Federated Capital Corporation v. Abraham

2018 UT App 117THE UTAH COURT OF APPEALS
FEDERATED CAPITAL CORPORATION,
Appellant,
v.
ARNELLA M. ABRAHAM,
Appellee.
Opinion
No. 20140570-CA
Filed June 21, 2018
Third District Court, Salt Lake Department
The Honorable Keith A. Kelly
No. 119901843
Barnard N. Madsen, Aaron P. Dodd, and Peter
Reichman, Attorneys for Appellant
Lester A. Perry, Attorney for Appellee
JUDGE MICHELE M. CHRISTIANSEN authored this Opinion, in
which JUDGES RYAN M. HARRIS and DIANA HAGEN concurred.
CHRISTIANSEN, Judge:
¶1 Federated Capital Corporation (Federated) appeals from
the district court’s grant of summary judgment in favor of
Arnella M. Abraham. Because Federated did not present to the
district court the issue it raises on appeal, we conclude that
Federated waived the challenge. Accordingly, we affirm and
remand for the limited purpose of calculating Abraham’s
attorney fees incurred on appeal.
BACKGROUND
¶2 In August 2011, Federated, a Michigan corporation,
brought suit against Abraham, a Texas resident, alleging that she
Federated Capital Corporation v. Abraham
had breached a credit card contract that required her to make
payments in Pennsylvania. Specifically, Federated alleged that
Abraham had failed to make credit card payments to Federated’s
predecessor-in-interest totaling $11,528.59 and that she
consequently owed Federated that amount plus approximately
five years of interest at 39.64%. A provision of the contract
specified that Utah law applied, that Utah courts were the
proper forum, and that the parties consented to Utah courts’
jurisdiction (the Controlling Law & Jurisdiction Clause). The
contract also contained an attorney-fee provision.
¶3 Abraham filed an answer, in which she asserted, “As an
affirmative defense, the defendant alleges that this action fails
because of the statute of limitations.” Thereafter, Abraham filed
a motion for summary judgment, arguing that the cause of
action arose in Pennsylvania and that Utah’s borrowing statute 1 0F
required the district court to apply Pennsylvania’s four-year
statute of limitations for breach of contract instead of Utah’s six-
year statute of limitations. Thus, according to Abraham,
Federated’s claim was barred because Federated had not filed
suit until August 9, 2011, “a date well [past] the four year
limitations period for suit on written contracts under
Pennsylvania law.” Abraham also requested attorney fees under
Utah’s reciprocal attorney fee statute. See Utah Code Ann. § 78B-
5-826 (LexisNexis 2012).
1. Utah’s borrowing statute provides,
A cause of action which arises in another
jurisdiction, and which is not actionable in the
other jurisdiction by reason of the lapse of time,
may not be pursued in this state, unless the cause
of action is held by a citizen of this state who has
held the cause of action from the time it accrued.
Utah Code Ann. § 78B-2-103 (LexisNexis 2012).
20140570-CA 2 2018 UT App 117Federated Capital Corporation v. Abraham
¶4 Federated filed an opposition to Abraham’s motion for
summary judgment, addressing Abraham’s statute-of-
limitations defense on the merits. Specifically, Federated argued
that its claim was not time-barred, because Utah’s six-year
statute of limitations applied as a result of the Controlling Law
& Jurisdiction Clause. Federated did not argue or suggest to the
court that Abraham’s answer lacked specificity nor did it raise a
challenge to the manner in which Abraham had pleaded her
affirmative defense.
¶5 The district court agreed with Abraham’s interpretation of
Utah law and the applicability of Utah’s borrowing statute, and
it granted summary judgment in her favor. The court also
awarded Abraham attorney fees pursuant to the reciprocal
attorney fee statute. Federated appeals.
ISSUE AND STANDARD OF REVIEW
¶6 On appeal, Federated contends that the district court
erred in granting summary judgment in favor of Abraham.
Federated specifically asserts that Abraham failed to properly
plead her statute-of-limitations defense, and thereby lost the
right to pursue that defense. However, Federated did not raise
this objection to the district court. Generally, issues that are not
preserved are waived, absent a valid exception. See 438 Main St.
v. Easy Heat, Inc., 2004 UT 72, ¶ 51, 99 P.3d 801 (“Issues that are
not raised at trial are usually deemed waived.”); see also State v.
Johnson, 2017 UT 76, ¶ 18, 416 P.3d 443 (“A failure to preserve an
issue in the trial court generally precludes a party from arguing
that issue in an appellate court, absent a valid exception.”).
Federated concedes that it did not preserve the issue it raises on
appeal, but it seeks review under the plain-error exception to
the preservation rule. “To obtain relief via the plain-
error doctrine, an appellant must show the existence of a
harmful error that should have been obvious to the district
20140570-CA 3 2018 UT App 117Federated Capital Corporation v. Abraham
court.” Thomas v. Mattena, 2017 UT App 81, ¶ 9, 397 P.3d 856(quotation simplified).
ANALYSIS
I. Statute of Limitations
¶7 Federated contends that the district court plainly erred by
granting Abraham’s motion for summary judgment, arguing
that Abraham lost her right to pursue her statute-of-limitations
defense due to her failure to specifically plead that defense in her
answer, and that the infirmities in Abraham’s pleading should
have been obvious to the district court.
¶8 Rule 8(c) of the Utah Rules of Civil Procedure provides
that “[a] party must set forth affirmatively in a responsive
pleading . . . statute of limitations . . . and any other matter
constituting an avoidance or affirmative defense.” Utah R. Civ.
P. 8(c). Pursuant to rule 9(i),
[i]n pleading the statute of limitations it is not
necessary to state the facts showing the defense but
it may be alleged generally that the cause of action
is barred by the statute, referring to or describing
the statute by section number, subsection
designation, if any, or designating the provision
relied on sufficiently to identify it.
Id. R. 9(i).
¶9 Here, Abraham raised the statute of limitations
affirmative defense in her answer by stating simply, “As an
affirmative defense, the defendant alleges that this action fails
because of the statute of limitations.” She did not specify the
statute of limitations by section number. See id. However, in her
memorandum in support of her motion for summary judgment,
20140570-CA 4 2018 UT App 117Federated Capital Corporation v. Abraham
Abraham laid out her arguments concerning the various statutes
of limitations in more detail. Specifically, she asserted that
“[Federated] brought this action in Utah. Thus, the statutes of
limitation of Utah apply to this lawsuit. These statutes include
the Utah borrowing statute.” See Utah Code Ann. § 78-2-103(LexisNexis 2012). Abraham further alleged that “[a] cause of
action for breach of contract arises in the state in which the
parties determine that performance was due” and that, based on
the contract, “[t]he cause of action . . . arose in Pennsylvania.”
Observing that “Pennsylvania has a four year statute of
limitations for breach of contract” pursuant to section 5525 of
title 42 of the Pennsylvania Consolidated Statutes, Abraham
asserted that Federated’s suit was not timely filed and that the
case should be dismissed. See 42 Pa. Cons. Stat. § 5525(a)(8)
(2002).
¶10 Federated contends that rule 9(i) of the Utah Rules of
Civil Procedure “requires the statute of limitations to be pleaded
specifically” and that Abraham lost the right to pursue her
statute of limitations affirmative defense because she “failed to
describe the statute by section number” in her answer. However,
Federated did not bring these arguments to the attention of the
district court, nor did it object to Abraham’s assertion of the
statute-of-limitations defense in responding to her motion for
summary judgment. Instead, in its memorandum in opposition
to summary judgment, Federated addressed Abraham’s
affirmative defense on the merits, arguing that Utah’s borrowing
statute was inapplicable because the contract contained a forum-
selection clause that “required the parties to bring suit in Utah”
and that Pennsylvania’s four-year statute of limitations was
therefore “irrelevant.”
¶11 “A party waives all defenses and objections not presented
either by motion or by answer or reply[.]” Utah R. Civ. P. 12(h);
see also State v. Rettig, 2017 UT 83, ¶ 31, 416 P.3d 520 (“[R]ule
12(h) sets forth an express sanction of waiver.”). Accordingly,
even if we assume, without deciding, that Abraham had lost the
20140570-CA 5 2018 UT App 117Federated Capital Corporation v. Abraham
right to pursue any statute-of-limitations defense by not
pleading that defense with specificity in her answer under rule
9(i), Federated waived any objection to Abraham’s defective
answer when it responded to her motion for summary judgment
and addressed her affirmative defense on the merits. 2 See, e.g.,
1F
Golding v. Ashley Central Irrigation Co., 793 P.2d 897, 899–900
(Utah 1990) (observing that the defendant had lost the right to
bring a statute of limitations affirmative defense when it failed to
properly preserve the defense in its answer, but that the plaintiff
had waived the issue by not objecting to the defendant’s
“defective mode of placing the [affirmative defense] in issue”);
In re Estate of LeFevre, 2009 UT App 286, ¶ 29, 220 P.3d 476(concluding that the petitioners had waived the right to object to
the respondent’s unpreserved affirmative defense on appeal
where the petitioners had failed to object to the respondent’s
2. During oral argument before this court, Federated
acknowledged that had it raised the rule 9(i) issue in the district
court, there was a “good chance” that the district court would
have simply allowed Abraham to amend her answer pursuant to
rule 15 of the Utah Rules of Civil Procedure. But for whatever
reason, Federated did not raise the rule 9(i) issue to the district
court. Accordingly, if we were to review the issue now,
Federated would receive both the benefit of its silence on the
matter in the district court and the benefit of review on appeal.
Allowing this dual benefit would incentivize parties to
strategically refrain from raising issues in the district court only
to raise them on appeal if that strategy fails, thus thwarting the
purpose of our preservation requirement. Cf. Tschaggeny v.
Milbank Ins. Co., 2007 UT 37, ¶ 20, 163 P.3d 615 (“[R]equiring
preservation of an issue prevents a party from avoiding the issue
at trial for strategic reasons only to raise the issue on appeal if
the strategy fails.”); id. ¶ 23 (“Allowing this dual benefit is
clearly contrary to the policy behind requiring issues to be
litigated at trial before they are eligible for review.”).
20140570-CA 6 2018 UT App 117Federated Capital Corporation v. Abraham
assertion of the defense in responding to his motion for
summary judgment and had addressed his defense on the
merits). Because Federated waived any objection to Abraham’s
affirmative defense, we cannot consider Federated’s plain-error
argument. 3 See Rettig, 2017 UT 83, ¶ 27 (observing that Utah Rule
2F
of Civil Procedure 12(h) “prescribe[s] a rule of preservation and
establish[es] a waiver sanction that stands as a jurisdictional bar
on appellate consideration of matters not properly preserved”);
id. ¶ 33 (“The waiver sanction prescribed by . . . civil rule 12 is
‘jurisdictional’ in the sense that it forecloses appellate
consideration of the merits of the waived matter.”).
¶12 In any event, although we need not go further, we briefly
observe that even if Federated were entitled to plain-error
review, it has failed to demonstrate how it was harmed by the
alleged error in Abraham’s answer. Our supreme court has
recognized that while rule 8(c) “is a good rule whose purpose is
to have the issues to be tried clearly framed,” the Utah Rules of
Civil Procedure “must all be looked to in the light of their even
more fundamental purpose of liberalizing both pleading and
procedure to the end that the parties are afforded the privilege of
presenting whatever legitimate contentions they have pertaining
to their dispute.” Smith v. Grand Canyon Expeditions Co., 2003 UT
57, ¶ 12, 84 P.3d 1154 (quotation simplified). Therefore, “what
[parties] are entitled to is notice of the issues raised and an
opportunity to meet them. When this is accomplished, that is all
that is required.” Id. (quotation simplified).
¶13 Here, although Abraham’s answer did not identify by
section number which statutes of limitations she was asserting as
a defense, she later specified which statutes of limitations she
was relying on in her memorandum in support of summary
3. From a practical standpoint, when waiver is prescribed as a
sanction pursuant to rule 12(h), allowing a party to sidestep its
effect by asserting plain error would eviscerate the rule.
20140570-CA 7 2018 UT App 117Federated Capital Corporation v. Abraham
judgment. Federated responded to Abraham’s motion and fully
argued the statute of limitations issue on the merits. Thus, the
record demonstrates that Federated had notice of Abraham’s
statute-of-limitations defense and took the opportunity to meet
it. See Smith, 2003 UT 57, ¶ 12; see also Bangerter v. Petty, 2008 UT
App 153, ¶¶ 16, 18, 184 P.3d 1249 (concluding, where the
defendant generally raised the statute of limitations affirmative
defense in its answer but later “clearly laid out its arguments
concerning the various statutes of limitations” in its rule 56(f)
motion and amended its answer, that the plaintiff and the trial
court “clearly had written notice of the three statutes of
limitations at issue from documents filed with the court,
including an amended answer”). That is all that is required.
Smith, 2003 UT 57, ¶ 12.
¶14 We conclude that Federated waived its objection to any
potential defect in the pleading of Abraham’s statute-of-
limitations defense when it failed to raise the issue in the district
court.
II. Attorney Fees Incurred on Appeal
¶15 Abraham contends that she should be awarded her
attorney fees and costs incurred on appeal. “Under Utah’s
reciprocal attorney fee statute, courts may award attorney fees to
the prevailing party of a contract dispute so long as the contract
provided for the award of attorney fees to at least one of the
parties[.]” 4 Federated Capital Corp. v. Haner, 2015 UT App 132,
3F
4. Utah’s reciprocal attorney fee statute provides,
A court may award costs and attorney fees to
either party that prevails in a civil action based
upon any promissory note, written contract, or
other writing executed after April 28, 1986, when
the provisions of the promissory note, written
(continued…)
20140570-CA 8 2018 UT App 117Federated Capital Corporation v. Abraham
¶ 11, 351 P.3d 816; see also Utah Code Ann. § 78B-5-826
(LexisNexis 2012). Here, the contract provided for attorney fees
to Federated, and the district court awarded attorney fees to
Abraham based on the reciprocal attorney fee statute. “A party
entitled by contract or statute to attorney fees below and that
prevails on appeal is entitled to fees reasonably incurred on
appeal.” Haner, 2015 UT App 132, ¶ 19 (quotation simplified).
Abraham has prevailed on appeal, and we therefore award
Abraham her reasonable attorney fees incurred in connection
with this appeal in an amount to be determined by the district
court on remand.
CONCLUSION
¶16 We affirm the district court’s grant of summary judgment
in favor of Abraham and remand this case to the district court
for the limited purpose of calculating Abraham’s attorney fees
incurred on appeal.
(…continued)
contract, or other writing allow at least one party to
recover attorney fees.
Utah Code Ann. § 78B-5-826 (LexisNexis 2012).
20140570-CA 9 2018 UT App 117