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First Interstate Financial LLC v. Savage

Court of Appeals of Utah

January 3, 2020

First Interstate Financial LLC and Paul Thurston, Appellants,
v.
Scott Savage and Savage Yeates and Waldron PC, Appellees.

          Third District Court, Salt Lake Department The Honorable Mark S. Kouris No. 170906637

          Karra J. Porter, Scott Evans, Erika Larsen, and Kristen C. Kiburtz, Attorneys for Appellants

          Andrew M. Morse, R. Scott Young, and Adam M. Pace, Attorneys for Appellees

          Judge Michele M. Christiansen Forster authored this Opinion, in which Judges David N. Mortensen and Jill M. Pohlman concurred.

          OPINION

          CHRISTIANSEN FORSTER, JUDGE

         ¶1 First Interstate Financial LLC and Paul Thurston (collectively, Plaintiffs) appeal the district court's dismissal of their complaint against Scott Savage and Savage Yeates and Waldron PC (collectively, Savage[1]), as well as its denial of their motion to amend their complaint. We reverse and remand for further proceedings.

         BACKGROUND

         ¶2 In April 2009, Plaintiffs retained Savage to defend them in a lawsuit filed against them in Utah by McGillis Investments Company. During the discovery period on this lawsuit, Plaintiffs collected and produced approximately 19, 000 documents, which Savage intended to present as exhibits at trial. However, Savage failed to comply with the pretrial disclosure requirements of rule 26(a) of the Utah Rules of Civil Procedure, and as a result, the trial court struck "substantially all" the exhibits Savage intended to use to defend Plaintiffs at trial.

         ¶3 The case proceeded to trial, and the jury entered a verdict against Plaintiffs on October 22, 2010, which included a $1, 250, 000 judgment. Plaintiffs paid the judgment, as well as $700, 000 in legal fees to Savage. Subsequently, McGillis filed a second suit against Plaintiffs in Colorado, which went to trial in June 2014. At trial in that case, "McGillis was allowed to make references to the Utah case." The Colorado jury ultimately found against Plaintiffs as well and entered judgment "in the amount of $1, 450, 000 and property worth $400, 000."

         ¶4 Plaintiffs filed a complaint against Savage on October 17, 2017, alleging legal malpractice, breach of contract, and breach of fiduciary duty. The complaint alleged that Savage did not tell Plaintiffs the exhibits had been stricken until just before trial, that he told them "not to worry" about the stricken exhibits because he could rely on the other party's exhibits at trial, and that he assured them the trial court had erred in striking the exhibits and its decision would be overturned on appeal. It further alleged that Savage did not inform Plaintiffs that the exhibits were stricken due to his failure to comply with the pretrial disclosure requirements of rule 26(a) and that Plaintiffs did not learn of his failure until June 2014.

         ¶5 Savage moved to dismiss Plaintiffs' complaint on the ground that the statute of limitations on their malpractice claims had expired. Savage asserted that the statute of limitations on Plaintiffs' claims began to run on October 22, 2010, when the verdict was entered against them in Utah, and that pursuant to the four-year limitations period on legal malpractice claims, see Utah Code Ann. § 78B-2-307 (LexisNexis 2018), their claims expired on October 22, 2014. Savage further asserted that the statute of limitations was not tolled, because Plaintiffs admitted that they discovered the facts giving rise to their claims in June 2014, within the limitations period.

         ¶6 In response to Savage's motion, Plaintiffs sought to amend their complaint to include additional allegations relevant to the tolling issue:

36. At the time Plaintiffs first heard of Savage's failure, Savage was still representing Plaintiffs.
37. When Plaintiffs first learned of Savage's failure, they did not know that such failure amounted to ...

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