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The Armer Texas Trust v. Brazell

Court of Appeals of Utah

February 24, 2017

The Armer Texas Trust, et al., [1] Appellants,
v.
Robert V. Brazell, In-Store Broadcasting Network LLC, In- Store Broadcasting Holdings LLC, IBN Media LLC, In-Touch LLC, In-Touch Media LLC, Talos Partners LLC, Von H. Whitby, Robert W. Kasten Jr., Robert E. Riley, and Robin Nebel, Appellees.

         Third District Court, Salt Lake Department The Honorable Andrew H. Stone No. 130900740

          Donald H. Flanary Jr., John P. Mertens, and Adam L. Hoyt, Attorneys for Appellants

          Michael N. Zundel, John S. Chindlund, and Florence M. Vincent, Attorneys for Appellees IBN Parties

          Richard D. Burbidge, Jefferson W. Gross, and S. Ian Hiatt, Attorneys for Appellee Von H. Whitby

          Judge Kate A. Toomey authored this Opinion, in which Judges Gregory K. Orme and Stephen L. Roth concurred.

          OPINION

          TOOMEY, Judge

         ¶1 The Appellants seek reversal of the district court's order denying them leave to amend their complaint and determining that their complaint lacked particularity under rule 9(c) of the Utah Rules of Civil Procedure.[2] We affirm.

         BACKGROUND

         ¶2 The Appellants are individuals and entities who allegedly invested approximately two million dollars in various In-Store Broadcasting Network entities. They claimed these investments were induced by the misrepresentations of the Appellees (collectively, IBN).

         ¶3 In their initial complaint and subsequent amended complaints, the Appellants alleged several causes of action including fraudulent misrepresentation, fraudulent inducement and rescission, promissory estoppel, civil conspiracy, common law fraud, constructive trust, fraudulent transfer, and violation of the Utah Uniform Securities Act.

         ¶4 The Appellants filed their initial complaint in February 2013. In March 2013, before IBN had responded, the Appellants filed a first amended complaint. They later sought leave of court to file a second amended complaint, which the court granted, and they filed it in September 2013. The parties then stipulated to a scheduling order, which provided that any "[a]mended pleadings shall be filed by July 3, 2014." The district court never approved this stipulation, and in March and July 2014, the Appellants filed third and fourth amended complaints without leave of court.

         ¶5 In October 2014, IBN filed a rule 12(b)(6) motion to dismiss the Appellants' complaint for failure to state a claim upon which relief could be granted. Instead of defending the latest iteration of their complaint, the Appellants responded by seeking leave to file a fifth amended complaint.

         ¶6 The district court denied the Appellants' motion to amend because the motion was untimely, because granting it would substantially prejudice IBN, and because the Appellants gave no justification for this fifth attempt. The court also determined that the fifth amended complaint "fail[ed] to plead a fraud claim as to any specific plaintiff against any specific defendant with the particularity required by Rule 9([c])." The district court determined there was no need to decide whether the previous versions of the Appellants' complaint met the requirements of rule 9(c), because the Appellants acknowledged that their fifth amended complaint "contain[ed] greater particularity than the earlier versions, "[3] and because the court had determined that this more detailed version was still insufficient under the rule. Stating that "[s]ix tries at pleading fraud are enough, " the court granted IBN's motion to dismiss. The Appellants appeal the district court's order.

         ISSUES AND STANDARDS OF REVIEW

         ¶7 The Appellants raise three issues on appeal. First, they contend the district court erred when it refused to grant them leave to amend their complaint for the fifth time. We review a district court's ruling on a motion to amend a complaint for abuse of discretion. Coroles v. Sabey, 2003 UT App 339, ¶ 16, 79 P.3d 974. Under this standard, we will not reverse a district court's decision ...


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