White v. Jeppson
| Decision Date | 24 April 2014 |
| Docket Number | No. 20120997–CA.,20120997–CA. |
| Citation | 325 P.3d 888,759 Utah Adv. Rep. 11 |
| Court | Utah Court of Appeals |
| Parties | Mark WHITE and Irene White, Plaintiffs and Appellants, v. Peter JEPPSON; Alan Williams; Time and Money, LLC; Money Mastery, LLC; Desert Fortress, LLC; Piney Place, LLC; Time and Money Mastery Marketing; Business Development, LC; and Two Big Success, LLC, Defendants and Appellees. |
OPINION TEXT STARTS HERE
Richard R. Arnold Jr. and D. Scott Crook, for Appellants.
James D. Gilson and Nathan R. Denney, for Appellees.
Opinion
¶ 1 Plaintiffs Mark and Irene White challenge the district court's judgment in favor of Defendants.1 The district court granted in part the Defendants' motion for judgment on the pleadings because of Plaintiffs' failure to join indispensable parties. It also granted Defendants' motion targeting Plaintiffs' failure to timely designate an expert witness.2 We reverse and remand for further proceedings.
¶ 2 In 2005, in an effort to learn how to manage money more effectively, Plaintiffs enrolled in a financial course offered through a community education program. The course was taught by Defendants. Following the eight-week course, Plaintiffs met with Jeppson personally and entered into an agreement for Jeppson to become their personal financial coach. After the initial coaching sessions, Defendants began offering Plaintiffs different investment opportunities and introducing them to individuals who had potential real estate investment projects.
¶ 3 In 2005, Jeppson introduced Plaintiffs to a real estate broker named Todd Stadig. Plaintiffs claim that Jeppson “pushed” them to invest and that they eventually invested more than $3 million with Stadig and his related entities. Plaintiffs also allege that Jeppson failed to disclose that Stadig owed him large sums of money and that Jeppson and Stadig had “finder's fees” arrangements whereby Stadig paid Jeppson for each person Jeppson convinced to invest with Stadig.
¶ 4 Plaintiffs' investments with Stadig were not profitable, and they brought a separate action against him and related entities in 2009. They did not name or join Defendants as parties to that suit. In 2011, Plaintiffs obtained a judgment against Stadig for the full amount that they invested with him.
¶ 5 In the fall of 2005, Jeppson introduced Plaintiffs to an attorney named James Packer. Packer administered a real estate investment trust (the Packer REIT). Plaintiffs claim that while they investigated the Packer REIT, “Jeppson took a prominent role in encouraging them to invest” and made “representations about the investment.” Jeppson also represented to them that Defendants were invested in the Packer REIT and were receiving “big checks” from their investment.
¶ 6 Plaintiffs eventually invested over $800,000 in the Packer REIT and subsequently lost nearly all of it. According to Plaintiffs, they later learned not only that Defendants had never invested with the Packer REIT, but that Jeppson, Williams, and their related entities had some sort of consulting relationship with the Packer REIT. Plaintiffs initiated a separate legal proceeding against Packer and the Packer REIT in 2010. Defendants were not joined as parties to that suit, and it remains pending in the Fourth District Court.
¶ 7 In 2006, Jeppson introduced Plaintiffs to a real estate agent named Roger Beattie. Beattie presented Plaintiffs with the opportunity to purchase a motel that he managed in West Yellowstone, Montana. Plaintiffs allege that Jeppson encouraged them to purchase the motel and persuaded them that Williams should serve as a management consultant. Plaintiffs purchased the motel, allowing Beattie to continue managing the property, and hired an entity owned by Defendants to provide management consulting services through Williams. Plaintiffs allege that the motel did not meet their monthly income goals as Jeppson claimed it would, and Plaintiffs eventually sold it to Beattie in 2011 for the same amount as their purchase price.
¶ 8 In 2007, Defendants and a real estate agent formed Araunah, LLC in order to develop two townhouses on Nunley Court in Holladay, Utah. At Defendant's urging, Plaintiffs invested in the development. Plaintiffs did not realize any income from their investment because the homes never sold, and a bank eventually foreclosed on the properties.
¶ 9 As a result of Plaintiffs' losses in connection with these four transactions, they filed their complaint in district court alleging two causes of action against Defendants: (1) breach of fiduciary duty and (2) violation of Utah securities laws. Defendants filed a motion for judgment on the pleadings for failure to join indispensable parties. The district court granted Defendants' motion insofar as it related to Plaintiffs' claims involving Stadig, Beattie, and Packer, whom the district court deemed necessary, but denied the motion as it related to Plaintiffs' claims involvingthe Nunley Court transaction. Defendants also filed a motion for judgment on the pleadings and for summary judgment based on Plaintiffs' failure to designate an expert. The district court granted this motion because “in the absence of expert testimony on the requisite standard of care, causation, securities, and damages, Plaintiffs will be unable to prove their claims at trial.” Consequently, the district court dismissed all of Plaintiffs' claims against Defendants. Plaintiffs appeal.
¶ 10 Plaintiffs contend that the district court abused its discretion by ruling that they failed to join indispensable parties under rule 19 of the Utah Rules of Civil Procedure. “[A] trial court's determination properly entered under Rule 19 will not be disturbed absent an abuse of discretion.” Seftel v. Capital City Bank, 767 P.2d 941, 944 (Utah Ct.App.1989).
¶ 11 Plaintiffs also argue that the district court erred in granting Defendants' motion premised on Plaintiffs' failure to timely designate an expert. We treat this motion as one for summary judgment. See supra note 2. “We review a summary judgment determination ‘for correctness, granting no deference to the [district] court's legal conclusions.’ ” Salt Lake County v. Holliday Water Co., 2010 UT 45, ¶ 14, 234 P.3d 1105 (alteration in original) (quoting Hansen v. America Online, Inc., 2004 UT 62, ¶ 6, 96 P.3d 950).
¶ 12 Plaintiffs argue that the district court abused its discretion by determining that Stadig, Packer, and Beattie were indispensable parties to Plaintiffs' action. In considering whether unjoined parties are indispensable under rule 19 of the Utah Rules of Civil Procedure, we must first decide whether a party is necessary. See Johnson v. Higley, 1999 UT App 278, ¶ 29, 989 P.2d 61. “ ‘[A] necessary party is one whose presence is required for a full and fair determination of his rights as well as of the rights of the other parties to the suit.’ ” Id. (alteration in original) (quoting Cowen & Co. v. Atlas Stock Transfer Co., 695 P.2d 109, 114 (Utah 1984)). “Rule 19 requires joinder of such parties ‘to guard against the entry of judgments which might prejudice the rights of such parties in their absence.’ ” Johnson, 1999 UT App 278, ¶ 29, 989 P.2d 61 (quoting Cowen, 695 P.2d at 114). “Only if the party is necessary, but the court finds joinder unfeasible, must the court address indispensability under Rule 19(b).” Johnson, 1999 UT App 278, ¶ 29, 989 P.2d 61.
¶ 13 Assuming joinder will not deprive the court of its jurisdiction, a party is necessary to an action if
“(1) in [the party's] absence complete relief cannot be accorded among those already parties, or (2) [the party] claims an interest relating to the subject of the action and is so situated that the disposition of the action in [the party's] absence may (i) as a practical matter impair or impede [the party's] ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of [the party's] claimed interest.”
Turville v. J & J Properties, LC, 2006 UT App 305, ¶ 36, 145 P.3d 1146 (alterations in original) (quoting Utah R. Civ. P. 19(a)(1)-(2)). We conclude that Stadig, Packer, and Beattie are not necessary parties under rule 19.
¶ 14 First, complete relief can be granted among the parties in the absence of Stadig, Packer, and Beattie. The district court concluded that these parties were necessary because any damages that Plaintiffs suffered as a result of their failed investments would necessarily implicate the actions or inaction of Stadig, Packer, and Beattie. Defendants contend that joinder is therefore “necessary to prevent separate actions and inconsistent rulings on the issues of causation and damages.” However, it “has long been the rule that it is not necessary for all joint tortfeasors to be named as defendants in a single lawsuit.” Temple v. Synthes Corp., 498 U.S. 5, 7, 111 S.Ct. 315, 112 L.Ed.2d 263 (1990). See also PaineWebber, Inc. v. Cohen, 276 F.3d 197, 204 (6th Cir.2001) ( ).4
¶ 15 Defendants contend that Turville v. J & J Properties, LC, 2006 UT App 305, 145 P.3d 1146, should nonetheless control because, like the unjoined party in Turville, each of the unjoined parties in this case was an “instrumental participant” in the harm that is the subject of Plaintiffs' claims. Seeid. ¶ 39. However, the unusual factual backdrop...
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