Federated Capital Corp. v. Libby
384 P.3d 221
Utah2016Background
- In 2005 Libby (CA) and Chapa (TX) signed identical credit-card agreements with Advanta (Utah corp.; operations in Utah/Pennsylvania) that included a choice-of-law provision selecting Utah law and a forum-selection clause requiring suits be brought in Utah state or federal courts. Payment address on billing statements was Philadelphia, PA.
- Appellees defaulted in 2006; Advanta assigned the accounts to Federated, which sued each debtor in Utah in 2012 (about six years after default).
- Defendants moved for summary judgment arguing Utah’s borrowing statute required application of Pennsylvania’s four-year contract limitations period, barring Federated’s suits; district court granted summary judgment and awarded reciprocal attorney fees to defendants.
- Federated appealed, arguing (1) the forum-selection clause required application of Utah procedural law (including Utah’s six-year written-contract limitations period), and (2) the borrowing statute doesn’t apply where a forum-selection clause (not the foreign statute of limitations) made the claim unenforceable in the foreign forum.
- The Utah Supreme Court consolidated the appeals and affirmed: the contract selected Utah law (which includes the borrowing statute), the claims arose in Pennsylvania (accepted on appeal), and the borrowing statute required adopting Pennsylvania’s four-year limit, barring Federated’s claims; attorneys’ fees to appellees were affirmed and remanded for calculation.
Issues
| Issue | Plaintiff's Argument (Federated) | Defendant's Argument (Appellees) | Held |
|---|---|---|---|
| Whether an enforceable forum-selection clause that selects Utah as forum excludes Utah’s borrowing statute so Utah’s own (six-year) limitations period applies | Forum-selection/clause specifies Utah procedure and therefore the parties bargained for Utah’s six-year written-contract SOL; borrowing statute shouldn’t be used to import foreign limits | The agreement selects all Utah law (substantive and procedural), and Utah law includes the borrowing statute — so the borrowing statute remains applicable | Court held the contract selected Utah law including the borrowing statute; forum-selection clause does not exclude the borrowing statute |
| Whether Utah’s borrowing statute applies when the claim is not actionable in the foreign forum because of the forum-selection clause rather than solely by lapse of the foreign SOL | Borrowing statute applies only when the claim is not actionable solely "by reason of the lapse of time"; here the forum-selection clause, not the foreign limitations period alone, made claims unenforceable in PA, so borrowing statute should not apply | The statute applies whenever the claim is "not actionable ... by reason of the lapse of time," even if other independent reasons also render it not actionable; alternative defenses do not negate that the claim is time-barred in the foreign forum | Court held the borrowing statute applies: the claims were not actionable in PA by reason of PA’s four-year SOL and thus Utah must borrow that period |
| Whether prevailing party may recover reciprocal contractual attorneys’ fees | N/A (not argued as primary on appeal) | Contract authorized plaintiff’s fees; Utah reciprocal-fee statute permits awarding fees to prevailing defendant when contract grants fees to at least one party | Court affirmed award of reciprocal attorneys’ fees to appellees and remanded to determine amounts incurred on appeal |
Key Cases Cited
- Aurora Credit Servs., Inc. v. Liberty W. Dev., Inc., 970 P.2d 1273 (Utah 1998) (standard of review for summary judgment)
- Turner v. Staker & Parson Cos., 284 P.3d 600 (Utah 2012) (review of statutory interpretation principles)
- Trzecki v. Gruenewald, 532 S.W.2d 209 (Mo. 1976) (describing that a borrowing statute has the effect of adopting another state’s statute rather than extending foreign procedure)
- Fin. Bancorp, Inc. v. Pingree & Dahle, Inc., 880 P.2d 14 (Utah Ct. App. 1994) (place-of-performance rule for determining where a contract claim arises)
- Trillium USA, Inc. v. Bd. of Cty. Comm'rs, 37 P.3d 1093 (Utah 2001) (forum-selection clause binds parties to procedural rules of the chosen forum)