Gillett v. Brown

2017 UT App 19

THE UTAH COURT OF APPEALS

DAVID K. GILLETT AND MAJESTIC AIRLINES INC.,

Appellants,

v.

BOYD J. BROWN, SENTRY FINANCIAL CORPORATION, AND SFC

AIRCRAFT CORPORATION I,

Appellees.

Opinion

No. 20140682-CA

Filed January 26, 2017

Third District Court, Salt Lake Department

The Honorable L.A. Dever

No. 080921211

Stephen G. Homer, Attorney for Appellants

Christopher M. Ault and Zachary W. Powell,

Attorneys for Appellees Boyd J. Brown and Sentry

Financial Corporation

JUDGE STEPHEN L. ROTH authored this Opinion, in which JUDGE J.

FREDERIC VOROS JR. and JUSTICE JOHN A. PEARCE concurred.1

ROTH, Judge:

¶1 This case involves claims of breach of contract and fraud.

In March 1995, after David K. Gillett—through his company

Majestic Airlines Inc. (collectively, Gillett and Majestic)—

defaulted on repayment of a loan to Sentry Financial

1. Justice John A. Pearce began his work on this case as a

member of the Utah Court of Appeals. He became a member of

the Utah Supreme Court thereafter and completed his work on

the case sitting by special assignment as authorized by law. See

generally Utah R. Jud. Admin. 3-108(3).

Gillett v. Brown

Corporation (Sentry). Sentry received a substantial partial

payment of the balance due from one of the loan’s personal

guarantors, Boyd J. Brown. Neither Sentry nor Brown disclosed

Brown’s guaranty payment to Gillett or Majestic. Sentry later

commenced an action in the district court against Majestic to

collect on the past-due loan, and after the court entered default

judgment in Sentry’s favor, Sentry liquidated Majestic’s assets

and certain personal property of Gillett’s, all of which had been

pledged as security for the loan. Sentry thereafter reimbursed

Brown for the guaranty payment he had made. Brown then

facilitated the settlement of a dispute over Sentry’s handling of

the disposition of Gillett’s and Majestic’s property in the

aftermath of the default judgment, which resulted in a mutual

release of claims by and among Sentry, Brown, Majestic, and

Gillett (the Release).

¶2 Gillett discovered Brown’s guaranty payment and

Sentry’s reimbursement in 2002. Gillett and Majestic thereafter

brought a claim of breach of contract against Sentry and claims

of fraud and breach of contract against Brown. On appeal, Gillett

and Majestic contend that the district court erred in granting

summary judgment in favor of Brown and Sentry. We affirm the

district court’s dismissal of Gillett and Majestic’s claims. Sentry

and Brown request an award of attorney fees and costs incurred

on appeal. We decline to award Sentry and Brown their attorney

fees on appeal, but Sentry and Brown are entitled to their costs.

BACKGROUND

¶3 Majestic was a Utah corporation and Gillett was its

president and sole owner.2 In 1994, Majestic found itself in a

financial predicament. It owed Textron Financial Corp. (TFC)

almost half a million dollars on a loan and was in default. In

2. The corporation was dissolved in April 1996.

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Gillett v. Brown

April 1994, Sentry entered into an agreement with Majestic (the

Loan Agreement) to pay off the balance of Majestic’s TFC loan

and provide a small additional sum to Majestic—a total principal

amount of $483,102.43. In return, Majestic agreed to make thirty-

six equal monthly payments of $15,779.57 beginning on July 1,

1994, as well as an interim payment on or before that date to

cover the period between the signing of the Loan Agreement and

July 1. The loan was secured by interests in four cargo aircraft

and four fuel trucks, all property of Majestic, as well as by

Gillett’s pledge of certain personal property of his own. Because

Majestic had previously defaulted on its loan with TFC, Sentry

required additional assurances—the personal guaranties of

Gillett himself and Brown, a mutual acquaintance of both Gillett

and Sentry’s CEO.

¶4 Majestic failed to make the interim payment as well as

several monthly payments, and by March 1995 Majestic had paid

only about $57,000 of the amount it then owed Sentry in

principal, interest, and other fees under the Loan Agreement.

Following Majestic’s default, Sentry demanded that Brown fulfill

his obligation as personal guarantor by paying $249,964.88 (the

guaranty payment) to Sentry. Brown made the guaranty

payment in March 1995, but neither Sentry nor Brown informed

Majestic of that fact. A few weeks later, Sentry obtained a default

judgment against Majestic for the ‚principal sum of $450,119.70,‛

plus interest and costs. That principal sum did not reflect

Brown’s guaranty payment. To recover on the default judgment,

Sentry arranged for a public auction in October 1995 of the assets

Majestic and Gillett had pledged as collateral for the Loan

Agreement. At the auction, Majestic bought back four aircraft,

and the parties agreed that Majestic’s obligation would be

reduced by that amount. The proceeds of the auction were

otherwise remitted to Sentry, which then reimbursed Brown for

his guaranty payment.

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Gillett v. Brown

¶5 After the auction, Gillett became concerned about Sentry’s

post-sale handling of the proceeds. He sought an accounting

from Sentry of how the auction’s proceeds had been applied to

Majestic’s indebtedness, including whether there was any

surplus due to Majestic above what Sentry was owed. In

addition, Sentry had held back the bills of sale for the

repurchased aircraft, apparently because, by its accounting,

Majestic still owed money on the default judgment. Sentry

directed Gillett to discuss the outstanding issues with Brown.

Around the same time, despite the lack of bills of sale, Gillett

and Majestic began to use the aircraft in various business

dealings. For example, Majestic disassembled two of the planes

and shipped sections of the engines out of state. It also

attempted to negotiate leases for two of the aircraft with an

aviation company operating out of Kenya.

¶6 By the summer of 1996, Gillett and Majestic still had not

received a post-auction accounting of the proceeds from the

collateral sale or the bills of sale for the planes, and Gillett

contacted Brown, as Sentry had suggested. Brown informed

Gillett that Majestic still owed Sentry $150,000 and that Sentry

would not permit Majestic to lease the two planes to the Kenyan

aviation company. According to Gillett, Majestic cancelled those

leases in reliance on Brown’s assertions.

¶7 A few months later, Sentry presented Gillett with the

Release in an effort to resolve the outstanding disputes. Gillett

sought Brown’s advice as to whether to sign the Release. Brown

informed him that, among other things, Sentry’s general counsel

wanted to criminally prosecute Gillett personally for

disassembling one of the aircraft and shipping the ‚hot parts‛ of

the aircraft out of state, which Majestic had done believing that it

owned the aircraft after the collateral foreclosure sale. As Gillett

recounts, Brown advised Gillett to sign the Release and told

Gillett that he would ‚get things worked out with Sentry.‛ In

December 1996, Gillett and Sentry signed the Release, which

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Gillett v. Brown

provided that ‚Sentry and Gillett mutually release, forever

discharge and agree to hold harmless each other, and . . . Boyd

Brown, an individual, from any and all claims, demands,

damages, actions, counts, causes of action, or suits at law of

whatever kind and nature, and from all costs and attorneys’

fees.‛

¶8 More than five years later, in March 2002, Gillett

discovered that Brown had made the guaranty payment to

Sentry and that Sentry had not reduced Majestic’s loan

obligation accordingly. In 2007, Gillett and Majestic sued Sentry

and Brown, alleging three claims for relief: breach of contract

against Sentry; breach of contract against Brown; and fraud

against Brown. The 2007 suit was dismissed without prejudice

months later for failure to serve the complaint on the defendants

within 120 days of filing. See Utah R. Civ. P. 4(b). Gillett and

Majestic then refiled essentially the same claims against Sentry

and Brown in September 2008.

¶9 In the 2008 suit, Gillett and Majestic claimed that Sentry

had breached the Loan Agreement by failing to disclose the

guaranty payment and commensurately reducing the amount

Majestic owed on the loan, by failing to provide Gillett and

Majestic with an accounting of the surplus proceeds from the

collateral auction, and by colluding with Brown to improperly

induce Gillett and Majestic to execute the Release. The 2008

complaint alleged breach of contract against Brown, as well, but

also added a fraud claim against him. Gillett and Majestic

alleged that Brown had breached the Loan Agreement by

‚failing to abide by the terms of the *agreement+‛ and violating

the implied covenant of good faith and fair dealing. In addition,

they claimed that Brown had made ‚false and fraudulent

statements concerning the status of the outstanding

delinquencies‛ on the loan, which led to the loss of the aircraft

and the auction proceeds and finally to Gillett and Majestic’s

execution of the Release. In particular, they alleged that in

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Gillett v. Brown

connection with the negotiation of the Release, Brown had made

‚intentionally misleading and false statements‛—namely, that

Gillett and Majestic ‚were still indebted‛ to Sentry at the time,

that Sentry was threatening to criminally prosecute Gillett, and

that Gillett and Majestic had no right to lease the two aircraft for

use in Africa. They asserted that Brown made these statements

to induce them to, among other things, pay Sentry additional

money and sign the Release, and that Gillett and Majestic had

acted and relied upon these statements to their detriment.3

¶10 Gillett and Majestic eventually filed a motion for partial

summary judgment ‚against Sentry . . . only‛ for ‚breach of

contract . . . committed in violation of the implied covenant of

good faith and fair dealing.‛ Sentry opposed the motion, and

Sentry and Brown filed a joint cross-motion for summary

judgment against Gillett and Majestic. Sentry and Brown

asserted that Gillett and Majestic’s claims should be dismissed

for several reasons, including that Majestic’s claims were not

within the allowable scope of the ‚winding up‛ of its business

affairs as a dissolved corporation and that Gillett and Majestic’s

claims were barred by statutes of limitation as well as by the

Release.

¶11 In response to the cross-motions for summary judgment,

the district court ‚dismiss*ed+ with prejudice all claims‛ against

Sentry and Brown, effectively denying Gillett and Majestic’s

3. In their 2008 complaint, Gillett and Majestic also requested a

judicial accounting of the auction proceeds and a declaratory

judgment interpreting certain provisions of the contractual

documents, including the Release. Because we resolve the case

by affirming the district court’s statute of limitations

determinations and Gillett and Majestic do not pursue the

accounting claims separately on appeal, we do not address them

further.

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Gillett v. Brown

motion and granting Sentry and Brown’s cross-motion. In doing

so, the court made several determinations. First, it concluded

that, because Majestic was ‚no longer a viable corporation‛ and

its ‚winding up period had expired,‛ it lacked standing to

‚assert any claims.‛ The court determined, however, that Gillett

had ‚the right to assert Majestic’s claims‛ as its successor in

interest. The court then determined that all three of the

complaint’s substantive claims—the breach of contract claim

against Sentry and the breach of contract and fraud claims

against Brown—were barred. The court concluded that the

breach of contract claims were barred on two independent

grounds. First, the court determined that the applicable statute

of limitations had run on the breach of contract claims. Applying

what the court referred to as a ‚first breach‛ approach, the court

concluded that the statute of limitations on the breach of contract

claims began to run in 1995 when Gillett and Majestic defaulted

on their obligations to Sentry under the Loan Agreement, a

default that occurred before any alleged default by Sentry in

connection with the collateral disposition or the Release. The

court then determined that the six-year statute of limitations

applicable to claims based upon written instruments had expired

in 2001, thus barring the breach of contract claims.

¶12 Second, the court determined that the Release barred the

breach of contract claims. Though Gillett and Majestic claimed

the Release was invalid, the court decided that the statute of

limitations on that claim had run its course before the first

complaint was filed. Specifically, the court found that the

limitations period for Gillett and Majestic’s fraud claim, the only

claim challenging the validity of the Release, began to run in

2002 when Gillett and Majestic first became aware of the factual

basis for their claim. Applying the three-year fraud statute of

limitations, the court determined that the fraudulent inducement

claim expired in 2005—before Gillett and Majestic filed their first

complaint—and therefore that the passage of time barred any

challenge to the validity of the Release. As a result, the still-valid

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Gillett v. Brown

Release precluded Gillett and Majestic’s contract claims against

all the defendants.

¶13 The court accordingly dismissed with prejudice all claims

in the 2008 complaint. Gillett and Majestic filed a combined rule

59(b) motion for a new trial and rule 60(b) motion to set aside the

district court’s judgment (the post-judgment motions). The

district court denied the motions and affirmed its prior ruling

granting summary judgment in favor of the defendants,

concluding that Gillett and Majestic’s ‚‘objections’ *were+ merely

a veiled attempt to take a second bite at the apple.‛

ISSUES AND STANDARD OF REVIEW

¶14 Gillett and Majestic now appeal the district court’s grant

of summary judgment in favor of Sentry and Brown. ‚We review

a district court’s grant of summary judgment for correctness.‛

IHC Health Services, Inc. v. D & K Mgmt., Inc., 2008 UT 73, ¶ 15,

196 P.3d 588. And because Gillett and Majestic’s post-judgment

motions essentially sought reconsideration of the district court’s

summary judgment decision, to the extent that they purport to

separately appeal them, the standard of review is the same. Cf.

State v. Parker, 872 P.2d 1041, 1044 (Utah 1994) (‚In determining

the character of a motion, the substance of the motion, not its

caption, is controlling.‛).

ANALYSIS

¶15 Gillett and Majestic contend that the district court made

several errors in dismissing their claims: (1) the district court

incorrectly applied the three-year fraud statute of limitations to

their breach of contract claims against Sentry and Brown when it

should have applied the six-year limitations period applicable to

claims based on a written instrument; (2) the court failed to toll

the running of the statute of limitations on the claims against

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Gillett v. Brown

Brown while he resided out of the state; (3) the court erred in

ruling that Majestic’s claims devolved to Gillett after Majestic’s

dissolution as a corporation and were not valid corporate

‚winding up‛ activities; (4) the court incorrectly applied the

‚first breach‛ doctrine to bar Gillett and Majestic’s breach of

contract claims against Sentry and Brown; and (5) the court

failed to recognize disputes of material fact that precluded

summary judgment.

¶16 Gillett and Majestic acknowledge that the ‚winding up‛

and the ‚first breach‛ issues become relevant only if we reverse

the district court’s dismissal of the breach of contract and fraud

claims as time-barred. Indeed, they characterize the district

court’s conclusions on these points as ‚peripheral,‛

‚unnecessary,‛ and ‚irrelevant‛ ‚*i+f the summary judgment on

the ‘statute of limitations’ bar is affirmed,‛ noting that they have

raised these issues on appeal ‚only to avoid future ‘law of the

case’ problems if the case is remanded for trial.‛ Accordingly, we

first consider whether the district court correctly applied the

pertinent statutes of limitation to Gillett and Majestic’s breach of

contract claims against Sentry and Brown and their fraudulent

inducement claim against Brown. Because we conclude that the

district court correctly ruled that the claims against both

defendants are time-barred and that there are no unresolved

issues of material fact that preclude summary judgment, we do

not reach the merits of either the ‚winding up‛ or the ‚first

breach‛ issue. Lastly, we address Sentry and Brown’s request for

the attorney fees and costs they have incurred on appeal.

I. Statutes of Limitation

¶17 A district court’s application of a statute of limitations is

reviewed for correctness. Gillmor v. Summit County, 2010 UT 69,

¶ 16, 246 P.3d 102. Gillett and Majestic argue that the district

court erred in applying the pertinent statutes of limitation to

dismiss their breach of contract claims against Brown and Sentry

and their fraud claim against Brown. Specifically, they argue that

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Gillett v. Brown

the court correctly tolled the breach of contract claims until the

2002 discovery of Brown’s guaranty payment, but that the court

then wrongly applied the three-year fraud statute of limitations

to those breach of contract claims. They contend that, had the

court applied the correct six-year statute of limitations for claims

based upon written instruments, see Utah Code Ann. § 78B-2-

309(2) (LexisNexis 2012), their breach of contract claims would

have been timely filed because they filed those claims in 2007,

within six years of their discovery in 2002.

¶18 Gillett and Majestic also argue that their claims against

Brown—the fraud claim and the breach of contract claim—were

timely filed, because Brown has continuously resided out of state

at all times relevant to the litigation. Thus, they assert that under

Utah Code section 78B-2-104, the section that tolls statutes of

limitation in circumstances where the defendant is out of state,

the limitation periods on the claims against Brown should never

have begun to run.

¶19 We first address the district court’s dismissal of the

breach of contract claims and then consider whether the district

court correctly rejected Gillett and Majestic’s argument that the

claims against Brown ought to have been indefinitely tolled

because he was residing out of state.

A. Breach of Contract Claims

¶20 Gillett and Majestic argue that the district court

incorrectly applied the fraud statute of limitations to their breach

of contract claims.

¶21 Utah Code sections 78B-2-305 and 78B-2-309 set out the

statutes of limitation applicable to fraud claims and claims based

upon ‚an instrument in writing,‛ respectively. An action based

on fraud or mistake ‚may be brought within three years‛ from

the date of accrual. Utah Code Ann. § 78B-2-305(3) (LexisNexis

2012). An action based ‚upon any contract, obligation, or liability

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Gillett v. Brown

founded upon an instrument in writing‛ can ‚be brought within

six years‛ of accrual. Id. § 78B-2-309(2). ‚As a general rule, a

statute of limitations begins to run ‘upon the happening of the

last event necessary to complete the cause of action.’‛ Russell

Packard Dev., Inc. v. Carson, 2005 UT 14, ¶ 20, 108 P.3d 741

(quoting Myers v. McDonald, 635 P.2d 84, 86 (Utah 1981)). ‚Once

a statute has begun to run, a plaintiff must file his or her claim

before the limitations period expires or the claim will be barred.‛

Id.

¶22 In limited circumstances, however, ‚a statute of

limitations may be tolled until the discovery of facts forming the

basis for the cause of action.‛ Id. ¶ 21 (citation and internal

quotation marks omitted). Some limitation statutes contain their

own tolling provisions, establishing what our supreme court has

described as a ‚statutory discovery rule.‛ Id. For example, the

fraud statute of limitations expressly provides that ‚the cause of

action does not accrue until the discovery by the aggrieved party

of the facts constituting the fraud or mistake.‛ Utah Code Ann.

§ 78B-2-305(3). The supreme court has also recognized an

‚equitable discovery rule‛ that can apply where there is no

express statutory tolling provision. See Russell Packard, 2005 UT

14, ¶ 24. Under the equitable discovery rule, the accrual of a

claim may be tolled based upon ‚the defendant’s concealment or

misleading conduct‛ or where there are ‚exceptional

circumstances‛ making ‚the application of the general [statute of

limitations] rule . . . irrational or unjust.‛ Id. ¶ 25 (citation and

internal quotation marks omitted).

¶23 Gillett and Majestic assert that the district court correctly

tolled their claims against Brown and Sentry until 2002 based on

Sentry and Brown’s concealment of the guaranty payment but

then incorrectly applied the three-year statute of limitations for

fraud claims to their breach of contract claims. They argue that

the district court somehow conflated the fraudulent nature of the

concealment that tolled their claims with the breach of contract

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Gillett v. Brown

claims themselves and thus applied the wrong limitations

period. We disagree.

¶24 In its summary judgment ruling, the district court

dismissed all of Gillett and Majestic’s claims with prejudice and

confirmed that decision in denying the post-judgment motions.

While the logic of the district court’s summary judgment

decision is in places difficult to track, the court clarified its

reasoning in its ruling on Gillett and Majestic’s post-judgment

motion. Reading both the summary judgment and the post-

judgment rulings together, it appears that the court dismissed

the breach of contract claims against Sentry and Brown on two

independent grounds: first, that the claims were time-barred

because the six-year statute of limitations expired in 2001, and

second, that the Release barred the claims.

¶25 In deciding that the six-year limitations period barred the

contract claims, the court reasoned that Gillett and Majestic first

breached the Loan Agreement in 1995 by defaulting on their

payments to Sentry and that, according to the court’s

understanding of the ‚first breach‛ doctrine, the statute of

limitations began to run on the breach of contract claims from

the date of that default.4 In particular, the court stated that

4. Under the ‚first breach‛ doctrine, ‚a party first guilty of a

substantial or material breach of contract cannot complain if the

other party thereafter refuses to perform. He can neither insist

on performance by the other party nor maintain an action

against the other party for a subsequent failure to perform.‛

CCD, LC v. Millsap, 2005 UT 42, ¶ 29, 116 P.3d 366 (citation and

internal quotation marks omitted). Because we affirm the district

court’s dismissal of Gillett and Majestic’s claims on other

grounds, we do not reach the issue of whether the first breach

doctrine can be applied in a statute-of-limitations context as the

district court did here.

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Gillett v. Brown

‚Plaintiffs were the first party to breach the contract at issue in

1995 and therefore, the six (6) year statute of limitations expired

in 2001.‛ (Footnote omitted.) And in response to Gillett and

Majestic’s post-judgment contention that ‚the Court

misapprehended (and thus overlooked) the true ‘contractually-

based’ nature of the Plaintiffs’ claim (against *Sentry+) and

instead improperly converted Plaintiffs’ claims to allege ‘fraud,’

for which a shorter statute of limitations would apply,‛ the court

explained as follows: ‚[T]he contractual claims, i.e., [Gillett and

Majestic’s+ first and second causes of action, were barred by the

six (6) year statute of limitations‛ on the basis that ‚*Gillett and

Majestic] themselves asserted [that] they breached the terms of

the [Loan Agreement] in mid-1995 but did not file any suit until

June 2007.‛ Thus, contrary to Gillett and Majestic’s assertion, the

court did not equitably toll the limitations period for the breach

of contract claims at all. Rather, it concluded that the statute of

limitations applicable to claims based upon written instruments,

see Utah Code Ann. § 78B-2-309(2) (LexisNexis 2012), applied to

those claims, with the limitations period commencing in 1995

and expiring six years later in 2001. In so concluding, the court

noted that Gillett and Majestic alleged ‚they were unaware of

Sentry’s receipt of Mr. Brown’s $250,000 payment‛ until March

2002, when they first became aware of the guaranty payment.

But the court found that ‚the concealment *at issue+ pertains to

[the] alleged fraud inducing [Gillett and Majestic] to sign the

release in December 1996, which [Gillett and Majestic] alleged to

not have discovered until March 2002,‛ and, as a result, it

applied the discovery rule in the fraud statute of limitations to

toll only the fraud claim against Brown until March 2002.

¶26 Thus, the court did not even purport to toll the statute of

limitations on the contract claims, much less apply a fraud

limitations period to those claims. Rather the district court

seemed to simply bypass consideration of whether the equitable

discovery rule ought to toll the breach of contract claims until

discovery of the guaranty payment because it concluded that

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Gillett v. Brown

Gillett and Majestic had first breached the Loan Agreement

before the guaranty payment had even been made.

¶27 The second basis for the court’s decision to dismiss the

breach of contract claims was the operation of the Release.

Specifically, the district court concluded that even if the statute

of limitations had not expired, the Release barred both breach of

contract claims. The court reasoned that Gillett and Majestic’s

only challenge to the validity of the Release was asserted in their

fraud claim against Brown, where they alleged that he had

fraudulently induced them to execute the mutual release of all

contract claims relating to the Loan Agreement. Having assumed

for purposes of summary judgment that Gillett and Majestic did

not discover until the deposition of Sentry’s CEO that Brown

had misled them by, among other things, failing to disclose the

guaranty payment, the court tolled the fraudulent inducement

claim until March 2002. The court then applied the three-year

statute of limitations applicable to fraud claims from March 2002

and determined that, even though the fraud claim was tolled, it

had nonetheless expired in 2005, long before the 2007 case was

filed.

¶28 Thus, the district court dismissed the breach of contract

claims on two independent grounds: first, that they were barred

by the applicable statute of limitations; and second, that they

were barred by the Release. The court also ruled that the passage

of the three-year limitations period barred any challenge to the

Release.

¶29 We ‚will not reverse a ruling of the *district+ court that

rests on independent alternative grounds where [an] appellant

challenges only one of those grounds.‛ Wm. Douglas Horne

Family Revocable Trust v. Wardley/McLachlan Dev., LLC, 2013 UT

App 129, ¶ 9, 304 P.3d 99 (citation and internal quotation marks

omitted). Instead, we ‚may affirm if the [appellant] fail[s] to

challenge each of the grounds for the district court’s grant of

summary judgment.‛ Id.

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Gillett v. Brown

¶30 On appeal, Gillett and Majestic contend that the district

court incorrectly dismissed the breach of contract claims against

Brown and Sentry on statute of limitations grounds. But they do

not acknowledge that the validity of the Release was an

independent basis for the court’s decision. Indeed, Gillett and

Majestic do not even mention the Release in their opening brief,

much less challenge the district court’s interpretation of its

applicability and scope. And in their reply brief, while they

acknowledge that the allegation of fraud in the complaint ‚was

for the purpose of challenging the validity of the ‘Release’ and its

use so as to bar *Gillett and Majestic’s+ claims,‛ they simply

reassert without further analysis that the district court

‚narrowed its actual ‘summary judgment’ ruling to be on the

‘statute of limitations’ grounds.‛ Thus, Gillett and Majestic fail to

challenge the district court’s alternative conclusion that the

passage of time rendered the validity of the Release unassailable

and that the Release itself barred their breach of contract claims

against both Sentry and Brown.

¶31 Accordingly, even if the district court erred in its

application of the statute of limitations, as Gillett and Majestic

contend, we nonetheless affirm the court’s dismissal of the

breach of contract claims on the ‚unchallenged alternative

ground of [the operation of the Release] without reaching the

merits of that decision.‛ See id. ¶ 13.

B. Fraud Claim Against Brown

¶32 Gillett and Majestic argued below that former Utah Code

section 78-12-355 acted to indefinitely toll the statutes of

5. Section 78-12-35 was renumbered to 78B-2-104 in February

2008 and amended in March 2009 to read:

If a cause of action accrues against a person while

the person is out of the state and the person is not

subject to the jurisdiction of the courts of this state

(continued…)

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Gillett v. Brown

limitation on their claims against Brown because, as a resident of

Wyoming, Brown had been absent from the state of Utah since

the events that formed the basis of their claim. Section 78-12-35

provided:

Where a cause of action accrues against a person

when he is out of the state, the action may be

commenced within the term as limited by this

chapter after his return to the state. If after a cause

of action accrues he departs from the state, the time

of his absence is not part of the time limited for the

commencement of the action.

Utah Code Ann. § 78-12-35 (West 2007).

(…continued)

in accordance with Section 78B-3-205, the action

may be commenced within the term as limited by

this chapter after his return to the state. If after a

cause of action accrues the person departs from the

state, the time of his absence is not part of the time

limited for the commencement of the action unless

Section 78B-3-205 applies.

Utah Code Ann. § 78B-2-104 (LexisNexis Supp. 2009). In other

words, the references to long-arm jurisdiction under section 78B-

3-205 were not added until March 2009. Compare id. (LexisNexis

Supp. 2009), with id. (2008). Gillett and Majestic argued below

that the current section 78B-2-104 was not applicable because the

litigation commenced before the amendments. And indeed, in

their briefing on appeal, although Gillett and Majestic purport to

quote section 78B-2-104, they omit altogether the added

language that incorporated long-arm jurisdiction concepts into

the amended statute. Accordingly, we cite the former version in

our discussion.

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Gillett v. Brown

¶33 As discussed above, Gillett and Majestic asserted two

claims against Brown—one for breach of contract and one for

fraud. The district court determined in its summary judgment

ruling that the Release barred the breach of contract claim,

unless the claim alleging that the Release was fraudulently

obtained had been timely filed. It then determined that the fraud

claim was barred because the applicable statute of limitations

had expired in 2005, over two years before Gillett and Majestic

filed their 2007 case. The court accordingly dismissed all the

claims.

¶34 In their motions following entry of the summary

judgment order, Gillett and Majestic contended that the district

court’s summary judgment ruling on the fraud claim ‚fails to

consider the legal effect of [the out-of-state tolling statute] . . .

and [Brown’s+ essentially-continuous absence from Utah since

the mid-1990s.‛ They did not further analyze or explain this

contention to the court, however, as Gillett and Majestic failed to

submit a memorandum supporting their motion. Nevertheless,

in denying the motion, the district court addressed the issue and

concluded that the out-of-state tolling statute did not apply to

the circumstances in this case.

¶35 First, the court decided that it had jurisdiction to

adjudicate the claims against Brown by virtue of the forum

selection clauses found in the Loan Agreement, which Brown

signed, and Brown’s personal Guarantee and Waiver. Both

forum selection clauses stated that the parties agreed to resolve

all matters in ‚the exclusive jurisdiction of the Third Judicial

District for Salt Lake County, State of Utah.‛ Relying upon

Jacobsen Construction Co. v. Teton Builders, 2005 UT 4, 106 P.3d

719, the court discussed circumstances in which an enforceable

forum selection clause establishes personal jurisdiction over a

defendant. In Jacobsen Construction, our supreme court held that

for a court to have personal jurisdiction over a defendant by way

of a forum selection clause, there need be only ‚a rational nexus

20140682-CA 17 2017 UT App 19

Gillett v. Brown

between Utah and the underlying dispute.‛ Id. ¶ 32 (citation and

internal quotation marks omitted). The district court then

determined that the forum selection clauses at issue created a

‚rebuttable presumption‛ that it had personal jurisdiction over

Brown and that the circumstances in the case established ‚the

necessary rational nexus‛ between Utah and the matter in

controversy.6 (Citing Jacobsen Constr., 2005 UT 4, ¶ 39.)

¶36 Second, the court determined that the out-of-state tolling

statute—whether the 2008 or subsequently amended version—

did not apply under the circumstances, and that Gillett and

Majestic had ‚misconstrued the statutory language and . . . the

purpose of‛ the statute. Quoting Snyder v. Clune, 390 P.2d 915

(Utah 1964), a case applying the preamendment statute, the court

reasoned ‚‘that the objective of [the out-of-state tolling statute]

was to prevent a defendant from depriving a plaintiff of the

opportunity of suing him by absenting himself from the state

during the period of limitation.’‛ (Quoting id. at 916.) The

district court then observed that the supreme court, in applying

this principle in Olseth v. Larson, 2007 UT 29, 158 P.3d 532,

determined that, ‚because defendant was an out-of-state

defendant whom plaintiff was unable to locate at the time she

attempted to serve her second amended complaint, which then

was outside of the applicable statute of limitations, the statute of

limitations was tolled.‛ (Citing id. ¶¶ 2–7.)

¶37 The district court went on to compare the circumstances

in Olseth to those in the present case, observing that ‚[u]nlike the

matter in Olseth, [Gillett and Majestic] knew that [in] the mid-

1990s Mr. Brown relocated his permanent residence . . . to Teton

County, Wyoming, where he has continuously maintained his

6. We note that it is not clear whether the court viewed the

forum selection clauses as providing the court with an alternate,

independent basis not to invoke the tolling statute.

20140682-CA 18 2017 UT App 19

Gillett v. Brown

permanent legal residence and domicile.‛ (Third alteration in

original) (citation and internal quotation marks omitted). The

district court also noted that Gillett and Majestic had managed to

serve Brown with their complaint in Wyoming and that they had

‚never claimed that they were unable to locate Mr. Brown in

order to appropriately serve him‛ or that Brown’s ‚absence from

Utah deprived them of their ability to timely commence the

entitled matter.‛ The court accordingly determined that ‚*t+he

fact that Mr. Brown was served in Wyoming and the alleged

inconvenience of [Gillett and Majestic] in attempting to timely

depose Mr. Brown does not invoke [the out-of-state tolling

statute+.‛ Based on this analysis, the court concluded that the

claims against Brown were not tolled due to Brown’s out-of-state

residence.

¶38 On appeal, Gillett and Majestic do not meaningfully

engage with the district court’s reasoning that the forum

selection clauses provided a basis for personal jurisdiction over

Brown and that the out-of-state tolling statute did not apply in

the circumstances. See Wing v. Still Standing Stable LLC, 2016 UT

App 229, ¶ 19 (quoting Golden Meadows Props. LC v. Strand, 2010

UT App 257, ¶ 17, 241 P.3d 375) (explaining that appellate

review is ‚confined to the trial court’s ruling*s+‛ and rejecting a

challenge where the appellant’s brief ‚‘fail*ed+ to address the

basis of the district court’s ruling’‛); State v. Cooper, 2012 UT App

211, ¶ 10, 283 P.3d 1075 (declining to reach an issue in part

because the appellant ‚fail*ed+ to address . . . the district court’s

consideration and rejection of [the issue being appealed] when it

was raised in a motion for new trial‛); Duchesne Land, LC v.

Division of Consumer Prot., 2011 UT App 153, ¶ 8, 257 P.3d 441

(explaining that the appellants had ‚failed to persuade us that

the district court’s ruling constituted error‛ where the appellants

had ‚not addressed the actual basis for the district court’s

ruling‛).

20140682-CA 19 2017 UT App 19

Gillett v. Brown

¶39 Gillett and Majestic begin their argument on this point by

discussing the overall applicability of the out-of-state tolling

statute to this case. Their analysis in this regard consists of

quoting the statute, reciting the apparently undisputed factual

support for the proposition that Brown resided in Wyoming

since the mid-1990s events underlying the suit, and then stating

that due to Brown’s ‚permanent absence from the state, . . . the

statute of limitations effectively never commences or runs‛ on

the breach of contract and fraud claim against Brown. They then

conclude by stating that ‚the District Court’s dismissal of *their+

claims against [Brown+ was in error.‛7

¶40 But the district court explained at some length, based on

its analysis of certain language in the statute and prior cases

7. Indeed, apart from recounting the factual basis of Brown’s

absence from the state, Gillett and Majestic’s analysis on this

point is contained in one paragraph, which reads:

In this case, Defendant Brown has not

resided in Utah on a continuous basis since the

1990s; he (in the mid-1990s or earlier) changed his

residence and domicile to the State of Wyoming

(Teton County) and has continuously resided

there. . . . Thus, due to Brown’s permanent absence

from the state due to his residence in Wyoming

(and/or lengthy half-year annual vacations in

Mexico), the statute of limitation effectively never

commences or runs. This result—that the statute

effectively never runs—is applicable to both the

fraud claim (a three-year statute, tolled until

discovery) as well as the longer (six year) statute

for the breach of contract claims. Thus, the District

Court’s dismissal of the Plaintiffs’ claims against

Defendant [Brown] was in error.

(Internal quotation marks omitted.)

20140682-CA 20 2017 UT App 19

Gillett v. Brown

interpreting it, why it concluded that the statute did not apply in

the circumstances of this case. And Gillett and Majestic do not

describe, engage with, or effectively challenge the basis of the

court’s decision; they critique neither the court’s interpretation

of the statutory language nor its reading of prior cases applying

the statute. Indeed, the entirety of their response to the court’s

analysis in their opening brief consists of two sentences. After

simply noting without further description that the court’s

analysis of the applicability of the statute is found on ‚pages 6

thru 8‛of its post-judgment motions ruling, they state:

The District Court’s infusion . . . of long arm

jurisdiction concepts (namely, that the Plaintiffs

knew where Brown resided out-of-state and could

have served him, as was ultimately accomplished)

does not resolve the situation. The statute—78B-2-

[1]04—still tolls the running of the statute, because

[Brown] is out-of-state, regardless of whether the

Plaintiff knew where [Brown] was.

¶41 Such a conclusory analysis falls short of demonstrating

that the district court erred. See State v. Green, 2005 UT 9, ¶¶ 11–

12, 108 P.3d 710 (declining to address appellant’s argument

where, ‚*t+oo often, his legal analysis is little more than a

conclusory statement unsupported by analysis or authority‛).

Although Gillett and Majestic argue that, under the out-of-state

tolling statute, the claims against Brown should have been

tolled, they do not attempt to meaningfully address the district

court’s reasoning or explain why the court’s determination that

their arguments failed under both the original and the amended

versions of the out-of-state tolling statute was infirm. See Golden

Meadows Props., 2010 UT App 257, ¶¶ 17–18 (explaining that an

appellant cannot demonstrate that a district court erred if he or

she ‚fails to attack the district court’s reasons‛ for the decision it

made); see also Utah R. App. P. 24(a)(9). Rather, in order for us to

determine that the district court erred and reverse its decision,

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Gillett v. Brown

we would have to assume ‚the burden of argument and

research‛ and, in effect, act as Gillett and Majestic’s advocates.

See Hi-Country Estates Homeowners Ass’n v. Jesse Rodney Dansie

Living Trust, 2015 UT App 218, ¶ 5, 359 P.3d 655 (citation and

internal quotation marks omitted). We decline to do so. By

failing to address the district court’s reasoning, Gillett and

Majestic have ‚failed to carry their burden on appeal.‛ See id.

Accordingly, we affirm the district court’s conclusion that the

out-of-state tolling statute was inapplicable in the circumstances

of this case.8

8. Gillett and Majestic also contend that all their claims against

Sentry and Brown were timely filed in a 2003 case, which the

district court overlooked. The 2003 case, they allege, was

dismissed in June 2006 and timely refiled under the savings

statute in June 2007 and again in 2008. Thus, they argue, their

claims were filed well within the statutes of limitation—whether

the three-year fraud statute applicable to the Release or the six-

year period applicable to the contract claims—under their theory

of how the court should have applied that statute. As evidence

of the alleged filing, Gillett and Majestic attach a docketing

statement for a 2003 case as an addendum to their opening brief.

The docketing statement indicates that a civil complaint was

filed in September 2003, that Brown and Sentry filed answers,

and that the case was dismissed without prejudice for failure to

prosecute in June 2006 on the court’s own motion. We will not

consider this argument. Among other things, as Sentry and

Brown point out, Gillett and Majestic did not raise the 2003

complaint in the district court proceedings; rather, they ‚alleged

to the [district] court that this matter was filed in 2007 . . . , and

the [district] court confirmed that this matter was first filed in

2007.‛ ‚*I+n order to preserve an issue for appeal[,] the issue

must be presented to the [district] court in such a way that the

[district] court has an opportunity to rule on that issue.‛ 438

(continued…)

20140682-CA 22 2017 UT App 19

Gillett v. Brown

II. Issues of Fact

¶42 Gillett and Majestic contend that there were disputes of

material fact that ought to have precluded summary judgment

as a matter of law. Gillett and Majestic have identified three

questions of fact that they contend were material and disputed:

(1) whether Brown continuously resided out of state, (2) whether

Majestic’s claims against Sentry and Brown fell within the

‚‘winding up’ of its corporate affairs,‛ and (3) whether

Majestic’s ‚default in making the monthly repayments . . .

necessarily constitute*d+ ‘breach’‛ of the Loan Agreement in

terms of the ‚‘first breach’ doctrine.‛ The last two questions do

not seem entirely factual and, in any event, implicate issues that

we have already decided we do not need to reach. And because

we have resolved the question of Brown’s absence from the state

on legal grounds that do not implicate questions of fact, we do

not further address this claim.

III. Attorney Fees

¶43 Sentry and Brown request an award of attorney fees and

costs incurred to defend this appeal. They contend that Gillett

and Majestic’s brief is deficient under rule 24(k) of the Utah

(…continued)

Main Street v. Easy Heat, Inc., 2004 UT 72, ¶ 51, 99 P.3d 801 (first

and second alterations in original) (citation and internal

quotation marks omitted). Gillett and Majestic have provided no

justification for their failure to bring the 2003 litigation to the

attention of the district court; indeed, they do not even

acknowledge the omission. Further, the bare docketing

statement from the 2003 case, even if we were willing to take

judicial notice of it, does not establish that the claims filed in

2007 were originally brought in a 2003 complaint which has

never been produced.

20140682-CA 23 2017 UT App 19

Gillett v. Brown

Rules of Appellate Procedure,9 and that it is also meritless and

frivolous under rule 33.10 They also contend that they should be

awarded costs under rule 34.11

¶44 We decline to award attorney fees. ‚The decision to assess

attorney fees under rule 24(k) is a matter of discretion‛ for the

appellate court. Fullmer v. Fullmer, 2015 UT App 60, ¶ 27, 347

P.3d 14 (citation and internal quotation marks omitted). And

while we are required to order fees if we determine that an

appeal is meritless or frivolous under rule 33, we have stated

that ‚*t+he imposition of rule 33 sanctions is a serious matter and

only to be used in egregious cases, lest the threat of such

9. Rule 24(k) of the Utah Rules of Appellate Procedure provides:

All briefs under this rule must be concise,

presented with accuracy, logically arranged with

proper headings and free from burdensome,

irrelevant, immaterial or scandalous matters. Briefs

which are not in compliance may be disregarded or

stricken, on motion or sua sponte by the court, and

the court may assess attorney fees against the

offending lawyer.

10. Rule 33(a) of the Utah Rules of Appellate Procedure provides

that ‚if the court determines that . . . *an+ appeal taken under

these rules is either frivolous or for delay, it shall award just

damages, which may include single or double costs, . . . and/or

reasonable attorney fees, to the prevailing party.‛

11. Rule 34(a) of the Utah Rules of Appellate Procedure provides

in part, ‚Except as otherwise provided by law, if an appeal is

dismissed, costs shall be taxed against the appellant unless

otherwise agreed by the parties or ordered by the court; if a

judgment or order is affirmed, costs shall be taxed against

appellant unless otherwise ordered . . . .‛

20140682-CA 24 2017 UT App 19

Gillett v. Brown

sanctions should chill litigants’ rights to appeal lower court

decisions.‛ Tobler v. Tobler, 2014 UT App 239, ¶ 47, 337 P.3d 296

(citation and internal quotation marks omitted); Cooke v. Cooke,

2001 UT App 110, ¶ 14, 22 P.3d 1249 (‚The sanction for filing a

frivolous appeal applies only in egregious cases with no

reasonable legal or factual basis.‛ (citation and internal

quotation marks omitted)).

¶45 While Gillett and Majestic ultimately did not prevail,

given the complexity of the factual and legal issues present in

this case, we ‚cannot say that [this] appeal, taken as a whole,

presents the egregious case that warrants rule 33 sanctions.‛ See

Tobler, 2014 UT App 239, ¶ 47. Accordingly, we decline to award

attorney fees under rules 24(k) or 33. However, because we have

affirmed the district court’s dismissal, Sentry and Brown are

entitled to their costs under rule 34.

CONCLUSION

¶46 We conclude that Gillett and Majestic have not

demonstrated that the district court’s summary judgment ruling

was in error. Accordingly, we affirm the district court’s dismissal

of Gillett and Majestic’s claims.

20140682-CA 25 2017 UT App 19