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Lewis v. Nelson

Court of Appeals of Utah

December 14, 2017

Reggie Lewis, Appellee,
v.
Rodney Nelson, Appellant.

         Fifth District Court, St. George Department The Honorable Eric A. Ludlow[1] No. 120500402

          Charles A. Schultz, Attorney for Appellant

          Penrod W. Keith and Elijah L. Milne, Attorneys for Appellee

          Judge Kate A. Toomey authored this Opinion, in which Judges Michele M. Christiansen and Ryan M. Harris concurred.

          OPINION

          TOOMEY, Judge.

         ¶1 This case comes before us on an interlocutory appeal from the district court's denial of Rodney Nelson's motion to amend his answer to assert a compulsory counterclaim. Nelson contends the district court abused its discretion in denying his motion to amend because, in his view, the court "had the obligation" to grant his motion. We disagree and therefore affirm.

         ¶2 This case arises from a contract dispute between Nelson and Reggie Lewis, who sold Nelson the right to operate a distribution supply route. In July 2012, Lewis filed a breach of contract action against Nelson, complaining that Nelson missed payments under the contract. Nelson, acting pro se, answered the complaint and raised numerous affirmative defenses, including breach of the covenant of good faith and fair dealing; breach of contract; and fraud, deceit, or misrepresentation. The answer did not include any counterclaims.

         ¶3 More than three months after filing his answer, and without first seeking leave to amend it, Nelson filed counterclaims for fraud and violation of Utah's Business Opportunity Disclosure Act. Because Nelson did not first seek leave to amend his answer, Lewis filed a motion to dismiss the counterclaims. Nelson did not file an opposing memorandum but instead filed a belated motion to amend his answer, explaining that, "as a pro se litigant, it has taken him additional time to become familiar with his legal defenses, and [he] is only now aware of his legal defenses and counterclaims." Lewis opposed the motion, arguing that it was untimely, that there was no justification for Nelson's failure to include the counterclaims in his answer, that the counterclaims would cause undue delay, and that the counterclaims were not well pleaded.[2] In his reply memorandum, Nelson explained, "I thought that my answer would serve as a counterclaim . . . . [T]here will not be any new information or discovery needed with my counterclaim. The same facts and documents that will be central to my defense to [Lewis's] complaint will be used as evidence in my counterclaim."

         ¶4 During oral argument on the two motions in September 2013, Nelson conceded that "the answer and the counterclaim are essentially the same thing." First Judge then announced he was granting Lewis's motion to dismiss the counterclaims and denying Nelson's motion to amend and remarked, "[B]ut it really doesn't impact Mr. Nelson's defense at all." First Judge directed Lewis's counsel to prepare the order. The order simply stated that, "[b]ased upon the pleadings, motions, memoranda, exhibits, and oral arguments of the parties, " Nelson's motion to amend "should be denied for the reasons set forth in" Lewis's opposing memorandum, and that Nelson's counterclaims "should be dismissed with prejudice for the reasons set forth in" Lewis's motion to dismiss.

         ¶5 In January 2014, after discovery was completed, Lewis moved for summary judgment, which First Judge orally granted during a March hearing and which was signed by Second Judge.[3] Nelson eventually appealed from the order of summary judgment, [4] and post-judgment execution efforts were stayed. We reversed and remanded. See Lewis v. Nelson, 2015 UT App 262, ¶ 17, 366 P.3d 848. In a footnote of that opinion, we stated:

Nelson also challenges the trial court's dismissal with prejudice of his request for leave to file a counterclaim. This issue is not adequately briefed, and we accordingly do not consider it on appeal. This decision on our part is without prejudice to the prerogative of the trial court to reconsider the dismissal in view of our reversal of the summary judgment and our remand for further proceedings.

Id. ¶ 8 n.2 (citation omitted).

         ¶6 An order of remittitur issued in April 2016. On remand, the case was reassigned to Third Judge.

         ¶7 In May 2016, Lewis filed a certificate of readiness for trial. Two weeks later, Nelson filed a second motion to amend his answer to assert several compulsory counterclaims, but he did not attach his proposed counterclaim. Instead, in his supporting memorandum, Nelson argued he had "a legal right to file a counterclaim against Lewis for fraud, fraudulent inducement, breach of covenant of good faith and fair dealing, breach of contract, and other causes of action." Nelson also argued that First Judge abused his discretion in denying the first motion to amend and requested that Third Judge so conclude. Lewis filed an opposing memorandum, arguing the motion should be denied because

(1) Nelson has not submitted a proposed amended pleading with this motion; (2) his counterclaim was previously dismissed with prejudice; (3) he has not offered any excuse-let alone any justification-for his failure to assert a claim at the commencement of this case; (4) this lawsuit began nearly four years ago and the parties appeared in court for trial over two years ago; and (5) Lewis would suffer unavoidable prejudice if Nelson were allowed to amend his pleadings at this late stage.

         Nelson attached his proposed counterclaim to his reply memorandum. In it, he asserted claims for breach of the covenant of good faith and fair dealing, breach of contract, ...


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