Cougar Canyon v. Walker

2020 UT App 176THE UTAH COURT OF APPEALS
COUGAR CANYON LOAN LLC,
Appellant,
v.
LISA M. WALKER, ZIONS BANCORPORATION NA,
AND SALT LAKE COUNTY,
Appellees.
Opinion
No. 20190193-CA
Filed December 31, 2020
Third District Court, Salt Lake Department
The Honorable Richard E. Mrazik
No. 180900186
S. Ian Hiatt and Jefferson W. Gross,
Attorneys for Appellant
Gregory S. Roberts, Michael D. Mayfield, and
Carol Ann Funk, Attorneys for Appellee
Zions Bancorporation, NA
JUDGE RYAN M. HARRIS authored this Opinion, in which
JUDGES KATE APPLEBY and DIANA HAGEN concurred.
HARRIS, Judge:
¶1 Cougar Canyon Loan LLC (Cougar Canyon) acquired an
interest in—but not full ownership of—real property (the
Property) that was encumbered by a large lien held by Zions
Bancorporation NA (Zions). Cougar Canyon then brought a
partition action, naming Zions and all other putative interest
holders as defendants, and asking the district court to order the
Property sold and distribute the proceeds. In its answer to
Cougar Canyon’s complaint, however, Zions neglected to
include certain information required by Utah’s partition statute
(the Partition Statute). See Utah Code Ann. § 78B-6-1207
Cougar Canyon Loan v. Walker
(LexisNexis 2018). After Cougar Canyon filed a motion asking
the court to prohibit Zions from introducing evidence of its lien,
the court allowed Zions to amend its answer, on the eve of trial,
to include the statutorily required information. Cougar Canyon
appeals, challenging the court’s decision to grant Zions leave to
amend its answer. We affirm.
BACKGROUND
¶2 In the mid-2000s, Lisa M. Walker and her husband Blair
Walker owned the Property as joint tenants. In 2007, the Walkers
executed and delivered to Zions a Home Equity Line Credit
Agreement and Disclosure (Line of Credit), wherein Zions
agreed to loan the Walkers up to $960,000. The Line of Credit
was secured by a deed of trust (Trust Deed) on the Property.
Over the next few years, Zions loaned money to the Walkers
pursuant to the Line of Credit, and at some point prior to 2018,
the Walkers defaulted on their obligations under the Line of
Credit. In July 2018, Zions initiated nonjudicial foreclosure
proceedings by recording, through a trustee, a notice of default
against the Property, alleging that the Walkers had failed to
repay the loan as required, and indicating that Zions had elected
to sell the Property. In the notice of default, Zions stated that the
outstanding unpaid principal balance on the Line of Credit was
$956,385.08. Zions mailed a copy of the notice of default to all
persons it believed had an interest in the Property, including
Cougar Canyon.
¶3 Cougar Canyon acquired its interest in the Property in
2017, after it prevailed in a securities fraud lawsuit and obtained
a $4 million judgment against Blair Walker and others. See
Cougar Canyon Loan, LLC v. Cypress Fund, LLC, 2019 UT App 47,
¶ 4, 440 P.3d 884. Based on that judgment, Cougar Canyon
executed upon and sold Blair Walker’s interest in the Property,
and was itself the winning bidder at the ensuing November 2017
20190193-CA 2 2020 UT App 176Cougar Canyon Loan v. Walker
sheriff’s sale. Thereafter, Cougar Canyon and Lisa Walker
owned the Property together, as tenants in common.
¶4 After acquiring its interest in the Property, Cougar
Canyon initiated this action in January 2018, seeking partition of
the Property by sale and asking for “distribution of the proceeds
to the parties in accord with their interests.” Cougar Canyon
asserted that, as a tenant in common, it was entitled to a one-half
interest in the Property, with Lisa Walker entitled to the
remaining one-half interest. The complaint named as defendants
all persons and entities Cougar Canyon believed might have an
interest in the Property, including Zions. 1
¶5 In its original answer, filed in March 2018, Zions noted
that, in 2007, it had “recorded a revolving credit deed of trust
against [the Property] in a first lien position.” But in that answer,
Zions did not provide any other details about its lien, such as the
original amount of the loan or the then-current outstanding
balance owed. However, as noted, Zions sent Cougar Canyon a
copy of the notice of default some weeks later in connection with
its nonjudicial foreclosure efforts; that notice included Zions’
estimate of the then-outstanding principal balance.
¶6 In June 2018, during the early stages of the case, Cougar
Canyon made initial disclosures, setting forth the witnesses and
documents it planned to use at trial to prove its claims. Some of
the other defendants followed suit, but Zions did not serve any
initial disclosures, at least not during the early stages of the case.
¶7 As the case proceeded, and before any meaningful
discovery had been conducted, the parties came before the
1. The claims related to all of the other named defendants were
resolved, in some manner, by the district court, and no
defendant other than Zions is a party to this appeal; accordingly,
only the claims related to Zions are at issue here.
20190193-CA 3 2020 UT App 176Cougar Canyon Loan v. Walker
district court in early August 2018 for a hearing and, while
discussing scheduling matters, Cougar Canyon noted that Zions
had initiated nonjudicial foreclosure proceedings. In light of the
pendency of those proceedings, the parties agreed that an effort
should be made to expedite trial on Cougar Canyon’s partition
action, so that the partition trial could be completed before any
sale of the Property occurred in connection with Zions’
nonjudicial foreclosure efforts. The court then scheduled a trial
to occur on September 25, 2018, less than two months hence, and
set other expedited deadlines, including an August 31 deadline
for amending pleadings.
¶8 Zions did not seek leave to amend its answer by the
August 31 deadline. Fifteen days later, however, on September
14, it did seek such leave; its request was spurred by Cougar
Canyon’s motion in limine, 2 filed on September 12, that sought
an order precluding Zions from introducing any evidence of its
interest in the Property, on the basis that Zions had failed to
comply with the Partition Statute’s requirement that certain
information about its interest be included in its answer, see Utah
Code Ann. § 78B-6-1207 (LexisNexis 2018), and had failed to
serve initial disclosures. Zions responded to Cougar Canyon’s
motion in limine by, among other things, belatedly filing its
initial disclosures and by filing a motion seeking leave to amend
its answer to include the statutorily required information.
Attached to Zions’ various mid-September filings were copies of
the Line of Credit, Trust Deed, and associated documents, as
well as its statement that the outstanding amount then owed on
the Line of Credit was $1,003,949.53.
2. “A motion in limine is a procedure for obtaining a ruling on
the admissibility of evidence prior to or during trial, but before
the evidence has been offered.” State v. Bermejo, 2020 UT App
142, ¶ 8 n.4, 476 P.3d 148 (quotation simplified).
20190193-CA 4 2020 UT App 176Cougar Canyon Loan v. Walker
¶9 After full briefing, the two motions—Cougar Canyon’s
motion in limine and Zions’ motion to amend—came before the
district court for oral argument on September 24, the day before
the trial was to be held. At the hearing, Cougar Canyon
acknowledged that, before filing its complaint in January, it ran a
title search and learned of the existence and date of Zions’ lien as
well as “what the original principal amount was.” Cougar
Canyon also did not “dispute receiving the notice of default” in
July 2018, but it nevertheless asserted that Zions had waived any
right to assert its lien when it failed to include in its answer the
information required by the Partition Statute. For its part, Zions
asserted, among other things, that Cougar Canyon would not be
prejudiced by any amendment, because it was fully aware from
other sources, including the nonjudicial foreclosure proceedings,
of all the information that the statute required.
¶10 At the conclusion of the hearing, the court denied Cougar
Canyon’s motion in limine and granted Zions’ motion for leave
to amend, allowing Zions to file an amended answer containing
the statutorily required information. The court also postponed
the trial, and allowed Zions to serve belated initial disclosures.
However, the court ordered Zions to pay reasonable attorney
fees and costs incurred by Cougar Canyon, “which [Cougar
Canyon] would not have incurred had Zions . . . filed its original
answer” in compliance with the Partition Statute. The court later
quantified that fee award, ordering Zions to pay Cougar Canyon
$20,208.75 in attorney fees and costs.
¶11 Following the court’s ruling on the two motions, the
parties eventually stipulated to most of the relevant facts, 3
3. In the stipulation, the parties agreed that Cougar Canyon, by
stipulating to certain relevant facts, had “in no way waived or
otherwise impaired its right to appeal the [district court’s]
decision to allow Zions . . . to amend its [a]nswer.”
20190193-CA 5 2020 UT App 176Cougar Canyon Loan v. Walker
including the fact that the “payoff estimate amount” on the Line
of Credit was $1,035,895.93, and based on those stipulated facts,
the court ordered the Property to be sold. At the sale, Zions
purchased the Property with a credit bid of $930,526.00, and the
trustee conveyed the Property to Zions by trustee’s deed. There
were no excess proceeds.
ISSUES AND STANDARDS OF REVIEW
¶12 Cougar Canyon now appeals, challenging the district
court’s order granting Zions’ motion to amend. In so doing, it
asks us to consider three issues. First, it asserts that the district
court misinterpreted and misapplied the Partition Statute, a law
Cougar Canyon construes as mandating waiver of any claims
related to any liens not particularly described in a litigant’s
original answer. “We review questions of statutory
interpretation for correctness, affording no deference to the
district court’s legal conclusions.” State v. Outzen, 2017 UT 30,
¶ 5, 408 P.3d 334 (quotation simplified).
¶13 Second, and in the alternative, Cougar Canyon asserts
that the district court inappropriately granted Zions’ motion to
amend its answer. District courts have “substantial discretion” in
considering motions to amend, and “[o]ur review under this
discretionary standard is deferential.” See Stichting Mayflower
Mountain Fonds v. United Park City Mines Co., 2017 UT 42, ¶¶ 48–
49, 424 P.3d 72. “The question presented is not whether we
would have granted leave to amend. It is whether we find an
abuse of discretion in the district judge’s decision.” Id. ¶ 49.
¶14 Third, and also in the alternative, Cougar Canyon
challenges the district court’s decision to allow Zions to serve
belated initial disclosures, instead of prohibiting Zions from
introducing any evidence about its lien as a sanction for its
failure to serve timely disclosures. We review a district court’s
ruling on sanctions under rule 26 of the Utah Rules of Civil
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Procedure using an abuse of discretion standard. See Keystone
Ins. Agency, LLC v. Inside Ins., LLC, 2019 UT 20, ¶ 12, 445 P.3d 434(stating that appellate courts “review a district court’s decision
on sanctions under rule 26(d)(4) . . . for an abuse of discretion”).
ANALYSIS
I
¶15 Cougar Canyon first argues that the district court
erroneously interpreted the Partition Statute. The text of the
relevant provision states as follows:
(1) All defendants shall set forth in their
answers, fully and particularly, the origin, nature,
and extent of their respective interests in the
property.
(2) If a defendant claims a lien on the property
by mortgage, judgment, or otherwise, the
defendant shall state the original amount and date
of the mortgage or judgment, and the amounts
remaining unpaid. The defendant shall also state
whether the mortgage or judgment has been
secured in any other way, and if secured, the extent
and nature of the security. If this information is not
provided, the defendant shall be considered to
have waived any rights to the lien.
Utah Code Ann. § 78B-6-1207 (LexisNexis 2018). In Zions’
original answer, it mentioned that it had a lien on the Property
based on a “revolving credit deed of trust,” but it did not
provide the original amount and date of the Line of Credit, or
the amount that, at the time, remained unpaid. It is therefore
apparent that Zions’ original answer did not include the
information required by the Partition Statute.
20190193-CA 7 2020 UT App 176Cougar Canyon Loan v. Walker
¶16 Cougar Canyon asserts that, because Zions’ original
answer did not include the statutorily required information,
Zions should be “considered to have waived any rights to”
the Line of Credit. See id. § 78B-6-1207(2). This assertion
formed the basis for Cougar Canyon’s motion in limine, wherein
it asked the district court to bar Zions from introducing any
evidence of the Line of Credit, because of its noncompliant
original answer. For its part, Zions asserts that it complied with
the statute by including the required information in its amended
answer, a proposition with which the district court agreed. The
question before us, then, is whether the Partition Statute requires
that the information be included in the original answer, or
whether the requirements of the statute are satisfied if the
information is included in an authorized and duly filed
amended answer.
¶17 The Partition Statute requires merely that “defendants
shall set forth” the required information “in their answers.” See
id. § 78B-6-1207(1). In the statute’s text, the term “answers” is
unaccompanied by modifiers that might limit the meaning of the
term to a particular subset of all answers. See id. And the
Partition Statute does not purport to provide any specialized
meaning of the term “answers.” See id. We therefore apply the
plain meaning of the term. See State v. Rushton, 2017 UT 21, ¶ 11,
395 P.3d 92 (stating that, “when we tackle questions of statutory
construction, our overarching goal is to implement the intent of
the legislature,” and “the best evidence of the legislature’s intent
is the plain language of the statute itself” (quotation simplified));
see also United States v. Porter, 745 F.3d 1035, 1042 (10th Cir. 2014)
(applying the “so-called ‘general-terms canon’ that holds that
‘general terms are to be given their general meaning’” (quoting
Antonin Scalia & Bryan Garner, Reading Law: The Interpretation of
Legal Texts 101 (2012))).
¶18 And the plain meaning of the term “answers” is
undoubtedly broad enough to include amended answers that are
20190193-CA 8 2020 UT App 176Cougar Canyon Loan v. Walker
duly filed according to our rules of civil procedure, including
amended answers for which filing permission has been
obtained from the district court. See Answer, Merriam-Webster’s
Law Dictionary, https://www.merriam-webster.com/dictionary/a
nswer#legalDictionary [https://perma.cc/4BMC-8JAC] (defining
answer as “the defendant’s written response to the plaintiff’s
complaint in a civil suit in which he or she may deny any of the
plaintiff’s allegations, offer any defenses, and make any
counterclaims against the plaintiff”); Answer, Law.com Legal
Dictionary, https://dictionary.law.com/Default.aspx?selected=240
7 [https://perma.cc/RFY6-2DD2] (defining answer as “a written
pleading filed by a defendant to respond to a complaint in a
lawsuit filed and served upon that defendant”); see also Answer,
Black’s Law Dictionary (11th ed. 2019) (stating that an “answer”
is the “defendant’s first pleading that addresses the merits of the
case, usu[ally] by denying the plaintiff’s allegations,” and
“set[ting] forth the defendant’s defenses and counterclaims”);
61A Am. Jur. 2d Pleading § 264 (2020) (“A letter, or any
document, that is filed with the court and substantively
responds to the complaint may constitute an answer,
notwithstanding its failure to comply with all of the technical
requirements of the rules of civil procedure. . . . Moreover, if a
document constitutes an answer for any purpose, it should
constitute an answer for all purposes.”). Like any other pleading,
answers can be amended, subject to the strictures of rule 15 of
the Utah Rules of Civil Procedure. Once an amended answer is
filed, that answer becomes the legally operative answer,
definitively setting forth a party’s current defenses. See, e.g.,
Talmer Bank & Trust v. Malek, 651 F. App’x 438, 443 (6th Cir. 2016)
(stating that a defendant’s “[a]mended [a]nswer supersedes his
original one, and is thus the operative answer in [the] case”).
Therefore, applying the general-terms canon to the Partition
Statute, the plain meaning of “answer[],” as that term is
generally understood, refers to any duly filed answer, including
the operative answer in a given case.
20190193-CA 9 2020 UT App 176Cougar Canyon Loan v. Walker
¶19 Moreover, nothing in the text of the Partition Statute
suggests that the legislature intended to curtail the ability of
defendants in partition actions to amend their answers—
something that would materially affect the application of the
Utah Rules of Civil Procedure to such situations. The district
court was similarly unconvinced, opining that it had seen no
authority “that says that [the Partition Statute] precludes any
effort under the Rules of Civil Procedure to amend [a] pleading.”
We find the court’s analysis on this point to be sound. “We will
not infer substantive terms into the text that are not already
there. Rather, the interpretation must be based on the language
used, and we have no power to rewrite the statute to conform to
an intention not expressed.” Bryner v. Cardon Outreach, LLC, 2018
UT 52, ¶ 21, 428 P.3d 1096 (quotation simplified). 4
¶20 The Partition Statute requires only that defendants “set
forth in their answers” certain information about their claimed
interest in the property at issue. See Utah Code Ann. § 78B-6-
1207(1). The term “answer,” construed according to its plain and
general meaning, is not limited to merely the first or original
answer; rather, a defendant can satisfy the requirements of the
Partition Statute by including the required information in a duly
filed amended answer. Cougar Canyon acknowledges that
Zions’ amended answer included all of the statutorily required
information. Accordingly, to the extent that Zions’ amended
answer was duly and properly filed, Zions has satisfied the
requirements of the Partition Statute, and has not waived its
rights under the Line of Credit.
4. Zions urges us to go a step further and determine that
“Cougar Canyon’s proposed reading” of the Partition Statute
would render it “unconstitutional.” But because we conclude
that Cougar Canyon’s interpretation is inconsistent with the
plain meaning of the Partition Statute, we need not address
Zions’ constitutionality argument.
20190193-CA 10 2020 UT App 176Cougar Canyon Loan v. Walker
II
¶21 We must next assess Cougar Canyon’s contention that the
district court abused its discretion by allowing Zions to file an
amended answer on the eve of the scheduled trial. 5 If Cougar
Canyon is correct that the court abused its discretion by allowing
the amendment, then no amended answer should have been
filed in this case and—by failing to include the required
information in its original answer—Zions would have indeed
waived its rights under the Line of Credit. But if the court did
not abuse its discretion by allowing the amendment, then Zions
fully complied with the mandates of the Partition Statute, and
did not waive its rights under the Line of Credit.
¶22 The rules of civil procedure instruct district courts to
“freely give permission” for a party to amend its pleading
“when justice requires.” See Utah R. Civ. P. 15(a)(2). And in
general “our legal system strongly prefers to decide cases on
their merits.” Lee v. Max Int’l, LLC, 638 F.3d 1318, 1321 (10th Cir.
2011); see also Malmstrom v. Second East Apartment Co., 278 P. 811,
815 (Utah 1929) (noting the preference to decide cases on their
5. Zions argues that Cougar Canyon failed to properly preserve
its right to challenge the court’s decision to allow the
amendment, because Cougar Canyon “acknowledged the
district court had the authority” to grant the motion to amend.
Zions’ argument is inapposite. Cougar Canyon’s attorney stated
that the court “ha[d] the discretion” under rule 15 to allow Zions
to file an amended answer, but then continued on to urge the
court not to exercise its discretion to grant Zions’ motion,
asserting that there were “other considerations that augur
against” allowing the amendment. Considered in context,
counsel’s offhand comment about the court’s discretion does not
support Zions’ assertion that Cougar Canyon failed to preserve
its challenge to the court’s exercise of its discretion.
20190193-CA 11 2020 UT App 176Cougar Canyon Loan v. Walker
merits rather than technical grounds). To these ends, district
“courts should liberally allow amendments [to pleadings] unless
the amendments include untimely, unjustified, and prejudicial
factors.” Daniels v. Gamma West Brachytherapy, LLC, 2009 UT 66,
¶ 18, 221 P.3d 256. “In ruling on a motion to amend, a [district]
court must weigh three factors: the timeliness of the motion, the
justification for the delay, and the resulting prejudice to the
responding party.” Reller v. Argenziano, 2015 UT App 241, ¶ 24,
360 P.3d 768. “Although courts should consider all three factors,
the circumstances of a particular case may be such that a court’s
ruling on a motion to amend can be predicated on only one or
two of the particular factors.” Evans v. B&E Pace Inv. LLC, 2018
UT App 37, ¶ 20, 424 P.3d 963 (quotation simplified). “The
applicability of the three factors will vary from case to case,” but
“in many cases, the factor that the [district] court should
primarily consider is whether granting the motion would subject
the opposing party to unavoidable prejudice.” Id. (quotation
simplified); see also Fishbaugh v. Utah Power & Light, 969 P.2d 403,
409 (Utah 1998) (stating that “whether the opposing side would
be put to unavoidable prejudice” is “a primary consideration
that a [court] must take into account in determining whether
leave [to amend] should be granted” (quotation simplified)).
¶23 Cougar Canyon asserts that none of the three factors
weigh in favor of granting Zions’ requested amendment. It
contends that Zions’ motion was untimely, and filed less than
two weeks before trial; that Zions has not proffered any
compelling justification for its late filing; and that Cougar
Canyon will suffer—and has suffered—prejudice as a result of
Zions’ amendment. We address each of the three factors—
timeliness, justification, and prejudice—in turn.
¶24 First, with regard to timeliness, Cougar Canyon is correct
in asserting that Zions’ motion was filed after the deadline for
amending pleadings had passed, and only eleven days before
the date on which trial was scheduled to take place. But “[t]here
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is . . . no ‘bright line rule’ against which to judge the timeliness of
a motion to amend.” Beckman v. Cybertary Franchising LLC, 2018
UT App 47, ¶ 31, 424 P.3d 1016 (quoting Kelly v. Hard Money
Funding, Inc., 2004 UT App 44, ¶ 28, 87 P.3d 734). While it is true
that motions “filed in the advanced procedural stages of the
litigation process, such as after the completion of discovery [or]
on the eve of a scheduled trial date” are “typically deemed
untimely,” in many cases trials do not occur until “several years
into the litigation.” Kelly, 2004 UT App 44, ¶¶ 29–30. In this case,
Zions’ motion was filed only fifteen days after the deadline for
amending pleadings, and that deadline—like the other deadlines
in the case, including the trial date—had been set in an
expedited fashion and placed on a compressed timeline to
accommodate Zions’ nonjudicial foreclosure action. Zions points
out that its motion to amend was filed only six months after the
filing of its original answer, only three months after Cougar
Canyon served its initial disclosures, and before any meaningful
discovery had taken place. While Cougar Canyon is technically
correct that Zions’ motion was untimely, under the
circumstances of this case the district court did not abuse its
discretion by viewing the timeliness factor as non-determinative,
or at least as not weighing heavily in favor of denying the
motion to amend.
¶25 Second, we assess Zions’ justification for not raising the
matter sooner. See Evans, 2018 UT App 37, ¶ 19 (“With regard to
justification, the analytic thrust should be focused on the reasons
offered by the moving party for not raising the issues earlier.”
(quotation simplified)). In evaluating the justification factor,
“courts focus on the reasons offered by the moving party for
failing to include the new facts or allegations in the original
complaint,” paying particular attention to the presence of “a
dilatory motive, a bad faith effort, or unreasonable neglect.”
Beckman, 2018 UT App 47, ¶ 33 (quotation simplified). Here, the
reason Zions provides for failing to include the required
information in its original answer, or for not sooner seeking
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leave to amend, is hardly compelling: in its brief on appeal,
Zions proffers its perception that the relevant section of the
Partition Statute is relatively obscure, and contends that “parties
cannot reasonably be expected to be on the lookout for civil
pleading standards in our legislative code.” But Zions fails to
mention that Cougar Canyon cited the Partition Statute in its
complaint, and it does not strike us as an undue burden for a
defendant, in preparing its answer, to consult the statute upon
which the plaintiff’s complaint is based. Although Zions’
proffered reason is not compelling, it is likewise true that there is
no indication that Zions was acting out of “bad faith” or with “a
dilatory motive.” See id. Under the circumstances, we do not
consider the district court to have abused its discretion by
viewing this factor as non-determinative, or at least as not
weighing heavily in favor of denying the motion to amend.
¶26 Much more important to the district court’s analysis was
the third—and primary, see Evans, 2018 UT App 37, ¶ 20—factor:
whether Cougar Canyon would be unavoidably prejudiced by
allowing Zions to amend its answer. The court identified two
potential areas in which allowing Zions’ requested amendment
might cause prejudice to Cougar Canyon: (a) that the trial date
was imminent, and (b) that Cougar Canyon had incurred
attorney fees and costs as a result of Zions’ deficient original
answer. The district court correctly understood that “a showing
of simple prejudice is not enough to support a denial of a motion
to amend.” Kelly, 2004 UT App 44, ¶ 31. Instead, “a motion to
amend should be denied only where the opposing side would be
put to unavoidable prejudice by having an issue adjudicated for
which he had not time to prepare.” Id. (quotation simplified). And
the court determined, in its discretion, that, on the facts of this
case, “the timeliness and justification prongs are insufficient to
support denial of th[e] motion” because any prejudice to Cougar
Canyon could be entirely alleviated by continuing the trial date
and awarding Cougar Canyon the attorney fees it incurred in
relation to Zions’ motion to amend. See Evans, 2018 UT App 37,
20190193-CA 14 2020 UT App 176Cougar Canyon Loan v. Walker
¶ 25 (noting that a “brief, tailored extension” to deadlines can
sometimes alleviate prejudice from pleading amendments).
¶27 The district court also found, in connection with its
decision, that any harm to Cougar Canyon was “mitigated in
some part by the information contained in the notice of default
which Cougar Canyon had actual notice of.” Cougar Canyon did
indeed have actual notice, through various sources, of all the
information that Zions had left out of its original answer. The
Partition Statute required Zions to set forth “the original amount
and date” of its lien, as well as the “amounts remaining unpaid.”
See Utah Code Ann. § 78B-6-1207(2). But Cougar Canyon
acknowledged that, before it filed its lawsuit, it had conducted a
title search and not only knew about Zions’ lien but knew the
original amount and date of that lien. And it acknowledged that
it had received a copy of Zions’ notice of default, which set forth
the amount that Zions believed was then owed on the Line of
Credit. Thus, Cougar Canyon had actual notice, well in advance
of Zions’ motion to amend, of all the information that should
have been included in Zions’ original answer. Cougar Canyon’s
attorney even acknowledged that, as soon as Cougar Canyon
saw Zions’ answer, it “knew . . . [Zions] had messed up” and
made a conscious decision to refrain from seeking additional
discovery about the nature of Zions’ lien in the hopes of later
winning a judicial ruling that, pursuant to the Partition Statute,
Zions had waived its rights under the Line of Credit. Under
these circumstances, the district court was within its discretion
to determine that Cougar Canyon would not be meaningfully or
unavoidably prejudiced by allowing Zions to amend its answer,
and to take measures—postponing the trial, allowing additional
discovery, and ordering reimbursement of attorney fees—
designed to eliminate the types of prejudice it could identify.
¶28 Cougar Canyon resists this conclusion, asserting that, if
the court’s decision to allow amendment is here affirmed, “then
there can be no limit to a [district] court’s discretion” to grant a
20190193-CA 15 2020 UT App 176Cougar Canyon Loan v. Walker
motion to amend. Cases in which a court’s decision to grant (as
opposed to deny) a motion to amend has been determined, on
appeal, to be an abuse of discretion are rare, but Cougar Canyon
directs our attention to two such cases. See Evans v. Syracuse City
Sch. Dist., 704 F.2d 44 (2d Cir. 1983); Rolan v. New West Health
Services, 2017 MT 270, 405 P.3d 65. We find these cases readily
distinguishable from the case at hand, and we certainly do not
view our affirmance here as an indication that district courts
enjoy boundless discretion to grant motions to amend.
¶29 In Evans v. Syracuse City School District, the case had
been pending for three years by the time the defendant
sought leave to amend its answer, which motion was
brought just six days before a multi-day trial was set to begin.
704 F.2d at 47. The defendant had known of the grounds for
the amendment for “more than two years and nine months”
prior to seeking leave to amend, but there was no indication
that the plaintiff was aware of the issues related to the
amendment prior to the filing of the motion to amend. Id. at 48.
And in Rolan, the plaintiff proceeded with a class action lawsuit
under state law, relying on sworn representations of the
defendant that federal law was not at issue. 2017 MT 270, ¶¶ 4–5.
The parties litigated for three years based on those
representations, including a class certification motion and an
interlocutory appeal of the class certification decision to the
Montana Supreme Court. Id. After the first appeal, the defendant
sought leave to amend its answer to assert that the original
representations it had made under oath were not correct, and the
state district court granted the motion. Id. ¶¶ 6–7. In a second
appeal, the Montana Supreme Court determined that the district
court had abused its discretion in allowing the amendment,
determining that “undue prejudice” regarding the class
certification phase of the litigation was “the dispositive issue,”
and that the defendant should not be allowed to amend in order
to take back sworn statements that had sent the litigation down a
three-year path. Id. ¶¶ 22–24.
20190193-CA 16 2020 UT App 176Cougar Canyon Loan v. Walker
¶30 In this case, by contrast, Cougar Canyon had not filed its
lawsuit based on sworn representations by Zions, and the delay
and untimeliness were minimal given the compressed schedule
imposed by the district court. The case had only been pending
for a matter of months, and Zions was only fifteen days late in
filing its motion. Moreover, unlike the non-movants in Rolan and
Evans v. Syracuse City School District, Cougar Canyon was fully
aware of all the information relevant to the proposed
amendment, and could not articulate any prejudice that was not
fully alleviated by a continuance of the trial and an award of
attorney fees. We find the district court’s exercise of its discretion
in this case to be proper, and our affirmance of that decision on
the facts of this case is not a sign that district courts have
unlimited discretion to grant motions to amend. Were this case
not on a compressed schedule, or had Cougar Canyon not
already known of the information at issue, or had the district
court failed to take the steps it did (continuance and a fee award)
to alleviate the limited prejudice that did exist, our conclusion
may have been different.
¶31 But district courts have wide discretion in considering
motions to amend pleadings. As our supreme court has
noted, “[t]he question presented is not whether we would
have granted leave to amend. It is whether we find an abuse
of discretion in the district judge’s decision.” See Stichting
Mayflower Mountain Fonds v. United Park City Mines Co., 2017
UT 42, ¶ 49, 424 P.3d 72. Under the circumstances of this case,
we discern no abuse of the court’s wide discretion in its
decision to grant Zions’ motion for leave to amend its answer,
and we therefore affirm that determination. And our decision in
this regard means that Zions, by including the information
required by the Partition Statute in its duly filed and authorized
amended answer, satisfied the requirements of the Partition
Statute, and its rights under the Line of Credit were therefore
not waived.
20190193-CA 17 2020 UT App 176Cougar Canyon Loan v. Walker
III
¶32 Finally, Cougar Canyon asserts that the district court
abused its discretion under rule 26 of the Utah Rules of Civil
Procedure by failing to sanction Zions and prevent it from
introducing any evidence about its lien, and by instead
effectively extending the deadline by which Zions could file
complete initial disclosures.
¶33 “If a party fails to disclose or to supplement timely a
disclosure or response to discovery, that party may not use the
undisclosed witness, document or material at any hearing or
trial unless the failure is harmless . . . .” Utah R. Civ. P. 26(d)(4)
(emphasis added). As noted, the district court determined that
any harm to Cougar Canyon had been “mitigated in some part”
because Cougar Canyon already had, from other sources, all of
the information that the Partition Statute required Zions to set
forth in its answer. And all remaining harm, including an
inability to conduct discovery on the undisclosed information
and “actual economic harm” in the form of attorney fees, was
ameliorated by the continuance of the trial and the order
compelling Zions to pay Cougar Canyon’s attorney fees. In
essence, the court determined that Zions’ initial failure to
disclose had been rendered harmless by circumstances,
including the court’s own remedial measures. And we have
recently noted that district courts have the discretion, in the rule
26(d)(4) context, to impose remedial measures that render
harmless a failure to disclose. See, e.g., Segota v. Young 180 Co.,
2020 UT App 105, ¶ 22, 470 P.3d 479 (noting that, in appropriate
cases, harm from a party’s belated rule 26 initial disclosures can
be “remedied . . . through an assessment of attorney fees and
costs against [that party] imposed in connection with an
extension of the deadlines”). Under the circumstances, the
district court’s determination—that Zions’ failure to make timely
initial disclosures was harmless—was within the bounds of its
20190193-CA 18 2020 UT App 176Cougar Canyon Loan v. Walker
discretion, and therefore the court did not abuse that discretion
by declining to impose sanctions against Zions under rule 26.
CONCLUSION
¶34 The language of the Partition Statute does not necessarily
require a defendant to set forth the statutorily required
information in its original answer; the statute’s mandates are
satisfied if the information is set forth in an amended answer
that is properly filed pursuant to rule 15 of the Utah Rules of
Civil Procedure. In this case, the district court allowed Zions to
file an amended answer, and that decision was not an abuse of
the court’s substantial discretion in such matters. Accordingly,
Zions satisfied the requirements of the Partition Statute, and did
not waive its rights under the Line of Credit by failing to include
the necessary information in its original answer. And for similar
reasons, the district court did not abuse its discretion under rule
26(d)(4) by determining that the initial failure to disclose was
harmless, and accordingly declining to exclude Zions’ evidence
regarding its interest in the Property.
¶35 Affirmed.
20190193-CA 19 2020 UT App 176