Gregory and Swapp v. Kranendonk , 424 P.3d 897 ( 2018 )

This opinion is subject to revision before final
publication in the Pacific Reporter
2018 UT 36IN THE
SUPREME COURT OF THE STATE OF UTAH
GREGORY & SWAPP, PLLC,
and ERIK HIGHBERG,
Appellants and Cross-Appellees,
v.
JODI KRANENDONK,
Appellee and Cross-Appellant.
No. 20160377
Filed July 26, 2018
On Direct Appeal
Third District, Salt Lake
The Honorable Royal I. Hansen
No. 100923050
Attorneys:
Gregory J. Sanders, Clemens A. Landau, Patrick C. Burt,
Michael D. Zimmerman, Troy L. Booher, Salt Lake City,
for appellants and cross-appellees
Shaun L. Peck, John D. Luthy, Brandon J. Baxter,
Matthew David Lorz, Logan, for appellee and cross-appellant
CHIEF JUSTICE DURRANT authored the opinion of the Court,
in which ASSOCIATE CHIEF JUSTICE LEE, JUSTICE PEARCE,
JUSTICE PETERSEN, and JUDGE MORTENSEN joined.
Having recused himself, JUSTICE HIMONAS did not participate
herein; COURT OF APPEALS JUDGE DAVID N. MORTENSEN sat.
CHIEF JUSTICE DURRANT, opinion of the Court:
Introduction
¶1 Erik Highberg, a personal injury attorney for Gregory &
Swapp, PLLC, failed to bring a claim against two truck drivers who
severely injured Mr. Highberg’s client, Jodi Kranendonk, before the
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Opinion of the Court
statute of limitations ran on Ms. Kranendonk’s claim. Mr. Highberg
then failed to disclose to Ms. Kranendonk for ten months the fact
that he missed the statute of limitations. During that time, he sought
other legal avenues to correct his mistake. Ms. Kranendonk
ultimately sued Mr. Highberg and Gregory & Swapp (collectively,
the Swapp Defendants) for legal malpractice, breach of contract,
breach of fiduciary duty, and negligent hiring, training, and
supervision.
¶2 At trial, Mr. Highberg testified that he withheld information
from Ms. Kranendonk because he wanted to protect her from stress
and worry. In response to this testimony, she sought to admit two
statements in which he had written that she was becoming “a pain
[in] the ass” and was “a moron.” The district court refused, under
rule 403 of the Utah Rules of Evidence, to admit these statements and
the trial went forward.
¶3 The four claims ultimately went to a jury, which found in
favor of Ms. Kranendonk on each. The jury first awarded her
$750,000, the amount the jurors believed she would have received if
Mr. Highberg had timely brought her personal injury claim against
the truck drivers. The jury also awarded her $2.75 million for
non-economic damages, i.e., emotional distress she sustained as the
result of Mr. Highberg’s malpractice in this case. This second award
did not relate in any way to the emotional distress she sustained
from the original personal injury. The jury did not award punitive
damages.
¶4 After the jury’s decision, Ms. Kranendonk moved for
attorney fees and litigation expenses on the ground that the Swapp
Defendants had breached their fiduciary duties. The district court
awarded her $1,166,666.67 in attorney fees—the amount she owed
under her contingency fee agreement—but did not award her
litigation expenses.
¶5 After trial, the Swapp Defendants moved for judgment
notwithstanding the verdict on the jury’s second award of $2.75
million, arguing that non-economic damages unrelated to the
original personal injury claim should not be awarded in this
instance. The district court denied their motion.
¶6 The Swapp Defendants challenge this decision on appeal.
Specifically, they argue that this case does not qualify as one of the
“rare” cases where non-economic damages can be recovered for
breach of contract, because emotional distress was not a foreseeable
result of a breach in this case and was not explicitly contemplated by
the parties when they formed their agreement. They also argue that
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the non-economic damage award cannot be supported under a
breach of fiduciary claim, because there is insufficient evidence to
establish an actionable breach of fiduciary duty. We agree with both
arguments and so vacate the jury’s $2.75 million award for
non-economic damages.
¶7 We also vacate the court’s attorney fees award because
Ms. Kranendonk’s breach of fiduciary duty claim failed and this was
the only claim that could support this award. And, for the same
reason, we hold that the district court correctly denied her litigation
expenses.
¶8 Lastly, Ms. Kranendonk challenges the district court’s
decision to exclude Mr. Highberg’s two written statements—
statements she argues are necessary to support her prayer for
punitive damages. But because she fails on her breach of fiduciary
claim, punitive damages cannot be awarded in this case. Any
decision we could render on this issue therefore would be
meaningless and so we hold that this issue is moot.
Background
¶9 On June 19, 2006, Jodi Kranendonk suffered severe injuries
when two semi-trucks collided with her car outside of Portland,
Oregon. She retained Gregory & Swapp, PLLC dba Craig Swapp &
Associates and Erik Highberg to bring a negligence action against
the truckers. Mr. Highberg filed a complaint in Oregon, but failed to
properly serve the truckers within sixty days, as required under
Oregon law. A year later, in June 2008, he filed the complaint a
second time and again failed to timely serve the truckers. But this
time his failure was fatal—the statute of limitations had run on the
claim. Ms. Kranendonk’s negligence claims against the truckers were
subsequently dismissed with prejudice.
¶10 After realizing that Ms. Kranendonk’s claim was
time-barred, and in an attempt to fix his error in missing the
limitation deadline, Mr. Highberg moved in an Oregon state court
for an extension of time to serve the truckers, which was denied in
November 2008. He filed an appeal of his denial in February 2009,
which failed. During this ten-month period, Mr. Highberg failed to
disclose to Ms. Kranendonk, despite having multiple conversations
with her about her case, that her claim was now time-barred. Finally,
in May or June of 2009, he revealed to her that he had failed to bring
a valid action within the applicable statute of limitations and that she
could no longer bring a successful personal injury claim against the
truckers.
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¶11 Ms. Kranendonk was “devastated” at the news. As
Mr. Highberg was aware, she was a “very anxious person” and the
news was catastrophic to her. She retained a new law firm that filed
legal malpractice claims against the Swapp Defendants on her
behalf. Her complaint alleged claims of legal malpractice, breach of
contract, breach of fiduciary duty, fraudulent non-disclosure, and
negligent hiring, training, and supervision.1 Ms. Kranendonk also
sought punitive damages. The case went to trial in 2015.
¶12 At a pre-trial hearing, Ms. Kranendonk unsuccessfully
attempted to bring in two statements Mr. Highberg had written
describing his interaction with her. The first indicated that he felt she
was becoming “a pain [in] the ass,” and the second showed that he
believed she was “a moron.” The district court kept out these
statements under rule 403 of the Utah Rules of Evidence. At trial,
Mr. Highberg testified that he did not disclose to Ms. Kranendonk
the fact that the statute of limitations had run on her claim, because
he cared for her and did not want to cause her more stress. In
response to this testimony, Ms. Kranendonk moved to introduce the
two statements to show that Mr. Highberg’s actions were not
motivated by his solicitude for her well-being, but rather that he
harbored ill will toward her. The district court rejected this motion,
stating that the two statements were “not directly on point” and
“hardly suggest that he was acting against her interest intentionally”
or “that he didn’t care about her.”
¶13 When the trial concluded, the district court provided the
jury with instructions regarding each of the five claims brought by
Ms. Kranendonk. Importantly, the court instructed the jury that the
conduct required to establish her legal malpractice claim was not the
same as the conduct required to establish her breach of fiduciary
duty claim. The court defined legal malpractice as failing “to use the
same degree of care, skill, judgment and diligence used by
reasonably careful attorneys under similar circumstances.” But the
court instructed the jury that it need not determine whether the
Swapp Defendants committed legal malpractice because it “ha[d]
found the [Swapp Defendants] negligently performed legal
services.” Accordingly, the jury was only asked to determine
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1 Ms. Kranendonk also alleged a fraud claim but later withdrew
this claim at trial.
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whether the Swapp Defendants’ legal malpractice “was a cause of
harm to [Ms.] Kranendonk.”
¶14 The jury was asked, however, to determine whether the
Swapp Defendants had breached their fiduciary duties in this case.
The court then set forth the conduct that would constitute a breach
of fiduciary duty. It explained that in order for Ms. Kranendonk to
prevail on this claim she must show that the Swapp Defendants
“conceal[ed] important facts or law from [her]; . . . deceiv[ed]
[her]; . . . plac[ed] their own interests ahead of the interests of [her]
by failing to inform [her] of a conflict of interest created by the
[Swapp Defendants’] acts or omissions;” or “fail[ed] to advise [her]
to seek competent counsel after a conflict of interest arose between
the [Swapp Defendants] and [her].” The court also stated that
Ms. Kranendonk must prove that “[t]he acts or omissions of the
[Swapp Defendants] were a cause of [her] injury.”
¶15 The jury rendered a verdict in favor of Ms. Kranendonk on
legal malpractice, breach of contract, breach of fiduciary duty, and
negligent hiring, training, and supervision grounds, and awarded
her $750,000 to compensate for the injuries she suffered in the
underlying accident. These damages included $80,000 in economic
damages and $670,000 in non-economic damages related to the
accident. The jury also awarded her an additional $2.75 million for
non-economic damages she sustained as a result of the Swapp
Defendants’ malpractice. The jury did not award punitive damages.
¶16 The Swapp Defendants thereafter filed a motion for
judgment notwithstanding the verdict (JNOV) under rule 50(b) of
the Utah Rules of Civil Procedure. They sought to negate
Ms. Kranendonk’s entitlement to the $2.75 million jury award of
non-economic damages under all four legal theories—legal
malpractice, breach of contract, breach of fiduciary duty, and
negligent hiring, training, and supervision. In Ms. Kranendonk’s
response to the motion, she conceded that non-economic damages
unrelated to the underlying case were not available under her legal
malpractice and negligent hiring, training, and supervision claims,
but she argued that they were available under her breach of contract
and breach of fiduciary duty claims. The district court agreed and
denied the Swapp Defendants’ motion, upholding the $2.75 million
jury award under these two claims.
¶17 After the court upheld the jury’s verdict in post-trial
proceedings, Ms. Kranendonk moved for attorney fees and the
district court awarded her $1,166,666.67—the contingency fee
amount she agreed to pay when she hired the new law firm to
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represent her in her legal malpractice suit. The district court also
awarded her $17,977.82 in costs, but did not award the additional
$177,911.64 she had sought in litigation expenses.
¶18 The Swapp Defendants timely appealed the district court’s
decision to uphold the $2.75 million jury award for non-economic
damages unrelated to the personal injury case and the court’s award
of attorney fees. The Swapp Defendants do not challenge the
$750,000 jury award for damages related to the personal injury case.
Ms. Kranendonk cross-appeals the district court’s decision to
exclude Mr. Highberg’s two statements demonstrating his ill will
toward her and the court’s decision not to award litigation expenses.
We have jurisdiction to hear this case pursuant to Utah Code section
78A-3-102(3)(j).
Standard of Review
¶19 The Swapp Defendants raise two issues on appeal: first,
whether the district court erred in denying their JNOV motion to set
aside the $2.75 million jury award of non-economic damages arising
from their malpractice; and second, whether the court erred in
awarding Ms. Kranendonk attorney fees in the amount of the full
contingency fee. “[A] district court may grant a JNOV motion only if
there is no ‘basis in the evidence, including reasonable inferences
which could be drawn therefrom, to support the jury’s
determination.’”2 But “[w]e review rulings on JNOV motions for
correctness.”3 Likewise, “[w]hether attorney fees are recoverable in
an action is a question of law, which we review for correctness.”4
¶20 Ms. Kranendonk raises two additional issues for review:
whether the district court erred in refusing to award litigation
expenses and whether the court erred in excluding Mr. Highberg’s
two statements under rule 403 of the Utah Rules of Evidence.
Whether a court may award litigation expenses is a question of law
and so is reviewed for correctness.5 But “we review [the amount of
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2 ASC Utah, Inc. v. Wolf Mountain Resorts, L.C., 2013 UT 24, ¶ 18,
309 P.3d 201 (citation omitted).
3 Id.4 Fericks v. Lucy Ann Soffe Tr., 2004 UT 85, ¶ 22, 100 P.3d 1200(citation omitted).
5 Campbell v. State Farm Mut. Auto. Ins. Co., 2001 UT 89, ¶ 127, 65
P.3d 1134, rev’d on other grounds, 538 U.S. 408 (2003).
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an award of litigation expenses] under an abuse of discretion
standard.”6 Also, “[w]e review a trial court’s decision to admit or
exclude evidence under Rule 403 of the Utah Rules of Evidence
under an abuse of discretion standard, and will not overturn a lower
court’s determination of admissibility unless it is beyond the limits
of reasonability.”7
Analysis
¶21 On appeal, the Swapp Defendants first argue that the
district court erred in refusing to vacate the $2.75 million jury award
for non-economic damages unrelated to the personal injury case.
Specifically, they argue that Utah law precludes recovery of damages
beyond the amount the plaintiff would have recovered in the
underlying case—i.e., “the case within the case.” They assert that
such damages are precluded whether the plaintiff brings a
malpractice suit under the theory of legal malpractice, breach of
contract, or breach of fiduciary duty.
¶22 We have observed on many occasions that “a malpractice
action . . . necessarily presents a ‘case within a case.’”8 In other
words, a case involving a malpractice action necessarily depends
upon an attorney’s conduct in a separate, underlying case and
whether, absent such conduct, “the underlying suit would have been
successful.”9 While we typically have looked to the underlying case
when addressing the evidence necessary to establish proximate
cause in legal malpractice cases,10 we have never considered whether
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6 Id. ¶ 128.
7Goebel v. Salt Lake City S. R.R. Co., 2004 UT 80, ¶ 35 n.1, 104 P.3d
1185 (citation omitted).
8 Glencore, Ltd. v. Ince, 972 P.2d 376, 380 (Utah 1998) (citation
omitted); see also Harline v. Barker, 912 P.2d 433, 439 (Utah 1996)
(holding that a legal malpractice case is based in part on a “suit
within a suit” or “trial-within-a-trial” (citation omitted)).
9 Harline, 912 P.2d at 439.
10 See Christensen & Jensen, P.C. v. Barrett & Daines, 2008 UT 64,
¶ 26, 194 P.3d 931 (“[I]n order to meet the standard for causation for
a breach of fiduciary duty in a legal malpractice action, ‘clients must
show that if the attorney had adhered to the ordinary standards of
professional conduct[,] the client would have benefitted.’” (citation
omitted)); Glencore, 972 P.2d at 380 (stating that when determining
(Continued)
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damages are available beyond those damages awardable in the
underlying case. This case therefore presents an issue of first
impression.
¶23 The court of appeals has, however, recently addressed this
issue. In a prior appeal in this same case, the court of appeals held
that damages in a malpractice suit should generally be limited to
those damages recoverable in the underlying case.11 Specifically, it
asserted that “[t]he measure of damages is generally held to be the
value of the plaintiff’s lost claim, that is, the actual amount the
plaintiff would have recovered had she been successful in the
underlying case.”12 The court relied on other jurisdictions for this
assertion.13
¶24 As a general matter, the court of appeals is correct. In most
legal malpractice cases, whether brought under negligence, breach of
contract, or breach of fiduciary duty theories, “a plaintiff’s
damages . . . are limited to the actual amount the plaintiff would
have recovered had he been successful in the underlying case.”14 But
proximate cause in malpractice, “[t]he objective is to establish what
the result [of the underlying litigation] should have been” (second
alteration in original) (emphasis omitted) (citation omitted)); Harline,
912 P.2d at 439 (“To prove proximate cause in legal malpractice cases
. . . the plaintiff must show that absent the attorney’s negligence, the
underlying suit would have been successful.”).
11See Kranendonk v. Gregory & Swapp, PLLC, 2014 UT App 36, ¶ 28,
320 P.3d 689.
12 Id.13 Id. (citing Eastman v. Messner, 721 N.E.2d 1154, 1158 (Ill. 1999)
(“[A] plaintiff’s damages in a malpractice suit are limited to the
actual amount the plaintiff would have recovered had he been
successful in the underlying case.”)); Schultheis v. Franke, 658 N.E.2d
932, 939–40 (Ind. Ct. App. 1995) (“The law in this state, like the law
in most jurisdictions, generally provides that the measure of
damages in a legal malpractice case is the value of the plaintiff’s lost
claim.”); Campagnola v. Mulholland, Minion & Roe, 555 N.E.2d 611, 613
(N.Y. 1990) (stating that the measure of damages in a legal
malpractice suit is “the value of the claim lost”); 3 Ronald E. Mallen
& Jeffrey M. Smith, LEGAL MALPRACTICE § 21.1, at 3 (2013 ed.)).
14 Eastman, 721 N.E.2d at 1158.
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there may be exceptions to this rule depending on which legal theory
is asserted.
¶25 We have long held that “[a]n action for legal malpractice
may be framed conceptually as either a tort or a breach of
contract.”15 So, when bringing a legal malpractice suit,
“[c]lients . . . may sue for damages based on breach of contract,
breach of fiduciary duty, or negligence.”16 Usually, the elements
required to prove negligence and breach of fiduciary duty in the
legal malpractice context are “substantially the same,”17 so a
plaintiff’s choice to classify its malpractice claim under one of the
two theories does not cause “any difference in result.”18 This is so
because “[m]ost rules applicable to negligence actions also apply to
actions for breach of fiduciary duty.”19 But an action for breach of
contract is “very different” from these other two legal malpractice
theories.20 The “[r]ules of contract, not rules of legal malpractice,
govern an action” brought under a breach of contract theory.21 In
that vein, damages that may be awarded under these theories may
also differ.
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15Christensen & Jensen, 2008 UT 64, ¶ 21 (quoting Dunn v. McKay,
Burton, McMurray & Thurman, 584 P.2d 894, 904 (Utah 1978)
(Maughan, J., dissenting)).
16 Id. (citation omitted).
17 Id. ¶ 23; see also id. ¶¶ 22–23 (“In a legal malpractice action
based on negligence, a plaintiff must prove ‘(i) an attorney-client
relationship; (ii) a duty of the attorney to the client arising from their
relationship; (iii) a breach of that duty; (iv) a causal connection
between the breach of duty and the resulting injury to the client; and
(v) actual damages.’ . . . [T]he elements required for a legal
malpractice claim based on a breach of fiduciary duty [are]: ‘(1) an
attorney-client relationship; (2) breach of the attorney’s fiduciary
duty to the client; (3) causation, both actual and proximate; and
(4) damages suffered by the client.’” (citations omitted)).
18 Id. ¶ 23 n.7 (citation omitted).
19 Id. (citation omitted).
20 Id. ¶ 24.
21 Id. (alteration in original) (citation omitted).
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¶26 Below, the district court held that non-economic damages
may be awarded beyond damages based on the case within the case
when the plaintiff establishes legal malpractice under a breach of
contract or breach of fiduciary duty theory.22 The Swapp Defendants
challenge the court’s conclusion on these two grounds. Accordingly,
we address whether an award of non-economic damages unrelated
to the underlying case is appropriate under these two legal theories.
I. Breach of Contract
¶27 The Swapp Defendants first argue that the $2.75 million jury
award for non-economic damages cannot be supported under a
breach of contract theory in this case. Because Ms. Kranendonk
cannot point to specific language or obligations in her contract with
Mr. Highberg that show that emotional damages were contemplated
by them at the time they formed the contract, we hold that the
district court erred in affirming the $2.75 million jury award under
this theory.
¶28 Normally “there is no recovery of damages for mental
anguish stemming from a breach of contract.”23 This is so because
“an award of damages in a breach of contract case attempts to ‘place
the aggrieved party in the same economic position the party would
have been in if the contract was not breached.’”24 In the legal
malpractice context, this means that typically the only emotional
damages recoverable under a breach of contract theory are those
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22 The court did not, however, address whether a negligence
theory of malpractice could support damages beyond
case-within-a-case damages and the parties do not argue this theory
on appeal. The district court reasoned that because “the jury verdict
on Plaintiff’s claims for breach of fiduciary duty and breach of
contract provides an adequate basis for the award of noneconomic
damages,” the court “need not address the Defendants’ arguments
regarding Plaintiff’s claims for professional negligence and negligent
training.”
23Cabaness v. Thomas, 2010 UT 23, ¶ 72, 232 P.3d 486 (citation
omitted).
24Christensen & Jensen, P.C. v. Barrett & Daines, 2008 UT 64, ¶ 26,
194 P.3d 931 (citation omitted).
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stemming from the injury in the underlying case. But we have noted
that an exception to this rule may exist in “unusual circumstances.”25
¶29 In Cabaness v. Thomas, we held that “a non-breaching party
may recover general and/or consequential damages related to
emotional distress or mental anguish arising from a breach of
contract when such damages were both a foreseeable result of the
breach of contract and explicitly within the contemplation of the
parties at the time the contract was entered into.”26 These
requirements guarantee that “the applicability of such damages ‘will
always hinge upon the nature and language of the contract and the
reasonable expectations of the parties.’”27 Accordingly, we held that
the exception is implicated only when the plaintiff can point to
“specific language” and “obligations” in the contract that show that
emotional damages were in contemplation of the parties at the time
the parties formed the contract.28 But this seldom happens.
¶30 Emotional damages for a breach of contract are awardable
only in “rare cases” because “such damages are rarely a foreseeable
result of breach.”29 While “[s]ome type of mental anguish, anxiety, or
distress is apt to result from the breach of any contract which causes
pecuniary loss,” it is well established that these damages are not “the
‘natural and probable’ result of the breach” and “are deemed to be
too remote to have been in the contemplation of the parties at the
time the contract was entered into to be considered as an element of
compensatory damages.”30 Something in the contract, therefore,
must show that the parties contemplated granting relief for more
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25 Cabaness, 2010 UT 23, ¶ 72.
26 Id. ¶ 75.
27Id. (quoting Beck v. Farmers Ins. Exch., 701 P.2d 795, 802 (Utah
1985)).
28 Id. ¶ 76. While we stated in Cabaness that we focus on the
“reasonable expectations of the parties,” id. ¶ 75, our focus has
always been on the contract language. So while we do consider the
expectations of the parties when determining damages in the breach
of contract context, we consider only those expectations that are
apparent from the language of the contract.
29 Id. ¶¶ 74–75.
30 Id. ¶ 74 (alteration in original) (citations omitted).
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than the typical mental anguish and discouragement that results
from a breach of contract.
¶31 Cabaness illustrates this point. In Cabaness, we reversed a
district court’s grant of summary judgment against an employee
seeking emotional damages for a breach of contract by his employer.
There, we reviewed the employment contract, which stated that the
employer would “not tolerate verbal or physical conduct by any
employee which harasses, disrupts, or interferes with another’s work
performance or which creates an intimidating, offensive, or hostile
work environment.”31 We noted the significance of this provision,
stating that it appeared to be “specifically directed toward matters of
mental concern and solicitude.”32 We explained that given “the
unusual nature of the contractual obligations and the specific
language of the contractual provisions,” it was “possibil[e] that
emotional damages were within the contemplation of the parties at
the time the contract was entered.”33 We therefore concluded that
questions of fact remained regarding whether “emotional damages
were within the contemplation of the parties at the time the contract
was formed,” and accordingly remanded the case to the district
court to make such a determination.34 Cabaness therefore stands for
the proposition that non-economic damages are supported under a
breach of contract theory only where the specific language and
nature of the contract demonstrates that such damages were
contemplated.35
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31 Id. ¶ 76.
32 Id.
33 Id.
34 Id.
35 It could be argued that the result we reached on the facts of
Cabaness does not square with the standard we articulated in that
case, which is that there must be an explicit provision in the contract
contemplating emotional distress damages. The provision at issue in
Cabaness did not expressly state that a breach of the employment
contract could produce emotional damages. See Cabaness, 2010 UT 23,
¶ 76. It merely stated that the employer would not tolerate
harassment or other conduct that would create a hostile work
environment. See id. We held that this provision created a genuine
issue of material fact as to whether the parties contemplated
(Continued)
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¶32 But here the district court misapplied Cabaness and the
“rare” exception we articulated there. The court held that there was
competent evidence supporting the finding that Ms. Kranendonk’s
emotional distress damages were foreseeable and explicitly
contemplated by the parties. But the court failed to review the
contract at issue. Instead, it improperly relied on testimony and
extrinsic evidence to determine that emotional distress damages
were contemplated. Specifically, it relied on testimony that
Mr. Highberg knew Ms. Kranendonk was a “very anxious person,”
language from the Swapp Defendants’ website asserting that they
will “eliminate[] the stress and uncertainty of dealing with [an]
accident,” and Craig Swapp’s testimony, in which he acknowledged
that “one of the Defendants’ jobs is to minimize [] stress, to take care
of the problems, to take care of the difficulties of the case, to manage
the case and get everything done so the client doesn’t have to stress
about that.” This was error. As Cabaness mandates, the district court
should have analyzed whether the nature and language of the
contract plainly show that non-economic damages were explicitly
contemplated by the parties at the time the contract was formed.
Had it done so, the court would have concluded that nothing in the
contract suggests non-economic damages were contemplated here.
¶33 First, nothing in the “nature” of the contract signals that
emotional distress damages were a foreseeable result of a breach.
The Restatement (Second) of Contracts states that “[r]ecovery for
emotional disturbance will be excluded unless . . . the breach is of
such a kind that serious emotional disturbance was a particularly
likely result.”36 Most courts that have found emotional distress
damages are a foreseeable result of a breach in legal malpractice
cases have done so because the character or purpose of the contract
involved some “peculiarly personal subject matter[]”37—like
emotional distress damages at the time they formed the contract. Id.We did not hold that the provision illustrated that the parties
expressly contemplated emotional distress damages. To the extent
that Cabaness is inconsistent with our holding today, we disavow its
holding to conform to this opinion.
36RESTATEMENT (SECOND) OF CONTRACTS § 353 (1981) (emphasis
added).
37 Miranda v. Said, 836 N.W.2d 8, 24 (Iowa 2013) (citation omitted).
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wrongful conviction,38 custody of a child,39 or mental health
determinations.40 As the Eleventh Circuit has explained:
[I]n the ordinary commercial contract, damages are not
recoverable for disappointment, even amounting to
alleged anguish, because of breach. Such damages are
. . . too remote. But these are contracts entered into for
the accomplishment of a commercial purpose.
Pecuniary interests are paramount . . . . [I]t has long
been settled that recovery therefor was not
contemplated by the parties as the natural and
probable result of the breach. Yet not all contracts are
purely commercial in their nature. Some involve rights
we cherish, dignities we respect, emotions recognized
by all as both sacred and personal. In such cases the
award of damages for mental distress and suffering
[are] commonplace . . . .41
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38 See D. Dusty Rhoades & Laura W. Morgan, Recovery for
Emotional Distress Damages in Attorney Malpractice Actions, 45 S.C. L.
REV. 837, 845 (1994) (“When an attorney’s negligence causes a client’s
loss of liberty, courts have been willing to step away from the
general rule barring damages for emotional distress.”).
39 See Person v. Behnke, 611 N.E.2d 1350, 1353 (Ill. App. Ct. 1993)
(“We hold that a valid claim exists for noneconomic damages
resulting from a plaintiff’s loss of custody and visitation of his
children which allegedly resulted from an attorney’s negligence.”);
McEvoy v. Helikson, 562 P.2d 540, 544 (Or. 1977) (holding plaintiff
could obtain emotional distress damages when attorney negligence
surrounding divorce and child custody proceedings resulted in
plaintiff’s ex-wife fleeing to Switzerland with their child), superseded
on other grounds by Or. R. Civ. P. 18, as recognized in Moore v. Willis,
767 P.2d 62, 64 (Or. 1988).
40 Wagenmann v. Adams, 829 F.2d 196, 221–22 (1st Cir. 1987)
(holding emotional distress damages are available when attorney
negligence results in the client being “forcibly deprived of his liberty
and dispatched to a mental hospital”).
41 Sheely v. MRI Radiology Network, P.A., 505 F.3d 1173, 1200 (11th
Cir. 2007) (second, third, fourth, and sixth alterations in original)
(quoting Stewart v. Rudner, 84 N.W.2d 816, 823 (Mich. 1957)).
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We agree with these courts. We therefore look to the nature of the
contractual obligations in assessing whether emotional distress
damages may be awardable under breach of contract claims.
Specifically, we look to whether the subject matter of the contract
involves peculiarly personal interests, as opposed to rights
stemming from monetary interests. When the primary nature of the
contractual obligations involves peculiarly personal interests, as
opposed to pecuniary interests, emotional distress damages
stemming from a breach of that contract may be warranted. But that
is not the case here.
¶34 Here, the nature of the contract formed by the Swapp
Defendants did not involve peculiarly personal interests.
Ms. Kranendonk hired Mr. Highberg to bring a personal injury suit
to recoup pecuniary damages for her injuries. So the purpose of
Mr. Highberg’s contractual obligation was solely to obtain monetary
compensation—not to protect personal interests. Although an
argument can be made that Ms. Kranendonk also contracted, as she
suggests, for peace of mind, the peace of mind a plaintiff seeks in a
personal injury case is generally still tied to monetary interests—e.g.,
having sufficient funds to pay medical expenses and other bills while
recovering from a physical injury. Because pecuniary interests were
paramount in this case, we cannot say that the mental anguish
Ms. Kranendonk suffered as a result of the breach was explicitly
contemplated by the parties.
¶35 Additionally, the specific language of the contract does not
show that emotional distress damages were explicitly contemplated
by the parties. The contract between the Swapp Defendants and
Ms. Kranendonk is void of any language related to mental or
emotional harm. Instead, the contract here simply stated that the
Swapp Defendants “will utilize its best efforts to obtain a settlement
or judgment for [Ms. Kranendonk] through negotiation or other legal
action.” Ms. Kranendonk argues that this “best effort” provision
includes making sure the client has peace of mind. But this provision
specifically provides that the Swapp Defendants will use their best
efforts to secure a monetary “settlement or judgment.” So even the
“best efforts” provision is not ambiguous in its focus on a pecuniary,
and not a personal, interest. And, in fact, every section of the
contract deals solely with pecuniary interests.42 The language of the
_____________________________________________________________
The first section of the contract states that the “Purpose of
42
Employment” is for the Swapp Defendants to “represent you with
(Continued)
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Opinion of the Court
contract therefore does not show that emotional damages were
explicitly contemplated.43
respect to your claim for damages” and to “utilize its best efforts to
obtain a settlement or judgment.” The second section deals with the
attorney fee structure, setting forth the percentage the Swapp
Defendants will be paid of the monetary settlement or judgment
they obtain. The third section of the contract outlines who will pay
for costs in the litigation. And the last section states that the Swapp
Defendants “make no warranties or representations regarding the
amount of recovery, if any, or the successful outcome of your claim.”
These provisions clearly show the contract was made primarily for
pecuniary purposes.
Ms. Kranendonk argues, however, that this contract resembles
contracts beneficiaries make with insurance companies—contracts
we have held can warrant “damages for mental anguish” because “it
is axiomatic that insurance frequently is purchased not only to
provide funds in case of loss, but to provide peace of mind for the
insured or his beneficiaries.” Beck, 701 P.2d at 802. As stated above,
an argument can be made that clients retain attorneys in personal
injury cases not only to obtain monetary compensation, but also to
provide peace of mind, and therefore mental anguish is fairly
contemplated in the contract. But the Beck court went on to say that
“[t]he foreseeability of any such damages will always hinge upon the
nature and language of the contract and the reasonable expectations
of the parties” and that “damages will not be available for the mere
disappointment, frustration, or anxiety normally experienced in the
process of filing an insurance claim and negotiating a settlement
with the insurer.” Id. at 802 & n.6. As discussed above, the nature
and language of the contract here do not support emotional distress
damages in this case.
43 Ms. Kranendonk argues that the Swapp Defendants’ website
ensures that it will reduce the stress a client has in his or her
personal injury claim—an argument the district court also relied on
in its determination to uphold the jury award of non-economic
damages. But Ms. Kranendonk and the district court are mistaken.
The website is not part of the four corners of the document we
review. “When interpreting a contract, [we] first look[] to the
contract’s four corners to determine the parties’ intentions, which are
controlling.” Strohm v. ClearOne Commc’ns, Inc., 2013 UT 21, ¶ 34, 308
P.3d 424 (citation omitted). And, when “the language within the four
corners of the contract is unambiguous[,] . . . [we] determine[] the
(Continued)
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¶36 Because the nature and language of the contract in this case
do not show that emotional distress damages were explicitly
contemplated by the parties, the district court erred in upholding the
$2.75 million jury award for non-economic damages under a breach
of contract theory.
II. Breach of Fiduciary Duty
¶37 In addition to breach of contract, the district court denied
the Swapp Defendants’ JNOV motion on the $2.75 million jury
award under a separate legal theory—breach of fiduciary duty.44 The
Swapp Defendants argue that this was also error. Specifically, they
contend that Mr. Highberg’s breach did not rise to a level of willful
or outrageous conduct—a standard they believe a plaintiff must
meet in order to obtain an award of emotional distress damages
under a breach of fiduciary duty theory. Additionally, they argue
that even if emotional distress damages are recoverable under a
breach of fiduciary duty theory in this case, the $2.75 million jury
award should be vacated because it was not sufficiently supported
by the evidence. We agree with their second argument. There is no
evidentiary basis on which the jury could have awarded
non-economic damages for Ms. Kranendonk’s breach of fiduciary
duty claim. Accordingly, we do not reach the important question of
when, if ever, a plaintiff may recover emotional distress damages for
a breach of fiduciary duty in the attorney malpractice context.
¶38 In order to win on a breach of fiduciary duty claim in the
legal malpractice context, a plaintiff must show (1) the existence of
“an attorney-client relationship; (2) breach of the attorney’s fiduciary
duty to the client; (3) causation, both actual and proximate; and
parties’ intentions from the plain meaning of the contractual
language as a matter of law.” Fairbourn Commercial Inc. v. Am. Hous.
Partners, Inc., 2004 UT 54, ¶ 10, 94 P.3d 292 (second alteration in
original) (citation omitted). Here, the contract is unambiguous and
so we do not consider the website as evidence of the parties’
intentions in signing the agreement.
44 The district court did not engage with this theory on the merits.
It simply stated that it chose not to review, under the law of the case
doctrine, its prior decision that the jury “could properly award
Plaintiff noneconomic damages based on a finding of liability with
regard to any of Plaintiff’s malpractice claims, ” including breach of
fiduciary duty.
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Opinion of the Court
(4) damages suffered by the client.”45 While each of these elements is
necessary to establish a claim, we have identified the causation
element as a particularly “crucial and distinct element to any
malpractice claim.”46 As such, we have held that “an abundance of
evidence as to breach of duty cannot make up for a deficiency of
evidence as to causation.”47
¶39 The Swapp Defendants moved for JNOV below in part on
causation grounds, which the district court denied. They argue this
was error. In order for the Swapp Defendants “[t]o successfully
attack a district court’s refusal to grant a motion for JNOV based on
insufficient evidence, [they] ‘must marshal all the evidence
supporting the verdict and then demonstrate that, even viewing the
evidence in the light most favorable to that verdict, the evidence is
not sufficient to support it.’”48 “[W]e will not overturn a verdict on a
challenge to the sufficiency of evidence ‘[s]o long as some evidence
and reasonable inferences support the jury’s findings.’” 49 While this
is a “very difficult burden” to meet,50 we hold that the Swapp
Defendants have met it.
¶40 The Swapp Defendants have demonstrated that no
competent evidence exists to support the jury’s determination of
causation or damages. After reviewing all the evidence supporting
the jury award of non-economic damages, we conclude that it is clear
Ms. Kranendonk failed to provide any evidence that Mr. Highberg’s
breach of the fiduciary duty (i.e., his intentional concealment of the
fact that he had lost her claim) caused the mental anguish she
experienced. Rather, the evidence provided at trial shows only that
she suffered emotional distress due to Mr. Highberg’s legal
malpractice (i.e., his negligence in losing her claim)—conduct that
_____________________________________________________________
45Christensen & Jensen, P.C. v. Barrett & Daines, 2008 UT 64, ¶ 23,
194 P.3d 931 (citation omitted).
46 USA Power, LLC v. PacifiCorp, 2016 UT 20, ¶ 113, 372 P.3d 629.
47 Id.48 Hess v. Canberra Dev. Co., 2011 UT 22, ¶ 28, 254 P.3d 161(citation omitted).
49 Brewer v. Denver & Rio Grande W. R.R., 2001 UT 77, ¶ 36, 31 P.3d
557 (second alteration in original) (citation omitted).
50Grossen v. DeWitt, 1999 UT App 167, ¶ 7, 982 P.2d 581 (citation
omitted).
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both parties concede cannot support non-economic damages in this
case.51
¶41 For example, Mr. Kranendonk testified at trial that
Ms. Kranendonk was “devastated,” “hysterical,” and “crying,” but
this testimony was in response to her counsel’s question regarding
her reaction “when she got the news that her case was dead.”
Mr. Kranendonk said nothing about Ms. Kranendonk’s reaction
when she learned about Mr. Highberg’s intentional concealment and
dishonesty—the actions necessary to support her breach of fiduciary
duty claim. Similarly, Ms. Kranendonk testified herself that she “was
devastated,” but did so only in response to counsel’s question
regarding “[h]ow [she] fe[lt] when [she] heard that [her] case was
dead?” And she again testified that she was devastated “[o]nce
[Mr. Highberg] told us that the ball had been dropped.” She never
testified about her reaction to learning that Mr. Highberg had
intentionally concealed his legal malpractice from her for ten
months, or whether his intentional actions caused her harm.
¶42 We have held that “[i]f the client’s injury would have
occurred regardless of the attorney’s action, then there is no
causation.”52 Here, nothing at trial suggests that Ms. Kranendonk’s
mental distress would not have occurred if Mr. Highberg had not
concealed his malpractice from her. Instead, the evidence suggests
that Ms. Kranendonk’s mental distress would still have occurred
because Mr. Highberg lost her personal injury claim.
¶43 Additionally, none of the testimony from the Swapp
Defendants shows that Ms. Kranendonk’s emotional damage
occurred as a result of Mr. Highberg’s concealment and dishonesty
in this case. At trial, Mr. Highberg testified that “[i]t could be
emotionally catastrophic” to his clients if he didn’t do his job well.
Mr. Swapp likewise acknowledged that an attorney’s malpractice
“can create a lot of mental distress” for a client, and that determining
how to get the case resolved after the malpractice “can be very
stressful for a client.” But testimony that an attorney’s malpractice
_____________________________________________________________
51 Ms. Kranendonk conceded in her rule 50(c) response below that
non-economic damages were not available under her legal
malpractice and negligent hiring, training, and supervision claims.
She likewise has conceded in her briefing before us that these claims
cannot support an award of non-economic damages.
52 USA Power, 2016 UT 20, ¶ 115.
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GREGORY & SWAPP v. KRANENDONK
Opinion of the Court
could cause emotional damages is not enough to support a finding
that Mr. Highberg’s concealment and dishonesty did cause emotional
damages. “To prove damages, [a] plaintiff must prove . . . the fact of
damages.”53 This means that the plaintiff must provide evidence that
“do[es] more than merely give rise to speculation that damages in
fact occurred; it must give rise to a reasonable probability that the
plaintiff suffered damage as result of a breach.”54 The testimony of
the Swapp Defendants leaves us wondering whether any mental
anguish from Mr. Highberg’s concealment in fact occurred. And the
testimony that Ms. Kranendonk was “devastated” when she learned
that her “case was dead” does not help.
¶44 While Ms. Kranendonk provided sufficient evidence to
show that Mr. Highberg had a fiduciary duty to her, and that he
breached that duty, this evidence is insufficient to support an
actionable claim for breach of fiduciary duty. “[A]n abundance of
evidence as to breach of duty cannot make up for a deficiency of
evidence as to causation.”55 Nor can it make up for a deficiency of
evidence as to damages. Ms. Kranendonk needed to also provide
evidence that Mr. Highberg’s breach of his fiduciary duty caused
Ms. Kranendonk mental anguish. This she failed to do.
¶45 So we hold that the jury had no evidence upon which to
base its verdict that Ms. Kranendonk suffered emotional distress
damages as a result of Mr. Highberg’s intentional concealment and,
therefore, the district court erred in dismissing the Swapp
Defendants’ motion for JNOV under a breach of fiduciary duty
theory. And because the $2.75 million jury award for non-economic
damages is not supported under either a breach of contract or breach
of fiduciary claim in this case, we vacate it.
III. Attorney Fees and Litigation Expenses
¶46 The Swapp Defendants finally argue that the district court
erred in awarding Ms. Kranendonk $1,166,666.67 in attorney fees.
Specifically, they contend that the court “misread the scope” of the
_____________________________________________________________
53 Atkin Wright & Miles v. Mountain States Tel. & Tel. Co., 709 P.2d
330, 336 (Utah 1985).
54 Id.; see also State v. Ogden, 2018 UT 8, ¶ 52, 416 P.3d 1132 (“[A]n
award of damages based only on speculation cannot be upheld . . . .”
(citation omitted)).
55 USA Power, 2016 UT 20, ¶ 113.
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fiduciary duty exception to the American rule for attorney fees as set
forth in Campbell v. State Farm Mutual Automobile Insurance Co.56 On
cross-appeal, Ms. Kranendonk also claims that the district court
erred in declining to award $177,911.64 in litigation expenses under
Campbell. But because we find there is insufficient evidence to
support Ms. Kranendonk’s breach of fiduciary claim, we hold that
the district court erred in awarding attorney fees. And, for the same
reason, we hold that it correctly denied litigation expenses in this
case.
¶47 “In general, Utah follows the traditional American rule that
attorney fees cannot be recovered by a prevailing party unless a
statute or contract authorizes such an award.”57 But there are
exceptions to this rule. In Campbell, we noted “that breach of a
fiduciary obligation is a well-established exception to the American
rule precluding attorney fees in tort cases generally.”58 We therefore
held that not only may a party recover attorney fees under a
first-party bad faith claim against an insurer—a claim sounding in
contract—but they may also do so under a third-party bad faith
claim against an insurer—a claim sounding in tort.59 We also
concluded that, “[f]or the same reasons . . . regarding attorney fees,
. . . litigation expenses are recoverable in this limited type of
action.”60
¶48 Relying on our holding in Campbell, the district court
awarded Ms. Kranendonk attorney fees under her breach of
fiduciary claim, but refused to award her all of her litigation
_____________________________________________________________
56 2001 UT 89, ¶ 122, 65 P.3d 1134, rev’d on other grounds, 538 U.S.
408 (2003).
57 Utahns for Better Dental Health–Davis, Inc. v. Davis Cty.
Clerk, 2007 UT 97, ¶ 5, 175 P.3d 1036 (citation omitted); see also Neff v.
Neff, 2011 UT 6, ¶ 77, 247 P.3d 380 (“The general rule for attorney
fees in tort cases is that the parties are each responsible for their own
fees. Under this rule, commonly referred to as the ‘American Rule,’
the prevailing party may generally only recover fees if a statutory or
contractual provision entitles that party to such an award.”) (internal
footnote omitted)).
58 2001 UT 89, ¶ 122.
59 Id. ¶¶ 120–22.
60 Id. ¶ 127.
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GREGORY & SWAPP v. KRANENDONK
Opinion of the Court
expenses. The Swapp Defendants take issue with the attorney fees
award. They contend that our statement in Campbell was never
meant to operate as an endorsement of attorney fee awards in all
breach of fiduciary duty cases. Instead, they argue that Campbell
permitted an award of attorney fees in rare circumstances where the
breach is “particularly egregious”—a fact not present in most legal
malpractice cases. While the Swapp Defendants raise an important
question, we decline to answer it because Ms. Kranendonk failed to
establish that a breach of fiduciary duty occurred in this case. And
because no breach of fiduciary duty exists in this case, no ground
remains on which the district court could have properly awarded
attorney fees.61 Accordingly, we vacate the court’s award of
$1,166,666.67 in attorney fees.
¶49 We likewise refuse, under the same reasoning, to overturn
the district court’s denial of litigation expenses. Below, the district
court declined to award litigation expenses and chose to “award
instead only those costs properly taxable” under rule 54 of the Utah
Rules of Civil Procedure to Ms. Kranendonk—an amount it set at
$17,977.82. On cross-appeal, Ms. Kranendonk argues that the district
court erred in failing to award her $177,911.64 in litigation expenses
and granting only “costs.” She contends that, under Campbell, all
litigation expenses are recoverable in a legal malpractice action
brought under a breach of fiduciary duty claim.62 But because
Ms. Kranendonk’s breach of fiduciary duty claim cannot be
established in this case, there is no basis to support her recovery of
_____________________________________________________________
61 Like the district court, Ms. Kranendonk relies exclusively on the
breach of fiduciary duty exception under Campbell for support of her
award of attorney fees in this case. She did not argue, nor did the
district court find, that the court’s award of attorney fees was
supported by contract or statute, or that a different exception to the
American rule applies.
62 In Campbell, State Farm argued that, “like attorney fees,
litigation expenses may not be awarded as damages in a tort action.”
2001 UT 89, ¶ 127. The court rejected this argument, holding that
“[f]or the same reasons detailed in the previous section regarding
attorney fees, we conclude that litigation expenses are recoverable in
this limited type of action.” Id. The court went on to reason that
“litigation expenses incurred by plaintiffs [were] . . . foreseeable to
State Farm” and therefore were warranted in this case. Id.(alterations in original).
22
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litigation expenses. We therefore affirm the district court’s denial of
litigation expenses.63
IV. Exclusion of Mr. Highberg’s Statements
¶50 Lastly, on cross-appeal, Ms. Kranendonk contends that the
district court improperly excluded Mr. Highberg’s statements that he
believed Ms. Kranendonk was “a moron” and a “pain [in] the ass”—
evidence she claims supports her prayer for punitive damages.
Specifically, she argues that the district court failed to conduct a
proper rule 403 analysis when it chose to exclude these statements.
Alternatively, she asserts that the court abused its discretion in its
rule 403 determination by failing to admit the only rebuttal evidence
Ms. Kranendonk had “about what motivated [Mr. Highberg] to
breach his fiduciary duties.” But because there is insufficient
evidence to establish an actionable breach of fiduciary duty claim—
the only claim that arguably contemplates willful and malicious
conduct—no cognizable cause of action exists that would support a
punitive damage award. Accordingly, this issue is moot.
¶51 “In Utah, punitive damages are available only upon clear
and convincing proof of ‘willful and malicious or intentionally
fraudulent conduct, or conduct that manifests a knowing and
reckless indifference toward, and disregard of, the rights of
others.’”64 This means that “simple negligence will not support
_____________________________________________________________
63 Although the parties dispute the trial court’s denial of litigation
expenses, neither party has challenged the court’s award of “costs”
under rule 54 of the Utah Rules of Civil Procedure. See UTAH R. CIV.
P. 54(d)(1) (“Unless a statute, these rules, or a court order provides
otherwise, costs should be allowed to the prevailing party.”); Armed
Forces Ins. Exch. v. Harrison, 2003 UT 14, ¶ 42, 70 P.3d 35 (“[T]here is a
distinction to be understood between the legitimate and taxable
‘costs’ and other ‘expenses’ of litigation which may be ever so
necessary, but are not properly taxable as costs.” (citation omitted)).
Accordingly, we do not disturb this award.
64 Smith v. Fairfax Realty, Inc., 2003 UT 41, ¶ 27, 82 P.3d 1064(citation omitted); see also UTAH CODE § 78B-8-201(1)(a) (“[P]unitive
damages may be awarded 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
(Continued)
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Opinion of the Court
punitive damages,” but “negligence manifesting a knowing and
reckless indifference toward the rights of others will.”65
Additionally, “punitive damages cannot be awarded for a breach of
contract,” unless “the breach of contract amounts to an independent
tort.”66
¶52 Here, the jury awarded damages on four causes of actions—
legal malpractice, breach of contract, breach of fiduciary duty, and
negligent hiring, training, and supervision. But only
Ms. Kranendonk’s breach of fiduciary duty action could conceivably
support a punitive damage award in this case. This is so because her
other claims are predicated upon simple negligence and traditional
breach of contract theories—theories that cannot support punitive
damage awards. First, Ms. Kranendonk’s legal malpractice claim
rested on simple negligence—that the Swapp Defendants failed “to
use the same degree of care, skill, judgment and diligence used by
reasonably careful attorneys under similar circumstances.” Her
negligent hiring, training, and supervision claim likewise was based
on simple negligence—that the Swapp Defendants were negligent in
failing to recruit, train, and supervise sufficient attorneys and staff
“so that they would be able to provide professional and competent
legal services.” And lastly, her breach of contract claim, like all
breach of contract claims, was based on contract principles and so
did not amount to an independent tort.67 These three claims
therefore could not support a punitive damage award as a matter of
law.
manifests a knowing and reckless indifference toward, and a
disregard of, the rights of others.”).
65 Smith, 2003 UT 41, ¶ 27 (citation omitted).
66 Norman v. Arnold, 2002 UT 81, ¶ 35, 57 P.3d 997 (citation
omitted).
67 While an argument can be made that the Swapp defendants’
breach of contract amounted to an independent tort—a breach of
fiduciary duty—Ms. Kranendonk specifically couched these actions
as separate, distinct claims. And the jury made its determination
under this framework. So we cannot say that the Swapp Defendants’
breach of contract amounted to a breach of fiduciary duty. That
action was separately pled.
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¶53 Ms. Kranendonk’s breach of fiduciary duty claim, however,
conceivably could support a punitive damage request.68 And since
this claim was the only claim upon which the jury could possibly
have awarded punitive damages, the fate of Ms. Kranendonk’s
argument on cross-appeal necessarily depends on the success of that
claim.69 But, as stated above, Ms. Kranendonk’s breach of fiduciary
duty claim fails because the jury had insufficient evidence to
conclude that an actionable breach occurred in this case. This means
that there is no cognizable claim upon which her prayer for punitive
damages may be based.70 So Ms. Kranendonk’s cross-appeal is moot
because, regardless of our decision, she cannot receive the punitive
damages she seeks.
¶54 An issue “may be mooted on appeal if ‘the relief requested’
is rendered ‘impossible or of no legal effect.’”71 This is so because
without the possibility of relief, “anything we might say about the
issue[] would be purely advisory.”72 Regardless of our decision on
the admissibility of Mr. Highberg’s two statements,
Ms. Kranendonk’s prayer for punitive damages cannot be granted
because no cognizable claim exists to support such an award.
Anything we might say on the matter would therefore be purely
advisory. Accordingly, the issue is moot.
_____________________________________________________________
68 See Norman, 2002 UT 81, ¶ 35 (“In Utah, a claim for breach of
fiduciary duty is an independent tort . . . and can serve as the basis
for punitive damages.”).
69While Ms. Kranendonk also pled, and the jury heard, a claim of
fraudulent non-disclosure—a claim that conceivably could support a
punitive damage award—the jury did not find that she had
established by clear and convincing evidence that the Swapp
Defendants fraudulently failed to disclose important facts to her, and
she has not challenged that finding on appeal. So her breach of
fiduciary duty claim is the only claim on which she could seek
punitive damages in this case.
70 See Norman, 2002 UT 81, ¶ 8 n.2 (stating that punitive damages
“must be requested in conjunction with a cognizable cause of
action”).
71 Transp. All. Bank v. Int’l Confections Co., 2017 UT 55,
¶ 15, --- P.3d --- (citation omitted).
72 Id. (citation omitted).
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GREGORY & SWAPP v. KRANENDONK
Opinion of the Court
Conclusion
¶55 The Swapp Defendants claim that, under either a breach of
contract or breach of fiduciary duty theory, the district court erred in
upholding the $2.75 million jury award for emotional distress
damages unrelated to the underlying case. We agree.
Ms. Kranendonk’s breach of contract claim cannot support these
damages, because such emotional distress was not explicitly
contemplated by the parties. The jury award also cannot be
supported under her breach of fiduciary duty claim, because the jury
had no evidence that the Swapp Defendants’ concealment and
dishonesty caused Ms. Kranendonk harm. We accordingly reverse
the district court’s decision denying the Swapp Defendants’ JNOV
motion and vacate the $2.75 million jury award.
¶56 We also vacate the district court’s award of $1.666,667.67 in
attorney fees because Ms. Kranendonk’s breach of fiduciary duty
claim—the only claim that could support this award—failed. And
we hold that her claim on cross-appeal for litigation expenses also
fails for the same reason.
¶57 Finally, we decline to reach Ms. Kranendonk’s challenge of
the district court’s decision to exclude Mr. Highberg’s two
statements. Ms. Kranendonk seeks the admission of these statements
in order to support her prayer for punitive damages. But because her
breach of fiduciary duty claim fails, punitive damages cannot be
awarded in this case regardless of our decision on this issue. So the
issue is moot.
26