Phillips v. Skabelund , 2021 UT App 2 ( 2021 )

2021 UT App 2THE UTAH COURT OF APPEALS
PETER O. PHILLIPS AND PDNULEBAKS UTAH LLC,
Appellants and Cross-appellees,
v.
GREGORY N. SKABELUND AND S&S ACRES LLC,
Appellees and Cross-appellants,
and
PEOPLE’S INTERMOUNTAIN BANK AND
CACHE TITLE COMPANY INC.,
Appellees.
Opinion
No. 20190552-CA
Filed January 7, 2021
Second District Court, Ogden Department
The Honorable Michael D. DiReda
No. 160903990
Adam S. Affleck, Attorney for Appellants
Joseph M. Chambers and J. Brett Chambers,
Attorneys for Appellees and Cross-appellants
Bradley L. Tilt and Sara E. Bouley, Attorneys for
Appellee People’s Intermountain Bank
Dustin Del Ericson, Attorney for Appellee
Cache Title Company Inc.
JUDGE DAVID N. MORTENSEN authored this Opinion, in which
JUDGES MICHELE M. CHRISTIANSEN FORSTER AND KATE APPLEBY
concurred.
MORTENSEN, Judge:
¶1 This case primarily arises out of a trustee’s sale, but there
is a significant backstory. Peter O. Phillips and Pdnulebaks Utah
LLC (collectively, Appellants) sued Gregory N. Skabelund and
Phillips v. Skabelund
S&S Acres LLC (S&S) (collectively, Cross-appellants), Cache
Title Company Inc. (Cache Title or Trustee), and People’s
Intermountain Bank (Bank) (collectively, Appellees) to set aside
the sale of certain property and the trustee’s deed thereto.
Appellants assert a catalog of claimed errors stemming from
orders resolving a motion to dismiss and multiple motions for
summary judgment. Cross-appellants relatedly appeal certain
orders to provide alternative grounds to sustain the court’s final
judgement in their favor. We affirm the district court’s entries of
judgment in favor of Appellees.
BACKGROUND 1
¶2 In April 2010, Phillips, an experienced real-estate
entrepreneur, sought a $140,000 bridge loan 2 from Skabelund,
his long-time legal counsel. The loan was backed by a
promissory note and secured by a trust deed against certain
property (Property) held by Phillips. Skabelund prepared the
1. “[W]hen reviewing a grant of summary judgment, we recite
the disputed facts in a light most favorable to the nonmoving
party.” Begaye v. Big D Constr. Corp., 2008 UT 4, ¶ 5, 178 P.3d 343.
Similarly, in reviewing a grant of judgment independent of the
motion, we view the facts in a light most favorable to the party
against whom judgment was entered. See Callioux v. Progressive
Ins. Co., 745 P.2d 838, 840 (Utah Ct. App. 1987).
2. “A bridge loan is a short-term loan that is used to cover costs
until more permanent financing is arranged or to cover a portion
of costs that are expected to be covered by an imminent sale.
Bridge loans typically have terms of up to one year, have
relatively high interest rates and are usually backed by some
form of collateral, such as real estate or inventory.” Cougar
Canyon Loan, LLC v. Cypress Fund, LLC, 2019 UT App 47, ¶ 1 n.1,
440 P.3d 884 (cleaned up).
20190552-CA 2 2021 UT App 2Phillips v. Skabelund
note and the trust deed, and loaned Phillips the money. Cache
Title was named trustee.
¶3 Shortly after executing the trust deed and promissory
note, Phillips conveyed the Property, subject to the trust deed, to
an entity designed to hold the Property, designated as
Pdnulebaks (“P” for Phillips and “Skabelund” written in
reverse). Skabelund formed Pdnulebaks as a member managed
company, and its original articles of organization reflected that
Skabelund was the sole “member/manager.”
¶4 On October 21, 2010, Phillips defaulted on the loan.
Thereafter, Phillips and Skabelund had a falling out. In March
2011, Skabelund engaged Trustee to commence non-judicial
foreclosure of the Property. On May 24, 2011, Trustee recorded a
notice of default to begin that process.
¶5 On November 9, 2011, Phillips filed for bankruptcy. As
part of that proceeding, Phillips listed among his assets
“contingent and unliquidated claims” against Skabelund for
“breach of contract, breach of fiduciary duty, conversion,
malpractice, fraud, fraudulent misrepresentation, rescission and
other potential claims.” The bankruptcy case was dismissed
three months later.
¶6 On March 30, 2012, Trustee recorded a notice of a trustee’s
sale to occur on a later date, as required by Utah’s Trust Deed
Act and the trust deed to the Property. Upon receipt of the
notice, Phillips challenged the sale and threatened Skabelund
with suit for breach of fiduciary duties to Pdnulebaks and
himself. Skabelund instructed Trustee to postpone the sale and
assigned the trust deed to S&S. 3 As directed, Trustee postponed
3. At the time Skabelund assigned the note and trust deed to
S&S, he held a sixty-three percent membership interest in S&S
(continued…)
20190552-CA 3 2021 UT App 2Phillips v. Skabelund
the sale for thirty days by public declaration at the time and
place of the initially scheduled sale. Thereafter, Phillips
demanded the Trustee’s sale be canceled, and he recorded a
Notice of Interest on the Property, asserting he was both the
equitable owner of Pdnulebaks and the titular owner of the
Property. At S&S’s direction, Trustee again postponed the sale
by public declaration. Ultimately, the Trustee’s sale was
postponed twelve times, each time by public declaration, for a
total of 276 days; no single postponement exceeded forty-five
days.
¶7 During the months between the initial and final
foreclosure sales, the parties entered into a settlement agreement
(Settlement Agreement) to resolve the foreclosure and related
claims. The Settlement Agreement provided that “Phillips would
release his claims relating to Skabelund’s conflicted status vis-à-
vis Pdnulebaks and the Trustee’s sale in consideration for
Skabelund transferring whatever rights he had in Pdnulebaks to
Phillips . . . and then, following such transfer, giving Pdnulebaks
. . . the normal non-judicial foreclosure time before Skabelund
would schedule the trustee’s sale.” At some point, Skabelund
provided Phillips with the information necessary to record his
membership status in Pdnulebaks. The Property was sold at the
Trustee’s sale 152 days after the Settlement Agreement.
¶8 On December 21, 2012, S&S purchased the Property at the
Trustee’s sale by a credit bid of $270,823.29—representing the
amount owed under the note and trust deed. By mid-January
2013, Appellants had knowledge of the Trustee’s sale. On
December 30, 2013, S&S obtained a loan of $180,000 from Bank,
by a trust deed pledging the Property as collateral. In January
(…continued)
and was its manager. Despite the assignment, Skabelund, acting
as S&S’s agent, continued to direct the non-judicial foreclosure.
20190552-CA 4 2021 UT App 2Phillips v. Skabelund
2014, Phillips recorded his membership in Pdnulebaks and
renewed its expired status as a business entity.
Procedural History
¶9 On December 20, 2015, Appellants filed the underlying
action. Appellants’ original complaint sought to set aside the
trustee’s deed for violations of Utah Code section 57-1-27(2),
which sets out the requirements for additional notice when a
trustee’s sale is postponed beyond its originally noticed date.
That claim was dismissed by order ruling on a motion made
pursuant to rule 12(b)(6) of the Utah Rules of Civil Procedure
(First Order). During the pendency of the rule 12(b)(6) motion,
Appellants moved to file an amended complaint, adding new
claims and bolstering their previous claim. The motion to file an
amended complaint was denied (Second Order).
¶10 Thereafter, Appellants moved for, and were permitted to
submit, a third amended complaint, specifying eight claims:
(1) malpractice for the trust deed and note against Skabelund,
(2) malpractice in the formation of Pdnulebaks against
Skabelund, (3) fraud in the formation of Pdnulebaks against
Skabelund, (4) breach of the Settlement Agreement against S&S,
(5) fraud relating to the postponement of the Trustee’s sale
against Skabelund and S&S, (6) breach of fiduciary duty as to
Pdnulebaks against Skabelund, (7) a claim against S&S and Bank
to set aside the Trustee’s sale, and (8) breach of the trust deed
against Cache Title.
¶11 The litigation proceeded through discovery, and multiple
motions for summary judgment followed. In an order resolving
cross-motions for summary judgment from Appellants and
Bank, the court granted judgment to Bank on the seventh claim
(Third Order). In response to a later motion, the court granted
summary judgment in favor of S&S on all claims encompassed
within the Settlement Agreement and subsequently granted
judgment in favor of S&S and Skabelund on claims four and six
20190552-CA 5 2021 UT App 2Phillips v. Skabelund
(Fourth Order). The court later determined the Settlement
Agreement also encompassed the first, second, third, fifth and
seventh causes of action and granted summary judgment on
each claim in favor of Skabelund and S&S (Fifth Order). In a
separate order issued that same day, the court granted a motion
to exclude Appellants’ valuation expert and denied Appellants’
motion to supplement that expert’s report (Sixth Order). In
response to the exclusion of Appellants’ expert, Cache Title
moved for, and was granted, summary judgment on the
remaining eighth claim for breach of the trust deed. The court
entered final judgment in January 2019.
¶12 The following month, Appellants moved to alter or
amend three orders: the Fourth and Fifth Orders, which granted
summary judgment to Skabelund and S&S, and the Sixth Order,
which excluded Appellants’ expert and denied the motion to
supplement the expert’s report. The court issued an order
(Seventh Order) denying the motion but amending its prior
orders. In the Seventh Order, the court amended the rationale
used in the Fourth and Fifth Orders, stating it erred in
determining that summary judgment was warranted based on
the resolution reached under the Settlement Agreement. In lieu
thereof, the court determined that summary judgment was still
appropriate based on the exclusion of Appellants’ expert, as
ruled in the Sixth Order. The court gave each party thirty days to
respond to its Seventh Order. Appellants did not offer a
response.
¶13 Appellants appeal, and S&S and Skabelund cross-appeal.
ISSUES AND STANDARDS OF REVIEW
¶14 Appellants first contend that the district court erred in
dismissing their claim that the Trustee’s sale violated the Utah
Trust Deed Act’s notice-of-postponement provision in Utah
Code section 57-1-27(2). But Appellants fail to challenge an
20190552-CA 6 2021 UT App 2Phillips v. Skabelund
independent basis for dismissal relied on by the district court. 4
And we have “no choice except to affirm,” Kendall v. Olsen, 2017
UT 38, ¶ 9, 424 P.3d 12; see also id. ¶ 12 (stating that under “our
rules of appellate procedure . . . we will not reverse a ruling of
the district court that rests on independent alternative grounds
where the appellant challenges only one of those grounds”
(cleaned up)), because we “have no occasion to reach the merits
of the[] claim[] here,” id. ¶ 9.
¶15 Appellants next contend that the court erred in its Third
Order, granting summary judgment to Bank on the seventh
claim, on two points relating to the court’s application of the
law. 5 “We review the district court’s ultimate grant or denial of
4. Appellants challenge the First Order by asserting that the
court erred as a matter of statutory interpretation in ruling that
the Trustee’s sale complied with Utah Code section 57-1-27(2),
and as a result also erred by not reaching the determination of
whether the sale was void ab initio as against public policy. But
the district court also dismissed the statutory claim because the
claim lacked the specific allegations necessary to set aside the
Trustee’s sale. This defect in the claim persisted in the amended
complaint denied by the Second Order. On appeal, Appellants
do not address this defect, nor do they mention the independent
basis for dismissal.
5 . Not naming the particular ruling they seek to overturn,
Appellants also argue that because Trustee breached the notice
provision of the trust deed, the deed is voidable even if they
cannot demonstrate prejudice. To demonstrate preservation of
this issue, Appellants cite two separate motions for summary
judgment. The first motion raised this claim but it was dismissed
as “obsolete” because the court granted a motion to dismiss the
relevant claim from Appellants’ first complaint and denied
(continued…)
20190552-CA 7 2021 UT App 2Phillips v. Skabelund
summary judgment for correctness. We give no deference to the
district court’s legal conclusions and consider whether the court
correctly decided that no genuine issue of material fact existed.”
Far West Bank v. Robertson, 2017 UT App 213, ¶ 15, 406 P.3d 1134(cleaned up). 6
(…continued)
Appellants’ motion for leave to file a second amended
complaint. Appellants do not challenge those rulings on appeal.
The second motion for summary judgment did not raise
the issue presented on appeal. In that motion, Appellants argued
that “a trustee’s deed is voidable and may be set aside (1) if there
is a defect in trustee’s sale, (2) that was prejudicial to the
trustor/owner, and (3) no rights of a bona fide purchaser have
intervened.” (Citing Bank of America v. Adamson, 2017 UT 2, 391
P.3d 196.) Appellants point us to no place in the record where
they raised and argued the issue presented on appeal in a way
that the district court had an opportunity to rule on it. It is
therefore unpreserved. See Issertell v. Issertell, 2020 UT App 62,
¶ 21, 463 P.3d 698 (“Parties are required to raise and argue an
issue in the district court in such a way that the court has an
opportunity to rule on it. When a party fails to raise and argue
an issue in the district court, it has failed to preserve the issue,
and an appellate court will not typically reach that issue absent a
valid exception to preservation.” (cleaned up)). Appellants make
no argument for our consideration of the unpreserved claim.
Accordingly, we decline to address it. See State v. Johnson, 2017
UT 76, ¶ 19, 416 P.3d 443 (observing that a party must establish
the applicability of a preservation exception to persuade an
appellate court to reach an unpreserved issue).
6. In its responsive brief, Bank asserts that we could affirm the
district court’s ruling on the alternative ground of laches.
(continued…)
20190552-CA 8 2021 UT App 2Phillips v. Skabelund
¶16 Appellants additionally contend that the court erred in its
Sixth Order, which excluded Appellants’ valuation expert and
denied the motion to supplement the expert’s report. We
“review discovery orders for abuse of discretion and will not
find abuse of discretion absent an erroneous conclusion of law or
where there is no evidentiary basis for the trial court’s ruling.”
Arreguin-Leon v. Hadco Constr. LLC, 2018 UT App 225, ¶ 15, 438
P.3d 25 (cleaned up). Additionally, a district court’s decisions
regarding the admissibility of expert testimony “are reviewed
under an abuse of discretion standard” and “we will not reverse
a decision to admit or exclude expert testimony unless the
decision exceeds the limits of reasonability.” Id. ¶ 15 n.4 (cleaned
up).
¶17 Appellants next argue that the court erred in its Seventh
Order, in which it amended its rationale but retained the
ultimate ruling reached in the Fourth and Fifth Orders
dismissing claims one through seven against Skabelund and
S&S. We review a court’s entry of summary judgment
independent of the motion under rule 56(f) of the Utah Rules of
Civil Procedure for correctness. Cf. Far West Bank, 2017 UT App
213, ¶ 15.
¶18 Cross-appellants counter by arguing that the statute of
limitations is an alternative ground to affirm the dismissal of
certain claims. They contend that the court erred by rejecting
that defense in their motion to dismiss, in opposition to
Appellants’ third amended complaint, and in their summary
judgment motion. The application of a statute of limitations is a
question of law that we review for correctness. See Moshier v.
Fisher, 2019 UT 46, ¶ 6, 449 P.3d 145. We also review summary
(…continued)
Because we otherwise resolve this issue, we do not address
Bank’s laches claim.
20190552-CA 9 2021 UT App 2Phillips v. Skabelund
judgment and orders on rule 12(b)(6) motions to dismiss for
correctness, but under different standards. See Pinder v. Duchesne
County Sherriff, 2020 UT 68, ¶ 31. “Summary judgment is proper
only if the moving party shows that there is no genuine dispute
as to any material fact and the moving party is entitled to
judgment as a matter of law.” Id. (cleaned up). “But dismissal
under rule 12(b)(6) is proper only if—accepting the plaintiff’s
description of facts alleged in the complaint to be true—the
plaintiff can prove no set of facts in support of his claim.” Id.(cleaned up).
¶19 Lastly, Cross-appellants seek attorney fees on appeal.
“When a party who received attorney fees below prevails on
appeal, the party is also entitled to fees reasonably incurred on
appeal.” Telegraph Tower LLC v. Century Mortgage LLC, 2016 UT
App 102, ¶ 52, 376 P.3d 333 (cleaned up).
ANALYSIS
¶20 We begin by reviewing Appellants’ challenge to the
district court’s Third Order denying their motion for summary
judgment on their seventh claim. We then review Appellants’
claims concerning their valuation expert. We next address
Appellants’ and Cross-appellants’ contentions relating to the
Seventh Order granting summary judgment against Appellants
on an amended rationale. We conclude by reviewing Cross-
appellants’ claim for attorney fees on appeal.
I. Third Order Denying Summary Judgment to Appellants
¶21 Appellants contend that the district court erred in
denying their motion for summary judgment on the seventh
claim, arguing that the court erroneously looked for prejudice
only in whether the bidding was chilled and an inadequate price
obtained at the Trustee’s sale. Appellants further argue that if
that measure of prejudice is appropriate here, such prejudice
20190552-CA 10 2021 UT App 2Phillips v. Skabelund
“should be presumed where there is a notice failure.” We
address each argument in turn.
A
¶22 To succeed in their contention that the court erred by
denying their motion for summary judgment on their seventh
claim, Appellants, as the moving party with the burden of proof
at trial on this issue, must show that they established each
element of their claim as part of demonstrating entitlement to
judgment as a matter of law. See Utah R. Civ. P. 56(a); see also
Salo v. Tyler, 2018 UT 7, ¶ 2, 417 P.3d 581. Appellants begin that
undertaking by arguing, in effect, that the court applied the law
too narrowly in determining whether they met the element of
prejudice to establish a voidable deed. We disagree.
¶23 The district court ruled that to prove the trustee’s deed
voidable, Appellants had to show prejudice by “demonstrat[ing]
that the defect resulted in chilling the bidding and causing an
inadequacy of price.” (Citing Far West Bank v. Robertson, 2017 UT
App 213, 406 P.3d 1134.) Appellants contend that “is not the only
way in which prejudice can be shown.” In support of their
proposition, Appellants cite Bank of America v. Adamson, 2017 UT
2, 391 P.3d 196, to suggest that the focus should be on whether
the defect in the notice prevented the trustor from protecting his
property interests.
¶24 In Adamson, our supreme court addressed the question of
how to remedy a trustee’s violation of the requirement to
maintain an office in Utah under Utah’s Trust Deed Act. 2017 UT
2, ¶ 1. Adamson clarified the difference among deeds that are
void, voidable, or valid. Id. ¶¶ 15, 20. In so doing, the court held
that in most cases the time for the trustor to assert rights in the
property is “before the trustee’s sale” occurs because “the need
for finality is at its apex” when “title to real property is at issue.”
Id. ¶¶ 16–17 (cleaned up). The court instructed that after a
trustee’s sale is accomplished, a deed will not be voidable
20190552-CA 11 2021 UT App 2Phillips v. Skabelund
“unless the interests of the debtor were sacrificed or there was
some attendant fraud or unfair dealing” reaching “unjust
extremes.” Id. ¶¶ 20, 22 (cleaned up). Thus, to prove a deed is
voidable, “the trustor must show evidence of fraud or other
unfair dealing, or that a defect prejudiced the trustor.” Id. ¶ 34.
¶25 Neither fraud nor unfair dealing was asserted as a basis
for Appellants’ summary judgment motion, so, the inquiry here
is limited to whether Appellants suffered prejudice caused by
the defect alleged. To that end, Appellants assert that Adamson
indicates they may show prejudice in a trustee’s sale by proving
the defect affected their ability to protect their rights or interests
in the property. See id. ¶¶ 23–24. But, the supreme court has also
more particularly specified that “[d]efects in the notice of
foreclosure sale that will authorize the setting aside of the sale
must be those that would have the effect of chilling the bidding
and causing an inadequacy of price,” Concepts, Inc. v. First Sec.
Realty Services, Inc., 743 P.2d 1158, 1159 (Utah 1987) (per curiam),
the objective of the notice requirements being to prevent a
sacrifice of the property by enabling the trustor to timely act, see
id. The court in Adamson did not depart from that holding. And
Far West Bank v. Robertson, 2017 UT App 213, 406 P.3d 1134,
which the district court relied on, reiterated the Concepts holding,
stating “any notice-of-sale irregularities a trustor may allege . . .
are immaterial if the trustor does not demonstrate that there was
a resulting effect of chilling the bidding and causing an
inadequacy of price.” Id. ¶ 37 (cleaned up); accord Concepts, 743
P.2d at 1159.
¶26 Because the holding of Concepts remains binding
precedent, the district court correctly denied Appellants’ motion
for summary judgment on their seventh claim after determining
that material facts remained in dispute regarding any effect of
chilling the bidding and inadequacy of price.
20190552-CA 12 2021 UT App 2Phillips v. Skabelund
B
¶27 Appellants further challenge the court’s denial of their
motion for summary judgment, arguing that even if prejudice
must be shown by an effect of chilling the bidding thereby
producing an inadequate price, this “should be presumed where
there is a notice failure.” But we cannot agree because
Appellants’ “argument that the flaw in the notice . . . invalidated
the sale . . . perverts and uses as a sword a statute that was
meant to shield the property rights of a trustor.” See Concepts,
Inc. v. First Sec. Realty Services, Inc., 743 P.2d 1158, 1160 (Utah
1987) (per curiam).
¶28 Appellants assert that “public advertisement was not
given at all” and that “the chilling effect on bidding and
inadequacy of price should be deemed proven.” Appellants
overstate their case. The parties agree that the initial notice was
properly given. They also agree that the trust deed limited
postponements for a trustee’s sale to one day unless the sale was
fully re-noticed via writing, publication, posting, and mailing
but that only oral postponements were provided. 7 Accordingly,
7. Notably, Appellants were aware of at least the first five oral
postponements, meaning they had actual notice of the sale to
that point. It seems that Appellants’ lack of diligence in
continuing to attend the postponed sales—presumably owing to
the Settlement Agreement—prevented them from being aware of
remaining postponements and attending the final sale.
Importantly, Appellants took no action under the trust deed or
statute during the series of oral postponements to try to stop the
Trustee’s sale from occurring, all despite having actual
knowledge that only oral notices of postponement were being
given. See Bank of Am. v. Adamson, 2017 UT 2, ¶ 16, 391 P.3d 196(“In most cases, Utah law requires that a trustor assert her rights
before the trustee’s sale.” (cleaned up)).
20190552-CA 13 2021 UT App 2Phillips v. Skabelund
this case is not about a notice failure but a notice defect.
Appellants relied on the defect in seeking summary judgment
and contended then, as they do now, that prejudice should be
presumed given the defective notice. While Appellants’ concerns
are reasonable, Utah law dictates otherwise.
¶29 We understand the burdens which a lack of notice of a
trustee’s sale can cause a trustor. The notice requirement is
designed “to protect the rights of trustors to challenge the
foreclosure prior to the sale,” Bank of Am. v. Adamson, 2017 UT 2,
¶ 15, 391 P.3d 196, “and serve to ensure the fairness of the sale
through competitive bidding, thus securing the highest possible
prices,” Concepts, 743 P.2d at 1160 (cleaned up). But the potential
disadvantages of defective notice do not always follow. That is
why our courts have required a showing that prejudice also
resulted. And rather than presume that a defect causes prejudice,
“absent evidence to the contrary, . . . [we] presume that the sale
was regular.” Far West Bank v. Robertson, 2017 UT App 213, ¶ 36,
406 P.3d 1134 (cleaned up). It is incumbent on the trustor to
show prejudice in the sale, see Concepts, 743 P.2d at 1159, a
burden which is “much higher” once the sale has taken place, see
Adamson, 2017 UT 2, ¶ 18.
¶30 Utah courts require a showing of prejudice because courts
are concerned with whether the trustor’s property has been
sacrificed by a defect denying the trustor the opportunity to act
and protect its rights and interests in the property. See id. ¶ 22
(“A sale once made will not be set aside unless the interests of
the debtor were sacrificed.” (cleaned up)). If not, “immaterial
errors and mistakes will not affect the sufficiency of the notice or
the sale made pursuant thereto.” Concepts, 743 P.2d at 1159; see
also Adamson, 2017 UT 2, ¶ 24 (“If the defect does not cause
prejudice, then the error is considered inconsequential.”). For
this reason, our supreme court has indicated that a “failure to
strictly comply with notice requirements [is] not sufficient to set
aside [the] trustee’s deed without [a] showing of prejudice.”
20190552-CA 14 2021 UT App 2Phillips v. Skabelund
Adamson, 2017 UT 2, ¶ 24 (cleaned up) (citing Timm v. Dewsnup,
2003 UT 47, ¶¶ 34–37, 86 P.3d 699).
¶31 Because a sale could be accomplished with defective
notice but not run afoul of the trustor’s rights and interests, or
still provide the trustor with an adequate price for the property
(or as S&S contended below, a price even above its value), 8 we
cannot presume the trustor is consequentially prejudiced by the
defect, especially when the need for finality in the property’s
title is at its apex. See id. ¶ 17. Rather, the trustor must articulate
and prove the “unjust extremes” compelling the court to set
aside the sale that has been accomplished. Id. ¶ 20 (cleaned up).
To prevail on a claim to set aside a trustee’s sale, the trustor must
show actual harm resulting from the defect; prejudice cannot be
presumed.
¶32 Appellants were required to show prejudice resulting
from the defect alleged to be entitled to judgment as a matter of
law that the trustee’s deed was voidable. The district court,
therefore, correctly denied Appellants’ motion for summary
judgment on the seventh claim.
II. Appellants’ Valuation Expert
¶33 Appellants contend the district court erred in its Sixth
Order excluding Appellants’ expert testimony and denying a
8. S&S’s expert reported the Property’s value at $120,000. Cache
Title’s expert reported the Property’s value at $240,000. Both
valuations are below the credit bid of $270,823.29, and if
accurate, suggest the credit bid resulted in a benefit to
Appellants.
20190552-CA 15 2021 UT App 2Phillips v. Skabelund
motion to supplement the valuation expert’s report. 9 We note the
following additional relevant facts and then address each
argument below.
¶34 In November 2017, Appellants provided their expert
witness’s report on the value of the Property. The report
incorrectly indicated that at the time of the Trustee’s sale the
Property was zoned for “commercial services” as opposed to the
correct zoning as “gateway.” Relatedly, the expert incorrectly
named industrial use as the highest and best use of the Property.
He also used the incorrect zoning designation to find
comparable properties in assessing the Property’s value. In
January 2018, Bank provided its expert’s report, which noted the
errors in Appellants’ expert report. Expert discovery closed in
February 2018, and trial was set for that December.
¶35 In August 2018, seven months after the close of expert
discovery, in response to a motion to exclude their expert’s
testimony, Appellants sought leave to supplement their expert’s
report. In its Sixth Order, the court granted the motion to
exclude, and denied Appellants’ motion to supplement. In so
doing, the court stated,
On its face, [the expert’s] appraisal does not meet
the threshold showing of reliability because the
incorrect zoning classification affects the highest
and best use and comparable property analyses,
which both impact valuation. The number given in
the report is not supported by the facts. These
fundamental errors mean that [the expert’s]
valuation is based on unreliable and insufficient
9 . Appellants do not explicitly challenge the order granting
summary judgment in favor of Trustee on Appellants’ eighth
claim on the basis of the valuation expert’s exclusion.
20190552-CA 16 2021 UT App 2Phillips v. Skabelund
facts, and thus it is inadmissible. In addition, the
errors render the entire opinion unhelpful since it
was the valuation that could be used to show
chilled bidding on the property, a required element
of [Appellants’] claims.
The court further observed that Appellants’ action came
“approximately eight months after the . . . report challenging the
accuracy of facts” asserted by Appellants’ expert.
A
¶36 On appeal, Appellants argue that the court abused its
discretion by denying their motion to supplement their expert’s
report. We disagree.
¶37 Under rule 26 of the Utah Rules of Civil Procedure, a
party is required, when elected by an opposing party, to provide
an expert report “contain[ing] a complete statement of all
opinions the expert will offer at trial and the basis and reasons
for them.” Utah R. Civ. P. 26(a)(4)(B), (C)(i). The rule further
provides “[i]f a party fails to disclose or to supplement timely a
disclosure or response to discovery, that party may not use the
undisclosed witness, document or material at any hearing or
trial unless the failure is harmless or the party shows good cause
for the failure.” Id. R. 26(d)(4). Or, “[i]f a party learns that a
disclosure or response is incomplete or incorrect in some
important way, the party must timely serve on the other parties
the additional or correct information if it has not been made
known to the other parties. The supplemental disclosure or
response must state why the additional or correct information
was not previously provided.” Id. R. 26(d)(5). As long as it
applies the correct law, a court has discretion in determining
whether disclosure is complete, whether later remedy of non-
disclosure or incomplete disclosure is harmless, or whether good
cause exists for any related failure. See Askew v. Hardman, 918
P.2d 469, 472 (Utah 1996) (recognizing discretion courts are
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given in decisions regarding sufficiency of discovery responses,
discovery sanctions, and compliance with earlier versions of rule
26); Bad Ass Coffee Co. of Hawaii Inc. v. Royal Aloha Int’l LLC, 2020
UT App 122, ¶ 37, 473 P.3d 624 (using abuse of discretion
standard to review finding on sufficiency of disclosure); Gines v.
Edwards, 2017 UT App 47, ¶ 17, 397 P.3d 612 (reviewing, for
abuse of discretion, district court’s determination that untimely
expert disclosure was harmless); id. ¶ 29 (observing that
appellate courts have “consistently applied the ‘harmless’ and
‘good cause’ exceptions when analyzing disclosure errors”
(cleaned up)); accord Sleepy Holdings LLC v. Mountain West Title,
2016 UT App 62, ¶ 24, 370 P.3d 963 (observing that “the proper
inquiry is whether the district court abused its discretion in
determining that the plaintiff’s failure to disclose was not
harmless and that good cause did not excuse its failure” (cleaned
up)). And we afford great deference to a court in resolving
factual questions underlying those determinations. See Dahl v.
Dahl, 2015 UT 79, ¶ 63, 459 P.3d 276 (“As a general rule, we grant
district courts a great deal of deference in matters of discovery
and review discovery orders for abuse of discretion.”).
¶38 The district court found that Appellants’ motion ran afoul
of each of the above standards in rule 26. It first concluded that
Appellants’ motion to supplement did not merely propose
supplementation. This was because Appellants sought to
significantly change the underlying data of the expert’s report.
The court reasoned this was an attempt to submit an “entirely
new expert opinion.”
¶39 An expert report is intended to “fairly disclose the
substance of and basis for each opinion the expert will offer.”
Utah R. Civ. P. 26 advisory committee notes. A significant
change to the basis of an expert’s report—one that goes beyond
“revis[ing] incorrect information or mak[ing] minor changes, see
Daniels v. Gamma West Brachytherapy, LLC, 2009 UT 66, ¶ 56, 221
P.3d 256—upends the intent of the disclosure, and may be
20190552-CA 18 2021 UT App 2Phillips v. Skabelund
viewed as a new report rather than a supplementation. And a
report—however titled—founded on a fundamentally different
basis is not one which comports with rule 26’s instruction to
provide a “complete statement of all opinions the expert will
offer at trial and the basis and reasons for them.” Utah R. Civ. P.
26(a)(4)(B); see also Daniels, 2009 UT 66, ¶ 56 (holding no abuse of
discretion in striking supplementation to expert’s testimony
because the expert sought to add new testimony). Here,
Appellants sought to change the underlying metric used to
determine the Property’s valuation—the zoning classification—
and the data aggregated to inform the expert’s opinion based on
that metric—the highest and best use and comparable
properties. That “supplementation” was more than a minor
correction or change to the expert’s opinion of the Property’s
value, as the district court found. And Appellants have not
shown that the district court’s finding was clearly erroneous or
without support in the record. Therefore, the court’s decision to
deny the motion to supplement the expert’s report was within its
discretion.
¶40 Additionally, the court concluded that Appellants failed
to timely supplement the disclosure and that this failure was
neither harmless nor excused by good cause. As the court noted,
the motion to supplement came a full eight months after the
errors in the expert’s report were pointed out to Appellants, and
then only in response to a motion to exclude their expert.
Appellants stated that their reason for delay was their reliance
on the expert’s assurance that the errors were immaterial. But
Appellants “had time during expert discovery to add a rebuttal
or to ‘supplement’ timely and correct the error when it was
initially pointed out. [But they] chose not to do so.” This was not
good cause for delay. Experts are expected to know the
professional standards of their fields and to provide reliable
opinions within those standards. Reluctance to acknowledge a
substantial defect as to a known fact in one’s own expert opinion
does not justify delayed correction when the defect is known,
20190552-CA 19 2021 UT App 2Phillips v. Skabelund
especially where another expert has pointed out the folly. Any
such reliance is not reasonable under these circumstances.
Moreover, allowing supplementation at the late stage of ligation
would have harmed the other parties who shouldered the
expense and effort of preparing their own experts to respond to
Appellants’ expert report. Accordingly, the district court did not
abuse its discretion in finding that Appellants lacked good cause
and could not show that granting their motion would be
harmless, and therefore, it did not abuse its discretion by
denying Appellants’ motion to supplement their expert’s report.
B
¶41 Appellants also contend that the district court abused its
discretion in excluding their expert’s testimony on the Property’s
value. Appellants do not dispute that zoning is an important
consideration when valuing property. They do not dispute that
the Property’s actual zoning classification was more restrictive
than that used by their expert. And they do not dispute that the
expert erred by using the wrong zoning classification. Rather,
Appellants assert that the error does not render the expert’s
opinion “outside the threshold of reliability.” They therefore
claim the district court abused its discretion in excluding the
expert’s opinion. We do not agree.
¶42 Rule 702 of the Utah Rules of Evidence “assigns to trial
judges a ‘gatekeeper’ responsibility to screen out unreliable
expert testimony.” Taylor v. University of Utah, 2020 UT 21, ¶ 16,
466 P.3d 124 (cleaned up). A court therefore should “approach
expert testimony with rational skepticism.” Eskelson v. Davis
Hosp. & Med. Center, 2010 UT 59, ¶ 12, 242 P.3d 762 (cleaned up).
“The rule provides trial judges the framework to fulfill this
assignment.” Taylor, 2020 UT 21, ¶ 17. As relevant here, the rule
requires a “threshold showing that the principles or methods
that are underlying in the testimony . . . are based upon
sufficient facts or data.” Utah R. Evid. 702(b)(2). The data used
20190552-CA 20 2021 UT App 2Phillips v. Skabelund
must “have a foundation in the evidence, even if the data is in
dispute.” California College Inc. v. UCN Inc., 2019 UT App 39,
¶ 22, 440 P.3d 825. Accordingly, “the expert cannot give opinion
testimony that flies in the face of uncontroverted facts or data.”
Id. (cleaned up).
¶43 In this case, the expert’s report relied on a zoning
classification of “commercial” rather than the correct zoning
classification of “gateway.” Based on that error, the expert
incorrectly named industrial use as the Property’s highest and
best use and incorrectly looked to other industrial use properties
to determine the Property’s value. Resultantly, the data
underlying the expert’s opinion on the Property’s value lacked
any foundation indicating reliability and therefore the report
was unreliable. 10 The court’s decision to exclude the expert’s
testimony based on that unreliable report did not exceed the
limits of reasonability. Therefore, the court did not abuse its
discretion by excluding the expert’s testimony.
III. Seventh Order Retaining Summary Judgment Ruling and
Amending Rationale
¶44 Appellants contend the district court erred in granting
judgment against them in the Seventh Order. Cross-appellants
10. Appellants assert that any change in the data or the analysis
employed by the expert is immaterial because he comes to the
same conclusion in his new opinion. Even if we were to believe
the expert’s assertion that the valuation remained the same after
further analysis using different underlying data, we would still
not view the court’s determination that the expert’s report was
unreliable as an abuse of discretion. Reliability is as much about
the data and analysis as it is about the conclusion. And our rules
of discovery require disclosure of each component of an expert’s
opinion for that reason, among others.
20190552-CA 21 2021 UT App 2Phillips v. Skabelund
argue that we lack jurisdiction to consider Appellants’ challenge
to the Seventh Order and alternatively argue that if the court
erred, its ruling may be sustained as to certain claims on the
ground that they are time-barred. Cross-appellants also
alternatively argue that the court erred in amending the Seventh
Order and suggest that summary judgment in their favor can be
based on the Settlement Agreement, as the court originally ruled.
As a further alternative, Cross-appellants contend that laches bar
Appellants’ claims. Because we otherwise resolve Cross-
appellants’ concerns, we do not reach the latter two issues. We
first determine we have jurisdiction over this issue. We then
address whether Appellants’ claim has merit. We conclude that
it does as to the first cause of action, and we proceed to address
Cross-appellants’ argument that the statute of limitations bars
that claim.
A
¶45 Cross-appellants assert that we lack jurisdiction over the
Seventh Order by pointing out that Appellants filed their first
notice of appeal before the Seventh Order was entered and
contending that the amended notice of appeal was untimely and
unspecific. We hold the amended notice of appeal was both
timely and sufficiently specific.
¶46 After amending its previous orders granting summary
judgment against Appellants, the district court entered anew a
final judgment on August 13, 2019. This was an amended
judgment rather than a separate judgment. See Butler v.
Corporation of the President of the Church of Jesus Christ of Latter-day
Saints, 2014 UT 41, ¶ 24 n.6, 337 P.3d 280 (“Once final judgment
is entered, all preceding interlocutory rulings that were steps
towards final judgment merge into the final judgment and
become appealable at that time.” (cleaned up)). Appellants filed
their amended notice of appeal on September, 11, 2019—one day
before Cross-appellants filed their notice of appeal. Because the
20190552-CA 22 2021 UT App 2Phillips v. Skabelund
appeal was filed within the time allowed under the Utah Rules
of Appellate Procedure, it was timely. See Utah R. App. P. 4(a).
Appellants’ notice stated that they appealed “the final judgment
in this case, which was entered on August 13, 2019,” and
specified that the “appeal [wa]s of the entire judgment.” A party
which has “generally designated the final judgment in his notice
of appeal . . . is not precluded from alleging errors in any
intermediate order involving the merits or necessarily affecting
the judgment as long as such errors were properly preserved”
because “the notice of appeal is to be liberally construed” if the
opposing party is not prejudiced by the general designation. See
North Fork Special Service Dist. v. Bennion, 2013 UT App 1, ¶¶ 18,
20, 297 P.3d 624 (cleaned up). Therefore, the notice of appeal was
sufficient, and we have jurisdiction to consider the issue raised.
B
¶47 Appellants contend that the district court erred in
granting summary judgment independent of the motion against
them in its Seventh Order pursuant to rule 56(f) of the Utah
Rules of Civil Procedure. In particular, Appellants assert that the
court erred in so doing because its basis for dismissing the
claims—Appellants’ inability to prove damages based on the fair
market value of the Property at the time of the Trustee’s sale—
was not determinative of each claim. We agree as to claim one
but disagree as to claims two through seven.
¶48 In response to Appellants’ motion to alter or amend its
earlier orders, the court ruled in the Seventh Order that
“conflicting evidence . . . created a genuine issue of material fact”
making summary judgment on the basis of the Settlement
Agreement inappropriate. But the court found another reason to
grant judgment: the order excluding Appellants’ valuation
expert. The court reiterated that the expert’s appraisal of the
Property was unreliable and based on insufficient facts, and
thereby it concluded that “there is no genuine issue of material
20190552-CA 23 2021 UT App 2Phillips v. Skabelund
fact that would preclude summary judgment on the issue of
proof of damages.” See supra Section II. The court, on the basis of
rule 56(f)(3) of the Utah Rules of Civil Procedure, 11 granted
judgment to Skabelund and S&S on all claims against them.
¶49 As an initial matter, Cross-appellants challenge whether
Appellants’ arguments regarding the Seventh Order are
preserved. In the Seventh Order the court stated that it “hereby
provides notice to the parties and a reasonable time to respond,
30 days, before it will enter judgement on these grounds.” See
Utah R. Civ. P. 56(f). Appellants did not thereafter file anything
with the court to oppose the proposed ruling. 12 Cross-appellants
11. We clarify here that under the procedural posture of the case,
the court’s ruling is based on rule 56(f)(3) rather than rule
56(f)(2), that is referenced in the court’s order. Subsections
(1) and (2) of rule 56(f) permit a court to grant summary
judgment to a party after a motion is filed, regardless of whether
that party filed the motion or whether the ground for the
judgment was raised in the motion. See Utah R. Civ. P. 56(f). By
contrast, subsection (3) empowers a court to “consider summary
judgment on its own,” even in the absence of a motion. Id. Here,
the court had already adjudicated the motion for summary
judgment and was considering only the motion to alter or
amend its judgment. Because no motion for summary judgment
was before the court at the time of its ruling on the motion to
alter or amend, the court’s order granting summary judgment on
an alternative basis was pursuant to rule 56(f)(3).
12. Appellants assert the cause for their unresponsiveness was
confusion regarding the implications of the court’s order. The
court’s Seventh Order granted the parties notice and time to
respond but also indicated it was entering the judgment and that
the “order constitute[d] the final order of the court” on the
matter. Appellants thereafter sought clarification from the
(continued…)
20190552-CA 24 2021 UT App 2Phillips v. Skabelund
assert that the absence of a response means that Appellants’
issue is not preserved for appeal.
¶50 Utah courts have consistently held that “an issue is
preserved for appeal when it has been presented to the district
court in such a way that the court has an opportunity to rule on
it.” E.g., State v. Johnson, 2017 UT 76, ¶ 15, 416 P.3d 443 (cleaned
up). Here, the district court acted of its own initiative to grant
judgment independent of a motion. The rule 56(f) undertaking
not only presented the court with an opportunity to consider
whether its judgment was sustainable on grounds not raised in
Cross-appellants’ motion for summary judgment, but necessarily
compelled the court to consider that issue. Therefore, the issue
was preserved for appeal by nature of the court’s rule 56(f)
ruling. Appellants’ failure to respond within a reasonable time
(…continued)
court—albeit well past the time allotted for a response—and
were informed the court had sufficient evidence to make its
decision.
We take this opportunity to clarify the procedure for
obtaining a rule 56(f) judgment. Whether a motion is filed, or
whether the court considers summary judgment of its own
accord, the court must present the parties with notice of its
anticipated judgment and a reasonable time to respond before
entering the judgment. The notice need not be in the form of a
proposed order but must fairly apprise the parties of (1) the
particular claims on which the court anticipates granting
summary judgment and (2) the ground(s) to be relied on by the
court in granting judgment, including, if applicable, any material
facts the court may consider not to be genuinely in dispute. If
after receiving the parties’ responses, the court determines
summary judgment is appropriate, the court may then enter the
judgment in keeping with the notice provided to the parties.
20190552-CA 25 2021 UT App 2Phillips v. Skabelund
after receiving notice, while unadvisable, does not divest the
issue of its preserved status. Therefore, we consider it.
¶51 We begin by recognizing that a court may enter summary
judgment independent of a motion against a party to which the
burden of production falls if the court determines, after the party
is given notice and reasonable time to respond, see Utah R. Civ.
P. 56(f), 13 that the opposing party (or parties) is entitled to
judgment as a matter of law and no material fact remains in
13. Although the 2015 amendment to rule 56 of the Utah Rules of
Civil Procedure was designed to “adopt the style of Federal Rule
of Civil Procedure 56 without changing the substantive Utah
law,” Utah R. Civ. P. 56 advisory committee notes, it added rule
56(f), governing judgments independent of the motion—a
procedure not previously articulated in our rules. That
procedure was added to the federal rules in 2010 to “bring[] into
Rule 56 text a number of related procedures that have grown up
in practice.” Fed. R. Civ. P. 56(f) (2010 advisory committee
notes). The incorporation of rule 56(f) similarly reflects some
procedures that appear in Utah practice but conflict with others.
Compare Utah R. Civ. P. 56(f) (permitting a court to grant
summary judgment independent of the motion under
subsections (1) and (2) and to grant judgment independent of
any motion under subsection (3)), with Kell v. State, 2008 UT 62,
¶ 46, 194 P.3d 913 (“It is error for a trial court to sua sponte grant
summary judgment on an issue when neither party has sought
summary judgment on that issue.”). The implication is that the
adoption of the rule supersedes—whether intentionally or not—
our case law to the contrary. Thus, rule 56(f) abrogates Kell v.
State, inasmuch as that opinion indicates a court may not sua
sponte grant summary judgment on an issue in the absence of a
motion. But a court must still provide notice and an opportunity
to respond before doing so. See Utah R. Civ. P. 56(f).
20190552-CA 26 2021 UT App 2Phillips v. Skabelund
dispute, cf. Salo v. Tyler, 2018 UT 7, ¶ 26, 417 P.3d 581. But, if a
party shows either that judgment cannot be determined as a
matter of law or that a genuine issue of material fact precludes
summary judgment on the independent basis the court has
identified, then summary judgment remains unavailable. See
Utah R. Civ. P. 56(a), (f).
¶52 The court’s Seventh Order dismissed claims one through
seven against S&S and Skabelund. To determine whether the
court correctly entered judgment independent of the motion on
each claim, we first must identify whether each claim requires a
showing of damages. Next, we must determine whether the
exclusion of Appellants’ valuation expert forecloses Appellants’
ability to prove damages as a matter of law on each claim.
1. First Claim
¶53 Appellants’ first claim for legal malpractice against
Skabelund alleged he breached applicable standards of
professional conduct when he entered into and enforced the
terms of the trust deed. The complaint’s language frames the
claim as one arising from fiduciary duties. 14 The elements
required to prove legal malpractice based on fiduciary duty
includes damages. 15 See Christensen & Jensen, PC v. Barrett
& Daines, 2008 UT 64, ¶ 22, 194 P.3d 931. On this claim,
14. Legal malpractice claims may derive from tort law, fiduciary
duty, or contract. See Christensen & Jensen, PC v. Barrett & Daines,
2008 UT 64, ¶ 21, 194 P.3d 931.
15. “The 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.” Christensen & Jensen, 2008 UT 64, ¶ 23
(cleaned up).
20190552-CA 27 2021 UT App 2Phillips v. Skabelund
Appellants asserted they were damaged when Skabelund
“enforced the note . . . by foreclosing the trust deed and directing
the sale of the [Property] . . . to satisfy it.” Appellants sought the
difference between the interest and charges prescribed under the
note and “reasonable interest and charges.” The damages sought
on this claim were not tied to the Property’s value, but to the
different interest rates and charges. Thus, the exclusion of the
valuation expert’s testimony did not prevent Appellants from
proving damages as a matter of law.
¶54 Cross-appellants assert that Appellants failed to offer any
evidence of what “reasonable terms for interest and charges”
would be, and therefore they still lack the necessary evidence to
prove their claim. That assertion is the single reference to a lack
of evidentiary support to establish damages for this cause of
action in the voluminous briefings on appeal. Cross-appellants
do not cite the record to support their assertion, and they do not
explain and demonstrate how Appellants might be foreclosed
from proving these damages (e.g., by arguing that an expert
must establish such damages, and that such expert was never
disclosed) beyond the general assertion. Appellants are silent on
the issue. We therefore conclude that support for this assertion is
not apparent on the record, and we decline to address it. See
Cochegrus v. Herriman City, 2020 UT 14, ¶ 36, 462 P.3d 357 (“For a
legal theory to be apparent on the record, the record must
contain sufficient and uncontroverted evidence supporting the
ground or theory to place a person of ordinary intelligence on
notice that the prevailing party may rely thereon on appeal.”
(cleaned up)).
¶55 Because the first claim asserts damages that do not
depend on the Property’s value, the district court incorrectly
concluded that the exclusion of Appellants’ valuation expert
foreclosed, as a matter of law, Appellants’ ability to demonstrate
damages on this claim.
20190552-CA 28 2021 UT App 2Phillips v. Skabelund
2. Second Through Sixth Claims
¶56 Appellants’ second claim alleges legal malpractice against
Skabelund, related to his formation and management of
Pdnulebaks. The third claim asserts Skabelund committed fraud
in connection with the formation of Pdnulebaks. The fourth
claim was against S&S for breach of the Settlement Agreement
and asserted S&S failed to wait as agreed to accomplish a
trustee’s sale. The fifth claim asserted fraud in the Trustee’s sale
against Skabelund and S&S because it was not postponed as
stipulated in the Settlement Agreement. The sixth claim was for
breach of fiduciary duty against Skabelund for his management
of Pdnulebaks while conflicted as the manager of S&S. Each
claim required Appellants to prove damages. 16 And Appellants
framed those claimed damages in terms of the Property’s value.
16. The elements to be shown for the second malpractice claim
are the same as those in the first claim. See supra note 15. As to
claims three and five,
A claim of fraud requires the plaintiff to allege
(1) that a representation was made (2) concerning a
presently existing material fact (3) which was false
and (4) which the representor either knew to be
false or made recklessly, knowing that there was
insufficient knowledge upon which to base such a
representation, (5) for the purpose of inducing the
other party to act upon it and (6) that the other
party, acting reasonably and in ignorance of its
falsity, (7) did in fact rely upon it (8) and was
induced to act (9) to that party’s injury and
damage.
Robinson v. Robinson, 2016 UT App 33, ¶ 21, 368 P.3d 105. On the
fourth claim, “the elements of a prima facie case for breach of
contract are (1) a contract, (2) performance by the party seeking
(continued…)
20190552-CA 29 2021 UT App 2Phillips v. Skabelund
¶57 On the second claim, Appellants asserted as the single
source of damages Skabelund’s management of Pdnulebaks “for
his own benefit including by failing to take reasonable steps to
preserve Pdnulebaks’ equity in the [Property] and allowing it to
be sold” under value at the Trustee’s sale. Accordingly,
Appellants’ demanded the difference between the Property’s
sale price and its “fair market value.” On their third claim,
Appellants asserted that they were damaged by the fraud
because it “resulted in the loss of the [Property] at the Trustee’s
sale to S&S for substantially below market value.” Appellants
again conditioned their claim on damages deriving from the
sale. As damages for the fourth claim, Appellants asserted that
the Property was sold without the exercise of Appellants’ rights,
resulting in “the difference between [the sale price] and the fair
market value of the [Property],” and they asked for relief in that
amount. Similarly, Appellants’ fifth claim complained that the
sale was accomplished by fraud and resulted in harm because
the Property was “sold at the trustee’s sale for substantially less
than market value.” Appellants again claimed damages for the
difference between the sale price and “the fair market” value.
For the sixth cause of action, Appellants claimed they were
damaged by “Skabelund’s breach of fiduciary duties including,
without limitation, the difference between the successful credit
bid of S&S at the trustee’s sale and the fair market value of the
[Property].” But Appellants limit themselves to the Property’s
(…continued)
recovery, (3) breach of the contract by the other party, and (4)
damages.” America West Bank Members v. State, 2014 UT 49, ¶ 15,
342 P.3d 224 (cleaned up). Regarding the sixth claim, “[b]reach of
fiduciary duty claims generally require proof of four elements:
the existence of a fiduciary relationship . . . ; breach of the
fiduciary duty; causation, both actual and proximate; and
damages.” Gables at Sterling Village Homeowners Ass'n, Inc. v.
Castlewood-Sterling Village I, LLC, 2018 UT 04, ¶ 52, 417 P.3d 95.
20190552-CA 30 2021 UT App 2Phillips v. Skabelund
value as the basis for their claim of damages and again seek the
difference between the Property’s sale price and its “fair market
value.” Appellants point us to no place in the record asserting
any other basis for their claims of damages, nor do they present
such a basis on appeal.
¶58 Accordingly, Appellants’ damages theory for each claim
depends on the assertion that the Property was sold for less than
its value at the Trustee’s sale because “[a] party is bound by the
terms of his own pleading.” See Larsen v. Davis County School
Dist., 2017 UT App 221, ¶ 39, 409 P.3d 114. To prove their claims,
Appellants had to provide evidence that the Property’s value
exceeded its sale price. The exclusion of Appellants’ valuation
expert deprived Appellants of evidence to that end—the
remaining valuations being less than the sale price. See supra
note 8.
¶59 Because Appellants could not provide evidence of the
Property’s value in excess of its sale price after the exclusion of
their valuation expert, the court correctly entered judgment
against them on claims two through six.
3. Seventh Claim
¶60 Appellants’ seventh claim was to set aside the Trustee’s
sale. Appellants correctly argue that this equitable claim does
not necessarily require a showing of the type of damages with
which we are concerned here. 17 But when a claimant’s argument
17 . “To set aside a trustee’s deed, a court must determine
whether the trustee’s deed was void as against public policy, or
voidable because of fraud, unfair dealing, or that the trustor
suffered prejudice due to some defect in the sale, such as the
trustee’s failure to strictly comply with the Trust Deed Act.”
Bank of Am. v. Adamson, 2017 UT 2, ¶ 33, 391 P.3d 196.
20190552-CA 31 2021 UT App 2Phillips v. Skabelund
to set aside a trustee’s sale requires a showing of prejudice
arising from a notice defect in the sale, proof of damages is
essential. See Concepts, Inc. v. First Sec. Realty Services, Inc., 743
P.2d 1158, 1159 (Utah 1987) (per curiam) (“Defects in the notice
of foreclosure sale that will authorize the setting aside of the sale
must be those that would have the effect of chilling the bidding
and causing an inadequacy of price.”); see also Bank of Am. v.
Adamson, 2017 UT 2, ¶ 26, 391 P.3d 196.
¶61 Appellants’ cause of action to set aside the Trustee’s sale
requires a showing of prejudice as we explain above. Although
Appellants’ pleadings included allegations of fraud in the
Trustee’s sale, those claims fail, supra ¶¶ 56–59, and cannot
support their seventh claim. Likewise, we have rejected
Appellants’ contention that the trustee’s deed was void. See supra
note 4. Accordingly, Appellants’ remaining avenue of argument
is that the Trustee’s sale resulted in prejudice, and they were
required to show damages in the form of chilled bidding and an
inadequate purchase price. But the exclusion of their valuation
expert leaves them without evidence on whether an inadequate
purchase price was obtained. 18 Consequently, the district court
correctly granted judgment against Appellants on their seventh
claim.
18. This argument further fails in light of our other holdings. See
supra note 5 (rejecting, as unpreserved, argument that Trustee’s
breach of the trust deed’s notice provision made the trustee’s
deed voidable); supra Section I.A (rejecting argument that
Appellants demonstrated prejudice in challenge to Third Order
denying summary judgment to Appellants on seventh claim);
supra Section I.B (rejecting argument that prejudice should be
presumed in challenge to Third Order denying summary
judgment to Appellants on seventh claim).
20190552-CA 32 2021 UT App 2Phillips v. Skabelund
C
¶62 Having determined that the district court erred in
granting judgment against Appellants on their first claim
alleging malpractice by Skabelund for the trust deed, we proceed
to address Cross-appellants’ argument that the remaining claim
is time-barred. Specifically, Cross-appellants argue, as an
alternative to upholding the district court’s summary judgment
ruling, that the court erred in rejecting the statute of limitations
defense presented in their motion to dismiss, in their opposition
to Appellants’ third amended complaint and in their motion for
summary judgment. We agree.
¶63 “A plaintiff must file a complaint before the statute of
limitations expires or its claim will be barred.” Young Res. Ltd.
P'ship v. Promontory Landfill LLC, 2018 UT App 99, ¶ 10, 427 P.3d
457; see Utah Code Ann. § 78B-2-102 (LexisNexis 2017) (“Civil
actions may be commenced only within the periods prescribed
in this chapter . . . .”). “Under Utah law, a malpractice action
must be brought within a four-year limitation period.” Moshier v.
Fisher, 2019 UT 46, ¶ 8, 449 P.3d 145 (citing Utah Code section
78B-2-307(3)). Our supreme court has indicated that for a
malpractice claim, the limitation period begins to run when a
party suffers actual harm or damages—i.e., “the last event
necessary to complete the cause of action.” See id. (cleaned up);
see also Utah Code Ann. § 78B-2-102 (“Civil actions may be
commenced only . . . after the cause of action has accrued . . . .”);
see generally supra note 15 (describing elements of malpractice
claim). But “full comprehension of damages stemming from
injurious conduct is not required before the clock starts running
on the limitations period.” Stephenson v. Elison, 2017 UT App 149,
¶ 46, 405 P.3d 733. In other words, “a cause of action accrues
when a plaintiff could have first filed and prosecuted an action
to successful completion.” DOIT, Inc. v. Touche, Ross & Co., 926
P.2d 835, 843 (Utah 1996).
20190552-CA 33 2021 UT App 2Phillips v. Skabelund
¶64 Here, Cross-appellants argue that the claim accrued when
the note and deed were executed or, alternatively at the time the
note was due, at the time a default was declared, or at the
recording of the foreclosure. Contrastingly, Appellants contend
they “did not incur actual losses until Skabelund enforced the
note and conducted the foreclosure sale” and insist that the
malpractice action has yet to accrue because this litigation
remains unresolved.
¶65 Appellants cite Tuttle v. Olds, 2007 UT App 10, 155 P.3d
893, to support their proposition. In Tuttle, the court adjudicated
a statute of limitations issue on a claim regarding water rights.
Id. ¶ 11. The plaintiffs in that case had received notice about their
lack of certain water rights but sold their property relying on
earlier assurances that they possessed those rights. Id. ¶¶ 3–4.
The buyers sued plaintiffs and prevailed. Id. ¶ 4. The plaintiffs
later sued the state to recover damages for providing them
misleading information regarding their water rights. Id. ¶ 5. The
state moved to dismiss the case as barred by the statute of
limitations, arguing that the plaintiffs’ cause of action accrued
when they received notice of the lack of water rights. Id. ¶¶ 5,
11–12. The court granted the motion but was reversed on appeal.
Id. ¶¶ 5, 17. This court explained that “the law does not
recognize an inchoate wrong, and therefore, until there is actual
loss or damage resulting to the interests of another, a claim for
negligence is not actionable.” Id. ¶ 11 (cleaned up). Accordingly,
this court concluded it was after the judgment was entered for
the buyers that plaintiffs suffered an actual loss, and only then
did their cause of action accrue. Id. ¶ 12.
¶66 Tuttle is distinguishable from this case because there is no
underlying litigation that must resolve before damages accrue to
Appellants. Rather, Appellants were damaged, as they
acknowledge, when Skabelund enforced the trust deed. But
Skabelund enforced the trust deed well before the Trustee’s sale;
the sale was a continuation of the enforcement effort. He first
20190552-CA 34 2021 UT App 2Phillips v. Skabelund
enforced the trust deed between October 21, 2010—the maturity
date on the note and deed—and May 24, 2011—the date
Skabelund declared the note and deed in default and caused
Cache Title to record the same. His enforcement of the note
sought payment, including the “unreasonable interest and
charges.” Therefore, it was at that time Appellants suffered
actual harm or damages from the alleged malpractice. And
although the amount of damages continued to increase through
the conclusion of the sale, that increase is immaterial to when the
initial harm—completing the cause of action—was done.
¶67 The trust deed’s enforcement presented more than an
inchoate harm—the mere possibility, or probability, of loss. Loss
(the imposition of the note’s interests and charges) became
certain when Skabelund enforced the deed. That is discernable
because even if Phillips had paid the balance on the note at the
time it was due—avoiding the foreclosure—he would still have a
prima facie claim for malpractice against Skabelund under the
alleged facts because he would still have suffered the harm of
paying “unreasonable interest and charges” under the note.
What’s more, Phillips was aware that his claims had accrued, as
manifest by his bankruptcy filling in November 2011 indicating
that he had unliquidated claims against Skabelund for
malpractice.
¶68 Under these facts, the latest date for the accrual of
Appellants’ claim for malpractice on the trust deed and note
against Skabelund was May 24, 2011. Appellants did not file
their complaint until December 20, 2015. This is beyond the four-
year limitation period. Accordingly, Appellants’ first claim for
malpractice was time-barred and the district court incorrectly
denied Cross-appellants’ motions.
IV. Attorney Fees on Appeal
¶69 Finally, Cross-appellants ask us to award them their
attorney fees incurred on appeal. It is well-settled that “when a
20190552-CA 35 2021 UT App 2Phillips v. Skabelund
party who received attorney fees below prevails on appeal, the
party is also entitled to fees reasonably incurred on appeal.”
Tronson v. Eagar, 2019 UT App 212, ¶ 39, 457 P.3d 407 (cleaned
up). Having received attorney fees in the underlying action and
under the conclusions reached in this opinion, Cross-appellants
are entitled to recover reasonable attorney fees incurred on
appeal. 19
CONCLUSION
¶70 We affirm the district court’s dismissal of Appellants’
claim under the Utah Trust Deed Act’s notice-of-postponement
provision because Appellants do not challenge an independent
basis for dismissal as articulated by the district court. We do not
address Appellants’ argument that the trustee’s deed is voidable
even absent a showing of prejudice where Trustee breached the
notice provision of the trust deed because that claim is
unpreserved and Appellants make no argument for our
consideration of the unpreserved claim. We reject Appellants’
challenge to the denial of their motion for summary judgment on
the seventh claim asserting that prejudice should be presumed
or that prejudice was sufficiently demonstrated. We also reject
Appellants’ argument that the district court abused its discretion
in denying their motion to supplement their expert’s report and
in ordering that expert’s testimony excluded. We uphold as
correct the district court’s ruling granting judgment to S&S and
Skabelund on claims two through six based on Appellants’
inability to prove damages following the exclusion of their
valuation expert. We uphold the district court’s grant of
judgment to S&S and Skabelund as to claim one on the
19 . Appellants similarly request attorney fees on appeal.
However, because they are not prevailing parties, we deny their
request.
20190552-CA 36 2021 UT App 2Phillips v. Skabelund
alternative ground that the claim is time-barred. Finally, we
grant Cross-appellants’ request for attorney fees on appeal and
remand to the district court for the purpose of quantifying those
fees.
¶71 Affirmed. Costs to Appellees and Cross-appellants. See
Utah R. App. P. 34(a).
20190552-CA 37 2021 UT App 2