Haskell v. Wakefield & Assocs. Inc.

• Decision Date: 12 November 2021
• Docket Number: No. 20200412-CA,20200412-CA
• Citation: 500 P.3d 950
• Parties: Kourtni HASKELL, Appellant, v. WAKEFIELD & ASSOCIATES INC. and Matthew Frawley, Appellees.
• Court: Utah Court of Appeals

500 P.3d 950

Kourtni HASKELL, Appellant,

v.WAKEFIELD & ASSOCIATES INC. and Matthew Frawley, Appellees.

No. 20200412-CA

Court of Appeals of Utah.

Filed November 12, 2021

Daniel Baczynski, Attorney for Appellant

Mark A. Nickel and David Garner, Attorneys for Appellees

Judge Gregory K. Orme authored this Opinion, in which Judges David N. Mortensen and Ryan M. Harris concurred.

Opinion

ORME, Judge:

¶1 Kourtni Haskell appeals the district court's dismissal of her current action against Wakefield & Associates Inc. and its president, Matthew Frawley (collectively, Appellees). The court determined that the claim preclusion branch of the res judicata doctrine barred Haskell's complaint because a different court in a prior action had already ruled on the merits of her claims. Haskell argues that claim preclusion cannot bar her current action because the prior court's written order had dismissed her earlier complaint "without prejudice." We agree with Haskell and reverse.

BACKGROUND¹

¶2 In 2016, Wakefield, a debt collection agency, obtained a default judgment against Haskell for an unpaid debt. Two years later, in 2018, Haskell filed suit against Wakefield in the Third District Court in Tooele County (Haskell I ), alleging that the default judgment against her was void because, at the time it initiated suit, Wakefield was not properly licensed under the Utah Collection Agency Act (the UCAA). See Utah Code Ann. § 12-1-1 (LexisNexis 2013). Specifically, she alleged that Wakefield's engagement in unlicensed debt collection and its failure to disclose this status "is a deceptive practice designed to take advantage of consumers" in violation of the Utah Consumer Sales Practices Act (the UCSPA). See generally id. §§ 13-11-1 to -23 (2013 & Supp. 2020).

¶3 Haskell later emailed Frawley proposing to settle the suit for the "payment of $23,000.00, forgiveness of the old debt, repayment of any monies received from [Haskell], and complete removal from her credit report, and no other conditions." Frawley purportedly accepted Haskell's settlement terms, but a few days later sent a proposed settlement agreement to Haskell that included an additional term: a confidentiality agreement. Pointing to the "no other conditions" language of the offer, Haskell rejected the additional term and sent her own proposed settlement agreement to Frawley. Haskell does not allege that the parties ever signed a written settlement agreement.

¶4 A few months later, Wakefield moved for judgment on the pleadings under rule 12(c) of the Utah Rules of Civil Procedure. During the pendency of the motion, Haskell moved to amend her complaint to add Frawley as a defendant and to add claims for breach of contract and for fraud in the inducement against him related to the settlement agreement.

¶5 During the hearing on the motions, Haskell argued for the first time that she "was deceived or misled by" a misrepresentation Wakefield made to her. The court rejected this argument, ruling that under rule 9(c) of the Utah Rules of Civil Procedure, Haskell had "not pled with particularity the circumstances surrounding the deceit that occurred." The court also entered judgment dismissing the Haskell I complaint, stating to Haskell's counsel:

Given the Court's ruling, particularly with the 9(c) issue ... it seems to me that I think it should be a dismissal without prejudice with respect to the ... 9(c) issue. ... [I]f you can put together a complaint that alleges that Ms. Haskell, in fact, ... relied on some statement from [Wakefield] that they were a licensed collection agency and that that somehow created some deception or fraud, then I think it would be appropriate to reassert that. I'm not going to bar you from reasserting that.

....

But on its face, at this point, I think I've made clear that there's no claim simply for ... operating a debt collection business without a license in the state of Utah, and that would be ... law of the case or res judicata at this point. But ... if you want to assert some claim that she was actually deceived by what they did, ... I don't think that this would necessarily bar that. So it will be without prejudice at this point.

¶6 In May 2019, the court issued a written order, drafted by Wakefield's counsel and approved as to form by Haskell's counsel, addressing both Wakefield's motion for judgment on the pleadings and Haskell's motion to amend the Haskell I complaint. In granting Wakefield's motion, the court stated that Haskell's claims failed as a matter of law because:

a. There is no private cause of action under the [UCAA]; and there is nothing under the UCAA that could be construed as giving a debtor the right to sue or otherwise bring any claim against a collection agency merely for failing to be licensed in accordance with the UCAA ....

b. The act of attempting to collect a debt without being properly licensed under the UCAA ... is neither a deceptive nor unconscionable act under the [UCSPA].

c. [The UCAA] is merely a business licensure statute, and therefore, in an action to collect on a debt, a debtor cannot raise as a defense that the unlicensed debt collector lacks standing to file or maintain that action. Likewise, a technical violation of [the UCAA] does not give a debtor the right or standing to challenge or otherwise seek to set aside a judgment entered in favor of an unlicensed debt collector.

d. The new claim—raised for the first time during oral argument—that Plaintiff Kourtni Haskell was deceived or misled by something that Defendant Wakefield represented to her, fails to comply with the requirement under rule 9(c) ... to plead with particularity the circumstances surrounding Defendant Wakefield's alleged deception.

e. The additional reasons stated on the record during oral argument.

¶7 The court's written order also denied Haskell's motion to amend her complaint, stating, "The proposed amendment is futile because it does not cure the problems and deficiencies that provided the basis for granting the Motion for Judgment on the Pleadings and dismissing each of the claims asserted against Defendant Wakefield." The written order concluded by indicating that the Haskell I complaint, "and each of the claims asserted" therein, were "dismissed without prejudice." Haskell did not appeal that dismissal.

¶8 In July 2019, Haskell initiated the current action against Appellees (Haskell II ), this time in the Third District Court in Salt Lake County. The Haskell II complaint realleged the UCSPA claims against Wakefield and also included claims for breach of contract and fraud in the inducement against Frawley related to the settlement agreement.

¶9 Appellees moved to dismiss the complaint under rule 12(b)(6) of the Utah Rules of Civil Procedure, arguing that all four claims had "already been litigated by these parties in Tooele County." Appellees acknowledged the Haskell I court had dismissed that case without prejudice, but they asserted that the court did so only because Haskell, during the hearing, "argued for the first time that there may be some other act of deceit" apart from Wakefield's lack of license "that would allow [her] to prevail on [her] UCSPA claim." With reference to that newly raised argument, Appellees asserted that the court "held that if [Haskell] could establish a basis—other than the failure to register in accordance with the UCAA—then [she] may have a valid UCSPA claim that could be brought at a later date" and, based on that contingency, the court dismissed Haskell I without prejudice. Appellees also argued that the Haskell I court had already determined that the claims against Frawley related to the settlement agreement were "futile" when it denied Haskell's motion to amend her complaint in that action, thereby effectively ruling that the claims would not survive a motion to dismiss. Appellees thus argued that the Haskell II complaint should be dismissed because the Haskell I court had already ruled on the claims and Haskell had "not alleged any new facts that would provide a basis for recovery under Utah law."

¶10 The Haskell II court agreed that res judicata—more specifically claim preclusion—barred the action, and it granted Appellees’ motion. The court held that "each of [Haskell's] claims were clearly brought or should have been brought in ... Haskell I " and that "the dismissal in Haskell I was clearly a final judgment on the merits." Accordingly, the court ruled that the Haskell I court's "use of the term ‘without prejudice’ has no meaning with respect to the claim preclusion analysis for this case" and dismissed the Haskell II complaint with prejudice.

¶11 Haskell appeals.

ISSUE AND STANDARD OF REVIEW

¶12 Haskell challenges the district court's dismissal of her complaint on claim preclusion grounds. "We review a district court's decision to grant a rule 12(b)(6) motion to dismiss a complaint for correctness, giving no deference to the district court's ruling." Van Leeuwen v. Bank of Am. NA , 2016 UT App 212, ¶ 6, 387 P.3d 521 (quotation simplified). We likewise review for correctness a court's ruling on whether res judicata bars an action. See id.

ANALYSIS

¶13 "The doctrine of res judicata comprises claim preclusion and issue preclusion, both of which serve the important policy of preventing previously litigated issues from being relitigated." Kodiak Am. LLC v. Summit County , 2021 UT App 47, ¶ 14, 491 P.3d 962 (quotation simplified). Claim preclusion, the branch of res judicata at issue in the instant appeal, "bars a party from prosecuting in a subsequent action a claim that has been fully litigated previously." Peterson v. Armstrong , 2014 UT App 247, ¶ 11, 337 P.3d 1058 (quotation simplified). See Fundamentalist Church of Jesus Christ of Latter-Day Saints v. Horne , 2012 UT 66, ¶ 12, 289 P.3d 502 (stating that claim preclusion "is premised on the principle that a controversy should be adjudicated only once") (quotation simplified). For claim preclusion to apply, the movant has to establish that (1) "both cases ......