Iota v. Davco Management Company, 391 P.3d 239

Background

Davco purchased two Utah apartment complexes from Iota via owner-financed promissory notes secured by deeds of trust that assigned rents to Iota upon default; Davco defaulted and foreclosure followed.
Iota obtained an ex parte Rule 67 order (Nov. 5, 2008) requiring Davco and Fisher to deposit all rents collected from the properties with the court during the action; Davco was served but did not timely object and collected rents instead.
A foreclosure sale occurred Feb. 2009; Davco deposited a single payment into court in Aug. 2009 after the court expressed displeasure; Iota later sought deficiency judgments and contempt sanctions for failure to comply with the Ex Parte Order.
The district court entered deficiency judgments and held Davco and Fisher in contempt, awarding damages and attorney fees; this court vacated the contempt judgment in Iota I for lack of a required affidavit and remanded for further proceedings.
On remand Iota filed the required affidavit, the district court conducted an evidentiary hearing, again found Davco and Fisher in contempt, awarded roughly $116,025 in withheld rents and attorney fees (including pre-remand fees), and Davco appealed.
The Court of Appeals affirmed: it held the collateral bar doctrine barred Davco’s post-violation attack on the Ex Parte Order (because it was not void for lack of subject-matter or personal jurisdiction), found the order unambiguous and contempt findings supported, and upheld damages and attorney-fee awards; it also awarded Iota appellate fees to be determined by the district court.

Issues

Issue	Iota's Argument	Davco's Argument	Held
Validity of Ex Parte Order and ability to challenge it after violation	The order was within the court's authority and Davco waived timely challenge by not moving to vacate; collateral bar doctrine bars belated attack	The Order failed Rule 67 and was invalid/unenforceable; Davco may attack it because it was transparently invalid or issued without jurisdiction	Collateral bar doctrine applies; court had subject-matter and personal jurisdiction; the order was not void ab initio or transparently invalid and Davco's late attack is barred
Ambiguity of the phrase "rents collected" and ability to comply	The phrase unambiguously covered rents collected during the pendency of the action; Davco knew and intentionally disobeyed	The phrase was ambiguous (past tense) so Davco reasonably thought it applied only to rents in hand when served, making compliance impossible	The Order was unambiguous in context (also required tenants to pay clerk); court did not abuse discretion — contempt finding stands
Contempt findings and use of pre-remand record on remand	Iota could rely on prior proceedings and the remand affidavit; judicial notice/law-of-the-case permitted use of pre-remand evidence	The original contempt proceedings were void for lack of jurisdiction, so those records should not support contempt on remand	Prior proceedings were voidable (procedural infirmity), not void for lack of subject-matter jurisdiction; judicial notice of prior evidence was proper; new hearing and findings cure the procedural defect
Damages and attorney fees (including pre-remand fees)	Damages and fees flow from Davco's contempt (loss distinct from breach of trust deeds); statute permits costs and attorney fees for contempt, including pre-remand fees	Damages arise from breach of trust deed, not contempt; pre-remand fees/expenses are not recoverable because earlier proceeding was void or because fees were not properly apportioned	Court properly awarded damages tied to contempt (loss of court-held rents) and attorney fees under contempt statute; reliance on pre-remand fee submissions was permissible; insufficient appellate briefing from Davco to overturn fee/cost calculations

Key Cases Cited

Maness v. Meyers, 419 U.S. 449 (U.S. 1975) (collateral bar doctrine supports obedience to court orders until reversed)
United States v. United Mine Workers of Am., 330 U.S. 258 (U.S. 1947) (orders issued by a court with jurisdiction must be obeyed pending appeal)
Walker v. City of Birmingham, 388 U.S. 307 (U.S. 1967) (deliberate violation of injunction without attempting to dissolve it supports contempt conviction)
Liquor Control Comm'n v. McGillis, 65 P.2d 1136 (Utah 1937) (disobedience of an order within court's jurisdiction is contempt even if order was erroneous)
Utah Power & Light Co. v. Richmond Irrigation Co., 13 P.2d 320 (Utah 1932) (order which a party is charged with refusing to obey may be attacked collaterally only if absolutely void)
United States v. Cutler, 58 F.3d 825 (2d Cir. 1995) (transparently invalid exception requires seeking emergency appellate relief before violating order)
In re Establishment Inspection of Hern Iron Works, Inc., 881 F.2d 722 (9th Cir. 1989) (collateral bar rule is cornerstone of orderly adjudication)
Summer v. Summer, 280 P.3d 451 (Utah Ct. App. 2012) (elements for contempt: knowledge of requirement, ability to comply, and intentional failure)