Mower v. Simpson
| Decision Date | 17 May 2012 |
| Docket Number | No. 20100532–CA.,20100532–CA. |
| Citation | 278 P.3d 1076,708 Utah Adv. Rep. 12,2012 UT App 149 |
| Parties | Leslie D. MOWER; LD SQ, LLC; LD III, LLC; LD Purpose, LLC; and Navona, LC, Plaintiffs and Appellants, v. David R. SIMPSON; Nathan R. Simpson; Michael K. Thompson; Todd Dorny; Brandon Dente; David N. Nemelka; Dallas M. Hakes; Chad D. Carlson; Michael A. Marx; Allen R. Hakes; Michael W. Aviano; ALS Properties, LLC; Mai Ke Kula, LLC; Hanalei Kai Holdings, LLC; Ka Mahina, LLC; He Kiakolu, LLC; Koamalu Plantation, LLC; Landmark Real Estate, Inc.; Wood Springs, LLC; Oak Leaf, LLC; Dente, LLC; Sunny Ridge, LLC; KNDJ Development, LLC; DN Simpson Holdings, LLC; SOS Mapleton Development, LLC; DN Simpson Mapleton Holdings, LLC; The Preserve at Mapleton Development Company, LLC; Pheasant Meadows, LLC; Carnesecca Orchard Estates, LLC; Spanish Vista Plat I, LLC; Landmark Homes of Utah, LLC; Maple Mountain Water Tank, LLC; Lonestar Gutters, LLC; 2 Brothers Communications; and Lonestar Builders, Inc., Defendants and Appellees. |
| Court | Utah Court of Appeals |
OPINION TEXT STARTS HERE
Bart J. Bailey and William T. Jennings, Orem; and Denver C. Snuffer Jr., Sandy, for Appellants.
Caleb J. Frischknecht, Salt Lake City; Craig Carlile; Provo; and Mark D. Eddy and Morgan L. Cummings, Pleasant Grove, for Appellees.
Before Judges ORME, THORNE, and ROTH.
¶ 1 Leslie D. Mower; LD SQ, LLC; LD III, LLC; LD Purpose, LLC; and Navona, LC (collectively, Plaintiffs) bring this interlocutory appeal challenging the district court's dismissal of several of their numerous causes of action against David R. Simpson and his codefendants (collectively, Defendants). Specifically, Plaintiffs argue that the district court erred in dismissing their fraud and fraud-based claims for failure to plead them with particularity; erred in dismissing their fraud claims after determining that Mower's deceased husband, Ken Dolezsar, was a necessary and indispensable party to those claims; and erred in dismissing their claims alleging aiding and abetting a breach of fiduciary duty on the ground that Utah law does not recognize such a cause of action. We reverse the district court and remand this matter for further proceedings consistent with this opinion.
¶ 2 Plaintiffs filed their initial Complaint in this matter on October 20, 2009. The Complaint was 212 pages long, asserted twenty-six claims against multiple defendants in 701 numbered paragraphs, and was supported by 183 exhibits comprising an additional 1100–some pages of material. Many of the paragraphs in the individual causes of action referred to specific earlier paragraphs in the factual section of the Complaint.1 The Complaint alleged fraud and other claims arising out of the development and funding of various real estate projects in Hawaii and Utah. In November 2009, after several defendants had filed motions to dismiss, Plaintiffs filed a First Amended Complaint spanning 216 pages and asserting twenty-eight claims in 713 numbered paragraphs. The First Amended Complaint prompted several more motions to dismiss.
¶ 3 On January 22, 2010, the district court dismissed Plaintiffs' fraud claims for failure to plead them with particularity. In regard to the fraud claims, the district court stated,
[T]hey do not contain the required level of particularity—who in particular said or represented what to whom in particular, when, where, and how such representations occurred, the specific terminology used, why reliance was reasonable and what particular damages were caused by each discrete action. Defendants are entitled to know the precise events on which plaintiffs rely without having to infer what happened through assembling pieces of a puzzle contained throughout a voluminous complaint.
The district court then granted Plaintiffs twenty days in which to plead their fraud claims “concisely and with particularity.” On March 5, 2010, Plaintiffs filed a 361–page Second Amended Complaint asserting forty-eight claims over 1362 numbered paragraphs and continuing Plaintiffs' previous convention of stating claims by reference to prior paragraphs. The Second Amended Complaint resulted in yet another wave of motions to dismiss.
¶ 4 In June 2010, the district court issued two written rulings on the various motions to dismiss. The effects of these two rulings included the dismissal of Plaintiffs' fraud and fraud-based claims for failure to plead them concisely and with particularity. The district court explained,
Despite Plaintiffs' addition of 145 more pages, the Second Amended Complaint still does not provide the particularity mandated by Rule 9(b). Instead, Plaintiffs' “much too long and involved” Second Amended Complaint merely “dumps upon the [Court] ... the burden of sifting through the hundreds of paragraphs of alleged facts to ascertain whether Plaintiffs have allege [d] ..., the facts necessary to make all their elements of fraud.”
(Alterations and omissions in original.) (Quoting Coroles v. Sabey, 2003 UT App 339, ¶¶ 23, 27, 79 P.3d 974.) The district court also dismissed Plaintiffs' fraud claims pursuant to rule 19 of the Utah Rules of Civil Procedure, ruling that Mower's deceased husband was a necessary and indispensable party to those claims. Finally, the district court dismissed Plaintiffs' claims for aiding and abetting a breach of fiduciary duty and aiding and abetting fraudulent nondisclosure, reasoning that Utah law does not recognize these causes of action. Plaintiffs sought and received permission to bring this interlocutory appeal from the district court's dismissal orders.
¶ 5 Plaintiffs first argue that the district court erred when it dismissed their fraud and fraud-based claims for failure to plead them with particularity. “ ‘Because the propriety of a motion to dismiss is a question of law, we review for correctness, giving no deference to the decision of the trial court.’ ” Coroles v. Sabey, 2003 UT App 339, ¶ 15, 79 P.3d 974 (quoting Krouse v. Bower, 2001 UT 28, ¶ 2, 20 P.3d 895).
¶ 6 Next, Plaintiffs argue that the district court erred when it dismissed their fraud claims based on its determination that Mower's deceased husband was a necessary and indispensable party to those claims. “[A] trial court's determination properly entered under Rule 19[, which governs the joinder of indispensable parties,] will not be disturbed absent an abuse of discretion.” Werner–Jacobsen v. Bednarik, 946 P.2d 744, 746 (Utah Ct.App.1997) () (internal quotation marks omitted).
¶ 7 Finally, Plaintiffs argue that Utah law recognizes causes of action for aiding and abetting the breach of a fiduciary duty and aiding and abetting fraudulent nondisclosure. Whether a cause of action is recognized in Utah is a question of law, and we therefore review the district court's ruling on this issue for correctness. See Jacob v. Bezzant, 2009 UT 37, ¶ 18, 212 P.3d 535 ().
¶ 8 Plaintiffs argue that the district court erred in dismissing their fraud and fraud-based claims for failure to plead them with particularity. Reading the district court's January 2010 and June 2010 rulings together, we can ascertain three grounds for the district court's ultimate dismissal of Plaintiffs' fraud and fraud-based claims: (1) Plaintiffs failed to state their claims with the required level of particularity; (2) notwithstanding this lack of particularity, Plaintiffs' Second Amended Complaint was too long and involved; and (3) Plaintiffs employed internal cross-referencing of paragraphs in the Second Amended Complaint rather than repeating every factual allegation in every claim. We conclude that the district court's dismissal of Plaintiffs' fraud and fraud-based claims on these grounds constitutes error.
¶ 9 We first address the district court's concerns about the length and complexity of the Second Amended Complaint, as well as Plaintiff's cross-referencing of paragraphs within the Second Amended Complaint. In finding fault with Plaintiffs on these grounds, the district court appears to have relied primarily on Coroles v. Sabey, 2003 UT App 339, 79 P.3d 974.Coroles states that rule 9(b) of the Utah Rules of Civil Procedure imposes a “basic and fundamental requirement” of “clarity and conciseness.” See id. ¶ 23;see alsoUtah R. Civ. P. 9(b). The reasons for this requirement are to ensure
“that the essential facts upon which redress is sought be set forth with simplicity, brevity, clarity and certainty so that it can be determined whether there exists a legal basis for the relief claimed; and, if so, so that there will be a clearly defined foundation upon which further proceedings by way of responsive pleadings and/or trial can go forward in an orderly manner.”
Coroles, 2003 UT App 339, ¶ 23, 79 P.3d 974 (quoting Heathman v. Hatch, 13 Utah 2d 266, 372 P.2d 990, 992 (1962)).
¶ 10 Coroles also determined that the particulars necessary to plead a claim of fraud may not generally be supplied merely by incorporating all preceding factual allegations into a fraud claim. See id. ¶¶ 25–27. In Coroles, the plaintiffs attempted to plead a common law fraud claim with no specific factual allegations besides the bare incorporationof 660 preceding paragraphs. See id. ¶ 25. In light of the burdens that this method of pleading placed on the district court, we rejected it as “unacceptable.” See id. ¶ 27.
¶ 11 In the present case, despite the substantial length and complexity of the Second Amended Complaint, we are not convinced that it is automatically too long or involved in light of the number and complexity of Plaintiffs' claims. Coroles recognized that “[w]hether a complaint is ‘much too long and involved’ is ... dependent upon the complexity of...
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