Yknot Global Limited v. Stellia Limited

2016 UT App 132

THE UTAH COURT OF APPEALS

YKNOT GLOBAL LIMITED,
Appellant,
v.
STELLIA LIMITED, KENNETH CASSAR,
AND DOMINIC TAMPONE,
Appellees.

Opinion
No. 20140313-CA
Filed June 23, 2016

Third District Court, Salt Lake Department
The Honorable Andrew H. Stone
No. 130901334

Jeffrey J. Steele and Justin R. Baer, Attorneys
for Appellant
Eric K. Schnibbe and David Paul Steiner, Attorneys
for Appellees

JUDGE J. FREDERIC VOROS JR. authored this Opinion, in which
JUDGE GREGORY K. ORME and SENIOR JUDGE RUSSELL W. BENCH
concurred.1

VOROS, Judge:

¶1 This is one of two appeals arising from a business dispute
between two companies, Yknot Global Limited and Stellia
Limited. In this appeal, Yknot asserts that the district court erred
by refusing to set aside its second voluntary dismissal under rule
60(b)(6) of the Utah Rules of Civil Procedure. We affirm.

1. Senior Judge Russell W. Bench sat by special assignment as
authorized by law. See generally Utah R. Jud. Admin. 11-201(6).
 Yknot Global Limited v. Stellia Limited

BACKGROUND

¶2 Yknot, organized in the United Kingdom and based in
Salt Lake County, sells various products online. Stellia,
organized and based in Malta, provides electronic credit card
processing services to online sellers—including, for a time,
Yknot. At some point a dispute arose between the two
companies; the nature of that dispute does not bear on the
questions presented on appeal.

¶3 This appeal involves three claims filed by Yknot (and
related individuals) against Stellia (and related individuals):
first, a complaint filed in federal district court; second, a
complaint filed in state court; and third, a counterclaim filed in a
second state court action. All sought more or less the same relief
on the same grounds.

¶4 First, Yknot sued Stellia and its principals, Kenneth
Cassar and Dominic Tampone, (collectively, Stellia) in federal
district court in Utah (the federal case). Stellia moved to dismiss
on jurisdictional grounds, and Yknot voluntarily dismissed its
federal complaint without court involvement. No appeal ensued.
This was the first dismissal.

¶5 Second, Yknot sued Stellia in Utah state court; the case
was assigned to Judge Andrew H. Stone (the Judge Stone Case).
Stellia moved to dismiss on the ground that Yknot, a foreign
entity not registered in Utah, lacked legal authority to sue in this
state. In response, Yknot, in its own words, ‚cured any
deficiency by filing its registration.‛ When settlement
negotiations broke down, Stellia withdrew its motion to dismiss
and prepared to file an answer and counterclaim. But before it
did so, Yknot filed a notice of voluntary dismissal, dismissing its
state complaint without judicial involvement. This was the
second dismissal, and the one from which this appeal arises.

¶6 Third, Stellia sued Yknot (and related individuals) in Utah
state court; the case was assigned to Judge Su J. Chon (the Judge

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Chon Case). Stellia sought both affirmative relief and a
declaratory judgment, arguing that the two-dismissal rule found
in rule 41(a) of the Utah Rules of Civil Procedure barred any
potential counterclaim. Yknot and the individual defendants
responded by filing a counterclaim. Stellia moved to dismiss the
counterclaim, Judge Chon granted the motion, and Yknot
appealed. We resolve that appeal in Stellia v. Yknot, 2016 UT App
133, also issued today.

¶7 Ten days after Stellia filed its complaint in the Judge Chon
Case seeking a declaratory judgment under the two-dismissal
rule, Yknot, now with new counsel, filed three motions seeking
relief from the second dismissal in the Judge Stone Case. First,
Yknot filed a motion to set aside the dismissal and to withdraw
its notice of dismissal. This motion relied on subsections (b)(3)
and (b)(6) of rule 60(b) of the Utah Rules of Civil Procedure.2
Second, Yknot filed a motion to compel arbitration. And third,
Yknot filed a motion to consolidate the Judge Stone Case and the
Judge Chon Case. Stellia opposed all three motions.

¶8 Judge Stone denied all of Yknot‘s motions. In denying the
first motion, the court found that Yknot had not established
grounds for relief under either rule 60(b)(3)—relief for fraud or
misconduct of an adverse party—or rule 60(b)(6)—relief for ‚any
other reason that justifies relief.‛3 See Utah R. Civ. P. 60(b)(3),
(b)(6). The court ruled that Yknot’s reliance on rule 60(b)(6) was
misplaced because the motion could have been brought under
rule 60(b)(1)—seeking relief for mistake—and therefore that it
did not state an ‚other reason‛ justifying relief. Further, the

2. Rule 60 was amended after this case arose, but the relevant
portions of the rule have not changed. See Utah R. Civ. Pro 60(b)
(2015). We cite to the prior version of the statute for reader
convenience.

3. Because Yknot has not appealed the denial of its rule 60(b)(3)
motion, we do not address it.

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court ruled that the facts did not support relief under rule
60(b)(1):

Plaintiff has not established grounds for relief
under Utah Rule of Civil Procedure 60(b)(6); Utah
Rule of Civil Procedure 60(b)(6) does not apply
when a motion implicates Rule 60(b)(1); Plaintiff
has admittedly not moved for relief under Rule
60(b)(1); and the facts described in support of
Plaintiff’s Motion to Set Aside would not support
relief under Rule 60(b)(1).

As a result of this ruling, Judge Stone denied the second and
third motions as moot. Yknot appealed. We address the appeal
in this opinion.

ISSUES

¶9 On appeal, Yknot contends that the district court erred by
refusing to set aside Yknot’s voluntary dismissal under rule
60(b)(6). Yknot advances three arguments to support this
contention.

¶10 First, Yknot argues that the district court erred by
‚construing Yknot’s rule 60(b) motion in accordance with rule
60(b)(1) rather than rule 60(b)(6).‛

¶11 Second, Yknot argues that the district court abused its
discretion by ‚refusing to set aside *Yknot’s+ voluntary
dismissal‛ under rule 60(b).

¶12 Third, Yknot argues that the district court abused its
discretion by ‚refusing to either strike or allow Yknot to
withdraw, the voluntary dismissal.‛

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ANALYSIS

I. Yknot’s Motion for Relief from Judgment Did Not Qualify for
Treatment Under Rule 60(b)(6).

¶13 Yknot first contends that the district court erred by
construing its rule 60(b) motion ‚in accordance with rule 60(b)(1)
rather than rule 60(b)(6).‛ A district court’s determination that a
motion is a rule 60(b)(1) motion rather than a rule 60(b)(6)
motion is a conclusion of law, which we review for correctness.
Richins v. Delbert Chipman & Sons Co., 817 P.2d 382, 385 (Utah Ct.
App. 1991).4

¶14 Rule 60(b) lists various grounds on which the court may
relieve a party from a final judgment or order:

On motion and upon just terms, the court may
relieve a party or its legal representative from a
judgment, order, or proceeding for the following
reasons: (1) mistake, inadvertence, surprise, or
excusable neglect; (2) newly discovered evidence
which by due diligence could not have been
discovered in time to move for a new trial under
Rule 59(b); (3) fraud (whether previously called
intrinsic or extrinsic), misrepresentation or other
misconduct of an opposing party; (4) the judgment

4. Yknot seems to argue that Judge Stone did not base his
dismissal on rule 60(b)(6). But Judge Stone specifically
determined that Yknot’s motion failed under 60(b)(6)—not
60(b)(1). Although the reason Yknot’s motion failed to meet
60(b)(6)’s requirements was because it should have been brought
under rule 60(b)(1), Judge Stone’s ruling itself was under
60(b)(6). Judge Stone’s order cited rule 60(b)(6) and stated that
Yknot had ‚not established relief under Utah Rule of Civil
Procedure 60(b)(6).‛

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is void; (5) the judgment has been satisfied,
released, or discharged, or a prior judgment upon
which it is based has been reversed or vacated, or it
is no longer equitable that the judgment should
have prospective application; or (6) any other
reason that justifies relief.

Utah R. Civ. P. 60(b) (2015). As ‚the residuary clause of rule
60(b),‛ subsection (6) embodies three requirements: ‚First, that
the reason be one other than those listed in subdivisions (1)
through ([5]); second, that the reason justify relief; and third, that
the motion be made within a reasonable time.‛ Laub v. South
Central Utah Tel. Ass’n, 657 P.2d 1304, 1306–07 (Utah 1982)
(emphasis in original). Moreover, rule 60(b)(6) ‚should be very
cautiously and sparingly invoked by the Court only in unusual
and exceptional circumstances.‛ Id. at 1307–08 (citation and
internal quotation marks omitted).

¶15 Here, Yknot’s rule 60(b) motion relied on subsections
60(b)(3) (misconduct) and 60(b)(6) (any other reason), but not
60(b)(1) (mistake). On appeal, Yknot relies solely on subsection
60(b)(6). At the hearing on the motion, Yknot described its
asserted ground for relief as ‚essentially an unclean hands
argument.‛ Yknot argued that it had dismissed the action to
pursue arbitration, but Stellia refused to arbitrate. ‚[O]bviously,‛
Yknot argued, ‚if we had believed at any point that we would be
precluded from seeking arbitration by filing a dismissal, we
would never have done that.‛

¶16 The district court ruled that Yknot’s rule 60(b) motion
implicated subsection 60(b)(1). It described Yknot’s stated reason
for relief as a tactical choice—essentially a mistake, though not
one that would justify relief under subsection 60(b)(1). Yknot
challenges this characterization and offers various explanations
for voluntarily dismissing its complaint in this case. But tellingly
it never asserts that it acted with knowledge that a second
voluntary dismissal would trigger rule 41’s two-dismissal

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provision. Accordingly, we agree with Judge Stone that Yknot
effectively seeks relief from its own mistake. And because
subsection 60(b)(1) provides relief for mistake, Yknot could not
assert its claim under the residuary clause of subsection 60(b)(6);
the claim did not state an ‚other reason‛ for relief.

¶17 On appeal, Yknot argues that its rule 60(b)(6) motion ‚did
not have a basis in subdivisions (1) through (5)‛ and thus that
‚[it] was error for the trial court to find that the reason
underlying the Rule 60(b)*(6)+ motion was mistake.‛ ‚The reason
for the Rule 60(b) motion,‛ Yknot argues, ‚is that unless the
voluntary dismissal is set aside, Yknot is facing an action by
Stellia without the opportunity to present its counterclaims‛
because rule 41’s two-dismissal provision prohibits Yknot from
bringing any affirmative claims.

¶18 Essentially, Yknot asked the district court, and now asks
this court, to shield it from the harsh—albeit predictable—
consequences of its choice to voluntarily dismiss its second
complaint. But as we explain in Stellia Limited v. Yknot Global
Limited (the companion case to this one) rule 41(a) plainly
mandates that a second voluntary dismissal will be treated as
though it were dismissed on the merits. 2016 UT App 133, ¶ 24;
see Utah R. Civ. P. 41(a) (‚*A+ notice of dismissal operates as an
adjudication upon the merits when filed by a plaintiff who has
once dismissed in any court of the United States or of any state
an action based on or including the same claim.‛). Yknot filed
two voluntary dismissals; as a result, the second dismissal
operates as an adjudication on the merits. See Stellia, 2016 UT
App 133, ¶ 24. And however uncooperative an adverse party
Stellia may have been, Yknot—not Stellia—chose to voluntarily
dismiss Yknot’s second complaint.

¶19 In sum, we agree with the district court that Yknot’s
motion implicated subsection 60(b)(1) and on that basis did not
justify relief under subsection 60(b)(6).

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II. The District Court Did Not Abuse Its Discretion by Denying
Yknot’s Rule 60(b) Motion.

¶20 Second, Yknot contends that the district court abused its
discretion by ‚refusing to set aside *Yknot’s+ voluntary
dismissal‛ under rule 60(b)(6). Yknot argues that the district
court abused its discretion because the consequence of the two-
dismissal rule was ‚similar to a default judgment that does not
allow Yknot the opportunity to present its claims against
Stellia.‛

¶21 Our ruling on Yknot’s first claim moots this one; because
Yknot’s claim implicates subsection (b)(1) it did not qualify for
consideration under subsection (b)(6). But even if Yknot’s
motion could fit within subsection (b)(6), that subsection ‚should
be very cautiously and sparingly invoked . . . only in unusual
and exceptional circumstances.‛ Laub v. South Central Utah Tel.
Ass’n, 657 P.2d 1304, 1307–08 (Utah 1982) (citation and internal
quotation marks omitted). And the application of the two-
dismissal rule as written does not qualify as an exceptional
circumstance. Accordingly, denial of Yknot’s motion under rule
60(b)(6) would not constitute an abuse of discretion.

III. The District Court Did Not Abuse Its Discretion by Refusing
to Strike or Withdraw Yknot’s Voluntary Dismissal.

¶22 Finally, Yknot contends that the ‚unique circumstances of
this case‛ required the district court to permit Yknot to
withdraw its second voluntary dismissal. Yknot argues that
‚Utah has not addressed the question of whether the filing of a
motion to dismiss, then the subsequent withdrawal of that
motion to dismiss, allows a party to file a Rule 41 voluntary
dismissal.‛ Such a motion to dismiss, Yknot implies, constituted
‚service by the adverse party of an answer or other response to
the complaint,‛ Utah R. Civ. P. 41(a)(1), thereby precluding
Yknot from filing a notice of voluntary dismissal. In effect, Yknot
argues that rule 41 did not authorize Yknot’s own voluntary
dismissal.

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¶23 This argument is not adequately briefed. ‚Pinpointing
where and how the trial court allegedly erred is the appellant’s
burden.‛ GDE Constr., Inc. v. Leavitt, 2012 UT App 298, ¶ 24, 294
P.3d 567. To demonstrate district court error, an appellant must
support his argument with reasoned analysis based on relevant
legal authority. See Simmons Media Group, LLC v. Waykar, LLC,
2014 UT App 145, ¶ 37, 335 P.3d 885. Where the contentions on
appeal are ‚‘asserted without the support of legal reasoning or
authority,’‛ this court ‚will not assume the appellant’s burden of
argument and research.‛ Crossgrove v. Stan Checketts Props., LLC,
2015 UT App 35, ¶ 6, 344 P.3d 1163 (quoting Angel Inv’rs, LLC v.
Garrity, 2009 UT 40, ¶ 36, 216 P.3d 944). Here, Yknot has not
supported its argument with legal authority. Aside from two
procedural citations (one identifying the standard of review and
one explaining that a rule 41 voluntary dismissal ‚divests the
trial court of jurisdiction‛), Yknot’s argument contains no
citations to legal authority. Accordingly, Yknot has not carried
its burden of persuasion on appeal. See Simmons, 2014 UT App
145, ¶ 37.

¶24 Furthermore, Stellia asserts—and Yknot does not deny—
that Yknot itself invited any error. After Yknot filed its notice of
voluntary dismissal, Stellia resisted on the ground that Stellia
had filed a motion to dismiss and that Yknot should not be
allowed to dismiss the complaint when Stellia sought attorney
fees. Yknot responded that because Stellia had withdrawn its
motion ‚there was no longer any pleading responsive to the
Complaint on the record, and the Voluntary Dismissal was
proper and [Yknot] had the right to dismiss this action without
either leave of Court or of *Stellia+.‛ In support of this argument,
Yknot cited multiple cases from the United States Tenth Circuit
Court of Appeal. Even under our supreme court’s recently
clarified formulation of the invited error doctrine, urging the
district court to adopt one view of the law and urging the
appellate court to adopt the opposite view of the law qualifies as
invited error. See State v. McNeil, 2016 UT 3, ¶¶ 17–23, 365 P.3d
699. We therefore affirm the district court’s refusal to strike or
withdraw Yknot’s voluntary dismissal.

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CONCLUSION

¶25 Because Yknot’s rule 60(b)(6) motion could have been
brought under another section of rule 60(b)—to correct a mistake
or act of inadvertence—the district court correctly ruled that rule
60(b)(6) relief was not available to Yknot and did not abuse its
discretion in denying the motion. The judgment of the district
court is affirmed.

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