Wilcox v. Geneva Rock Corp., 940518

• Decision Date: 02 February 1996
• Docket Number: No. 940518,940518
• Citation: 911 P.2d 367
• Parties: Robert E. WILCOX, Liquidator of Southern American Insurance Co., Plaintiff and Appellant, v. GENEVA ROCK CORPORATION, a Utah corporation, Defendant and Appellee.
• Court: Utah Supreme Court

Page 367

911 P.2d 367

Robert E. WILCOX, Liquidator of Southern American Insurance Co., Plaintiff and Appellant, v. GENEVA ROCK CORPORATION, a Utah corporation, Defendant and Appellee.

No. 940518.

Supreme Court of Utah.

Feb. 2, 1996.

Randall R. Smart, Michael A. Day, Salt Lake City, for plaintiff.

R. Stephen Marshall, James D. Gilson, Salt Lake City, for defendant.

HOWE, Justice:

Plaintiff Robert E. Wilcox, in his capacities as Utah Insurance Commissioner and acting liquidator of Southern American Insurance Company (SAIC), appeals from a summary judgment dismissing a complaint in which he sought to recover, under a fraudulent transfer theory, payments made by SAIC to Geneva Rock Products, Inc. (Geneva).

Since this review involves a grant of summary judgment, "we view the facts and all reasonable inferences drawn therefrom in the light most favorable to the nonmoving party." Higgins v. Salt Lake County, 855 P.2d 231, 233 (Utah 1993) (citations omitted).

Between August 8, 1989, and January 9, 1990, SAIC paid Geneva $250,989.73 in five installments to settle a court collection order against Suzanne Borcherds, an owner of SAIC. On March 25, 1992, Harold C. Yancey, acting as Utah Insurance Commissioner, petitioned for a liquidation order on SAIC in the district court. The court granted the petition and issued a liquidation order on the following day, March 26, 1992.

On March 25, 1994, plaintiff Wilcox, in his capacities as Utah Insurance Commissioner and acting liquidator of SAIC, filed a complaint in the district court to avoid and recover pre-petition fraudulent transfers. The complaint incorrectly named as defendant "Geneva Rock Corporation, a Utah Corporation," rather than "Geneva Rock Products, Inc., a Utah Corporation." However, a summons that correctly named Geneva and a copy of the complaint were served on Don McGee, manager and vice president of Geneva Rock Products, Inc., at its corporate offices.

Geneva moved to dismiss for failure to state a claim upon which relief can be granted on the grounds that Wilcox had filed the complaint (1) against the wrong entity, and (2) after the end of the allowable statutory periods for recovery of fraudulent transfers and for claims asserted in connection with liquidation orders. Wilcox responded, arguing that (1) the mistaken name in the complaint was a nonprejudicial misnomer, not a fatal defect which would justify dismissal, and (2) the statutes of limitations did not bar the filing of the complaint. Wilcox contended that the misnomer should be corrected by amendment and moved for leave to amend the caption of the complaint.

The district court granted Geneva's motion to dismiss, treating it "as a motion for summary judgment because matters outside the pleadings were considered." The dismissal was based on untimely filing of the complaint and the failure to state a claim due to the misnaming of defendant in the pleadings. The court was not requested to rule and thus did not rule on the motion to amend the caption. Wilcox appeals from the grant of summary judgment, assailing the dismissal as error.

Summary judgment is proper only when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Utah R.Civ.P. 56(c); Higgins, 855 P.2d at 235. Therefore, "[w]e determine only whether the trial court erred in applying the governing law and whether the trial court correctly held that there were no disputed issues of material fact." Ferree v. State, 784 P.2d 149, 151 (Utah 1989). We make this determination without deference to the trial court's resolution of the legal issues considered. Higgins, 855 P.2d at 235; Ferree, 784 P.2d at 151.

We first address the timeliness of filing the complaint. Wilcox's action against Geneva is grounded in fraudulent transfer. Under Utah Code Ann. §§ 25-6-5(1)(b), 25-6-10(2), and 78-12-25(2), such claims are subject to a four-year statute of limitations. Since SAIC's payment of funds to Geneva began on August 8, 1989, and terminated on January 9, 1990, the four-year period which would encompass all of the payments ended on August 8, 1993. However, section 31A-27-317(3) in chapter 27 of the insurance code, titled "Insurers Rehabilitation and Liquidation," provides:

The liquidator may, within two years subsequent to an order for liquidation or within any further time as applicable law permits, institute an action or proceeding on behalf of the estate of the insurer upon any cause of action against which the period of limitation fixed by applicable law had not expired at the time of the filing of the petition.

Therefore, since the period of limitation "fixed by applicable law" (here, four years for the recovery of fraudulent transfers) had not expired when the petition for a liquidation order was filed, Wilcox had two years subsequent to the liquidation order to institute this action.

Geneva contends that March 25, 1994, the date on which Wilcox filed the complaint, was not "within two years subsequent to [the] order for liquidation" as required by section 31A-27-317(3). Although the liquidation order was signed on March 26, 1992, Geneva points out that by its terms it was effective on the previous day, March 25, when the petition for the liquidation order was filed. This apparently was done pursuant to section 31A-27-310(2), which provides that all rights and liabilities are fixed as of the date of the filing of the petition for liquidation. Thus Geneva argues that the two-year period of limitation began to run on March 25, 1992, because the complaint could have been filed on that date. Under that argument, the last day of the allowable two-year period would be March 24, 1994, and Wilcox's filing on March 25, 1994, was one day too late.

We reject Geneva's contention. We conclude that the determination of the two-year period is governed by section 68-3-7, which provides, "The time in which any act provided by law is to be done is computed by excluding the first day and including the last, unless the last is a holiday, and then it is also excluded." In addition, rule 6(a) of the Utah Rules of Civil Procedure states:

In computing any period of time prescribed or allowed by these rules ... or by any applicable statute, the day of the act, event, or default from which the designated period of time begins to run shall not be included. The last day of the period so computed shall be included....

We adopted a straightforward interpretation of this statute and rule in Gilroy v. Lowe, 626 P.2d 469, 471 (Utah 1981), stating, "When the time period is measured in months or years from a certain date, the day from which the time period is to run is excluded and the same calendar date of the final month or year is included."

We have consistently followed this interpretation in construing allowable time periods in many contexts, although admittedly it does allow a plaintiff an extra day if we grant that he or she could file a complaint on the day of the event, such as the occurrence of a tort or the signing of a contract. We hold that Wilcox filed his complaint exactly two years after the date on which he filed the petition for a liquidation order and two years minus one day subsequent to the grant of that order. Because Wilcox's filing was timely in either case, we do not reach the issue of whether it is the filing of the petition or the grant of the order which starts the two-year statute of limitations running.

We next address the mistake in the pleadings. Geneva argues that since the complaint erroneously named as defendant Geneva Rock Corporation rather than Geneva Rock Products, Inc., the complaint failed to state a cause of action against Geneva and the corporation was not put on notice of the proceedings within the limitations period. However, Utah Rule of Civil Procedure 15(a) provides for the amendment of a pleading, instructing that "leave [to amend] shall be freely given when justice so requires." This court has interpreted this rule consistently with the liberal pleading practices mandated by rule 8 of the Federal Rules of Civil Procedure. In Williams v. State Farm Insurance Co., we reiterated that "the fundamental purpose of our liberalized pleading rules is to afford parties 'the privilege of presenting whatever legitimate contentions they have pertaining to their dispute.' " Williams v. State Farm Ins. Co., 656 P.2d 966, 971 (Utah 1982) (quoting Cheney v. Rucker, 14 Utah 2d 205, 211, 381 P.2d 86, 91 (1963)). "What [the parties] are entitled to is notice of the issues raised and an opportunity to meet them. When this is accomplished, that is all that is required." Cheney, 381 P.2d at 91.

When the statute of limitations has expired before an amendment to a pleading is made, the amendment must relate back to the date of...