Am. W. Bank Members, L.C. v. State, No. 20120456.

CourtSupreme Court of Utah
Writing for the CourtJustice LEE
Citation772 Utah Adv. Rep. 9
PartiesAMERICA WEST BANK MEMBERS, L.C., Appellant, v. STATE of Utah and its agents; Utah Department of Financial Institutions; G. Edward Leary, Appellees.
Docket NumberNo. 20120456.
Decision Date24 October 2014

772 Utah Adv. Rep. 9

AMERICA WEST BANK MEMBERS, L.C., Appellant,
v.
STATE of Utah and its agents; Utah Department of Financial Institutions; G. Edward Leary, Appellees.

No. 20120456.

Supreme Court of Utah.

Oct. 24, 2014.



Affirmed in part and remanded with directions in part.

Lee, J., filed opinion in which Durant, C.J., and Durham and Parrish, JJ., joined.


[342 P.3d 227]


Douglas M. Durbano, L. Miles Lebaron, Jacob D. Briggs, Layton, for appellant.

Sean D. Reyes, Att'y Gen., Peggy E. Stone, Reed M. Stringham, III, Asst. Att'ys Gen., Salt Lake City, for appellees.


Associate Chief Justice NEHRING authored an opinion of the Court with respect to Parts I, II.A, II.C, and III, in which Chief Justice DURRANT, Justice DURHAM, Justice LEE, and Justice PARRISH joined, and a dissenting opinion with respect to Part II.B. Associate Chief Justice NEHRING, opinion of the Court except as to Part II.B:
INTRODUCTION

¶ 1 America West Bank Members, L.C. (AWBM) challenges the district court's dismissal of its claims against the State of Utah, the Utah Department of Financial Institutions (UDFI), and the director of UDFI, Mr. G. Edward Leary (collectively referred to as the State).1 AWBM asserts that the district court erred when it dismissed its claims for lack of sufficient factual allegations under rule 12(b)(6) of the Utah Rules of Civil Procedure. AWBM contends it pleaded sufficient factual allegations for breach of contract, breach of the covenant of good faith and fair dealing, violations of procedural and substantive due process under the Utah Constitution, and violation of the Takings Clause of the Utah Constitution. We affirm the decision of the district court dismissing AWBM's claims.


¶ 4 In its opposition to the State's motion to dismiss, AWBM consented to the dismissal of some of its claims. AWBM acknowledged that it failed to file an appropriate notice of claim against Mr. Bay, as required by the Immunity Act, and as a result, all claims against Mr. Bay were dismissed.3 Additionally, AWBM conceded to the dismissal with prejudice of its claims of failure to disclose evidence at a hearing, negligent destruction

[342 P.3d 228]

of property, and negligence, based primarily on the existence of immunity enjoyed by the defendants.4

¶ 5 The district court did not hold a hearing on the motion to dismiss, but “reviewed and considered all Memoranda in support, opposition and reply” and granted the State's motion to dismiss “in full as prayed for based upon all of the reasons ... and legal authorities set forth in [the State's] [m]emoranda in support and reply, including [AWBM's] concessions.” Based on the minute entry and the State's motion to dismiss and accompanying memorandum, the district court dismissed AWBM's breach of contract, breach of the covenant of good faith and fair dealing, and unconstitutional taking claims all due to insufficient factual allegations in the complaint. The district court also dismissed AWBM's claims of denial of procedural and substantive due process with prejudice, because it found that the right to a pre-seizure hearing was not clearly established and, therefore, could not form the basis of a due process claim.

¶ 6 Following the district court's dismissal of AWBM's claims, AWBM filed a timely notice of appeal. AWBM appeals the dismissal of its claims for breach of contract, breach of the covenant of good faith and fair dealing, unconstitutional taking, denial of procedural due process, and denial of substantive due process.

STANDARD OF REVIEW

¶ 7 AWBM contends the district court erred when it dismissed its causes of action for breach of contract, breach of the covenant of good faith and fair dealing, unconstitutional taking, and violations of procedural and substantive due process under rule 12(b)(6) of the Utah Rules of Civil Procedure. “A district court's grant of a motion to dismiss based upon the allegations in the plaintiff's complaint[ ] presents a question of law that we review for correctness.” 5 When “reviewing a dismissal under Rule 12(b)(6) of the Utah Rules of Civil Procedure, we accept the plaintiff's description of facts alleged in the complaint to be true, but we need not accept extrinsic facts not pleaded nor need we accept legal conclusions in contradiction of the pleaded facts.” 6 The district court's ruling “should be affirmed only if it clearly appears that [the plaintiff] can prove no set of facts in support of his claim.” 7 “Furthermore, it is well established that an appellate court may affirm the judgment appealed from if it is sustainable on any legal ground or theory apparent on the record, even if it differs from that stated by the trial court.” 8

ANALYSIS

¶ 8 AWBM appeals the district court's dismissal of its claims for breach of contract, breach of the covenant of good faith and fair dealing, unconstitutional taking, and violations of substantive and procedural due process. The district court granted the State's motion to dismiss all of AWBM's claims. The district court dismissed all of AWBM's claims under rule 12(b)(6) of the Utah Rules of Civil Procedure for “failure to state a claim upon which relief can be granted.” The claims for breach of contract and breach of the covenant of good faith and fair dealing were dismissed without prejudice for failure to plead sufficient facts supporting the claims. The claim of an unconstitutional taking, which AWBM argued as a violation of substantive due process, was also dismissed without prejudice for failure to plead sufficient facts. Finally, the claims alleging a violation of substantive and procedural due

[342 P.3d 229]

process were dismissed with prejudice by the district court because it concluded there is no right to a pre-seizure hearing when the State takes a financial institution into receivership.

¶ 9 As a threshold matter, we must determine if we have jurisdiction to hear this appeal.9 If we lack jurisdiction, we must dismiss the appeal.10 Only if we first determine that we have appropriate jurisdiction will we address the merits of a case.

I. THE DISTRICT COURT'S DISMISSAL IS A FINAL, APPEALABLE ORDER

¶ 10 The State argues that “[t]here may be a question whether the [c]ourt has jurisdiction to hear [AWBM's] claims,” and contends that the order below may not be a final order subject to appeal. “[T]he issue of subject matter jurisdiction is a threshold issue, which can be raised at any time and must be addressed before [turning to] the merits of other claims....” 11 We have consistently upheld the “final judgment” rule, which states that “[a]n appeal is improper if it is taken from an order or judgment that is not final.” 12 A “final judgment for purposes of appeal is one that resolves all claims, counterclaims, cross-claims, and third-party claims before the court and fully and finally resolves the case.” 13

¶ 11 “Utah has adopted the majority rule that an order of dismissal is a final adjudication, and thereafter, a plaintiff may not file an amended complaint,” 14 even if such a dismissal is without prejudice. 15 This rule is rooted in the United States Supreme Court decision United States v. Wallace & Tiernan Co.16 There, the Court found that dismissal “without prejudice to filing another suit does not make the cause unappealable, for denial of relief and dismissal of the case ended [the] suit so far as the District Court was concerned.” 17 Our general rule in determining whether an order is final is “whether the effect of the ruling is to finally resolve the issues.” 18 We do not focus on whether a dismissal was with or without prejudice, because the “test to be applied is a pragmatic test.” 19

¶ 12 In the present case, there are no counterclaims, cross-claims, or third-party

[342 P.3d 230]

claims. The district court determined it did not have an adequately pleaded complaint before it and dismissed the complaint, thereby ending the suit as far as the district court was concerned.20 The pragmatic effect of the dismissal was to fully terminate the case in the district court. Because we follow the majority rule that an order of dismissal is a final adjudication, and because our test for finality is a pragmatic one, we conclude that we have jurisdiction to hear this appeal.

II. THE DISTRICT COURT DID NOT ERR WHEN IT DISMISSED AWBM'S CLAIMS

¶ 13 On appeal, AWBM relies heavily on the principle that, on a motion to dismiss, the court must “accept the plaintiff's description of facts alleged in the complaint to be true.” 21 Additionally, rule 8(a) of the Utah Rules of Civil Procedure sets a liberal standard for complaints, requiring only that a complaint “contain a short and plain: (1) statement of the claim showing that the party is entitled to relief; and (2) demand for judgment for specified relief.” 22 “A dismissal is a severe measure and should be granted by the trial court only if it is clear that a party is not entitled to relief under any state of facts which could be proved in support of its claim.” 23 Keeping these principles in mind, we address each of AWBM's claims in turn.

A. The District Court Did not Err When It Dismissed AWBM's Claims for Breach of Contract and Breach of the Covenant of Good Faith and Fair Dealing

¶ 14 The district court dismissed AWBM's claims for breach of contract and breach of the covenant of good faith and fair dealing due to a lack of sufficient factual allegations in the complaint. AWBM argues that its complaint properly stated a claim for breach of contract. Particularly, AWBM claims it has alleged the existence of a contract between the State and AWBM, that the State breached the contract, and that AWBM is entitled to damages as a result. AWBM claims that due to its assertion of a right to damages, it can be implied or inferred that AWBM performed its obligations under the contract. Conversely, the State argues that one cannot prove a breach of contract claim without alleging the actual existence of a contract. We agree with the State.

¶ 15 Because...

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