Velander v. LOL of Utah, LLC

2015 UT App 171THE UTAH COURT OF APPEALS
D. DOUGLAS VELANDER,
Plaintiff and Appellant,
v.
LOL OF UTAH, LLC, AND KEVIN G. RICHARDS,
Defendants and Appellee.
Memorandum Decision
No. 20140471-CA
Filed July 9, 2015
Second District Court, Ogden Department
The Honorable Mark R. DeCaria
No. 080905254
Samuel A. Hood, Attorney for Appellant
Brian M. Lindquist, Attorney for Appellee
JUDGE GREGORY K. ORME authored this Memorandum Decision,
in which JUDGES JAMES Z. DAVIS and MICHELE M. CHRISTIANSEN
concurred.
ORME, Judge:
¶1 Appellant D. Douglas Velander filed an action to collect a
debt against Appellee Kevin G. Richards, among others. More
than four years later, the district court dismissed the case for
failure to prosecute. Velander appeals, arguing that the district
court abused its discretion by dismissing the case. We affirm.
¶2 On August 20, 2008, Velander filed a debt collection
action in the district court on behalf of the Velander Family
Trust. Richards was one of several defendants named in the
complaint. Velander alleged that on August 5, 2005, LOL of
Utah, LLC, executed a promissory note in favor of the trust for
$71,288 and that this note was due one year from execution.
Velander also alleged that Richards was one of five individuals
who personally guaranteed payment of the note.
Velander v. LOL of Utah, LLC
¶3 Richards answered the complaint on September 10, 2008,
disputing that he was responsible for payment of the note. Just
over four years later, on September 14, 2012, Richards moved for
dismissal of the case under rule 41(b) of the Utah Rules of Civil
Procedure, arguing that Velander had failed to prosecute. On
December 21, 2012, the district court granted that motion. 1
¶4 “‘[We] do not disturb [a trial court’s order of dismissal for
failure to prosecute] absent an abuse of discretion and a
likelihood that an injustice occurred.’” PDC Consulting, Inc. v.
Porter, 2008 UT App 372, ¶ 5, 196 P.3d 626 (alterations in
original) (quoting Hartford Leasing Corp. v. State, 888 P.2d 694, 697
(Utah Ct. App. 1994)). Velander essentially argues that the
district court abused its discretion in weighing and analyzing the
factors outlined in Westinghouse Electric Supply Co. v. Paul W.
Larsen Contractor, Inc., 544 P.2d 876, 879 (Utah 1975).
1. In his brief, Velander asserts that this December 2012 dismissal
is “the order from which this appeal is primarily taken.” We
acknowledge, however, that the procedural posture of this case
is slightly more complicated than what we have just outlined.
Following the December 2012 order of dismissal, Velander filed
a motion to amend the judgment. See Utah R. Civ. P. 59. The
district court denied that motion as untimely. Velander
appealed, and this court reversed. Velander v. LOL of Utah, LLC,
2013 UT App 196, ¶ 5, 307 P.3d 710 (per curiam). Following that
appeal, the district court considered Velander’s renewed rule 59
motion on its merits. The court denied the motion in April 2014
but acknowledged “two legal errors” contained in its December
2012 order of dismissal. The court incorporated its amended
analysis, contained in the April 2014 order, as the “basis for the
Court’s final order.” Velander then filed the instant appeal.
Inasmuch as Velander’s appeal raises issues that were cured by
the court’s April 2014 order, we regard those issues as moot.
Velander does not claim to appeal that order, and he offers no
analysis specific to it.
20140471-CA 2 2015 UT App 171Velander v. LOL of Utah, LLC
¶5 In Westinghouse, the Utah Supreme Court explained that a
dismissal for failure to prosecute would constitute an abuse of
discretion if there was justifiable excuse for the delay. Id. at 878–
79.
Whether there is such justifiable excuse is to be
determined by considering more factors than
merely the length of time since the suit was filed.
Some consideration should be given to the conduct
of both parties, and to the opportunity each has
had to move the case forward and what they have
done about it; and also what difficulty or prejudice
may have been caused to the other side; and most
important, whether injustice may result from the
dismissal.
Id. at 879 (footnote omitted). The district court organized its
analysis around these factors in its December 2012 order
dismissing the case and in its April 2014 order denying
Velander’s motion to amend the judgment.
¶6 In attacking the district court’s analysis, Velander
specifically argues that (1) he was not required to initiate a
scheduling conference and Richards’s right to conduct discovery
was not dependent on such a conference, (2) Richards suffered
no prejudice and Velander gained no financial advantage
because of the delay in prosecuting the case, and (3) the
dismissal caused significant injustice to Velander. 2
2. The district court acknowledged that its December 2012 order
erroneously applied rule 26(f) of the Utah Rules of Civil
Procedure, as then in effect. See Utah R. Civ. P. 26(f) (2011). It
also acknowledged that its original order erroneously
interpreted the interest rate that would apply to any judgment
that might have ultimately been entered in the case.
Problematically for Velander, his appeal rests almost entirely on
these two claimed errors. Because the district court corrected
(continued…)
20140471-CA 3 2015 UT App 171Velander v. LOL of Utah, LLC
¶7 Under rule 41(b), a case can be dismissed “[f]or failure of
the plaintiff to prosecute or to comply with [the Rules of Civil
Procedure].” Utah R. Civ. P. 41(b). The district court found both
that Velander had “not complied with the Utah Rules of Civil
Procedure” and that he had “failed to prosecute [his] claim
against Richards.” The court originally found that Velander had
failed to arrange for a scheduling conference in accordance with
rule 26(f). See id. 26(f) (2011). 3 The court, in its April 2014 order,
acknowledged that some of the defendants in the action were
not represented by counsel and that rule 26(f) therefore did not
apply. See id. R. 26(a)(2)(A). The court nevertheless determined
that this change in its analysis did not “affect[] its original
weighing of the Westinghouse factors in any way.” Velander’s
arguments on this point focus entirely on the court’s rule 26
analysis, which the court rescinded in its April 2014 order.
(…continued)
itself on these two issues and nevertheless determined that
dismissal was proper, and because Velander focuses almost
exclusively on these two issues throughout his brief, there really
is little for us to decide. Accordingly, we briefly review the
factors articulated in Westinghouse Electric Supply Co. v. Paul W.
Larsen Contractor, Inc., 544 P.2d 876, 879 (Utah 1975), with which
Velander takes issue. We conclude that most of Velander’s
specific arguments are moot. Cf. Maverik Country Stores, Inc. v.
Industrial Comm'n, 860 P.2d 944, 947 (Utah Ct. App. 1993)
(explaining that when “‘an administrative agency . . . correct[s]
its own errors,’” the controversies become moot) (quoting Parisi
v. Davidson, 405 U.S. 34, 37 (1972)).
3. With the exception of rule 26 of the Utah Rules of Civil
Procedure, which has since been significantly revised, the rules
that we cite in this memorandum decision have not been
substantively changed since the district court made its decision.
Accordingly, except when citing rule 26, we cite the current
version of the rules.
20140471-CA 4 2015 UT App 171Velander v. LOL of Utah, LLC
Velander’s arguments on this first issue are therefore moot and
will not be considered further.
¶8 Next, Velander takes issue with the district court’s
analysis under the fourth Westinghouse factor—what difficulty or
prejudice may have been caused to Richards. 4 See K.L.C. Inc. v.
McLean, 656 P.2d 986, 988 (Utah 1982) (per curiam). The district
court’s
original ruling found three types of prejudice that
[Velander’s] failure to prosecute caused [Richards]:
1) the ever-persistent threat of damages in a law
suit, 2) the continuing increase of interest owing on
the debt throughout the entire span of [Velander’s]
4. The district court’s analysis of the first three Westinghouse
factors, outside its eventually rescinded rule 26 discussion,
included the following:
1. The Conduct of Both Parties
Neither party pursued resolution of Plaintiff’s
claim for over 3 years. The burden of prosecuting a case,
however, lies with the Plaintiff.
2. The Opportunity Each Party has had to Move the Case
Forward
Plaintiff bore the burden to begin the litigation
process. Yet, Plaintiff failed to make any attempts to move
the case against Richards forward for over three years. . . .
[I]t would be foolish for Richards to pressure the Plaintiff
to pursue a claim against him. Richards did all that he
was required to do.
3. What Each Party has Done to Move the Case Forward
Since Richards filed his answer, he has done
nothing to move the case against him forward. He,
however, was under no obligation to do so. Plaintiff,
likewise, did not do anything to move this case forward
until about October 2011 when it first began attempting to
contact Richards in hopes of settlement.
20140471-CA 5 2015 UT App 171Velander v. LOL of Utah, LLC
delay, and 3) the higher rate of interest owed prior
to judgment than after judgment.
In its April 2014 order, the court reversed its finding of the third
type of prejudice, and Velander’s arguments related to the same
are now inapposite. Moreover, Velander does not contest the
first form of prejudice. We are thus left to consider whether the
district court erred in finding prejudice to Richards because of
the increased interest caused by Velander’s delay and whether
that error, if any, affected the court’s weighing of the
Westinghouse factors.
¶9 There can be no dispute that the interest on the alleged
debt increased significantly over time. The note provided for
interest at the unusually high rate of three percent per month,
compounded monthly. The longer the case went unresolved, the
more interest accrued on any future judgment. Velander rightly
acknowledges that “[t]he only thing that would have mitigated
the ballooning interest charges for Richards would be to pay on
the obligation.” It is counter-intuitive, however, to expect
Richards to pay on an obligation that he disputed. 5 Furthermore,
while Velander is right that no one can know how long the case
might have taken to reach resolution, there is no real dispute
5. Velander questions whether the dispute was made in good
faith. At oral argument before this court, counsel for Velander
referred to an email in which Richards acknowledged
responsibility for the debt, only later to deny all responsibility in
his answer. Such a scenario would presumably have triggered an
immediate motion to strike the answer and to have sanctions
imposed for the apparent violation of rule 11. See Utah R. Civ. P.
11(b)(4), (c). Instead, Velander filed nothing regarding the email
for forty-eight months. The email was first raised in Velander’s
motion for summary judgment, filed a week after Richards’s
motion to dismiss for failure to prosecute. In view of the
dismissal, the district court never reached the merits of
the summary judgment motion.
20140471-CA 6 2015 UT App 171Velander v. LOL of Utah, LLC
that Velander’s inaction caused the case to sit dormant for three
years, during which three years’ worth of exceptionally high
interest accrued. So while the prejudice to Richards might not
have been as significant as the district court originally thought
(when it was under the mistaken impression that the interest
rate would decrease once the debt was reduced to judgment), the
delay still caused prejudice to Richards by allowing inordinately
high interest to accumulate for three years while Velander did
nothing vis-à-vis Richards.
¶10 Finally, we consider Velander’s argument that dismissal
caused him significant injustice. It is important to note that
Velander obtained default judgments against each of the other
defendants originally named in the complaint, and he did so
rather expeditiously. This is not, then, a case where the court’s
decision not to hear Velander’s case on the merits left him
wholly without a remedy. And Velander has offered no
legitimate excuse for why he could not have pursued his case
against Richards with the same swiftness he used in obtaining
judgments against the other defendants.
¶11 The only arguments asserted by Velander that were not
rendered moot by the district court’s April 2014 order were those
dealing with the prejudice caused to Richards and the injustice
suffered by Velander. The other three Westinghouse factors,
which the district court determined weighed in favor of
dismissing the case, remain unchallenged. We conclude that the
prejudice caused to Richards in the form of increased interest
was significant—we were told at oral argument that the total
debt now due on this note, with a face value just over $71,000, is
some $2 million—and Velander’s loss of a cause of action against
Richards did not result in the sort of injustice that necessarily
outweighs the other factors that must be considered.
Accordingly, we affirm the district court’s dismissal for failure to
prosecute.
20140471-CA 7 2015 UT App 171