Jensen v. Cannon

2020 UT App 124THE UTAH COURT OF APPEALS
JODI JENSEN,
Appellant and Cross-appellee,
v.
GARY CANNON,
Appellee and Cross-appellant.
Opinion
No. 20190433-CA
Filed August 27, 2020
Third District Court, Salt Lake Department
The Honorable Patrick Corum
No. 160904276
Bruce M. Pritchett Jr. and Robert D. Strieper,
Attorneys for Appellant and Cross-appellee
Julianne P. Blanch, Alissa M. Mellem, and Aaron
Worthen, Attorneys for Appellee and
Cross-appellant
JUDGE JILL M. POHLMAN authored this Opinion, in which
JUDGE DAVID N. MORTENSEN concurred. JUDGE RYAN M. HARRIS
concurred in part and concurred in the result, with opinion.
POHLMAN, Judge:
¶1 Jodi Jensen and Gary Cannon divorced in March 1998.
More than a decade later, Jensen filed an independent action
seeking relief from the parties’ divorce decree on the basis that
Cannon failed to disclose certain assets during the divorce
proceedings. The district court largely resolved the dispute in
Cannon’s favor through summary judgment and a bench trial. In
this appeal and cross-appeal, Jensen and Cannon challenge
several of the district court’s rulings resolving Jensen’s claims
and denying Cannon’s motions. We affirm the challenged
rulings.
Jensen v. Cannon
BACKGROUND
¶2 Jensen and Cannon married in 1987 and divorced in 1998.
Before the parties divorced, they entered into a settlement
agreement resolving “any and all disputes” regarding “the
distribution of real and personal property acquired by them
during the course of their marriage” and dividing identified
assets. (Cleaned up.) The agreement was incorporated into the
divorce decree.
¶3 Some years later, Jensen began to suspect that Cannon
had not disclosed all of his assets during the divorce
proceedings. She accordingly filed suit against Cannon in 2009,
alleging that Cannon had committed fraud in not disclosing
certain assets. After several years, that case was dismissed
without prejudice by stipulation. In 2016, within one year of the
dismissal, Jensen re-filed her complaint, again alleging that
Cannon committed fraud by not disclosing certain assets during
the divorce proceedings. She subsequently amended her
complaint, adding claims for breach of the covenant of good
faith and fair dealing, negligent misrepresentation, unjust
enrichment, accounting, and fraudulent nondisclosure.
¶4 As relevant here, Jensen alleged that at the time of their
divorce, Cannon held an interest in two assets: a 3.89-acre parcel
of real property Jensen has identified on appeal as the Riverton
Corners property and an option (the Option Agreement) to
purchase a different 3.4-acre parcel of land Jensen has identified
as the Green property. Jensen claimed that Cannon did not
disclose either asset during the divorce proceedings.
¶5 Cannon moved for summary judgment on all Jensen’s
claims. He argued that Jensen’s non-fraud claims should be
dismissed because they constituted an “improper[] attempt to
modify the divorce decree” and were untimely and improper
under rule 60 of the Utah Rules of Civil Procedure. He also
20190433-CA 2 2020 UT App 124Jensen v. Cannon
argued that Jensen could not prove her fraud-related claims by
clear and convincing evidence. And he requested attorney fees
pursuant to Utah Code section 78B-5-825, contending that
Jensen’s claims both lacked merit and were brought in bad faith.
¶6 The district court granted the motion in part and denied it
in part. The court awarded Cannon judgment on some of
Jensen’s fraud-based claims but concluded that Jensen could
“proceed with her [fraud] and [fraudulent nondisclosure] causes
of action” with respect to the Riverton Corners and Green
properties. The court also dismissed Jensen’s claims for breach of
the covenant of good faith and fair dealing, negligent
misrepresentation, accounting, and unjust enrichment. The court
rendered no ruling on Cannon’s request for bad faith attorney
fees in its summary judgment ruling.
¶7 The case proceeded to a bench trial. At the trial’s
conclusion, the court determined that Jensen had not carried her
burden of proving her fraud claims by clear and convincing
evidence. The court stated that the central issue on the fraud
claims was whether Cannon knew the Option Agreement and
the Riverton Corners property were assets “that he needed to
disclose during the divorce.” The court found that Cannon
credibly testified that he did not know he was required to
disclose those assets and that he therefore did not have the intent
required for fraud.
¶8 The district court also denied Cannon’s request for bad
faith attorney fees under Utah Code section 78B-5-825. It
determined that the case was “brought in good faith” and on
that basis denied the request.
¶9 Finally, the district court also denied a motion filed by
Cannon for sanctions against Jensen under rule 11 of the Utah
20190433-CA 3 2020 UT App 124Jensen v. Cannon
Rules of Civil Procedure. 1 During the proceedings, Jensen had
filed a motion in limine requesting that the court sanction
Cannon under rule 37 of the Utah Rules of Civil Procedure for
spoliation of the Option Agreement. She asked the court to
presume that a physical copy of the Option Agreement once
existed and to impose an adverse inference in her favor that had
the document been disclosed, it would have shown that Cannon
“had an ownership interest in the Green Property during the
marriage that was not disclosed.” The court denied Jensen’s
motion.
¶10 In response, Cannon filed a motion requesting that Jensen
be sanctioned under rule 11 for filing the spoliation motion,
claiming that at the time Jensen filed the motion she did not
have, and was not likely to attain, evidentiary support for her
contentions. See Utah R. Civ. P. 11(b)(3), (c) (providing that, by
presenting a motion to the court, the attorney certifies that,
having conducted a reasonable inquiry, “the allegations and
other factual contentions have evidentiary support or . . . are
likely to have evidentiary support after a reasonable opportunity
for further investigation or discovery,” and that an “appropriate
sanction” may be imposed for a violation of subsection (b)).
Following trial, the court determined that while there “may not
be direct evidentiary support for” the contention that the Option
Agreement had been in writing and that Cannon had spoliated
the document, “there [were] inferences” supporting the
contention, and on that basis denied Cannon’s motion.
¶11 Jensen now appeals the district court’s conclusion that she
failed to prove her fraudulent nondisclosure claim with respect
1. We read Cannon’s motion for rule 11 sanctions as against
Jensen’s counsel rather than against Jensen herself. However, the
parties on appeal treat the motion as though it were filed against
Jensen, and we accordingly follow suit.
20190433-CA 4 2020 UT App 124Jensen v. Cannon
to the Option Agreement and the Riverton Corners property. She
also appeals the court’s dismissal of her non-fraud claims on
summary judgment. Cannon cross-appeals, challenging the
court’s denial of his request for bad faith attorney fees and for
rule 11 sanctions based on Jensen’s spoliation motion. Cannon
also requests attorney fees on appeal under rule 33 of the Utah
Rules of Appellate Procedure.
ISSUES AND STANDARDS OF REVIEW
¶12 Jensen first challenges the district court’s determination
that she did not prove her fraudulent nondisclosure claim
regarding the Riverton Corners property and the Option
Agreement, arguing that the court misconstrued the elements of
the claim. We review a district court’s legal conclusions for
correctness. See Reynolds v. MacFarlane, 2014 UT App 57, ¶ 11,
322 P.3d 755; see also Nielsen v. Spencer, 2008 UT App 375, ¶ 10,
196 P.3d 616 (stating that we review issues concerning the
elements of a tort claim for correctness).
¶13 Jensen next challenges the district court’s dismissal of her
non-fraud claims on summary judgment. She argues that the
district court erroneously dismissed those claims due to its
misinterpretation of rule 60(d) of the Utah Rules of Civil
Procedure. Summary judgment should be granted “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 district court’s
grant of “summary judgment for correctness, viewing the facts
and all reasonable inferences drawn therefrom in the light most
favorable to the nonmoving party.” Penunuri v. Sundance
Partners, Ltd., 2017 UT 54, ¶ 14, 423 P.3d 1150 (cleaned up). And
we review a district court’s “interpretation of a rule of civil
procedure for correctness.” Lodge at Westgate Park City Resort
20190433-CA 5 2020 UT App 124Jensen v. Cannon
& Spa Condo. Ass’n Inc. v. Westgate Resorts Ltd., 2019 UT App 36,
¶ 18, 440 P.3d 793 (cleaned up).
¶14 On cross-appeal, Cannon challenges the district court’s
denial of his request for attorney fees under Utah Code section
78B-5-825. Under that section, a court in a civil action “shall
award reasonable attorney fees to a prevailing party if the court
determines that the action or defense to the action was without
merit and not brought or asserted in good faith.” Utah Code
Ann. § 78B-5-825(1) (LexisNexis 2018). As relevant here, whether
Jensen acted in good faith is a “question of fact,” and we review
the district court’s determination on that point for clear error. See
Bresee v. Barton, 2016 UT App 220, ¶ 15, 387 P.3d 536 (cleaned
up); see also Rocky Ford Irrigation Co. v. Kents Lake Reservoir Co.,
2020 UT 47, ¶ 77 (affording a “substantial measure of discretion”
to a district court’s bad faith finding).
¶15 Finally, Cannon challenges the district court’s denial of
his motion for sanctions against Jensen under rule 11 of the Utah
Rules of Civil Procedure. We review factual findings related to
the rule 11 determination for clear error and the court’s legal
conclusions for correctness. See Gillmor v. Family Link, LLC, 2012
UT 38, ¶ 9, 284 P.3d 622; Westmont Mirador LLC v. Shurtliff, 2014
UT App 184, ¶ 8, 333 P.3d 369.
ANALYSIS
I. Jensen’s Appeal
A. Fraudulent Nondisclosure
¶16 Jensen challenges the district court’s determination that
she did not prove all the elements of her fraudulent
nondisclosure claim by clear and convincing evidence. “To
prevail on a claim for fraudulent nondisclosure, a plaintiff must
20190433-CA 6 2020 UT App 124Jensen v. Cannon
prove by clear and convincing evidence that (1) the defendant
had a legal duty to communicate information, (2) the defendant
knew of the information he failed to disclose, and (3) the
nondisclosed information was material.” Anderson v. Kriser, 2011
UT 66, ¶ 22, 266 P.3d 819 (cleaned up); accord Hess v. Canberra
Dev. Co., 2011 UT 22, ¶ 29, 254 P.3d 161; Mitchell v. Christensen,
2001 UT 80, ¶ 9, 31 P.3d 572.
¶17 In evaluating Jensen’s fraudulent nondisclosure claim, the
district court determined that the “core issue” regarding the
Option Agreement and the Riverton Corners property was
whether Cannon knew that they were “asset[s] that he needed to
disclose during the divorce.” The court found that Cannon
credibly testified with respect to both “that he did not know” he
needed to disclose them. Regarding the Option Agreement
specifically, the court found that Cannon had an “option with
the Greens[] to act as their real estate agent,” not an option “to
purchase and hold the land,” and that there was no “clear and
convincing evidence that [Cannon] knew [the Option
Agreement] was an asset that would require disclosure” where,
at the relevant time, “he did not believe the real estate option to
have value,” given that it “was a potential future interest in
land.” And for the Riverton Corners property, the court
determined that “there was no evidence” that Cannon “intended
to deceive” Jensen about the property. The court found that
Cannon “convincingly testified” that he “did not view [the
property] as something he needed to disclose as an asset”
because he did not believe he owned an interest in it.
¶18 Jensen argues that the court “erred when it extended the
element of knowledge” beyond mere knowledge of the asset to
Cannon’s knowledge that “he had to disclose the assets.” She
faults the court for basing its judgment on Cannon’s “testimony
that he did not believe he had to disclose” the Option Agreement
and the Riverton Corners property rather than on his knowledge
of these properties in the abstract. In this respect, she contends
20190433-CA 7 2020 UT App 124Jensen v. Cannon
that the relevant issue to prove the fraudulent nondisclosure
claim was simply whether Cannon knew of the Option
Agreement and the Riverton Corners property, and that it was
inappropriate for the court to consider Cannon’s subjective belief
about whether they were “assets” that needed to be disclosed. 2
¶19 Jensen’s argument has some appeal. After all, in
articulating the three-part test applied to fraudulent
nondisclosure claims, intent to deceive is not identified as an
element of the tort. See Anderson, 2011 UT 66, ¶ 22. The test
speaks only of duty, knowledge, and materiality. Id. And in that
respect, the articulation of the tort is similar to constructive
fraud, which does not require a showing of intent to deceive. See
Jensen v. IHC Hosps., Inc., 944 P.2d 327, 339 (Utah 1997)
(“Constructive fraud requires two elements: (i) a confidential
relationship between the parties; and (ii) a failure to disclose
material facts.”); d’Elia v. Rice Dev., Inc., 2006 UT App 416, ¶ 51,
147 P.3d 515 (holding that intent to defraud is not an element of
constructive fraud), holding modified on other grounds by Jones
& Trevor Mktg., Inc. v. Lowry, 2012 UT 39, 284 P.3d 630.
¶20 We also recognize that in other jurisdictions, the tort of
fraudulent nondisclosure has been described a variety of ways,
some of which do not necessarily depend on establishing a
fraudulent intent. For example, some courts separately recognize
the tort of fraudulent concealment, which requires an intent to
2. Jensen also challenges the court’s conclusion regarding the
duty element of her fraudulent nondisclosure claim. The court
determined that Jensen “did not meet her burden of proof in
establishing” that Cannon had a duty “to disclose any of the
information she claimed he withheld.” However, because we
ultimately affirm the district court’s conclusions with respect to
the knowledge element of her claim, we have no need to address
Jensen’s arguments regarding the other elements.
20190433-CA 8 2020 UT App 124Jensen v. Cannon
conceal, and the tort of fraudulent nondisclosure, which requires
only the breach of a duty to disclose. See United States v. Colton,
231 F.3d 890, 898–900 & n.2 (4th Cir. 2000) (explaining the
difference between fraudulent concealment, which requires an
intent to deceive, and fraudulent nondisclosure, which requires
the failure to disclose when there is a duty to do so, and
collecting cases from jurisdictions that recognize a distinction
between fraudulent concealment and fraudulent nondisclosure
on this basis and those that do not); Wells Fargo Bank v. Arizona
Laborers, Teamsters & Cement Masons Local No. 395 Pension Trust
Fund, 38 P.3d 12, 21–22, 35–36 (Ariz. 2002) (en banc) (discussing
the difference between fraudulent concealment, which requires
an intent to conceal, and fraudulent nondisclosure, which
requires only a duty to disclose). See generally Restatement
(Second) of Torts §§ 550, 551 (Am. Law Inst. 1977) (discussing
requirements of concealment versus nondisclosure).
¶21 Utah, however, does not draw a distinction between the
torts of fraudulent nondisclosure and fraudulent concealment. In
this state, “the elements for fraudulent nondisclosure are
essentially the same as those for fraudulent concealment,” and
our courts have “sometimes used the names of the two causes of
action interchangeably.” Anderson, 2011 UT 66, ¶ 22 n.11. And
while intent is not a listed element of fraudulent nondisclosure
claims, our supreme court has nevertheless emphasized that
“fraudulent nondisclosure is an intentional tort” and that “intent
is the hallmark” of intentional torts. Id. ¶ 26.
¶22 In so stating, the Anderson court plainly described the tort
of fraudulent nondisclosure as dependent on the actor’s intent.
Id. ¶¶ 25–26; see also Marcantel v. Michael & Sonja Saltman Family
Trust, No. 2:16-cv-250-DBP, 2019 WL 1262648, at *5–7, *11 (D.
Utah Mar. 19, 2019) (discussing Anderson, explaining that
fraudulent intent is an element of the tort of fraudulent
nondisclosure, and applying the element of intent accordingly to
resolve the fraudulent nondisclosure claims at issue). To make
20190433-CA 9 2020 UT App 124Jensen v. Cannon
this point, the Anderson court contrasted fraudulent
nondisclosure with negligent nondisclosure, explaining that the
“essential difference” between the two claims “is the mental
state of the defendant that the plaintiff must establish in order to
prevail.” Anderson, 2011 UT 66, ¶ 25. For fraudulent
nondisclosure, a defendant must have “a willful intent to
deceive,” while for negligent nondisclosure, the plaintiff “is not
required to demonstrate any wrongful intent on the part of the
defendant.” Id. (cleaned up); see also Price-Orem Inv. Co. v. Rollins,
Brown & Gunnell, Inc., 713 P.2d 55, 59 n.2 (Utah 1986) (explaining
that “negligent misrepresentation does not require the intentional
mental state necessary to establish fraud”); Shah v. Intermountain
Healthcare, Inc., 2013 UT App 261, ¶ 11, 314 P.3d 1079 (“The
elements of negligent misrepresentation are similar to those of
fraud except that negligent misrepresentation does not require
the intentional mental state necessary to establish fraud.”
(cleaned up)); Moore v. Smith, 2007 UT App 101, ¶ 36 n.12, 158
P.3d 562 (stating that the “only difference between” claims for
negligent misrepresentation and fraudulent concealment is that
negligent misrepresentation requires a “lesser mental state”).
¶23 Applying these principles, we conclude that the district
court properly considered Cannon’s beliefs—i.e., his mental
state—in determining whether Cannon knew of the information
he failed to disclose. To be sure, Cannon knew of the Option
Agreement and the Riverton Corners property during the
divorce proceedings. But importantly, the court credited
Cannon’s testimony that he did not know that the Option
Agreement and the Riverton Corners property were “asset[s]”
responsive to Jensen’s discovery request. And because Cannon
did not know they were responsive to Jensen’s discovery,
Cannon lacked a “willful intent to deceive,” as is required for
fraudulent nondisclosure. See Anderson, 2011 UT 66, ¶¶ 25–26
(cleaned up); see also Marcantel, 2019 WL 1262648, at *6–7
(looking at the circumstances surrounding the alleged
20190433-CA 10 2020 UT App 124Jensen v. Cannon
fraudulent nondisclosure to conclude that a mere knowledge of
an easement and a failure to disclose it did not amount to
fraudulent intent).
¶24 In his separate opinion, Judge Harris disagrees with our
interpretation of Anderson. He contends that in applying the
supreme court’s instruction about willful intent to the
circumstances of this case, we have “tack[ed] on a new fourth
element never before discussed as such by any Utah appellate
opinion.” Infra ¶ 58. We respectfully disagree with Judge
Harris’s assessment of our analysis. We have not added a fourth
element to the tort of fraudulent nondisclosure any more than
the supreme court did in Anderson. Rather, we believe we are
merely following the lead of Anderson in recognizing that an
intent to deceive must necessarily inform the application of the
tort’s three elements.
¶25 The court in Anderson addressed the contours of the
second element of the tort: that “the defendant knew of the
information he failed to disclose.” 2011 UT 66, ¶¶ 22, 24 (cleaned
up). In particular, the court resolved “whether satisfaction of this
element requires a showing of actual, or merely constructive,
knowledge,” id. ¶ 24, emphasizing that the tort of fraudulent
nondisclosure is a tort committed by someone acting with
fraudulent intent, or the intent to deceive, id. ¶¶ 25–26. The court
then concluded that the tort must require actual knowledge of
the undisclosed information, because to conclude otherwise
would overlook the intentional nature of the tort. Id. ¶ 26. The
court explained it would be “unreasonable and illogical to infer
that the defendant intended to conceal [a nondisclosed] fact” if
the defendant did not have actual knowledge of it. Id.
¶26 Similarly, here, the three elements of nondisclosure do not
answer the specific question the district court (and now this
court) have been called on to resolve: whether satisfaction of the
knowledge element requires that Cannon knew of the Option
20190433-CA 11 2020 UT App 124Jensen v. Cannon
Agreement and the Riverton Corners property in the abstract or
that he knew that the properties were assets as defined by
Jensen’s discovery requests. To answer that question, we do not
add a fourth element to the tort. Instead, like the supreme court
in Anderson, we resolve that unanswered question by
acknowledging that “fraudulent nondisclosure is an intentional
tort.” Id. And we conclude that when a defendant like Cannon
lacks the knowledge that a particular property is an asset for
purposes of discovery (as the district court found), “it is both
unreasonable and illogical to infer that [he] intended to conceal
that fact.” Id. “Indeed, permitting a plaintiff to state a claim for
fraudulent nondisclosure without proving actual knowledge on
the part of the defendant would allow a plaintiff to convert
merely negligent acts into fraudulent acts.” Id.¶27 Finally, we take no issue with Judge Harris’s conclusion
that fraudulent intent for purposes of a fraudulent nondisclosure
claim may be inferred when a plaintiff shows that a defendant
had actual knowledge of a material fact and failed to disclose
that fact. See infra ¶¶ 60, 63. The supreme court made that clear
in Anderson. 2011 UT 66, ¶ 26. But we do not read Anderson as
requiring such an inference. And we view it as inconsistent with
the designation of fraudulent nondisclosure as an intentional tort
to insist that such an inference must be drawn in this case where
the court found, as a factual matter, that Cannon did not know
the Option Agreement and the Riverton Corners property were
assets to be disclosed. Such a conclusion, in our opinion, would
render Cannon liable for fraudulent nondisclosure even where
the court found that he carried no fraudulent intent. And that is
a conclusion we cannot square with Anderson.
¶28 For these reasons, we conclude that the court did not
improperly extend or apply the elements of fraudulent
nondisclosure in considering Cannon’s beliefs about whether the
Option Agreement and the Riverton Corners property had to be
20190433-CA 12 2020 UT App 124Jensen v. Cannon
disclosed. Accordingly, we affirm the court’s judgment on
Jensen’s fraudulent nondisclosure claim. 3
B. Jensen’s Non-fraud Claims
¶29 In addition to asserting claims for fraud and fraudulent
nondisclosure, Jensen sought relief from the divorce decree
based on theories of negligent misrepresentation, breach of the
implied covenant of good faith and fair dealing, accounting, and
unjust enrichment (the non-fraud claims). Cannon moved for
summary judgment on these claims, arguing that they were
untimely and improper under rule 60(d) of the Utah Rules of
Civil Procedure. The district court agreed and granted Cannon’s
motion. The court adopted Cannon’s construction of rule 60(d),
concluding that “in attacking the underlying settlement
agreement,” the “only appropriate actions are the fraud related
claims.”
¶30 Jensen challenges the court’s summary judgment
decision, contending that the plain language of rule 60(d)
permits parties to seek relief from a judgment based on claims
3. On appeal, Jensen also asserts claims of error regarding
related aspects of the court’s fraudulent nondisclosure rulings.
Jensen challenges the court’s valuation of the Option Agreement,
its assessment of Cannon’s ownership in the Riverton Corners
property without reference to partnership law, and its exclusion
of an amended expert report appraising the value of the
Riverton Corners property. She additionally challenges the
court’s alternative determination that all Jensen’s claims are
barred by the doctrine of laches. However, because we affirm the
court’s determination that Jensen did not establish her claims of
fraudulent nondisclosure regarding the Option Agreement and
the Riverton Corners property by clear and convincing evidence,
we have no occasion to reach these other claims of error.
20190433-CA 13 2020 UT App 124Jensen v. Cannon
other than fraud. Although we agree with Jensen that fraud is
not the only theory allowed in an independent action for relief
from a judgment, we do not agree that the district court erred in
granting summary judgment against Jensen on her particular
non-fraud claims.
¶31 Rule 60 recognizes two avenues by which a litigant may
seek relief from a final judgment. See Pepper v. Zions First Nat’l
Bank, NA, 801 P.2d 144, 150 (Utah 1990) (“[D]espite the doctrine
of res judicata, [rule 60] expressly recognizes two different
methods for attacking a judgment.”). First, rule 60(b) permits a
party to move a district court for relief from a judgment based
on several enumerated grounds, such as excusable neglect,
newly discovered evidence, and fraud, each of which is subject
to time constraints set out in subsection 60(c). See Utah R. Civ. P.
60(b), (c) (requiring a motion for relief from a judgment based on
grounds such as excusable neglect, newly discovered evidence,
and fraud to be filed within ninety days of the entry of
judgment, while a motion based on other reasons under
subsection (b) must be filed “within a reasonable time”).
¶32 Second, rule 60(d) separately recognizes a district court’s
inherent power to entertain an independent action for relief from
a judgment. Id. R. 60(d); see also State v. Boyden, 2019 UT 11, ¶ 39,
441 P.3d 737; St. Pierre v. Edmonds, 645 P.2d 615, 618 (Utah 1982)
(recognizing a “court’s historic powers to relieve a party” from
judgment and explaining that rule 60 “does not limit the power
of a court to entertain an independent action” (cleaned up)).
Because the availability of an independent action flows from a
“court’s historic powers to relieve a party” from judgment, the
time frames set forth in rule 60(c) do not apply. See St. Pierre, 645
P.2d at 618. “Rather, the doctrine of laches and other equitable
principles determine the time within which the action must be
brought.” Id.
20190433-CA 14 2020 UT App 124Jensen v. Cannon
¶33 When Jensen discovered Cannon’s alleged fraud, the
window of time for her to seek relief for that fraud under rule
60(b) had long since expired. See Utah R. Civ. P. 60(b)(3), (c)
(providing that a motion for relief from a judgment or order on
the basis of fraud must be filed “not more than 90 days after
entry of the judgment or order”). Thus, her only option was to
seek relief from the divorce decree by filing an independent
action as endorsed by rule 60(d). And while Jensen originally
asserted only fraud claims, she later amended her complaint to
add the non-fraud claims, including a claim for negligent
misrepresentation. 4
¶34 Rule 60(d) states, “This rule does not limit the power of a
court to entertain an independent action to relieve a party from a
judgment, order or proceeding or to set aside a judgment for
fraud upon the court.” Id. R. 60(d). “When we interpret a rule of
civil procedure, we look to the express language of the rule and
to cases interpreting it.” Drew v. Lee, 2011 UT 15, ¶ 16, 250 P.3d
48. The dispute before us centers on the final phrase of the rule:
“for fraud upon the court.” Jensen argues that the phrase
modifies only the clause that immediately precedes it—“to set
aside a judgment”—and thus the rule permits actions “to relieve
a party from a judgment, order or proceeding” based on causes
of action other than fraud. The district court and Cannon
disagree, concluding that “for fraud upon the court” modifies
the entire provision, meaning the only claim recognizable in an
independent action for relief from judgment is fraud.
4. Jensen’s non-fraud claims sound in negligence, contract, and
equity. Yet on appeal, she makes no distinction between them
and refers to them collectively as “causes of action based in
negligence.” Thus, we follow Jensen’s lead and consider her four
non-fraud claims collectively as based in negligence.
20190433-CA 15 2020 UT App 124Jensen v. Cannon
¶35 Neither party dissects the grammar of the sentence; each
simply insists his or her interpretation is the right one. And, in
fairness, the sentence could perhaps be read either way. 5 But this
issue does not come to us on a blank slate. Our supreme court
has previously endorsed the viability of independent actions for
relief from a judgment on grounds other than fraud. Thus, on
this point we agree with Jensen.
¶36 In St. Pierre v. Edmonds, 645 P.2d 615 (Utah 1982), the court
acknowledged the district court’s power to entertain an
independent action predicated on “duress” arising out of the
“physical and mental intimidation” directed at the appellant by
the other party in the underlying suit. Id. at 618–20. And in
Gillmor v. Wright, 850 P.2d 431 (Utah 1993), the court recognized
accident and mutual mistake as grounds on which an
independent action may be asserted in equity under rule 60. 6 Id.
5. The federal counterpart to Utah’s rule 60(d) appears to be
clearer (at least grammatically) on this point, providing, “This
rule does not limit a court’s power to: (1) entertain an
independent action to relieve a party from a judgment, order, or
proceeding; . . . or (3) set aside a judgment for fraud on the
court.” Fed. R. Civ. P. 60(d).
6. Although Gillmor and St. Pierre were decided under a previous
version of rule 60, the previous rule’s provision for an
independent action is nearly identical to the current rule 60(d).
Compare Utah R. Civ. P. 60(d) (“This rule does not limit the
power of a court to entertain an independent action to relieve a
party from a judgment, order or proceeding or to set aside a
judgment for fraud upon the court.”), with Pepper v. Zions First
Nat’l Bank, NA, 801 P.2d 144, 150 n.1 (Utah 1990) (setting forth
the previous version of rule 60, which provided, at the end of
subsection (b), “This rule does not limit the power of a court to
(continued…)
20190433-CA 16 2020 UT App 124Jensen v. Cannon
at 435–36. In fact, the Gillmor court rejected the appellant’s
reading of St. Pierre as providing that “an independent action in
equity is justified only when particularly egregious behavior has
resulted in an unconscionable judgment or order.” Id. at 435.
Observing that “St. Pierre involved allegations of fraud upon the
court,” the court explained, “The case did not state that an
independent action will only lie for such claims or that such an
action is no longer viable to remedy errors based on mutual
mistakes of fact in legal descriptions.” Id. In support, the court
pointed to its reliance in St. Pierre on federal treatises for the
proposition that although “relief from a judgment by an
independent action on the basis of accident or mistake is less
common than relief on the basis of fraud,” “both accident and
mistake afford the basis for relief in an appropriate situation.” Id.
at 435–36 (cleaned up); see also 11 Charles Alan Wright & Arthur
R. Miller, Federal Practice & Procedure § 2868 (3d ed. 2012)
(explaining that under federal rule 60(d), “[r]esort to an
independent action may be had only rarely, and then only under
unusual and exceptional circumstances,” and that while “[t]he
most common ground for an independent action is fraud, . . . the
action also will lie on the basis of mistake”).
¶37 Although Gillmor and St. Pierre compel us to conclude
that “fraud upon the court” is not the only basis for relief from
judgment in an independent action, Jensen has not persuaded us
that her negligence-based claims are a viable basis for such relief.
Rather, our courts have generally rejected the idea that claims
akin to negligence are adequate to wage an independent
collateral attack on a judgment.
(…continued)
entertain an independent action to relieve a party from a
judgment, order or proceeding or to set aside a judgment for
fraud upon the court” (cleaned up)).
20190433-CA 17 2020 UT App 124Jensen v. Cannon
¶38 In this respect, the decision in Christensen v. Christensen,
619 P.2d 1372 (Utah 1980), is noteworthy. There, the court
rejected an appellant’s attempt to set aside an award of property
to her former husband based on a claim of negligent
misrepresentation. Id. at 1372–74. The appellant had originally
argued in her independent action that her ex-husband had
fraudulently misrepresented the value of certain property—an
apartment complex—during the divorce proceedings. Id. at
1372–73. After the district court ruled against her on the fraud
claim, she argued that “even though [the ex-husband’s] conduct
did not constitute fraud, the Court should have modified the
original decree and given her part of the equity in the apartment
complex in light of the disparity between the actual value of the
property and the value she was led to believe that it had at that
time.” Id. at 1373. The supreme court rejected her claim. Left
with only “an alleged nonfraudulent misrepresentation by the
[ex-husband],” the court held that “[s]uch facts would not justify
. . . overturning a stipulated property settlement and
redistributing the property.” Id. The court expressed sympathy
for the appellant’s position but affirmed the district court, stating
that it “[could not] now upset a stipulated property settlement
because of her having relied upon values furnished by her
husband in an adversary proceeding.” Id. at 1373–74.
¶39 To the extent Jensen seeks to rely on an alleged negligent
misrepresentation during the course of her divorce proceeding,
in our view, there is no basis on which to distinguish this case
from Christensen. At the very least, we are aware of no case in
Utah (nor has Jensen directed us to one) where a court has
permitted a collateral attack on a judgment through an
independent action raising only negligence-based claims. 7 Like
7. This view appears to be consistent with federal law
interpreting and applying federal rule 60(d). See United States v.
(continued…)
20190433-CA 18 2020 UT App 124Jensen v. Cannon
in Christensen, Jensen may have been mistaken as to the value of
her stipulated property settlement due to the alleged negligent
misrepresentations of her husband, but such facts are inadequate
to relieve her from the divorce decree. See id.; see also Pepper, 801
P.2d at 150–51 (explaining that while rule 60(b) “sets forth
several grounds for setting aside a judgment by motion,” several
of those grounds “would not be an adequate ground for an
independent collateral attack on a judgment,” such as relief
sought due to excusable neglect); Beagley v. Spurling, No.
981515-CA, 1998 WL 1758335, at *1 (Utah Ct. App. 1998) (per
curiam) (stating that rule 60 “does not authorize an independent
action asserting the grounds enumerated” in rule 60(b) and that
“several grounds for setting aside a judgment by motion would
not be an adequate ground for an independent attack on a
judgment” (cleaned up)). For these reasons, we conclude that the
district court did not err in dismissing Jensen’s non-fraud claims.
(…continued)
Beggerly, 524 U.S. 38, 47 (1998) (determining that allegations that
the government “failed to thoroughly search its records and
make full disclosure to the Court” regarding a land grant at issue
did not “approach [the] demanding standard” such that
“allow[ing] the judgment to stand” would work a “grave
miscarriage of justice” (cleaned up)); Haik v. Salt Lake City Corp.,
No. 2:12-CV-997 TS, 2013 WL 968141, at *7–8 (D. Utah Mar. 12,
2013) (concluding that allegations that the defendants “failed to
provide allegedly relevant information” with respect to change
applications did “not meet the high burden necessary to bring an
independent action,” as described in Beggerly), aff’d, 567 F. App’x
621 (10th Cir. 2014). See generally United States v. Buck, 281 F.3d
1336, 1341 (10th Cir. 2002) (stating that the “independent action”
for relief under rule 60 is “a narrow avenue” that “should be
available only to prevent a grave miscarriage of justice” (cleaned
up)).
20190433-CA 19 2020 UT App 124Jensen v. Cannon
II. Cannon’s Cross-appeal
¶40 In his cross-appeal, Cannon challenges the district court’s
denial of both his request for bad faith attorney fees under Utah
Code section 78B-5-825 and his motion for sanctions under rule
11 of the Utah Rules of Civil Procedure. He also requests an
award of attorney fees on appeal pursuant to rule 33 of the Utah
Rules of Appellate Procedure. We address each issue below.
A. Bad Faith Attorney Fees
¶41 Cannon challenges the district court’s denial of fees under
section 78B-5-825, claiming that the district court’s finding “that
the case was brought in good faith” is clearly erroneous.
(Cleaned up.) To prove his claim, he characterizes the “entire
case” as “a fishing expedition and an excuse to engage [him] in
expensive, stressful litigation for a decade.” He also assigns bad-
faith motives to Jensen, pointing generally to Jensen’s failure to
actively pursue her case for many years following the filing of
her first complaint.
¶42 To receive an award of attorney fees under section
78B-5-825, the moving party bears the burden of proving “two
distinct elements,” namely, that the claim lacks merit and that
the action was not brought in good faith. In re Discipline of
Sonnenreich, 2004 UT 3, ¶ 46, 86 P.3d 712. Good faith, for
purposes of the latter element, is defined as having “(1) an
honest belief in the propriety of the activities in question; (2) no
intent to take unconscionable advantage of others; and (3) no
intent to, or knowledge of[,] the fact that the activities in
question will hinder, delay, or defraud others.” Id. ¶ 48 (cleaned
up). “To establish a lack of good faith, or ‘bad faith’ under
section [78B-5-825], a party must prove that one or more of these
factors is lacking.” Id.
20190433-CA 20 2020 UT App 124Jensen v. Cannon
¶43 We conclude that Cannon has not demonstrated that the
district court erred by denying his request for attorney fees. As
the party requesting fees under section 78B-5-825, Cannon bore
the burden of proving that Jensen brought this action in bad
faith. And although Cannon posits and ascribes to Jensen
bad-faith motives favorable to his position, he relies exclusively
on accusation and points to no record evidence demonstrating
that Jensen did not believe in the propriety of her claims or that
she filed this action with the intent to “hinder, delay, or
defraud.” See id. (cleaned up). For example, Cannon complains
that Jensen did not meaningfully investigate her claims until
filing this action in 2016, but he cites no supporting evidence and
fails to tie even the allegation to the applicable standard.
Similarly, Cannon’s generic complaints about Jensen’s failure to
actively prosecute her 2009 case do little to establish that she
filed the present case in bad faith.
¶44 We review the district court’s finding regarding bad faith
for clear error, Bresee v. Barton, 2016 UT App 220, ¶ 15, 387 P.3d
536, and will reverse that finding only if it is “against the clear
weight of the evidence” or “we otherwise reach a firm conviction
that a mistake has been made,” Grimm v. DxNA LLC, 2018 UT
App 115, ¶ 12, 427 P.3d 571 (cleaned up). While litigating with
Jensen over the course of the last decade has undoubtedly been
expensive and frustrating for Cannon, his arguments have not
persuaded us that the court clearly erred in finding that Jensen
brought this action in good faith. 8
8. Cannon also challenges the district court’s denial of bad faith
attorney fees by arguing that Jensen’s action was meritless.
However, because we have affirmed the court’s good faith
determination, it is unnecessary for us to address whether
Jensen’s case lacked merit. See Utah Code Ann. § 78B-5-825(1)
(LexisNexis 2018) (providing that a district court shall award bad
(continued…)
20190433-CA 21 2020 UT App 124Jensen v. Cannon
B. Rule 11 Sanctions
¶45 Cannon next argues that the district court erred
in denying his motion for sanctions against Jensen under rule
11 of the Utah Rules of Civil Procedure. He contends
that Jensen’s motion in limine regarding spoliation contained
a baseless allegation lacking evidentiary support—that the
Option Agreement was “in writing at one point,” but “no
longer exists” because Cannon “intentionally destroyed [it].”
See Utah R. Civ. P. 11(b)(3) (providing that, by filing a motion
with the court, the attorney certifies “that to the best of the
person’s knowledge, information, and belief, formed after an
inquiry reasonable under the circumstances, . . . the allegations
and other factual contentions have evidentiary support or, if
specifically so identified, are likely to have evidentiary support
after a reasonable opportunity for further investigation or
discovery”).
¶46 The district court denied Cannon’s motion because it
determined that while “there may not be direct evidentiary
support for the contention” that Cannon spoliated a written
version of the Option Agreement, “there are inferences” that
could support that position. The court reached this conclusion by
considering the circumstances surrounding the Option
Agreement, including the parties to the contract and their
experience, as well as the type of contract involved and statute of
frauds considerations. In this respect, the court stated that while
it did not view Jensen’s spoliation motion to be a “good motion,”
it did not believe the motion rose to the level of a rule 11
violation.
(…continued)
faith attorney fees if it concludes that the case was both without
merit and brought in bad faith).
20190433-CA 22 2020 UT App 124Jensen v. Cannon
¶47 On appeal, Cannon assails the court’s denial of his
motion, arguing that by accusing him of spoliation, Jensen
necessarily asserted that he “intentionally and inappropriately”
destroyed the Option Agreement document and that sanctions
are merited for such an assertion because it was “baseless.” 9
Cannon also contends that because Jensen “permitted so many
years to go by” before actively prosecuting her case, she could
not “in good faith” ask the district court to infer that Cannon
spoliated a decades-old document. We disagree.
¶48 Our courts have explained that “rule 11(b)(3) sets a
relatively low standard requiring some factual basis after a
reasonable inquiry, permitting sanctions against plaintiffs only
for bringing a claim merely founded on innuendo and
suspicion.” Heartwood Home Health & Hospice LLC v. Huber, 2020
UT App 13, ¶¶ 36–37, 39–40, 459 P.3d 1060 (cleaned up)
(vacating rule 11 sanctions related to a failure to withdraw
certain claims where, despite the fact that the claims were
“anemic,” they nevertheless “had not become plainly frivolous
or completely lacking in evidentiary support”); see also Morse v.
Packer, 2000 UT 86, ¶¶ 28–29, 15 P.3d 1021 (explaining that rule
11 sanctions should not be imposed “whenever there are factual
errors” but that they should be reserved for “misstatements”
that are “significant” and “critical,” and concluding that
sanctions were appropriate where, given the record, “a
statement in [a] pleading . . . clearly lacked evidentiary support”
(cleaned up)).
9. In support of his rule 11 motion, Cannon claimed that Jensen’s
“motion in limine accuses [him] of intentionally destroying
evidence with the purpose of harming his ex-wife.” In other
words, the premise of the rule 11 motion was that Jensen had
accused Cannon of intentionally destroying the Option
Agreement in bad faith.
20190433-CA 23 2020 UT App 124Jensen v. Cannon
¶49 At the outset, we are not persuaded that Jensen’s
spoliation motion was tantamount to an accusation of an
intentional and inappropriate destruction of the Option
Agreement. For one thing, nowhere in her motion in limine,
seeking sanctions under rule 37, did Jensen accuse Cannon of
acting in bad faith. For another, the premise underlying
Cannon’s argument—that a spoliation accusation necessarily
implies a bad faith motive—is not sound. As this court has
explained, “a party who destroys or conceals relevant evidence
need not do so willfully or in bad faith to trigger the penalties
outlined in rule 37.” Ockey v. Club Jam, 2014 UT App 126, ¶ 11,
328 P.3d 880; see also Daynight, LLC v. Mobilight, Inc., 2011 UT
App 28, ¶ 2, 248 P.3d 1010 (explaining that spoliation “is on a
qualitatively different level than a simple discovery abuse” and
that a spoliation determination “does not require a finding of
willfulness, bad faith, fault or persistent dilatory tactics or the
violation of court orders before a court may sanction a party”
(cleaned up)).
¶50 We also agree with the district court that given the type
of agreement involved—an option related to the sale of
real estate involving sophisticated players—Jensen’s allegations
of a written Option Agreement and its spoliation did not
clearly lack evidentiary support. Rather, the motion presented a
colorable argument based on inferences that could be drawn
from the circumstances surrounding the agreement’s genesis.
And other than suggesting that the court ought to have
adopted an inference that Jensen’s dilatory conduct contributed
to the destruction of any Option Agreement document and
pointing to circumstances he believes to be favorable to
his position, Cannon does not engage with the court’s
actual reasoning on the issue or the evidence supporting its
rule 11 determination. See Federated Cap. Corp. v. Shaw, 2018 UT
App 120, ¶ 20, 428 P.3d 12 (explaining that an appellant
who “does not meaningfully engage with the district court’s
20190433-CA 24 2020 UT App 124Jensen v. Cannon
reasoning” necessarily “falls short of demonstrating any error
on the part of the district court”). Thus, although her claim
was ultimately unsuccessful, we conclude that it was
not frivolous of Jensen to argue to the district court that
“there would be something in writing” memorializing the
Option Agreement and that Cannon had a hand in failing to
preserve it.
¶51 Because Cannon has not persuaded us that the district
court erred by denying his request for rule 11 sanctions, we
affirm the court’s resolution of the motion.
C. Rule 33 Fees on Appeal
¶52 Finally, Cannon requests his attorney fees on appeal
pursuant to rule 33 of the Utah Rules of Appellate Procedure.
Rule 33(a) provides that when an “appeal taken under
these rules is either frivolous or for delay, [the appellate
court] shall award just damages, which may include . . .
reasonable attorney fees, to the prevailing party.” The
imposition of sanctions under rule 33 is a serious matter,
“only to be used in egregious cases.” Pyper v. Reil, 2018 UT App
200, ¶ 28 n.3, 437 P.3d 493 (cleaned up). While Jensen may not
have prevailed on her appellate claims, this is not an egregious
case. Thus, we decline to award Cannon his attorney fees on
appeal.
CONCLUSION
¶53 We affirm on the issues raised by Jensen’s appeal. First,
we conclude that the district court appropriately determined
that Jensen did not establish her fraudulent nondisclosure
claims. Second, we conclude that the court properly dismissed
Jensen’s negligence-based claims under rule 60 of the Utah Rules
of Civil Procedure.
20190433-CA 25 2020 UT App 124Jensen v. Cannon
¶54 We also affirm on the issues raised by Cannon’s cross-
appeal. Specifically, we affirm the district court’s denial of
Cannon’s request for bad faith attorney fees and his motion for
sanctions pursuant to rule 11 of the Utah Rules of Civil
Procedure.
HARRIS, Judge (concurring in part, and concurring in the
result):
¶55 I concur without reservation in Parts I.B. and II of the
majority opinion. That is, I agree with the majority’s disposition
of Cannon’s cross-appeal, as well as with the majority’s
explanation of why the district court was correct to dismiss
Jensen’s non-fraud claims on summary judgment. But I cannot
sign on to the majority’s analysis in Part I.A., regarding Jensen’s
claim for fraudulent nondisclosure, because in my view the
majority adds a fourth element to our supreme court’s three-
element test for establishing fraudulent nondisclosure under
Utah law. Nevertheless, I concur in the result reached by the
majority, because I am persuaded that the district court correctly
dismissed Jensen’s fraudulent nondisclosure claim on the
alternative ground that it was barred by the doctrine of laches.
I.
¶56 In the course of analyzing whether the district court
properly dismissed Jensen’s claim for fraudulent nondisclosure,
we are called upon to interpret our supreme court’s statements
in Anderson v. Kriser, 2011 UT 66, 266 P.3d 819, and apply those
statements to the facts of this case. As an introductory matter, I
readily acknowledge that Anderson, as applied to the question
presented here, is difficult to interpret, and that it may well be
that our supreme court intended Anderson to read as the majority
has interpreted it. But I read Anderson differently, and perceive
therein an intent by our supreme court to set out a broader
version of the fraudulent nondisclosure tort, and I write
20190433-CA 26 2020 UT App 124Jensen v. Cannon
separately in an effort to articulate that interpretation.
Ultimately, this may be an instance in which our supreme court
may need to take an appropriate opportunity to clarify its
intentions regarding the contours of the fraudulent
nondisclosure tort.
¶57 In my view, our supreme court has articulated the tort of
fraudulent nondisclosure as containing three elements—not
four. At the outset of its analysis, the majority correctly recites
those elements. See supra ¶ 16 (citing Anderson, 2011 UT 66, ¶ 22).
They are as follows: “(1) the defendant had a legal duty to
communicate information; (2) the defendant knew of the
information he failed to disclose; and (3) the nondisclosed
information was material.” 10 Anderson, 2011 UT 66, ¶ 22 (cleaned
up). In every case in which our supreme court has discussed
fraudulent nondisclosure, it has described the tort as being
comprised of these same three elements. See, e.g., Hess v. Canberra
Dev. Co., 2011 UT 22, ¶ 29, 254 P.3d 161; Mitchell v. Christensen,
2001 UT 80, ¶ 9, 31 P.3d 572. To my knowledge, the court has
never described this tort as containing a fourth element.
10. The district court did not correctly recite the three elements.
It misstated the first element by proclaiming that the duty in
question had to be a “fiduciary duty,” which is a contention
unsupported by any case law of which I am aware. As our
supreme court articulates this element, the duty in question does
not necessarily have to be “fiduciary” in nature. See, e.g.,
Anderson v. Kriser, 2011 UT 66, ¶ 22, 266 P.3d 819. The district
court also misstated the third element, articulating that element
as an “intentional failure to disclose to plaintiff’s detriment.” As
discussed generally herein, our supreme court has never
included “intent to deceive” or “intentional failure to disclose”
as one of the elements of the tort of fraudulent nondisclosure.
20190433-CA 27 2020 UT App 124Jensen v. Cannon
¶58 Yet both the district court as well as the majority in this
case tack on a new fourth element never before discussed as
such by any Utah appellate opinion. 11 According to the majority,
a plaintiff who wishes to make out a valid claim for fraudulent
nondisclosure must not only satisfy the three listed elements, but
in addition must also prove that the defendant had a “willful
intent to deceive” the plaintiff. See supra ¶¶ 22–23. In my view,
the addition of this fourth element is unsupported by existing
Utah Supreme Court precedent.
¶59 I have no quarrel with the majority’s observation—
supported by Anderson—that fraudulent nondisclosure is an
intentional tort, and that such torts are generally distinguished
from non-intentional torts by the “mental state of the defendant
that the plaintiff must establish in order to prevail.” See
Anderson, 2011 UT 66, ¶¶ 25–26. But I read Anderson as
explaining that the three elements, as listed, have an intent
requirement already baked into them, and that a plaintiff who
satisfies all three listed elements has raised a sufficient inference
that the defendant acted intentionally. 12 Id. ¶ 26. In this way, the
11. I recognize that one local federal court recently held, like the
majority does here, that under Utah law, the tort of fraudulent
nondisclosure has a fourth element, holding that—in addition to
the three elements recited by the Utah Supreme Court—a
plaintiff “must also show clear and convincing proof of intent to
deceive.” See Marcantel v. Michael & Sonja Saltman Family Trust,
No. 2:16-cv-250-DBP, 2019 WL 1262648, at *5 (D. Utah Mar. 19,
2019). In my view, the federal court’s analysis suffers from the
same potential infirmities as the majority’s.
12. The majority reads Anderson differently, offering its
viewpoint that a district court is not required to draw such an
inference, even where all three elements are otherwise met. See
(continued…)
20190433-CA 28 2020 UT App 124Jensen v. Cannon
three listed elements already distinguish the tort from its
negligence-based cousin; no unlisted fourth element is necessary
for this purpose.
¶60 As the court explained in Anderson, “fraudulent intent is
often difficult to prove by direct evidence” and, “[b]ecause of
this difficulty,” in other contexts—citing specifically to criminal
theft and bankruptcy nondischargeability cases, see id. ¶ 26
n.26—“fraudulent intent is often inferred based on the totality of
the circumstances in a case.” Id. ¶ 26. The court then explained
that, in the specific context of a fraudulent nondisclosure claim,
“fraudulent intent may be inferred” when the three listed
elements of the tort are met, that is, “when a plaintiff
demonstrates that a defendant had actual knowledge of a
material fact and that the defendant failed to disclose that fact.”
Id. The court explained that this formulation of the tort
sufficiently distinguishes it from the tort of negligent
nondisclosure, which does not require a plaintiff to demonstrate
the defendant had actual knowledge of the material information,
but instead merely requires a showing that the defendant should
have been aware of the material information. See id.
¶61 In my view, this formulation of the tort is not only
sufficiently distinct from negligent nondisclosure, but it is also—
as the majority acknowledges, supra ¶ 19—consistent with our
law’s formulation of other similar intentional torts, such as
(…continued)
supra ¶ 27. But if that’s true, then there exists a separate inquiry,
beyond the three listed elements, that a district court must
undertake: namely, examining whether an intent inference
should be drawn on the facts of the particular case. This looks a
lot like a fourth element to me, even though the majority
maintains that it has “not added a fourth element to the tort of
fraudulent nondisclosure.” See supra ¶ 24.
20190433-CA 29 2020 UT App 124Jensen v. Cannon
constructive fraud. See Jensen v. IHC Hosps., Inc., 944 P.2d 327,
339 (Utah 1997) (stating that the tort of constructive fraud
contains only “two elements: (i) a confidential relationship
between the parties; and (ii) a failure to disclose material facts”).
And—as the majority also acknowledges, supra ¶ 20—it is also
consistent with the manner in which some other states formulate
the elements of the fraudulent nondisclosure tort. See, e.g.,
Restatement (Second) of Torts §§ 550, 551 (Am. Law Inst. 1977)
(describing the tort of “fraudulent concealment” as containing
an explicit requirement that the defendant acted “intentionally,”
but describing the tort of “fraudulent nondisclosure” as
containing no such requirement).
¶62 The majority points out that our supreme court has used
the terms “fraudulent concealment” and “fraudulent
nondisclosure” more or less interchangeably, and has even noted
that the elements of the two torts are “essentially the same,” see
supra ¶ 21 (citing Anderson, 2011 UT 66, ¶ 22 n.11), and infers
from that fact that the apparently-combined tort must look more
like fraudulent concealment than fraudulent nondisclosure, and
therefore must have a separate intent requirement. But it is just
as easy to draw the opposite inference from the supreme court’s
apparent merger of the two torts: that the merged tort looks
more like fraudulent nondisclosure, as described in the
Restatement, and does not have a separate intent requirement. 13
In my view, this inference is supported by the fact that, as noted
13. I also note that our supreme court does not appear to have
yet been confronted with a case that required it to squarely
address the question of whether, and to what extent, the two
torts (fraudulent concealment and fraudulent nondisclosure) are
separate under Utah law, and therefore acknowledge the limited
utility of the inferences drawn here by both the majority’s
opinion and mine.
20190433-CA 30 2020 UT App 124Jensen v. Cannon
above, our supreme court has, without exception, described this
merged tort as containing three—and only three—elements,
none of which contains an explicit intent requirement. This
inference is also supported by the fact that, in certain other
jurisdictions, the difference between fraudulent concealment
and fraudulent nondisclosure is that the more active
concealment tort requires a showing of “intent to mislead”
but does not require a showing that there was any “duty to
speak,” whereas the more passive nondisclosure tort requires a
showing that there is a duty to speak but does not require a
showing of intent to deceive. See United States v. Colton, 231 F.3d
890, 899 & n.2 (4th Cir. 2000) (citing cases). Because the tort, as
articulated by our supreme court, contains a requirement that
there be a duty to disclose, and contains no explicit requirement
that there be intent to deceive, to my mind that tort appears a lot
more like fraudulent nondisclosure than fraudulent
concealment.
¶63 For all of these reasons, I would conclude that the district
court erred by requiring Jensen to prove, as part of her
fraudulent nondisclosure claim, that Cannon had a specific
intent to deceive her. Jensen should only be required to prove
the three elements of the tort listed in Anderson. Under my
interpretation of that case, Jensen can make out a valid claim by
demonstrating that Cannon had a duty to disclose the Riverton
Corners property and the Option Agreement to Jensen during
the divorce proceedings; that Cannon had actual knowledge of
those assets; and that those assets were material. As our supreme
court has explained, once those three elements are met, the
district court “may . . . infer[]” the requisite level of intent on the
part of Cannon. See Anderson, 2011 UT 66, ¶ 26.
¶64 If the majority had adopted my interpretation of
Anderson—that the tort of fraudulent nondisclosure does not
require a direct showing of intent to deceive—we would have
had to confront a number of additional questions regarding the
20190433-CA 31 2020 UT App 124Jensen v. Cannon
viability of Jensen’s fraudulent nondisclosure claim. First, we
would have had to determine whether the “legal duty to
communicate information” described in the first element of the
tort, see id. ¶ 22 (cleaned up), includes discovery disclosure
obligations imposed by rule 26 of the Utah Rules of Civil
Procedure. I acknowledge that turning discovery violations into
potential torts is something that could have negative unintended
consequences, but discovery disclosure obligations are arguably
“legal” duties, and other states have determined that pretrial
disclosure obligations do qualify as the kind of duty that can
trigger the tort, albeit perhaps with additional restrictions. See,
e.g., Allstate Ins. Co. v. Dooley, 243 P.3d 197, 204–05 (Alaska 2010)
(holding that “a cause of action for fraudulent concealment of
evidence may be maintained in Alaska only when a plaintiff
lacks another sufficient remedy,” because “most discovery
violations can be appropriately addressed with our existing
civil rules,” and because “the tort of fraudulent concealment
of evidence [should] be available only when evidence is
concealed until after judgment is entered and the time for
seeking relief from judgment under Civil Rule 60(b) has
expired”); Rosenblit v. Zimmerman, 766 A.2d 749, 757 (N.J. 2001)
(describing a “slight modification” to the tort when it “occurs in
a litigation context”).
¶65 Second, if discovery disclosure obligations qualify as legal
duties for the purposes of the tort, we would then have had to
determine whether Cannon had a duty to disclose the specific
properties at issue here: the Riverton Corners property and the
Option Agreement. Because the discovery rules obligated him to
disclose his “assets” to Jensen, we would have then had to
determine whether the Riverton Corners property and the
Option Agreement were “assets” subject to Cannon’s disclosure
obligation. That inquiry, in turn—at least with respect to the
Riverton Corners property—may have required us to analyze
partnership law, given Cannon’s defense that the Riverton
20190433-CA 32 2020 UT App 124Jensen v. Cannon
Corners property did not belong to him or his partnership but,
instead, belonged to his partner. 14
¶66 Next, we may have had to confront other issues raised by
Jensen in her appeal, including whether the district court
properly excluded one of Jensen’s expert witnesses, and whether
the district court correctly valued the Option Agreement.
II.
¶67 But I need not further explore these issues in this
concurring opinion, because in my view the district court’s
alternative disposition of Jensen’s claim for fraudulent
nondisclosure—that Jensen’s suit was barred by the equitable
doctrine of laches—was correct. On that basis, I concur in the
result reached by the majority opinion.
¶68 The doctrine of laches “has two elements: (1) a party’s
lack of diligence and (2) an injury resulting from that lack of
diligence.” Insight Assets, Inc. v. Farias, 2013 UT 47, ¶ 19, 321 P.3d
1021 (cleaned up). As our supreme court has explained, “laches
14. Both the majority and the district court framed the question
as “whether satisfaction of the knowledge element requires that
Cannon knew of the Option Agreement and the Riverton
Corners property in the abstract or that he knew that the
properties were assets as defined by Jensen’s discovery
requests.” See supra ¶ 26. But I read Anderson as having answered
that question: the “knowledge” necessary to satisfy the second
element is simply knowledge “of the information he failed to
disclose,” Anderson, 2011 UT 66, ¶ 22 (cleaned up), and not
necessarily knowledge of whether the information in question
had to be disclosed. Here, Cannon had actual knowledge of the
properties, and may therefore be liable under Anderson if the
properties actually were his assets and he failed to disclose them.
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is based upon the maxim that equity aids the vigilant and not
those who slumber on their rights.” Id. ¶ 17 (cleaned up).
Accordingly, the doctrine of laches punishes plaintiffs whose
litigation delays harm the other parties involved in a suit: “not
mere delay, but delay that works a disadvantage to another,” is
of “legal significance” in a laches analysis. Id. (cleaned up). The
doctrine is an equitable one “founded upon considerations of
time and injury.” Id. (cleaned up). At its essence, laches “is a
negative equitable remedy which deprives one of some right or
remedy to which he would otherwise be entitled, because his
delay in seeking it has operated to the prejudice of another.”
Fundamentalist Church of Jesus Christ of Latter-Day Saints v. Horne,
2012 UT 66, ¶ 37, 289 P.3d 502 (cleaned up).
¶69 The language of the two-part laches test, as articulated by
our supreme court, is broad. That test requires a defendant to
demonstrate the existence of two elements: the plaintiff’s “lack of
diligence,” and a resulting injury to the defendant. Insight Assets,
2013 UT 47, ¶ 19. So, although laches cases often turn on whether
the plaintiff delayed in bringing suit in the first place, see Veysey
v. Veysey, 2014 UT App 264, ¶ 16, 339 P.3d 131 (asking whether
“the plaintiff unreasonably delayed in bringing an action” to
fulfill the first laches element), the doctrine is not limited in
application to only that circumstance. As our supreme court has
explained, “laches is designed to shelter a prejudiced defendant
from the difficulties of litigating meritorious claims after an
unexplained delay,” Horne, 2012 UT 66, ¶ 37, and no Utah case of
which I am aware has limited the definition of laches-triggering
“delay” to the delay in filing the lawsuit in the first place.
¶70 Other courts have expressly recognized that the equitable
doctrine of laches can apply when a litigant who files an
otherwise-timely lawsuit takes an inordinately long time to
prosecute it. See, e.g., Miller v. Bloomberg, 466 N.E.2d 1342, 1346
(Ill. App. Ct. 1984) (stating that “failure to prosecute an action
after its commencement can also constitute laches”); Thompson v
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State, 31 N.E.3d 1002, 1007 (Ind. Ct. App. 2015) (holding that the
doctrine of laches applies to unreasonable delays in “prosecuting
a . . . petition”); see also Atlas One Fin. Group, LLC v. Alarcon, No.
12-23400-Civ-COOKE/TURNOFF, 2014 WL 12570243, at *4 (S.D.
Fla. Mar. 31, 2014) (“Under the doctrine of laches, a person
otherwise entitled to relief may be barred from recovery if he has
failed to bring or, having brought, has failed to prosecute, a suit
for so long a time and under such circumstances that it would be
inequitable to permit him now to prosecute the suit.”).
¶71 Accordingly, in my view the district court properly
determined, as a legal matter, that the doctrine of laches can
apply to situations in which a litigant takes an unreasonably
long time to prosecute a lawsuit, and is not limited to situations
in which a litigant unreasonably delays in filing one. See Veysey
v. Nelson, 2017 UT App 77, ¶ 5, 397 P.3d 846 (“Whether laches
applies is a question of law, which we review for correctness.”).
¶72 After it is established, as a legal matter, that the doctrine
can apply in a particular case, the “application of laches to a
particular set of facts and circumstances presents a mixed
question of law and fact,” a framework whereunder “we review
the [district] court’s conclusions of law for correctness and will
disturb its findings of fact only if they are clearly erroneous.” Id.(cleaned up). In my view, the district court’s underlying factual
findings regarding laches were not clearly erroneous, and the
court did not err by concluding that Cannon was prejudiced by
Jensen’s unreasonable delay in prosecuting the case.
¶73 The district court determined that the filing of Jensen’s
lawsuit occurred within the applicable statute of limitations, and
no party has appealed that determination. Accordingly, the
district court does not appear to have held any pre-filing delay
against Jensen in connection with its laches analysis. Instead, the
court noted that, after the suit was filed, almost nothing occurred
for some six years, resulting in multiple order-to-show-cause
20190433-CA 35 2020 UT App 124Jensen v. Cannon
hearings before the suit was eventually dismissed, without
prejudice. Another whole year passed before the suit was refiled,
resulting in approximately seven years of post-filing delay that
the district court attributed entirely to Jensen. The court found
that, during that time, witnesses’ “memories faded and
documents were destroyed in the normal course of purging old
documents,” with the result that, when trial finally occurred,
“the extreme passage of time had taken its toll,” and “witnesses
who testified at trial sometimes struggled with remembering
things,” including important things like whether certain
agreements were ever reduced to writing. Reasoning from these
factual findings, the court concluded that “[i]n a case as old as
this, prejudice to the defendant can practically be presumed,”
but found that, in this case, “there was also actual prejudice,”
including witnesses with poor memories and documents that
had been lost.
¶74 I discern no error in the district court’s findings or
conclusions with regard to laches, and therefore I would affirm
the court’s dismissal of Jensen’s fraudulent nondisclosure claim
on that basis. I therefore concur in the result reached by the
majority.
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