440 P.3d 884
Utah Ct. App.2019Background
- In 2009 Cypress sought Cougar as a co-lender on a Trinidad, Colorado real-estate bridge loan; Cypress committed $4.8M and Cougar agreed to fund half via a $2.8M note, but only $1.7M was ultimately advanced ($1.5M by Cougar).
- The Trinidad borrower defaulted; Cougar sued Cypress (Oct. 17, 2013) for securities fraud (Utah Uniform Securities Act) and breach of the implied covenant of good faith and fair dealing.
- After a four-day trial, a jury returned a special verdict for Cougar: $4M on securities fraud and $1M on the covenant claim; the court entered judgment for $4M (duplicative awards consolidated).
- Cypress moved for JNOV, new trial, and to set aside judgment; the trial court denied those motions and held Baxter in contempt after he transferred $230,000 in violation of a stay order.
- On appeal, Cypress centered on one argument: the securities-fraud claim was time-barred under the Act’s two-year discovery rule, asserting earlier emails (2009 and 2011) gave Cougar notice. The trial court had given a two-year statute-of-limitations instruction that Cypress had stipulated to; the 2011 email was never admitted into evidence.
- The Court of Appeals affirmed: Cypress’s statute-of-limitations argument was unpreserved and not plain error because the asserted jury-instruction omission was not obvious given Cypress’s stipulation to the instruction and its trial conduct; the contempt finding against Baxter was not clearly erroneous. The court remanded to fix Cougar’s appellate attorney-fee award.
Issues
| Issue | Plaintiff's Argument (Cougar) | Defendant's Argument (Cypress/Baxter) | Held |
|---|---|---|---|
| Whether Cougar’s securities-fraud claim was time-barred by the two-year discovery rule | Claim timely; jury found Cougar did not have actual or inquiry notice before Oct. 17, 2011 | 2009 and 2011 emails provided actual or imputed notice, triggering the two-year bar | Affirmed for Cougar: issue unpreserved; no plain error in jury instructions because Cypress had stipulated to them and did not timely object |
| Whether the trial court plainly erred by failing to instruct that an agent’s knowledge is imputed to the corporation | No additional instruction necessary; jury resolved factual notice questions | Trial court should have instructed that the administrative assistant’s knowledge is imputed to Cougar | Rejected: omission not obvious; Cypress invited/waived the instruction by stipulating and failing to preserve objection |
| Whether Baxter was properly held in contempt for transferring funds in violation of the Stay Order | N/A (Cougar sought enforcement) | Baxter argued transferred funds belonged to Baxter Properties, not him, so no contempt | Affirmed: Baxter failed to rebut presumption that the funds belonged to him; contempt finding stands |
| Whether Cougar is entitled to appellate attorney fees | Cougar sought fees under Utah Code and prior fee award below | Cypress sought fees on appeal | Court awarded Cougar reasonable appellate fees for defending the verdict; denied Cypress’s request for fees |
Key Cases Cited
- USA Power, LLC v. PacifiCorp, 372 P.3d 629 (Utah 2016) (standards for reciting facts in appellate review)
- ASC Utah, Inc. v. Wolf Mountain Resorts, LC, 309 P.3d 201 (Utah 2013) (standard for reversing on a new-trial legal-error ground)
- State v. Johnson, 416 P.3d 443 (Utah 2017) (plain-error test requirements)
- State v. Dean, 95 P.3d 276 (Utah 2004) (clarity of law in plain-error analysis)
- Kerr v. Salt Lake City, 322 P.3d 669 (Utah 2013) (invited-error doctrine)
- LD III, LLC v. BBRD, LC, 303 P.3d 1017 (Utah Ct. App. 2013) (elements for civil contempt)
- Peterson v. Peterson, 571 P.2d 1360 (Utah 1977) (presumption about ownership of bank-account funds)
- Grimm v. DxNA LLC, 427 P.3d 571 (Utah Ct. App. 2018) (appellate marshalling-of-evidence principle)
- State v. Nielsen, 326 P.3d 645 (Utah 2014) (burden to marshal record when challenging factual findings)
- Tobler v. Tobler, 337 P.3d 296 (Utah Ct. App. 2014) (appellate fee-award practice)
- Federated Capital Corp. v. Abraham, 428 P.3d 21 (Utah Ct. App. 2018) (appellate fees where fees awarded below)
- Gardner v. Gardner, 294 P.3d 600 (Utah Ct. App. 2012) (attorney fees awarded as contempt sanctions)
- Maxwell v. Woodall, 328 P.3d 869 (Utah Ct. App. 2014) (limitations on awarding appellate fees where lower-court fees were sanctions)
- Liston v. Liston, 269 P.3d 169 (Utah Ct. App. 2011) (denial of appellate fees where lower-court fees were sanctions)