2010-1 RADC/CADC VENTURE, LLC, Respondent, v. DOS LAGOS, LLC; Mellon Valley, LLC; Roland Neil Family Limited Partnership; Roland N. Walker; and Sally Walker, Petitioners.
No. 20160436
Supreme Court of Utah.
Filed June 2, 2017
2017 UT 29
Justice Pearce authored the opinion of the Court, in which Chief Justice Durrant, Associate Chief Justice Lee, Justice Durham, and Justice Himonas joined.
Richard C. Terry, Jeremiah R. Taylor, Douglas A. Oviatt, Salt Lake City, for respondent.
Douglas B. Thayer, Andy V. Wright, Lehi, for petitioners.
Justice Pearce, opinion of the Court:
INTRODUCTION
¶ 1 Petitioners Dos Lagos, LLC and Mellon Valley, LLC defaulted on a loan in which Utah First Federal Credit Union (Utah First) owned a 52 percent interest and 2010-1 RADC/CADC Venture, LLC (RADC) owned a 48 percent interest. Utah First filed a deficiency action аgainst Petitioners Dos Lagos, LLC; Mellon Valley, LLC; and guarantors, the Roland Neil Family Limited Partnership, Roland N. Walker, and Sally Walker (collectively, Dos Lagos). Utah First filed an amended complaint adding RADC as a party plaintiff, but not before the statute of limitations had expired. The district court held that the amended complaint related back to the date of the original complaint under
¶ 2 We conclude that the amended complaint relates back to the date of the original complaint and that the court of appeals properly upheld the district court’s decision to allow RADC to collect the full amount due on the note.
BACKGROUND
¶ 3 In March 2007, America West Bank (America West) loaned Dos Lagos, LLC and Mellon Valley, LLC $2.5 million under a Loan Agreement. The Roland Neil Family Limited Partnership, Roland Walker, and Sally Walker each personally guaranteed the loan.
¶ 4 The Loan Agreement states that the Lender may “sell, transfer, assign or grant participations in all or any part of the Loan.” The Loan Agreement also provides that the “Borrower ... unconditionally agrees that either Lendor or such purchaser may enforce Borrower’s obligation under the Loan irrespective of the failure or insolvency of any holder of any interest in the Loan.”
¶ 5 In December 2007, America West entered into a Loan Participation Agreement (Participation Agreement) with Utah First Federal Credit Union. Under the Participation Agreement, Utah First obtained an undivided 52 percent interest in the Loan, and America West retained an undivided 48 percent interest.
¶ 6 The following December, Dos Lagos, LLC and Mellon Valley, LLC executed a Change in Terms Agreement, which modified and extended their promissory note (Note) with America West. The Note was seсured by real property that Mellon Valley, LLC owned (Property). The Revolving Credit Deed of Trust on the Property named America West as both beneficiary and trustee.
¶ 7 Then in May 2009, the Federal Deposit Insurance Corporation (FDIC) closed America West and seized its assets, including America West’s interest in the Note. Between May and December 2009, the FDIC sent Dos Lagos multiple letters, notifying it that its loan with America West was in default and demanding payment. In 2010, the FDIC auctioned and sold America West’s 48 percent interest in the Note to 2010-1 RADC/CADC Venture, LLC (RADC). The FDIC subsеquently assigned and transferred the Revolving Credit Deed of Trust to RADC and recorded the assignment at the Washington County Recorder’s Office. In September 2010, Dos Lagos, LLC and Mellon Valley, LLC received notice from the FDIC that their loan had been transferred from America West to RADC.
¶ 8 In December 2010, RADC purchased the Property securing the Note at a trustee’s sale for $1,060,000.00. The value of the Property securing the Note was $1,510,000.00. At the time of the sale, the outstanding payoff balance on the Revolving Credit Deed of Trust was $3,426,701.91, leaving a deficiency of $1,916,701.91 between the amount owed and the value of the Property.
¶ 9 In January 2011, Utah First filed a deficiency action (Original Complaint) intending to recover the difference between the
¶ 10 In August 2011, more than eight months after the trustee’s sale, Utah First filed a motion for leave to amend the complaint with a proposed amended complaint (First Amended Complaint). The First Amended Complaint added RADC as a party plaintiff. It also clarified that under the Participation Agreement, Utah First received an undivided 52 percent interest in thе loan and America West received an undivided 48 percent interest, which the FDIC later sold to RADC. Dos Lagos stipulated to the filing of the First Amended Complaint.
¶ 11 In June 2012, Utah First and RADC proposed a second amended complaint (Second Amended Complaint) to correct the total amount of alleged indebtedness to $3,426,701.91. Utah First filed an affidavit claiming that the Original Complaint mistakenly referenced $1,819,774.97 as the “outstanding payoff balance” when that sum represented only Utah First’s 52 percent interest.1 The Second Amended complaint cоrrected the amount of alleged indebtedness to include RADC’s 48 percent interest, $1,606,926.94. Dos Lagos did not object, and the Second Amended Complaint was filed on September 7, 2016.
¶ 12 Both Utah First and RADC filed motions for summary judgment. The district court concluded that genuine issues of material fact precluded summary judgment on Utah First’s claims and denied Utah First’s motion for summary judgment.2 The court granted RADC’s motion for summary judgment and awarded RADC the entire deficiency amount.
¶ 13 Dos Lagos appealed the district court’s findings and argued that “RADC’s complaint should not relate[] baсk to the time Utah First filed its complaint” because RADC’s claim arising out of its ownership in 52 percent of the Note should be considered a different claim than Utah First’s claim for the other 48 percent of the Note.
¶ 14 The court of appeals affirmed the district court’s ruling. The court of appeals held that, under
ISSUES AND STANDARD OF REVIEW
¶ 15 Dos Lagos first challenges the court of appeals’ conclusion that RADC’s claims against Dos Lagos could be deemed to relate back to the filing of the Original Complaint under
¶ 16 This court considers appeals from a district court’s summary judgment decision “for correctness, giving no deference to the [lower] court’s decision.” Bahr v. Imus, 2011 UT 19, ¶ 15, 250 P.3d 56. We consider “the facts and all reasonable inferences ... in the light most favorable to the nonmoving party.” R & R Indus. Park, L.L.C. v. Utah Prop. & Cas. Ins. Guar. Ass‘n, 2008 UT 80, ¶ 18, 199 P.3d 917 (citation omitted).
ANALYSIS
I. The Statute of Limitations Did Not Bar RADC’s Deficiency Claim Because RADC’s Addition to the Action Related Back to the Original Complaint
¶ 17 Dos Lagos contends that the statute of limitations in
¶ 18
Rule 15(c) is based on the notion that once litigation involving particular conduct or a given transaction or occurrence has been instituted, the parties are not entitled to the protection of the statute of limitations against the later assertion by аmendment of defenses or claims that arise out of the same conduct, transaction, or occurrence as set forth in the original pleading. 6A CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE & PROCEDURE: CIVIL § 1496 (3d ed. 2017) (discussing the similarly worded Federal Rule of Civil Procedure).4 It bears emphasis that rule 15(c) is designed to strike a balance between the policy of deciding a case on its merits and allowing a party to enjoy the benefits of the statute of limitations. See, e.g., Baldwin Cty. Welcome Ctr. v. Brown, 466 U.S. 147, 149 n.3 (1984) (“The rationale of [Federal] Rule 15(c) is that a party who has been notified of litigation concerning a particular occurrence has been given all the notice that statutes of limitations were intended to provide.”).
¶ 19 The then-applicable version of Utah’s rule 15(c) did not expressly contemplate the substitution of parties.5 In interpreting that version of the rule, we noted that “[r]ule 15(c) will not apply to an amendment which substitutes or adds new parties
¶ 20 Here, that translates into RADC needing to demonstrate that (1) “the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading,”
¶ 21 Dos Lagos argues that RADC and Utah First did not share an identity of interest because they are distinct entities and because “privity of contract alone is an insufficient identity of interest for relation back under
¶ 22 Dos Lagos cites three cases in which we held that privity of contract alone is insufficient to establish an identity of interest sufficient to support relation back of an amended complaint. Each of those cases is distinguishable from the present case.
¶ 23 In Perry v. Pioneer Wholesale Supply Co., a general contractor sued a subcontractor for installing defective doors. 681 P.2d 214, 216 (Utah 1984). The subcontractor had “ordered the doors by telephone from the supplier, ... which then ordered them from the manufacturer.” Id. After the statute of limitations had expired, the subcontractor proposed an amended third-party complaint for indemnity against the manufacturer and supplier of the door. Id. The subcontractor, manufacturer, and supplier were not “so
¶ 24 Dos Lagos also cites Russell, 898 P.2d 263. In Russell, Russell filed a libel action against the Associated Press (AP) and the Salt Lake Tribune (Tribune), based on an article that the Ogden Standard-Examiner (Standard) had originally published. Id. at 264. After the statute of limitations for libel actions had run, Russell amended her complaint to add the Standard as a defendant. Id. We rejected Russell’s аrgument that the Standard, the AP, and the Tribune had an identity of interest because “they adopt and incorporate the same material, pursuant to contractual agreements with one another.” Id. at 265. We concluded that the parties did not have an identity of interest sufficient for relation back under
¶ 25 Finally, Dos Lagos cites VCS, Inc., 2012 UT 89, 293 P.3d 290. In VCS, Inc., VCS, Inc. sought to foreclose a mechanic’s lien. Id. ¶ 2. VCS originally sued the оwner but failed to both name a third-party lender and to file a lis pendens within 180 days as the statute required. Id. ¶¶ 2, 29. VCS later filed an amended complaint adding claims against Utah Community Bank. Id. ¶ 9. VCS argued that its amended complaint should relate back to the filing of the original complaint. Id. ¶ 24. This court held that the original defendant owner and Utah Community Bank did not share an identity of interest based solely on their contractual relationship as borrower and lender. Id. ¶ 29. Once again, the underlying consideration was that, absent the filing of a lis pendens, a suit against a рroperty owner would not have put the lender on notice that its interests would be at issue in litigation such that it could anticipate being added to the suit after the statute of limitations expired.
¶ 26 Dos Lagos also argues that the Original Complaint did not provide it with sufficient notice that RADC might be added as a plaintiff. And we agree that there are many instances where the late addition of a plaintiff might catch a defendant unaware and prejudice its ability to defend itself. Dos Lagos contends that receiving notice of Utah First’s actiоn to recover its 52 percent interest in the loan did not put Petitioners on notice that RADC would also seek a deficiency judgment for its 48 percent interest. “[B]eing on notice that one creditor intends to sue,” Dos Lagos argues, “is substantially different from being on notice that an additional creditor intends to sue.”
¶ 27 In some circumstances that might be true. But here, Utah First and RADC were co-holders of a single note. Although Utah First and RADC individually owned proportionally different interests in the loan, they owned interests in the same loan.7 Dos Lagos entered into and defaulted on one Loan Agreement. Utah First did not attempt to foreclose or sell a percentage of the Property; it foreclosed and sold the entire Property.
¶ 28 Moreover, nothing in the record suggests that Dos Lagos suffered prejudice from RADC’s late addition. And Dos Lagos has not argued or even hinted at any way in which it would have changed its approach to the litigation had RADC been a party to the suit from the initial filing date. Dos Lagos has not identified any way in which the addition of RADC as a party plaintiff required it to change the manner in which it conducted its discovery or prepared its defense. Nor does it point to any lost evidence or testimony occasioned by the delay in RADC joining the proceedings. As the court of appeals noted, the First Amended Complaint “did nothing more than add RADC, a successor co-holder of the very note Utah First had sued upon, as a plaintiff.” 2010-1 RADC/CADC Venture, 2016 UT App 89, ¶ 12, 372 P.3d 683. Adding RADC would have been improper had it prejudiced Dos Lagos, but the record provided the court of appeals no reason to conclude that Dos Lagos suffered any prejudice. The court of appeals correctly upheld the district сourt’s grant of summary judgment.
II. The Court of Appeals Did Not Err When It Affirmed that RADC Was Entitled to the Full Deficiency Amount
¶ 29 Dos Lagos argues that the court of appeals erred when it found that Dos Lagos had not carried its burden of persuasion on its argument that the district court improperly awarded RADC the full amount due under the Note. The court of appeals stated
[Dos Lagos] complain[s] that the district court’s order, making the judgment subject to any subsequently determined interest of Utah First, “cited no law.” But after registering this complaint, [Dos Lagos] direct[s] this court to no statute, case, or other authority that supports [its] contention that the district court got this wrong. [Dos Lagos’s] failure to carry [its] burden of persuasion on appeal is a sufficient ground for us to reject this argument.
2010-1 RADC/CADC Venture, LLC v. Dos Lagos, LLC, 2016 UT App 89, ¶ 21, 372 P.3d 683 (citing Hi-Country Estates Homeowners Ass‘n v. Jesse Rodney Dansie Living Tr., 2015 UT App 218, ¶ 8, 369 P.3d 655).
¶ 30 Dos Lagos assumes the court of appeals declined to address the merits of this second issue on the basis of inadequate briefing. And, indeed, even though the court of appeals never used the words “inadequate briefing” to bolster its conсlusion that Dos Lagos had not met its burden of persuasion, it cited Hi-Country Estates Homeowners Ass‘n, a case that discusses inadequate briefing.8 Dos Lagos asserts that the court of
¶ 31 In its brief to the court of appeаls, Dos Lagos dedicated its two pages to complaining that the award to RADC would result in an impermissible windfall. This approach suffered from two defects. First, it failed to even mention the district court’s conclusion that Dos Lagos “concede[s] that [RADC] may seek remedy against [Dos Lagos] for the entire amount of deficiency.” Second, Dos Lagos’s opening brief before the court of appeals did not address the Note’s language, which acknowledged that America West might sell participation in the Note and that Dos Lagos “unconditionally agree[d] that either [America West] or such purchaser [of an interest in the Note] may enforce [Dos Lagos]’s obligation.” Instead, Dos Lagos complained that “the district court cited no law, and provided no valid reason for awarding RADC the full judgment rather than its proportionate share of the Note.”
¶ 32 We have dealt with this situation before—that is, where a party attempts to meet its burden of persuasion with general arguments rather than an analysis of the key contractual language. In ASC Utah, Inc. v. Wolf Mountain Resorts, L.C., Wolf Mountain appealed the district court’s adoption of ASC Utah’s interpretation of an agreement. 2013 UT 24, ¶ 14, 309 P.3d 201. We declined to address Wolf Mountain’s agreement-based contentions because Wolf Mountain did not present competing interpretations or provide “reasoned argument and legal authority” that would overcome ASC Utah’s interpretation of the agreement. Id. ¶¶ 15-16. We repeated that “[a]ppellate courts are ‘not a depository in which [a party] may dump the burden of argument and research.’” Id. ¶ 16 (second altеration in original) (citation omitted). This court held that Wolf Mountain failed to meet its “burden to clearly set forth the issues they [were] appealing and to provide reasoned argument and legal authority.” Id.
¶ 33 Dos Lagos asked the court of appeals to evaluate the district court’s conclusion that RADC was entitled to collect the full amount due on the Note. Just as Wolf Mountain did in ASC Utah, Dos Lagos failed to present a competing interpretation and present reasoned argument and legal authority.10 Considering the paucity оf analysis and legal arguments in Dos Lagos’s court of appeals brief, the court of appeals properly rejected Dos Lagos’s second argument because Dos Lagos failed “to carry [its] burden of persuasion on appeal.” 2010-1 RADC/CADC Venture, 2016 UT App 89, ¶ 21, 372 P.3d 683.
CONCLUSION
¶ 34 The court of appeals did not err when it found that RADC’s claim was not time barred under