McBroom v. Child, 392 P.3d 835

Background

Rufus C. Willey died in 1954 leaving a will that gave his wife a life estate and contingent remainder interests to his children and grandchildren in the business R.C. Willey & Son.
In 1959 the business incorporated; in 1973 family members (including grandchildren) entered a Stock Settlement and Purchase Agreement (the 1973 Agreement) redistributing shares based on an actuarial valuation.
Under the 1973 Agreement Helen Immelt exchanged a contingent remainder for five shares and those shares were purchased by the company; Don McBroom (a minor) likewise received five shares which his guardian (Commercial Security Bank) later sold for $1,000 per share after court approval.
Decades later Immelt and McBroom sued family members, the lawyer who prepared the 1973 Agreement, and KeyBank (successor to the guardian bank) for claims including quiet title, fraud, conversion, interference with inheritance, and breach of fiduciary duty seeking to undo the transactions.
The district court granted summary judgment for defendants; the Utah Supreme Court affirms, holding the 1973 Agreement bars Immelt’s claims and most of McBroom’s claims, and rejecting the remaining claims on other grounds (circularity and statute of limitations).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the 1973 Agreement can be set aside for fraud/negligent misrepresentation (Immelt)	Immelt says she was induced to sign by grandmother’s oral representations and thought she was just getting a $5,000 gift	Defendants point to Immelt’s signed agreement and law imputing knowledge from a signed written instrument	Held: Immelt is charged with knowledge of the written 1973 Agreement; reasonable reliance fails and the agreement bars her claims
Whether McBroom can collaterally attack the Second District Court’s approvals of the guardianship and the 1973 Agreement	McBroom contends he brought an independent equitable action (fraud on the court) or that no court approved the 1973 Agreement	Defendants note the Second District Court approved the agreement and that Utah requires a Rule 60(b) motion or an independent, properly pleaded action to set aside such orders	Held: The court approved the 1973 Agreement; McBroom did not plead an appropriate independent action or Rule 60(b) motion, so collateral attack fails and most claims are barred
Whether Mr. Child breached a fiduciary duty to McBroom by causing him to enter the 1973 Agreement	McBroom contends Child failed to protect his interests and treated him unequally	Child argues McBroom had only a contingent remainder pre-1973 and no fiduciary relationship existed before the agreement	Held: Claim is circular—the fiduciary duty arose only when the guardian caused McBroom to become a shareholder via the 1973 Agreement, so the breach claim fails
Whether McBroom’s breach of fiduciary duty claim against KeyBank is timely/tollable	McBroom argues equitable tolling/equitable discovery applies due to concealment/exceptional circumstances	KeyBank argues McBroom was on inquiry notice and the statute of limitations applies	Held: McBroom was on inquiry notice once he reached majority and had the requisite documents; he failed the threshold for equitable discovery tolling, so the claim is barred by the statute of limitations

Key Cases Cited

Price-Orem Inv. Co. v. Rollins, Brown & Gunnell, Inc., 713 P.2d 55 (Utah 1986) (elements and reasonable-reliance requirement for negligent misrepresentation/fraud)
Gold Standard, Inc. v. Getty Oil Co., 915 P.2d 1060 (Utah 1996) (written contract defeats reasonable reliance on contrary oral statements)
Garff Realty Co. v. Better Bldgs., Inc., 234 P.2d 842 (Utah 1951) (party who signs a contract is bound; failure to read is not a defense absent special circumstances)
Berneau v. Martino, 223 P.3d 1128 (Utah 2009) (equitable discovery rule / tolling threshold and tests)
Jensen ex rel. Jensen v. Cunningham, 250 P.3d 465 (Utah 2011) (standard of review for summary judgment)