Duke Capital v. Proctor , 2023 UT App 59 ( 2023 )

2023 UT App 59THE UTAH COURT OF APPEALS
DUKE CAPITAL LLC,
Appellant,
v.
JON PROCTOR,
Appellee.
Opinion
No. 20210581-CA
Filed May 25, 2023
Third District Court, Tooele Department
The Honorable Dianna Gibson
No. 200301831
Gregory M. Constantino, Attorney for Appellant
Jon Proctor, Appellee Pro Se
JUDGE JOHN D. LUTHY authored this Opinion, in which
JUDGES GREGORY K. ORME and RYAN D. TENNEY concurred.
LUTHY, Judge:
¶1 Jon Proctor borrowed $5,400 from LoanMe, Inc., and
signed a promissory note (the Note) in exchange. The Note
contained an arbitration provision (the Arbitration Provision).
After some months, Proctor quit making payments on the loan,
LoanMe sold the Note to Duke Capital, LLC (Duke), and Duke
sued Proctor. Proctor filed a pro se answer but did not respond
when Duke moved for summary judgment. The district court
denied Duke’s motion and, instead, invoked the Arbitration
Provision, concluded that the Arbitration Provision divested the
court of jurisdiction, and dismissed the case. Duke appeals.
¶2 We hold that the district court erred by sua sponte
invoking the Arbitration Provision and by concluding that the
Arbitration Provision divested the court of jurisdiction. We
Duke Capital v. Proctor
therefore reverse the court’s order of dismissal. We reject,
however, Duke’s assertion of judicial misconduct and endorse the
district court’s admonition to Duke’s attorney to avoid arguments
that impugn, without evidence, a court’s impartiality. Finally, we
hold that the district court erred by denying Duke’s summary
judgment motion, and we remand with instructions that the court
enter judgment in favor of Duke.
BACKGROUND
¶3 In July 2018, LoanMe, a California lender, loaned Proctor,
a Utah resident, $5,130 plus $270 for a “Prepaid Finance
Charge/Origination Fee.” In exchange, Proctor signed the Note, in
which he “promise[d] to pay to the order of LoanMe . . . or any
subsequent holder of [the] Note the sum of $5,400.00, together
with interest calculated at 110.00% . . . and any outstanding
charges or late fees, until the full amount of [the] Note is paid.”
The Note outlined a payment schedule requiring Proctor to make
eighty-six monthly payments, all but the first and last of which
were to be $495.31, beginning in August 2018.
¶4 Proctor made the minimum payment or more in August,
September, October, and November 2018, but he made no
payments after that. After Proctor stopped making payments,
LoanMe sold the Note to Duke. Duke asked Proctor to pay the
balance owing, and when he did not, it sued him for breach of
contract. Proctor filed a pro se answer, and Duke then filed a
motion for summary judgment. In its motion, Duke asserted as
undisputed facts the terms of the Note, Proctor’s payment history,
and Duke’s purchase of the Note. It also submitted an affidavit
providing an evidentiary basis for those facts. Proctor did not
respond to Duke’s summary judgment motion.
¶5 The district court scheduled a hearing on the motion.
Duke’s counsel (Counsel) attended the hearing; Proctor did not.
At the outset of the hearing, the court explained that its purpose
20210581-CA 2 2023 UT App 59Duke Capital v. Proctor
in holding the hearing was to “ask if [the] [c]ourt had jurisdiction”
in light of the Arbitration Provision. The relevant terms of the
Arbitration Provision are as follows:
WAIVER OF JURY TRIAL AND
ARBITRATION PROVISION. Arbitration is a
process in which persons with a dispute: (a) waive
their rights to file a lawsuit and proceed in court and
to have a jury trial to resolve their disputes; and (b)
agree, instead, to submit their disputes to a neutral
third person (an “arbitrator”) for a decision. . . . We
have a policy of arbitrating all disputes with
customers which cannot be resolved in a small
claims tribunal . . . . THEREFORE, YOU
ACKNOWLEDGE AND AGREE AS FOLLOWS:
For purposes of this Waiver of Jury Trial and
Arbitration Provision, the words “dispute” and
“disputes” are given the broadest possible meaning
and include, without limitation . . . all federal or
state law claims, disputes or controversies, arising
from or relating directly or indirectly to the Note . . .
[;] all common law claims, based upon contract . . .
[;] [and] all claims asserted by us against you,
including claims for money damages to collect any
sum we claim you owe us . . . .
....
3. Any party to a dispute . . . may send the
other party written notice by certified mail return
receipt requested of their intent to arbitrate and
setting forth the subject of the dispute along with
the relief requested, even if a lawsuit has been filed.
...
....
20210581-CA 3 2023 UT App 59Duke Capital v. Proctor
6. This Arbitration Provision is made
pursuant to a transaction involving interstate
commerce and shall be governed by the [Federal
Arbitration Act].
¶6 Counsel responded to the court’s inquiry about jurisdiction
by asserting that the Arbitration Provision is “not a mandatory
arbitration clause” and that the court “has jurisdiction.” He
argued that “if a dispute arises between the parties, either party
can select arbitration as a way of settling that dispute, but neither
party is required to [initiate arbitration].” He also referenced his
awareness of “a case where . . . the federal courts found that this
is not a mandatory provision.”
¶7 The court stated its view that the Arbitration Provision is
mandatory and that “this is really a question of jurisdiction.” The
court also explained that even though Proctor had not responded
to Duke’s motion, the court still had an obligation to determine
whether summary judgment was appropriate. Counsel then
observed that he had not “been aware of this issue until [the]
hearing.” The court said that it would be “happy” to “give
[Counsel] an opportunity to respond . . . and provide additional
information” before it ruled on the motion.
¶8 Counsel then reiterated his view that “if neither party [to
the Note] chooses [arbitration],” then the court “absolutely has
jurisdiction” and “doesn’t have the right to choose arbitration.”
The court explained that it was “not electing arbitration” and,
instead, that it appeared to the court “that the parties [had] elected
[arbitration] on their own by . . . the inclusion of the [A]rbitration
[P]rovision in the [Note].” The court then asked Counsel to
identify where in the Arbitration Provision it says that arbitration
was something that the parties still had to choose.
¶9 Counsel pointed to paragraph 3 of the Arbitration
Provision, which says, “Any party to a dispute . . . may send the
other party written notice by certified mail return receipt
20210581-CA 4 2023 UT App 59Duke Capital v. Proctor
requested of their intent to arbitrate and setting forth the subject
of the dispute along with the relief requested, even if a lawsuit has
been filed.” Counsel then asserted that because neither party had
sent the other notice of an intent to arbitrate, the court “ha[d]
jurisdiction and should consider the lawsuit.”
¶10 The court acknowledged paragraph 3 but explained:
Well, I think you need to read it all together as one
document and not just selectively pull out
Paragraph 3. Paragraph 3 is embedded within the
entire section that says, “Waiver of jury trial and
arbitration provision.” It goes on and has several
paragraphs that talk[] about what’s being waived
....
. . . [A] lot of contracts include options, right?
Where parties can elect to arbitrate. I don’t see
where there’s any other option here. . . . All I see is
that there’s . . . a waiver of jury trial [and] every
dispute is going to be arbitrated. That’s what I see
here.
So that’s why I’m saying that that’s the way I
read it. . . . [I]t doesn’t mean that I’m right.
Counsel responded that there was “[no] evidence of any dispute”
and demanded: “[T]ell me about the dispute between the parties.
Where is there a dispute between the parties?”
¶11 The court reminded Counsel that the court and Counsel
“are not adversaries” and said: “I’m just telling you . . . how I read
your contract and why I’m not today going to grant your motion
for summary judgment. I’ll leave it open. You can provide me
with some additional information to support your argument that
this is not a mandatory arbitration provision.”
20210581-CA 5 2023 UT App 59Duke Capital v. Proctor
¶12 Counsel then said:
I’m sensing that you are an advocate and that you
are advocating a position, and I don’t feel that I’ve
got a neutral deciding this case. . . . I’d love to have
a judge, and I’d love for you to be arguing the case
and creating a brief arguing that that’s what it
means. But I don’t know how to . . . be a lawyer
representing a client with you coming up with an
interpretation of this contract that I’ve never had
another attorney come up with in probably a
thousand cases.
. . . [T]his appears to be you’re taking a side.
¶13 The court replied that it was “not electing arbitration” and
“not being an advocate.” It then went on, saying: “I’m not denying
your motion for summary judgment. I’ve [told] you why I have a
question. I’ve tried to explain it to you, and I’m giving you an
opportunity to provide me with information that supports your
position.” The court then reiterated that its “job [was] to make
sure that [Duke was] entitled to judgment as a matter of law.”
¶14 Counsel then asked: “[W]hat’s the brief that I’m writing
against? What’s the argument I’m writing against? . . . What’s the
question I’m trying to address?” And the court explained:
The question that you have to address is whether or
not this [c]ourt has jurisdiction, because I stated that
it appears that [the Note] contains a provision where
the parties have . . . agreed to waive their right to a
jury trial and have agreed to arbitration in advance
to resolve all disputes. That is what the contract
language appears to me [to say]. So I’m questioning
whether or not this [c]ourt has jurisdiction to resolve
the dispute, because the parties have already
decided a different forum would do that . . . . That’s
20210581-CA 6 2023 UT App 59Duke Capital v. Proctor
the question. So it’s a supplemental brief to support
your argument that [arbitration] is not mandatory
and that this [c]ourt has jurisdiction.
¶15 Duke filed a supplemental brief, arguing that “mandatory
arbitration provisions relate to venue not jurisdiction” and that “it
is inappropriate for a court to raise, sua sponte, an issue of venue.”
In support of this argument, Duke cited three cases from the
United States Court of Appeals for the Seventh Circuit. Duke then
concluded by declaring that “[i]t is a usurpation of power for the
[c]ourt to interject itself, uninvited, into a question of venue” and
that the court “should grant [Duke’s] Motion for Summary
Judgment, without further court instigated irregularities.”
¶16 The district court denied Duke’s motion and dismissed the
case “for lack of subject matter jurisdiction.” The court anchored
its decision in “the plain language” of the Arbitration Provision.
It read the Arbitration Provision as “requir[ing] the parties to
submit their claims to a small claims tribunal and/or binding
arbitration,” and it concluded that the court could not exercise
jurisdiction and thereby “allow[] some parties to avoid the terms
of a contract that they themselves drafted.” The court also
admonished Counsel for engaging in “conduct unbecoming [the
legal] profession” by challenging the court’s integrity, declaring
that the court was usurping power, and asserting that the court
was instigating irregular delays. Duke appeals.
ISSUES AND STANDARDS OF REVIEW
¶17 Duke first argues that the Arbitration Provision did not
divest the district court of jurisdiction over Duke’s breach-of-
contract claim. “Whether a court has subject matter jurisdiction is
a question of law, which we review for correctness, granting no
deference to the district court.” State v. Stone, 2013 UT App 148,
¶ 4, 305 P.3d 167 (cleaned up).
20210581-CA 7 2023 UT App 59Duke Capital v. Proctor
¶18 Duke next argues that a district court should not be
permitted to invoke an arbitration provision on its own motion.
We review de novo the legal question of whether a district court
may sua sponte invoke an arbitration agreement between the
parties. See Randolph v. State, 2022 UT 34, ¶ 19, 515 P.3d 444(holding that “abstract legal questions” are reviewed under “a
non-deferential de novo standard” (cleaned up)).
¶19 Separately, Duke asserts that, in addition to the other
reasons it gives for a rule prohibiting district courts from sua
sponte invoking arbitration agreements, “[d]ue process concerns”
require a rule that district courts may not sua sponte invoke an
arbitration agreement. “Constitutional issues, including questions
regarding due process, are questions of law that appellate courts
review for correctness.” Valerios Corp. v. Macias, 2015 UT App 4,
¶ 10, 342 P.3d 1127 (cleaned up).
¶20 Finally, Duke asserts that the district court erred by
denying its motion for summary judgment. “We review a district
court’s denial of summary judgment de novo, affording its
conclusions no deference.” Kay v. Barnes Bullets, 2022 UT 3, ¶ 11,
506 P.3d 530. 1
1. Duke also argues that Proctor waived the right to arbitrate
when Proctor filed an answer that did not assert that right. Duke
did not raise this issue below, however, and has therefore failed
to preserve it for appeal. See 438 Main St. v. Easy Heat, Inc., 2004
UT 72, ¶ 51, 99 P.3d 801 (“In order to preserve an issue for appeal,
the issue must be presented to the trial court in such a way that
the trial court has an opportunity to rule on that issue.” (cleaned
up)).
20210581-CA 8 2023 UT App 59Duke Capital v. Proctor
ANALYSIS
I. Subject-Matter Jurisdiction
¶21 Duke first argues that the Arbitration Provision did not
divest the district court of subject-matter jurisdiction over Duke’s
breach-of-contract claim. We agree.
¶22 “The district court has original jurisdiction in all matters
civil and criminal, not excepted in the Utah Constitution and not
prohibited by law.” Johnson v. Johnson, 2010 UT 28, ¶ 8, 234 P.3d
1100 (cleaned up); see also Utah Const. art. VIII, § 5 (“The district
court shall have original jurisdiction in all matters except as
limited by this constitution or by statute . . . .”); Utah Code § 78A-
5-102(1) (“Except as otherwise provided by the Utah Constitution
or by statute, the district court has original jurisdiction in all
matters civil and criminal.”). “Because subject-matter jurisdiction
is ‘special’ and ‘distinct’ from other jurisdictional concepts,” our
supreme court has “cabin[ed] the issues that fall under the
category of subject matter jurisdiction.” In re adoption of B.N.A.,
2018 UT App 224, ¶ 13, 438 P.3d 10 (cleaned up). Specifically, it
“has limited the concept of subject-matter jurisdiction to two
specific situations: (a) statutory limits on the authority of the court
to adjudicate a class of cases, and (b) timing and other limits on
the justiciability of the proceedings before the court (such as
standing, ripeness, and mootness).” Id. ¶ 14 (cleaned up). Neither
of these situations is present here.
¶23 As to the first situation, statutory limits on jurisdiction, we
note that “[o]ur law has long assessed subject-matter jurisdiction
at the categorical level,” meaning that what matters are any
“statutory limits on the classes of cases to be decided.” In re
adoption of B.B., 2017 UT 59, ¶ 153, 417 P.3d 1; see also Kramer v.
Pixton, 268 P. 1029, 1031 (Utah 1928) (“In determining the
jurisdiction of a court the test is not whether the court has
jurisdiction of a particular case, but rather whether the court has
jurisdiction of the class of cases to which the particular case
20210581-CA 9 2023 UT App 59Duke Capital v. Proctor
belongs.”). This is a breach-of-contract case involving a contract
with an arbitration provision. We have not found, and the district
court did not identify, any statute that excepts either breach-of-
contract cases generally or breach-of-contract cases involving
arbitration agreements specifically from the district court’s
jurisdiction.
¶24 As to the second situation, timing and other limits on
justiciability, the existence of an arbitration agreement simply is
not among the “traditional limits on justiciability,” “such as
standing, ripeness, and mootness.” In re adoption of B.B., 2017 UT
59, ¶¶ 121, 153.
¶25 Stated another way, just as “parties cannot create, by
contract, jurisdiction that would not otherwise exist,” Ute Indian
Tribe of the Uintah & Ouray Rsrv. v. Lawrence, 22 F.4th 892, 907 n.15
(10th Cir. 2022); see also Hardy v. Meadows, 264 P. 968, 972 (Utah
1928) (relying on the “familiar doctrine that subject-matter
jurisdiction of a cause may not be conferred by consent”), parties
cannot avoid or extinguish by contract a court’s subject-matter
jurisdiction established through constitutional or statutory
pronouncement, cf. Elna Sefcovic, LLC v. TEP Rocky Mountain, LLC,
953 F.3d 660, 666 (10th Cir. 2020) (“[W]hen Congress grants
subject matter jurisdiction, no other entity—not the litigants and
not the states—can divest a federal court of the same.”).
¶26 Hence, instead of being a mechanism to divest a court of
jurisdiction, “[a]n agreement to arbitrate before a specified
tribunal is, in effect, a specialized kind of forum-selection clause.”
Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 (1974). “Forum-
selection clauses . . . historically [were] not . . . favored by
American courts,” partly because of the view that “their effect was
to ‘oust the jurisdiction’ of the court.” M/S Bremen v. Zapata Off-
Shore Co., 407 U.S. 1, 9 (1972). However, in Bremen, the United
States Supreme Court upheld the validity of a forum-selection
clause and a federal district court’s jurisdiction to enforce it,
observing that “[t]he argument that such clauses [were] improper
20210581-CA 10 2023 UT App 59Duke Capital v. Proctor
because they tend to ‘oust’ a court of jurisdiction [was] hardly
more than a vestigial legal fiction” and that “[n]o one seriously
contend[ed] . . . that the forum-selection clause [in that case]
‘ousted’ the [d]istrict [c]ourt of jurisdiction.” Id. at 12. Then in
Prows v. Pinpoint Retail Systems, Inc., 868 P.2d 809 (Utah 1993),
citing Bremen, the Utah Supreme Court declared that “the [forum-
selection clause] ‘ouster theory’ [had been] permanently laid to
rest.” Id. at 811. Thus, while a forum-selection clause—or, by
extension, an arbitration agreement—may limit the extent to
which a court may exercise its jurisdiction, it does not divest a court
of jurisdiction. See Bremen, 407 U.S. at 12 (concluding, in the face
of a forum-selection clause, not that “[t]he threshold question”
was whether the court had jurisdiction but “whether that court
should have exercised its jurisdiction . . . by specifically enforcing the
forum clause” (emphasis added)). 2
¶27 While Bremen illustrates that forum-selection clauses and,
by extension, arbitration agreements do not divest courts of
jurisdiction to enforce such agreements, the Utah Supreme Court’s
decision in ASC Utah, Inc. v. Wolf Mountain Resorts, LC, 2010 UT
2. The district court noted that in Energy Claims Ltd. v. Catalyst
Investment Group Ltd., 2014 UT 13, 325 P.3d 70, the Utah Supreme
Court said, “We have accepted the general principle that forum
selection clauses are enforceable and can limit a court’s jurisdiction.”
Id. ¶ 47 (emphasis added). But the supreme court immediately
followed that statement with the observation that “[t]his principle
was adopted in Prows,” id., the case acknowledging that the
theory under which forum-selection clauses “‘oust’ a court . . . of
jurisdiction” had been “permanently laid to rest,” Prows v.
Pinpoint Retail Sys., Inc., 868 P.2d 809, 811 (Utah 1993) (cleaned
up). Thus, to harmonize Energy Claims and Prows, we read the
statement from Energy Claims that forum-selection clauses “can
limit a court’s jurisdiction” to mean that forum-selection clauses
can limit a court’s exercise of jurisdiction, not that they can divest a
court of jurisdiction.
20210581-CA 11 2023 UT App 59Duke Capital v. Proctor
65, 245 P.3d 184, demonstrates that courts also retain jurisdiction
not to enforce arbitration agreements in appropriate circumstances.
In ASC Utah, the parties entered into a development contract that
contained an arbitration provision. Id. ¶¶ 3, 8. They also entered
into a lease agreement that incorporated the development
contract. Id. ¶¶ 2, 4. After some time, each party believed the other
was in breach of their agreements, and each filed suit. Id. ¶ 4. Their
cases were consolidated, and for nearly three years, the parties
engaged in litigation, including substantial discovery and motion
practice. Id. ¶¶ 4–7. One of the parties then filed a motion to bring
additional parties into the litigation. Id. ¶ 7. When that motion was
denied, the party filed a motion to compel arbitration. Id. ¶ 8. The
district court denied the motion to compel arbitration “on the
grounds that [the party seeking arbitration] had waived any
potential right to arbitration by participating in litigation to a
point inconsistent with an intent to arbitrate and causing
prejudice to [the other party] as a result.” Id. ¶ 9.
¶28 On appeal, the party seeking arbitration argued that
“section 78-31a-4 of the Utah Arbitration Act[3] [was] mandatory
and jurisdictional, leaving the district court without authority” to
do anything other than order arbitration. Id. ¶ 14 (footnote
omitted). Section 78-31a-4(1) said, “The court, upon motion of any
party showing the existence of an arbitration agreement, shall
order the parties to arbitrate.” Utah Code § 78-31a-4(1) (2002). The
supreme court observed that to conclude that this provision was
mandatory and jurisdictional would “not account for other
language contained in [the same] section.” ASC Utah, 2010 UT 65,
¶ 15. Specifically, the court noted that section 78-31a-4 also said
that “‘[r]efusal to issue an order to arbitrate may not be grounded
on a claim that an issue subject to arbitration lacks merit, or that
3. The Utah Arbitration Act has since been repealed, and the Utah
Uniform Arbitration Act has been enacted in its place. See Utah
Code §§ 78B-11-101 to -131.
20210581-CA 12 2023 UT App 59Duke Capital v. Proctor
fault or grounds for the claim have not been shown.’” Id. ¶ 16
(quoting Utah Code § 78-31a-4(4) (2002)). It then explained:
It would not have been necessary to specify these
two prohibited grounds for refusing arbitration if
the legislature intended to prohibit the court from
refusing to issue an order to arbitrate under any
circumstances. Had the legislature intended section
78-31a-4 to be a mandatory and jurisdictional
provision, it could have specified that courts must
issue orders to arbitrate under all circumstances . . . .
Instead, by providing specific guidance on the two
narrow grounds upon which a refusal to issue an
order to arbitrate should not be based, the text of the
statute makes it clear that the legislature did not
intend to limit the court’s jurisdiction to refuse to
issue orders to arbitrate on other grounds, such as
when a party has waived its right to arbitrate.
Id. In other words, although the Utah Arbitration Act contained
provisions limiting the district court’s ability to exercise its
jurisdiction under some circumstances—for example, when a
party who had not waived arbitration demonstrated the existence
of an arbitration agreement and requested arbitration—the act did
not divest the court of jurisdiction or prevent it from exercising
that jurisdiction when appropriate.
¶29 The current Utah Uniform Arbitration Act (the UUAA) is
similar to the prior Utah Arbitration Act in relevant respects.
Much like the prior act, the current act says that the district court
“shall order the parties to arbitrate” upon a “motion of a person
showing an agreement to arbitrate,” if the other party refuses to
arbitrate and “does not appear or does not oppose the motion.”
Utah Code § 78B-11-108(1). And just like the prior act, the current
act says that the district court “may not refuse to order arbitration
because the claim subject to arbitration lacks merit or grounds for
the claim have not been established.” Id. § 78B-11-108(4). Thus,
20210581-CA 13 2023 UT App 59Duke Capital v. Proctor
under the reasoning of ASC Utah, the current UUAA does not
divest the district court of jurisdiction, even though it limits the
scenarios under which the district court may exercise its
jurisdiction when the parties have an enforceable arbitration
agreement.
¶30 In sum, because there is no statute that excepts breach-of-
contract cases—even those involving arbitration agreements—
from the district court’s jurisdiction; because the existence of an
arbitration agreement is not among the traditional limits on
justiciability; and because an arbitration agreement is, in essence,
a specialized type of forum-selection clause and forum-selection
clauses do not divest courts of jurisdiction, the district court erred
by concluding that it did not have jurisdiction here.
II. Sua Sponte Enforcement of the Arbitration Provision
¶31 Duke next argues that the district court may not invoke an
arbitration agreement on its own motion. Again, we agree.
¶32 The Arbitration Provision provides that it is “made
pursuant to a transaction involving interstate commerce and shall
be governed by the [Federal Arbitration Act (the FAA)].” We are
thus first confronted with the question of whether federal law or
Utah law governs the procedural issue of whether a district court
may sua sponte invoke an arbitration agreement. 4 See Zions Mgmt.
Services v. Record, 2013 UT 36, ¶¶ 14–19, 305 P.3d 1062 (applying
Utah law to answer one procedural question and the FAA to
answer another in a case where the parties’ arbitration agreement
said that it was to be governed by the FAA). We need not decide
whether Utah law or federal law applies, however, since the result
is the same under both.
4. A rule that “prescribes the manner and means of raising a
particular issue in court proceedings” is “quintessentially
procedural.” State v. Rettig, 2017 UT 83, ¶ 58, 416 P.3d 520.
20210581-CA 14 2023 UT App 59Duke Capital v. Proctor
¶33 The UUAA directs that an order to arbitrate shall be made
“[o]n motion of a person showing an agreement to arbitrate and
alleging another person’s refusal to arbitrate.” Utah Code § 78B-
11-108(1) (emphasis added). The UUAA also provides that parties
to an arbitration agreement may waive the requirements of the
Act, except for, among other provisions, the foregoing
requirement to seek arbitration by filing a motion. See id. § 78B-
11-105. And case law interpreting the Utah Arbitration Act
(predecessor to the UUAA) holds that an arbitration agreement
may be waived by the parties. See ASC Utah, Inc. v. Wolf Mountain
Resorts, LC, 2010 UT 65, ¶¶ 14–21, 245 P.3d 184. These
considerations all lead to the conclusion that under Utah law, a
district court may not invoke an arbitration agreement on its own
motion. 5
¶34 Similarly, the FAA directs that if suit is filed on “any issue
referable to arbitration under an [arbitration] agreement,” the
court “shall on application of one of the parties stay the trial of the
action until such arbitration has been had.” 9 U.S.C. § 3 (emphasis
added). Additionally, the United States Supreme Court has
explained that the “[Federal Arbitration] Act, after all, does not
mandate the arbitration of all claims, but merely the
enforcement—upon the motion of one of the parties—of privately
negotiated arbitration agreements.” Dean Witter Reynolds, Inc. v.
Byrd, 470 U.S. 213, 219 (1985) (emphasis added). And several
federal courts—including the Seventh Circuit, as cited by Duke—
have held that district courts may not enforce arbitration clauses
sua sponte. See, e.g., Automobile Mechs. Local 701 Welfare & Pension
5. Like Utah, Oklahoma has adopted a version of the Uniform
Arbitration Act, and the Oklahoma Court of Civil Appeals has
held that under Oklahoma’s version of the act, a trial court may
not invoke an arbitration agreement sua sponte. See Conn
Appliances Inc. v. Powers, 2018 OK CIV APP 25, ¶ 6, 417 P.3d 390.
We find persuasive much of that court’s reasoning and largely
mirror it here.
20210581-CA 15 2023 UT App 59Duke Capital v. Proctor
Funds v. Vanguard Car Rental USA, Inc., 502 F.3d 740, 746–47 (7th
Cir. 2007); Wren v. Sletten Constr. Co., 654 F.2d 529, 536–37 (9th Cir.
1981); Amiron Dev. Corp. v. Sytner, No. 12-CV-3036(JS)(ETB),
2013 WL 1332725, at *3 (E.D.N.Y. Mar. 29, 2013); Lopardo v.
Lehman Bros., Inc., 548 F. Supp. 2d 450, 457 (N.D. Ohio 2008). For
these reasons, we conclude that federal law also precludes a
district court from invoking an arbitration agreement on its own
motion.
¶35 Because under both Utah and federal law a district court
may not sua sponte invoke an arbitration agreement, it was error
for the district court in this case to do just that.
III. Due Process and Professionalism
¶36 Duke also argues that, in addition to the reasons outlined
above, “[d]ue process concerns” require the rule that a district
court may not invoke an arbitration agreement sua sponte.
Without such a rule, Duke asserts, courts would be allowed to
unconstitutionally abandon their proper role as neutral arbiters.
Duke believes this case is illustrative in that, in Duke’s view, the
district court here abandoned its proper role as neutral arbiter
when it sua sponte identified and ruled on what it thought was a
jurisdictional issue in Duke’s summary judgment motion. 6
Because, as we have explained, there are other reasons for the rule
that a district court may not sua sponte invoke an arbitration
agreement, we do not decide whether due process concerns also
require that rule. See State v. Goins, 2017 UT 61, ¶ 24, 423 P.3d 1236(“[J]udicial restraint counsels against reaching constitutional
questions if we can resolve the case on non-constitutional
grounds.”).
6. Duke asserts that it was actually “denied due process” by the
district court’s actions, but it seeks no relief on that basis, other
than a holding that district courts may not invoke arbitration
agreements sua sponte.
20210581-CA 16 2023 UT App 59Duke Capital v. Proctor
¶37 We observe, however, that “subject matter jurisdiction is
an issue that can and should be addressed sua sponte when
jurisdiction is questionable.” Petersen v. Utah Board of Pardons, 907
P.2d 1148, 1151 (Utah 1995). Thus, although the district court
ultimately reached an erroneous conclusion regarding subject-
matter jurisdiction, it did not act inappropriately by raising the
issue when it deemed jurisdiction to be in question. Of course, “if
[a] court is inclined to dismiss sua sponte, it must afford the
plaintiff an opportunity to be heard and to persuade the court that
dismissal is not proper.” Miller v. Miller, 2020 UT App 171, ¶ 39,
480 P.3d 341 (cleaned up). But that is exactly what the court did
when it waited to rule on the jurisdictional issue until after
affording Duke an opportunity to address it at oral argument and
through supplemental briefing.
¶38 We also note that rule 56 of the Utah Rules of Civil
Procedure “requir[es] independent judicial review of unopposed
summary judgment papers.” Tronson v. Eagar, 2019 UT App 212,
¶ 17 n.6, 457 P.3d 407. Inherent in this requirement is the
possibility that a court will identify, raise, and rule on an issue not
raised by the moving party but which might have been argued by
the nonmoving party had that party chosen to respond. While a
court should not become “an advocate for either side” and is not
“obligated to scour the record to come up with arguments or
theories that the nonmoving party had an opportunity to raise but
did not,” Turley v. Childs, 2022 UT App 85, ¶ 32, 515 P.3d 942, we
decline to label as improper advocacy a court’s raising of and
ruling (even erroneously) on an issue that is apparent on the
face of the moving party’s papers and that could have been
argued in good faith by the nonmoving party. That is all the court
did here.
¶39 Duke also takes issue with the district court’s designation
of some of Counsel’s comments as “unprofessional.” In Segota v.
Young 180 Co., 2020 UT App 105, 470 P.3d 479, toward the end of
a motion hearing, the district court “expressed its displeasure
with a statement [the plaintiff’s] counsel [had] made in the
20210581-CA 17 2023 UT App 59Duke Capital v. Proctor
memoranda opposing the defendants’ . . . motions, where counsel
characterized the motions as ‘feckless.’” 7 Id. ¶ 8 n.1. “The court
brought up the references on its own, . . . told counsel to
‘remember to always be courteous,’ and expressed its view that it
was discourteous ‘to refer to opposing counsel’s arguments as
‘feckless.’” Id. “On appeal, [the plaintiff] argue[d] that the court’s
sua sponte expression of disapproval of counsel’s word choice
indicate[d] that the court was biased against her or her attorney.”
Id. We disagreed and explained:
A judge’s behavior toward a party during court
proceedings must be extreme to warrant a finding
of bias or prejudice on the part of the judge. The
district court’s mild admonition of [the plaintiff’s]
attorney fell far short of this standard. We find
nothing at all improper with the court’s effort to
encourage civility and professionalism, and
certainly do not interpret the court’s actions as
indicative of bias.
Id. (cleaned up).
¶40 Counsel here was at least as deserving of encouragement
toward civility as was counsel in Segota. During the summary
judgment hearing, Counsel said to the court, among other things:
I’d love to have a judge . . . . I don’t know how to . . .
be a lawyer representing a client with you coming
up with an interpretation of this contract that I’ve
never had another attorney come up with . . . .
. . . [T]his appears to be you’re taking a side.
7. “Feckless” can mean “worthless” or “irresponsible.” Feckless,
Merriam-Webster, https://www.merriam-webster.com/dictionar
y/feckless [https://perma.cc/E2NF-VQXW].
20210581-CA 18 2023 UT App 59Duke Capital v. Proctor
Duke insists that expression of these sentiments was appropriate
because they amounted to merely “a description of what [Counsel
was] feeling during the hearing” and, “[g]iven what [was]
actually occurring in the hearing, [Counsel’s] feelings as
expressed . . . [were] within the bounds of professionalism.” We
are not convinced. There are more than a few feelings a lawyer
might have during litigation that ought not to be expressed,
especially in a courtroom, precisely because their expression
would be unprofessional. Here, Counsel’s expression of feelings
of judicial bias was unprofessional where the only apparent basis
for them was the court’s identification of a legal concern, coupled
with its invitation for Counsel to address that concern. See Utah
R. Jud. Admin. 14-301(3) (“Lawyers shall not, without an
adequate factual basis, attribute to . . . the court improper motives,
purpose, or conduct.”).
¶41 In Duke’s supplemental brief, Counsel also declared that
the court was “usurp[ing] . . . power” and that it should grant
Duke’s motion “without further court instigated irregularities.”
To “usurp” means “to seize and hold . . . by force or without
right.” Usurp, Merriam-Webster, https://www.merriam-
webster.com/dictionary/usurp [https://perma.cc/N5YP-MVMG].
And “instigate” “often connotes underhandedness or evil
intention.” Instigate, Merriam-Webster, https://www.merriam-
webster.com/dictionary/instigate [https://perma.cc/62D4-NSU5].
Except in circumstances clearly not present here, it is also
unprofessional to accuse a court, even obliquely, of evil intent,
underhandedness, or seizing power without right. See Utah R.
Jud. Admin. 14-301(3).
¶42 Duke contends that the foregoing statements from its
supplemental brief are not unprofessional because they are “the
type of advocacy statement[s] made by lawyers in written briefs.”
Duke is mistaken; briefs rarely contain emotionally charged
language of accusation and reproof directed at the court.
Counsel’s arguments could have been appropriately—and at least
20210581-CA 19 2023 UT App 59Duke Capital v. Proctor
as effectively—framed simply as assertions that the court’s
contemplated action would constitute “legal error.” 8 Accordingly,
as with the admonition to counsel in Segota, “[w]e find nothing at
all improper with the [district] court’s effort [here] to encourage
civility and professionalism.” 2020 UT App 105, ¶ 8 n.1.
IV. Summary Judgment
¶43 Finally, when the district court dismissed this case for lack
of subject-matter jurisdiction, it also denied Duke’s motion for
summary judgment. Duke contends that the court erred when it
denied the motion for summary judgment. And again, we agree.
¶44 Summary judgment is appropriate when “there is no
genuine dispute as to any material fact and the moving party is
entitled to judgment as a matter of law.” Utah R. Civ. P. 56(a). As
“the moving party with the burden of proof at trial,” Duke was
required to show that it “established each element of [its] claim as
part of demonstrating entitlement to judgment as a matter of
law.” Phillips v. Skabelund, 2021 UT App 2, ¶ 22, 482 P.3d 237, cert.
denied, 496 P.3d 713 (Utah 2021).
¶45 Duke’s claim is for breach of contract. “The elements of a
prima facie case for breach of contract are (1) a contract,
(2) performance by the party seeking recovery, (3) breach of the
contract by the other party, and (4) damages.” America West Bank
Members, LC v. State, 2014 UT 49, ¶ 15, 342 P.3d 224 (cleaned up).
8. In fact, in most of the supplemental brief, Counsel did frame his
argument, which was ultimately correct, in appropriate terms, for
example, by asserting without equivocation: “The court has, on its
own motion, raised an issue of ‘jurisdiction,’ when in fact,
mandatory arbitration provisions relate to venue not jurisdiction.
Further, it is inappropriate for a court to raise, sua sponte, an issue
of venue.” This is professional and zealous advocacy that needs
no attempt at amplification through unprofessional assertions like
those addressed above.
20210581-CA 20 2023 UT App 59Duke Capital v. Proctor
Duke’s summary judgment papers include evidence supporting
each element of its claim, specifically, that Proctor executed the
Note in favor of LoanMe; that LoanMe loaned Proctor $5,400; that
Proctor breached the agreement memorialized in the Note by
failing to make the required monthly payments; that Duke
purchased LoanMe’s rights under the Note; and that as of October
14, 2020, Proctor owed $5,950.66 on the Note.
¶46 Proctor failed to respond to Duke’s motion. “When a
nonmovant fails to respond to a summary judgment motion,
‘[e]ach material fact set forth in the motion . . . is deemed admitted
for the purposes of the motion.’” Turley v. Childs, 2022 UT App 85,
¶ 26, 515 P.3d 942 (alteration and omission in original) (quoting
Utah R. Civ. P. 56(a)(4)). Thus, under applicable law and the
undisputed material facts, Duke is entitled to judgment as a
matter of law, and the district court erred by denying the motion.
CONCLUSION
¶47 The existence of an arbitration provision in a contract does
not divest a court of jurisdiction, and the district court erred by
concluding otherwise. Additionally, a court may not invoke an
arbitration agreement sua sponte, and the district court erred by
sua sponte invoking the Arbitration Provision here. Finally, under
the undisputed material facts, Duke is entitled to judgment as a
matter of law, and the district court thus erred by denying Duke’s
summary judgment motion. Although the district court erred in
these respects, it did not usurp power, instigate irregularities, or
engage in improper conduct, and Counsel should not have
suggested that it did. We reverse, remand, and instruct the district
court to enter judgment in favor of Duke in the amount of
$5,950.66 plus costs.
20210581-CA 21 2023 UT App 59