Helfrich v. Adams , 299 P.3d 2 ( 2013 )

2013 UT App 37_________________________________________________________
THE UTAH COURT OF APPEALS
CHRISTINE HELFRICH AND MARY ANNE CHESAREK,
Plaintiffs and Appellants,
v.
LUKE L. ADAMS,
Defendant and Appellee.
Opinion
No. 20110459‐CA
Filed February 22, 2013
Second District, Farmington Department
The Honorable John R. Morris
No. 070700508
David B. Stevenson and Ryan B. Wilkinson, Attorneys for
Appellants
T. Richard Davis, Thomas B. Price, and Benjamin P. Harmon,
Attorneys for Appellee
JUDGE JAMES Z. DAVIS authored this Opinion,
in which WILLIAM A. THORNE JR.
and J. FREDERIC VOROS JR. concurred.
DAVIS, Judge:
¶1 Christine B. Helfrich and Mary Anne Chesarek, on behalf of
Carmen R. Finan’s estate and trust (collectively, Plaintiffs), appeal
the trial court’s grant of summary judgment in favor of Luke L.
Adams. We affirm.
Helfrich v. Adams
BACKGROUND
¶2 Finan, Adams, and Frankie A. Emley are siblings who
inherited property from their mother. Because the value of the
property Adams inherited exceeded that of the property his sisters
inherited, he agreed to sign a promissory note (the Note) granting
each of them a one‐half interest in $26,340,1 to be secured by the
property Adams had inherited. The Note provided that if the
property securing the Note was “sold, assigned, or transferred for
any reason or in any manner, then the entire remaining balance of
[the Note would be] immediately due and payable.” It also
provided that if Adams were to sell the property for greater than
$129,942, he would pay Finan and Emley 20.27% of the sale price
instead of the agreed‐upon $26,340.
¶3 On January 22, 1999, Adams transferred the property, which
had previously been in his name only, to himself and his wife as
joint tenants via quitclaim deed (the 1999 transfer). The deed was
recorded the same day. In January 2005, Adams and his wife
transferred the property to themselves as trustees of the Luke L.
Adams Trust and the Diana C. Adams Trust. Adams did not notify
Finan of either transfer. On February 22, 2006, Emley died,
bequeathing her interest in the Note to Adams. On or about
November 21, 2006, Adams filed a Petition to Approve Payment of
Promissory Note and Authorize Partial Distribution of Estate (the
2006 Petition) in the probate case relating to Emley’s estate, in
which he represented that the Note was not yet due and payable
because there had been no “event of transfer” or other triggering
event. Adams requested that he be permitted to pay Emley’s
portion of $26,340 to her estate—and ultimately to himself—in
satisfaction of his obligation to Emley under the Note.
1. This amount represented 20.27% of the property’s $129,942
market value at the time the Note was signed. According to
Plaintiffs, the property now appraises at $1,250,000.
20110459‐CA 2 2013 UT App 37Helfrich v. Adams
¶4 Finan learned of the transfers sometime after Emley’s death
in February 2006 and filed suit against Adams on September 14,
2007, more than eight and a half years after the 1999 transfer. Finan
alleged that Adams was in breach of the terms of the Note for
failure to pay the sum due to her at the time of the transfer. Finan
died in September 2009, and Finan’s daughters, Plaintiffs, were
substituted as plaintiffs in May 2010. Plaintiffs filed a motion for
summary judgment on July 30, 2010, and Adams filed a cross‐
motion for summary judgment on August 16, 2010. The trial court
granted Adams’s motion, ruling that the statute of limitations had
run on Plaintiffs’ claims. Specifically, the court determined that the
statute of limitations began running on January 22, 1999, the date
the property was transferred to Adams and his wife as joint
tenants, and that Finan’s filing of the action on September 14, 2007,
was therefore untimely under the applicable six‐year statute of
limitations, see Utah Code Ann. § 78B‐2‐309(2) (LexisNexis 2012).
The court further determined that the equitable discovery rule was
inapplicable because the recorded deeds gave Finan constructive
notice of the transfers, Adams did not conceal the transfers, and the
case did not present exceptional circumstances that would justify
tolling the statute of limitations.
¶5 Plaintiffs filed a timely notice of appeal from the trial court’s
summary judgment ruling. Subsequently, Plaintiffs discovered the
2006 Petition and filed a rule 60(b) motion for relief from the
summary judgment order, arguing that Adams’s misleading
statements in the 2006 Petition, which represented that the Note
was not yet due and payable and that no transfer had been made,
justified tolling the statute of limitations under the equitable
discovery rule. The trial court denied the motion, and Plaintiffs
contest this ruling as well.
ISSUES AND STANDARDS OF REVIEW
¶6 Plaintiffs assert that the trial court erred in granting Adams’s
motion for summary judgment and denying Plaintiffs’. “This Court
20110459‐CA 3 2013 UT App 37Helfrich v. Adams
reviews a trial court’s entry of summary judgment for correctness
and gives its conclusions of law no deference.” Utah Farm Bureau
Ins. Co. v. Crook, 1999 UT 47, ¶ 3, 980 P.2d 685. “Summary judgment
is appropriate when no genuine issues of material fact exist and the
moving party is entitled to judgment as a matter of law.” Id. (citing
Utah R. Civ. P. 56(c)). Plaintiffs also challenge the trial court’s
denial of their rule 60(b) motion for relief from the summary
judgment. “We review the trial court’s denial of a motion to
reconsider summary judgment under rule 60(b) of the Utah Rules
of Civil Procedure for abuse of discretion.” Lund v. Hall, 938 P.2d
285, 287 (Utah 1997).
ANALYSIS
¶7 Plaintiffs challenge several aspects of the trial court’s
summary judgment ruling. First, they argue that the trial court
erred in employing Utah Code section 57‐3‐102(1) to determine that
Finan had constructive notice of the transfer by virtue of Adams
having recorded the quitclaim deed. Second, they assert that the
trial court erred in determining that Adams did not conceal the
transfer because there were disputed issues of material fact relating
to that issue. In connection with this argument, they also contest
the trial court’s denial of their motion for rule 60(b) relief, which
was premised on newly‐discovered evidence that allegedly
demonstrated Adams’s misleading conduct. Finally, they maintain
that exceptional circumstances justify applying the equitable
discovery rule to toll the statute of limitations in this case. In the
alternative, they assert that the 1999 transfer was not a valid
triggering event that made the note due and payable and that the
trial court therefore erred in determining that the statute of
limitations began running as of that date. Because the running of
the statute of limitations must be established before it becomes
necessary to consider the applicability of the equitable discovery
rule, we address Appellant’s alternative argument as a threshold
matter before considering the other issues on appeal.
20110459‐CA 4 2013 UT App 37Helfrich v. Adams
I. The 1999 Transfer Triggered the Running of the Statute of
Limitations.
¶8 The applicable statute of limitations in this case is six years.
See Utah Code Ann. § 78B‐2‐309(2). “In a breach of contract action
the statute of limitations ordinarily begins to run when the breach
occurs.” Butcher v. Gilroy, 744 P.2d 311, 313 (Utah Ct. App. 1987).
Under the terms of the Note, “the entire remaining balance of [the
Note] is immediately due and payable” “[i]n the event the title to
the real property . . . securing [the] note is sold, assigned or
transferred for any reason or in any manner.” Plaintiffs maintain
that the 1999 transfer “was not the type of transfer contemplated
that would trigger default.” However, we fail to see how the
quitclaim deed transferring the property from Adams to Adams
and his wife would not fall under the category of a transfer “for
any reason or in any manner.” Thus, according to the Note’s plain
language, Adams was in breach when he failed to pay Finan
immediately following the 1999 transfer, and the statute of
limitations began to run as of that date.
II. The Equitable Discovery Rule Does Not Apply.
¶9 Plaintiffs next contend that the trial court erred in declining
to apply the equitable discovery rule. There are two circumstances
where the “equitable discovery rule may operate to toll an
otherwise fixed statute of limitations period”:
(1) where a plaintiff does not become aware of the
cause of action because of the defendant’s
concealment or misleading conduct, and (2) where
the case presents exceptional circumstances and the
application of the general rule would be irrational or
unjust, regardless of any showing that the defendant
has prevented the discovery of the cause of action.
Russell Packard Dev., Inc. v. Carson, 2005 UT 14, ¶ 25, 108 P.3d 741(citation and internal quotation marks omitted). However, “before
20110459‐CA 5 2013 UT App 37Helfrich v. Adams
a statute of limitations may be tolled under [the equitable discovery
rule], the plaintiff must make an initial showing that he did not
know nor should have reasonably known the facts underlying the
cause of action in time to reasonably comply with the limitations
period.” Berneau v. Martino, 2009 UT 87, ¶ 23, 223 P.3d 1128.
A. Constructive Notice
¶10 Utah Code section 57‐3‐102 provides that documents
completed in accordance with Title 57, “from the time of recording
with the appropriate county recorder, impart notice to all persons
of their contents.” Utah Code Ann. § 57‐3‐102(1) (LexisNexis 2010).
Thus, because the transfers were recorded at the time they
occurred, the trial court determined that Finan had constructive
notice long before the statute of limitations expired. Plaintiffs
contest this determination, asserting that section 57‐3‐102 should be
interpreted as applying only to individuals with a prospective
interest in property, not those with an existing interest, because it
would be unreasonable to require individuals with an existing
interest to continually check the property records in order to
protect their interest.
¶11 We acknowledge that “[i]n general, Utah law does not
require one to inspect the public record to verify the truthfulness
of statements made to him or her,” Timothy v. Keetch, 2011 UT App
104, ¶ 12, 251 P.3d 848, and that the constructive notice provided
by recording will therefore not necessarily defeat a fraud claim,
Christensen v. Commonwealth Land Title Ins. Co., 666 P.2d 302, 307
(Utah 1983). However, we are aware of no authority, and Plaintiffs
have cited none, suggesting that this rule applies outside of the
fraud context.2
2. Had Finan’s lack of actual knowledge been the result of
affirmative concealment or misleading behavior on Adams’s
part—e.g., had Finan asked Adams about the status of the property
(continued...)
20110459‐CA 6 2013 UT App 37Helfrich v. Adams
¶12 Nor do we think it absurd to require an individual with an
interest in property to take reasonable steps to periodically confirm
the continuing viability of that interest. See generally Russell Packard,
2005 UT 14, ¶ 26 (explaining that the concealment version of the
equitable discovery rule “requires an evaluation of the
reasonableness of a plaintiff’s conduct in light of the defendant’s
fraudulent or misleading conduct”). Such reasonable steps need
not even necessarily require a search of the property records. Finan
could have simply asked her brother whether he had taken any
action that might affect her interest in the property. See generally
Timothy, 2011 UT App 104, ¶ 12 (“Utah law does not require one to
inspect the public record to verify the truthfulness of statements
made to him or her.”). Given that the transfers were a matter of
public record, we agree with the trial court that Finan had
constructive notice that the transfers had occurred and, through the
exercise of reasonable diligence, could have discovered her claims
within the limitations period.
¶13 In any event, we are not convinced that the equitable
discovery rule would apply in this case even if Finan did not have
constructive notice of the transfers. “Mere ignorance of the
existence of a cause of action will neither prevent the running of the
statute of limitations nor excuse a plaintiff’s failure to file a claim
within the relevant statutory period.” Russell Packard, 2005 UT 14,
¶ 20. Thus, even assuming that Finan neither knew nor should
have known of her claims prior to the running of the statute of
limitations, she would have to establish either that Adams
prevented her from discovering the transfers by “concealment or
2. (...continued)
and had he falsely represented to her that the property had not
been transferred—then the equitable discovery rule might apply,
despite the constructive notice provided by the recording.
However, as discussed further infra ¶ 15, Plaintiffs have presented
no evidence tending to suggest that Adams made any attempt to
conceal the transfer.
20110459‐CA 7 2013 UT App 37Helfrich v. Adams
misleading conduct” or that exceptional circumstances would
make it unjust to enforce the statute of limitations. See id. ¶ 25(citation and internal quotation marks omitted).
B. Concealment
¶14 In order to successfully toll the statute of limitations under
the concealment branch of the equitable discovery rule, Plaintiffs
must demonstrate that Finan did “not become aware of the cause
of action because of [Adams’s] concealment or misleading conduct.”
See Russell Packard Dev., Inc. v. Carson, 2005 UT 14, ¶ 25, 108 P.3d
741 (emphasis added). Thus, even accepting Plaintiffs’ assertion
that Finan was neither actually nor constructively aware of the
transfers, in order to defeat summary judgment, they must have
produced at least some evidence that Adams concealed the
transfers or engaged in misleading conduct that prevented Finan
from learning of the transfers.
¶15 In support of their summary judgment motion, Plaintiffs
argued “that [Adams’s] failure to provide any notice to his sister of
the transfers he made to his wife and later to his trust amounted to
concealment under the circumstances.” The trial court declined to
recognize Adams’s failure to inform Finan of the transfers as the
type of “concealment or misleading conduct” contemplated by the
equitable discovery rule, see id., and determined that Plaintiffs had
“not submitted any competent evidence to create a genuine issue
of material fact as to whether [Adams’s] conduct was misleading.”
Plaintiffs renew this argument only cursorily in their brief and
point us to no authority in support of the position that failure to
inform rises to the level of concealment. Cf. First Sec. Bank of Utah
NA v. Banberry Dev. Corp., 786 P.2d 1326, 1333 (Utah 1990)
(explaining that failure to disclose is not fraudulent unless a
fiduciary relationship exists, which requires “not only confidence
of the one in the other, but . . . [also] a certain inequality,
dependence, weakness of age, of mental strength, business
intelligence, knowledge of the facts involved, or other conditions,
giving to one advantage over the other” (citation and internal
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quotation marks omitted)). We therefore decline to address this
argument further, see generally State v. Crabb, 2011 UT App 440, ¶ 5,
268 P.3d 193 (per curiam) (“It is well established that appellate
courts need not address arguments that are inadequately briefed.”),
and determine that, based on the undisputed facts presented to the
trial court on summary judgment, the concealment branch of the
equitable discovery rule does not apply to toll the statute of
limitations in this case.
¶16 Plaintiffs nevertheless assert that even if summary judgment
was appropriate on the facts presented at the time of the summary
judgment hearing, the trial court should have granted their rule
60(b) motion to set aside its summary judgment ruling based on the
newly‐discovered 2006 Petition, which contained Adams’s false
statements that as of 2006, the Note was not due and payable and
no transfer had been made. See generally Utah R. Civ. P. 60(b) (“On
motion and upon such terms as are just, the court may in the
furtherance of justice relieve a party or his legal representative
from a final judgment, order, or proceeding for the following
reasons: . . . (2) newly discovered evidence which by due diligence
could not have been discovered in time to move for a new trial
under Rule 59(b) . . . .”). However, we agree with the trial court that
this evidence would have made no difference to the outcome of its
summary judgment ruling because even assuming that the
statements actually misled Finan as to the existence of a cause of
action, they were not made until after the statute of limitations had
expired in January 2005. Thus, Adams’s statements in the 2006
Petition could not have impacted Finan’s ability to discover and
pursue her claims within the limitations period.
C. Exceptional Circumstances
¶17 Plaintiffs next assert that this case presents exceptional
circumstances because by transferring the Property, Adams
improperly denied Finan her rightful share of the inherited
property by surreptitiously triggering the statute of limitations and
letting it run without informing Finan. Plaintiffs also rely on
20110459‐CA 9 2013 UT App 37Helfrich v. Adams
“expectations of honesty among family members and the value of
the property at stake” in support of their argument that exceptional
circumstances exist.
¶18 “The ultimate determination of whether a case presents
exceptional circumstances is a question of law and turns on a
balancing test” that “examines [t]he hardship the statute of
limitations would impose on the plaintiff . . . [against] any
prejudice to the defendant from difficulties of proof caused by the
passage of time.” Berneau v. Martino, 2009 UT 87, ¶ 23, 223 P.3d
1128 (alterations and omission in original) (citations and internal
quotation marks omitted). The trial court concluded that “Finan
[had] ample time to evaluate and assert her claims” and “that the
passage of time and [Plaintiffs’] aged causes of action will create
difficulties and prejudice to [Adams], as title to the subject property
transferred a second time after the 1999 transfer and Ms. Finan
cannot be called to testify as a witness.” We agree that this case
does not present exceptional circumstances. The “expectations of
honesty among family members” do not make it reasonable for
Finan to have made no inquiry whatsoever concerning her interest
in the property over the course of at least the seven years between
the 1999 transfer and the filing of the 2006 Petition. Furthermore
Adams was not obligated to inform Finan of the transfers, see supra
¶ 15. Thus, any hardship resulting from the regular application of
the six‐year statute of limitations could have been avoided by
Finan’s having exercised minimal diligence, and it does not
outweigh the prejudice to Adams of defending against a stale
claim.
CONCLUSION
¶19 The trial court correctly determined that the statute of
limitations began running as of the date of the 1999 transfer, that
the recording of the transfers imparted constructive notice to Finan
of their existence, that there was no genuine issue of material fact
as to whether Adams concealed the transfers, and that exceptional
20110459‐CA 10 2013 UT App 37Helfrich v. Adams
circumstances did not justify the tolling of the statute of limitations.
Thus, the trial court correctly granted Adams’s summary judgment
motion. Further, the trial court did not abuse its discretion by
denying Plaintiffs’ rule 60(b) motion because the newly‐discovered
evidence was not material to the determination of whether Adams
concealed the transfers during the relevant time period.
Accordingly, we affirm.
20110459‐CA 11 2013 UT App 37