Jones v. Mackey Price , 2020 UT 25 ( 2020 )

This opinion is subject to revision before final
publication in the Pacific Reporter
2020 UT 25
IN THE
SUPREME COURT OF THE STATE OF UTAH
GREGORY N. JONES,
Appellant/Cross-Appellee,
v.
MACKEY PRICE THOMPSON & OSTLER, MACKEY PRICE, LLC,
RANDALL A. MACKEY, and GIFFORD W. PRICE,
Appellees/Cross-Appellants.
No. 20170604
Heard October 4, 2019
Filed May 14, 2020
On Direct Appeal
Third District, Salt Lake County
The Honorable Richard D. McKelvie
No. 060911956
Attorneys:
James D. Gilson, Lyndon R. Bradshaw, Cole P. Crowther,
Salt Lake City, for appellant/cross-appellee
Gifford W. Price, Salt Lake City, for appellees/cross-appellants
ASSOCIATE CHIEF JUSTICE LEE authored the opinion of the Court,
in which CHIEF JUSTICE DURRANT, JUSTICE HIMONAS,
JUSTICE PETERSEN, and JUDGE POHLMAN joined.
Having recused himself, JUSTICE PEARCE does not participate herein;
COURT OF APPEALS JUDGE JILL M. POHLMAN sat.
ASSOCIATE CHIEF JUSTICE LEE, opinion of the Court:
¶1 This appeal arises out of a longstanding dispute between
attorney Gregory Jones and his former law firm, Mackey Price
Thompson & Ostler, P.C. (MPTO), over the distribution of litigation
proceeds. Jones claims a right to some of the fees collected by the
firm in personal injury cases arising out of the use of the diet drug
JONES v. MACKEY PRICE THOMPSON & OSTLER
Opinion of the Court
known as Fen-Phen. Jones has asserted claims for quantum
meruit/unjust enrichment, breach of fiduciary duty, and fraudulent
transfer. He also claims a right to an award of punitive damages and
seeks to impose a constructive trust on the funds held by MPTO.
¶2 In 2017, after nearly ten years of litigation (including a
previous appeal to this court), a jury entered a $647,090 verdict
against MPTO on a quantum meruit/unjust enrichment theory. But
the district court dismissed Jones’s claims for breach of fiduciary
duty, fraudulent transfer, and punitive damages after MPTO filed a
motion for directed verdict. It also rejected Jones’s request for a
constructive trust.
¶3 After trial, the district court concluded that the judgment
properly extended to a second entity, Mackey Price, LLC—an entity
that the district court deemed a successor in interest to MPTO under
rule 25 of the Utah Rules of Civil Procedure. Yet the district court
denied Jones’s request to extend joint and several liability (under an
alter ego theory) against Randall Mackey and Gifford Price
individually and against a third entity—Mackey Price Law, a Utah
corporation. And it declined Jones’s request to conclude, in post-
judgment proceedings, that Mackey, Price, and Mackey Price Law
had violated Utah’s LLC and corporation statutes.
¶4 On this appeal, Jones challenges the dismissal of several of
his claims on directed verdict, the denial of his request for a
constructive trust, and the refusal to entertain his alter ego and
statutory violation claims in post-judgment proceedings. On
cross-appeal, MPTO challenges the jury verdict on the quantum
meruit/unjust enrichment claim on the ground that the expert
witness testimony that supported it should have been excluded.
Mackey Price, LLC also cross-appeals, asserting that the district
court lacked jurisdiction to add it to the judgment as a successor in
interest to MPTO.
¶5 We affirm the directed verdict on the fiduciary duty claim
but reverse the dismissal of the fraudulent transfer and punitive
damages claims and reverse and remand for further proceedings on
Jones’s request for imposition of a constructive trust. We also affirm
the denial of Jones’s alter ego and statutory claims against Mackey,
Price, and Mackey Price Law because such claims cannot be asserted
in post-judgment proceedings under Brigham Young University v.
Tremco Consultants, Inc., 2007 UT 17, 156 P.3d 782. And we uphold
the jury verdict on the quantum meruit/unjust enrichment claim on
the ground that the district court did not abuse its discretion in
admitting the testimony of Jones’s expert witness.
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¶6 Finally, we clarify and limit the reach of our decision in
Tremco. We conclude that the district court had the authority to
consider a rule 25 motion for substitution—to add Mackey Price,
LLC as a successor to MPTO—in post-verdict proceedings. But we
nonetheless reverse and remand on the ground that Mackey Price,
LLC was entitled to contest the merits of the proposed substitution
once the district court rejected its jurisdictional arguments.
I. BACKGROUND
A. The Dispute and Jones’s First Appeal
¶7 In 1992 Randall Mackey and Gifford Price formed a
professional corporation to conduct their law practice. Their firm has
had various names over the years but was known as Mackey Price
Thompson & Ostler, P.C., during the period relevant to this case. We
refer to it herein as MPTO.
¶8 Two attorneys associated with MPTO, Jeffrey Thompson
and Russell Skousen, initiated a Fen-Phen program with MPTO to
litigate claims arising from the fallout surrounding the beleaguered
weight-loss pill. Jones also worked for MPTO and focused on
Fen-Phen cases from 2002 to May 2005. At that time, Jones developed
dissociative amnesia, which severely impaired his memory and
prevented him from continuing his work. The Fen-Phen cases
eventually generated over $1 million in fees for MPTO. After Jones
claimed to be entitled to some of the Fen-Phen funds, MPTO
deposited the fee checks into its trust account and agreed as a
“professional courtesy” to let Jones know if any of the funds were to
be distributed.
¶9 Jones sued MPTO over these funds in July 2006, asserting
various claims for relief. MPTO distributed the Fen-Phen funds in
December of that year, purportedly to avoid incurring large tax
liabilities. MPTO paid $328,261 to Thompson and Skousen, $165,000
to Jones, $175,484 each to Mackey and Price, and the rest to other
MPTO creditors. Yet Jones maintained that he was entitled to a
larger share of the funds. In February 2007, he successfully amended
his complaint to add claims for breach of fiduciary duty and
fraudulent transfer.
¶10 Jones’s suit against MPTO, Mackey, Price, Thompson,
Skousen, and various Thompson and Skousen limited liability
companies reached us in 2015. At that time, we affirmed the district
court’s dismissal of Jones’s contract claim, as well as his quantum
meruit and fraudulent transfer claims against Mackey, Price,
Thompson, Skousen, and the LLCs. Jones v. Mackey Price Thompson &
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Ostler (Jones I), 2015 UT 60, ¶¶ 4–5, 355 P.3d 1000. But we reversed
the district court’s denial of Jones’s request for a jury trial, ruling that
Jones was entitled to a jury on his quantum meruit/unjust
enrichment claim against MPTO. Id. ¶ 5.
B. MPTO’s Trial Objections
¶11 A trial followed. In the course of the proceedings, MPTO
objected several times to the testimony offered by Jones’s expert
witness, John Hansen. In part, MPTO objected that Hansen’s trial
drawings, use of notes, and some aspects of his methodology were
not previously disclosed under rule 26 of the Utah Rules of Civil
Procedure and therefore should be excluded from the jury’s
consideration. The district court overruled these objections. MPTO
also objected to Hansen testifying as to what considerations typically
went into a fee-splitting agreement, asserting that they were
irrelevant in light of the dismissal of Jones’s contract claim. The
district court also overruled these objections, citing another portion
of our Jones I decision.
C. MPTO’s Motion for Directed Verdict
¶12 Before the case was submitted to the jury, MPTO sought
directed verdict on several of Jones’s claims, including his claims
that MPTO’s December 2006 transfers breached a fiduciary duty to
Jones and were fraudulent under the Utah Fraudulent Transfer Act.
The district court entered directed verdict against Jones on his claims
for breach of fiduciary duty and fraudulent transfer and his request
for punitive damages.
¶13 Jones opposed MPTO’s motion. On the fiduciary duty claim,
he argued that rule 1.15 of the Utah Rules of Professional Conduct
and MPTO’s alleged agreement to place the funds in a “segregated
account” indicated that MPTO owed Jones a fiduciary duty. Jones
asserted that MPTO had violated that duty by leaving him out of the
process that gave Mackey and Price “much more than they
deserved” and paid others who “didn’t do anything on . . . Fen-
Phen.” The district court disagreed, ruling that no statute created an
independent duty to Jones and that while the Utah Rules of
Professional Conduct might be evidence of a fiduciary duty, they
cannot in and of themselves create such a duty.
¶14 In defending his fraudulent transfer claim, Jones focused on
several factors laid out in the Utah Fraudulent Transfer Act. He
argued that Mackey and Price had received payments “far in excess”
of the reasonable value of their services, that they knew that the
$165,000 paid to Jones was “woefully inadequate,” and that MPTO
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had paid the paltry sum to frustrate Jones’s ability to prosecute his
case. But the district court weighed the various factors laid out in the
statute differently. And it concluded that there was insufficient
evidence for a jury to find by clear and convincing evidence that
MPTO acted with actual intent to hinder, delay, or defraud Jones. In
particular, the court emphasized its belief that MPTO transferred the
funds only to avoid tax liability and that Jones was not actually
harmed by the transfer.
¶15 With respect to his request for punitive damages, Jones
asserted that MPTO had acted in blatant disregard of his rights and
thus he was entitled to punitive damages on both his fiduciary duty
and fraudulent transfer claims. The district court again disagreed,
ruling that there was no evidence of “malicious intent” on the part of
MPTO.
D. The Verdict and Jones’s Request for a Constructive Trust
¶16 On March 7, 2017 a jury awarded Jones a $647,090 verdict
against MPTO on his remaining claims. Jones quickly proposed that
the district court impose a constructive trust to assist him in
obtaining satisfaction of the judgment. MPTO objected, arguing that
Jones I precluded the possibility of a constructive trust (an equitable
remedy) on Jones’s quantum meruit claim (a legal claim). The district
court agreed with MPTO and denied Jones’s request to impose a
constructive trust in connection with the judgment.
E. Jones’s Rule 25 Motion and MPTO’s JNOV Motion
¶17 The post-verdict proceedings continued when Jones sought
to hold another Mackey and Price entity responsible for the
judgment and MPTO asked the district court to reconsider its
decisions on the admissibility of Hansen’s expert testimony.
¶18 Prior to and during trial, Mackey and Price had maintained
a website for the newly named “Mackey Price & Mecham” at the
web address www.mackeyprice.com. The firm listed a phone
number and described itself as a “business law firm” comprised of
four attorneys: Mackey, Price, and two others. But just two days after
the jury verdict, on March 9, 2017, Mackey and Price formed Mackey
Price, LLC. The LLC’s Certificate of Organization listed the same
address as MPTO’s, naming Mackey as the registered agent and
Mackey and Price as co-managers. Mackey and Price also transferred
its website to Mackey Price, LLC, which listed the same phone
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Opinion of the Court
number as before and again described itself as a “business law firm”
comprised of the same four attorneys.1
¶19 In June 2017 the district court held argument on Jones’s
proposed form of judgment. The court expressed concern that MPTO
had reorganized as Mackey Price, LLC to avoid paying the judgment
and wondered whether MPTO was engaged in a game of “legal
whack-a-mole.” At the conclusion of the hearing, the district court
gave MPTO the opportunity to submit a brief on whether Mackey
Price, LLC should be joined as a party under rule 21 of the Utah
Rules of Civil Procedure. MPTO availed itself of that opportunity,
asserting that rule 21 did not obviate the requirement for the court to
exercise personal jurisdiction via service of a summons and
complaint. For its part, Mackey Price, LLC made a special
appearance for the limited purpose of contesting the court’s
jurisdiction. Neither entity addressed the allegation that Mackey
Price, LLC had been formed to avoid the judgment. The district court
entered a judgment against MPTO, including Mackey Price, LLC in
the judgment’s definition of MPTO without any findings of fact or
conclusions of law explaining the basis for that decision.
¶20 A few weeks later, Mackey and Price executed security
agreements in favor of themselves on behalf of Mackey Price, LLC,
whereby Mackey and Price acquired a secured interest in the LLC’s
personal and fixture property, inventory, equipment, instruments,
and other assets in exchange for legal work. Mackey and Price
contend that these security agreements justify their decision to pay
themselves rather than the judgment.
¶21 Jones filed a notice of appeal from the initial judgment on
July 27, 2017. Thereafter, the district court heard argument on
MPTO’s motion for judgment notwithstanding the verdict (JNOV),
which asserted that Jones’s expert witness testimony should have
been excluded on the grounds that elements of his testimony had not
been disclosed prior to trial and that it was contrary to law and
established facts. MPTO reiterated the objections it made at trial. It
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1 Price later testified that he and Mackey immediately began
practicing law and billing their clients through the LLC. It “was
made clear to the clients” which business “was going forward,” and
that services “would be coming from the LLC.” Price also confirmed
that Mackey Price, LLC had been substituted on the lease at Mackey
Price & Mecham’s office and begun operating out of the same space.
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further alleged that previous rulings regarding MPTO’s agreements
with Thompson and Skousen meant that MPTO’s payments to
Thompson and Skousen could not properly be considered part of the
benefit Jones had conferred on MPTO. On September 22, 2017, the
district court denied MPTO’s JNOV motion. But in the same order, it
concluded that its decision to extend the judgment to include
Mackey Price, LLC as a judgment debtor was void under Brigham
Young University v. Tremco Consultants, Inc., 2007 UT 17, 156 P.3d 782.
It ordered Jones to prepare an amended judgment and remove
Mackey Price, LLC. In so doing, however, the court invited Jones to
serve and move to join Mackey Price, LLC under rule 21 or 25 of the
Utah Rules of Civil Procedure.
¶22 Jones filed a motion to do just that and served Mackey Price,
LLC with rule 4 notice.2 MPTO and Mackey Price, LLC both filed
memoranda in opposition to Jones’s motion. Once again, Mackey
Price, LLC made its case in a special appearance. MPTO and Mackey
Price, LLC first argued that the district court lacked subject matter
jurisdiction to rule on the motion. They claimed that once the district
court had denied MPTO’s JNOV motion on September 22, Jones’s
July 27 notice of appeal kicked in, shifting jurisdiction to this court.
They also argued that the district court lacked personal jurisdiction
over Mackey Price, LLC.
¶23 On November 22, 2017, the district court granted Jones’s
motion without oral argument and again joined Mackey Price, LLC
as a party to the judgment, this time under civil rules 21 and 25. In so
doing, the district court ruled that it retained jurisdiction because no
amended judgment had been entered; in the absence of a final
judgment, any notice of appeal was premature. The court also ruled
that it had personal jurisdiction over Mackey Price, LLC because
Jones had served the LLC in accordance with rule 4. In joining
Mackey Price, LLC, the district court noted that it was odd that a
party facing a significant judgment (like MPTO) would oppose the
joinder of another party if the two really were separate entities. It
also stated that if Mackey Price, LLC had disputed the factual
allegations, the court would have held an evidentiary hearing to
determine whether Mackey Price, LLC was in fact a successor to
MPTO. But since Mackey Price, LLC focused “entirely on procedural
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2 Around this time, MPTO filed a notice of appeal from the
district court’s denial of its JNOV motion.
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issues,” the court found that it was entitled to grant Jones’s motion
once those procedural arguments were rejected.3
¶24 On December 1, 2017 the district court entered an amended
judgment that included Mackey Price, LLC as a judgment debtor.
Thereafter, Mackey Price, LLC filed a petition for extraordinary
relief.
F. Jones’s Effort to Extend Liability to Mackey Price Law
¶25 In January 2018 Mackey and Price formed a third entity,
Mackey Price Law. Mackey and Price are the sole shareholders,
officers, and directors of Mackey Price Law. Once again, Mackey
serves as the registered agent. Moreover, Mackey and Price executed
additional security agreements, under which they acquired a secured
interest in “All Assets” of Mackey Price Law.
¶26 Jones had initially filed a motion asking the court to rule
that MPTO, Mackey, Price, and Mackey Price, LLC were abusing the
state’s corporation and LLC statutes and that the parties were alter
egos of one another. Upon discovering the creation of Mackey Price
Law, Jones filed a supplemental motion asking the court to find that
Mackey Price Law was also an alter ego and jointly and severally
liable for the amended judgment. Following a hearing, the district
court relied on Tremco and refused to hear Jones’s new claims for
fraudulent transfer, alter ego, and statutory violations in post-
judgment proceedings, or to add Mackey Price Law to the judgment.
G. The Appeal and Cross-Appeal
¶27 The parties thereafter filed their appeals and cross-appeals,
which we consider below. In Part II we consider the arguments
raised by Jones on his direct appeal. In Part III we take up the issues
on cross-appeal. And in Part IV we synthesize the basis for our
decision in order to clarify the questions presented on remand.
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3 The district court acknowledged that Mackey had filed a
declaration disputing whether certain assets were in fact transferred
from MPTO to Mackey Price, LLC, but concluded that “Mackey’s
testimony fails to challenge the central allegation in the Motion: that
Mackey Price, LLC is simply a continuation of Defendant Mackey
Price Thompson & Ostler.”
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II. JONES’S DIRECT APPEAL
¶28 On direct appeal, Jones challenges the district court’s
(A) entry of a partial directed verdict; (B) denial of a right to seek a
constructive trust in support of the judgment; and (C) refusal to
allow him to assert his fraudulent transfer, alter ego, and statutory
violations claims in post-judgment proceedings. We affirm in part
and reverse in part.
A. Directed Verdict
¶29 Jones first challenges the district court’s decision to take the
issues of breach of fiduciary duty, fraudulent transfer, and punitive
damages away from the jury. We “review[] trial court rulings on
motions for directed verdict for correctness.” Arnold v. Grigsby, 2018
UT 14, ¶ 10, 417 P.3d 606.
¶30 A directed verdict is in order “[i]f a party has been fully
heard on an issue during a jury trial and the court finds that a
reasonable jury would not have a legally sufficient evidentiary basis
to find for the party on that issue.” Id. (alteration in original)
(quoting UTAH R. CIV. P. 50(a)(1)). We affirm the entry of directed
verdict on the fiduciary duty claim but reverse on the fraudulent
transfer and punitive damages claims.
1. Fiduciary Duty
¶31 Jones claims that he was the beneficiary of a trust
relationship and that MPTO owed him a fiduciary duty under
(i) general trust principles, (ii) Utah Rule of Professional Conduct
1.15(e), and (iii) the “law of the case” doctrine. We disagree and
affirm the district court’s dismissal of this claim on MPTO’s motion
for directed verdict.
¶32 Jones first asserts that there was evidence that a trust was
created when MPTO placed the Fen-Phen funds in its trust account.
He claims that he was a beneficiary of that trust because MPTO
knew he claimed an interest in the Fen-Phen proceeds and allegedly
agreed to segregate the funds “on that basis.” Jones claims support
for this view in the fact that MPTO ultimately paid him a portion of
the Fen-Phen funds. Thus, in Jones’s view, MPTO, as trustee,
breached a fiduciary duty to him when it decided “what portion
Jones was entitled” to “rather than awaiting the jury’s verdict.” The
alleged breach is in MPTO “selfishly” paying Mackey and Price “and
[its] creditors the disputed remaining portion” prior to the resolution
of Jones’s claims.
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¶33 We affirm because we find no evidence of a
trustee-beneficiary relationship between Jones and MPTO. Trusts
and corresponding fiduciary relationships are generally created by
contract, statute, judicial decree, or some manifestation of an intent
to create a trust.4 Jones’s situation matches none of these scenarios,
and he has not identified a basis for an exception to the general rule.
¶34 Granted, MPTO notified Jones that it had placed the
disputed funds in its trust account and would inform him of any
decision to distribute funds “reasonably in advance of any
distribution actually being made.” But Jones cites no record basis for
the conclusion that MPTO intended to make or did make a binding
agreement of any kind, let alone a binding agreement to hold the
funds until after the resolution of the case, or to give notice before
making distributions. Jones can likewise point to no statute or
judicial decree that created a trustee-beneficiary relationship.
¶35 We find no authority for the proposition that a party can
unilaterally create a trust and make himself a beneficiary of that trust
by the simple expedient of claiming an interest in a pot of money
and having another agree to keep him apprised of any distributions.
Such a rule would press holders of disputed funds into fiduciary
service without their knowledge or consent. That is not the law. And
for these reasons we find no basis in general trust principles for a
trustee-beneficiary relationship between Jones and MPTO.
¶36 Second, Jones argues that Utah Rule of Professional Conduct
1.15(e) “supports” a finding of a fiduciary duty. Rule 1.15(e) states
that “[w]hen in the course of representation a lawyer is in possession
of property in which two or more persons (one of whom may be the
lawyer) claim interests, the property shall be kept separate by the
lawyer until the dispute is resolved.” According to Jones, this means
that a factfinder could determine that a fiduciary relationship arose
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4 See UTAH CODE § 75-7-401(1)(b) (“A trust may be created by . . .
declaration by the owner of property that the owner holds
identifiable property as trustee . . . .”); id. § 75-7-402(1)(b) (“A trust is
created only if . . . the settlor indicates an intention to create the trust
or a statute, judgment, or decree authorizes the creation of a trust
. . . .”); 24 AM. JUR. PL. & PR. FORMS Trusts § 2 (2020) (“Although
technical words, such as ‘trust’ or ‘trustee,’ are not required in order
to create the trust, the intention to create a trust must nevertheless be
apparent.”).
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once MPTO knew the ownership of the funds was disputed and
agreed to hold them in a trust account.
¶37 But as Jones himself acknowledges, rule 1.15(e) can only
support a finding of fiduciary duty—it can’t create one. The “Utah
Rules of Professional Conduct are not designed to create a basis for
civil liability.” Archuleta v. Hughes, 969 P.2d 409, 414 (Utah 1998). Nor
do the rules create a legal presumption that a duty has been
breached. Id. Without a basis in general trust principles, rule 1.15(e)
alone cannot support Jones’s breach of fiduciary duty claim.
¶38 Finally, Jones argues that the “law of the case” doctrine
mandates a finding of fiduciary duty. This doctrine states that “a
decision made on an issue during one stage of a case” is sometimes
“binding in successive stages of the same litigation.” IHC Health
Servs., Inc. v. D. & K. Mgmt., Inc., 2008 UT 73, ¶ 26, 196 P.3d 588
(citation omitted). Jones contends that the district court had already
determined at the summary judgment stage that Mackey and Price
owed him a fiduciary duty. And he asserts that that determination
should have bound the district court moving forward.
¶39 But the district court made no such finding. Instead, the
court simply concluded, in response to a motion for summary
judgment, that “a fact finder could determine that fiduciary duties
were voluntarily assumed” and “could determine that Rule 1.15(e)
would apply.” (Emphases added.) These were not determinations
that a fiduciary duty in fact existed. In any event, the district court
statements were subject to reconsideration by a successor judge. As
we recently clarified, the law of the case leaves a successor judge
broad discretion to revisit any “nonfinal decision entered
previously.” Build, Inc. v. Utah Dep’t of Transp., 2018 UT 34, ¶ 27, 428
P.3d 995.
¶40 Because neither general trust principles, rule 1.15(e), nor the
law-of-the-case doctrine supports a finding that MPTO owed Jones a
fiduciary duty, we affirm the district court’s entry of partial directed
verdict on Jones’s claim for breach of fiduciary duty.
2. Fraudulent Transfer
¶41 Jones next challenges the dismissal of his fraudulent transfer
claim, arguing that there was sufficient evidence for the jury to find
that MPTO had acted with actual intent to hinder, delay, or defraud
Jones when it distributed the Fen-Phen funds. In dismissing this
claim, the district court went through the list of factors that the
Fraudulent Transfer Act sets forth for determining a defendant’s
“actual intent.” These include whether the transfer was to an insider,
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whether the debtor retained possession or control of the property
after the transfer, and whether the transfer was concealed or made
after the threat of a lawsuit. UTAH CODE § 25-6-5(2) (2016).5 Based on
these factors, the district court concluded that “no reasonable jury
could make a determination [by clear and convincing evidence] that
there was a violation of the Fraudulent Transfer Act or that these
transfers took place [with] an intent to hinder, delay, or defraud
anyone.”
¶42 The district court first acknowledged that some of the
transfer in question was to insiders Mackey and Price, who thus
retained possession or control of some of the funds. But the court
also found that the transfer was disclosed (not concealed), that the
transfer didn’t consist of substantially all of MPTO’s assets, and that
MPTO didn’t abscond, conceal assets, become insolvent, make the
transfer before or after a substantial debt was incurred, or transfer
essential assets—all of which weighed in favor of the defendants.
Because the suit “was filed well in advance of the transfer,” the
district court said that it did not matter that the defendants had been
sued before they made the transfer. In addition, the district court
stated that it didn’t think it “weigh[ed] in favor of either party”
whether Mackey and Price had received their portion of the funds as
reasonable consideration (even if that fact was in dispute) since the
defendants “certainly believe[d]” that it was a reasonable
distribution. Lastly, the district court relied heavily on the notion
that “the only credible evidence in the record with respect to this
transfer [wa]s that the defendants became aware of a potential tax
liability.” The district court concluded that there was “no evidence to
contravene the position of the defendants that they transferred this
money solely in order to avoid paying the taxes on it,” and thus no
way for a jury to conclude that MPTO’s transfers were fraudulent.
¶43 We disagree and reverse. Before reaching the merits, we
address two threshold questions raised in the briefing on this appeal.
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5 We cite the 2016 version of the fraudulent transfer statute
throughout, though it is unclear which version of the statute the
district court applied in its March 2017 analysis. Because the statute
remained the same from the time Jones added the fraudulent
transfer claim to his complaint (February 2007) to the time the court
entered directed verdict (March 2017), it does not matter which
version we cite so long as we do not use the amended version that
went into effect in May 2017. See infra ¶¶ 46–50.
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We first conclude that a “mixed motive” is sufficient to establish an
“actual intent” to hinder, delay, or defraud under the Fraudulent
Transfer Act. We then hold that Jones was required to establish such
actual intent by clear and convincing evidence. With these premises
in mind, we conclude that there was sufficient evidence in the trial
record for a jury to find by clear and convincing evidence that there
was a fraudulent transfer in this case.
a. Mixed motive
¶44 We begin by clarifying the governing legal standard on a
question that has been decided in other states but never in Utah. The
question is whether “actual intent” to hinder, delay, or defraud
requires proof that such intent was the sole or primary purpose of
the defendant, or whether proof of a “mixed motive” is sufficient.
We conclude that there is no requirement that the intent to hinder,
delay, or defraud be the sole or even primary motive of the
defendant. This follows from the text of the statute, which requires
proof only that a defendant act “with actual intent” to hinder, delay,
or defraud. UTAH CODE § 25-6-5(1)(a) (2016). It would add an
unstated qualifier to require that a defendant acting “with actual
intent” act solely or primarily with that actual intent. And such an
addition is foreclosed by our canons of interpretation.6
¶45 Utah cases have not addressed this “mixed motive”
question directly. But they have spoken of an actual intent to hinder,
delay, or defraud when interpreting the Fraudulent Transfer Act or
its variants.7 And courts in other jurisdictions have interpreted
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6 See Nevares v. M.L.S., 2015 UT 34, ¶ 34, 345 P.3d 719 (rejecting an
interpretation of a statute on the ground that it ran afoul of the canon
against “read[ing] into the statute a limitation not expressly stated
on its face”); Olsen v. Eagle Mountain City, 2011 UT 10, ¶ 18, 248 P.3d
465 (declining to “add conditions . . . that are not set forth expressly
by legislation”).
7 See, e.g., Butler v. Wilkinson, 740 P.2d 1244, 1261 (Utah 1987)
(interpreting the Utah Fraudulent Conveyance Act to mean that “the
defendant must have an actual fraudulent intent” (emphasis added));
Selvage v. J.J. Johnson & Assocs., 910 P.2d 1252, 1261–62 (Utah Ct. App.
1996) (stating repeatedly that there was enough evidence to infer “an
actual intent to hinder, delay or defraud” in part because one
witness testified that, “part of the decision regarding the date for
placing Johnson into bankruptcy was to allow the one-year statute of
(continued . . .)
13
JONES v. MACKEY PRICE THOMPSON & OSTLER
Opinion of the Court
parallel language of the Uniform Fraudulent Transfer Act in the
same way—holding that actual intent to hinder, delay, or defraud
may be established on the ground that at least one of the defendant’s
motives was an impermissible one.8 We agree with these holdings
and disagree with the contrary view endorsed in other jurisdictions.9
We conclude that a plaintiff may carry her burden of showing that a
defendant had actual intent to hinder, delay, or defraud without
_____________________________________________________________
limitation to expire,” and thus the defendant’s actions “indicated an
intentional attempt to hinder, delay or defraud rather than merely a
bona fide purpose to reduce Johnson’s debt to [defendant]”
(emphases added)).
8 See, e.g., In re Blatstein, 192 F.3d 88, 97 (3d Cir. 1999) (“Our
inquiry under [the Pennsylvania UFTA] is whether [the] [debtor]
intended to hinder or delay a creditor. If he did, he had the intent
penalized by the statute notwithstanding any other motivation he
may have had for the transfer.” (third alteration in original) (citation
omitted)); In re Tronox Inc., 503 B.R. 239, 279 (Bankr. S.D.N.Y. 2013)
(holding that Oklahoma’s fraudulent transfer law does not require
the plaintiff to show that the “main or only purpose of the transfer
was defendant’s actual intent to damage a creditor” (citation and
internal quotation marks omitted)); In re Stanley, 384 B.R. 788, 799
(Bankr. S.D. Ohio 2008) (ruling that under Ohio’s UFTA, “‘[a]ctual
intent’ may be present whether the transfer was motivated entirely
or merely in part by a desire to hinder, delay or defraud creditors”);
Bertram v. WFI Stadium, Inc., 41 A.3d 1239, 1247 (D.C. 2012) (“[E]ven
if a debtor has at least one non-fraudulent motive for a transaction,
the additional motive of effecting the transaction to hinder a creditor
‘is a sufficient ground for an unassailable conclusion [of] . . .
fraudulent intent.’” (second and third alterations in original)
(citation omitted).
9 See, e.g., Tindall v. H & S Homes, LLC, 757 F. Supp. 2d 1339, 1364
(M.D. Ga. 2011) (“The facts here suggest that . . . Defendants’
dominant intent appears to have been to hinder, delay or defraud
Plaintiff . . . . ‘[Actual] intent will be found if the circumstances
indicate that the main or only purpose of the transfer was to prevent a
lawful creditor from collecting a debt.’” (emphases added) (citations
omitted)); In re Schneider, 417 B.R. 907, 915 (Bankr. N.D. Ill. 2009) (“If
the primary motivation for the transfer is based on fraudulent intent,
other motivations may be urged, but they are irrelevant.” (emphasis
added)).
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Opinion of the Court
showing that it was the defendant’s sole or primary motivation.
Thus, the question is whether there existed a legally sufficient
evidentiary basis for a reasonable jury to conclude that MPTO made
the payments from its trust account with an actual intent to hinder,
delay, or defraud Jones.
b. Standard of proof
¶46 We next consider what standard of proof Jones was required
to meet on his fraudulent transfer claim. The standard is clearly set
forth in the statute as it stands today. See UTAH CODE § 25-6-202.
Under the current version of the statute (effective May 2017), a
transfer made with “actual intent to hinder, delay, or defraud” is not
“fraudulent” but merely “voidable.” Id. § 25-6-202(1). And a claim
under this provision requires proof only by a “preponderance of the
evidence.” Id. § 25-6-202(3).
¶47 But this altered the operative burden of proof under Utah
law. The pre-2017 statute treated all transfers made with “actual
intent to hinder, delay, or defraud” as “fraudulent.” See UTAH CODE
§ 25-6-5(1) (2016). Under the old statute, any “transfer made or
obligation incurred by a debtor is fraudulent as to a creditor[] . . . if
the debtor made the transfer or incurred the obligation[] . . . with
actual intent to hinder, delay, or defraud any creditor of the debtor.”
Id. (emphasis added). And under Utah law, a claim of fraud must be
proven by clear and convincing evidence.10
¶48 This highlights an important distinction between the 2017
statute and the one it amended. Under the pre-2017 law, the plaintiff
bore the burden of proving all claims asserting intent to hinder,
_____________________________________________________________
10 See Daines v. Vincent, 2008 UT 51, ¶ 38, 190 P.3d 1269 (“To
prevail on a claim of fraudulent inducement, [the plaintiff] must
present clear and convincing evidence . . . .”); Armed Forces Ins. Exch.
v. Harrison, 2003 UT 14, ¶ 27, 70 P.3d 35 (“[F]raud is a wrong of such
nature that it must be shown by clear and convincing proof and will
not lie in mere suspicion or innuendo.” (alteration in original)
(citation and internal quotation marks omitted)); Lundstrom v. Radio
Corp. of Am., 405 P.2d 339, 341 (Utah 1965) (same); Ferrell v. Wiswell,
143 P. 582, 583–84 (Utah 1914) (“We have no right to overlook the
wholesome rule that where deeds or contracts are sought to be
vacated . . . upon the ground of fraud and deceit, the burden of
proving the alleged fraud is upon him who asserts it; moreover, that
the fraud must be established by clear and convincing evidence.”).
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JONES v. MACKEY PRICE THOMPSON & OSTLER
Opinion of the Court
delay, or defraud by clear and convincing evidence. But under the
statute that went into effect in May 2017, the plaintiff bears the
burden of proving such claims only by a preponderance of evidence.
¶49 This triggers the question of which version of the statute
applies. And that implicates standards set forth in our decision in
State v. Clark, 2011 UT 23, 251 P.3d 829. Under Clark “we apply the
law as it exists at the time of the event regulated by the law in
question.” Id. ¶ 13. “On matters of substance the parties’ primary
rights and duties are dictated by the law in effect at the time of their
underlying primary conduct (e.g., the conduct giving rise to a
criminal charge or civil claim).” Id. ¶ 14. “Thus, if a law regulates a
breach of contract or a tort, we apply the law as it exists . . . at the
time of the event giving rise to [the] cause of action.” Id. ¶ 13. “When
it comes to the parties’ procedural rights and responsibilities,
however, the relevant underlying conduct is different: the relevant
occurrence for such purposes is the underlying procedural act (e.g.,
filing a motion or seeking an appeal).” Id. ¶ 14. “The law governing
th[e] [relevant] procedural occurrence is thus the law in effect at the
time of the procedural act . . . .” Id.
¶50 We have not decided whether a statute altering the standard
of proof in a civil proceeding is substantive or procedural. Nor have
we decided whether a statute effecting such change can or should be
applied retroactively.11 And we need not do so here. The statute
lowering the standard of proof to a preponderance of evidence was
not in effect until May 2017. By then, all the relevant events even
arguably regulated by the statute—whether the substantive
“primary conduct” giving rise to the alleged fraudulent transfer
(December 2006), or the procedural filing of the relevant pleadings
(February 2007) and presentation of proof at trial (March 2017)—had
already taken place. For that reason there is no basis for application
of the new statute to this case. And Jones was thus required to prove
his claim for fraudulent transfer by clear and convincing evidence.
_____________________________________________________________
11 In criminal proceedings, we have held that “statutes which
‘alter the degree, or lessen the amount or measure, of the proof
which was made necessary to conviction when the crime was
committed’” may not be applied retroactively. See State v. Schreuder,
726 P.2d 1215, 1218 (Utah 1986) (citation omitted). But that decision
was based on the Ex Post Facto Clauses of the federal and state
constitutions, id., not the framework laid out in State v. Clark, 2011
UT 23, 251 P.3d 829.
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Opinion of the Court
c. Application of the law to the facts in the record
¶51 We may reverse the district court’s decision dismissing
Jones’s fraudulent transfer claim if we find that the jury had a
“legally sufficient evidentiary basis” to find for Jones on this claim.
UTAH R. CIV. P. 50(a)(1). Under the standards set forth above, we
must decide whether there was a sufficient basis for a reasonable
jury to find by clear and convincing evidence that MPTO had an
actual intent to hinder or delay Jones in seeking his share of the
funds. We reverse because we conclude that there was sufficient
evidence in the record for a reasonable jury to so conclude.
¶52 The district court leaned heavily on its finding that “the only
credible evidence in the record with respect to this transfer is that the
defendants became aware of a potential tax liability.” Conversely,
the court stated that there was “no evidence to contravene the
position of the defendants that they transferred this money solely in
order to avoid paying the taxes on it.” We see the record differently.
The court may have been correct to suggest that the only direct
evidence of MPTO’s motives went to tax avoidance. But
circumstantial evidence may also be considered. And we think there
was ample circumstantial evidence in the record to support a jury
determination (by clear and convincing evidence) that at least one of
MPTO’s motives was to hinder or delay Jones.
¶53 The district court also cited the fact that Jones had filed his
lawsuit several months before MPTO made the transfer. But this
would not have prevented the jury from drawing a negative
inference from the fact that, “before the transfer was made or
obligation was incurred, the debtor had been sued or threatened
with suit.” UTAH CODE § 25-6-5(2)(d) (2016). The fact that Jones filed
his lawsuit several months before the transfer doesn’t categorically
exonerate the defendants’ motivations. A reasonable jury could have
found that the fact the defendants were being sued cut in favor of
Jones. And given that the jury verdict awarded Jones virtually all the
Fen-Phen litigation funds, a reasonable jury could have decided that
the large transfers to Mackey and Price did not constitute “the value
of the consideration . . . reasonably equivalent to the value of the
asset transferred.” Id. § 25-6-5(2)(h). That too would have weighed in
favor of Jones.
¶54 We also think the district court placed too much weight on
MPTO’s supposed tax motivations. A reasonable jury could have
wondered why there was no written or paid advice regarding the
alleged tax problem—a potential weakness that Jones probed at trial.
A reasonable jury also could have found Mackey and Price to be
17
JONES v. MACKEY PRICE THOMPSON & OSTLER
Opinion of the Court
lacking credibility in general. At trial, Jones’s attorney tried to
uncover exactly how Mackey and Price arrived at the $165,000 figure
for Jones, as they did not involve Jones in their calculations. Price
testified that in calculating how many of the Fen-Phen funds to send
Jones, he and Mackey took into account damages that Jones caused
the firm in his handling of two specific cases. But Mackey testified to
just the opposite. Mackey said they did not take into account the fact
that Jones’s work had been “deficient” in certain cases. A reasonable
jury could have discounted Mackey’s and Price’s testimony in light
of this contradiction. At a minimum, a reasonable jury could have
concluded that Mackey and Price were being less than forthcoming
on the issue, as they failed to offer any kind of concrete formula for
MPTO’s payment to Jones and repeatedly insisted that they were
simply trying to “be fair to Mr. Jones” by looking at “various
factors.”
¶55 Any jury may be less inclined to find for a party whose
credibility is called into question. But Mackey’s and Price’s
credibility on this point was especially important. While MPTO’s tax
fears might adequately explain why MPTO distributed the funds
when it did, they do nothing to explain why MPTO paid out the sums
it did or why it chose to pay the entities it did. The decision to pay
Mackey, Price, and other creditors decreased the amount of Fen-
Phen funds in MPTO’s possession, and thus how much and how
quickly Jones could reasonably expect to recover in the event of a
favorable outcome at trial. If the jury believed that MPTO paid Jones
based on a reasonable, good-faith determination of what it believed
Jones was owed, the jury likely would have found that MPTO
simply made the transfers with the intent to avoid taxes and pay off
creditors. But if the jury believed that MPTO was trying to lowball
Jones and divest itself of the rest of the funds, the jury very well
could have inferred that MPTO was also trying to put itself in a
position where it no longer had what Jones claimed (and MPTO
believed) he was owed.
¶56 MPTO’s failure to explain its calculation of Jones’s payment,
as well as its possible offset for Jones’s alleged mishandling of cases,
make it more likely that MPTO also acted to hinder or delay Jones in
his efforts to recover his share of the Fen-Phen fees. We hold that
there was sufficient evidence for a reasonable jury to conclude by
clear and convincing evidence that MPTO acted with actual intent to
hinder or delay Jones. And we accordingly reverse the directed
verdict on this claim.
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Opinion of the Court
3. Punitive Damages
¶57 Jones next challenges the district court’s dismissal of his
claim for punitive damages. By statute, punitive damages are
generally available “only if compensatory or general damages are
awarded and it is established by clear and convincing evidence that
the acts or omissions of the tortfeasor are the result of willful and
malicious or intentionally fraudulent conduct, or conduct that
manifests a knowing and reckless indifference toward, and a
disregard of, the rights of others.” UTAH CODE § 78B-8-201(1)(a); id.
§ 78-18-1(1)(a) (2006). In rejecting Jones’s request for punitive
damages, the district court relied on the notion that there was “no
evidence of malice” on MPTO’s part. We reverse in light of our
decision to reinstate the fraudulent transfer claim. With the
fraudulent transfer claim in place, Jones is entitled to pursue his
claim for punitive damages.
B. Constructive Trust
¶58 Jones also challenges the district court’s ruling denying his
request for the imposition of a constructive trust. In the proceedings
below, Jones asserted that he had established all the prerequisites for
the imposition of a constructive trust. The district court declined to
reach that question, however, because it concluded that our ruling in
Jones I “specifically rejected the availability of a constructive trust as
a potential remedy” in this case.
¶59 We concede that there was a degree of imprecision in our
discussion in Jones I on this point. But we clarify that our analysis in
Jones I did not foreclose the possibility of a constructive trust in this
case and remand to allow the district court to decide in the first
instance whether Jones has established the preconditions for the
imposition of a constructive trust.
¶60 In Jones I we held that Jones had a right to a jury trial
because he sought “only money damages” and requested a “legal
remedy, not an equitable one.” 2015 UT 60, ¶ 51, 355 P.3d 1000. With
this in mind, the district court thought that Jones was seeking to
move the goalposts on remand. It thought it unfair to allow Jones to
“seek[] to obtain an equitable remedy (a constructive trust)” after
convincing this court that “his claim seeks a legal remedy (monetary
relief).”
¶61 We can see how the district court could read our Jones I
opinion in this way. But our analysis in Jones I, though not as precise
as it might have been, was not an indication that Jones could not
seek the imposition of a constructive trust. In Jones I we held only
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JONES v. MACKEY PRICE THOMPSON & OSTLER
Opinion of the Court
that the quantum meruit/unjust enrichment claim itself was legal in
nature. In the briefing in Jones I, Jones never proffered an intent to
forgo an equitable remedy in the aid of the collection on his legal
claim. Indeed, we noted that Jones was not just asserting a claim for
quantum meruit/unjust enrichment but also “ask[ing] the court to
hold the fees received by Mackey Price in constructive trust.” Id. ¶ 51
n.58. And our analysis did not foreclose the availability of such
relief; the question was simply not presented to us.
¶62 We thus conclude that Jones I does not categorically
foreclose Jones from seeking the imposition of a constructive trust.
Our case law supports the availability of equitable remedies in
support of the collection of damages on a legal claim. See Ong Int’l
(U.S.A.) Inc. v. 11th Ave. Corp., 850 P.2d 447, 457 (Utah 1993); see also
RESTATEMENT (THIRD) OF RESTITUTION & UNJUST ENRICHMENT § 4
cmt. d (AM. LAW INST. 2011). Constructive trusts, moreover, have
properly been imposed to aid in collecting on a legal claim.12 And
that is all that Jones has asked for here.
¶63 We reverse on that basis. In so doing we are not endorsing
the propriety of a constructive trust in the circumstances of this case.
See Wilcox v. Anchor Wate, Co., 2007 UT 39, ¶ 34, 164 P.3d 353
(identifying factors for consideration in the imposition of a
constructive trust). We leave the resolution of that question for the
district court on remand.
C. New Claims in Post-Judgment Proceedings
¶64 Jones’s last contention is his challenge to the district court’s
determination that he could not prosecute his claims for fraudulent
transfer, alter ego, and statutory violations in post-judgment
proceedings. The district court held that such claims were foreclosed
under our decision in Brigham Young University v. Tremco Consultants,
Inc., 2007 UT 17, 156 P.3d 782. We agree and affirm.
_____________________________________________________________
12 See Butler, 740 P.2d at 1253, 1262 (ruling that plaintiffs were
entitled to a constructive trust on their fraudulent conveyance claim
to prevent defendants from unjustly enriching themselves from
proceeds not yet received from a land sale); RESTATEMENT (THIRD) OF
RESTITUTION & UNJUST ENRICHMENT § 4 cmt. e, illus. 9–10 (AM. LAW
INST. 2011) (endorsing the availability of a constructive trust in
connection with a claim for collection of embezzled funds).
20
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Opinion of the Court
¶65 Tremco involved a plaintiff who sought to execute a
judgment on the assets of persons not named as parties to the
lawsuit or judgment. Id. ¶¶ 12–13, 36. In that case, the court held that
claims founded on “alter ego” and “fraudulent transfer” are “civil
action[s] that must be prosecuted in the manner prescribed in the
Utah Rules of Civil Procedure, commencing with the filing of a
summons and complaint and not the abbreviated post-judgment
collection procedures of rule 69.” Id. ¶ 39. “In light of the status
conferred through the development of the common law and
legislative action upon alter ego and fraudulent transfer” claims, a
plaintiff may not seek to advance these claims in post-judgment
proceedings in an attempt to extend liability for a judgment to new
parties. Id.; see also id. ¶ 45. Instead, such claims must be initiated and
litigated in the ordinary course under our rules of civil procedure,
with rights of discovery, motion practice, trial, etc. Id. ¶ 40.
¶66 Jones seeks to distinguish this case on the ground that he is
invoking rules 21 and 25 of the Utah Rules of Civil Procedure in an
attempt to “substitute” Mackey, Price, and Mackey Price Law as
“successors” to MPTO. In support of this view, Jones notes that the
district court has already allowed Mackey Price, LLC to be
substituted as a successor entity under rules 21 and 25. Jones claims
that his bid to add Mackey, Price, and Mackey Price Law is no
different.
¶67 We disagree. The proceedings seeking to add Mackey Price,
LLC as a party to the judgment are distinct from the proceedings at
issue here. See infra ¶¶ 91–93. When Jones sought to extend the
judgment to Mackey Price, LLC he was asserting only that Mackey
Price, LLC was a successor to MPTO that should be substituted in as
a named party to the judgment. But the proceedings seeking to add
Mackey, Price, and Mackey Price Law were different. There, Jones
asserted new, substantive common-law and statutory claims—
fraudulent transfer, alter ego, and other statutory violations—against
an unnamed, unjoined party. These are precisely the kinds of claims
that cannot be asserted in post-judgment proceedings under Tremco.
¶68 We affirm on this basis.13 Jones’s claims against Mackey,
Price, and Mackey Price Law are separate civil actions with
_____________________________________________________________
13 For reasons explained below, see infra ¶¶ 89–90, the district
court may have also lacked jurisdiction to allow Jones to assert new
claims for liability against Mackey, Price, and Mackey Price Law.
Jones’s July 27, 2017 notice of appeal became effective, and generally
(continued . . .)
21
JONES v. MACKEY PRICE THOMPSON & OSTLER
Opinion of the Court
common-law or statutory status triggering the need to initiate new
proceedings in accordance with the Utah Rules of Civil Procedure.
Jones has no right to bypass the protections of our rules by tacking
on a brand-new claim in the abbreviated mechanism of a
post-judgment proceeding. This was our holding in Tremco and we
stand by it here. Jones has identified no persuasive basis for
distinguishing our precedent or for departing from it, and we thus
reinforce Tremco and affirm on that basis.
III. CROSS-APPEALS
¶69 Both MPTO and Mackey Price, LLC raise claims on
cross-appeal: (A) MPTO challenges the district court’s decision to
allow Jones’s expert witness to testify in support of his quantum
meruit/unjust enrichment claim; and (B) Mackey Price, LLC asserts
that the district court erred in adding it as a party to the judgment
under rules 21 and 25 of the Utah Rules of Civil Procedure. We
affirm in part and reverse in part.
A. MPTO’s Cross-Appeal
¶70 MPTO challenges the district court’s decision allowing the
jury to consider expert testimony from John Hansen, the expert
witness called by Jones in support of his claim for quantum
meruit/unjust enrichment. In pretrial proceedings, Jones had
produced an expert witness report for Hansen under the
then-applicable version of rule 26 of the Utah Rules of Civil
_____________________________________________________________
deprived the court of jurisdiction over most matters, when the
district court entered its amended final judgment on December 1,
2017, see infra ¶¶ 89–90—before the district court denied Jones’s
request to assert new claims of liability against these parties.
Despite the notice of appeal, however, the district court retained
jurisdiction over certain post-judgment proceedings. See Garver v.
Rosenberg, 2014 UT 42, ¶ 10 n.12, 347 P.3d 380. So the court retained
the power to decide whether it was appropriate to allow Jones to
assert new claims for liability against Mackey, Price, and Mackey
Price Law. It had jurisdiction to determine its own jurisdiction. In
rejecting Jones’s attempt to assert new claims for liability, the district
court was effectively concluding that such claims could not properly
be asserted within a post-judgment proceeding. That would hold
both as a matter of jurisdiction and under Tremco.
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Opinion of the Court
Procedure.14 MPTO had also had the opportunity to depose Hansen.
But at trial in 2017, MPTO made objections (some clearer than
others) that suggested it believed that Hansen’s testimony was going
beyond the scope of the testimony forecast in the report and
deposition and should be foreclosed on that basis. Specifically,
MPTO objected to Hansen’s drawing during his testimony, use of
handwritten notes, and alleged reliance on information and
methodology not cited in his initial report and deposition. The
district court overruled all of MPTO’s objections regarding
inadequate disclosure, although at one point the district judge
appeared to indicate that he had not read Hansen’s report. MPTO
also argued that since Jones no longer had a contract claim, Hansen
could not testify as to what types of considerations typically go into
a fee-splitting arrangement. The district court overruled this latter
point by citing our decision in Jones I.
¶71 After trial in its JNOV motion, MPTO also objected to the
admissibility of Hansen’s testimony on the ground that it was
foreclosed by prior summary judgment rulings that suggested that
the funds MPTO paid to Thompson and Skousen never properly
belonged to MPTO. MPTO argued that these funds therefore could
not be considered part of the benefit Jones conferred on MPTO.
Again, the district court rejected MPTO’s arguments.
¶72 MPTO contends that the quantum meruit/unjust
enrichment jury verdict cannot stand without Hansen’s testimony.
And it seeks to overturn the verdict on the above grounds. We
review the district court’s determinations on the admissibility of
expert testimony for abuse of discretion, Northgate Vill. Dev., LC v.
City of Orem, 2019 UT 59, ¶ 14, 450 P.3d 1117, and affirm.
1. Adequacy of Jones’s Pretrial Disclosures
¶73 The 2006 version of rule 26(a)(3)(B) of the Utah Rules of
Civil Procedure stated that an expert report should contain “the
subject matter on which the expert is expected to testify; the
substance of the facts and opinions to which the expert is expected to
testify; [and] a summary of the grounds for each opinion.” As the
_____________________________________________________________
14 Here, the adequacy of Jones’s pretrial disclosures is judged by
the standard applicable at the time he was required to make them.
See supra ¶ 49.
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JONES v. MACKEY PRICE THOMPSON & OSTLER
Opinion of the Court
language suggests, this was not a demanding standard.15
Nonetheless, MPTO argues that Hansen’s testimony was
inadequately disclosed because his trial testimony strayed too far
from his expert report and deposition. We disagree.
¶74 At trial, MPTO was not always clear about the precise
nature of its objections—or even about the fact that it was making a
rule 26 objection. And the imprecisions in MPTO’s objections had an
effect on the district court’s stated grounds for its rulings. Yet MPTO
did object at least twice that Hansen was straying from his report.
And in the context in which the objections were raised, we affirm the
district court’s rulings.
¶75 MPTO’s first objection—to Hansen making an illustration to
help convey what he was saying—clearly lacked merit. Hansen was
simply mapping out what he was explaining, not introducing a new
exhibit or document. It was in this context that the district court
indicated that it “ha[d]n’t seen the report and ha[d]n’t seen the
exhibit” that Hansen was in the process of drawing.16 The district
court’s statement made sense in this context. This was not an
admission by the court that it had no basis for assessing the viability
of any of MPTO’s objections. It was an acknowledgement that the
expert was entitled to make an illustration expanding on the
testimony in his report, and on that point we agree.
_____________________________________________________________
15 The Advisory Committee Notes to the new rule 26 illustrate
how the old rule operated in practice: “[B]ecause experts often were
allowed to deviate from the opinions disclosed, attorneys typically
would take the expert’s deposition to ensure the expert would not
offer ‘surprise’ testimony at trial, thereby increasing rather than
decreasing the overall cost. The amendments seek to remedy this
and other costs associated with expert discovery by, among other
things, allowing the opponent to choose either a deposition of the
expert or a written report, but not both; in the case of written reports,
requiring more comprehensive disclosures, signed by the expert, and
making clear that experts will not be allowed to testify beyond what
is fairly disclosed in a report . . . .”
16 MPTO did specifically raise the objection that “[t]here’s
nothing in [his report] about the fee split with any clients[,]” but this
was also in the context of the objection to Hansen’s illustration. And
again we affirm the decision to overrule that objection.
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Opinion of the Court
¶76 MPTO’s next objection was to Hansen’s discussion of
Thompson’s and Skousen’s affiliation with “national class counsel.”
But after the district court struck Hansen’s initial answer, MPTO
dropped the matter. To be sure, MPTO also challenged Hansen’s
alleged reliance on documents not disclosed in his report, including
Hansen’s use of some last-minute notes on the stand. But these notes
didn’t stray from the substance of Hansen’s prior disclosures, and
the judge marked Hansen’s notes as an exhibit for MPTO’s counsel
to use. As for Hansen’s other supposed reliance on information “not
in the report,” Hansen’s testimony was based on what he had heard
others testify at trial. The district court was well within its rights to
overrule MPTO’s vague objections on these points.17
¶77 MPTO claims that the district court never conducted a
proper rule 26 analysis because it incorrectly relied on Jones I to
excuse Hansen’s “new,” inadequately disclosed testimony. But the
record belies this. At trial, MPTO’s main—and continuing—objection
apparently went to Hansen’s discussion of fee-splitting
arrangements in general. MPTO’s counsel argued that Hansen’s
testimony on this point was inappropriate since there was “no
agreement” between Jones and MPTO and the trial was focused on
Jones’s quantum meruit/unjust enrichment claim. It was in this
context that the district court finally quoted from Jones I and
reasoned that “[t]o the extent that the [Utah] Supreme Court has
given me some leeway or some discretion in allowing an expert
witness or evidence regarding the other appropriate factors, that’s
what Mr. Hansen is doing. . . . I believe that this not only is
appropriate but, basically, is what the Supreme Court has ordered
me to allow.” We affirm that ruling. The district court was simply
making the point that even though there was no contract between
Jones and MPTO, it was appropriate for Hansen to testify about
what factors usually went into fee-splitting agreements because
those factors were relevant for determining the reasonable value of
Jones’s services. It was not ruling that Jones I allowed Jones to skirt
_____________________________________________________________
17 MPTO also cross-examined Hansen extensively about specific
figures that were not in his report, repeatedly invoking the Utah
Rules of Civil Procedure. But haranguing a witness on
cross-examination about the plaintiff’s obligations under the rules is
not the same as making a specific rule 26 objection for the district
court to rule on.
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Opinion of the Court
rule 26 pretrial disclosure requirements regarding Hansen’s
testimony.
¶78 The district court’s ruling on MPTO’s JNOV motion
confirms that the court relied on Hansen’s testimony at trial and not
on Jones I in overruling MPTO’s rule 26 objections. In that ruling the
court said that it was “not persuaded that Mr. Hansen strayed from
the substance of his expert report at trial,” but rather found that “Mr.
Hansen testified consistent with his pretrial disclosures.”
¶79 We agree. Hansen’s report stated that it was based on his
“evaluation and professional opinion” and his experience as a law
firm shareholder, practicing attorney in the Salt Lake area for
twenty-five years, former managing partner of a law firm, and
former president of the Utah Chapter of the Federal Bar Association.
It explained that he has specific knowledge and experience with
personal injury claims, contingency fees, and fee allocations between
multiple attorneys. It also named factors that Hansen took into
account in concluding that Jones was entitled to 80 percent of the
Fen-Phen fees. These factors included Jones’s unique employment
standing, personal expenses, commitment, leadership, time, and
origination. In his deposition, Hansen likewise highlighted his
professional experience with contingency fee cases and fee-splitting
between attorneys, including how fee splits often depend on the
circumstances surrounding the representation. He said that he
arrived at the 80 percent figure “based on [his] experience in dealing
with contingency fees and fair resolution” and factors such as
risk-taking, leadership, commitment, out-of-pocket expenses, and
work distribution.
¶80 MPTO asserts that Hansen’s trial testimony “deviated
materially” from these pretrial disclosures because he used terms
like “standard practices in the community” and “community
standards” and gave more specific percentage breakdowns and
dollar figures. But Hansen’s testimony included numerous
references to his experience with contingency fee and fee-splitting
cases, based on his personal practice and observations during the
course of his professional career. The bulk of his testimony
concerned the factors listed in his report. All Hansen did at trial was
lump these factors into discrete categories (risks, resources, and
responsibilities). The same factors still led to the same 80 percent
determination.
¶81 Hansen’s experience, methodology, and opinions were all
highlighted in his report and deposition. MPTO was thus on notice
about the substance of Hansen’s trial testimony. There is no undue
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surprise when experts summarize factors listed in their report into
succinct groupings or use slightly different terminology. We hold
that Hansen’s testimony was properly admitted and that Jones’s
disclosure of Hansen’s expert testimony was adequate under the
then-applicable rule 26 of the Utah Rules of Civil Procedure.
2. Hansen’s Inclusion of the Thompson & Skousen Payment
¶82 In post-trial proceedings, MPTO also contended that
Hansen’s testimony should have been excluded because it was
contrary to established facts. Specifically, MPTO argued that
Hansen’s testimony was deficient because it included MPTO’s
payment to Thompson & Skousen as part of the reasonable value of
Jones’s services. According to MPTO, past rulings had “created a
‘ceiling’ on Plaintiff’s damages . . . that Mr. Hansen failed to account
for.”
¶83 The district court was not bound by past district court
judges’ summary judgment rulings. See Build, Inc. v. Utah Dep’t of
Transp., 2018 UT 34, ¶¶ 30–31, 428 P.3d 995. In any case, the past
rulings concerned whether Jones could pursue a claim against
Thompson & Skousen for the payment it received from MPTO. But
whether Jones has a claim against Thompson & Skousen has nothing
to do with how much benefit Jones conferred on MPTO. MPTO
asserts that not accounting for the Thompson & Skousen payment
means that MPTO ultimately lost $59,000 processing the Fen-Phen
suits. This, MPTO, argues, contradicts Jones’s theory that MPTO was
unjustly enriched. But whether MPTO made a good deal when all is
said and done does not affect the value of the benefit that MPTO
received from Jones. Like the district court, this court “does not view
as unreasonable Mr. Hansen’s decision to use the total amount
received by Defendants as the starting point for Plaintiff’s quantum
meruit claim.”
¶84 We have even less trouble affirming on this point because
MPTO could have presented evidence of the Thompson & Skousen
payment to the jury and argued that Jones’s damages should be
reduced accordingly. But it chose not to. In fact, it affirmatively
prevented the jury from hearing evidence of the Thompson &
Skousen payment. Having kept evidence of the payment from the
jury, MPTO cannot now complain that the jury didn’t account for it
in its calculations.
¶85 Hansen’s testimony was adequately disclosed. It was not
contrary to law or established facts. Because Hansen’s testimony was
properly admitted, the jury’s verdict was based on sufficient
evidence and not contrary to law. We affirm the district court’s
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JONES v. MACKEY PRICE THOMPSON & OSTLER
Opinion of the Court
admission of Hansen’s testimony and its denial of MPTO’s JNOV
motion.
B. Mackey Price, LLC’s Cross-Appeal
¶86 Mackey Price, LLC challenges the district court’s authority
to add it to the judgment as a successor in interest to MPTO. A lower
court’s interpretation of the rules of civil procedure is a question of
law we review for correctness. Belnap v. Howard, 2019 UT 9, ¶ 7, 437
P.3d 355. We reverse in part and remand. We conclude that the
district court retained jurisdiction at the time it considered Jones’s
substitution motion and had the authority to use post-verdict
proceedings to determine whether Mackey Price, LLC should be
added as a successor in interest under rules 21 and 25 of the Utah
Rules of Civil Procedure. But we reverse on the ground that the
district court was required, after it rejected Mackey Price, LLC’s
jurisdictional challenges, to afford Mackey Price, LLC an
opportunity to challenge the assertion that it was in fact a successor
to MPTO.
1. Jurisdiction over Post-Verdict Proceedings
¶87 Mackey Price, LLC argues that the district court lost “subject
matter jurisdiction” once it denied the JNOV motion on September
22, 2017.18 On that date, Mackey Price, LLC claims that Jones’s July
27 notice of appeal became effective and stripped the district court of
jurisdiction over the case. And for that reason Mackey Price, LLC
claims that the district court had no authority to add it to the
judgment on November 16, 2017.
¶88 The district court ruled that it retained jurisdiction over the
case because an amended judgment—which the district court had
also ordered in its September 22 ruling—had yet to be entered. For
that reason, the district court concluded that there was still no final
judgment to effectively appeal.
¶89 We agree with the district court. Granted, the general rule is
that “jurisdiction transfers from the district court to the appellate
court” for most matters “[o]nce a notice of appeal is filed.” Garver v.
Rosenberg, 2014 UT 42, ¶ 10, 347 P.3d 380. But this general rule is
_____________________________________________________________
18 Mackey Price, LLC acknowledges that the district court
retained jurisdiction to rule on its rule 50(b) JNOV motion, filed July
27, 2017. See UTAH R. APP. P. 4(b)(1)(A) (listing a rule 50(b) motion as
one that tolls the time for parties to appeal a judgment).
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Opinion of the Court
subject to important exceptions19—including the principle that “a
premature notice of appeal does not effectuate a transfer of
jurisdiction to review the merits of a case.” Id. ¶ 15. And a notice of
appeal is premature (and thus ineffective) if it is filed before the
entry of final judgment. See id. ¶ 12 (“[J]urisdiction transfers from the
district court to the appellate court only where: (1) the district court
has . . . announced its decision, and a subsequent final judgment is
entered in conformity with the announcement; and (2) the appealing
party files a timely notice of appeal.” (emphases added)).
¶90 In its September 22 ruling, the district court rejected MPTO’s
JNOV motion and explicitly directed Jones to prepare an amended
judgment (at that time, to remove Mackey Price, LLC). At that point,
Jones’s July 27 notice of appeal was premature, and the district court
retained jurisdiction. See id. ¶ 10 (“[A]n untimely notice may ‘trigger
stern consequences,’ precluding the appellate court from exercising
jurisdiction.” (citation omitted)). When the district court granted
Jones’s motion to re-add Mackey Price, LLC to the judgment on
November 16, there still had been no appealable “final judgment . . .
entered in conformity with the announcement” the district court had
made in its September 22 ruling. It was not until December 1 that the
district court entered a final, amended judgment. So it was not until
that date that Jones’s July 27 notice of appeal became effective and
deprived the district court of jurisdiction over most matters. See
UTAH R. APP. P. 4(c) (“A notice of appeal filed after the
announcement of a decision, judgment, or order but before entry of
the judgment or order shall be treated as filed after such entry and
on the day thereof.”). On that basis we conclude that the district
court retained jurisdiction to decide Jones’s rule 21/25 motion on
November 16.
_____________________________________________________________
19 Our cases also recognize another exception that could
potentially apply here—district courts retain jurisdiction over some
post-judgment proceedings, including “orders relating to
enforcement of a judgment when a judgment is not stayed pending
appeal.” Garver v. Rosenberg, 2014 UT 42, ¶ 10 n.12, 347 P.3d 380. A
proper motion for substitution of a successor entity could
conceivably fall within a district court’s jurisdiction over certain
post-judgment proceedings. See supra ¶ 68 n.13. We need not decide
the matter here, however, because we conclude that the notice of
appeal did not become effective until after the challenged decision.
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JONES v. MACKEY PRICE THOMPSON & OSTLER
Opinion of the Court
2. Substitution Under Rules 21 and 25
¶91 “In case of any transfer of interest,” rule 25 provides that an
“action may be continued by or against the original party, unless the
court upon motion directs the person to whom the interest is
transferred to be substituted in the action or joined with the original
party.” UTAH R. CIV. P. 25(c). Under the terms of the rule, the party
seeking to add a successor entity need only “serve the motion and
any notice of hearing . . . upon persons not parties in the manner
provided in Rule 4 for the service of a summons.” Id. 25(a)(1), (c). So
substitution is available under rule 25 after service of a motion,
notice of a hearing, and appropriate proceedings on the question of
whether the new party is an entity “to whom the [original party’s]
interest is transferred.” Id. 25(c). Such a motion, moreover, may be
filed after a jury verdict. See id. 21 (“Parties may be dropped or
added by order of the court on motion of any party or of its own
initiative at any stage of the action and on such terms as are just.”
(emphasis added)).20 These rules thus provide authority for a court
_____________________________________________________________
20 Rule 21 ostensibly deals with the “[m]isjoinder and
[n]on-joinder of [p]arties,” while rule 25 handles the more specific
process of “[s]ubstitution.” But the rules clearly overlap. See UTAH R.
CIV. P. 25(c) (allowing a successor interest to be “substituted in the
action or joined with the original party” (emphasis added)); id. 21
(allowing parties to be generally “dropped or added”). Importantly,
moreover, rule 25(a)(1) places a ninety-day time limit only on the
substitution of successors for deceased parties. And that implies that
there is no similar time limit on substitutions of successors in
interest. See ANTONIN SCALIA & BRYAN A. GARNER, READING LAW 107
(2012) (“The expression of one thing implies the exclusion of
others.”).
Federal authorities applying a parallel federal rule agree. Because
federal rule 25(c) is “wholly permissive,” a leading federal treatise
holds that “there is no time limit on moving to substitute under its
provisions”—so long as the district court otherwise retains
jurisdiction. See 7C CHARLES ALAN WRIGHT & ARTHUR R. MILLER,
FEDERAL PRACTICE & PROCEDURE § 1958 (3d ed. 2018); id. (noting that
the “most significant feature” of the nearly identical federal rule
25(c) is that it “does not require that anything be done after an
interest has been transferred,” because “[t]he action may be
continued by or against the original party, and the judgment will be
binding on the successor in interest even though the successor is not
(continued . . .)
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Opinion of the Court
to add a party to a judgment as a successor in interest to a party to
the original proceedings—even after the jury has returned a verdict.
¶92 Where mere substitution of a successor entity is sought,
there is no requirement that the plaintiff initiate a new proceeding by
service of a summons and complaint. Brigham Young University v.
Tremco Consultants, Inc., 2007 UT 17, ¶ 39, 156 P.3d 782, is
distinguishable. Tremco, as noted above, see supra ¶¶ 64–68, requires
an entirely new proceeding where the plaintiff is asserting a new
common-law or statutory claim—like alter ego or fraudulent
transfer—that seeks to establish freestanding, independent liability
for a new party. 2017 UT 17, ¶ 39 (“In light of the status conferred
through the development of the common law and legislative action
upon alter ego and fraudulent transfer, it is apparent that a claim
founded on either theory is a civil action that must be prosecuted in
the manner prescribed in the Utah Rules of Civil Procedure,
commencing with the filing of a summons and complaint and not
the abbreviated post-judgment collection procedures of rule 69.”).
The domain of rule 25 substitution is different. Here we are dealing
not with a new cause of action with its own separate elements but
the extension of liability on an entity properly joined to the suit as a
successor to the existing defendant. As noted, rule 25 specifically
allows for a more truncated process under the umbrella of the initial
proceeding, requiring only that a party seeking to add an alleged
successor “serve the motion and any notice of hearing” under rule 4.
UTAH R. CIV. P. 25(a)(1), (c).
¶93 We reject Mackey Price, LLC’s jurisdictional arguments on
this basis.21 Because Jones was seeking to add Mackey Price, LLC as
_____________________________________________________________
named”). The federal counterpart to our rule 25(c) has thus been
deemed to allow for substitution not just post-verdict, but
post-judgment (usually where necessary to facilitate enforcement of a
judgment). See, e.g., Negrón-Almeda v. Santiago, 579 F.3d 45, 52 (1st
Cir. 2009); Luxliner P.L. Exp., Co. v. RDI/Luxliner, Inc., 13 F.3d 69, 70
(3d Cir. 1993); Panther Pumps & Equip. Co., Inc. v. Hydrocraft, Inc., 566
F.2d 8, 23 (7th Cir. 1977); TFG–Indiana, L.P. v. Hanco, Inc., No. 2:12–
cv–00146 DN, 2014 WL 6473108, at *1 (D. Utah Nov. 18, 2014).
21We also reject Mackey Price, LLC’s suggestion that adding a
successor entity to a judgment under rules 21 and 25 runs afoul of
“due process.” Our opinion in Brigham Young University v. Tremco
Consultants, Inc., does suggest that the unnamed parties in that case
were “denied their requisite measure of due process of law when the
(continued . . .)
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JONES v. MACKEY PRICE THOMPSON & OSTLER
Opinion of the Court
a successor entity to MPTO, we hold that Jones was not required to
initiate a new proceeding against Mackey Price, LLC by service of a
summons and complaint. Jones was entitled to seek substitution of
Mackey Price, LLC for MPTO under rules 21 and 25.
3. Default of Mackey Price, LLC
¶94 Our conclusion that rule 25 substitution is available in
post-verdict proceedings does not exhaust all of Mackey Price, LLC’s
challenges to the proceedings below. Mackey Price, LLC also claims
that it was entitled to be heard on the merits—on whether it was in
_____________________________________________________________
district court extended liability to them.” 2007 UT 17, ¶ 27, 156 P.3d
782. But Tremco nowhere held that the substitution of a successor
entity is a violation of the Due Process Clause of the Utah
Constitution. Quite the contrary. Our holding in Tremco was rooted
in the language and structure of our rules of civil procedure. See id.
¶ 29 (holding that a party “who pursue[s] civil actions in conformity
with the rules of civil procedure” is presumptively entitled “to
invoke the coercive power of the state to seize property or to
command a party to conform its conduct to the court’s decrees”).
The problem in Tremco was the plaintiff’s failure to pursue civil
litigation in conformance with our rules. While we made general
reference to the principle of “due process,” we never established any
freestanding constitutional right. Instead we held that “[o]ur rules of
civil procedure lend operational expression” to the “abstract”
promise of “due process” and are “‘designed to provide a pattern of
regularity of procedure which the parties and the courts [can] follow
and rely upon.’” Id. (second alteration in original) (citation omitted).
We reiterate those principles here. Mackey Price, LLC’s rights to
due process are given “operational expression” in our rules of civil
procedure. Those rights are adequately protected by the fair and
proper application of rules 21 and 25. And Mackey Price, LLC has
provided no basis for the establishment of a “due process” right that
provides greater protections than those established in our civil rules.
See Neese v. Utah Bd. of Pardons & Parole, 2017 UT 89, ¶ 100, 416 P.3d
663 (explaining that the content of “general, abstract” constitutional
principles like the Due Process Clause must be based on how the
founding generation would have understood those principles); In re
Discipline of Steffensen, 2016 UT 18, ¶ 7, 373 P.3d 186 (“[T]he Due
Process Clause is not a free-wheeling constitutional license for courts
to assure fairness on a case-by-case basis.”).
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Opinion of the Court
fact a successor entity to MPTO. On this point we agree, and reverse
and remand.
¶95 Because Mackey Price, LLC was not a party to the original
proceedings, the district court required Jones to serve the motion on
the LLC pursuant to rule 4. Jones did so. That was all the notice to
which Mackey Price, LLC was entitled. But the district court never
required that Jones demonstrate that Mackey Price, LLC was in fact a
successor in interest to MPTO. Instead, the district court considered
a memorandum submitted by Mackey Price, LLC and defaulted the
LLC on the ground that its memo challenged only “procedural
issues” that the district court found unavailing:
To the extent Mackey Price, LLC had disputed the
factual allegations for joinder, the Court was prepared
to schedule an evidentiary hearing to resolve the
disputes. But Mackey Price, LLC does not dispute the
factual allegations and, instead, focuses its opposition
entirely on procedural issues. The Court has now
resolved the procedural arguments against Mackey
Price, LLC. And because Mackey Price, LLC raised no
argument or opposition to the merits of the Motion,
there remains nothing to litigate. Accordingly, the
Court determines that Plaintiff is entitled to all relief
requested in the Motion.
¶96 This was error. Mackey Price, LLC was entitled to appear
specially and challenge the district court’s jurisdiction and then
argue the merits of the rule 25 motion if and when the district court
rejected its procedural challenge. Mackey Price, LLC was not
required to immediately address the merits of the rule 25 motion, as
the district court suggested, or to affirmatively request an
evidentiary hearing for disposition on the merits, as Jones suggests
on appeal. As a threshold matter of procedure, Mackey Price, LLC
had every right to make a special appearance and to challenge the
court’s jurisdiction. Once the district court rejected that challenge, it
should have given Mackey Price, LLC an opportunity to be heard on
the merits.22
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22 In fairness to the district court, this procedure is not clearly set
forth in our rules or case law. We reverse nonetheless, however,
because the prescribed procedure reflects the threshold nature of the
(continued . . .)
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JONES v. MACKEY PRICE THOMPSON & OSTLER
Opinion of the Court
¶97 The procedure for challenging the attachment of a non-party
as a successor in interest under rule 25 may thus find a parallel in
that for filing a rule 12(b) motion. When a party contests a court’s
jurisdiction under rule 12(b), it is not required to affirmatively
preserve the right to argue the merits of the underlying claim. It may
simply make its 12(b) argument, receive an adverse ruling from the
district court, and then contest the merits. This is the notion of a
special appearance that is baked into rule 12. See UTAH R. CIV. P.
12(a)(1) (“If the court denies the [Rule 12] motion . . . the responsive
pleading shall be served within 14 days after notice of the court’s
action.” (emphasis added)); see also id. 12(d) (“The defenses
specifically enumerated (1)-(7) in subdivision (b) of this rule,
whether made in a pleading or by motion . . . shall be heard and
determined before trial on application of any party, unless the court
orders that the hearings and determination thereof be deferred until
the trial.” (emphasis added)). And we believe that such a process is
appropriate in the context of a rule 25 substitution motion as well—a
point that our advisory committee may wish to take up in a
proposed amendment to this rule.
¶98 This principle should have governed here. Once the district
court determined that it had jurisdiction over Mackey Price, LLC, it
should have required Jones to show that Mackey Price, LLC was in
fact a successor in interest to MPTO. The district court should not
have taken Mackey Price, LLC’s silence during a special appearance
as a concession or endorsement of Jones’s position. We reverse and
remand for a resolution of Mackey Price, LLC’s status on the
merits—under procedures deemed appropriate by the district court
on remand.
IV. CONCLUSION
¶99 We reverse the dismissal of Jones’s fraudulent transfer and
punitive damages claims, the decision that a constructive trust was
categorically unavailable, and the default determination that Mackey
Price, LLC was a successor in interest to MPTO. But we affirm the
district court in all other respects and remand for further
proceedings consistent with this opinion.
_____________________________________________________________
jurisdictional inquiry and parallels how our civil rules handle
analogous procedural matters.
34