State v. HCIC

Decision Date30 July 2002
Docket NumberNo. 20000413.,20000413.
Citation52 P.3d 1257,2002 UT 75
PartiesSTATE of Utah, Department of Natural Resources, Division of Wildlife Resources, Plaintiff and Appellant, v. HUNTINGTON-CLEVELAND IRRIGATION CO., Defendant and Appellee.
CourtUtah Supreme Court

Mark L. Shurtleff, Att'y Gen., Michael M. Quealy, Norman K. Johnson, Martin B. Bushman, Asst. Att'ys Gen., Salt Lake City, for plaintiff.

J. Craig Smith, David B. Hartvigsen, Salt Lake City, for defendant.

RUSSON, Justice:

¶ 1 The Utah Department of Wildlife Resources ("DWR"), a shareholder in the Huntington-Cleveland Irrigation Company ("HCIC"), filed a complaint to challenge unequal share assessments levied by HCIC and the reduction of DWR's voting rights. The trial court dismissed the complaint, finding that the statute of limitations precluded the claims asserted therein. We reverse and remand.

BACKGROUND

¶ 2 When determining whether a trial court properly dismissed an action, we accept the factual allegations in the complaint as true and consider them, and all reasonable inferences to be drawn from them, in the light most favorable to the nonmoving party. See, e.g., Riddle v. Perry, 2002 UT 10, ¶ 2, 40 P.3d 1128; Clark v. Deloitte & Touche LLP, 2001 UT 90, ¶ 2, 34 P.3d 209. We recite the facts accordingly.

¶ 3 HCIC, a Utah mutual nonprofit irrigation company, delivers water to its shareholders and charges each shareholder an annual assessment relating to the amount of water the shareholder receives from the HCIC canal system. DWR is an HCIC shareholder and uses HCIC water to cultivate crops that are not harvested but are left onsite for wildlife forage. This dispute arises out of the assessment of HCIC shares held by DWR.

¶ 4 In 1977, HCIC amended its articles of incorporation to permit unequal share assessments. The amended articles instructed the HCIC board of directors to consider the purpose of water use when making assessments.

¶ 5 Ten years later, in 1987, HCIC again amended its articles of incorporation. This amendment modified the rights of shareholders who used the water received under their shares for "municipal and industrial use." Under the amended articles, the voting rights of such shareholders were limited to voting only at HCIC's annual meeting to approve newly elected directors. The amended articles also directed the board to levy an additional assessment on shares used for municipal and industrial purposes, increasing the assessment on those shares.

¶ 6 In January 1995, the HCIC board of directors adopted bylaws that defined the terms "irrigation use" and "municipal and industrial use" as used in the 1987 amended articles of incorporation. As defined in the bylaws, "irrigation use" means "water applied to land for crop or livestock-feed production purposes for pecuniary gain," and "municipal and industrial use" refers to all other uses not classified as "irrigation use."

¶ 7 As a result, in February 1995, HCIC informed DWR that it could no longer vote a portion of its shares at HCIC meetings for the election of officers because those shares had been reclassified as "municipal and industrial use" pursuant to the 1987 change in the articles of incorporation and the 1995 adoption of bylaws. DWR protested this reclassification. On October 11, 1995, DWR received the first annual assessment under the amended articles of incorporation and bylaws that reclassified some of DWR's shares as municipal and industrial shares ("M & I shares"), and left the remaining shares as irrigation shares. The shares reclassified as M & I shares were subject to the additional assessment and the reduced voting rights.

¶ 8 In 1996, HCIC reduced the number of DWR's shares it considered to be M & I shares. However, in 1999, HCIC reconsidered and determined that all of DWR's shares were M & I shares, subject to decreased voting rights and increased annual assessments, because DWR's crops irrigated by the HCIC canal system failed to meet the pecuniary gain requirement in order for DWR's water use to be classified as "irrigation use." From 1995 to 1998, DWR paid its annual assessment under protest. Ultimately, DWR filed a complaint on June 14, 1999, which it then amended on August 16, 1999, asking the trial court to hold that none of its shares should be classified as M & I shares. On September 3, 1999, HCIC moved to dismiss DWR's amended complaint under Utah Rule of Civil Procedure 12(b)(6), arguing, inter alia, that the statute of limitations had run.

¶ 9 On April 20, 2000, the trial court dismissed DWR's complaint, concluding that the applicable statutes of limitation had expired. Specifically, the trial court found (1) that each of DWR's claims was based either upon an implied contract between DWR and HCIC or upon alleged violations of the Utah Code, and (2) that all contract and statutory violations occurred no later than February 1995. Accordingly, the trial court held that the four-year statute of limitations in section 78-12-25(1) of the Utah Code that applies to claims based upon an implied contract, as well as the three-year statute of limitations in section 78-12-26(4) that applies to liability predicated upon Utah statutes, precluded DWR from pursuing all of its causes of action.

¶ 10 DWR appeals the trial court's dismissal of its amended complaint. The primary issues on appeal are whether DWR's claims are barred by the statutes of limitation in sections 78-12-25(1) and 78-12-26(4) of the Utah Code.

STANDARD OF REVIEW

¶ 11 The determination of whether the trial court properly concluded that the statute of limitations expired to bar DWR's action is a question of law that we review for correctness. Quick Safe-T Hitch, Inc. v. RSB Sys. L.C., 2000 UT 84, ¶ 10, 12 P.3d 577; see also State v. Lusk, 2001 UT 102, ¶ 11, 37 P.3d 1103

.

ANALYSIS

I. STATUTE OF LIMITATIONS

A. Implied Contracts

¶ 12 The resolution of whether the statute of limitations expired on DWR's implied contract claims depends upon when the four-year limitation period commenced. This determination hinges upon the construction of Utah Code section 78-12-25(1).1 The trial court determined that the four-year limitation period began running no later than February 1995 when HCIC informed DWR that it could no longer vote a portion of its shares under the January 1995 bylaws. The trial court's interpretation of this statute is a question of law that we review for correctness. State ex rel. Div. of Forestry, Fire & State Lands v. Tooele County, 2002 UT 8, ¶ 8, 44 P.3d 680.

¶ 13 In interpreting statutes, our paramount concern is to give effect to the legislative intent, manifested by the plain language of the statute. State v. Lusk, 2001 UT 102, ¶ 19, 37 P.3d 1103; Regal Ins. Co. v. Bott, 2001 UT 71, ¶ 10, 31 P.3d 524; City of Hildale v. Cooke, 2001 UT 56, ¶ 36, 28 P.3d 697. Unless a statute is ambiguous, we will not look beyond the plain language of the statute. Lusk, 2001 UT 102 at ¶ 9, 37 P.3d 1103. In doing so, we "`presume that the legislature used each word advisedly and [we] give effect to the term according to its ordinary and accepted meaning,'" C.T. v. Johnson, 1999 UT 35, ¶ 9, 977 P.2d 479 (quoting Nelson v. Salt Lake County, 905 P.2d 872, 875 (Utah 1995)), and "we seek `to render all parts [of the statute] relevant and meaningful,'" Hall v. State Dep't of Corr., 2001 UT 34, ¶ 15, 24 P.3d 958 (quoting Millett v. Clark Clinic Corp., 609 P.2d 934, 936 (Utah 1980)).

¶ 14 Unless otherwise provided, a civil action "may be commenced only within the periods prescribed in [chapter twelve of title seventy-eight], after the cause of action has accrued." Utah Code Ann. § 78-12-1 (1996); see also Davidson Lumber Sales, Inc. v. Bonneville Inv., Inc., 794 P.2d 11, 19 (Utah 1990)

. The plain language of section 78-12-25(1) is unambiguous regarding when the four-year limitation period begins to run on implied contracts. That section provides:

An action may be brought within four years:
(1) upon a contract, obligation, or liability not founded upon an instrument in writing; also on an open account for goods, wares, and merchandise, and for any article charged on a store account; also on an open account for work, labor or services rendered, or materials furnished; provided, that action in all of the foregoing cases may be commenced at any time within four years after the last charge is made or the last payment is received . . . .

Utah Code Ann. § 78-12-25(1) (emphasis added).

¶ 15 The plain language unequivocally provides that an action "may be commenced at any time within four years after the last charge is made or the last payment is received" ("statute of limitations trigger phrase") in all of the situations listed in section 78-12-25(1), which are actions on an open account on goods, on an open account for work or services rendered, or "upon a contract, obligation, or liability not founded upon an instrument in writing." Id.; see also CIG Exploration, Inc. v. State, 2001 UT 37, ¶¶ 9-10, 24 P.3d 966

. The legislature's use of the phrase "in all the foregoing cases" clearly indicates the legislature's intent that the statute of limitations trigger phrase apply to all cases explicitly enumerated in the statute, including implied contracts. Construing the statute otherwise would render the last phrase of the "statute superfluous or inoperative," contrary to Utah law. Hall, 2001 UT 34 at ¶ 15, 24 P.3d 958.

¶ 16 Moreover, this interpretation of section 78-12-25(1) comports with "[a]n application of `elementary rules of punctuation and grammar.'" State ex rel. Div. of Forestry, Fire & State Lands v. Tooele County, 2002 UT 8, ¶ 13, 44 P.3d 680 (quoting Newspaper Agency Corp. v. Auditing Div. of State Tax Comm'n, 938 P.2d 266, 271 (Utah 1997)). In section 78-12-25(1), the punctuation, which we do not arbitrarily ignore, bolsters the construction of the statute that the limitation period commences either when the final charge is made or the final payment is received. Id....

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