude that Sumsion’s claim for unjust
enrichment is time-barred by the applicable four-year statute of
limitations. The district court correctly entered summary
judgment in favor of Bay Harbor on Sumsion’s unjust
enrichment claim.
III
¶45 Having determined that (1) Bay Harbor did not actually
enter into a binding contract with Sumsion for legal services, and
(2) Sumsion’s claim for unjust enrichment is time-barred, we
must finally consider whether Sumsion’s attorney’s lien has any
substance. “In Utah an attorney’s lien arises by operation of law
20170066-CA 21 2018 UT App 114Sumsion v. Bay Harbor Farm LC
for the balance of compensation due from a client . . . .” Rehn v.
Christensen, 2017 UT App 21, ¶ 43, 392 P.3d 872 (emphasis
added); see also Utah Code Ann. § 38-2-7(2) (LexisNexis Supp.
2017) (“An attorney shall have a lien for the balance of
compensation due from a client . . . .”). As we have determined, Bay
Harbor never actually entered into a contract with Sumsion, and
Sumsion’s claim for unjust enrichment is time-barred. Thus,
there is no “compensation due” to Sumsion from Bay Harbor.
Because Bay Harbor does not owe Sumsion any compensation,
there is no basis for his lien, and therefore his lien foreclosure
claim necessarily fails.
IV
¶46 After the district court granted Bay Harbor’s summary
judgment motion, Bay Harbor moved for an award of attorney
fees pursuant to Utah Code section 78B-5-826 (LexisNexis 2012),
which provides that “[a] court may award costs and attorney
fees to either party that prevails in a civil action based upon any
promissory note.” The court granted Bay Harbor’s motion. Bay
Harbor now seeks attorney fees it incurred on appeal, and
Sumsion mounts no argument that Bay Harbor should not be
entitled to its attorney fees on appeal should we reject his
arguments. “In general, when a party who received attorney fees
below prevails on appeal, the party is also entitled to fees
reasonably incurred on appeal.” CORA USA LLC v. Quick Change
Artist LLC, 2017 UT App 66, ¶ 7, 397 P.3d 759 (quotation
simplified). Because Bay Harbor has prevailed on appeal, we
grant Bay Harbor’s request, and remand the case to the district
court for a determination of reasonable fees and costs incurred
on appeal.
CONCLUSION
¶47 The district court correctly entered summary judgment in
favor of Bay Harbor on all of Sumsion’s claims. Bay Harbor was
20170066-CA 22 2018 UT App 114Sumsion v. Bay Harbor Farm LC
never Sumsion’s client in the Workers’ Compensation Litigation,
and Sumsion’s claim for unjust enrichment is barred by the
applicable statute of limitations. Because Sumsion has no valid
substantive claims against Bay Harbor, Sumsion’s lien claim
must necessarily also fail. We therefore affirm the judgment of
the district court, and remand the case to the district court for the
limited purpose of quantifying Bay Harbor’s reasonable attorney
fees and costs incurred on appeal.
20170066-CA 23 2018 UT App 114