Records v. Briggs

• Decision Date: 13 December 1994
• Docket Number: No. 930776-CA,930776-CA
• Citation: 887 P.2d 864
• Parties: Loretta Penfold RECORDS, aka Loretta Gallent, Plaintiff and Appellee, v. Gary M. BRIGGS, Defendant and Appellant.
• Court: Utah Court of Appeals

Page 864

887 P.2d 864

Loretta Penfold RECORDS, aka Loretta Gallent, Plaintiff and Appellee, v. Gary M. BRIGGS, Defendant and Appellant.

No. 930776-CA.

Court of Appeals of Utah.

Dec. 13, 1994.

George W. Preston and Joseph M. Chambers, Preston & Chambers, Logan, for appellant.

Gary N. Anderson, Hillyard, Anderson & Olsen, Logan, for appellee.

Before BILLINGS, ORME and WILKINS, JJ.

OPINION

WILKINS, Judge:

Gary Briggs appeals the grant of summary judgment against him in favor of Loretta Gallent. We reverse the summary judgment and remand to the trial court for further proceedings.

BACKGROUND

In 1981, Gary Briggs, then a resident of California, purchased a limited partnership interest in Crane Development, Ltd. Briggs purchased his interest with $57,750 cash and a promissory note (Crane note) for $70,882, due and payable to the general partner in November 1990. Crane Development, a Louisiana limited partnership, was created for the funding and development of a crane simulator to be used for training crane operators. At the time relevant to the present case, Simulator Research, Inc. was Crane Development's general partner. Also at the time, Loretta Records, now known as Loretta Gallent, was the majority shareholder of Simulator Research.

Shortly after the formation of the partnership, Crane Development entered an agreement with Digicrane, Inc. ¹ to provide to Digitran the necessary research and development for the simulators and, in return, to receive royalties from Digitran on the simulator sales. At all times relevant to this action, Gallent also served as president of Digitran.

On April 1, 1986, Digitran offered Briggs an option to discount the Crane note and purchase Briggs's partnership interest. In exchange for $30,400 cash and transfer of the partnership interest, Briggs was to receive 40,533 shares of Digitran stock and a release from any obligation on the Crane note. Briggs, a resident of Colorado at the time, exercised his option to discount the Crane note on April 30, 1986.

Originally, the Digitran stock was to be delivered in June 1986, but Digitran apparently experienced legal difficulties in issuing the new shares. Finally, in October 1987, Briggs went to Louisiana and complained to Gallent that Digitran had not delivered the stock owed him nor paid to Crane Development royalties on simulator sales. In order to satisfy Briggs, Gallent executed an irrevocable stock power and delivered to Briggs a stock certificate representing 32,190 shares of her personal Digitran stock. Gallent gave her stock to Briggs as collateral to secure performance of Digitran's obligations to him. Briggs returned to Colorado, and subsequently moved to Texas.

In March 1988, Briggs complained that he still had not received the Digitran stock owed him. Digitran then paid Briggs interest on the $30,400 he had advanced in 1986.

Finally, on November 22, 1988, Digitran issued the 40,533 shares due to Briggs. Gallent then asked her secretary to retrieve her personal shares from Briggs. Apparently, no real efforts were made to recover the pledged stock at this time. Later that month, Gallent and Digitran relocated to Logan, Utah.

In September 1989 and thereafter, Briggs continued to complain to Gallent that he had not received his share of royalties owed by Digitran to Crane Development. Finally, in August 1990, Briggs had the certificate representing the pledged shares of stock transferred from Gallent's name to his own.

On January 3, 1992, Gallent filed a complaint against Briggs in Utah, charging Briggs with breach of their pledge agreement and conversion of her personal shares. Briggs filed a motion to join Digitran, Crane Development, and others as indispensable parties to the action. The trial court denied the motion. Subsequently, Briggs filed a motion for summary judgment, claiming that the statute of limitations had run on Gallent's action. Gallent then filed a cross-motion for summary judgment against Briggs. The trial court denied Briggs's motion, concluding that none of the possible statutes of limitations that might apply had run on Gallent's cause of action. The trial court did, however, grant Gallent's motion for summary judgment against Briggs. Briggs appeals.

ISSUES ON APPEAL

Briggs bases his appeal on the grounds that the trial court (1) erred in concluding that Gallent's claim was not barred by the applicable statute of limitations, (2) erred in granting summary judgment because a genuine issue of material fact remains to be resolved, (3) incorrectly based the summary judgment on evidence received in violation of the parol evidence rule, (4) incorrectly considered an exhibit introduced by Gallent to be binding on Briggs even though the document fails to satisfy the statute of frauds, and (5) abused its discretion in failing to join indispensable parties to the action.

ANALYSIS

I. Conflict of Laws Problem

The parties dispute which state's law applies to this case as a whole and to the limitations issue in particular. The trial court made no express determination on the matter. Nevertheless, the question of which state's law should apply to a case or to a particular issue is a question of law, and we would accord no deference to the trial court's conclusion in any event. Shaw v. Layton Constr. Co., 872 P.2d 1059, 1061 (Utah App.1994).

Since Louisiana, Texas, and Utah could all claim some interest in the present case, we must resolve whose substantive law applies. This determination is necessary because statutes of limitation can be either substantive or procedural in nature. See Rhoades v. Wright, 622 P.2d 343, 349 (Utah 1980). Accordingly, we must first determine which state's substantive law applies and then decide whether that state's applicable statute of limitation should be considered substantive or procedural. Furthermore, even if the statute is merely procedural in nature, we need to know whether that state's limitation period has run on Gallent's cause of action because Utah's "borrowing statute" serves to bar in this state any cause of action that has arisen in another state and would be time barred in that state. Utah Code Ann. § 78-12-45 (1992). ²

Because Utah is the forum state, Utah's choice of law rules determine the outcome of the conflict. Shaw, 872 P.2d at 1063. We apply the "most significant relationship" approach, as described in the Restatement (Second) of Conflict of Laws, in determining which state's law should apply in actions involving torts, contracts, property interests, and the like. ³ See, e.g., Forsman v. Forsman, 779 P.2d 218, 219-20 (Utah 1989) (applying "most significant relationship" analysis to torts case).

For many years, Utah followed the lex loci ⁴ approach to resolving conflicts, as set forth in the first Restatement of Conflict of Laws. See, e.g., Velasquez v. Greyhound Lines, Inc., 12 Utah 2d 379, 381-82, 366 P.2d 989, 991 (Utah 1961) (applying rule of lex loci delictus ⁵ regarding torts), overruled on other grounds by Harris v. Utah Transit Auth., 671 P.2d 217 (Utah 1983); Crofoot v. Thatcher, 19 Utah 212, 213, 57 P. 171, 173 (Utah 1899) (applying rule of lex loci contractus ⁶ regarding contracts). More recently, however, the Utah Supreme Court followed the "most significant relationship" torts analysis in Forsman, 779 P.2d at 219-20.

Accordingly, we conclude that Utah should also apply the "most significant relationship" analysis to determine the proper choice of law in contract disputes, as articulated in the Restatement (Second). We doubt that our supreme court intended to apply the new approach in tort cases alone, while retaining the old approach in all other cases. ⁷ Following this same reasoning, several federal cases have also concluded that Utah courts would apply the "most significant relationship" test in contract matters as well as tort matters. See Rocky Mountain Helicopters, Inc. v. Bell Helicopter Textron, Inc., 24 F.3d 125, 129 (10th Cir.1994); Mountain Fuel Supply v. Reliance Ins. Co., 933 F.2d 882, 888 (10th Cir.1991) (concluding that, while not yet formally embraced by Utah courts, most significant relationship analysis would be adopted in Utah for contract cases).

A. Characterization of the Action

To apply the "most significant relationship" test, we must first characterize the nature of the cause of action. This is necessary because the particular factors to be considered under this approach vary according to the type of action brought. ⁸ Gallent argues that the present case should be characterized as a contract matter, while Briggs argues that it is a personal property or tort matter. "[T]he characterization of an action must be made in accordance with the law of the forum." Forsyth v. Cessna Aircraft Co., 520 F.2d 608, 611 (9th Cir.1975). In characterizing a cause of action, Utah courts look to the nature of the action and not the pleading labels chosen. Accordingly, we are most concerned with the true nature of the wrong and the injury as evidenced in the substance of the pleadings. See, e.g., Davidson Lumber Sales, Inc. v. Bonneville Inv., Inc., 794 P.2d 11, 14 (Utah 1990) (court should look to nature of action and not pleading labels chosen); Holm v. B & M Serv., Inc., 661 P.2d 951, 953 (Utah 1983); Taylor Bros. Co. v. Duden, 112 Utah 436, 440, 188 P.2d 995, 996 (Utah 1948) (court must look to nature of cause of action); Reese v. Qualtrough, 48 Utah 23, 33, 156 P. 955, 959 (1916) ("Neither the form of the proceeding nor the name applied to it can change the nature of the wrong or the injury."). ⁹

Gallent clearly bases her complaint on an oral agreement between Briggs and herself as to the purpose behind giving Briggs her stock. In the complaint, Gallent states that she agreed to transfer to Briggs some of her personal stock to secure Digitran's promises to relieve Briggs from liability on the Crane note and to transfer to him the Digitran shares. The complaint further alleges that Gallent delivered her personal shares to...