June 20, 2013, Utah Court of Appeals Case Summaries

June 20, 2013

Utah Court of Appeals

Ross v. Epic Engineering PC, 2013 UT App 136, No. 20110537-CA (June 20, 2013).

ISSUE: Exclusion of Expert Testimony on an Engineer’s Standard of Care

Judge Orme,

Jason Ross appeals the district court’s grant of Epic Engineering’s motion in limine that excluded the testimony of Ross’s expert. Ross also appeals the district court’s subsequent grant of Epic’s motion for summary judgment on Ross’s breach of contract claim and the resulting dismissal of Ross’s complaint with prejudice. We affirm.

At  ¶ 1.

Ross argued that his expert was qualified to provide testimony about the standard practices of structural engineers because the expert was a licensed engineer. Utah law requires that “the standard of care in a trade or profession generally must be determined by testimony of witnesses in the same trade or profession.” Ortiz v. Geneva Rock Prods., Inc., 939 P.2d 1213, 1217 n.2 (Utah Ct. App. 1997) (brackets, citation, and internal quotation marks omitted). But not every engineer is qualified to opine about the standard of care or the standard practices applicable to all other engineers.

We recognize that “[a]n expert witness belonging to one school may testify against a member of another school once the expert provides sufficient foundation to show that the method of treatment at issue is common to both schools or that the expert is knowledgeable about the standard of care of the other school.” Boice v. Marble, 1999 UT 71, ¶ 14, 982 P.2d 565. See also Arnold v. Curtis, 846 P.2d 1307, 1310 (Utah 1993) (stating that a witness is allowed to testify “when a witness is knowledgeable about the standard of care of another specialty or when the standards of different specialties on the issue in a particular case are the same”). On the other hand, an expert may be excluded if unable to establish a common standard of care. See, e.g., Burton v. Youngblood, 711 P.2d 245, 248 (Utah 1985) . . .

At ¶¶ 16-17.

We disagree with Ross’s contention that his expert “opined about a standard of care that applies to all engineers, regardless of their specialty.” On the contrary, Ross’s expert admitted that he was not asked to and did not prepare an opinion as to the standard of care applicable to Epic. The expert acknowledged that geotechnical engineers—of which he is one—do not design buildings and that he would need to conduct an investigation involving the “review of reports, records or opinions of other professionals performing the same or similar service at the time in question” in order to develop an opinion on the standard of care applicable here. An opinion developed through such an undertaking would not be the result of his “knowledge, skill, experience, training, or education,” as required by the Utah Rules of Evidence. See Utah R. Evid. 702(a). See also Dikeou, 881 P.2d at 947 (“By definition, an expert [in the context of a medical malpractice claim] is one who possesses a significant depth and breadth of knowledge on a given subject. To allow a doctor in one specialty, retained as an expert witness, to become an ‘expert’ on the standard of care in a different medical specialty by merely reading and studying the documents in a given case invites confusion, error, and a trial fraught with unreliable testimony.”). Therefore, we agree that Ross’s expert was not qualified to opine on the standard of care expected of Epic.

At ¶ 18.

The remainder of Ross’s expert’s contentions related either to evidence not in dispute or to matters in which he lacked relevant experience or knowledge. . . .

At ¶ 19.

The court was within its discretion to conclude that the expert did not qualify under rule 702 to offer his opinions either because he was unqualified to so opine or because the issue was not in dispute. Accordingly, the district court properly granted Epic’s motion in limine that excluded Ross’s expert’s testimony.

At ¶ 21.

It is undisputed that the district court ruled on Epic’s motion in limine prior to the deadline provided by rule 7(c) of the Utah Rules of Civil Procedure. See Utah R. Civ. P. 7(c) (“Within ten days after service of the motion and supporting memorandum, a party opposing the motion shall file a memorandum in opposition.”). Such an error does not warrant reversal, however, if it is “sufficiently inconsequential so no reasonable likelihood exists that the error affected the outcome of the proceedings.” Jones v. Cyprus Plateau Mining Corp., 944 P.2d 357, 360 (Utah 1997). . . . 

. . . While additional time may have allowed Ross to refine his arguments somewhat, he points to nothing new that he would have added had he been permitted the opportunity to submit a memorandum in opposition to the motion. And from all that appears, the pivotal analysis by the district court would have remained the same. See Utah R. Civ. P. 61 (stating that an error is harmless and does not warrant disruption of a ruling or order if it “does not affect the substantial rights of the parties”). Therefore, Ross was not prejudiced by the district court’s error, and we decline to overturn its ruling.

At ¶¶ 22-23.

The Court holds that because Ross’s expert testimony regarding an engineer’s standard of care is not admissible, the trial court properly granted the defendant’s motion for summary judgment.

At ¶¶ 24-26.

State v. Wright, 2013 UT App 142, No. 20090643-CA (June 20, 2013)

ISSUE: Ineffective Assistance of Counsel, Expert Testimony & Prosecutorial Misconduct

Judge Roth,

Justin George Wright challenges his conviction for aggravated sexual abuse of a child on three grounds. First, Wright contends that his trial counsel provided ineffective assistance in investigating and presenting his defense. Wright next argues that the district court erred when it permitted the jury to hear inadmissible expert testimony. Finally, he asserts prosecutorial misconduct during closing statements. We affirm.

At ¶ 1.

The Court summarizes the relevant background and facts of the case.

At ¶¶ 2-9.

Detective Faulkner interviewed Daughter as part of the investigation that ensued from the sexual abuse Daughter reported. Detective Faulkner also testified at trial. In the course of its direct examination, the State asked Detective Faulkner, “Is it uncommon for you to have cases involving a disclosure that comes years after an initial event of touching?” Detective Faulkner responded, “No. No.” Wright’s counsel did not object to this question. But when the State followed up by asking how many cases Detective Faulkner had handled where the disclosure occurred a significant period of time after the abuse, Wright’s counsel did object, arguing that Detective Faulkner was never designated as an expert witness and that the question seemed to require expert testimony. He also objected on grounds of “relevance.” The court overruled Wright’s objections. Detective Faulkner then answered, “I would be willing to say that at least a third of my cases . . . are victims where they have either become 18 and are [o]lder or they’ve endured the abuse living with the suspect without telling anyone for years.”

At ¶ 5.

During the prosecutor’s closing arguments, the prosecutor stated,

[T]here is absolutely no reason not to believe [Daughter], who, as I told you before gave you every single piece of evidence that you need for the elements of this crime. [Daughter] doesn’t want to hurt her father. She loved him even after he did horrible things to her. She just wants him to stop hurting her. You have the power to make that stop.

At ¶ 8.

The jury convicted Wright on one count of aggravated sexual abuse of a child and acquitted him on the other count. Wright appealed, and on his motion, this court remanded the case to the district court to conduct a hearing pursuant to rule 23B of the Utah Rules of Appellate Procedure on the claims that trial counsel had been ineffective because he had not reasonably investigated or pursued a fabrication defense and he did not effectively use available witnesses and evidence at trial. See Utah R. App. P. 23B(a) (“A party to an appeal in a criminal case may move the [appellate] court to remand the case to the trial court for entry of findings of fact, necessary for the appellate court’s determination of a claim of ineffective assistance of counsel.”). The district court on rule 23B remand concluded that Wright’s trial counsel had not been ineffective. The court supported its decision with detailed factual findings.

At ¶ 9.

Wright makes three claims on appeal. First, he argues that trial counsel provided ineffective assistance when he failed to adequately investigate the merits of both the defense urged by Wright (fabrication) and the defense trial counsel pursued (mistake). Wright also asserts that counsel underutilized available evidence and witnesses at trial. . . .

Next, Wright asserts that the district court erred in allowing Detective Faulkner to testify about the incidence of delayed reporting in sexual abuse cases when Detective Faulkner had not been designated or qualified as an expert witness. . . .

Finally, Wright claims prosecutorial misconduct during the State’s closing statement. Because Wright did not object to the prosecutor’s statements in the district court . . . .

At ¶¶ 10-12.

Ineffective Assistance of Counsel

To establish ineffective assistance, “a defendant must . . . demonstrate that counsel’s performance was deficient, in that it fell below an objective standard of reasonable professional judgment[,] . . . [and] show that counsel’s deficient performance was prejudicial—i.e., that it affected the outcome of the case.” State v. Litherland, 2000 UT 76, ¶ 19, 12 P.3d 92. To show that his counsel performed inadequately, a defendant must “rebut the strong presumption that under the circumstances the challenged action might be considered sound trial strategy.” Id. (citation and internal quotation marks omitted). This presumption “may be overcome only if there is a lack of any conceivable tactical basis for counsel’s actions.” State v. King, 2012 UT App 203, ¶ 14, 283 P.3d 980 (citation and internal quotation marks omitted). “Additionally, because both deficiency and prejudice must be shown, a reviewing court can dispose of an ineffectiveness claim on either ground.” State v. Bair, 2012 UT App 106, ¶ 49, 275 P.3d 1050 (citation and internal quotation marks omitted).

At ¶ 13.

The Court reviews the findings made by the trial court on remand, and determines that Defendant’s counsel did not fail to investigate the potential defenses, and his pursuit of a mistake defense was a reasonable tactical decision.

At ¶¶ 15-22.

The Utah Supreme Court has stated that “counsel can make a reasonable decision to call or not to call particular witnesses for tactical reasons” in presenting a defense “only after an adequate inquiry” into “the underlying facts of a case, including the availability of prospective defense witnesses.” State v. Templin, 805 P.2d 182, 188 (Utah 1991). Wright contends that because testimony from several potential defense witnesses would have supported his claim that Daughter had been induced to lie, his counsel must have inadequately investigated a fabrication defense. On remand, however, the district court determined that counsel “knew of the substance of the testimony” of available defense witnesses and “adequately investigated their potential testimony,” although it recognized that counsel “only spent a minimal amount of time preparing” one witness who had information pertinent to the fabrication defense. Wright has not contested the court’s findings that counsel was adequately aware of the testimony supporting a fabrication defense. Wright has therefore failed to demonstrate that counsel’s investigation fell outside the “wide range of reasonable professional assistance.” See Strickland v. Washington, 466 U.S. 668, 689 (1984).

At ¶ 16.

Wright also claims that counsel’s investigation of the mistake defense was incomplete because he relied on Daughter’s exposure to “adult content” in age-inappropriate television programs and books without researching their contents. According to Wright, had counsel investigated, he would have learned that the television programs Daughter may have been exposed to covered the topics of sexuality, family discord, and use of abuse allegations to alienate an accused parent and that Daughter was reading books that contained sexual content “too graphic for a tenyear-old child.” The State counters that Wright’s claim requires speculation that the contents of the television shows and books would have bolstered the defense. We agree. Wright’s claim is based on the premise that additional research into the content of the media to which Daughter might have been exposed would have provided information useful to the mistake defense. While there is evidence in the record that Daughter “loved” watching Oprah and also watched America’s Most Wanted and Dr. Phil on occasion, Wright has failed to support, with specific facts, his contention that counsel’s failure to look further into this subject would likely have provided substantial additional evidence to support a mistake defense. . . .

At ¶ 17.

Finally, Wright asserts that the mistake defense was strategically “inferior” to the fabrication defense “because it is incomplete: It explained how [Daughter] could manufacture false allegations of abuse, but not why she would.” Wright’s attack on trial counsel’s strategic decision at this stage in the proceeding, however, is made with the benefit of hindsight. Even if Wright’s proposed approach to his defense might actually have amounted to a better strategy than the one his counsel chose, we will not conclude that trial counsel was ineffective unless “there is a lack of any conceivable tactical basis for counsel’s actions,” State v. King, 2012 UT App 203, ¶ 14, 283 P.3d 980 (citation and internal quotation marks omitted). . . .

At ¶ 20.

The Court reviews the additional evidence Defendant claims his counsel should have presented to the jury and determines that counsel’s decision not to call additional witnesses or present documentary evidence falls within the scope of legitimate trial strategy.

At ¶¶ 23-26.

The Court reviews the evidence Wright’s mother and Sister could have presented and determines that counsel was not deficient in limiting the use of Wright’s mother’s and sister’s testimonies.

At ¶¶ 27-32.

Detective Faulkner’s Testimony

. . . Detective Faulkner’s negative response to the question about whether it was uncommon to have cases where the abuse went unreported for a period of time simply relayed a common fact to the jury and did not convey any information about how it should view the testimony or other evidence in the case.

Detective Faulkner’s testimony, however, went a step beyond recognition of the general principle that delayed reporting is common when she reported that one-third of the “[h]undreds” of “child sex abuse” cases that she has investigated over five years involved delayed reporting of the abuse. According to Wright, this kind of quasi-statistical information falls within the realm of “knowledge [that] is not within the ken of the average bystander,” State v. Rothlisberger, 2006 UT 49, ¶ 34, 147 P.3d 1176, and is therefore governed by evidence rules dealing with expert testimony, id. ¶¶ 11–12 (“Expert testimony, which is treated under rule 702 [of the Utah Rules of Evidence], is opinion or fact testimony based on scientific, technical, or otherwise specialized knowledge” and is subject to “various qualification and advance disclosure requirements.”). Wright further contends that this quasistatistical information “encouraged the jury ‘to focus upon a seemingly scientific, numerical conclusion rather than to analyze the evidence before it and decide where the truth lies.’” (Quoting State v. Rammel, 721 P.2d 498, 501 (Utah 1986).)

At ¶ 35-36.

Even assuming for purposes of appeal that Detective Faulkner’s testimony about the percentage of cases involving delayed reporting was inadmissible, Wright has not demonstrated any harm that resulted from its admission. Wright argues that because the jury acquitted him of one charge of aggravated child sexual abuse, it likely would have acquitted him of the second charge had it not heard Detective Faulkner’s testimony. Wright does not, however, contend that Detective Faulkner lacked the knowledge or experience to offer such information, even conceding that she had investigated “[h]undreds” of sexual abuse cases. Nor does he contest the accuracy of her statement. Indeed, an incidence of “one-third” appears to be generally consistent with her testimony that delayed reporting is not uncommon—testimony that the jury could properly hear—and the increment of precision it adds to the more general statement seems too small to undermine the defense in any material way. Without any showing that the admission of Detective Faulkner’s statement was likely to have unfairly affected the outcome of the proceedings, we will not disturb the jury’s verdict, even if the testimony was erroneously admitted.

At ¶ 37.

Prosecutor’s Closing Remarks

Wright argues that these remarks were improper because they “divert[ed] the jury from its duty to decide the case on the evidence.” See State v. Todd, 2007 UT App 349, ¶ 18, 173 P.3d 170 (citation and internal quotation marks omitted). He further contends that the final statement is the most damaging because it as “‘designed to appeal to the jurors’ sentiments by charging the jury to convict [Wright] in order to ensure [Daughter’s] safety.’” (First alteration in original.) (Quoting State v. Tosh, 91 P.3d 1204, 1212 (Kan. 2004).) The State counters that Wright opened the door to such remarks by attributing a specific motive to Daughter that provoked what amounted to a “fair reply” from the prosecutor. See United States v. Schwartz, 655 F.2d 140, 142 (8th Cir. 1982) (“It is well settled that prejudicial error does not result from the improper remarks made during closing argument when such remarks were provoked by the opposing counsel. When the defense counsel chose to open the door on the issue . . . , the counteracting statement made by the prosecutor fell within the doctrine of fair reply.” (citation omitted)); United States v. Daniels, 617 F.2d 146, 150 (5th Cir. 1980) (same).

At ¶ 38.

“Generally speaking, in argument to the jury, counsel for each side has considerable latitude and may discuss fully from their viewpoints the evidence and the inferences and deductions arising therefrom.” State v. Tillman, 750 P.2d 546, 560 (Utah 1987). However, “[a] prosecutor’s actions and remarks constitute misconduct that merits reversal if the actions or remarks call to the attention of the jurors matters they would not be justified in considering in determining their verdict and, under the circumstances of the particular case, the error is substantial and prejudicial . . . .” Id. at 555. “In determining whether a given statement constitutes prosecutorial misconduct, the statement must be viewed in light of the totality of the evidence presented at trial.” State v. Longshaw, 961 P.2d 925, 927 (Utah Ct. App. 1998) (citation and internal quotation marks omitted).

At ¶ 39.

We agree with the State that the first four sentences of the prosecutor’s response fall within the fair reply doctrine. Wright encouraged the jury to view the facts and inferences from the evidence in a manner that supported his theory that Daughter was mistaken about how Wright had touched her, and in closing suggested that her mistake had an aspect of calculation to it in that it furthered her goal of getting Wright out of her life so she could be “with the family she wants to be with.” In response, the State was entitled to argue from the evidence at trial that Daughter had a different motivation for the accusations than simply eliminating Wright from her life, that is, to protect herself from abuse.

At ¶ 40.

We agree with Wright, however, that the prosecutor’s final statement—“You have the power to make that [(the abuse)] stop.”—is beyond the scope of a fair reply. It does not rebut any statements made by Wright; instead, the statement calls on the jury to assume the responsibility of ensuring Daughter’s safety. Such a statement appeals to the jurors’ emotions by contending that the jury has a duty to protect the alleged victim—to become her partisan—which diverts their attention from their legal duty to impartially apply the law to the facts in order to determine if Wright had committed the crimes of aggravated sexual abuse of a child for which he was on trial. See generally Tosh, 91 P.3d at 1212 (noting that asking the jury to protect the victim of sexual abuse “fell outside the wide latitude afforded a prosecutor” because such comments are “designed solely to inflame the passions of the jurors and divert their attention” from the evidence that is intended to help them decide guilt or innocence). Yet, despite the impropriety of the prosecutor’s remark, it does not require reversal. As the Utah Supreme Court stated in State v. Ross, 2007 UT 89, 174 P.3d 628,

The test of whether the remarks made by counsel are so objectionable as to merit a reversal in a criminal case is, did the remarks call to the attention of the jurors matters which they would not be justified in considering in determining their verdict, and were they, under the circumstances of the particular case, probably influenced by those remarks. . . . . If prosecutorial misconduct is established, the State must show that the error was harmless beyond a reasonable doubt.

Id. ¶ 54 (citation and internal quotation marks omitted) (setting forth this standard in context of plain error review).

At ¶ 41.

The Court concludes that in the context of the entire case, “the prosecutor’s isolated statement to the jury was harmless beyond a reasonable doubt.”

At ¶¶ 42-43.

The Court rejects Defendant’s cumulative error argument.

At ¶¶ 44-45.

Hahnel v. Duchesne Land, 2013 UT App 150, No. 20111098-CA (June 20, 2013)

ISSUE: Mootness of Damages Issue & Attorney Fees

Judge McHugh,

Magna G. Hahnel, Cheryl Pietz, and Carol J. Stewart (collectively, Buyers) appeal the trial court’s entry of summary judgment and award of attorney fees in favor of Duchesne Land, LC and Highland Development, Inc. (collectively, Sellers). We affirm.

At ¶ 1.

The Court outlines the background of this case including: the specific terms of a land purchase agreement and construction agreement, the alleged breaches of the agreements, and the trial court’s summary judgment rulings that (1) Plaintiffs had not properly mitigated damages and were therefore, limited in their assertion of damages, and (2) that Defendants were entitled to attorney fees for their successful defense against Plaintiffs’ claims.

At ¶¶ 2-9.

Damages Challenge

We begin our analysis with Buyers’ claim that the trial court erred in limiting the damages they could request at trial. Specifically, Buyers argue that they were denied the right to a full and fair presentation to the jury because evidence of greater damages could have swayed the jury’s determination of whether Sellers had breached the Building Contract. In response, Sellers contend that this issue is moot due to the jury’s determination that Sellers did not breach either contract.

At ¶ 12.

“An issue is moot when resolution of it cannot affect the rights of the parties.” Cox v. Cox, 2012 UT App 225, ¶ 21, 285 P.3d 791. Because the jury concluded that Sellers had not breached either agreement, any decision about the damages that would have been available had the jury concluded otherwise could have no legal effect on the rights of the parties and is therefore moot. . . .

At ¶ 13.

.

Nor are we persuaded by Buyers’ argument that evidence of greater damages was relevant to the liability determination. . . . Whether there was a breach is an independent inquiry separate from the issue of damages. . . .

At ¶ 14.

Attorney Fees

The attorney fees provision states, “Buyer[s] shall pay all costs and expenses, including attorney’s fees, incurred by Seller[s] in the enforcement of the terms of this agreement and/or the Trust Deed, whether or not a legal suit is brought by Seller[s] in connection therewith.” Buyers contend that because Sellers did not advance any counterclaims or affirmative defenses, they did not incur any attorney fees “in the enforcement of the terms” of the Building Contract. Sellers respond that by proving no breach had occurred, they were enforcing the terms of the Building Contract

At ¶ 15.

Here, Buyers argue that since [Carr v. Enoch Smith Co., 781 P.2d 1292 (Utah Ct. App. 1989)], Utah courts have construed attorney fees provisions tied to “enforcement” of a contract as more limited in scope than provisions that award attorney fees to the prevailing party. However, each of the decisions relied upon by Buyers, like Carr, involved an attorney fees provision that required a default or failure to perform. . . . While we agree that the fee provision at issue in this case does not award fees to the prevailing party, it likewise does not require a finding that the other party is in default or has failed to perform.

At ¶ 18.

By defending against Buyers’ claims for breach of contract, Sellers were enforcing their interpretation of the terms of, and defending their right to retain the amounts paid by Buyers under, the Building Contract. To prove that there was no breach of the Building Contract despite Buyers’ claim that the cabin was not completed on time, that the punch‐list items were never completed, or that there was mold in the cabin that would justify a damages award to Buyers, Sellers had to establish that they had complied with the terms of the Building Contract. Accordingly, Sellers were engaged in an “enforcement of the terms of” the Building Contract as they interpreted them when they successfully defended against Buyers’ claims that a breach had occurred. Therefore, Sellers were entitled to recover their attorney fees pursuant to the express language of the attorney fees provision.

At ¶ 21.

In re N.M (A.G. v. State), 2013 UT App 151, No. 20130159‐CA, (6/20/2013).

ISSUE: Parental Rights (Neglect)

PER CURIAM,

A.G. (Father) appeals the juvenile court’s February 8, 2013 order wherein the court determined that Father neglected N.M. We affirm.

At ¶ 1.

The father asserts that there was insufficient evidence to support the juvenile court’s determination that he neglected N.M. However, Utah Code § 78A-6-105(27) defines neglect, in part as the lack of proper parental care of a child by reason of the parent’s faults or habits. The juvenile court may determine that a parent has neglected a child if there is a history of violent behavior. The juvenile court’s determination of neglect was based on sufficient supporting evidence of Father’s violent history.

At ¶ 2–3.

The father next asserts that the juvenile court violated his due process rights by not permitting him to cross-examine Mother regarding her alleged mental illness or her propensity to harm herself. However, this issue was not preserved for appeal.

At ¶ 4–5.

Hodge v. State, 2013 UT App 152, No. 20120069-CA (June 20, 2013)

*Affirming Judge Michael Lyon.

ISSUE: Post-Conviction Remedies Act, Frivilous allegations of error, Ineffective Assistance of Counsel, & Miranda

Per Curiam.

Hodge challenges his convictions under the Post-Conviction Remedies Act, alleging various claims of error. The district court dismissed several of his post-conviction claims as being frivolous on their face. The district court reached the merits of the two remaining claims and dismissed the claims upon granting the State’s motion to dismiss. Hodge appeals.

At ¶ 2

On appeal, Hodge asserts these claims were improperly dismissed as frivolous. We have reviewed the record and conclude that the district court correctly determined that the claims were frivolous on their face, and we decline to address them further. See State v. Carter, 776 P.2d 886, 888 (Utah 1989).

At ¶ 2, fn. 1.

Hodge asserts that the district court erred in dismissing his claim that he was not properly advised of his Miranda rights. However, the detective provided the required Miranda warnings at the beginning of his interview and Hodge waived his rights. Accordingly, the district court properly dismissed this claim.

At ¶ 3.

Hodge next asserts that he received ineffective assistance of counsel at the trial court because trial counsel did not adequately confer with him prior to trial. To establish ineffective assistance of counsel, Hodge must demonstrate that his trial counsel’s performance was deficient by identifying counsel’s specific acts or omissions. See Strickland v. Washington, 466 U.S. 668, 687–88 (1984). Hodge must next demonstrate that “there is a reasonable probability that, but for counsel’s unprofessional errors, the result of the proceeding would have been different.” Id. at 694.

At ¶ 4.

The district court determined that Hodge had not demonstrated that he was prejudiced by trial counsel’s purported omissions based upon the overwhelming evidence of his guilt. The district court did not err by determining that Hodge failed to demonstrate that he was prejudiced. Therefore, the district court properly dismissed this claim

At ¶ 5.

Bonnie & Hyde v. Lynch, 2013 UT App 153, No. 20120367-CA (June 20, 2013)

*Affirming in part and reversing in part Judge Scott Hadley.



ISSUE: Landlord/Tenant Abandonment, Eviction, Wrongful Attachment

Judge McHugh,

Tom Lynch (Tenant) appeals from the trial court’s determination that he abandoned property that he had leased from Bonnie & Hyde, Inc. (BHI). Tenant also challenges the trial court’s conclusions that BHI did not wrongfully convert or attach his personal property. We affirm, in part, and reverse and remand, in part.

At ¶ 1.

The Court outlines the background of this case including: the landlord/tenant agreement between the parties, tenant’s failures to pay rent and communicate with landlord, tenant’s abandonment of the property, an agreement between the parties regarding tenant’s personal property, tenant’s counterclaims for wrongful eviction and other violations, and tenant’s bankruptcy which resolved landlord’s affirmative claims.

At ¶¶ 2-12.

After trial, the court ruled in favor of BHI on all of the counterclaims. First, the trial court concluded that several of Tenant’s claims failed because he had abandoned the property. Second, the trial court determined that Tenant could not recover on his personal property claims because he left the property at the restaurant by agreement and the personal property was later attached. Third, while noting that Tenant did not comply with rule 26(a)(1) of the Utah Rules of Civil Procedure requiring the disclosure of his damages evidence, the court determined that even if the evidence were considered, it did not show that Tenant had suffered damages. Tenant filed a timely appeal of the trial court’s decision.

At ¶ 12.

Abandonment

Tenant first challenges the trial court’s conclusion that he abandoned the leased premises. The Utah Code defines the circumstances under which abandonment will be presumed. See Utah Code Ann. § 78B-6-815 (LexisNexis 2012). . . . “Common-law abandonment depends on the intent of the party accused of the act.” Aris I, 2005 UT App 326, ¶ 15. “The determination of intent is a question of fact, which will only be reversed if the district court’s finding is clearly erroneous.” Id.

At ¶ 13.

Tenant first challenges the trial court’s factual findings supporting the conclusion that he had abandoned the premises. The Court reviews the trial court’s findings and determines that they are “not clearly erroneous.”

At ¶¶ 17-23.

The Utah Code provides that abandonment is presumed if

[t]he tenant has not notified the owner that he or she will be absent from the premises, and the tenant fails to pay rent within [fifteen] days after the due date, and there is no reasonable evidence other than the presence of the tenant’s personal property that the tenant is occupying the premises.

Utah Code Ann. § 78B-6-815(1) (LexisNexis 2012). Accordingly, Tenant is presumed to have abandoned the premises if (a) he did not notify BHI that he would be absent from the premises, (b) he failed to pay rent within fifteen days, and (c) there is no reasonable evidence other than the presence of his personal property that Tenant is occupying the premises. See id.  Where the statutory factors are established, the intent to abandon is presumed. See id. Here, the trial court determined that these factors were met.

At ¶ 24.

The Court reviews the trial court’s findings and concludes that the trial court did not  exceed its discretion in applying a presumption that Tenant had abandoned the premises.

At ¶ 25.

The Court distinguishes the facts in this case from the facts in Aris I, 2005 UT App 326, 121 P.3d 24, aff’d, 2006 UT 45, 143 P.3d 278.

At ¶¶ 26-27.

Tenant further argues that abandonment can be found only in situations in which the tenant has an intent to abandon the premises. Intent is an element of common law abandonment. . . . Because Tenant is presumed to have abandoned the premises under Utah law, his intent is relevant only to rebut that statutory presumption.

At ¶ 28.

Attachment & Conversion

Third, Tenant argues that the trial court erred in failing to determine that BHI wrongfully attached and converted his personal property. The authority to grant a writ of attachment is governed by the Utah Rules of Civil Procedure. See Utah R. Civ. P. 64; id. R. 64A; id. R. 64C. . . .

At ¶ 15.

Tenant next argues that the trial court erred in ruling against him on his claims for wrongful conversion and attachment. “A 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.” Fibro Trust, Inc. v. Brahman Fin., Inc., 1999 UT 13, ¶ 20, 974 P.2d 288 (citation and internal quotation marks omitted). A basic requirement of conversion is “[t]hat there be a wrongful exercise of control over personal property in violation of the rights of its owner.” Frisco Joes, Inc. v. Peay, 558 P.2d 1327, 1330 (Utah 1977).

At ¶ 30.

The court reviews the testimony at the trial and rejects Tenant’s challenge to the trial court’s factual findings regarding the initial agreement to leave the personal property on the premises.

At ¶ 31-33.

With respect to wrongful attachment, Tenant argues that he was not given notice or an opportunity to be heard before the writ was granted. Tenant therefore contends that “the writ . . . expired because there was never a hearing” and that “[n]o one bothered to determine whether any of the property seized pursuant to the attachment included exempt property.” The trial court acknowledged that “both [Tenant] and the Court made mistakes in the attachment proceedings.” However, the trial court overlooked these deficiencies on the ground that Tenant “should have asked for the writ to be set aside, which was not done until trial.

At ¶ 34.

The  issuance  of  prejudgment  writs  of  attachment  is governed by rules 64, 64A, and 64C of the Utah Rules of Civil Procedure. See Utah R. Civ. P. 64; id. R. 64A; id. R. 64C. Although rule 64 provides that “[a]t any time before notice of sale of the property or before the property is delivered to the plaintiff, the defendant may file a motion to discharge the writ on the ground that the writ was wrongfully obtained,” such a motion was not necessary here. See id. R. 64(f)(1). Rule 64A provides that

[i]f a writ is issued without notice to the defendant and an opportunity to be heard, . . . the writ and the order authorizing the writ shall . . . expire [ten] days after issuance unless the court establishes an earlier expiration date, the defendant consents that the order and writ be extended or the court extends the order and writ after hearing.

Id. R. 64A(i)(5). The writ of attachment here was issued on April 3, 2008, and it was never extended by the court after hearing or by Tenant’s consent. As a result, it expired ten days after it was issued by the court. . . .

At ¶ 35.

In February 2009, almost a year after the writ of attachment had expired by its terms, Tenant asked BHI to return his personal property. BHI refused to release the property, instructing Tenant to seek redress from the trial court. However, the plain language of rule 64A obviates any obligation for Tenant to challenge the writ, instead providing that it “shall . . . expire [in ten] days” unless extended by consent or an order of the court after hearing. See Utah R. Civ. P. 64A(i)(5). At the time of the February 2009 request for its return, BHI was holding Tenant’s personal property only by agreement. Tenant withdrew his agreement in February 2009, yet BHI refused to return the personal property. We agree with Tenant that the failure to return the personal property was wrongful.

At ¶ 36..

The trial court provisionally determined the value of the personal property at a little more than $1,500. However, it also found that BHI had filed a notice of claim in the bankruptcy proceeding “for more than $65,000.00.” At trial, counsel stipulated that, in the event that Tenant prevailed on his counterclaims, the trial court could not offset any damages due to Tenant against the amount due  to  BHI  because that  issue  should be  left  to  the bankruptcy court. As a result, we remand to the trial court to enter judgment in favor of Tenant for the value of the personal property and stay enforcement thereof pending further proceedings in the bankruptcy court. . . .

At ¶ 37

CONCLUSION

Tenant has not shown that the findings of fact are clearly erroneous, and the trial court did not exceed its discretion in ruling that under the present facts, Tenant abandoned the premises. Accordingly, the trial court properly dismissed Tenant’s claims for forcible entry, unlawful detainer, and wrongful eviction. The trial court  erred  in  denying  Tenant’s  wrongful  conversion  and attachment claims because the writ of attachment had expired by the time Tenant withdrew his consent to BHI’s possession of the personal property. We therefore remand to the trial court for entry of judgment in favor of Tenant for the value of that personal property, which the trial court found was approximately $1,500, with the understanding that this amount will be offset against any amounts deemed owing to BHI in the bankruptcy proceedings.

At ¶ 38.

State v. Martinez, 2013 UT App 154, No. 20120297-CA (June 20, 2013)

*Affirming Judge W. Brent West

ISSUE: Self-Defense Jury Instruction Burden of Proof

Judge Christiansen,

Defendant Angelo Noe Martinez appeals his convictions for aggravated assault and distribution of a controlled substance in a drug-free zone. We affirm.

At ¶ 1

On appeal, Defendant asserts that the trial court failed to adequately instruct the jury on his claim of self-defense. . . . Even though the trial court did instruct the jury on the law of self-defense, Defendant claims that the court’s instructions were flawed because they did not properly explain the State’s and Defendant’s relative burdens of proof. See id. (“Once the jury has been instructed on self-defense, the [State] has the burden to prove beyond a reasonable doubt that the [defendant did] . . . not [act] in self-defense.” (alterations and omission in original) (citation and internal quotation marks omitted)). . . .

At ¶ 3.

The [trial court’s] relevant jury instruction included the following sentence: “A person is not justified in using force . . . if the person is attempting to commit, committing, or fleeing after the commission or attempted commission of a felony.” See also Utah Code Ann. § 76‐2‐ 402(2)(a)(ii) (LexisNexis 2012).

At ¶ 2.

At the outset, we note, and Defendant acknowledges, that he did not preserve his objection to the jury instructions before the trial court. Therefore, we must review his claim for plain error. See Utah R. Crim P. 19(e) . . . A  party seeking reversal under the plain error standard must prove that “‘[1] [a]n error exists; [2] the error should have been obvious to the trial court; and [3] the error is harmful.’” See State v. Powell, 2007 UT 9, ¶ 18, 154 P.3d 788 (alterations in original) (quoting State v. Dunn, 850 P.2d 1201, 1208 (Utah 1993)). A party must prove all three prongs to successfully mount a plain error challenge. See State v. Dean,  2004  UT  63,  ¶  15,  95  P.3d  276  . . .  Because resolution of this case turns on the third prong, we limit our analysis to a discussion of harmfulness. To establish that an error is harmful, a party must demonstrate that, “absent the error, there is a reasonable likelihood of a more favorable outcome.” Lee, 2006 UT 5, ¶ 26 (citation and internal quotation marks omitted).

At ¶ 4.

Additionally, Defendant argues for the first time on appeal that his convictions should be overturned as a result of the ineffective assistance of his trial counsel. See Strickland v. Washington, 466 U.S. 668, 686 (1984). Defendant argues that his trial counsel’s failure to request specific instructions regarding the burdens of proof for a claim of self-defense was objectively deficient performance and prejudiced his defense by seriously undermining the fairness of his trial. According to Defendant, “it seems likely that with proper instructions, the jury would have considered  self-defense to create a reasonable doubt as to [Defendant’s] guilt.” We review this claim as a matter of law. See State v. Sellers, 2011 UT App 38, ¶ 9, 248 P.3d 70. To warrant reversal, Defendant must first “demonstrate that specific acts or omissions of counsel fell below an objective standard of reasonableness.” See Powell, 2007 UT 9, ¶ 24. Second, Defendant must show that this deficient performance prejudiced his defense. See Strickland, 466 U.S. at 687. Prejudice is established by showing “that  there  is  a  reasonable  probability  that,  but  for counsel’s unprofessional errors, the result of the proceeding would have been different.” Powell, 2007 UT 9, ¶ 45 (citation and internal quotation marks omitted). Thus, the prejudice test for ineffective assistance of counsel claims is equivalent to the harmfulness test for plain error. See Dunn, 850 P.2d at 1225.

At ¶ 5.

We conclude that Defendant’s claims of plain error and ineffective assistance fail because he cannot demonstrate that the instructions given to the jury were harmful or that his counsel’s failure to request proper instructions resulted in prejudice. Because the analysis is equivalent on both claims, we limit our analysis to whether providing the jury with an instruction setting forth the appropriate burdens of proof would have created a reasonable probability, in this instance, that Defendant would have been acquitted.

At ¶ 6.

With respect to Defendant’s drug conviction, we determine that even if the jury instructions had been prepared exactly to Defendant’s specification, those instructions could not have affected the jury’s decision on the drug count because self-defense is not a valid defense to the attempted commission of a drug offense. See id. § 76-2-401(1) (“Conduct which is justified is a defense to prosecution for any offense based on the conduct.” (emphasis added)). Here, the conduct for which Defendant claims self-defense was his stabbing of Torres. Yet the State’s prosecution of the drug offense was based on Defendant’s arrangement to sell drugs. Thus, Defendant is statutorily precluded from claiming self-defense for the drug offense. Because Defendant does not challenge his drug conviction on any other grounds, we affirm the jury’s verdict on this count.

At ¶ 8.

As to the aggravated assault charge, Defendant has never disputed that he stabbed Torres. Indeed, his entire defense hinged on his claim of self-defense, which necessarily involved admission of the underlying assault. However, because we affirm Defendant’s conviction of the felony drug offense, Defendant’s use of force against Torres cannot be justified because it occurred during the drug transaction. See id. § 76-2-402(2)(a)(ii). Accordingly, even if the jury instructions had been written as he preferred, there is not a reasonable probability that Defendant would have been acquitted of the aggravated assault.

At ¶ 9.

Defendant is correct in asserting that a proper self-defense jury instruction should inform the jury about the burdens of proof necessary for self-defense to be considered. However, Defendant could not have successfully raised such a defense in this case. That is, Defendant’s use of force against Torres cannot be justified here because the stabbing occurred during the commission of a felony. Therefore, Defendant cannot demonstrate that the trial court’s failure to provide jury instructions setting forth the appropriate burdens of proof was harmful under the plain error standard. Nor can Defendant demonstrate that his trial counsel’s failure to request such instructions prejudiced him, resulting in ineffective assistance at trial. Accordingly, we decline to reverse Defendant’s convictions.

At ¶ 10.

Orem City v. Santos, 2013 UT App 155, No. 20120316-CA (June 20, 2013)

ISSUE: Was the Interrogation and Detention of a Shoplifting Suspect by Costco  Employees a State Action, Subject to Constraints of Fourth and Fifth Amendments

Judge Christiansen,

Defendant Elba Virginia Santos appeals her conviction for retail theft, a class B misdemeanor. See Utah Code Ann. § 76‐6‐602(1) (LexisNexis 2012). Santos argues that the trial court erred in not suppressing her written and verbal statements, which were obtained by Costco employees during a shoplifting investigation. We affirm.

At ¶ 1.

The Court outlines the background of the case, including defendant’s behavior in Costco, Costco employees’ actions, and the subsequent arrest for retail theft.

At ¶¶ 2-5.       .      

Santos argues that the Costco employees with whom Santos interacted were engaged in state action during her interrogation and detention. Thus, she contends, as state actors, the Costco employees’ interrogation and detention were subject to the constraints of the Fourth and Fifth Amendments to the United States Constitution. See U.S. Const. amends. IV, V. As “[t]he party objecting to the evidence,” Santos “has the burden of establishing the agency relationship,” i.e., that “a private individual acts as an agent of the government in conducting a search.” State v. Koury, 824 P.2d 474, 477 (Utah Ct. App. 1991).

At ¶ 6.     

When a private party acts as an agent of a government authority, any search performed by that private party becomes subject to state and federal constitutional protections. See State v. Watts, 750 P.2d 1219, 1221 (Utah 1988). To determine whether a private party has acted as an agent of the government, our supreme court has adopted the two-part test set forth by the Ninth Circuit Court of Appeals in United States v. Walther, 652 F.2d 788 (9th Cir. 1981). See Watts, 750 P.2d at 1221–22; Koury, 824 P.2d at 477.

At ¶ 7.     

To satisfy the Walther test, “[t]he government must be involved either directly as a participant or indirectly as an encourager of the private citizen’s actions before we deem the citizen to be an instrument of the state.” Walther, 652 F.2d at 791. To determine the extent of the government’s involvement, we first consider “whether the government knew of or acquiesced [in] the search,” and then, second, we “consider the person’s intent and purpose in conducting the search and decide whether the person was acting in the person’s own interest or to further law enforcement.” Koury, 824 P.2d at 477; Watts, 750 P.2d at 1221–22. More precisely, the party claiming governmental action by a private party must show that the private party “‘acted with the intent to assist the government in its investigatory or administrative purposes and not for an independent purpose.’” State v. Ellingsworth, 966 P.2d 1220, 1223 (Utah Ct. App. 1998) (quoting United States v. Attson, 900 F.2d 1427, 1432–33 (9th Cir. 1990)).

At ¶ 8.      

In analyzing Santos’s case under the Walther test, and to determine whether the government knew of or acquiesced in the search, we first look to the OCPD’s involvement in the questioning and detention of Santos by the Costco employees. Santos argues that the State, and specifically Utah law, authorizes and encourages these employees to act on the State’s behalf. She points to Utah Code section 77-7-12(1), which provides,

A peace officer, merchant, or merchant’s employee, servant, or agent who has reasonable grounds to believe that goods held or displayed for sale by the merchant have been taken by a person with intent to steal may, for the purpose of investigating the unlawful act and attempting to effect a recovery of the goods, detain the person in a reasonable manner for a reasonable length of time.

Utah Code Ann. § 77-7-12(1) (LexisNexis 2012).

At ¶ 9.

In its denial of Santos’s motion to suppress, the trial court relied on a similar statute, Utah Code section 76-6-603, to conclude that the Costco employees had probable cause to reasonably detain Santos. See Utah Code Ann. § 76-6-603(1)(a)–(e) (LexisNexis 2012)… . In her motion to suppress, Santos did not challenge the propriety of her detention under section 76-6-603 or section 77-7-12(1), as the trial court’s decision would seem to indicate. Rather, she argued below, as she does on appeal, that the Costco employees were engaged in state  action,  which  implicated  the  protections  of  the  Fourth Amendment. We affirm the trial court’s denial of Santos’s motion to suppress on different grounds. . . .

At  ¶ 9, n. 2.    

Santos argues that the government knew of and acquiesced in the Costco employees’ questioning and detention because the statute provides private employees with “quasi-law enforcement status.” In support of this proposition, Santos cites Romanski v. Detroit Entertainment, LLC, 428 F.3d 629 (6th Cir. 2005), which stated, “Where private security guards are endowed by law with plenary police powers such that they are de facto police officers, they may qualify as state actors . . . .” Id. at 637. Santos also relies on People v. Zelinski, 594 P.2d 1000 (Cal. 1979), which held that a search conducted by store employees was not conduct “of . . . private citizen[s] acting in a purely private capacity.” Id. at 1006. The Zelinski court explained that “[a]lthough the search exceeded lawful authority, it was nevertheless an integral part of the exercise of sovereignty allowed by the state to private citizens.” Id.

At ¶ 10.

We find these cases inapposite. In Romanski, Michigan law endowed the private security officers with plenary power to make arrests. See Romanski, 428 F.3d at 638–39. In contrast, Utah Code section 76-6-603 and section 77-7-12(1) provide merchants with the authority only to detain a retail theft suspect. See Utah Code Ann. § 76-6-603 (LexisNexis 2012); id. § 77-7-12(1). In Zelinski, employees searched a suspect’s person and effects for goods that were not in plain view, which overstepped the bounds of the authority prescribed in the California statute authorizing a merchant’s privilege. See Zelinski, 594 P.2d at 1003–04.3

At ¶ 11.

More to the point, as explained above, we analyze this issue under the two-part Walther test. See supra ¶¶ 8–9. Walther explained, “Mere governmental authorization of a particular type of private search in the absence of more active participation or encouragement is . . . insufficient to require the application of fourth amendment standards.” United States v. Walther, 652 F.2d 788, 792 (9th Cir. 1981). Moreover, in State v. Watts, 750 P.2d 1219 (Utah 1988), the supreme court held that although the police had previously told an informant that they might dismiss their criminal case against him if he assisted with their investigation of the defendant, “the ‘offer’ given to the informant was ‘far too vague and general to constitute governmental knowledge’”  of the informant’s search of the defendant’s premises. Id. at 1223 (quoting United States v. Bazan, 807 F.2d 1200, 1203 (5th Cir. 1986)). Thus, the “[police] did not in any sense know of or acquiesce in the informant’s conduct.” Id.

At ¶ 12.

Similarly, although Utah law authorizes a merchant’s employee to reasonably detain a person suspected of theft, this legal authorization does not equate to the government’s knowledge of or acquiescence in the search that occurred here. See Utah Code Ann. § 76-6-603; id. § 77-7-12(1). Santos does not point to any evidence in the record, nor did the trial court find, that the OCPD knew of or acquiesced in the Costco employees’ questioning of Santos regarding her suspected shoplifting, at least prior to the time the Costco employees called the OCPD to inform them of Santos’s detention. Thus, there is no indication that the OCPD had knowledge of or acquiesced in the Costco employees’ investigatory conduct.

At ¶ 13.

Furthermore, to prevail on the second element of the Walther test, a defendant must show that the private party conducting the search or seizure had “‘no other purpose but to aid the government’s investigatory or administrative functions.’” State v. Ellingsworth, 966 P.2d 1220, 1223 (Utah Ct. App. 1998) (quoting Wallace v. Batavia Sch. Dist. 101, 68 F.3d 1010, 1013 (7th Cir.1995)) . . .

At ¶ 14.

In support of her claim that the primary purpose for the Costco employees’ investigation was to aid prosecution of suspected shoplifters, Santos refers only to the Costco employees’ testimonies that they routinely require suspected shoplifters to complete  Costco’s  investigation forms to promote criminal prosecution of those suspects. Although Santos makes much of this testimony, she does not refer to the employees’ other testimony as to their reasons for requiring suspected shoplifters to complete those forms. For example, the employees’ testimonies reveal that Costco also has business purposes for using the forms, such as for training, record keeping, and defending potential civil lawsuits. Finally, the trial court found that the employees acted “with the primary purpose of protecting Costco assets,” and Santos does not challenge the trial court’s factual findings on appeal. See supra ¶ 5 & note 1.

At ¶ 15.

Moreover, this court has determined that a private person does not become an agent of law enforcement simply because the private person desires that someone be arrested or prosecuted. See State v. Koury, 824 P.2d 474, 478 n.2 (Utah Ct. App. 1991). In this case, the Costco employees who interacted with Santos certainly may have had an interest in the successful prosecution of Santos for shoplifting. But we cannot say that those employees did not also have a separate interest in protecting the store’s assets. Simply because the Costco employees ultimately participated in Santos’s eventual criminal prosecution does not cancel out the legitimate business reasons for their investigation. Therefore, the court did not err in concluding that the employees were protecting Costco assets.

At ¶ 16.

Pentskiff Interpreting v. Department of Health, 2013 UT App 156, Case No. 20120064-CA (June 20, 2013)

ISSUE: Jurisdiction of Medicaid Reviews.

Justice Christiansen,

Pentskiff Interpreting Services (Pentskiff) seeks judicial review of a decision by the Utah Department of Health, Division of Medicaid and Health Financing Office of Formal Hearings (the Division) denying Pentskiff’s request for a hearing due to a lack of jurisdiction. We decline to disturb the Division’s decision.

At ¶ 1

The Court outlines the facts of the case, specifically, Pentskiff’s claim that Healthy U has not paid them in full for 83 instances of interpreting service, Pentskiff’s attempt to obtain relief by filing a request for hearing with the Department of Health, and the Department of Health’s denial of the hearing due to lack of jurisdiction.

At ¶ 2.

Pentskiff challenges the Division’s decision, claiming it misapplied the relevant law and the Division’s own administrative rules in determining that it lacked jurisdiction to hear Pentskiff’s claims. . . .  Pentskiff also argues that the Division inconsistently interpreted and applied its amended rules in a way that substantially prejudiced Pentskiff. “Claims that an agency decision is contrary to the agency’s prior practice are . . . reviewed to determine if an inconsistency is justified by a fair and rational basis.” Benson v. Peace Officer Standards & Training Council, 2011 UT App 220, ¶ 11, 261 P.3d 643 (omission in original) (citation and internal quotation marks omitted).

At ¶ 3.

Federal law and regulations require that a state fair-hearing process be available for Medicaid enrollees whose claims for assistance are denied or not promptly acted upon. . . .  Additionally, federal regulation requires “Medicaid managed care organizations to establish internal grievance procedures under which Medicaid enrollees, or providers acting on their behalf, may challenge the denial of coverage of, or payment for, medical assistance.” 42 C.F.R. § 438.400(a)(3). In order for providers and their subcontractors to access the fair hearing process and grievance procedures, they must be “acting on behalf of the enrollee and with the enrollee’s written consent.” Id. § 438.402(b)(1)(ii).

At ¶ 4.

The Division is responsible for “implementing, organizing, and maintaining [Utah’s] Medicaid program.” Utah Code Ann. § 26-18-2.1 (LexisNexis 2007). Consistent with the federal laws and regulations cited above, the Utah Administrative Code provides a fair-hearing process to Medicaid enrollees and their providers. See Utah Admin. Code R410-14-3, -4 (LexisNexis 2012). In order for a managed care provider to access the fair-hearing process, it must be “acting solely on behalf of the client [or Medicaid enrollee].” Id. R410-14-3(2)(i). Otherwise, the provider “has no right to a hearing with [the Division].” Id. Also, the Division “may not grant a hearing to a managed care provider to dispute the terms of a contract or the payment of a claim.” Id. R410-14-4(5).

At ¶ 5.

The Division construed these federal and state laws and regulations to mean that “providers [like Pentskiff] under contract with managed care organizations who are not acting solely on behalf of the client and [who] do not have written consent from the client to act on their behalf,” are not entitled to a hearing before the Division. The Division also noted, “This dispute is about payment, or non-payment, of Pentskiff’s claims by Healthy U. It falls directly within the  language of the rule, and [the Division] is therefore prohibited from granting [Pentskiff] a hearing.” Accordingly, the Division ruled that Pentskiff “is not entitled to a hearing from [the Division] to dispute the non-payment  or under payment of its claims against Healthy U.”

At ¶ 6.

We determine the Division’s interpretation of the relevant law and rules with respect to its jurisdiction is correct. See Darvish, 2012 UT App 68, ¶ 16. In requesting a hearing before the Division, Pentskiff was not acting solely on behalf of a Medicaid enrollee and with that enrollee’s written consent. Rather, Pentskiff was seeking payment for interpretation services it provided to Healthy U. The fair-hearing process is open to enrollees who are “adversely affected by any action or inaction” of the Division, see Utah Admin. Code R410-14-2(2)(b) (LexisNexis 2012), resulting in a “denial of payment for medical assistance,” see id. R410-14-3(2)(d). Here, there is no claim by Pentskiff that the Division denied payment for an enrollee’s medical assistance. Pentskiff’s intent in requesting a hearing before the Division was to resolve its own dispute with Healthy U. Because Pentskiff was not acting exclusively on behalf of an enrollee, it is not entitled to a hearing before the Division.

At ¶ 7.

The Division acknowledges that it previously allowed managed care providers and their subcontractors, including Pentskiff, to use the fair-hearing process to litigate contract and payment claims. However, the Division discontinued this practice following a change to its rules on April 25, 2011. Pentskiff argues that it is entitled to relief because the Division’s application of its amended rules to this case has resulted in substantial prejudice to Pentskiff. See Utah Code Ann. § 63G-4-403(4)(h)(iii) (LexisNexis 2011) . . . The burden of proving a prima facie case of substantial prejudice by a preponderance of the evidence is on the party seeking judicial review. See Benson v. Peace Officer Standards & Training Council, 2011 UT App 220, ¶ 24, 261 P.3d 643.

At ¶ 9.

Other than the denial of its hearing request, Pentskiff has not identified precisely how it was substantially prejudiced by the Division’s departure from its prior practice. Other forums are available to Pentskiff in which it can fully litigate its dispute with Healthy U. Indeed, the Division even advised Pentskiff to take “its claims to the applicable small claims or district court.” Nevertheless, even if Pentskiff were to demonstrate substantial prejudice, we conclude that the change in the Division’s practice was fair and rational. . . .

At ¶ 10

Pentskiff Interpreting v. Department of Health, 2013 UT App 157, Case No. 201108240-CA (June 20, 2013)

ISSUE: Finality of Agency Actions.

Justice Christiansen,

Pentskiff Interpreting Services (Pentskiff) seeks review of a decision by the Utah Department of Health, Division of Medicaid and Health Financing Office of Formal Hearings (the Division) that it lacked jurisdiction to review Pentskiff’s claims against Healthy U Managed Health Plan (Healthy U). We conclude that Pentskiff’s petitions to this court were filed prior to any final agency action by the Division and are therefore premature.

At ¶ 1

The Court reviews the facts of the case.

At ¶ 2–3.

“As a threshold matter, we must determine whether we have jurisdiction” to review Pentskiff’s claims. See Maverik Country Stores, Inc. v. Industrial Comm’n, 860 P.2d 944, 947 (Utah Ct. App. 1993). Pentskiff filed its petitions for judicial review after the ALJs’ decisions, but before resolution of its requests for reconsideration. Thus, we must determine if the ALJs’ decisions constitute final agency action.

At ¶ 4.

Utah Code section 78A-4-103(2) grants judicial review of “a final order or decree resulting from . . . a formal adjudicative proceeding of a state agency.” Utah Code Ann. § 78A-4-103(2)(a)(i) (LexisNexis 2012) (emphasis added). Additionally, the Utah Administrative Procedure Act provides that “the Court of Appeals has jurisdiction to review all final agency action resulting from formal adjudicative proceedings.” Id. § 63G-4-403(1) (LexisNexis 2011) (emphasis added); see also id. § 63G-4-401(1) (“A party aggrieved may obtain judicial review of final agency action . . . .” (emphasis added)).

At ¶ 5.

An agency action is considered final when it meets a three-part inquiry:

“(1) Has administrative decision making reached a stage where judicial review will not disrupt the orderly process of adjudication?;

(2) Have rights or obligations been determined or will legal consequences flow from the agency action?; and

(3) Is the agency action, in whole or in part, not preliminary, preparatory, procedural, or intermediate with regard to subsequent agency action?”

Heber Light & Power Co. v. Utah Pub. Serv. Comm’n, 2010 UT 27, ¶ 7, 231 P.3d 1203 (quoting Union Pac. R.R. Co. v. Utah State Tax Comm’n, 2000 UT 40, ¶ 16, 999 P.2d 17). “All three questions must be answered in the affirmative for an order to qualify as final agency action.” Id.

At ¶ 6.

Pentskiff argues that the “request for reconsideration is not a prerequisite for seeking a judicial review which means that the judicial review can be done independently from reconsideration.” Pentskiff relies on Utah Code section 63G-4-302(1)(b), which provides, “Unless otherwise provided by statute, the filing of the request [for reconsideration] is not a prerequisite for seeking judicial review of the order.” See id. § 63G-4-302(1)(b). Though it is true that a request for reconsideration is not a prerequisite for judicial review, Pentskiff mistakenly construes this to mean that judicial review and reconsideration may be pursued at the same time. “Although the step of seeking reconsideration is optional, once reconsideration is initiated, it must be followed through before seeking judicial review.” Rathmann v. Labor Comm’n, 2011 UT App 110, ¶ 3, 252 P.3d 868 (per curiam) (citing Maverik Country Stores, Inc. v. Industrial Comm’n, 860 P.2d 944, 951 (Utah Ct. App. 1993)). Furthermore, we have noted that the availability of a request for reconsideration “does not provide a petitioner the opportunity to pursue both routes concurrently.” See Maverik, 860 P.2d at 951 n.11. Rather, “a petitioner who decides to file a request for reconsideration no longer has a ‘final agency action’ from which to appeal. The petitioner must wait until the request is either responded to in writing or denied by operation of law.” Id. Thus, Pentskiff was obligated to wait to seek review of the ALJs’ decisions until after the deputy director resolved its requests for reconsideration.

At ¶ 10.

Holladay v. Storey, 2013 UT App 158, No. 20090824-CA, (June 20, 2013)

ISSUE: Backdating an Expelled Member of an LLC's interest in the LLC, Enforcement of Mediation Agreements, Punitive Damages, & Attorney Fees

Judge Christiansen,

This appeal and cross-appeal arise from a bench trial ruling that removed David A. Storey as manager of Castlerock Inn, LLC (the Company), expelled him as a member of the Company, and backdated his expulsion from and the valuation of his interest in the Company. We affirm in part, reverse in part, and remand for further proceedings.

At ¶ 1.

The Court reviews the facts of the case including: the formation of the Company by Storey and Appellees and the Amended Operating Agreement (“AOA”); the trial court’s findings regarding Storey’s mismanagement of company assets; and the trial court’s order expelling Storey from ownership in the company and backdating the value of his interest in the company, for purposes of dissolution, to the date of Storey mismanagement.

At ¶ 2–8.

Breach of Fiduciary Duty

Storey first argues that the trial court erroneously based its conclusion that he breached a fiduciary duty owed to Appellees, which justified his removal and expulsion from the Company, upon conduct that took place prior to the adoption of the AOA and that Appellees thus “forgave” any misconduct. As a result, Storey argues that Appellees failed to state a claim for breach of fiduciary duty. We decline to consider this issue because Storey failed to preserve it before the trial court.

At ¶ 9.

Backdating

The primary issue on appeal is whether the trial court erred in setting the effective date for Storey’s expulsion from the Company and for the valuation of Storey’s interest in the Company as December 31, 2005. Storey argues that the effective date for both expulsion and valuation should be the date of the trial court’s determination at trial. Appellees argue that the effective date for the valuation of Storey’s interest should be no later than November 2003, when Appellees filed a counterclaim against Storey in which they sought Storey’s expulsion as a member. “[B]ecause the parties do not challenge the trial court’s lengthy findings of fact, we accept these findings as true in our analysis on appeal.” See d’Elia v. Rice Dev., Inc., 2006 UT App 416, ¶ 24, 147 P.3d 515.

At ¶ 15.

The [Utah Revised Limited Liability Company] Act does not explicitly provide a method for a judicial determination of the date of an expulsion. Nor has the legislature specifically addressed whether a court may retroactively apply an expulsion date. The provision that provides the most guidance in determining whether the trial court was correct in retroactively affixing the date for Storey’s expulsion from the Company is Utah Code section 48-2c-710, which states,

A member of a company may be expelled:

(1) as provided in the company’s operating agreement;

(2) by unanimous vote of the other members if it is unlawful to carry on the company’s business with the member; or

(3) on application by the company or another member, by judicial determination that the member:

(a) has engaged in wrongful conduct that adversely and materially affected the company’s business;

(b) has willfully or persistently committed a material breach of the articles of organization or operating agreement or of a duty owed to the company or to the other members under Section 48-2c-807; or

(c) has engaged in conduct relating to the company’s business which makes it not reasonably practicable to carry on the business with the member.

Id. § 48-2c-710.

At ¶ 19.

The Court reviews CCD, LC v. Millsap, 2005 UT 42, ¶ 16, 116 P.3d 366, and determines that it is informative to this question.

At ¶¶ 20-22.

As Millsap instructs, although subsection 48‐2c‐710(3) “provides sparse procedural direction,” it is significant not in providing for when an expulsion occurs but rather how it occurs. See id. ¶¶ 21–22. To understand how an expulsion occurs, one must understand the purpose of the Act, which is not “to define and regulate membership” or “fix boundaries between the tenure of a member and the right to expel a member,” but instead to “regulat[e] the formation and operation of limited liability companies,” including a limited liability company’s authority to expel a member for his or her wrongful acts. See id. ¶¶ 22–23.

At ¶ 23.

The policy expressed in Millsap is exactly the policy on which the trial court relied when it backdated Storey’s expulsion to December 31, 2005, based in part on its findings that Storey engaged in mismanagement, misconduct, and dishonesty; breached his fiduciary duty; and lacked success as a manager as of that date. In choosing the date of its judicial determination for Storey’s expulsion and backdating the expulsion to December 31, 2005, the trial court focused on Storey’s conduct that prompted the expulsion. As the supreme court indicated in Millsap, if the legislature had deemed the timing considerations of voluntary secession or expulsion important enough, it would have set parameters for this in the Act. See id. ¶ 25. Instead, the objective of the Act is to allow members to seek judicial determination for an expulsion based on another member’s wrongful acts.

At ¶ 24.

For that reason, the trial court did not err in backdating Storey’s expulsion. In fact, it could have backdated Storey’s expulsion as early as 2003 based on his misconduct. Yet, the trial court also found that Appellees did not conduct themselves according to the AOA or the Act, or seek to remove Storey as a member before 2005, when they first requested a preliminary injunction. We see nothing in the AOA or the Act that precluded the trial court from backdating Storey’s expulsion; the case law supports the trial court’s discretion to do so, and the trial court’s findings support the December 31, 2005 date. We therefore affirm the trial court’s date of expulsion.

At ¶ 25.

Valuation of Storey’s Interest

Similar to its silence concerning the date of expulsion, the Act does not outline a method for determining the date of valuation of a member’s share in a limited liability company. However, section 48-2c-708 provides,

A person who is a member of a company ceases to be a member of the company and the person or the person’s successor in interest attains the status of an assignee as set forth in Section 48-2c-1102, upon the occurrence of one or more of the following events: . . .

(e) the member is expelled as a member pursuant to Section 48-2c-710 . . . .

Utah Code Ann. § 48-2c-708(1)(e) (LexisNexis 2010). Pursuant to section 48-2c-1102, “An assignment only entitles the assignee to receive, to the extent assigned, any share of profits and losses and distributions to which the assignor would be entitled.” Id. § 48-2c-1102.

At ¶ 28.

We agree with Storey that upon his expulsion he became an assignee of future distributions or contributions pursuant to Utah Code section 48-2c-708. See id. § 48-2c-708(1)(e). However, nothing in the Act, including section 48-2c-1102, dictates when an assignee’s partnership interest can or must be valued. See id. § 48-2c-1102. We do not believe that sections 48-2c-708(1)(e) and 48-2c-1102 support Storey’s contention that, because he became an assignee after being expelled, his interest should necessarily be valued up until the time of the judicial determination or judicial dissolution.

At  ¶ 29.

If the court were precluded from valuing an expelled member’s interest as of a particular date based on that member’s misconduct, it would undermine the effectiveness of the right to judicially expel a member pursuant to subsection 48-2c-710(3). See id. § 48-2c-710(3)  . . . If the court is not permitted to set the date for the valuation of the expelled member’s interest in the company to the time of the commission of misconduct that led to expulsion, then that interest could not be valued until the company is dissolved. This would mean that the expelled member would continue to benefit from profits or, likewise, to suffer any losses of the company until such time as the company dissolves. It is far more logical that the legislature intended for the expelled member to be deemed an assignee only until the court determines the amount to be paid for the expelled member’s interest in the company, because it would be pointless for that expelled member to continue as an assignee once the value of the interest is fixed. We thus reconcile sections 48-2c-708(1)(e) and 48-2c-1102 with 48-2c- 710(3) by concluding that a member becomes an assignee pursuant to section 48-2c-708(1)(e) upon expulsion but that this assignee status continues only until valuation and does not preclude the retroactive valuation of the expelled member’s interest when appropriate.

At ¶ 30.

In their cross-appeal, Appellees argue that the trial court had discretion to set this date “where equities warrant,” which should have been November 2003, when Appellees filed their counterclaim against Storey as a result of his misconduct. As the trial court indicated, it had the discretion to affix the valuation to this date based on its determination that Storey engaged in misconduct. In addition, the trial court also had discretion to affix the date based on its findings of Appellees’ conduct. The trial court entered specific factual findings that Appellees did not act pursuant to the terms of the Act or the AOA to remove Storey as a member of the Company until 2005. We agree that the trial court correctly determined that it had discretion to set the valuation date based on the equities in the case. Because the trial court’s findings support the December 31, 2005 date, we further conclude that the trial court did not exceed that discretion in determining the valuation date on this basis, and we affirm the trial court’s date for valuation of Storey’s interest.

At ¶ 33.

Finally, Storey challenges the trial court’s failure to account for disbursements of income in its award to Storey for 2003 through 2005. Storey fails to demonstrate where he preserved this issue, as he is required to do. . . . [W]e therefore decline to address it.

At ¶ 34.

Interpretation of the AOA

Storey argues that the trial court erroneously interpreted the AOA by creating nonexistent provisions that placed Appellees in better positions and Storey in a worse position, thereby violating Storey’s right to freely contract. Storey’s principal complaint is that the AOA vests Storey with a one-third interest in the Company, yet he was ultimately awarded only 6.39% of the Company’s value. Storey explains that because the AOA is silent as to the interest a member retains upon voluntary withdrawal or expulsion, the trial court’s determination should have been dictated by section 48-2c-708 of the Act, which provides for his assignee status and allows his interest to continue to accrue. Appellees agree that the Act governs here but argue that section 48-2c-708 applies only in the absence of expulsion or dissolution.

At ¶ 35.

Storey’s argument is dependent upon our acceptance of the position that he continued to be entitled to assignee status beyond the trial court’s valuation date. As we explained above, we agree that Storey became an assignee upon his expulsion, see Utah Code Ann. § 48-2c-708(1)(e) (LexisNexis 2010), but that assignee status did not preclude the trial court from affixing a certain date as of which to value Storey’s interest in the Company. Once that value was set, Storey was no longer entitled to share in the Company’s profits. Because we affirm the trial court’s setting of the date of valuation, we affirm the trial court’s calculation of the value of Storey’s assignee interest as of that date.

At ¶ 36.

Adoption of Interim Mediation Agreement

We determine that the trial court correctly enforced the mediation agreement because by the time of trial, Appellees had prepared to present evidence based only on the agreement. Furthermore, on appeal, Storey argues only that the trial court should have relieved him from the agreement to prevent an injustice. However, Storey has not demonstrated that binding him to the stipulation would be a manifest injustice, particularly in light of the prejudice Appellees would suffer as a result of Storey’s late challenge to the stipulation on the first day of trial. This is insufficient cause to overcome the principle that “[o]rdinarily, courts are bound by stipulations between parties.” Yeargin, Inc. v. Auditing Div. of the Utah State Tax Comm’n, 2001 UT 11, ¶ 19, 20 P.3d 287 (alteration in original) (citation and internal quotation marks omitted).

At ¶ 38.

Storey also contends that the trial court miscalculated various aspects of his interest. The Court rules that Storey failed to preserve this issue for appeal because he did not notify the trial court of these alleged inaccuracies.

At ¶ 39.

To the extent that Storey also challenges the trial court’s calculations based on the trial court’s alleged inadequate findings of fact, he has failed to demonstrate that he preserved the issue by raising it to the trial court.

At ¶ 40.

Prejudgment Interest

Storey’s final claim is that the trial court erred in failing to award him prejudgment interest on the value of his interest in the Company. Again, as Appellees point out, Storey fails to indicate where in the record he preserved his claim. Storey argues that he was not required to preserve this issue because “‘the interest issue is injected by law into every action for the payment of past due money.’” See Crowley v. Black, 2007 UT App 245, ¶ 10, 167 P.3d 1087 (quoting Fitzgerald v. Critchfield, 744 P.2d 301, 304 (Utah Ct. App. 1987)). We disagree.

At ¶ 41.

Storey relies on cases in which the trial court included prejudgment interest without a specific request from the prevailing party. . . .  

However, none of the cases relied on by Storey involved a new claim for prejudgment interest on appeal. Storey never requested that the trial court award him prejudgment interest, nor did the trial court award prejudgment interest sua sponte. In order to preserve his issue for appeal, Storey should have requested prejudgment interest below or otherwise brought the issue to the trial court’s attention. Because Storey did not preserve this issue, we do not address it. See 438 Main St., 2004 UT 72, ¶ 56.

At ¶ 42-43.

Punitive Damages

Appellees claim that the trial court erroneously failed to grant their request for punitive damages where the trial court found that Storey’s conduct was egregious and that Storey had breached his fiduciary duty to other members of the Company. The trial court denied Appellees’ claim for punitive damages, stating that, if awarded, they would serve as a “double punishment” because the trial court had already retroactively set the date for expulsion and valuation of Storey’s interest. Appellees argue that this reasoning is flawed because the retroactive valuation constituted compensatory damages that were intended to make Appellees whole.

At ¶ 44.

We previously explained that the trial court properly weighed the parties’ respective conduct when retroactively assigning the expulsion date; however, we agree with Appellees that the trial court’s retroactive valuation of Storey’s interest served the purpose of compensating Appellees. Additionally, “a claim for breach of fiduciary duty is an independent tort . . . and can serve as the basis for punitive damages.” Norman v. Arnold, 2002 UT 81, ¶ 35, 57 P.3d 997. The trial court therefore exceeded its discretion by denying punitive damages on this basis. We thus reverse the trial court’s denial of punitive damages and remand for the trial court to evaluate whether to award punitive damages. See Utah Code Ann. § 78B-8-201(1)(a)

At ¶ 45.

Attorney Fees of Breach of Fiduciary Duty Claim

Appellees claim that the trial court erroneously failed to grant a request for attorney fees at the conclusion of the trial. The trial court previously awarded attorney fees paid for by the Company, excluding those for Appellees’ breach of fiduciary duty claim. With regard to Appellees’ breach of fiduciary duty claim, the trial court denied attorney fees “as a matter of law because this is not a tort action.” Nonetheless the trial court stated that, “if they were available . . . they would be limited to the amount applicable to the efforts to remove Mr. Storey in his role as a manager and not all of the attorney[] fees expended in this action.”

At ¶ 46.

Appellees do not assert that either a statute or the AOA provide for attorney fees. . . .  Instead, Appellees argue that they are entitled to attorney fees because they successfully proved that Storey breached his fiduciary duty. They rely on the principle that “breach of a fiduciary obligation is a well-established exception to the American rule precluding attorney fees in tort cases generally.” Id.

At ¶ 47.

We agree with Appellees that their fiduciary duty claim sounded in tort, that they prevailed, and that attorney fees were thus available as a matter of law. See id. Here, Storey’s fiduciary duties arose not only out of the AOA but also out of independent duties as a limited liability company manager. See Stevensen 3rd E., LC v. Watts, 2009 UT App 137, ¶ 32, 210 P.3d 977 (“‘In Utah, a claim for breach of fiduciary duty is an independent tort that, on occasion, arises from a contractual duty.’ Like the fiduciary duties of general partners or corporate officers, a limited liability company manager’s fiduciary duty arises from the corporate relationship itself, independent of any contractual duties.” (citation omitted) (quoting Norman v. Arnold, 2002 UT 81, ¶ 35, 57 P.3d 997)). We reverse the trial court’s denial of attorney fees for the fiduciary duty claim and remand for a determination of attorney fees and costs, aside from those previously determined in this case. We caution the trial court that the attorney fees shall be awarded only to the extent that Appellees are able to prove that they have damages other than merely the costs incurred in bringing their counterclaims. See Neff v. Neff, 2011 UT 6, ¶¶ 88–89, 247 P.3d 380.

At ¶48.