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National Title Agency LLC v. JPMorgan Chase Bank NA

Court of Appeals of Utah

July 27, 2018

National Title Agency LLC and William D. Rowley, Appellants,
v.
JPMorgan Chase Bank NA, Appellee.

          Third District Court, Salt Lake Department The Honorable Todd M. Shaughnessy No. 160901812

          Sean A. Monson, Ryan M. Merriman, and Jeremy C. Reutzel, Attorneys for Appellants

          Gary E. Doctorman and Nicholas U. Frandsen, Attorneys for Appellee

          Judge Gregory K. Orme authored this Opinion, in which Judges Michele M. Christiansen and David N. Mortensen concurred.

          ORME, JUDGE

         ¶1 Appellants National Title Agency LLC and William D. Rowley (collectively, Plaintiffs) appeal the district court's order dismissing their complaint against Appellee JPMorgan Chase Bank NA (Chase Bank) on the ground that their claims were barred by the statute of limitations. We affirm.

         BACKGROUND

         ¶2 National Title, formed by Rowley in 2006, was a licensed escrow and title agent that closed real estate transactions in Utah.[1] As a licensed escrow agent, National Title held funds in escrow for its clients in trust accounts at several banks, including a trust account at Chase Bank (the Trust Account).

         ¶3 Two unrelated suits were brought against National Title in 2010, and because it failed to appear in either suit, the district court entered default judgments against it. Shortly after the default judgments, the district court issued two writs of garnishment to Chase Bank, which, National Title alleges, mindlessly complied with the writs, releasing over $600, 000 belonging to National Title's clients from the Trust Account to National Title's judgment creditors. The last such release was in September 2010.

         ¶4 National Title periodically received statements from Chase Bank regarding the Trust Account. Somehow, National Title did not notice the substantial shortfall in the Trust Account until October 2013. It then alerted its underwriter, First American Title Insurance Company (First American), that it would need assistance in compensating clients for their escrowed funds that were lost as a result of the Trust Account's garnishments. First American promptly sent a written demand and then filed suit in November 2013 in federal court, demanding that National Title reimburse First American for any payments it would have to make to cover the shortfall. First American then terminated its relationship with National Title, resulting in National Title's closure.

         ¶5 In September 2015, Plaintiffs filed a third-party complaint against Chase Bank-in the federal case First American brought against Plaintiffs-alleging breach of fiduciary duty, breach of contract, and negligence per se. But the federal court, citing principles of federal abstention, dismissed the suit without prejudice. When Plaintiffs filed those same claims in state district court, Chase Bank moved to dismiss under rule 12(b)(6) of the Utah Rules of Civil Procedure on the ground that the suit was barred by the general four-year statute of limitations. See Utah Code Ann. § 78B-2-307(3) (LexisNexis Supp. 2017) (specifying that a four-year statute of limitations applies to claims "for relief not otherwise provided for by law"). Plaintiffs opposed the motion to dismiss, arguing that the statute of limitations began to run in 2013 when First American sued National Title-not in 2010 when the Trust Account was garnished. They also sought to file an amended complaint.

         ¶6 Concluding that the statute of limitations began to run in 2010, the district court determined that the breach of contract claim was subject to a two-year contractual limitation and that the claims for breach of fiduciary duty and negligence per se were subject to the general four-year statute of limitations.[2] And because Plaintiffs sued in 2015, the district court held that the claims were barred by the applicable statutes of limitations. As a result, it granted Chase Bank's motion, dismissed the suit, and denied Plaintiffs' motion to amend. This appeal followed.

         ISSUES AND STANDARDS OF REVIEW

         ¶7 Plaintiffs contend that the district court erred in dismissing their complaint, on the rationale that all three claims were time-barred. "When reviewing a rule 12(b)(6) motion to dismiss, we accept the factual allegations in the complaint as true and interpret those facts, and all reasonable inferences drawn therefrom, in a light most favorable to the plaintiff as the nonmoving party." Russell Packard Dev., Inc. v. Carson, 2005 UT 14, ¶ 34, 108 P.3d 741. ...


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