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Federated Capital Corporation v. Deutsch

Court of Appeals of Utah

June 21, 2018

Federated Capital Corporation, Appellant,
v.
Neal Deutsch, Appellee.

          Third District Court, Salt Lake Department The Honorable Keith A. Kelly No. 139918085

          Barnard N. Madsen, Aaron P. Dodd, and Peter Reichman, Attorneys for Appellant

          Lester A. Perry, Attorney for Appellee

          Judge Michele M. Christiansen authored this Opinion, in which Judges Ryan M. Harris and Diana Hagen concurred.

          CHRISTIANSEN, JUDGE:

         ¶1 This is a case about preservation. Federated Capital Corporation (Federated), an out-of-state corporation, and Neal Deutsch, an out-of-state individual, entered into a contract that specified an out-of-state place of performance but provided that the contract would be governed by Utah law in Utah courts. Federated filed suit against Deutsch for breach of contract. The district court ruled that Utah's borrowing statute applied because the other state's statute of limitations had run, and the court therefore granted summary judgment for Deutsch. Federated appeals, arguing that Utah's borrowing statute is inapplicable to the suit because the suit arose in Utah. Because Federated did not raise this issue in the district court, it is unpreserved. We therefore affirm and remand for the limited purpose of calculating Deutsch's attorney fees incurred on appeal.

         BACKGROUND

         ¶2 Federated, a Michigan corporation, brought suit against Deutsch, a Florida resident, alleging that he had breached a credit card contract that required him to make payments in Pennsylvania. Specifically, Federated alleged that Deutsch had failed to make credit card payments to Federated's predecessor-in-interest totaling $8, 881.85 and that he consequently owed Federated that amount plus five years of interest at 29.99%. A provision of the contract specified that Utah law applied, that Utah courts were the proper forum, and that the parties consented to Utah courts' jurisdiction (the Controlling Law & Jurisdiction Clause). Deutsch moved for summary judgment, arguing that because the place of performance was Pennsylvania and that state's four-year statute of limitations had already run, Utah's borrowing statute barred the suit. See generally 42 Pa. Cons. Stat. § 5525(a)(8) (2002); Utah Code Ann. § 78B-2-103 (LexisNexis 2012).[1] The district court agreed and granted Deutsch's motion. Federated appeals.

         ISSUE AND STANDARD OF REVIEW

         ¶3 On appeal, Federated contends that the district court erred by applying Utah's borrowing statute so as to import Pennsylvania's statute of limitations. In Federated's view, the district court should have instead applied Utah's six-year statute of limitations for actions founded on contracts. See generally Utah Code Ann. § 78B-2-309 (LexisNexis 2012). When evaluating a district court's decision to grant or deny a motion for summary judgment, we consider the facts in favor of the nonmoving party, and review the court's legal conclusions and ultimate decision for correctness. Orvis v. Johnson, 2008 UT 2, ¶ 6, 177 P.3d 600. However, we cannot review a legal conclusion or decision never actually made by the district court; the preservation doctrine of appellate review requires that, to reach the merits of an issue on appeal, the issue must have been brought to the district court's attention such that it had the opportunity to rule on it. State v. Johnson, 2017 UT 76, ¶ 15, 416 P.3d 443. "To provide the court with this opportunity, the issue must be specifically raised by the party asserting error, in a timely manner, and must be supported by evidence and relevant legal authority." Id. (quotation simplified).

         ANALYSIS

         ¶4 This case is one of several that follow in the wake of the Utah Supreme Court's decision in Federated Capital Corp. v. Libby, 2016 UT 41, 384 P.3d 221. In Libby, our supreme court addressed a similar case involving Federated based on an identical contract. The court there held that, because the contract's forum-selection provision selected Utah law as applied by Utah courts, the case was governed by both the substantive and procedural law of Utah. See id. ¶¶ 13, 17. Consequently, Utah's borrowing statute was applicable. Id. ¶ 17.

         ¶5 The supreme court then considered the application of Utah's borrowing statute to the facts of the case. The court explained that the borrowing statute creates a two-part test; first, the statute asks whether the cause of action arose in another jurisdiction and, second, it asks whether the cause of action is not actionable in the other jurisdiction due to the lapse of time. Id. ¶ 18. "If both of these elements are satisfied, a Utah court will adopt that foreign jurisdiction's time limitations[.]"[2] Id. The supreme court noted in Libby that Federated had not challenged the district court's determination that the cause of action arose in Pennsylvania and therefore proceeded to the second part of the test. Id. ¶ 19. The supreme court concluded that the second part of the test was satisfied because Pennsylvania's four-year statute of limitations had expired by the time Federated filed suit in Utah. Id. ¶ 27. Because both elements set forth by the borrowing statute were satisfied, the supreme court concluded that Federated's suit against Libby was time-barred. Id. ¶ 29.

         ¶6 In a concurring opinion, two members of the court emphasized that Federated's concession-that the cause of action had arisen in Pennsylvania-meant that the court was unable to address the meaning of the term "arises in" found in the borrowing statute. See id. ¶ 36 (Lee, J., concurring) ("When the argument is squarely raised, our courts should decide whether the borrowing statute's 'arises in' formulation is a reference to applicable choice-of-law rules or is dictated simply by the longstanding 'place of performance' test.").

         ¶7 Federated distinguishes the present case from Libby on a single ground. In contrast to its position in Libby, Federated does not concede that its causes of action flowing from this contract arose in Pennsylvania.[3] Instead, Federated contends that, based on the language of the contract, the causes of action pleaded in the complaint arose in Utah. Federated relies on the Controlling Law & Jurisdiction Clause in the contract, which contained choice-of-law, forum-selection, and personal-jurisdiction provisions:

CONTROLLING LAW AND JURISDICTION. This Agreement shall be governed solely by and interpreted entirely in accordance with the laws of the State of Utah, . . . regardless of where you reside . . . . YOU CONSENT TO PERSONAL JURISDICTION IN THE STATE AND FEDERAL COURTS IN UTAH AND AGREE THAT ANY LAWSUIT PERTAINING TO THE ACCOUNT MUST BE BROUGHT ONLY IN SUCH COURTS IN UTAH, REGARDLESS OF WHO FILES THE SUIT, AND MAY BE MAINTAINED ONLY IN THOSE ...

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