ASPENWOOD, LLC v. CAT, LLC

• Decision Date: 06 February 2003
• Docket Number: No. 20010735-CA.,20010735-CA.
• Citation: 73 P.3d 947,2003 UT App 28
• Parties: ASPENWOOD, L.L.C.; JMS Hidden, L.L.C.; and JMS Financial, L.L.C., Plaintiffs and Appellants, v. C.A.T., L.L.C.; Paul Taggart; and John Coats, Defendants and Appellees.
• Court: Utah Court of Appeals

73 P.3d 947

2003 UT App 28

ASPENWOOD, L.L.C.; JMS Hidden, L.L.C.; and JMS Financial, L.L.C., Plaintiffs and Appellants, v. C.A.T., L.L.C.; Paul Taggart; and John Coats, Defendants and Appellees.

No. 20010735-CA.

Court of Appeals of Utah.

February 6, 2003.

Rehearing Denied August 6, 2003.

Brian W. Steffensen, David C. Condie, and Damien E. Davenport, Steffensen Law Office, Salt Lake City, for Appellants.

Stephen B. Mitchell and Richard D. Burbidge, Burbidge & Mitchell, Salt Lake City, for Appellees.

Before Judges JACKSON, GREENWOOD, and ORME.

OPINION

GREENWOOD, Judge:

¶ 1 Plaintiffs Aspenwood, L.L.C. (Aspenwood), JMS Hidden, L.L.C., and JMS Financial, L.L.C. (together referred to as JMS) appeal various orders and judgments entered against them and in favor of Defendants C.A.T., L.L.C. (CAT), Paul Taggart (Taggart), and John Coats (Coats). We affirm.

BACKGROUND¹

¶ 2 Dan Mehr (Mehr) owned an excavation company called Baucorp, Inc. (Baucorp). Baucorp entered into a contract with Newport Holdings, Inc. (Newport), owned by Kent Hogan (Hogan), to acquire Newport's interest in various real estate development projects (the Newport Contract). The Newport Contract gave Baucorp an option to purchase and assume Newport's position in various contracts for real estate development projects described in an addendum. The addendum did not include legal descriptions or addresses of the properties, but only generalized reference to projects, usually by name of city. The Newport Contract did not specify a closing date, but indicated closings would occur "as developed."

¶ 3 Mehr approached Coats and Taggart about their possible financial participation in the Newport enterprise. Coats and Taggart operated through their company, CAT. According to Mehr, Hogan had represented that he anticipated imminent subdivision approval for one of the proposed projects, Hidden Ridge, and that Ryland Homes had contracted to purchase 100 of the Hidden Ridge lots. As a result, Hidden Ridge would produce substantial cash flow by fall 1997. Mehr, Taggart, and Coats formed Aspenwood for the purchase of the Hidden Ridge project and on May 22, 1997 executed an Operating Agreement. Baucorp and CAT each owned 50% of Aspenwood.

¶ 4 Contemporaneously, Aspenwood executed a purchase agreement (the Hidden Ridge Agreement) with Newport and its partner in Hidden Ridge, Lonnie Oman (Oman), to purchase their interest in the Hidden Ridge project and assume various underlying contracts. CAT funded Aspenwood's initial payment of $100,000 towards the purchase price of this project. The balance was to be paid in monthly installments with final payment due December 22, 1997. Mehr, Taggart, and Coats expected that within a couple of months, proceeds from a construction loan and lot sales would pay off their obligation under the Hidden Ridge Agreement. They also expected the funds would be sufficient to develop phase one of the Hidden Ridge project and fund other projects referred to in the Newport Contract. Aspenwood made further payments on the Hidden Ridge Contract and received title to phase one of the project.

¶ 5 Unfortunately, the Hidden Ridge project did not generate funds as the parties had hoped. Aspenwood stopped making payments on the Hidden Ridge Contract in fall 1997. Negotiations between Aspenwood and the Hidden Ridge principals were unsuccessful. By November 1998, there were unpaid bills on the Hidden Ridge project of approximately $319,000.

¶ 6 Mehr told Taggart and Coats that he knew of others who might buy out CAT's interest in Aspenwood. Subsequently, CAT sold its 50% interest in Aspenwood to JMS as documented in a written agreement (the JMS Purchase Agreement). The principals of JMS were Brian Steffensen, Harold Rosen, and Pam and Brent Watson. CAT quitclaimed its interest to JMS and was to receive the amount CAT had invested in Hidden Ridge, without any interest accrual. JMS did not pay CAT the amount agreed upon.

¶ 7 In June 1999, Aspenwood and JMS filed suit, claiming that CAT, Taggart, and Coats had defrauded JMS into purchasing CAT's interest in Aspenwood. Aspenwood claimed that the Defendants had breached their contractual duty to provide funds necessary to purchase and develop the projects that Mehr had an option to purchase from Hogan. Aspenwood also sued Hogan and his partner, Oman, for fraud. Aspenwood settled its claim against Oman and Hogan for $200,000 plus 30% of profits to be realized from further development of Hidden Ridge. CAT counterclaimed seeking payments due under the JMS Purchase Agreement.

¶ 8 The trial court set dates for discovery cutoff, motion cutoff, and trial. At the request of JMS, the court twice extended the discovery cutoff and continued the trial date. One business day before the motion cutoff date, Defendants filed a motion for partial summary judgment, seeking dismissal of all claims except the fraud claim against Taggart. JMS filed a rule 56(f) motion, seeking more time for discovery. The parties filed memoranda and supplemental memoranda setting forth their positions and the trial court conducted two hearings on the motion for partial summary judgment and subsequently granted the motion.

¶ 9 After a pretrial hearing in the trial court's chambers, the trial court sent a scheduling order and notices to the parties indicating that the trial would be to the bench. Almost a year later, shortly before the scheduled trial date, JMS indicated to the court clerk it wanted a jury trial. After a conference with the parties, the trial court determined that JMS had waived its right to a jury trial.

¶ 10 A four day bench trial was held, after which the trial court dismissed the fraud claim with prejudice. The trial court found in favor of CAT on its counterclaim for the amount due from JMS for the 50% interest in Aspenwood. Judgment was entered for CAT in the amount of $612,995 plus interest and reasonable attorney fees.

¶ 11 After JMS filed a Notice of Appeal, CAT initiated proceedings to collect its judgment. The trial court issued an Order in Supplemental Proceedings requiring that the judgment debtors appear, through Harold Rosen, for questioning about the assets of the debtors. After a series of objections, motions, and hearings, Rosen's examination was scheduled to take place on July 30, 2001. CAT became aware of a $230,000 payment on July 29 from Hogan and Oman to Aspenwood, as final settlement of sums due on the Hidden Ridge project. At CAT's request, the trial court issued a preliminary injunction prohibiting Aspenwood from disposing of the funds except for payment of ordinary business expenses. Aspenwood subsequently voluntarily paid JMS's share of the payment to CAT as a credit on the judgment.

ISSUES

¶ 12 JMS devotes the first eighteen pages of its one-hundred page opening brief to a description of thirty-two issues it raises on appeal, including where the issues were preserved at trial and the standards of review applicable. However, JMS only argues five of those issues in the body of the brief. Those issues include the following: (1) Was JMS given the opportunity to conduct full and fair discovery; (2) Did the trial court properly grant CAT's motion for partial summary judgment; (3) Did JMS waive its right to a jury trial; (4) Are the findings of fact clearly erroneous; and (5) Did the trial court err in its rulings during the post trial proceedings?

ANALYSIS

I. Opportunity to Conduct Full and Fair Discovery

¶ 13 JMS argues that CAT should have been sanctioned for discovery abuses and that the trial court improperly imposed a discovery schedule. "Trial courts have broad discretion in determining discovery sanctions because trial courts must deal first hand with the parties and the discovery process." Hales v. Oldroyd, 2000 UT App 75, ¶ 15, 999 P.2d 588 (internal quotations, citation, and alteration omitted). Therefore, "appellate courts will interfere with the exercise of such discretion only when abuse of that discretion is clearly shown." Id. (internal quotations, citation, and alteration omitted).

¶ 14 A disagreement arose between JMS and CAT over the order in which certain depositions would occur. JMS claimed that CAT refused to produce party witnesses Taggart and Coats to be deposed and filed a Motion for Protective Order and Motion to Compel Production with the court. CAT responded with a Memorandum in Opposition to JMS's motions arguing that JMS was trying to prevent CAT from deposing JMS's party witnesses until the depositions JMS noticed were complete.

¶ 15 In response, the trial court met in chambers with counsel. Based on an agreement by counsel and the trial court, the court ordered depositions to be taken in a certain order. The court's order did not impose sanctions on either party. JMS claims that due to the court's order, it ran out of time to complete the depositions of several individuals, and therefore, was not able to conduct full and fair discovery. The record, however, indicates that JMS never objected to the court's order scheduling depositions. In addition, the trial court and CAT granted JMS several extensions in response to JMS's claims that it needed more time to take depositions. Given the ongoing dispute between the parties concerning the order of depositions to be taken, it was within the trial court's discretion to impose a deposition schedule and to not impose sanctions. See Oldroyd, 2000 UT App 75

at ¶ 15, 999 P.2d 588.

II. Motion for Partial Summary Judgment

A. Denial of JMS's Rule 56(f) Motion

¶ 16 JMS argues that the trial court erred in denying its rule 56(f) motion because it did not have time to complete discovery. See Utah R. Civ. P. 56(f) (stating court may order continuance of summary judgment to permit further discovery or affidavits). This court reviews the denial of a rule 56(f) motion for an abuse of discretion. See Brown v. Glover, 2000 UT 89, ¶ 29, 16 P.3d 540

.

¶ 17 On October 20, 2000, CAT filed a motion for partial summary judgment...