Sorensen v. Sparks

2022 UT App 113THE UTAH COURT OF APPEALS
JARED SORENSEN,
Appellant,
v.
DAVID SPARKS, ASHLEY BENNETT SPARKS, B&W AUTO LLC,
DIESELSELLERZ.COM LLC, 4X4 ANYTHING LLC, ET AL.,1
Appellees.
Opinion
No. 20200648-CA
Filed October 6, 2022
Second District Court, Farmington Department
The Honorable Glen R. Dawson
The Honorable David J. Williams
No. 140700467
Jonathan W. Heaton, Attorney for Appellant
R. Lane Jenson and Cole S. Cannon,
Attorneys for Appellees
JUDGE GREGORY K. ORME authored this Opinion, in which
JUDGES DAVID N. MORTENSEN and RYAN D. TENNEY concurred.
ORME, Judge:
¶1 Jared Sorensen brought suit seeking, among other things,
declaratory judgment on his ownership interests in various
limited liability companies (LLCs) that were formed as part of a
joint venture he entered into with David Sparks (the
Sorensen/Sparks Venture). Following years of litigation, the
district court granted judgment on the pleadings to the
1. The parties on appeal are not limited to those listed but also
include other parties whose names appear on the notice of appeal
or who have otherwise entered appearances in this court.
Sorensen v. Sparks
defendants and subsequently denied Sorensen’s motion for leave
to amend his complaint a second time. We affirm.
BACKGROUND2
¶2 In 2012, Sparks owned B&W Auto LLC (B&W), a car
dealership and auto shop that specialized in diesel trucks, while
Sorensen owned a marketing and app development company.
Seeing an opportunity to combine forces, the two began
discussing going into business together. In mid-October of that
year, Sorensen and Sparks met to discuss the Sorensen/Sparks
Venture in greater detail. “They discussed how they could use
Sorensen’s marketing platform to sell diesel trucks and other
products, specifically how they could implement Sorensen’s
marketing platform on a Facebook page for diesel trucks that
Sparks had created the day before[.]” They also discussed the
need to build a website to which they would channel the social
media traffic, which eventually manifested as DieselSellerz.com.
¶3 That November, Sorensen left his company to work at the
Sorensen/Sparks Venture full-time, which he agreed to do on the
condition that he be a partner in the venture. But because of
Sparks’s reluctance, they “did not follow the legal formalities of
forming a partnership.” Instead, they “agreed to work together on
the Sorensen/Sparks Venture as partners, but without an
operating agreement or any other written contract between
them.” Despite this understanding, when registering
DieselSellerz.com LLC—one of multiple LLC entities formed in
2. “On appeal from the grant of a motion for judgment on the
pleadings, we take the factual allegations of the nonmoving party
as true, considering such facts and all reasonable inferences
drawn therefrom in a light most favorable to the non-moving
party.” Pierucci v. U.S. Bank, NA, 2015 UT App 80, ¶ 8, 347 P.3d
837 (quotation simplified).
20200648-CA 2 2022 UT App 113Sorensen v. Sparks
furtherance of the Sorensen/Sparks Venture—Sparks listed
himself and his wife, Ashley Bennett Sparks, as its sole owners.
¶4 In March 2013, shortly after construction of an office for the
Sorensen/Sparks Venture was completed in Salt Lake City,
Sorensen and Sparks “discussed their respective ownership
interests in the venture.” Although they did not define their exact
ownership interests at that time, they confirmed that the two of
them were “the equity partners in all of the Sorensen/Sparks
Venture’s dealings.”
¶5 Sorensen later developed Diesel Power Gear (DPG), a
clothing company catering to diesel truck enthusiasts. He also
designed the first ten shirts for DPG and created the website
dieselpowergear.com on which to sell the clothing. Sorensen and
Sparks agreed that for each clothing item purchased, the
purchaser would be entered into a raffle to win a diesel truck,
which Sparks would assemble under the auspices of B&W. Sparks
then organized Diesel Power Gear LLC but did so in his name
only, omitting Sorensen from the filing. In its first month, DPG
generated $60,000 in sales revenue.
¶6 By May, Sorensen had done most of the work on
DieselSellerz.com and on DPG, while Sparks’s involvement in the
Sorensen/Sparks Venture “was severely limited.” “Sorensen
created, managed, administered and otherwise solely ran those
companies,” while “Sparks spent his time at B&W and relied on
Sorensen to manage the Sorensen/Sparks Venture companies.”
Sparks nevertheless took draws from the companies and
commingled assets of the Sorensen/Sparks Venture companies
with those of B&W.
¶7 In June, Sorensen again tried to solidify their respective
ownership interests in the Sorensen/Sparks Venture, but Sparks
avoided any discussion on the subject and did not come to the
office for two months. Sparks told Sorensen that he “should trust
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him” and that he was not coming into the office because he was
busy “taking care of things and trying to get the shop stable.”
¶8 In October, Sparks sent Sorensen an email detailing that
Sorensen’s ownership share in the Sorensen/Sparks Venture was
limited to twenty-five percent. That December, the
Sorensen/Sparks Venture hired an attorney to, among other
things, draft an operating agreement. In January 2014, Sorensen
and Sparks asked the attorney to “set up multiple companies and
ensure that the structure was done correctly by including
Sorensen as an owner.” The attorney created several additional
LLC entities as part of the Sorensen/Sparks Venture but,
according to Sorensen’s complaint, “only listed a registered
agent” for those companies.
¶9 On two occasions between mid-January and early
February 2014, Sparks held Sorensen out as an owner of the
Sorensen/Sparks Venture during meetings with potential
investors and business partners. In a February 2014 meeting with
the attorney, Sparks indicated that he owned fifty percent,
Sorensen owned twenty-five percent, and a third individual
owned the remaining twenty-five percent of the Sorensen/Sparks
Venture companies. After the attorney questioned that
arrangement, Sparks emphasized that he was not concerned with
“the money split” and “agreed that Sorensen had built DPG from
the ground up” and that all the other companies were being
“funded and built off the income of DPG.” Sparks therefore stated
“that giving Sorensen a majority ownership of DPG was
appropriate and giving him equal profit and loss was acceptable”
but that he “wanted to retain final say about where the Company
direction was headed regarding . . . DieselSellerz.com.”
¶10 In mid-February, Sorensen, Sparks, the attorney, and the
third individual met to discuss the structure of the LLC entities
going forward. The parties eventually decided that Sorensen
would have a forty percent interest in DPG and a twenty-five
20200648-CA 4 2022 UT App 113Sorensen v. Sparks
percent interest in DieselSellerz.com. However, an operating
agreement to that effect was never executed. By late February, the
relationship between Sorensen and Sparks had soured. Sparks
accused Sorensen of incurring substantial debt for the
Sorensen/Sparks Venture companies and removed Sorensen’s
access to the companies’ business bank accounts. When Sorensen
later approached Sparks with an operating agreement reflecting
what had been agreed to during the mid-February meeting,
Sparks refused to sign it, stating that “things have changed.”
Sparks then took additional steps to alienate Sorensen from the
companies.
¶11 In May 2014, Sorensen brought suit against Sparks, Ashley
Bennett Sparks, B&W, and the various LLC entities formed under
the Sorensen/Sparks Venture (collectively, Appellees). Sorensen
filed an amended complaint later that year, which alleged several
causes of action and sought declaratory judgment establishing
Sorensen’s ownership interests in the Sorensen/Sparks Venture
companies. Appellees filed several counterclaims against
Sorensen, and the case proceeded to discovery.
¶12 Four years later, in 2018, the district court issued an order
resolving various motions in limine. Because neither side
“included a computation of damages prior to the end of
discovery,” the order barred either side from “presenting any
evidence of damages at trial” and dismissed “any cause of action
seeking money damages,” with the exception of one of Appellees’
counterclaims. Notably, the order did not dismiss Sorensen’s
claims seeking declaratory judgment.
¶13 Appellees filed a Motion to Refuse to Enter or Render a
Declaratory Judgment, in which they urged the district court to
exercise its discretion to decline to enter declaratory judgment on
the ground that it “would not terminate the uncertainty or
controversy giving rise to the proceeding.” See Utah Code Ann.
§ 78B-6-404 (LexisNexis 2012). In support of their argument,
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Appellees listed eighteen “legal and factual questions that would
be raised by a declaratory judgment giving [Sorensen] an
ownership interest in the” Sorensen/Sparks Venture companies.
And in their reply memorandum, Appellees argued that Sorensen
“has not plead[ed] a membership theory that would permit a trier
of fact to find he is a member of” the Sorensen/Sparks Venture
companies. Specifically, under the law in effect at the relevant
time (the LLC Act), a person could become a member of an LLC
upon its formation when (1) “the person signs the articles of
organization as a member,” (2) “the person signs the operating
agreement as a member,” or (3) “the person evidences the intent
to become a member, either orally, in writing, or by other action
such as transferring property or paying money to the company
for an interest in the company” and “the person’s admission as a
member is reflected in the records of the company or is otherwise
acknowledged by the company.” Id. § 48-2c-702(1) (2010). And to
become a member of an already formed LLC, unless otherwise
provided in the LLC’s operating agreement, the person is
required to have the ”consent of all members” and to sign the
operating agreement. See id. § 48-2c-703(1). Appellees argued that
because Sorensen had “alleged none of the above” and instead
“only allege[d] oral agreements,” his request for declaratory
judgment should be dismissed.
¶14 In April 2018, at the hearing on Appellees’ motion, the
district court stated that it viewed the motion as “tantamount to a
Rule 12(b)(6) motion,” in that Appellees were arguing that
Sorensen “had not pled a membership theory that would permit
a trier of fact to find that [he] is a member of defendant businesses,
considering the unique form of the business, the LLC form.” The
court found this argument to be “interesting” and, following a
lengthy exchange, invited further briefing on the matter.
¶15 Appellees subsequently filed a motion for judgment on the
pleadings under rule 12(c) of the Utah Rules of Civil Procedure,
which the court granted at a September 2018 hearing. The court
20200648-CA 6 2022 UT App 113Sorensen v. Sparks
first held that Sorensen did not allege in his first amended
complaint “that he signed the articles o[f] organization or any
operati[ng] agreement, nor does he allege that the defendant
businesses ever acknowledged his membership,” nor did “the
facts set out in the complaint . . . support [Sorensen] becoming a
member after the formation of defendant businesses.”
Additionally, after recognizing the eighteen questions Appellees
listed in their earlier motion, the court held that in any event,
“declaratory judgment would not . . . terminate the controversy
or uncertainty” and, on that ground, declined to enter declaratory
judgment.
¶16 The following month, Sorensen moved for leave to file a
second amended complaint.3 The court denied this motion on the
grounds that it was “both untimely and would cause substantial
prejudice to [Appellees].” Regarding timeliness, the court noted
that the case had been litigated for nearly five years and that
discovery had been completed some four years earlier. The court
rejected Sorensen’s argument “that his delay in asking for leave is
justified because [Appellees] waited so long to raise the pleading
deficiencies,” noting that “[i]t is the responsibility of [Sorensen] to
plead and prosecute his case” and “it is not the duty of [Appellees]
to point out deficiencies of [Sorensen’s] pleadings so that [he] can
timely amend his pleadings.” And regarding prejudice, the court
stated that Sorensen’s proposed second amended complaint
“includes new substantive issues and additional facts that would
require more time for preparation and require additional
discovery more than four years after discovery was closed.” The
court further stated that allowing Sorensen to amend his
complaint “after an unfavorable dispositive motion would be to
3. Before a hearing on Sorensen’s motion could be held, Judge
Glen R. Dawson retired from the bench, and responsibility for this
case shifted to Judge David J. Williams.
20200648-CA 7 2022 UT App 113Sorensen v. Sparks
allow [him] an unjustifiable ‘redo’ for inadvertence entirely
within [his] control.”
¶17 The court’s same order memorialized its prior grant of
judgment on the pleadings pursuant to rule 12(c) and dismissed
Sorensen’s remaining claims. Following the voluntary dismissal
of Appellees’ remaining counterclaims, Sorensen appealed.
ISSUES AND STANDARDS OF REVIEW
¶18 Sorensen raises two issues that we consider on appeal.4
First, he argues that the district court erred in granting Appellees’
motion for judgment on the pleadings. “We review the district
court’s grant of a motion for judgment on the pleadings for
correctness, affording no deference to the district court.” Pierucci
v. U.S. Bank, NA, 2015 UT App 80, ¶ 8, 347 P.3d 837.
¶19 Second, Sorensen contends that the court erred in denying
his second motion to amend his complaint. Because the court’s
denial of the motion to amend was not based on the “purported
futility of the amendment,” we review its denial for an abuse of
discretion. Salt Lake City Corp. v. Kunz, 2020 UT App 139, ¶ 16, 476
P.3d 989 (quotation simplified). See Stichting Mayflower Mountain
Fonds v. United Park City Mines Co., 2017 UT 42, ¶ 48, 424 P.3d 72(stating that a district court has “substantial discretion” in
deciding motions for leave to amend). Accordingly, “[t]he
question presented is not whether we would have granted leave
to amend” but “whether we find an abuse of discretion in the
district judge’s decision to deny the motion.” Stichting, 2017 UT
42, ¶ 49. In other words, “we will not reverse unless the decision
4. Sorensen also argues that the district court erred in concluding
that declaratory judgment would not end the controversy
between the parties. Because we affirm the court’s grant of
judgment on the pleadings, we need not address this additional
argument.
20200648-CA 8 2022 UT App 113Sorensen v. Sparks
exceeds the limits of reasonability.” Neztsosie v. Meyer, 883 P.2d
920, 922 (Utah 1994) (quotation simplified). See SA Group Props.
Inc. v. Highland Marketplace LC, 2017 UT App 160, ¶ 13, 424 P.3d
187 (“A trial court abuses its discretion if there is no reasonable
basis for the decision.”) (quotation simplified).
ANALYSIS
I. Judgment on the Pleadings
¶20 Although generally “not favored,” “a court may enter
judgment on the pleadings when the moving party is entitled to
judgment on the face of the pleadings themselves.” MBNA Am.
Bank, NA v. Williams, 2006 UT App 432, ¶ 2, 147 P.3d 536(quotation simplified). See Utah R. Civ. P. 12(c). In reviewing a
court’s grant of judgment on the pleadings, we “take[] the factual
allegations of the nonmoving party as true, considering such facts
and all reasonable inferences drawn therefrom in a light most
favorable to the non-moving party,” MBNA, 2006 UT App 432, ¶ 2
(quotation simplified), “but we do not accept a complaint’s legal
conclusions as true,” Kirkham v. Widdison, 2019 UT App 97, ¶ 22,
447 P.3d 89. See Estrada v. Mendoza, 2012 UT App 82, ¶ 2, 275 P.3d
1024 (“The grant of a motion for judgment on the pleadings is
reviewed under the same standard as the grant of a motion to
dismiss, i.e., we affirm the grant of such a motion only if, as a
matter of law, the plaintiff could not recover under the facts
alleged.”) (quotation simplified).
¶21 At the time of the formation of the Sorensen/Sparks
Venture companies, the LLC Act, which was subsequently
repealed on January 1, 2016, see Utah Code Ann. § 63I-2-248(2)
(LexisNexis 2016), was in effect. Section 702 of the LLC Act stated,
(1) In connection with formation of a company, a
person becomes a member of the company upon
the earliest to occur of the following:
20200648-CA 9 2022 UT App 113Sorensen v. Sparks
(a) when the person signs the articles of
organization as a member;
(b) when the person signs the operating
agreement as a member; or
(c) when:
(i) the person evidences the intent to
become a member, either orally, in
writing, or by other action such as
transferring property or paying money to
the company for an interest in the
company; and
(ii) the person’s admission as a member is
reflected in the records of the company or
is otherwise acknowledged by the
company.
(2) Notwithstanding Subsection (1), a person may
not become a member of the company prior to
formation of the company.
Id. § 48-2c-702 (2010).
¶22 And section 703 of the LLC Act, in relevant part, provided,
After formation of a company, a person is admitted
as an additional member of the company as
provided in the operating agreement or, if the
operating agreement does not provide for
additional members, then:
(1) in the case of a person who is not an assignee of
an interest in the company, including a person
acquiring an interest directly from the company,
20200648-CA 10 2022 UT App 113Sorensen v. Sparks
upon the person’s signing the operating agreement
or other writing by which the person agrees to be
bound by the operating agreement, and upon
consent of all members[.]
Id. § 48-2c-703(1).
¶23 Here, the district court granted judgment on the
pleadings, explaining, with our emphasis, that under sections 702
and 703 of the LLC Act, Sorensen’s first amended complaint did
not allege “that he signed the articles o[f] organization or any
operati[ng] agreement,” or “that the defendant businesses ever
acknowledged his membership,” nor did “the facts set out in the
complaint . . . support [Sorensen] becoming a member after the
formation of defendant businesses.”
¶24 Sorensen argues that in reaching this conclusion, the court
failed to view the facts alleged in the complaint in a light most
favorable to him. He acknowledges that the first amended
complaint did not allege that he signed articles of organization or
an operating agreement for any of the Sorensen/Sparks Venture
companies, thereby precluding him from asserting membership
in the companies under subsections (a) and (b) of section 702 or
under subsection (1) of section 703.5 But Sorensen contends that
he alleged facts sufficient to satisfy subsection (1)(c) of section 702
“because the Complaint unequivocally alleges both that
(1) Sorensen intended to become and believed he would be a
member (as evidenced by his words and actions), and
(2) Sorensen’s membership interests were . . . acknowledged by
the LLCs in question.” Specifically, Sorensen points to allegations
in the complaint concerning:
5. Sorensen likewise does not assert that the companies’ operating
agreements provided a different method through which
additional members could be added after their formation.
20200648-CA 11 2022 UT App 113Sorensen v. Sparks
• “the original discussions and overarching
oral agreement between Sorensen and
Sparks, which kicked off the Sorensen/Sparks
Venture”;
• “how Sorensen left his other preexisting
business and put in well over a year’s worth
of grueling labor, well beyond that of a
typical full-time employee, and with little
compensation to show for it, to build
virtually all aspects of the business from the
ground up—all in reliance upon the equity
Sorensen believed he was building for
himself”;
• “how Sorensen single-handedly managed
the Sorensen/Sparks Venture during the
period in question, while Sparks did little to
nothing valuable for the business”;
• “actual ownership percentages that were
negotiated and agreed upon by Sparks and
Sorensen and . . . an operating agreement that
was prepared . . . to memorialize percentages
as to at least one of the businesses”; and
• how Sparks held Sorensen out as an owner of
the Sorensen/Sparks Venture during
meetings with potential investors in early
2014.
¶25 But these alleged facts, even when viewed in a light most
favorable to Sorensen, do not satisfy the second prong of
subsection (1)(c): that Sorensen’s membership in the companies
20200648-CA 12 2022 UT App 113Sorensen v. Sparks
was “otherwise acknowledged by the compan[ies].”6 Id.§ 48-2c-702(1)(c)(ii). As an initial matter, the LLC Act stated that
“a person may not become a member of a company prior to
formation of the company.” Id. § 48-2c-702(2). Because the
Sorensen/Sparks Venture itself is not an LLC, any events or
agreements that took place prior to the formation of the
Sorensen/Sparks Venture companies, including “original
discussions and [an] overarching oral agreement between
Sorensen and Sparks [that] kicked off the Sorensen/Sparks
Venture,” are insufficient to establish Sorensen’s membership.7
Furthermore, section 702 is limited to membership created “[i]n
6. Sorensen does not allege that any of the companies’ records
reflected his membership.
7. Sorensen asserts that “Utah law undeniably allows a court to
enforce contracts between parties, and nothing in the LLC Act
should be read to limit such enforcement.” In support of this
assertion, he cites Wanlass v. D Land Title, 790 P.2d 568 (Utah Ct.
App. 1990), which states,
Where a partner wrongfully repudiates the
partnership and converts the assets of the
partnership to his own use and benefit, the excluded
partner may waive the tort or breach and sue to
specifically enforce the partnership or joint venture
agreement, including the remedy of a judicial
dissolution and an accounting or the victim may
submit to the repudiation and sue for damages for
breach of the joint venture agreement.
Id. at 572 (quotation simplified). But Wanlass is inapplicable here
because Sorensen did not seek to “enforce the partnership or joint
venture agreement” in his first amended complaint. See id. And
although he did set forth a claim for repudiation of the
partnership agreement in his proposed second amended
complaint, as discussed in section II the district court did not
exceed its discretion in denying him leave to file this complaint.
20200648-CA 13 2022 UT App 113Sorensen v. Sparks
connection with the formation of a company,” id. § 48-2c-702(1),
whereas section 703 provides the methods through which
additional members may be added “[a]fter the formation of a
company,” id. § 48-2c-703. Thus, Sorensen’s factual allegations of
his membership being “otherwise acknowledged” by the various
LLCs formed under the Sorensen/Sparks Venture must satisfy a
very narrow window in time: the time of the companies’
formation.
¶26 Sorensen’s first amended complaint did not allege that the
LLCs acknowledged his membership at the time of their
formation. Sorensen points to two instances in which Sparks
presented Sorensen as a member of the Sorensen/Sparks Venture
and to the meetings in which he and Sparks negotiated a forty
percent ownership interest in DPG and a twenty-five percent
interest in DieselSellerz.com, but these occurred after the
formation of the LLCs. Sorensen does not point to any fact in
which the LLC entities “otherwise acknowledged” his
membership at the time of their formation as contemplated by
section 702. And to qualify for membership by reason of
post-formation activities as contemplated by section 703, the
future member must qualify for membership under the operating
agreement or must sign the operating agreement or other writing,
neither of which Sorensen alleged happened here. Accordingly,
even when viewing the facts alleged in the complaint in the light
most favorable to Sorensen, the district court did not err in
granting judgment on the pleadings to Appellees.
¶27 Sorensen resists this conclusion, arguing that we “should
consider the public policy and precedential implications of
allowing a narrow and hyper-technical reading of the LLC Act as
urged by the trial court and [Appellees].” He asserts that “[s]uch
a reading places form over substance, essentially legitimizing and
encouraging fraud and dishonesty in these types of situations by
refusing to consider the agreements or dealings that may exist
between parties—and instead considering only what certain
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unilateral, self-serving paperwork reflects.” Although the LLC
Act was indeed expressly intended to be liberally construed, State
v. Bruun, 2017 UT App 182, ¶ 43, 405 P.3d 905, abrogated on other
grounds by State v. Silva, 2019 UT 36, 456 P.3d 718, subsection 702
expressly foreclosed the broader interpretation urged by
Sorensen.
¶28 “[T]he legislature stated its intent that the Act ‘be
interpreted so as to give maximum effect to the principle of
freedom of contract and to the enforceability of operating
agreements of companies.’” Id. (quoting Utah Code Ann.
§ 48-2c-1901). The Legislature did so by allowing “members of an
LLC . . . great flexibility when choosing how the LLC will be
organized and managed, with the provisions of the LLC Act
serving as default provisions that govern an LLC if its members
do not include contrary language in their operating agreement or
in the LLC’s articles of organization.” Id. (quotation simplified).
To that end, the LLC Act provided that
[a]n operating agreement may modify the rules of
any provision of this chapter that relates to: (a) the
management of the company; (b) the business
purpose of the company; (c) the conduct of the
company’s affairs; or (d) the rights, duties, powers,
and qualifications of, and relations between and
among, the members, the managers, the members’
assignees and transferees, and the company.
Id. (quoting Utah Code Ann. § 48-2c-502(1)). And section 703
provides that “[a]fter formation of a company, a person is
admitted as an additional member of the company as provided in
the operating agreement,” and it sets forth methods in which
members may join the LLC “if the operating agreement does not
provide for additional members.” Utah Code Ann. § 48-2c-703
(emphasis added).
20200648-CA 15 2022 UT App 113Sorensen v. Sparks
¶29 Section 702 likewise reflects this policy of promoting the
principle of freedom of contract. Subsection (1)(c) permits
membership to be established upon formation of a company
when “the person evidences the intent to become a member” and
“the person’s admission as a member is reflected in the records of
the company or is otherwise acknowledged by the company.” Id.§ 48-2c-702(1)(c)(i)–(ii). But the section likewise expressly states
that “[n]otwithstanding Subsection (1), a person may not become
a member of the company prior to formation of the company.” Id.
§ 48-2c-702(2). Accordingly, as discussed above, despite the
express policy of promoting the freedom of contract, the LLC Act
nonetheless expressly limited the facts establishing membership
to the time of the formation of the LLC. For this reason, although
many sections of the LLC Act are to be construed liberally with
the policy of promoting the freedom to contract in mind,
subsection (2) of section 702 limits this principle. Cf. CCD, LC v.
Millsap, 2005 UT 42, ¶ 23, 116 P.3d 366 (“The drafters of the [LLC]
Act deemed expulsion authority to be so important that, despite
acknowledging the power of limited liability company members
to govern their affairs by contract, they expressly barred members
from bargaining for expulsion rules that varied from those set out
in section 710.”).
¶30 For the foregoing reasons, the district court did not err in
granting judgment on the pleadings.
II. Denial of Leave to Amend the Complaint
¶31 Rule 15 of the Utah Rules of Civil Procedure provides that
courts “should freely give permission [to amend pleadings] when
justice requires.” Utah R. Civ. P. 15(a)(2). “The purpose of rule 15
is to provide litigants the maximum opportunity for each claim to
be decided on its merits rather than on procedural niceties.” Shah
v. Intermountain Healthcare, Inc., 2013 UT App 261, ¶ 7, 314 P.3d
1079 (quotation simplified). Accordingly, “[t]rial courts should
liberally allow amendments unless the amendments include
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untimely, unjustified, and prejudicial factors.” Daniels v. Gamma
West Brachytherapy, LLC, 2009 UT 66, ¶ 58, 221 P.3d 256.
Additionally, “many other factors, such as delay, bad faith, or
futility of the amendment, may weigh against the trial court’s
allowing amendment.” Id. (quotation simplified). However,
“[t]here is no rigid test,” and “[e]ven a single consideration or
factor may be enough to justify denial of a motion for leave to
amend.” Stichting Mayflower Mountain Fonds v. United Park City
Mines Co., 2017 UT 42, ¶ 48, 424 P.3d 72. “This sort of case-specific
weighing is precisely the kind of decision left to the trial court
under rule 15(a)’s grant of discretion.” Kelly v. Hard Money
Funding, Inc., 2004 UT App 44, ¶ 42, 87 P.3d 734. See Hudgens v.
Prosper, Inc., 2010 UT 68, ¶ 18, 243 P.3d 1275 (“A district court is
best positioned to evaluate the motion to amend in the context of
the scope and duration of the lawsuit[.]”) (quotation simplified).
¶32 Here, the district court relied on two factors when denying
Sorensen leave to file a second amended complaint in this case.
First, the court held that the motion for leave to amend was
untimely because litigation had been ongoing “for nearly five
years, and fact discovery ha[d] been complete for more than four
years.” The court also noted that “this case has been scheduled
five times for final pre-trial conferences.” The court rejected
Sorensen’s argument that his motion for leave to amend was
timely because Appellees “waited so long to raise the pleading
deficiencies,” stating that it was Sorensen’s responsibility “to
plead and prosecute his case.” Second, the court held that because
the proposed second amended complaint “includes new
substantive issues and additional facts that would require more
time for preparation and require additional discovery more than
four years after discovery was closed,” and in light of “the factual
circumstances and legal developments already occurring in this
case,” Appellees would suffer “substantial prejudice” if Sorensen
was granted leave to amend. We conclude that based on the first
factor alone, the court did not exceed its “substantial discretion”
in so ruling. See Stichting, 2017 UT 42, ¶ 48.
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¶33 “There is no bright line rule against which to judge the
timeliness of a motion to amend.” Cougar Canyon Loan LLC v.
Walker, 2020 UT App 176, ¶ 24, 482 P.3d 227 (quotation
simplified). Generally, motions to amend have been “deemed
untimely when they are filed in the advanced procedural stages
of the litigation process, such as after the completion of discovery,
on the eve of a scheduled trial date, or after an order of dismissal
has already been entered.” Kelly, 2004 UT App 44, ¶ 29.
Furthermore, “regardless of the procedural posture of the case,
motions to amend have typically been deemed untimely when
they were filed several years into the litigation.” Id. ¶ 30.
¶34 Here, several factors support the district court’s
untimeliness characterization. As the court noted, Sorensen’s
motion for leave to amend occurred approximately five years into
the litigation and four years after the close of discovery.
Additionally, Sorensen moved for leave to amend his complaint
after the court had already granted judgment on the pleadings.8
8. Sorensen asserts that “it is notable that after years of litigation,
and well beyond the typical time for pleadings challenges,
[Appellees] did not bring—and the trial court did not grant—a
motion for summary judgment in this matter.” But other than
noting the claimed irregularity, Sorensen has not argued that the
district court abused its discretion in permitting Appellees to
move for judgment on the pleadings when they did, see Maxfield
v. Herbert, 2012 UT 44, ¶ 11, 284 P.3d 647 (“Within the bounds set
by rule and statute . . . a district court’s management of its docket
and trial schedule is reviewed for an abuse of discretion.”)
(quotation simplified), nor has he asserted that the motion
delayed trial, see Utah R. Civ. P. 12(c) (“After the pleadings are
closed, but within such time as not to delay the trial, any party
may move for judgment on the pleadings.”). In any event, we fail
to see any meaningful distinction between a judgment on the
(continued…)
20200648-CA 18 2022 UT App 113Sorensen v. Sparks
Moreover, Sorensen’s second amended complaint raised two
additional claims that could have been included in his prior
pleadings: breach of contract and repudiation of partnership
agreement. Sorensen has not offered a justification for not
bringing either of these claims earlier.9 Even without addressing
the substantial prejudice factor, these facts alone are sufficient to
affirm the district court’s denial of Sorensen’s motion for leave to
amend.10 See Stichting, 2017 UT 42, ¶ 50 (stating that the district
court relied on “classic grounds for denying a motion under rule
15(a)” when the court noted that the case had been pending for
nine years and that the proposed amended complaint contained
pleadings and a motion for summary judgment for purposes of
the timeliness calculation in this case.
9. Indeed, Sorensen does not address these additional claims in
his briefing. Instead, he merely asserts that the district court did
not identify what “new substantive issues” he had raised in its
order of denial, which seems inconsequential given how obvious
they are when comparing the first amended complaint and
proposed second amended complaint.
10. Sorensen insists that “it is simply undeniable that the
responsibility for any lack of timeliness or delay rests squarely
with [Appellees] for failing to raise the pleadings issue sooner,
and it was improper for the trial court to find lack of timeliness on
Sorensen’s part while absolving [Appellees] of their causative role
in the timing.” Although it certainly would have been within the
court’s discretion to take this into consideration, it likewise was
not an abuse of discretion for the court not to do so. To the
contrary, as stated above, “motions to amend have typically been
deemed untimely when they were filed several years into the
litigation,” Kelly v. Hard Money Funding, Inc., 2004 UT App 44,
¶ 30, 87 P.3d 734, or when filed, among other things, “after the
completion of discovery . . . or after an order of dismissal has
already been entered,” id. ¶ 29, as was the case here.
20200648-CA 19 2022 UT App 113Sorensen v. Sparks
additional claims that could have been included in earlier
pleadings, and also that it “cited concerns regarding additional
delay”); Neztsosie v. Meyer, 883 P.2d 920, 922 (Utah 1994)
(affirming the district court’s denial of leave to amend because the
motion was filed after the district court had already granted
summary judgment, the litigation had been ongoing for three
years, and the plaintiffs “knew or should have known of the
[additional] claim”); Tretheway v. Furstenau, 2001 UT App 400,
¶ 17, 40 P.3d 649 (affirming the district court’s denial of leave to
amend because the motion was filed “after the district court
granted summary judgment adverse” to the plaintiff, who should
have been aware of “the possibility of an adverse ruling”); Atcitty
v. Board of Educ., 967 P.2d 1261, 1264–65 (Utah Ct. App. 1998)
(affirming the district court’s denial of leave to amend because
“appellant attempted to set forth new issues in his amended
complaint,” “appellant filed his motion approximately
two-and-a-half months after the discovery deadline, and after
both parties had filed summary judgment motions,” and
“appellant was aware of the ‘new issues’ in the amended
complaint long before his motion was filed”) (emphasis omitted).
¶35 Accordingly, because the district court’s decision did not
“exceed the limits of reasonability,” see Neztsosie, 883 P.2d at 922
(quotation simplified), the court did not abuse its discretion when
it denied Sorensen leave to amend his complaint for a second
time.
CONCLUSION
¶36 The district court did not err in granting judgment on the
pleadings and did not exceed its substantial discretion when it
denied Sorensen’s motion for leave to file a second amended
complaint. Affirmed.
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