T1 Plaintiff Healthcare Services Group, Inc. ("HSG"), appeals the district court's order granting defendant Utah Department of Health's (the "Department") motion for judgment on the pleadings.
BACKGROUND
T2 HSG is a provider of laundry and housekeeping services to long-term healthcare facilities, including nursing homes. HSG's breach of contract and conversion claims stem from two separate incidents involving the Department.
138 Because we are "reviewing a grant of a motion for judgment on the pleadings, this court accepts the factual allegations in the complaint as true; we then consider such allegations 'and all reasonable inferences drawn therefrom in a light most favorable to the plaintiff?" Arndt v. First Interstate Bank of Utah, N.A.,
I. BREACH OF CONTRACT
T4 HSG's breach of contract claim arises from an alleged promise by the Department to pay HSG for services rendered at the Rosewood Terrace Care Center (the "Rosewood"). On or about February 2, 1998, in response to substandard conditions at Rosewood, the Department took over management of Rosewood and appointed its employee, Dennis McFall, as temporary manager of Rosewood. At the time the Department took over Rosewood, Provider Management Services, Inc. ("Provider"), owed HSG a total of $110,346.68 in past-due amounts for services previously provided at Rosewood. According
IL CONVERSION
15 HSG's conversion claim against the Department stems from HSG's contractual relationship with Provider, which operated two Utah nursing homes, the Rosewood and the Ogden Care Center ("Ogden Center"). In 1989, HSG and Provider entered into contracts in which HSG agreed to provide its services to both Rosewood and Ogden Center.
[ 6 By January 1998, Provider was indebted to HSG for services rendered at both facilities. On or about January 15, 1998, HSG and Provider entered into a security agreement, in which HSG obtained a security interest in all of the accounts and receivables, including Medicaid receivables, and all other equipment and property of Provider. On September 15, 19983, HSG perfected its security interest by filing a UCC-1 financing statement with the state of Utah. Provider failed to pay HSG, however, and HSG subsequently obtained a default judgment against Provider in the amount of $215,056.63.
17 In 1995 and 1996, before the entry of the default judgment, the federal Health Care Financing Administration ("HCFA") imposed civil monetary penalties in excess of $350,000 against Provider for violations of federal law at Rosewood and/or Ogden Center. At the request of HCFA, the Department withheld Medicaid reimbursement payments due Provider and diverted the Medicaid payments to HCFA to satisfy the civil penalties against Provider. HSG alleges that the Department took these actions without giving HSG notice or a hearing, and without regard to HSC's prior perfected security interest in Provider's receivables.
T8 HSG now claims that its perfected security interest in Medicaid receivables, filed in September 1998, had priority over HCFA's claims against Provider. Therefore, HSG alleges that the Department's conduct with regard to Provider's Medicaid receivables amounts to tortious conversion. HSG contends that all amounts withheld by the Department should be turned over to HSG.
ANALYSIS
L. BREACH OF CONTRACT
19 With respect to HSG's breach of contract claim, the district court held it was barred by article VI, section 29 of the Utah Constitution, the statute of frauds, and the defense of lack of consideration. HSG argues each of these rulings is erroneous. We address each in turn.
A. Article VI, section 29 of the Utah Constitution
110 Article VI, section 29 of the Utah Constitution is "aimed at preventing government from ... using public assets for private purposes." Salt Lake County Comm'n v. Short,
The Legislature may not authorize the State, or any county, city, town, school district, or other political subdivision of the State to lend its credit or subscribe to stock or bonds in aid of any railroad, telegraph or other private individual or corporate enterprise or undertaking, except as provided in Article X, Section 5.
Utah Const. art. VI, § 29 (emphasis added). Accordingly, for this constitutional prohibition to apply and bar state aid to a private
{11 A lending of eredit is prohibited by article VI, section 29, 1F the state acts as "a surety or guarantor of another's debts." Utah Tech. Fin. Corp. v. Wilkinson,
When the underlying and activating purpose of the transaction and the financial obligation incurred are for the State's benefit, there is no lending of its credit though it may have expended funds or incurred an obligation that benefits another. Merely because the State incurs an indebtedness or expends its funds for its benefit and others may incidentally profit thereby does not bring the transaction within the letter or the spirit of the 'credit clause' prohibition.
Id. at 215 (citations omitted). Accordingly, where the state's purpose is to contract or invest for its own benefit, article VI, section 29 does not apply, even where there is a lending of the state's credit or purchase of stock. Id. In fact, the prohibition only applies where the state's obligation is an indi-reet and contingent secondary liability, not where the state is the party primarily liable. Utah Tech. Fin. Corp.,
{12 Here, the Department neither guaranteed Provider's credit nor agreed to pay Provider's obligations. Rather, it agreed to pay Provider's past-due balance owing to HSG for its own benefit, in order to obtain HSG's continuing services. Under this agreement, the Department was directly and primarily liable to HSG for the past-due balance. Therefore, the agreement does not constitute the kind of secondary guarantee of debt prohibited as lending of credit under article VI, section 29. Id. at 410-11. Furthermore, the agreement was not made "in aid of any ... private individual or corporate enterprise or undertaking." Utah Const. art. VI, § 29. The Department's agreement to pay HSG the past-due balance for its services at Rosewood was not an extension of financial aid to Provider or HSG. Instead, the Department entered the agreement in order to obtain needed services for patients in the nursing home it was operating-a legitimate and proper purpose for the State's benefit. Because "the underlying and activating purpose of the transaction and the financial obligation incurred are for the State's benefit, there is no lending of its credit though it may have expended its funds or incurred an obligation that benefits another." Utah State Land Bd.,
B. Statute of Frauds
113 HSG's breach of contract claim is based on McFall's oral promise to pay HSG Provider's past-due balance and HSC's existing rate for future services. The district court concluded that the statute of frauds, specifically section 25-5-4(2) of the Utah Code, applied to bar this claim.
1 14 This court has recognized that "agreements are enforceable even though there is neither a written memorialization of that agreement nor the signatures of the parties, unless specifically required by the statute of frauds." Murray v. State,
A promise to answer for the obligation of another ... is deemed an original obligation of the promisor and need not be in*596 writing: ... (2)[wJhere the creditor parts with value or enters an obligation ... under cireumstances such as to render the party making the promise the principal debtor....
Utah Code Ann. § 25-5-6(2)(Supp.2001). Here HSG alleges that the Department, as the operator of Rosewood, undertook the obligation of paying Provider's past-due balance as the original and sole promisor to further its own interest in maintaining necessary services for the Department's operation of Rosewood; Provider was not a party to the agreement.
$15 Nevertheless, the district court relied on section 25-5-4(2) of the Utah Code, which states that "every promise to answer for the debt, default or miscarriage of another" is "void unless the agreement, or some note or memorandum of the agreement, is in writing, signed by the party to be charged with the agreement." Utah Code Ann. § 25-5-4(2)(Supp.2001). With respect to this seetion of the statute of frauds, the Tenth Circuit has held:
Section 25-5-4 [of the Utah Code] ... has no application to an original undertaking of a promisor.... [I]f the predominant purpose of the promisor is to subserve or further his own interest rather than merely to underwrite the debt of another, it is an original undertaking not within the statute of frauds although it may be in form of a promise to pay or discharge the debt of another and although its performance may incidentally have the effect of extinguishing the liability of another.
Nephi Processing Plant v. W. Coop. Hatcheries,
$16 Determining whether there is an original promise (not subject to the statute of frauds) or a collateral promise to answer for the debt of another (unenforceable in the absence of a writing), requires an assessment of the intention of the parties. Id. This of course raises questions of fact to be determined from the words of the promise, the situation of the parties, and the surrounding cireumstances. Id. Given the cireumstances here, where there was no discovery or evidence on these matters, the district court erred in dismissing the breach of contract claim based on its interpretation of section 25-5-4(2).
C. Lack of Consideration
117 The trial court also found ' the agreement unenforceable for lack of consideration. See eg., Aquagen Int'l, Inc. v. Calrae Trust,
T18 The Department argues it did not benefit from HSG's past services at Rosewood or the Ogden Center because most of the services had been performed prior to the Department's involvement with the facilities. However, it is undisputed that substandard conditions at Rosewood caused HCFA to order the Department to install a temporary manager at Rosewood, namely McFall, In its answer to HSC's complaint, the Department acknowledges that "[MeFall]l had authority to hire, fire, and reassign staff and obligate funds on behalf of [Provider] as necessary to adequately care for residents."
119 HSG claims it agreed to continue providing services at Rosewood during this time specifically in exchange for the Department's promise to pay Provider's past-due balance in addition to paying for HSG's future services. Relying on this promise, HSG alleges it provided laundry services at Rosewood until the Department closed the facility down approximately three weeks later. Undoubtedly, given the circumstances surrounding the Department's involvement, it benefitted, even if slightly, from HSC's con
IIL CONVERSION
$20 The district court dismissed HSC's conversion claim on the ground that it was barred by the Utah Governmental Immunity Act (the "Act"), Utah Code Ann. §§ 63-30-1-38 (Supp.2001). The Act provides that "[elxeept as may be otherwise provided in this chapter, all governmental entities are immune from suit for any injury which results from the exercise of a governmental function...." Utah Code Ann. § 63-30-3 (Supp.2001). The Act further provides that this immunity is waived in specific types of cases. See §§ 63-30-5 to -10.6. If HS@'s conversion claim falls within a situation covered by a waiver, and if it is not subject to an exception to the waiver, HSG may bring an action against the Department. See Hansen v. Salt Lake County,
121 HSG contends its conversion claim falls within two separate waivers of immunity: (1) section 63-80-6, for actions involving property; and (2) section 63-80-10, for actions involving injury caused by the negligent act or omission of state employees. We will address each section separately.
A. Section 68-80-6
«[ 22 Section 638-80-6 provides:
Immunity from suit of all governmental entities is waived for the recovery of any property real or personal or for the possession thereof or to quiet title thereto, or to foreclose mortgages or other liens thereon or to determine any adverse claim thereon, or secure any adjudication touching any mortgage or other lien said entity may have or claim on the property involved.
Utah Code Ann. § 63-80-6 (Supp.2001)(emphasis added). HSG alleges that its conversion claim seeks to recover personal property, namely, Provider's Medicaid receivables, in which HSG held a perfected security interest. Therefore, HSG alleges its claim is an action falling under this section.
€T23 The Department argues that HSC's conversion claim does not fall under this section because HSG has in effect "transformed" its claim from conversion to one for recovery of property to qualify for the statutory waiver. The Department cites to Bullock v. Utah Department of Transportation,
1 24 Here, HSG's claim for conversion can properly be considered a claim for recovery of property. HSG's claim that section 63-30-6 applies to waive immunity still fails, however, because the State is not in possession of the property HSG seeks to recover, nor does the State hold a lien on the property.
$25 This court has held that section 63-30-6 "waives immunity only for actions to recover property, quiet title, clear title, or resolve disputes over mortgages or liens held by a governmental entity." Hansen,
B. Section 63-80-10
126 Section 63-30-10 provides:
Immunity from suit of all governmental entities is waived for injury proximately caused by a negligent act or omission of an employee committed within the seope of employment....
Utah Code Ann. § 63-30-10 (Supp.2001). Under this section, immunity is waived unless the injury results from statutory exceptions to waiver. On appeal, the Department argues section 68-80-10 does not waive immunity because conversion is an intentional tort. This argument fails; "[conversion] does not require an intentional wrongdoing, but only an intentional interference with the true owner's rights to such chattel." Allred,
127 The district court concluded that HSG's conversion claim fell within four of the exceptions to waiver under section 63-30-10:
(1) the exercise or performance or the failure to exercise or perform a discretionary function, whether or not the discretion is abused; ...
(8) the issuance, denial, suspension, or revocation of or by the failure or refusal to issue, deny, suspend, or revoke any permit, license, certificate, approval, order, or similar authorization;
(4) a failure to make an inspection or by making an inadequate or negligent inspection; ...
(6) a misrepresentation by an employee whether or not it is negligent or intentional;...
128 The discretionary function exception is limited to broad policy decisions "requiring evaluation of basic governmental policy matters," not operational and ministerial acts. Hansen,
§¥29 Nonetheless, the Department claims it is shielded from lability because HSG's conversion claim "arise[s] out of [its] involvement in regulating and licensing Rosewood." We disagree. This claim has nothing to do with the "issuance, denial, suspension or revocation of ... any permit, license, certificate, approval, order or similar authorization." Utah Code Ann. § 68-80-10(8)(Supp.2001). Rather, the claim is based on a perfected security interest and seeks recovery of funds wrongfully paid to another party. Furthermore, subsection four of seetion 63-30-10 applies only where the claim involves "a failure to make an inspection or . an inadequate or negligent inspection." Id. § 68-30-10(4). Under the cireumstances, we fail to see any application of this waiver exception to the facts of this case.
T30 Finally, the Department argues the claim is barred "to the extent ... that a state employee misrepresented himself or interfered with contract rights...." However, HSC's conversion claim is not based on negligent misrepresentations by a Department employee. The claim is based on the Department's payments to HCFA of Medicaid reimbursements in which HSG had a security interest. Thus, this exception is also inapplicable. Based on the foregoing, we conclude that none of the waiver exceptions relied upon by the district court are applicable, and that HSG's conversion claim should not have been dismissed.
CONCLUSION
{31 HSG's contract claim is not barred by article VI, section 29 of the Utah Constitution, nor was the State entitled to judgment on the pleadings on its defense of lack of consideration. Whether section 25-5-4(2) applies to bar this claim depends on factual questions to be determined by the fact-finder. Although section 63-80-6 does not waive governmental immunity for HSC's conver-gion claim, section 63-30-10 does, and none of the exceptions relied upon by the district court apply. Accordingly, we reverse and remand.
Notes
. HSG's complaint contained three claims: breach of contract, quantum meruit, and conversion. On appeal, HSG has not addressed its claim for quantum meruit, and therefore that claim is waived.
. In its motion, which was granted by the district court, the Department specified that its defense under the Utah Governmental Immunity Act applied only to HSG's conversion claim. The remaining defenses (article VI, section 29 of the Utah Constitution, the statute of frauds, and lack of consideration) are not applicable to a claim . for conversion. We address the claims accordingly.
. Conversion is "an act of wilful interference with a chattel, done without lawful justification by which the person entitled thereto is deprived of its use and possession." Allred v. Hinkley,
. In its reply brief, the Department introduces additional arguments that HSG's claim is barred by failure to serve the Department with actual notification of its security interest and that HSG's security interest is barred by federal law restrictions on assignment of medicaid payments. We do not reach the merits of those arguments as they were raised for the first time on appeal and are not properly before us. In addition, we note that the district court specified in its ruling that it granted the Department's motion, "except with respect to the notice and service requirements under the Governmental Immunity Act."
. In its brief, HSG notes that the exceptions argued by the Department below, on which the district court based its ruling, are subsections (1), (2), (3), (4), and (6). On review of the record, however, we conclude that the only exceptions raised by the Department below are those in subsections (1), (3), (4), and (6). Therefore, arguments relating to subsection (2) are not properly before us, and we do not address that subsection.