Fitzgerald v. Spearhead Invs., LLC

• Decision Date: 22 July 2021
• Docket Number: No. 20190644,20190644
• Citation: Fitzgerald v. Spearhead Invs., LLC, 493 P.3d 644 (Utah 2021)
• Court: Utah Supreme Court
• Parties: Ken M. FITZGERALD and Five C.J. Properties, LLC, Appellants, v. SPEARHEAD INVESTMENTS, LLC and Alpine East Investors, LLC, Appellees.

493 P.3d 644

Ken M. FITZGERALD and Five C.J. Properties, LLC, Appellants,

v.SPEARHEAD INVESTMENTS, LLC and Alpine East Investors, LLC, Appellees.¹

No. 20190644

Supreme Court of Utah.

Heard February 10, 2021

Filed July 22, 2021

Bryan H. Booth, Salt Lake City, for appellants

Thomas W. Seiler, Jared L. Anderson, Provo, for appellee

Justice Himonas authored the opinion of the Court, in which Chief Justice Durrant, Associate Chief Justice Lee, Justice Pearce, and Justice Petersen joined.

Justice Himonas, opinion of the Court:

INTRODUCTION

¶1 The Dutch have a saying that "promises make debt, and debt makes promises." Today, we expand on this commercial proverb to address what the law requires when a promise to pay is not kept and the limitations period has run. Specifically, we consider whether the equitable estoppel doctrine offers a discrete basis for tolling a statute of limitations in Utah. We hold that it does.

¶2 This case comes to us as an interlocutory appeal from the denial of Ken Fitzgerald and Five C.J. Properties, LLC's (collectively, Owners) motion for summary judgment on their claim for declaratory judgment/quiet title with respect to the subject property (the Property). Here are the essential facts: Owners executed a trust deed note with Alpine East Investors, LLC for the Property, promising to pay the note in full within two years. They didn't. After the foreclosure limitations period had expired, and despite numerous promises made—and subsequently broken—to pay the debt owed, Owners sought two results from the district court: (1) to enjoin Alpine East from foreclosing its trust deed on the Property, and (2) a determination that Alpine East had no valid interest in the Property. Alpine East responded by invoking the doctrine of equitable estoppel, which would toll the limitations period and estop Owners from using the statute of limitations to quiet title. Owners, however, argued before the district court, and now on appeal to us, that equitable estoppel is not a stand-alone basis for defeating a statute of limitations defense because this court has incorporated it into the equitable discovery doctrine. If Owners are right, then Alpine East is unable to toll the foreclosure limitations period because it cannot satisfy the elements of equitable discovery.

¶3 Our response to Owners’ view of equitable estoppel is a hard no. To reach our conclusion, we juxtapose equitable estoppel with equitable discovery and find that, though similar in name and function, they're separate equitable doctrines that are invoked in distinct circumstances. As such, we hold that equitable estoppel may be invoked as a stand-alone basis for tolling a statute of limitations. But we clarify that a mere promise to make good on a debt, without more, is insufficient to toll a limitations period under the equitable estoppel doctrine, even if a party has relied upon that promise. Still, we do not address equitable estoppel's specific application to this case—we leave that to the district court as it is better situated to make the determination in the first instance. Accordingly, we vacate the district court's interlocutory order denying summary judgment and remand for further proceedings consistent with this opinion.

BACKGROUND

¶4 In 2008, Owners executed and made payable to Alpine East a trust deed note for the Property. The parties also executed and recorded a trust deed to secure the note against the Property. The note was due two years later. When the due date had passed, Owners had yet to make a payment toward the note.²

¶5 Pursuant to Utah Code section 70A-3-118(1), Alpine East had a limitations period of six years to file an action to foreclose the trust deed or record a notice of default on the property. Seven days before that limitations period expired, Brian Hansen, the manager of Alpine East, spoke by telephone with Fitzgerald regarding payment of the note. During the nearly hour-long conversation, Hansen specifically mentioned to Fitzgerald the possibility of foreclosing on the Property. Fitzgerald did not dispute the amount or validity of the debt, pleaded with Hansen not to foreclose, and gave assurances of forthcoming payment or, alternatively, conversion of the note into equity in the company that would develop the Property. Fitzgerald pitched that Alpine East could earn more under this alternative proposal than what it was owed under the note. None of Fitzgerald's assurances were committed to writing. Hansen now alleges that he did not initiate a foreclosure of the Property before the limitations period had run because of these assurances.

¶6 Eight days after the presumed statute of limitations had expired, Hansen again spoke over the phone with Fitzgerald for nearly an hour. During this call, Fitzgerald recommitted to either make payment under the note or convert the debt into equity in one of his development companies. Fitzgerald also agreed to "work something out" to extend the note. When Hansen asked Fitzgerald to send an email confirming their plan to extend the note, Fitzgerald indicated that he would not sign anything until the State of Utah finished its then-current criminal investigation of his father and family.

¶7 Over a year later and well after the presumed limitations period had expired, Owners sought a court determination that the note and trust deed were unenforceable and that Alpine East had no interest in the property. Shortly thereafter, Owners filed a motion for summary judgment against Alpine East, arguing that the statute of limitations had expired and that Alpine East was therefore barred from foreclosing the trust deed. The district court granted the motion, declaring that the limitations period for enforcing the trust deed had expired before Alpine East recorded a notice of default or filed an action to foreclose. The district court also entered a judgment against Alpine East, enjoining them from foreclosing on the trust deed or otherwise enforcing the note. With both orders, the court concluded that Alpine East had no right, title, or interest in the Property.

¶8 Months later, however, in a separate case with related facts and parties, the Utah Court of Appeals held that dilatory tactics to stave off foreclosure until a limitations period had expired could toll the limitations period under the doctrine of equitable estoppel. Jeppesen v. Bank of Utah , 2018 UT App 234, ¶ 33, 438 P.3d 81. In so holding, the court of appeals delineated between equitable estoppel and equitable discovery. Id. ¶¶ 30, 32. Equitable estoppel, the court explained, tolls a limitations period when the plaintiff had knowledge of the cause of action but was induced by the other party to delay the action until after the period had run; equitable discovery tolls a statute of limitations when a plaintiff does not discover the cause of action because of the defendant's concealment. Id.

¶9 Based upon the holding in Jeppesen and following the district court's subsequent amended judgment granting attorney's fees to appellants, Alpine East filed a Rule 59 motion to revise the district court's prior ruling. Alpine East argued Owners had made promises that raised issues of material fact that precluded summary judgment under the doctrine of equitable estoppel. Relying on Jeppesen , the court granted the motion because it found a question of fact as to "whether Fitzgerald made promises to pay or to convert the debt which induced Alpine East not to foreclose within the statute of limitations."

¶10 Owners petitioned for permission to take an interlocutory appeal of the district court's ruling. We granted the appeal to consider whether the doctrine of equitable estoppel has been incorporated into the equitable discovery doctrine. We have jurisdiction under Utah Code section 78A-3-102(3)(j).

STANDARD OF REVIEW

¶11 On interlocutory appeal, we review grants and denials of summary judgment for correctness. Anderson Dev. Co. v. Tobias , 2005 UT 36, ¶ 19, 116 P.3d 323. "Summary judgment is only appropriate if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law." Herland v. Izatt , 2015 UT 30, ¶ 9, 345 P.3d 661 (citing UTAH R. CIV. P. 56(c) ). We view the facts and indulge reasonable inferences in the light most favorable to Alpine East, the nonmoving party. Id.

ANALYSIS

¶12 Our analysis clarifies the difference between equitable estoppel and equitable discovery. Although similar in name and function, these equitable doctrines each apply in distinct circumstances.

¶13 Owners argue that Jeppesen v. Bank of Utah , 2018 UT App 234, 438 P.3d 81, which the district court relied on in granting Alpine East's Rule 59 Motion, is bad law because the doctrine of equitable estoppel, as applied to statutes of limitations, has been incorporated into the concealment prong of the equitable discovery doctrine. For authority, Owners point to this court's statement in Russell Packard Development, Inc. v. Carson that equitable discovery has its "genesis in estoppel" and is "essentially a claim of equitable estoppel." 2005 UT 14, ¶ 26, 108 P.3d 741 (citation omitted). Thus, they assert, Alpine East must make the initial showing required under equitable discovery: that it did not know nor reasonably should it have known of its cause of action in time to comply with the limitations period because of the defendant's concealment. So, as Owners understand it, a party that knew the facts supporting its claim at the time the statute of limitations began to run—like Alpine East with its foreclosure claim—would never have the limitations period tolled.

¶14 Alpine East, on the other hand, argues that Jeppesen was correct to hold that equitable estoppel is an independent basis for tolling a statute of limitations. Thus, a party need not make an initial showing that it did not know the facts underlying the cause of action. Accordingly, Alpine East asserts, a party who had knowledge of the cause of action but was reasonably induced by...