Robinson v. Robinson

2016 UT App 33

THE UTAH COURT OF APPEALS

MICHAEL S. ROBINSON,
Appellant and Cross-appellee,
v.
DEBRA J. ROBINSON,
Appellee and Cross-appellant.

Opinion
No. 20140470-CA
Filed February 19, 2016

Third District Court, West Jordan Department
The Honorable Charlene Barlow
No. 110412982

F. Kevin Bond and Budge W. Call, Attorneys
for Appellant
Dean C. Andreasen and Diana Telfer, Attorneys
for Appellee

JUDGE MICHELE M. CHRISTIANSEN authored this Opinion, in
which JUDGE GREGORY K. ORME concurred. JUDGE STEPHEN L.
ROTH concurred in Parts I, II, XI, and XII, and concurred in the
result, without opinion, in Parts III, IV, V, VI, VII, VIII, IX, and X.

CHRISTIANSEN, Judge:

¶1 Michael S. Robinson (Husband) appeals from the district
court’s handling and eventual grant of both a motion to dismiss
and a motion for summary judgment in favor of defendants
Debra J. Robinson (Wife), Natalie D. Larson, Matthew R. Larson,
Kelly D. Larson, Derrick D. Larson, and Kaisa Cardall. Wife
cross-appeals the district court’s denial of an award of attorney
fees. We affirm.
 Robinson v. Robinson

BACKGROUND

¶2 This piece of satellite litigation orbits Husband and Wife’s
contentious divorce. See generally Robinson v. Robinson, 2016 UT
App 32; Robinson v. Jones Waldo Holbrook & McDonough, 2016 UT
App 34; Robinson v. Robinson, 2010 UT App 96, 232 P.3d 1081.

¶3 After filing for divorce in February 2007, Husband and
Wife attempted to disentangle the real property interests within
their marital assets. On November 2, 2007, Husband and Wife
came to a stipulated property settlement agreement (the
Stipulation). See Robinson v. Robinson, 2016 UT App 32, ¶ 2
(discussing the terms of the Stipulation). Husband later moved
to set aside the Stipulation, alleging that performance of his part
of the Stipulation was impossible, that there had been a mutual
mistake, and that Wife had fraudulently induced Husband to
enter the Stipulation. The district court denied Husband’s
motion and incorporated the Stipulation into a decree of divorce
entered on December 31, 2008. Husband appealed the denial of
his motion, arguing impossibility and mutual mistake, but he
did not raise a claim of fraud in the inducement. See generally
Robinson v. Robinson, 2010 UT App 96, 232 P.3d 1081. This court
affirmed. See generally id.

¶4 On September 7, 2011, Husband filed this civil action
alleging fraud, breach of fiduciary duty, conversion, and civil
conspiracy. His fraud and breach of fiduciary duty claims
related to three causes of action, all of which sought relief
primarily in the form of a declaration that the Stipulation and
divorce decree were void. The complaint named as defendants
Wife, three of her adult children, her daughter-in-law, and a
friend of the daughter-in-law (collectively, Defendants).1
Defendants filed a motion for summary judgment based on res
judicata, waiver, and the assertion that some of the issues were

1. Wife took the lead in defending this action. The other
defendants did not file any briefs or otherwise appear in this
appeal.

20140470-CA 2 2016 UT App 33
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duplicative of those in the ongoing divorce case. Defendants also
filed a motion to dismiss on the grounds that the complaint
failed to plead fraud with particularity and failed to state a claim
upon which relief could be granted. The motion to dismiss also
asserted that some of the causes of action pleaded by Husband
were barred by the statute of limitations.

¶5 At the hearing, Husband argued that his September 2011
complaint had been timely filed because he had not discovered
Wife’s fraud and breach of fiduciary duty until October 2008. He
further argued that his complaint was ‚in the nature of a rule
60(b), Utah Rules of Civil Procedure, motion for relief from a
judgment based on fraud.‛ He also argued that ‚time deadlines
did not apply to rule 60(b) motions.‛

¶6 The district court adopted Defendants’ statement of
undisputed material facts, accepted as true Husband’s statement
of facts pertaining to the motion to dismiss, and noted that
Husband was ‚a sophisticated businessman.‛ The court rejected
Husband’s argument relating to rule 60(b), concluding that the
complaint had been filed as a separate action and not as a rule
60(b) motion for relief to set aside any final orders made in the
Robinsons’ ongoing divorce action. The court noted that the
applicable rule 60(b) time periods had long since passed and that
a meritorious independent action alleging fraud can ultimately
relieve the prevailing party from judgment.2 The court ruled that
some of Husband’s claims were barred by the statute of
limitations, that Husband had failed to plead his fraud claims
with particularity, and that res judicata also barred the claims.
The court granted both the motion to dismiss and the motion for
summary judgment. Husband appeals those decisions. Wife
cross-appeals the court’s denial of her attorney-fee request.

2. The district court also ruled that there was no judgment in this
case from which a rule 60(b) motion could have been brought.
And it noted that Husband had not cited any authority holding
that rule 60(b)’s ‚reasonable time‛ requirement tolled the
applicable statute of limitations.

20140470-CA 3 2016 UT App 33
 Robinson v. Robinson

ISSUES AND STANDARDS OF REVIEW

¶7 Husband contends that the district court erred in ruling
that rule 60(b) of the Utah Rules of Civil Procedure did not apply
to relieve Husband from the judgment entered against him in
the divorce case. We review the district court’s interpretation
and application of statutes and rules for correctness. See Berneau
v. Martino, 2009 UT 87, ¶ 9, 223 P.3d 1128.

¶8 Husband also contends that the district court erred by
granting Wife’s motions to dismiss and for summary judgment.
‚For the purposes of a rule 12(b)(6) dismissal, we accept the
complaint’s factual allegations as true.‛ Fidelity Nat’l Title Ins. Co.
v. Worthington, 2015 UT App 19, ¶ 7, 344 P.3d 156. ‚As a result,
an appeal from a rule 12(b)(6) dismissal presents only questions
of law, and we review the district court’s ruling for correctness.‛
Id. We review a district court’s legal conclusions and ultimate
grant or denial of summary judgment for correctness, after
viewing the facts and all reasonable inferences drawn therefrom
in the light most favorable to the nonmoving party. Orvis v.
Johnson, 2008 UT 2, ¶ 6, 177 P.3d 600.

¶9 Wife contends that the district court erred by denying her
request for an award of attorney fees. The grant or denial of an
attorney-fee award pursuant to a contract is an issue of law that
we review for correctness. See Gardiner v. York, 2006 UT App 496,
¶ 5, 153 P.3d 791. The grant of an attorney-fee award pursuant to
the bad-faith attorney-fee statute requires findings that the
underlying claims were meritless and pursued in bad faith. See
Utah Code Ann. § 78B-5-825 (LexisNexis 2012); Gallegos v. Lloyd,
2008 UT App 40, ¶ 6, 178 P.3d 922. Whether an action or defense
is meritless constitutes a legal conclusion that we review for
correctness. Gallegos, 2008 UT App 40, ¶ 6. But the district court’s
finding as to bad faith is primarily factual, and we review the
finding for clear error. Id.

20140470-CA 4 2016 UT App 33
 Robinson v. Robinson

ANALYSIS

I. Rule 60(b) Does Not Govern Independently Filed Actions.

¶10 Husband first contends that the district erred in ruling
that rule 60(b) of the Utah Rules of Civil Procedure did not apply
to Husband’s continued attempts to seek relief from the
judgment entered against him in favor of Wife in the divorce
case. Rule 60(b) allows a party to file a motion to be relieved
‚from a final judgment, order, or proceeding‛ for six statutorily
enumerated reasons. Utah R. Civ. P. 60(b). A motion under rule
60(b) ‚shall be made within a reasonable time and for *certain
categories, including fraud], not more than 90 days after the
judgment, order, or proceeding was entered or taken.‛ Id.

¶11 Husband asserts that, because fraud is generally not a
proper basis for a petition to modify a divorce decree, it was
appropriate to bring his purported rule 60(b) motion as an
independent action. Husband cites Bayles v. Bayles, 1999 UT App
128, 981 P.2d 403, as support for his suit and his claim that the
time limits set forth in rule 60(b) do not apply. There, the court of
appeals noted that ‚a claim of fraud contemplated in the context
of [a] divorce is not generally a proper basis for a petition to
modify a divorce decree, [and therefore the] only avenue for
relief under the facts of [Bayles was] to file an independent
action.‛ Id. ¶ 17. This court concluded that ‚the party asserting a
cause of action for fraud after the parties have entered into a
stipulation that has been incorporated into an order of divorce
contemplating the basis for the fraud claim should either file a
Rule 60(b)(3) motion within the three month time limit, or file an
independent action.‛ Id. ¶ 20.

¶12 Bayles stands for the proposition that a post-divorce fraud
cause of action may be brought as a rule 60(b) motion or filed as
an independent action. It does not support Husband’s apparent
contention that a post-divorce fraud cause of action to relieve
one party from a judgment may be filed as a hybrid composed of
an independent fraud action stripped of the normally applicable
three-year statute of limitations with rule 60(b)’s ‚reasonable

20140470-CA 5 2016 UT App 33
 Robinson v. Robinson

time‛ limitation grafted on instead. Indeed, the language of rule
60(b) maintains a firewall between independent actions and rule
60(b) motions: ‚The procedure for obtaining any relief from a
judgment shall be by motion as prescribed [by rule 60(b)] or by
an independent action.‛ Utah R. Civ. P. 60(b) (emphasis added).

¶13 Because rule 60(b) motions and independent actions are
governed by separate procedural regimes, we conclude that the
district court did not err in ruling that the time limit provisions
set forth in rule 60(b) did not apply to Husband’s independently
filed action.

II. The Statute of Limitations Applies to Husband’s Complaint.

¶14 Apparently claiming that his complaint was actually a
hybrid rule 60(b) motion and independent action,3 Husband
contends that ‚it is not necessary that there be an order or
judgment already entered in the independent action for Rule
60(b) to apply.‛ As a result, in Husband’s view, ‚independent
actions filed under Rule 60(b) . . . are not limited by legal time
constraints.‛ However, as we have explained, there is no such
thing as an independent action filed under rule 60(b). Rather,
though an independent action is within the contemplation of the
rule, rule 60(b) does not govern such an action, and the time
limitations generally applicable to civil actions will apply. Thus,
we conclude that the district court did not err in applying the
statute of limitations to Husband’s independent action for Wife’s
alleged fraud in the inducement.

III. While the District Court Erred by Implicitly Converting the
Motion to Dismiss into a Motion for Summary Judgment, the
Error Was Harmless.

¶15 Husband next contends that the district court erred in
ruling that his fraud claims, brought in September 2011, were

3. Husband’s complaint does not purport to be a rule 60(b)
motion and does not reference that rule.

20140470-CA 6 2016 UT App 33
 Robinson v. Robinson

barred by the applicable three-year statute of limitations.
Specifically, he argues that the court considered materials
outside the pleadings to reach its determination that Husband
knew or should have known of the alleged fraud by December
2007.

¶16 In his complaint, Husband asserted that he did not
discover the alleged fraud until October 2008. However, the
district court looked to a pleading Husband had filed in the
divorce case on February 12, 2008. In that pleading, Husband
stated that his accountant had informed him of ‚a serious error‛
and had recommended an independent examination be
undertaken ‚to ensure that *Wife+ had not committed fraud or
made a material misrepresentation.‛ Husband attached a letter
from the accountant to that effect, dated December 17, 2007. As a
result, the district court determined that Husband knew or
should have known of the alleged fraud as of December 2007.
Accordingly, the court ruled that Husband’s fraud claims were
barred by the three-year statute of limitations.

¶17 A motion to dismiss admits the truth of the facts alleged
in the complaint but challenges the plaintiff’s right to relief
based on those facts. Osguthorpe v. Wolf Mountain Resorts, LC,
2010 UT 29, ¶ 20, 232 P.3d 999. The district court is therefore
limited to consideration of ‚the facts alleged in the pleading
itself rather than factual determinations from prior
proceedings.‛ Puttuck v. Gendron, 2008 UT App 362, ¶ 11, 199
P.3d 971.

¶18 Here, the accountant’s warning and letter were not ‚facts
alleged in the pleading itself.‛ See id. Accordingly, the district
court erred by considering them for the purposes of the motion
to dismiss. Instead, the district court should have treated the
motion to dismiss as a motion for summary judgment and given
the parties an opportunity to present pertinent material. See Utah
R. Civ. P. 12(c). If a district court does not exclude material
outside the pleadings and fails to convert a motion to dismiss to
one for summary judgment, ‚it is reversible error unless the
dismissal can be justified without considering the outside

20140470-CA 7 2016 UT App 33
 Robinson v. Robinson

documents.‛ State v. One Hundred Five Thousand Six Hundred
Forty Six Dollars, 2013 UT App 41, ¶ 7, 297 P.3d 647 (citation and
internal quotation marks omitted).

¶19 The district court’s error is rendered harmless, however,
by our determination below that Husband failed to plead fraud
with particularity. See infra ¶¶ 28, 36–37.4 We therefore decline to
reverse based on the district court’s error because dismissal is
justified without consideration of the outside documents.

IV. Husband Failed to Plead Fraud with Particularity.

¶20 Husband contends that the district court erred by ruling
that he failed to plead fraud with particularity. Husband’s
complaint stated four causes of action alleging fraud: that Wife
misrepresented the value of a commercial plaza owned by the
couple, that Wife fraudulently used marital assets to partially
fund the purchase of a townhouse, that Wife failed to disclose
accounts jointly held by her and one or more other defendants
that contained marital assets, and that Wife conspired with the
other defendants to ‚defraud *Husband+ of marital assets and to
convert those assets.‛

4. Additionally, if it had converted the motion to dismiss to one
for summary judgment, the court could have properly
considered Husband’s February 2008 pleading in the divorce
case and would likely have come to the conclusion that
Husband’s allegations in that pleading demonstrated
constructive knowledge of Wife’s alleged fraud. See Utah R. Civ.
P. 61 (‚*N+o error or defect in any ruling or order or in anything
done or omitted by the court . . . is ground for granting a new
trial or otherwise disturbing a judgment or order, unless refusal
to take such action appears to the court inconsistent with
substantial justice. The court at every stage of the proceeding
must disregard any error or defect in the proceeding which does
not affect the substantial rights of the parties.‛).

20140470-CA 8 2016 UT App 33
 Robinson v. Robinson

¶21 ‚In all averments of fraud or mistake, the circumstances
constituting fraud or mistake shall be stated with particularity.‛
Utah R. Civ. P. 9(b). A claim of fraud requires the plaintiff to
allege (1) that a representation was made (2) concerning a
presently existing material fact (3) which was false and (4) which
the representor either knew to be false or made recklessly,
knowing that there was insufficient knowledge upon which to
base such a representation, (5) for the purpose of inducing the
other party to act upon it and (6) that the other party, acting
reasonably and in ignorance of its falsity, (7) did in fact rely
upon it (8) and was induced to act (9) to that party’s injury and
damage. Armed Forces Ins. Exch. v. Harrison, 2003 UT 14, ¶ 16, 70
P.3d 35 (further noting, in the context of a motion for summary
judgment, that conclusory allegations of the elements of fraud,
unsupported by relevant surrounding facts, are insufficient).

A. Valuation of Phoenix Plaza

¶22 Husband and Wife owned certain commercial property
located in St. George, Utah, named Phoenix Plaza. In November
2007, Husband and Wife participated in mediation to divide
their marital property. One of the topics at mediation was the
disposition of Phoenix Plaza. Because Wife was managing
Phoenix Plaza at that time, she had prepared an estimate of its
value based, in part, upon information she had about the then-
current tenants. In her estimate, Wife stated, ‚We did compute
5% vacancy rates to get the 7.5 million [valuation] @ 7%
[capitalization rate]. Rents would have to increase by $277 per
month (which they are/will) before closing.‛5 Wife provided this

5. Husband asserts that this constituted a statement by Wife that
the vacancy rates were in fact five percent or less and that such
statement was a misrepresentation. However, elsewhere in his
complaint, Husband admitted that, at the time of the mediation
session, all of the space at Phoenix Plaza was occupied—a
vacancy rate of zero percent. He did not allege that the holdover
tenants were paying less in rent than they had under their leases.
(continued<)

20140470-CA 9 2016 UT App 33
 Robinson v. Robinson

estimate to Husband at some point prior to the mediation
session.

¶23 During the mediation session, Wife represented that a
banker was willing to refinance Phoenix Plaza for $3.5 million
based on a valuation of $7.5 million. Husband then agreed to
refinance the outstanding Phoenix Plaza mortgage for $3.5
million and to pay Wife roughly $1,784,419 in exchange for her
marital share of the equity in Phoenix Plaza. This agreement was
included in the Stipulation, which was itself incorporated into
the decree of divorce entered by the district court.

¶24 In his complaint, Husband alleged that Wife had
provided the banker with false information about the rent roll
for Phoenix Plaza in order to obtain an inflated valuation of the
property. Specifically, Husband claimed that Wife
misrepresented the status of the leases for roughly a quarter of
Phoenix Plaza by stating that the leases remained in force for a
further seven to twenty-two months when in fact the leases had
expired and the tenants were holding over from month to
month. Husband asserted that the banker had relied on Wife’s
false lease information to provide the $3.5 million refinancing
estimate. Husband claimed that he had relied on Wife’s
representation that the banker was willing to refinance Phoenix
Plaza for $3.5 million. In short, Husband alleged that Wife
misrepresented the nature of the tenants to the banker to get a
refinancing estimate of $3.5 million and then misrepresented to
Husband that a $3.5 million refinance was available from the
banker.

¶25 The district court ruled that Husband had not stated the
facts underlying Wife’s alleged fraud with the particularity

(