391 P.3d 1055
Utah Ct. App.2017Background
- In 1994 Sentry loaned Majestic Airlines $483,102.43 secured by aircraft and personal pledges; David Gillett and Boyd Brown personally guaranteed the loan.
- Majestic defaulted in 1995; Brown paid Sentry $249,964.88 as guarantor but neither Brown nor Sentry informed Gillett/Majestic of that payment.
- Sentry obtained a default judgment against Majestic, held a public auction of collateral (Majestic repurchased some aircraft), then reimbursed Brown for his guaranty payment.
- In 1996 Sentry presented a mutual Release resolving disputes; Gillett signed after Brown advised him to do so. Bills of sale and an accounting were withheld at the time.
- Gillett discovered Brown’s guaranty payment and Sentry’s reimbursement in 2002; Gillett and Majestic sued in 2007 (dismissed for service), refiled in 2008 asserting breach of contract (against Sentry and Brown) and fraud (against Brown).
- The district court granted summary judgment for Sentry and Brown, holding (1) contract claims time-barred, (2) the Release barred claims, and (3) the fraud claim challenging the Release was time-barred; the court also rejected tolling based on Brown’s out-of-state residence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Were breach of contract claims time-barred? | Gillett: claims tolled until 2002 discovery and governed by six-year written-instrument statute, so timely. | Sentry/Brown: limitations began earlier (1995) and expired; alternative ground: Release bars claims. | Court affirmed dismissal; even if statute application disputed, Release independently bars contract claims. |
| Was the fraudulent-inducement claim (challenge to Release) timely? | Gillett: discovery in 2002 tolled fraud claim under three-year fraud statute. | Sentry/Brown: fraud claim accrued earlier or otherwise untimely. | Court held fraud claim accrued/did accrue such that three-year period expired by 2005; dismissal affirmed. |
| Did Brown’s out-of-state residence indefinitely toll limitations? | Gillett: Brown’s continuous residence in Wyoming means statutes never ran under the out-of-state tolling statute. | Sentry/Brown: tolling statute inapplicable; forum-selection clauses and service in Wyoming negate tolling. | Court affirmed that tolling did not apply; plaintiffs failed to rebut court’s reasoning and did not preserve contrary factual showing. |
| Were there genuine issues of material fact precluding summary judgment? | Gillett: disputes exist about winding-up rights, first-breach doctrine, and Brown’s residence. | Sentry/Brown: legal issues resolved; no material factual disputes preclude summary judgment. | Court found no reversible factual disputes for the statute-of-limitations and Release rulings; summary judgment affirmed. |
Key Cases Cited
- IHC Health Servs., Inc. v. D & K Mgmt., Inc., 196 P.3d 588 (Utah 2008) (standard of review for summary judgment)
- Russell Packard Dev., Inc. v. Carson, 108 P.3d 741 (Utah 2005) (discussing discovery rule and tolling doctrines)
- Jacobsen Constr. Co. v. Teton Builders, 106 P.3d 719 (Utah 2005) (forum-selection clause can establish personal jurisdiction given a rational nexus)
- Olseth v. Larson, 158 P.3d 532 (Utah 2007) (application of out-of-state tolling where plaintiff could not locate defendant for service)
- CCD, LC v. Millsap, 116 P.3d 366 (Utah 2005) (first-breach doctrine described)
- Tobler v. Tobler, 337 P.3d 296 (Utah Ct. App. 2014) (rule 33 sanctions reserved for egregious, frivolous appeals)