500 P.3d 940
Utah Ct. App.2021Background
- In July 2010 the Dale K. Barker Company PC Profit Sharing Plan (the Plan) loaned Shawn D. Turner $25,000 under a written note: repayment due in 60 days; 60% simple annual interest; provision for late charges and for reimbursement of enforcement costs (including attorney fees) if notice of default and acceleration procedure followed.
- Turner made no payments when the note first came due; the debt grew. In Feb 2015 Turner directed Barker to apply his one-third share of a settlement (~$40,000) to the loan; Barker applied ~ $2,500 more in Nov 2017 from another settlement share.
- On Feb 9, 2018 Turner received a written notice of default; suit to enforce the note was filed on Apr 3, 2018 (original complaint named the Company; later amended to name the Plan as plaintiff).
- Turner moved for summary judgment arguing the six-year statute of limitations on notes had expired; the district court denied summary judgment, finding the 2015 and 2017 partial payments tolled/restarted the limitations period.
- At bench trial the court found default, awarded $113,750 (including two $1,250 late fees for the two late payments), and awarded $32,774 in attorney fees and $527.50 in costs to the Plan. Turner appealed.
- The Utah Court of Appeals affirmed: (1) partial payments (made at Turner’s direction) tolled § 3-118 limitations; (2) two late fees were authorized by the note’s language; (3) the notice requirement for fee recovery was satisfied (and Turner’s judicial admission that the Plan sent the notice barred his contrary argument). The case was remanded for the district court to calculate reasonable appellate fees.
Issues
| Issue | Plaintiff's Argument (Plan) | Defendant's Argument (Turner) | Held |
|---|---|---|---|
| Whether the 6‑year UCC limitations period for notes was tolled by partial payments | Partial payments in 2015 and 2017 tolled/restarted the statute under Utah’s general tolling statute supplementing the UCC | UCC § 3‑118 does not provide for tolling by payments; legislature intentionally omitted tolling | Court: General tolling statute supplements UCC § 3‑118; partial payments tolled the limitations period, making suit timely |
| Whether payments made by third party (Barker/Company) could toll the statute | Payments were made at Turner’s direction and therefore constitute debtor-directed payments that toll the statute | Only payments made by debtor should toll; Holloway requires debtor or payment under debtor’s immediate direction | Court: Holloway permits third‑party payments made at debtor’s direction; Turner’s emails and conduct showed direction/acknowledgment, so tolling applies |
| Whether the note allowed multiple late charges or only a single late charge | Note’s “once on each late payment” permits assessing a late charge for each separate late payment (2015 and 2017) | Section 3 contemplated one payment due in 60 days, so only one late fee may be imposed | Court: Affirmed district court—note’s “each late payment” language supports a late charge for each late payment; Turner failed to rebut district court’s reasoning |
| Whether attorney fees/costs under the note were recoverable and properly calculated | Fees and costs recoverable if notice/acceleration procedure in §6(C) was followed; Plan met the condition and is entitled to contractual fees (including on appeal) | The Plan failed to satisfy the notice/condition precedent, and some fees were for issues on which Plan did not prevail or were incurred by the Company, not the Plan | Court: Turner judicially admitted the Plan sent the notice; fees and costs awarded under the note were proper; Turner failed to show specific fees improperly awarded; remand for appellate fee calculation |
Key Cases Cited
- Russell Packard Dev., Inc. v. Carson, 108 P.3d 741 (Utah 2005) (standard of review for statute‑of‑limitations and tolling questions)
- J.R. Simplot Co. v. Sales King Int'l, Inc., 17 P.3d 1100 (Utah 2000) (UCC official comments are persuasive aids; general principles may supplement UCC)
- Lewiston State Bank v. Greenline Equip., LLC, 147 P.3d 951 (Utah Ct. App. 2006) (national UCC interpretation and use of other jurisdictions’ authority)
- Holloway v. Wetzel, 45 P.2d 565 (Utah 1935) (partial payment tolls limitations only if payment is by debtor or at debtor’s direction evidencing acknowledgment)
- Gilbert Dev. Corp. v. Wardley Corp., 246 P.3d 131 (Utah Ct. App. 2010) (contractual fee awards must be attributable to successful vindication of contractual rights)
- Luna v. Luna, 474 P.3d 966 (Utah 2020) (judicial admissions withdraw facts from issue and bar contradicting evidence)