Transp. Alliance Bank v. Int'l Confections Co.
423 P.3d 1171
| Utah | 2017Background
- T.A.B. sued International Confections (IC), NG Acquisition, and Michael Ryan for breach of a loan agreement and sought appointment of a receiver; several creditors (including Bank of American Fork) intervened and the court granted intervention.
- The court appointed a receiver with authority to take control of IC’s business and to sell its assets; T.A.B. subsequently voluntarily dismissed its claims but intervenors and the receivership remained.
- The receiver negotiated a rapid sale of IC’s assets to Mrs. Fields Confections, LLC; IC was unrepresented at the sale hearing, the court approved the sale, and Mrs. Fields paid $2.15 million and took possession.
- The asset purchase agreement included a broad release of claims against Mrs. Fields; the receiver was later discharged and the sale closed.
- IC later sued a Mrs. Fields affiliate in federal court, then returned to state court seeking relief under Utah R. Civ. P. 60 to reopen the receivership sale proceedings and object to the expedited sale order; the district court denied relief and IC appealed.
- The Utah Supreme Court dismissed the appeal as moot because IC failed to seek a stay and a third party had acquired the assets, leaving the court without power to grant effective relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the appeal is moot because a third party purchased the assets after the sale order and no stay was obtained | IC argued it sought only to enforce rights under a license agreement, not to recover the sold assets | Appellees argued the unstayed sale to a third party forecloses appellate relief and moots the appeal | Moot: sale finalized to third party without stay; court lacks power to grant relief, so appeal dismissed |
| Whether Rule 60 relief was warranted for irregularities in notice of counsel’s withdrawal and sale procedures | IC argued procedural irregularities entitled it to relief from judgment under Rule 60 | Appellees argued Rule 60 relief cannot undo an already completed, unstayed sale to a third party | Not reached on merits because case is moot; court refused to grant Rule 60 relief on appeal |
| Whether IC’s failure to object to the sale constituted "excusable neglect" under Rule 60(b)(1) | IC claimed neglect excused its nonappearance and justified reopening the sale order | Appellees contended nonappearance cannot defeat finality once the sale closed to a bona fide purchaser absent a stay | Not decided on the merits—mootness precluded relief |
| Whether T.A.B.’s voluntary dismissal terminated district court jurisdiction and voided subsequent proceedings | IC contended the voluntary dismissal under Utah R. Civ. P. 41(a)(1) divested the court of jurisdiction, rendering later proceedings void | Appellees disputed or downplayed impact; court did not decide because appellate jurisdiction was lacking | Court declined to resolve; held mootness foreclosed reaching jurisdictional issue |
Key Cases Cited
- Utah Transit Auth. v. Local 382 of Amalgamated Transit Union, 289 P.3d 582 (Utah 2012) (mootness limits judicial power under the state constitution)
- In re Adoption of L.O., 282 P.3d 977 (Utah 2012) (mootness arises when requested relief is impossible or ineffective)
- Kellch v. Westland Minerals Corp., 484 P.2d 726 (Utah 1971) (appeal moot where property sold to third party while appeal pending and no stay obtained)
- Richards v. Baum, 914 P.2d 719 (Utah 1996) (suit seeking specific performance of land sale rendered moot after sale to third party absent steps to prevent conveyance)
- Franklin Financial v. New Empire Development Co., 659 P.2d 1040 (Utah 1983) (distinguishes claims for share of proceeds from claims that would require rescinding a sale)
- United States v. Asset Based Res. Grp., LLC, 612 F.3d 1017 (8th Cir. 2010) (appeal moot where debtor failed to stay sale and property was sold to a bona fide purchaser)