Swift Stop, Inc. v. Wight

• Decision Date: 18 December 1992
• Docket Number: No. 910065-CA,910065-CA
• Citation: 845 P.2d 250
• Parties: SWIFT STOP, INC., et al., Plaintiffs and Appellants, v. Gerald WIGHT, Defendant and Appellee.
• Court: Utah Court of Appeals

Page 250

845 P.2d 250

SWIFT STOP, INC., et al., Plaintiffs and Appellants, v. Gerald WIGHT, Defendant and Appellee.

No. 910065-CA.

Court of Appeals of Utah.

Dec. 18, 1992.

John Spencer Snow and Louise T. Knauer, Salt Lake City, for plaintiffs and appellants.

Thomas L. Kay and Paul D. Newman, Salt Lake City, for defendant and appellee.

Before BILLINGS, JACKSON and RUSSON, JJ.

OPINION

JACKSON, Judge:

Appellants (Swift Stop) appeal the district court's order granting a motion for summary judgment and denying a motion to amend. We reverse and remand in part the grant of summary judgment and affirm the denial of the motion to amend.

FACTS

Swift Stop, a Utah Corporation, began operating as a gas station/convenience store in 1981. Swift Stop leased gasoline pumps, signs, and refrigerator cooling equipment from Charter Thrift. In connection with this lease, James Byars, a Swift Stop shareholder, executed a personal guaranty on the debt owed to Charter Thrift. Swift Stop obtained its gasoline from several sources, including Kellerstrass Brothers, Inc. (Kellerstrass). In January of 1983, Kellerstrass obtained a judgment against Swift Stop for $20,361.71. After entry of the judgment, Swift Stop filed a Chapter 11 bankruptcy petition through the law firm of Vlahos, Perkins & Sharp. After the petition was filed, attorney Gerald Wight began working on the case. Swift Stop continued to operate the store during the pendency of the bankruptcy, purchasing gasoline with money borrowed from Citizens Bank. During this time, Wight stipulated that Citizens Bank would be paid for the gasoline purchased.

On May 20, 1983, Wight filed a disclosure statement and plan of reorganization calling for a 25% repayment to Kellerstrass and a 100% repayment to smaller creditors. Kellerstrass opposed the plan and the bankruptcy court denied confirmation of the plan after a hearing on January 30, 1984. On November 29, 1984, the bankruptcy court ordered Swift Stop to have a plan confirmed by the end of February, 1985. Swift Stop allegedly instructed Wight to file a 100% repayment plan for all creditors. Wight did not file the plan. Rather, at a bankruptcy hearing on February 26, 1985, Wight explained to the court that he had not filed a 100% repayment plan because if the plan were approved, it would moot a pending appeal concerning the 25% repayment plan. In the alternative, Wight orally presented a 100% repayment plan to be paid out over five years. At the hearing, counsel for Kellerstrass stated that Kellerstrass wanted to receive the 100% repayment on a shorter term; however, by affidavit submitted later, he alleged that he was always willing to accept a 100% repayment plan on behalf of Kellerstrass. The bankruptcy judge determined that the evidence presented concerning the 100% repayment plan was "not conclusive as to feasibility" and that the case was "not in any position where there can be a confirmation hearing on the amended plan." Accordingly, the court denied confirmation of the 100% repayment plan.

The dismissal of the 25% plan was affirmed on October 17, 1985, and the bankruptcy was dismissed on October 25, 1985, based upon a motion by Swift Stop. Swift Stop continued to operate the store after the bankruptcy was dismissed but later went out of business.

Swift Stop filed a complaint alleging the following legal malpractice claims arising from Gerald Wight's representation of Swift Stop in the Chapter 11 bankruptcy proceeding: (1) Wight stipulated, without Swift Stop's authorization, that the debt owed to Citizens Bank was nondischargeable; (2) Swift Stop instructed Wight to propose a 100% repayment plan and Wight failed to do so; and (3) Plaintiff James Byars was personally obligated to pay a Swift Stop obligation because of Wight's negligence. After completing his discovery, Wight filed a motion for summary judgment. Swift Stop then filed a motion to amend its complaint. The trial court denied the motion to amend and granted the motion for summary judgment on the grounds that Swift Stop failed to show that Wight's actions proximately caused Swift Stop any harm. Swift Stop appeals both actions.

STANDARD OF REVIEW

In reviewing the grant of a motion for summary judgment, we review the facts in the light most favorable to the losing party, while giving no deference to the trial court's legal conclusions. Projects Unlimited, Inc. v. Copper State Thrift & Loan Co., 798 P.2d 738, 743 (Utah 1990). A trial court's decision not to allow a party to amend its complaint will not be disturbed on appeal absent an abuse of discretion. Kasco Servs. Corp. v. Benson, 831 P.2d 86, 92 (Utah 1992); Girard v. Appleby, 660 P.2d 245, 248 (Utah 1983).

ANALYSIS

First Cause of Action

Swift Stop contends that Wight, without proper authorization, entered into a stipulation on behalf of Swift Stop providing that the debt owed to Citizens Bank was nondischargeable. The trial court granted summary judgment on this issue, finding that even if Wight were negligent in entering into the stipulation, Swift Stop failed to show Wight's actions caused Swift Stop any harm. We agree.

Even if Swift Stop did not authorize the stipulation, Wight did not cause Swift Stop any harm because the debt to Citizens Bank was an expense incurred by Swift Stop in the day-to-day operation of the business after the commencement of the bankruptcy proceedings. Therefore, the debt was an administrative debt not dischargeable in bankruptcy regardless of the stipulation. See 11 U.S.C. §§ 503, 727(b). ¹

Second, Third, and Fourth Causes of Action

Swift Stop's second cause of action asserts that Wight was negligent in failing to prepare and properly submit a 100% repayment plan. Its third cause of action contends Wight breached an oral contract with Swift Stop when Wight failed to submit the 100% repayment plan. Swift Stop's fourth cause of action alleges that because of Wight's negligence, James Byars, one of Swift Stop's shareholders, was required to pay Swift Stop's obligation to Charter Thrift.

Swift Stop asserts, through its pleadings and affidavits, that its shareholders were ready to invest funds to assure the feasibility of the 100% plan and that the plan would have been approved if properly submitted. Swift Stop further contends that because the plan was not submitted and approved, Swift Stop went out of business, causing the shareholders to suffer losses, such as having to pay debts owed by Swift Stop. However, Wight contends that the plan never would have been approved because Kellerstrass did not approve the plan at the February 26, 1985, hearing and the judge determined the plan was not economically feasible. Wight further alleges that even if the plan had been approved, Swift Stop could not have successfully operated under the plan. The trial court found that "plaintiffs failed to establish a causal connection between the alleged negligence of defendant Wight and any alleged damage suffered by plaintiffs...."

Proximate causation is "[t]hat cause which in natural and continuous sequence, unbroken by an efficient intervening cause, produces...