PETER O. PHILLIPS AND PDNULEBAKS UTAH LLC, Appellants and Cross-appellees, υ. GREGORY N. SKABELUND AND S&S ACRES LLC, Appellees and Cross-appellants, and PEOPLE‘S INTERMOUNTAIN BANK AND CACHE TITLE COMPANY INC., Appellees.
No. 20190552-CA
THE UTAH COURT OF APPEALS
January 7, 2021
2021 UT App 2
Second District Court, Ogden Department
The Honorable Michael D. DiReda
No. 160903990
Adam S. Affleck, Attorney for Appellants
Joseph M. Chambers and J. Brett Chambers, Attorneys for Appellees and Cross-appellants
Bradley L. Tilt and Sara E. Bouley, Attorneys for Appellee People‘s Intermountain Bank
Dustin Del Ericson, Attorney for Appellee Cache Title Company Inc.
JUDGE DAVID N. MORTENSEN authored this Opinion, in which JUDGES MICHELE M. CHRISTIANSEN FORSTER AND KATE APPLEBY concurred.
¶1 This case primarily arises out of a trustee‘s sale, but there is a significant backstory. Peter O. Phillips and Pdnulebaks Utah LLC (collectively, Appellants) sued Gregory N. Skabelund and S&S Acres LLC (S&S) (collectively, Cross-appellants), Cache Title Company Inc. (Cache Title or Trustee), and People‘s Intermountain Bank (Bank) (collectively, Appellees) to set aside the sale of certain property and the trustee‘s deed thereto. Appellants assert a catalog of claimed errors stemming from orders resolving a motion to dismiss and multiple motions for summary judgment. Cross-appellants relatedly appeal certain orders to provide alternative grounds to sustain the court‘s final judgement in their favor. We affirm the district court‘s entries of judgment in favor of Appellees.
¶2 In April 2010, Phillips, an experienced real-estate entrepreneur, sought a $140,000 bridge loan2 from Skabelund, his long-time legal counsel. The loan was backed by a promissory note and secured by a trust deed against certain property (Property) held by Phillips. Skabelund prepared the
note and the trust deed, and loaned Phillips the money. Cache Title was named trustee.
¶3 Shortly after executing the trust deed and promissory note, Phillips conveyed the Property, subject to the trust deed, to an entity designed to hold the Property, designated as Pdnulebaks (“P” for Phillips and “Skabelund” written in reverse). Skabelund formed Pdnulebaks as a member managed company, and its original articles of organization reflected that Skabelund was the sole “member/manager.”
¶4 On October 21, 2010, Phillips defaulted on the loan. Thereafter, Phillips and Skabelund had a falling out. In March 2011, Skabelund engaged Trustee to commence non-judicial foreclosure of the Property. On May 24, 2011, Trustee recorded a notice of default to begin that process.
¶5 On November 9, 2011, Phillips filed for bankruptcy. As part of that proceeding, Phillips listed among his assets “contingent and unliquidated claims” against Skabelund for “breach of contract, breach of fiduciary duty, conversion, malpractice, fraud, fraudulent misrepresentation, rescission and other potential claims.” The bankruptcy case was dismissed three months later.
¶6 On March 30, 2012, Trustee recorded a notice of a trustee‘s sale to occur on a later date, as required by Utah‘s Trust Deed Act and the trust deed to the Property. Upon receipt of the notice, Phillips challenged the sale and threatened Skabelund with suit for breach of fiduciary duties to Pdnulebaks and himself. Skabelund instructed Trustee to postpone the sale and assigned the trust deed to S&S.3 As directed, Trustee postponed
the sale for thirty days by public declaration at the time and place of the initially scheduled sale. Thereafter, Phillips demanded the Trustee‘s sale be canceled, and he recorded a Notice of Interest on the Property, asserting he was both the equitable owner of Pdnulebaks and the titular owner of the Property. At S&S‘s direction, Trustee again postponed the sale by public declaration. Ultimately, the Trustee‘s sale was postponed twelve times, each time by public declaration, for a total of 276 days; no single postponement exceeded forty-five days.
¶7 During the months between the initial and final foreclosure sales, the parties entered into a settlement agreement (Settlement Agreement) to resolve the foreclosure and related claims. The Settlement Agreement provided that “Phillips would release his claims relating to Skabelund‘s conflicted status vis-à-vis Pdnulebaks and the Trustee‘s sale in consideration for Skabelund transferring whatever rights he had in Pdnulebaks to Phillips . . . and then, following such transfer, giving Pdnulebaks the normal non-judicial foreclosure time before Skabelund would schedule the trustee‘s sale.” At some point, Skabelund provided Phillips with the information necessary to record his membership status in Pdnulebaks. The Property was sold at the Trustee‘s sale 152 days after the Settlement Agreement.
¶8 On December 21, 2012, S&S purchased the Property at the Trustee‘s sale by a credit
Procedural History
¶9 On December 20, 2015, Appellants filed the underlying action. Appellants’ original complaint sought to set aside the trustee‘s deed for violations of
¶10 Thereafter, Appellants moved for, and were permitted to submit, a third amended complaint, specifying eight claims: (1) malpractice for the trust deed and note against Skabelund, (2) malpractice in the formation of Pdnulebaks against Skabelund, (3) fraud in the formation of Pdnulebaks against Skabelund, (4) breach of the Settlement Agreement against S&S, (5) fraud relating to the postponement of the Trustee‘s sale against Skabelund and S&S, (6) breach of fiduciary duty as to Pdnulebaks against Skabelund, (7) a claim against S&S and Bank to set aside the Trustee‘s sale, and (8) breach of the trust deed against Cache Title.
¶11 The litigation proceeded through discovery, and multiple motions for summary judgment followed. In an order resolving cross-motions for summary judgment from Appellants and Bank, the court granted judgment to Bank on the seventh claim (Third Order). In response to a later motion, the court granted summary judgment in favor of S&S on all claims encompassed within the Settlement Agreement and subsequently granted judgment in favor of S&S and Skabelund on claims four and six (Fourth Order). The court later determined the Settlement Agreement also encompassed the first, second, third, fifth and seventh causes of action and granted summary judgment on each claim in favor of Skabelund and S&S (Fifth Order). In a separate order issued that same day, the court granted a motion to exclude Appellants’ valuation expert and denied Appellants’ motion to supplement that expert‘s report (Sixth Order). In response to the exclusion of Appellants’ expert, Cache Title moved for, and was granted, summary judgment on the remaining eighth claim for breach of the trust deed. The court entered final judgment in January 2019.
¶12 The following month, Appellants moved to alter or amend three orders: the Fourth and Fifth Orders, which granted summary judgment to Skabelund and S&S, and the Sixth Order, which excluded Appellants’ expert and denied the motion to supplement the expert‘s report. The court issued an order (Seventh Order) denying the motion but amending its prior orders. In the Seventh Order, the court amended the rationale used in the Fourth and Fifth Orders, stating it erred in determining that summary judgment was warranted based on the resolution reached under the Settlement Agreement. In lieu thereof, the court determined that summary judgment was still appropriate based on the exclusion of Appellants’ expert, as ruled in the Sixth Order. The court gave each party thirty days to respond to its Seventh Order. Appellants did not offer a response.
¶13 Appellants appeal, and S&S and Skabelund cross-appeal.
ISSUES AND STANDARDS OF REVIEW
¶14 Appellants first contend that the district court erred in dismissing their claim that the Trustee‘s sale violated the Utah Trust Deed Act‘s notice-of-postponement provision in
¶15 Appellants next contend that the court erred in its Third Order, granting summary judgment to Bank on the seventh claim, on two points relating to the court‘s application of the law.5 “We review the district court‘s ultimate grant or denial of
summary judgment for correctness. We give no deference to the district court‘s legal conclusions and consider whether the court correctly decided that no genuine issue of material fact existed.” Far West Bank v. Robertson, 2017 UT App 213, ¶ 15, 406 P.3d 1134 (cleaned up).6
¶16 Appellants additionally contend that the court erred in its Sixth Order, which excluded Appellants’ valuation expert and denied the motion to supplement the expert‘s report. We “review discovery orders for abuse of discretion and will not find abuse of discretion absent an erroneous conclusion of law or where there is no evidentiary basis for the trial court‘s ruling.” Arreguin-Leon v. Hadco Constr. LLC, 2018 UT App 225, ¶ 15, 438 P.3d 25 (cleaned up). Additionally, a district court‘s decisions regarding the admissibility of expert testimony “are reviewed under an abuse of discretion standard” and “we will not reverse a decision to admit or exclude expert testimony unless the decision exceeds the limits of reasonability.” Id. ¶ 15 n.4 (cleaned up).
¶17 Appellants next argue that the court erred in its Seventh Order, in which it amended its rationale but retained the ultimate ruling reached in the Fourth and Fifth Orders dismissing claims one through seven against Skabelund and S&S. We review a court‘s entry of summary judgment independent of the motion under
¶18 Cross-appellants counter by arguing that the statute of limitations is an alternative
¶19 Lastly, Cross-appellants seek attorney fees on appeal. “When a party who received attorney fees below prevails on appeal, the party is also entitled to fees reasonably incurred on appeal.” Telegraph Tower LLC v. Century Mortgage LLC, 2016 UT App 102, ¶ 52, 376 P.3d 333 (cleaned up).
ANALYSIS
¶20 We begin by reviewing Appellants’ challenge to the district court‘s Third Order denying their motion for summary judgment on their seventh claim. We then review Appellants’ claims concerning their valuation expert. We next address Appellants’ and Cross-appellants’ contentions relating to the Seventh Order granting summary judgment against Appellants on an amended rationale. We conclude by reviewing Cross-appellants’ claim for attorney fees on appeal.
I. Third Order Denying Summary Judgment to Appellants
¶21 Appellants contend that the district court erred in denying their motion for summary judgment on the seventh claim, arguing that the court erroneously looked for prejudice only in whether the bidding was chilled and an inadequate price obtained at the Trustee‘s sale. Appellants further argue that if that measure of prejudice is appropriate here, such prejudice “should be presumed where there is a notice failure.” We address each argument in turn.
A
¶22 To succeed in their contention that the court erred by denying their motion for summary judgment on their seventh claim, Appellants, as the moving party with the burden of proof at trial on this issue, must show that they established each element of their claim as part of demonstrating entitlement to judgment as a matter of law. See
¶23 The district court ruled that to prove the trustee‘s deed voidable, Appellants had to show prejudice by “demonstrat[ing] that the defect resulted in chilling the bidding and causing an inadequacy of price.” (Citing Far West Bank v. Robertson, 2017 UT App 213, 406 P.3d 1134.) Appellants contend that “is not the only way in which prejudice can be shown.” In support of their proposition, Appellants cite Bank of America v. Adamson, 2017 UT 2, 391 P.3d 196, to suggest that the focus should be on whether the defect in the notice prevented the trustor from protecting his property interests.
¶24 In Adamson, our supreme court addressed the question of how to remedy a trustee‘s violation of the requirement to maintain an office in Utah under Utah‘s Trust Deed Act. 2017 UT 2, ¶ 1. Adamson clarified the difference among deeds that are void, voidable, or valid. Id. ¶¶ 15, 20. In so doing, the court held that in most cases the time for the trustor to assert rights in the property is “before the trustee‘s sale” occurs because “the need for finality is at its apex” when “title to real property is at issue.” Id. ¶¶ 16–17 (cleaned up). The court instructed that after a trustee‘s sale is accomplished,
¶25 Neither fraud nor unfair dealing was asserted as a basis for Appellants’ summary judgment motion, so, the inquiry here is limited to whether Appellants suffered prejudice caused by the defect alleged. To that end, Appellants assert that Adamson indicates they may show prejudice in a trustee‘s sale by proving the defect affected their ability to protect their rights or interests in the property. See id. ¶¶ 23–24. But, the supreme court has also more particularly specified that “[d]efects in the notice of foreclosure sale that will authorize the setting aside of the sale must be those that would have the effect of chilling the bidding and causing an inadequacy of price,” Concepts, Inc. v. First Sec. Realty Services, Inc., 743 P.2d 1158, 1159 (Utah 1987) (per curiam), the objective of the notice requirements being to prevent a sacrifice of the property by enabling the trustor to timely act, see id. The court in Adamson did not depart from that holding. And Far West Bank v. Robertson, 2017 UT App 213, 406 P.3d 1134, which the district court relied on, reiterated the Concepts holding, stating “any notice-of-sale irregularities a trustor may allege . . . are immaterial if the trustor does not demonstrate that there was a resulting effect of chilling the bidding and causing an inadequacy of price.” Id. ¶ 37 (cleaned up); accord Concepts, 743 P.2d at 1159.
¶26 Because the holding of Concepts remains binding precedent, the district court correctly denied Appellants’ motion for summary judgment on their seventh claim after determining that material facts remained in dispute regarding any effect of chilling the bidding and inadequacy of price.
B
¶27 Appellants further challenge the court‘s denial of their motion for summary judgment, arguing that even if prejudice must be shown by an effect of chilling the bidding thereby producing an inadequate price, this “should be presumed where there is a notice failure.” But we cannot agree because Appellants’ “argument that the flaw in the notice . . . invalidated the sale . . . perverts and uses as a sword a statute that was meant to shield the property rights of a trustor.” See Concepts, Inc. v. First Sec. Realty Services, Inc., 743 P.2d 1158, 1160 (Utah 1987) (per curiam).
¶28 Appellants assert that “public advertisement was not given at all” and that “the chilling effect on bidding and inadequacy of price should be deemed proven.” Appellants overstate their case. The parties agree that the initial notice was properly given. They also agree that the trust deed limited postponements for a trustee‘s sale to one day unless the sale was fully re-noticed via writing, publication, posting, and mailing but that only oral postponements were provided.7 Accordingly,
this case is not about a notice failure but a notice defect. Appellants relied on the defect in seeking summary judgment and contended then, as they do now, that prejudice should be presumed given the defective notice. While Appellants’ concerns are reasonable, Utah law dictates otherwise.
¶29 We understand the burdens which a lack of notice of a trustee‘s sale can cause a trustor. The notice requirement is designed “to protect the rights of trustors to challenge the foreclosure prior to the sale,” Bank of Am. v. Adamson, 2017 UT 2, 15, 391 P.3d 196, “and serve to ensure the fairness of the sale through competitive bidding, thus securing the highest possible prices,” Concepts, 743 P.2d at 1160 (cleaned up). But the potential disadvantages of defective notice do not always follow. That is why our courts have required a showing that prejudice also resulted. And rather than presume that a defect causes prejudice, “absent evidence to the contrary, [we] presume that the sale was regular.” Far West Bank v. Robertson, 2017 UT App 213, ¶ 36, 406 P.3d 1134 (cleaned up). It is incumbent on the trustor to show prejudice in the sale, see Concepts, 743 P.2d at 1159, a burden which is “much higher” once the sale has taken place, see Adamson, 2017 UT 2, ¶ 18.
¶30 Utah courts require a showing of prejudice because courts are concerned with whether the trustor‘s property has been sacrificed by a defect denying the trustor the opportunity to act and protect its rights and interests in the property. See id. ¶ 22 (“A sale once made will not be set aside unless the interests of the debtor were sacrificed.” (cleaned up)). If not, “immaterial errors and mistakes will not affect the sufficiency of the notice or the sale made pursuant thereto.” Concepts, 743 P.2d at 1159; see also Adamson, 2017 UT 2, ¶ 24 (“If the defect does not cause prejudice, then the error is considered inconsequential.“). For this reason, our supreme court has indicated that a “failure to strictly comply with notice requirements [is] not sufficient to set aside [the] trustee‘s deed without [a] showing of prejudice.” Adamson, 2017 UT 2, ¶ 24 (cleaned up) (citing Timm v. Dewsnup, 2003 UT 47, ¶¶ 34–37, 86 P.3d 699).
¶31 Because a sale could be accomplished with defective notice but not run afoul of the trustor‘s rights and interests, or still provide the trustor with an adequate price for the property (or as S&S contended below, a price even above its value),8 we cannot presume the trustor is consequentially prejudiced by the defect, especially when the need for finality in the property‘s title is at its apex. See id. ¶ 17. Rather, the trustor must articulate and prove the “unjust extremes” compelling the court to set aside the sale that has been accomplished. id. ¶ 20 (cleaned up). To prevail on a claim to set aside a trustee‘s sale, the trustor must show actual harm resulting from the defect; prejudice cannot be presumed.
¶32 Appellants were required to show prejudice resulting from the defect alleged to be entitled to judgment as a matter of law that the trustee‘s deed was voidable. The district court, therefore, correctly denied Appellants’ motion for summary judgment on the seventh claim.
II. Appellants’ Valuation Expert
¶33 Appellants contend the district court erred in its Sixth Order excluding Appellants’ expert testimony and denying a
motion to supplement the valuation expert‘s report.9 We note the following additional relevant facts and then address each argument below.
¶34 In November 2017, Appellants provided their expert witness‘s report on the value of the Property. The report incorrectly indicated that at the time of the Trustee‘s sale the Property was zoned for “commercial services” as opposed to the correct zoning as “gateway.” Relatedly, the expert incorrectly named industrial use as the highest and best use of the Property. He also used the incorrect zoning designation to find comparable properties in assessing the Property‘s value. In January 2018, Bank provided its expert‘s report, which noted the errors in Appellants’ expert report. Expert discovery closed in February 2018, and trial was set for that December.
¶35 In August 2018, seven months after the close of expert discovery, in response to a motion to exclude their expert‘s testimony, Appellants sought leave to supplement their
On its face, [the expert‘s] appraisal does not meet the threshold showing of reliability because the incorrect zoning classification affects the highest and best use and comparable property analyses, which both impact valuation. The number given in the report is not supported by the facts. These fundamental errors mean that [the expert‘s] valuation is based on unreliable and insufficient
facts, and thus it is inadmissible. In addition, the errors render the entire opinion unhelpful since it was the valuation that could be used to show chilled bidding on the property, a required element of [Appellants‘] claims.
The court further observed that Appellants’ action came “approximately eight months after the . . . report challenging the accuracy of facts” asserted by Appellants’ expert.
A
¶36 On appeal, Appellants argue that the court abused its discretion by denying their motion to supplement their expert‘s report. We disagree.
¶37 Under
¶38 The district court found that Appellants’ motion ran afoul of each of the above standards in
¶39 An expert report is intended to “fairly disclose the substance of and basis for each opinion the expert will offer.”
¶40 Additionally, the court concluded that Appellants failed to timely supplement the disclosure and that this failure was neither harmless nor excused by good cause. As the court noted, the motion to supplement came a full eight months after the errors in the expert‘s report were pointed out to Appellants, and then only in response to a motion to exclude their expert. Appellants stated that their reason for delay was their reliance on the expert‘s assurance that the errors were immaterial. But Appellants “had time during expert discovery to add a rebuttal or to ‘supplement’ timely and correct the error when it was initially pointed out. [But they] chose not to do so.” This was not good cause for delay. Experts are expected to know the professional standards of their fields and to provide reliable opinions within those standards. Reluctance to acknowledge a substantial defect as to a known fact in one‘s own expert opinion does not justify delayed correction when the defect is known, especially where another expert has pointed out the folly. Any such reliance is not reasonable under these circumstances. Moreover, allowing supplementation at the late stage of ligation would have harmed the other parties who shouldered the expense and effort of preparing their own experts to respond to Appellants’ expert report. Accordingly, the district court did not abuse its discretion in finding that Appellants lacked good cause and could not show that granting their motion would be harmless, and therefore, it did not abuse its discretion by denying Appellants’ motion to supplement their expert‘s report.
B
¶41 Appellants also contend that the district court abused its discretion in excluding their expert‘s testimony on the Property‘s value. Appellants do not dispute that zoning is an important consideration when valuing property. They do not dispute that the Property‘s actual zoning classification was more restrictive than that used by their expert. And they do not dispute that the expert erred by using the wrong zoning classification. Rather, Appellants assert that the error does not render the expert‘s opinion “outside the threshold of reliability.” They therefore claim the district court abused its discretion in excluding the expert‘s opinion. We do not agree.
¶42
¶43 In this case, the expert‘s report relied on a zoning classification of “commercial” rather than the correct zoning classification of “gateway.” Based on that error, the expert incorrectly named industrial use as the Property‘s highest and best use and incorrectly looked to other industrial use properties to determine the Property‘s value. Resultantly, the data underlying the expert‘s opinion on the Property‘s value lacked any foundation indicating reliability and therefore the report was unreliable.10 The court‘s decision to exclude the expert‘s testimony based on that unreliable report did not exceed the limits of reasonability. Therefore, the court did not abuse its discretion by excluding the expert‘s testimony.
III. Seventh Order Retaining Summary Judgment Ruling and Amending Rationale
¶44 Appellants contend the district court erred in granting judgment against them in the Seventh Order. Cross-appellants argue that we lack jurisdiction to consider Appellants’ challenge to the Seventh Order and alternatively argue that if the court erred, its ruling may be sustained as to certain claims on the ground that they are time-barred. Cross-appellants also alternatively argue that the court erred in amending the Seventh Order and suggest that summary judgment in their favor can be based on the Settlement Agreement, as the court originally ruled. As a further alternative, Cross-appellants contend that laches bar Appellants’ claims. Because we otherwise resolve Cross-appellants’ concerns, we do not reach the latter two issues. We first determine we have jurisdiction over this issue. We then address whether Appellants’ claim has merit. We conclude that it does as to the first cause of action, and we proceed to address Cross-appellants’ argument that the statute of limitations bars that claim.
A
¶45 Cross-appellants assert that we lack jurisdiction over the Seventh Order by pointing out that Appellants filed their first notice of appeal before the Seventh Order was entered and contending that the amended notice of appeal was untimely and unspecific. We hold the amended notice of appeal was both timely and sufficiently specific.
¶46 After amending its previous orders granting summary judgment against Appellants, the district court entered anew a final judgment on August 13, 2019. This was an amended judgment rather than a separate judgment. See Butler v. Corporation of the President of the Church of Jesus Christ of Latter-day Saints, 2014 UT 41, ¶ 24 n.6, 337 P.3d 280 (“Once final judgment is entered, all preceding interlocutory rulings that were steps towards final judgment merge into the final judgment and become appealable at that time.” (cleaned up)). Appellants filed their amended notice of appeal on September, 11, 2019—one day before Cross-appellants filed their notice of appeal. Because the appeal was filed within the time allowed under the Utah Rules of Appellate Procedure, it was timely. See
B
¶47 Appellants contend that the district court erred in granting summary judgment independent of the motion against them in its Seventh Order pursuant to rule 56(f) of the Utah Rules of Civil Procedure. In particular, Appellants assert that the court erred in so doing because its basis for dismissing the claims—Appellants’ inability to prove damages based on the fair market value of the Property at the time of the Trustee‘s sale—was not determinative of each claim. We agree as to claim one but disagree as to claims two through seven.
¶48 In response to Appellants’ motion to alter or amend its earlier orders, the court ruled in the Seventh Order that “conflicting evidence . . . created a genuine issue of material fact” making summary judgment on the basis of the Settlement Agreement inappropriate. But the court found another reason to grant judgment: the order excluding Appellants’ valuation expert. The court reiterated that the expert‘s appraisal of the Property was unreliable and based on insufficient facts, and thereby it concluded that “there is no genuine issue of material fact that would preclude summary judgment on the issue of proof of damages.” See supra Section II. The court, on the basis of rule 56(f)(3) of the Utah Rules of Civil Procedure,11 granted judgment to Skabelund and S&S on all claims against them.
¶49 As an initial matter, Cross-appellants challenge whether Appellants’ arguments regarding the Seventh Order are preserved. In the Seventh Order the court stated that it “hereby provides notice to the parties and a reasonable time to respond, 30 days, before it will enter judgement on these grounds.” See
¶50 Utah courts have consistently held that “an issue is preserved for appeal when it has been presented to the district court in such a way that the court has an opportunity to rule on it.” E.g., State v. Johnson, 2017 UT 76, ¶ 15, 416 P.3d 443 (cleaned up). Here, the district court acted of its own initiative to grant judgment independent of a motion. The
¶51 We begin by recognizing that a court may enter summary judgment independent of a motion against a party to which the burden of production falls if the court determines, after the party is given notice and reasonable time to respond, see
¶52 The court‘s Seventh Order dismissed claims one through seven against S&S and Skabelund. To determine whether the court correctly entered judgment independent of the motion on each claim, we first must identify whether each claim requires a showing of damages. Next, we must determine whether the exclusion of Appellants’ valuation expert forecloses Appellants’ ability to prove damages as a matter of law on each claim.
1. First Claim
¶53 Appellants’ first claim for legal malpractice against Skabelund alleged he breached applicable standards of professional conduct when he entered into and enforced the terms of the trust deed. The complaint‘s language frames the claim as one arising from fiduciary duties.14 The elements required to prove legal malpractice based on fiduciary duty includes damages.15 See Christensen & Jensen, PC v. Barrett & Daines, 2008 UT 64, ¶ 22, 194 P.3d 931. On this claim, Appellants asserted they were damaged when Skabelund “enforced the note . . . by foreclosing the trust deed and directing the sale of the [Property] . . . to satisfy it.” Appellants sought the difference between the interest and charges prescribed under the note and “reasonable interest and charges.” The damages sought on this claim were not tied to the Property‘s value, but to the different interest rates and charges. Thus, the exclusion of the valuation expert‘s testimony did not prevent Appellants from proving damages as a matter of law.
¶55 Because the first claim asserts damages that do not depend on the Property‘s value, the district court incorrectly concluded that the exclusion of Appellants’ valuation expert foreclosed, as a matter of law, Appellants’ ability to demonstrate damages on this claim.
2. Second Through Sixth Claims
¶56 Appellants’ second claim alleges legal malpractice against Skabelund, related to his formation and management of Pdnulebaks. The third claim asserts Skabelund committed fraud in connection with the formation of Pdnulebaks. The fourth claim was against S&S for breach of the Settlement Agreement and asserted S&S failed to wait as agreed to accomplish a trustee‘s sale. The fifth claim asserted fraud in the Trustee‘s sale against Skabelund and S&S because it was not postponed as stipulated in the Settlement Agreement. The sixth claim was for breach of fiduciary duty against Skabelund for his management of Pdnulebaks while conflicted as the manager of S&S. Each claim required Appellants to prove damages.16 And Appellants framed those claimed damages in terms of the Property‘s value.
¶57 On the second claim, Appellants asserted as the single source of damages Skabelund‘s management of Pdnulebaks “for his own benefit including by failing to take reasonable steps to preserve Pdnulebaks’ equity in the [Property] and allowing it to be sold” under value at the Trustee‘s sale. Accordingly, Appellants’ demanded the difference between the Property‘s sale price and its “fair market value.” On their third claim, Appellants asserted that they were damaged by the fraud because it “resulted in the loss of the [Property] at the Trustee‘s sale to S&S for substantially below market value.” Appellants again conditioned their claim on damages deriving from the sale. As damages for the fourth claim, Appellants asserted that the Property was sold without the exercise of Appellants’ rights, resulting in “the difference between [the sale price] and the fair market value of the [Property],” and they asked for relief in that amount. Similarly,
¶58 Accordingly, Appellants’ damages theory for each claim depends on the assertion that the Property was sold for less than its value at the Trustee‘s sale because “[a] party is bound by the terms of his own pleading.” See Larsen v. Davis County School Dist., 2017 UT App 221, ¶ 39, 409 P.3d 114. To prove their claims, Appellants had to provide evidence that the Property‘s value exceeded its sale price. The exclusion of Appellants’ valuation expert deprived Appellants of evidence to that end—the remaining valuations being less than the sale price. See supra note 8.
¶59 Because Appellants could not provide evidence of the Property‘s value in excess of its sale price after the exclusion of their valuation expert, the court correctly entered judgment against them on claims two through six.
3. Seventh Claim
¶60 Appellants’ seventh claim was to set aside the Trustee‘s sale. Appellants correctly argue that this equitable claim does not necessarily require a showing of the type of damages with which we are concerned here.17 But when a claimant‘s argument to set aside a trustee‘s sale requires a showing of prejudice arising from a notice defect in the sale, proof of damages is essential. See Concepts, Inc. v. First Sec. Realty Services, Inc., 743 P.2d 1158, 1159 (Utah 1987) (per curiam) (“Defects in the notice of foreclosure sale that will authorize the setting aside of the sale must be those that would have the effect of chilling the bidding and causing an inadequacy of price.“); see also Bank of Am. v. Adamson, 2017 UT 2, ¶ 26, 391 P.3d 196.
¶61 Appellants’ cause of action to set aside the Trustee‘s sale requires a showing of prejudice as we explain above. Although Appellants’ pleadings included allegations of fraud in the Trustee‘s sale, those claims fail, supra ¶¶ 56–59, and cannot support their seventh claim. Likewise, we have rejected Appellants’ contention that the trustee‘s deed was void. See supra note 4. Accordingly, Appellants’ remaining avenue of argument is that the Trustee‘s sale resulted in prejudice, and they were required to show damages in the form of chilled bidding and an inadequate purchase price. But the exclusion of their valuation expert leaves them without evidence on whether an inadequate purchase price was obtained.18 Consequently, the district court correctly granted judgment against Appellants on their seventh claim.
C
¶62 Having determined that the district court erred in granting judgment
¶63 “A plaintiff must file a complaint before the statute of limitations expires or its claim will be barred.” Young Res. Ltd. P‘ship v. Promontory Landfill LLC, 2018 UT App 99, ¶ 10, 427 P.3d 457; see
¶64 Here, Cross-appellants argue that the claim accrued when the note and deed were executed or, alternatively at the time the note was due, at the time a default was declared, or at the recording of the foreclosure. Contrastingly, Appellants contend they “did not incur actual losses until Skabelund enforced the note and conducted the foreclosure sale” and insist that the malpractice action has yet to accrue because this litigation remains unresolved.
¶65 Appellants cite Tuttle v. Olds, 2007 UT App 10, 155 P.3d 893, to support their proposition. In Tuttle, the court adjudicated a statute of limitations issue on a claim regarding water rights. Id. ¶ 11. The plaintiffs in that case had received notice about their lack of certain water rights but sold their property relying on earlier assurances that they possessed those rights. Id. ¶¶ 3–4. The buyers sued plaintiffs and prevailed. Id. ¶ 4. The plaintiffs later sued the state to recover damages for providing them misleading information regarding their water rights. Id. ¶ 5. The state moved to dismiss the case as barred by the statute of limitations, arguing that the plaintiffs’ cause of action accrued when they received notice of the lack of water rights. Id. ¶¶ 5, 11–12. The court granted the motion but was reversed on appeal. Id. ¶¶ 5, 17. This court explained that “the law does not recognize an inchoate wrong, and therefore, until there is actual loss or damage resulting to the interests of another, a claim for negligence is not actionable.” Id. ¶ 11 (cleaned up). Accordingly, this court concluded it was after the judgment was entered for the buyers that plaintiffs suffered an actual loss, and only then did their cause of action accrue. Id. ¶ 12.
¶66 Tuttle is distinguishable from this case because there is no underlying litigation that must resolve before damages accrue to Appellants. Rather, Appellants were damaged, as they acknowledge, when Skabelund enforced the trust deed. But Skabelund enforced the trust deed well before the Trustee‘s sale; the sale was a continuation of the enforcement effort. He first enforced the trust deed between October 21, 2010—the maturity date on the note and deed—and May 24, 2011—the date Skabelund declared the note and deed in default and caused Cache Title to record the same. His enforcement of the note sought payment, including the “unreasonable interest and charges.” Therefore, it was at that time Appellants suffered actual harm or damages from the alleged malpractice. And although the amount of damages continued to increase
¶67 The trust deed‘s enforcement presented more than an inchoate harm—the mere possibility, or probability, of loss. Loss (the imposition of the note‘s interests and charges) became certain when Skabelund enforced the deed. That is discernable because even if Phillips had paid the balance on the note at the time it was due—avoiding the foreclosure—he would still have a prima facie claim for malpractice against Skabelund under the alleged facts because he would still have suffered the harm of paying “unreasonable interest and charges” under the note. What‘s more, Phillips was aware that his claims had accrued, as manifest by his bankruptcy filling in November 2011 indicating that he had unliquidated claims against Skabelund for malpractice.
¶68 Under these facts, the latest date for the accrual of Appellants’ claim for malpractice on the trust deed and note against Skabelund was May 24, 2011. Appellants did not file their complaint until December 20, 2015. This is beyond the four-year limitation period. Accordingly, Appellants’ first claim for malpractice was time-barred and the district court incorrectly denied Cross-appellants’ motions.
IV. Attorney Fees on Appeal
¶69 Finally, Cross-appellants ask us to award them their attorney fees incurred on appeal. It is well-settled that “when a party who received attorney fees below prevails on appeal, the party is also entitled to fees reasonably incurred on appeal.” Tronson v. Eagar, 2019 UT App 212, ¶ 39, 457 P.3d 407 (cleaned up). Having received attorney fees in the underlying action and under the conclusions reached in this opinion, Cross-appellants are entitled to recover reasonable attorney fees incurred on appeal.19
CONCLUSION
¶70 We affirm the district court‘s dismissal of Appellants’ claim under the Utah Trust Deed Act‘s notice-of-postponement provision because Appellants do not challenge an independent basis for dismissal as articulated by the district court. We do not address Appellants’ argument that the trustee‘s deed is voidable even absent a showing of prejudice where Trustee breached the notice provision of the trust deed because that claim is unpreserved and Appellants make no argument for our consideration of the unpreserved claim. We reject Appellants’ challenge to the denial of their motion for summary judgment on the seventh claim asserting that prejudice should be presumed or that prejudice was sufficiently demonstrated. We also reject Appellants’ argument that the district court abused its discretion in denying their motion to supplement their expert‘s report and in ordering that expert‘s testimony excluded. We uphold as correct the district court‘s ruling granting judgment to S&S and Skabelund on claims two through six based on Appellants’ inability to prove damages following the exclusion of their valuation expert. We uphold the district court‘s grant of judgment to S&S and Skabelund as to claim one on the alternative ground that the claim is time-barred. Finally, we grant Cross-appellants’ request for attorney fees on appeal and remand to the district court for the purpose of quantifying those fees.
¶71 Affirmed. Costs to Appellees and Cross-appellants. See
Notes
Robinson v. Robinson, 2016 UT App 33, ¶ 21, 368 P.3d 105. On the fourth claim, “the elements of a prima facie case for breach of contract are (1) a contract, (2) performance by the party seeking recovery, (3) breach of the contract by the other party, and (4) damages.” America West Bank Members v. State, 2014 UT 49, ¶ 15, 342 P.3d 224 (cleaned up). Regarding the sixth claim, “[b]reach of fiduciary duty claims generally require proof of four elements: the existence of a fiduciary relationship . . .; breach of the fiduciary duty; causation, both actual and proximate; and damages.” Gables at Sterling Village Homeowners Ass‘n, Inc. v. Castlewood-Sterling Village I, LLC, 2018 UT 04, ¶ 52, 417 P.3d 95.A claim of fraud requires the plaintiff to allege (1) that a representation was made (2) concerning a presently existing material fact (3) which was false and (4) which the representor either knew to be false or made recklessly, knowing that there was insufficient knowledge upon which to base such a representation, (5) for the purpose of inducing the other party to act upon it and (6) that the other party, acting reasonably and in ignorance of its falsity, (7) did in fact rely upon it (8) and was induced to act (9) to that party‘s injury and damage.