Timm v. Dewsnup, 910157

• Citation: 851 P.2d 1178
• Decision Date: 27 April 1993
• Docket Number: No. 910157,910157
• Court: Utah Supreme Court
• Parties: Louis L. TIMM, John Neiuwland, and Floyd M. Childs, trustees of United Precision Machine and Engineering Company Profit Sharing Trust; ABCO Insurance Agency, Inc., a Utah corporation; and Joseph L. Henroid, trustee for the Annette Jacob Trust, Plaintiffs, Appellees, and Counterclaim Defendants, v. T. LaMar DEWSNUP and Aletha Dewsnup; Arrow Investment Co., a limited partnership; The Federal Land Bank of Berkley; Imperial Land Title Inc., as trustee and Eugene L. Carson and Elaine Carson as beneficiaries; Stringham, Masuran, Larsen & Sabin, a professional corporation; Mineral Fertilizer Co., Inc.; and Harry V. Kaps, Defendants, Appellants, and Counterclaimants.

Page 1178

851 P.2d 1178

Louis L. TIMM, John Neiuwland, and Floyd M. Childs, trustees

of United Precision Machine and Engineering Company Profit

Sharing Trust; ABCO Insurance Agency, Inc., a Utah

corporation; and Joseph L. Henroid, trustee for the Annette

Jacob Trust, Plaintiffs, Appellees, and Counterclaim Defendants, v. T. LaMar DEWSNUP and Aletha Dewsnup; Arrow Investment Co.,

a limited partnership; The Federal Land Bank of Berkley;

Imperial Land Title Inc., as trustee and Eugene L. Carson

and Elaine Carson as beneficiaries; Stringham, Masuran,

Larsen & Sabin, a professional corporation; Mineral

Fertilizer Co., Inc.; and Harry V. Kaps, Defendants,

Appellants, and Counterclaimants.

No. 910157.

Supreme Court of Utah.

April 27, 1993.

Michael Z. Hayes, Salt Lake City, for plaintiffs.

Russell A. Cline, Salt Lake City, for Dewsnups.

HOWE, Associate Chief Justice:

Defendant Aletha Dewsnup appeals the trial court's denial of her motions to (1) amend her counterclaim, and (2) either reconsider and set aside a summary judgment entered against her or certify the summary judgment as final so that she could appeal it. Defendant T. LaMar Dewsnup, Aletha's husband, died in 1986 during the pendency of this action.

FACTS

In June of 1978, the Dewsnups, farmers in Delta, Utah, with the help of two attorneys who the Dewsnups assert represented them, borrowed $119,000 for a two-year period to purchase a motel. The lenders were the Annette Jacob Trust, of which one of the attorneys was a trustee, the United Precision Machine and Engineering Company Profit Sharing Trust, and ABCO Insurance Agency, Inc. As security, the Dewsnups offered their 160-acre farm, together with its water rights. They were required to make an interest-only payment on the loan on June 1, 1979, and to pay the loan in full by June 1, 1980. The attorneys' firm prepared the loan documents that the Dewsnups executed, including three promissory notes and a trust deed to secure the notes. The Dewsnups later contended that they were not aware at that time (1) that the trust deed included, in addition to their farm, 56.71 acres of land in Oak City, Utah, that Aletha Dewsnup had inherited, and (2) that one of the papers they signed assigned to the lenders the Dewsnups' interest as purchasers in a real estate contract. The assignment was given as additional security for the notes.

The Dewsnups entered into the real estate contract in 1976 with Arrow Investment Company to purchase farm land adjacent to their farm. The contract provided that the $400,000 purchase price would be paid in twenty annual installments of $47,880.50, due on January 2 each year. The contract also stated that should the Dewsnups default on any payment and remain in default for five months (until June 2 of the same year), they would forfeit any interest in the contract and property.

The Dewsnups failed to timely pay the 1979 property taxes on the Arrow land and failed to make the 1980 annual January 2 payment on the Arrow contract. On June 7, 1980, the lenders made the January 2 payment and paid the past due 1979 property taxes. They then demanded that the Dewsnups reimburse them for those amounts because the assignment of contract required reimbursement for payments made by the lenders "under or pursuant to" the purchase contract. The Dewsnups refused to reimburse, contending that because the default terminated the purchase contract on June 2, by its own terms, the June 7 payments could not have been made under and pursuant to the purchase contract.

Although the Dewsnups had made the interest payment on the loan on June 1, 1979, they were unable to pay the loan in In December of 1980, the Dewsnups sold the motel, paid the $119,000 loan in full, and asked the lenders to reconvey the trust deed. The lenders refused unless they were reimbursed for the $47,880.50 payment they made on the Arrow contract and the 1979 property taxes in the sum of $2,085.71. In March of 1981, the lenders moved for summary judgment for those amounts plus attorney fees. Neither the motion for summary judgment nor the notice of the hearing on the motion mentioned the counterclaim.

full when it came due a year later. The lenders commenced a nonjudicial foreclosure of the trust deed, and in September of 1980, they filed this action against the Dewsnups to foreclose the assignment of contract because of their failure to pay the loan and to reimburse the lenders for the 1979 property taxes and the 1980 $47,880.50 installment on the Arrow contract. The Dewsnups engaged a new attorney who filed an answer and a counterclaim, seeking to (1) reform the trust deed to conform with what they asserted were the intentions of the parties, i.e., to include only the 160-acre farm and the water rights, and (2) vacate the assignment of the Arrow contract as security for the payment of the notes. The counterclaim alleged a breach of fiduciary duty on the part of their former attorneys, who the Dewsnups asserted had also acted on behalf of the lenders, in failing to fully advise the Dewsnups of the content of the loan documents.

The Dewsnups' attorney did not appear at the hearing, and the trial court granted summary judgment and a decree of foreclosure against their interest in the contract in favor of the lenders for the amounts sought in their motion. The summary judgment did not refer to the counterclaim by name. The lenders then pursued the foreclosure until April 23, 1981, when the Dewsnups filed chapter 11 (business reorganization) bankruptcy to forestall the foreclosure. The chapter 11 bankruptcy was never completed, and in June of 1984, the Dewsnups filed chapter 7 (liquidation) bankruptcy, which was pending at the time of this appeal. In March of 1986, the Dewsnups filed an adversary proceeding in bankruptcy court, primarily to determine whether they could void the lenders' lien in excess of the fair market value pursuant to 11 U.S.C. section 506. ¹

On January 6, 1991, the chapter 7 bankruptcy trustee abandoned the counterclaim the Dewsnups had filed in this action, and two weeks later, Mrs. Dewsnup filed (1) a motion to amend the counterclaim and (2) a motion to reconsider and set aside the summary judgment or, in the alternative, to certify the summary judgment as final pursuant to rule 54(b), Utah Rules of Civil Procedure, so that she could appeal it. The trial court denied both motions, holding that it had "implicitly" denied the counterclaim when it granted summary judgment in 1981 and that the summary judgment was "a final appealable judgment" at that time. Consequently, it would now be improper to certify it for appeal under rule 54(b).

ANALYSIS

Adjudication of Counterclaim

Mrs. Dewsnup contends that the trial court erred in denying her motion to amend her counterclaim. The denial was based on the court's determination that the counterclaim had been implicitly denied by the summary judgment and thus had been wholly disposed of and was no longer subject to amendment. She argues that the counterclaim and the issues raised therein were not before the court at the time the summary judgment was granted, that the counterclaim was unaffected by the judgment, and that the court should have addressed on its merits her motion to amend the counterclaim.

Rule 56(a) and (b), Utah Rules of Civil Procedure, states that a party seeking to recover on a claim, counterclaim, or cross-claim or the party against whom a claim, counterclaim, or cross-claim is asserted may move for summary judgment in his favor "upon all or any part thereof." We held in Bennion v. Amoss, 28 Utah 2d 216, 500 P.2d 512 (1972), that summary judgment on a complaint is not precluded by the existence of a counterclaim. Also, cases which raise issues of both fact and law may lend themselves to summary judgment only on issues of law.

The moving party determines the scope of a motion for summary judgment. That party decides what issues to present to the court for adjudication. He or she may move for summary judgment on all or less than all of the issues raised by the complaint and answer and may also move for determination of issues raised by any counterclaim or cross-claim if he or she deems it appropriate. When the moving party has decided what the scope of the motion for summary judgment shall be, rule 56 contemplates that a written motion shall be served on the opposite party setting forth with clarity the relief sought by the motion so that the opposite party may prepare to defend against it if he or she chooses to do so.

Summary judgment procedure is generally considered a drastic remedy, requiring strict compliance with the rule authorizing it. Parmelee v. Chicago Eye Shield Co., 157 F.2d 582, 168 A.L.R. 1130 (8th Cir.1946). In Lazar v. Allen, 347 So.2d 457 (Fla.Dist.Ct.App.1977), the court stressed the importance of "scrupulously observing the notice requirements" prior to entering summary judgment. The Florida Supreme Court has observed:

If the [requirements of the rules] are not fulfilled, both in letter and spirit, the summary judgment procedure may become a vehicle of injustice rather than a salutary medium of reaching a swift but just result on a pure matter of law, as intended by the framers of the rules.

Cleveland Trust Co. v. Foster, 93 So.2d 112, 114 (Fla.1957).

In accordance with that policy, the Florida District Court of Appeal in Faussner v. Wever, 432 So.2d 100 (Fla.Dist.Ct.App.1983), held that a summary judgment awarded to a seller in an action brought by a buyer seeking specific performance did not mean that the seller was also necessarily entitled to summary judgment on his counterclaim against the buyer for retention of the earnest money. The court held that in order to recover on the counterclaim, the seller had to make a motion for summary judgment to that effect and give notice as required by the rules of civil procedure. In a later decision of the same court, Redding v. Powell, 452 So.2d 132 (Fla.Dist.Ct.App.1984), at...