First Interstate Financial v. Savage
458 P.3d 1161
Utah Ct. App.2020Background:
- In April 2009 Plaintiffs retained attorney Scott Savage to defend a Utah suit; Plaintiffs produced ~19,000 documents that Savage intended to use as trial exhibits.
- Savage failed to comply with Utah R. Civ. P. 26(a); the trial court struck substantially all of Plaintiffs’ exhibits, and a Utah jury returned a verdict against Plaintiffs on October 22, 2010 (about $1,250,000); Plaintiffs paid the judgment and paid Savage ~$700,000 in fees.
- McGillis later sued Plaintiffs in Colorado; at the Colorado trial (June 2014) Plaintiffs were again found liable; Plaintiffs allege they first learned of Savage’s Rule 26 failure in June 2014.
- Plaintiffs sued Savage in October 2017 for legal malpractice, breach of contract, and breach of fiduciary duty; Savage moved to dismiss under Utah’s four-year malpractice statute of limitations, arguing the limitations period ran from the October 22, 2010 verdict.
- Plaintiffs sought to amend their complaint to plead fraudulent concealment tolling (alleging Savage misled them, continued to represent/consult with them, and that they reasonably delayed filing until independent counsel in April 2016 revealed the claim’s significance).
- The district court took judicial notice of filings indicating Savage withdrew May 13, 2014, ruled the concealment doctrine did not apply, denied leave to amend as futile, and dismissed. The Utah Court of Appeals reversed and remanded, holding the proposed amendment plausibly alleged tolling by fraudulent concealment.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Plaintiffs’ malpractice claims were time-barred by the four-year statute of limitations | Tolled by fraudulent concealment; although Plaintiffs learned facts in June 2014, Savage’s misrepresentations and continued representation made delay reasonable | Limitations ran from Oct. 22, 2010; Plaintiffs discovered facts by June 2014 and did not timely sue; no post-discovery concealment occurred to justify tolling | Reversed dismissal: the proposed amended complaint plausibly alleged facts that could toll the statute under the fraudulent concealment branch of the equitable discovery rule |
| Whether the district court abused discretion by denying leave to amend as futile | Proposed amendment alleged sufficient facts about ongoing attorney–client relationship and misrepresentations to survive a motion to dismiss | Amendment was futile because public records showed Savage withdrew before June 2014 and Plaintiffs could have sued within four months | Reversed: denial was erroneous because the amendment was not futile on its face; factual inferences must favor Plaintiffs on a motion to dismiss |
| Proper application of the fraudulent concealment doctrine when discovery precedes expiration of limitations | A plaintiff need only show that, given the defendant’s actions (including pre-discovery concealment), a reasonably diligent plaintiff might delay filing until after limitations expired | Tolling requires active concealment after discovery or other facts showing delay was unreasonable | Court clarified defendant need not have actively concealed after discovery; pre-discovery concealment and misinformation can make delay reasonable depending on facts |
| Use of judicially noticed public records to resolve statute-of-limitations on a motion to dismiss | Plaintiffs: court must accept amended-complaint allegations and reasonable inferences; public records cannot be used to defeat those allegations at dismissal | Savage: court properly relied on public records (e.g., withdrawal date) to show no ongoing relationship and to justify dismissal | Court held district court erred in relying on public records to contradict and negate alleged facts in the proposed amended complaint at the motion-to-dismiss stage |
Key Cases Cited
- Russell Packard Dev., Inc. v. Carson, 108 P.3d 741 (Utah 2005) (describes fraudulent concealment branch of equitable discovery rule and standard for tolling when discovery occurs before limitations expiry)
- Berenda v. Langford, 914 P.2d 45 (Utah 1996) (reasonableness inquiry on tolling typically requires factual findings and precludes dismissal in all but clearest cases)
- Colosimo v. Roman Catholic Bishop of Salt Lake City, 156 P.3d 806 (Utah 2007) (due-diligence requirement; investigation futility exception when plaintiff was misled)
- Mack v. Utah State Dep’t of Commerce, 221 P.3d 194 (Utah 2009) (pleading standard: complaint survives unless it appears to a certainty plaintiff entitled to no relief)
- Jensen v. IHC Hosps. Inc., 82 P.3d 1076 (Utah 2003) (amendment may be denied as futile if proposed claim cannot withstand a motion to dismiss)