Hussein v. UBS Bank USA, 446 P.3d 96

Background

Ahmed Hussein, an experienced investor and former broker, obtained $35.5 million in margin loans from UBS Bank in 2009–2010, secured primarily by 1.3 million QSI shares and other UBS-FS accounts.
Loan Agreements granted UBS Bank broad rights: to call loans at will, deem collateral insecure, and liquidate any collateral (including sale without prior notice) in its sole discretion.
A separate Servicing Agreement between UBS Bank and UBS Financial Services (UBS-FS) required UBS-FS to comply with UBS Bank entitlement orders and gave UBS Bank control over entitlement orders once it asserted exclusive control.
QSI stock dropped sharply in July 2012; after Hussein failed to cover a margin shortfall, UBS Bank liquidated approximately 2,276,756 QSI shares over several days.
Hussein sued UBS Bank for fraud, constructive fraud, breach of fiduciary duty, breach of contract, tortious interference, and aiding and abetting a breach of fiduciary duty; the district court granted UBS Bank summary judgment and awarded contractual attorney fees.
On appeal, the Utah Court of Appeals affirmed summary judgment and the fee award, and remanded solely to quantify appellate fees for UBS Bank.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether UBS Bank committed fraud/failed to disclose material facts (Advisory Claims)	Hussein: UBS Bank failed to disclose the Servicing Agreement terms and adverse agency relationship, and misled him about liquidity options.	UBS: Loan documents expressly disclosed adverse interests and control provisions; parties dealt at arm’s length; no duty to disclose beyond the contracts.	Held for UBS: no factual dispute—terms were disclosed and Hussein, an experienced investor, negotiated the loans.
Whether UBS Bank owed and breached fiduciary duties via UBS-FS (Agency)	Hussein: UBS-FS acted as UBS Bank’s agent in providing investment advice, making UBS Bank liable for UBS-FS’s conduct.	UBS: UBS-FS had limited authority under the servicing/loan documents; no evidence of express or apparent authority to give investment advice on UBS Bank’s behalf.	Held for UBS: no actual or apparent agency for investment advice; summary judgment appropriate.
Whether UBS Bank breached the Loan Agreements/CRA by liquidating QSI shares (Liquidation Claims)	Hussein: liquidation was unnecessary, inconsistent with normal lending practices, and UBS-FS breached CRA by following UBS Bank’s orders.	UBS: Loan Agreements expressly allowed discretionary liquidation when Bank deemed collateral insecure, including sale without notice; UBS-FS lawfully complied with entitlement orders and CRA.	Held for UBS: contractual language authorized the liquidation; no breach of CRA; no triable issue.
Whether attorney fees were properly awarded under the Loan Agreements	Hussein: arbitration findings against UBS-FS and other arguments undermined fee award.	UBS: indemnity/fee clause covered claims "arising out of or in connection with" the agreements, so prevailing on all claims supports fees; arbitration decision not binding here.	Held for UBS: fee clause applied; district court did not err; appellate fees remanded for calculation.

Key Cases Cited

Orvis v. Johnson, 177 P.3d 600 (Utah 2008) (summary judgment standard and appellate review).
Valcarce v. Fitzgerald, 961 P.2d 305 (Utah 1998) (prevailing party entitled to appellate fees when awarded below).
Semenov v. Hill, 982 P.2d 578 (Utah 1999) (elements of fraud and duty to disclose).
DeBry v. Valley Mortgage Co., 835 P.2d 1000 (Utah Ct. App. 1992) (omissions and concealments can support fraud where duty exists).
Davencourt at Pilgrims Landing Homeowners Ass'n v. Davencourt at Pilgrims Landing, LC, 221 P.3d 234 (Utah 2009) (limited fiduciary duty principles).
Zions First Nat’l Bank v. Clark Clinic Corp., 762 P.2d 1090 (Utah 1988) (actual and implied agency authority).
Russell/Packard Dev., Inc. v. Carson, 78 P.3d 616 (Utah Ct. App. 2003) (standard for aiding and abetting breach of fiduciary duty).