PUBLISH
UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT

________________ _________________ BANNER BANK, succe ssor by merger of American West Bank which formerly did business in Utah as Far West Bank, Plaintiff Counter Defendant - Appellant,

v. JAMES M. SMITH, a Utah resident; LOREE C. SMITH, an individual, Defendant Counterclaimants - Appellees. No. 19-4131 (D.C. No. 2:12-CV-00763-CW) (D. Utah)

________________ _________________ ORDER

________________ _________________ Before HARTZ , PHILLIPS , and EID , Circuit Judges.

________________ _________________ This matter is before us on (1) Appellant’s Petition for Rehearing Seeking Clarification and Correction of Certain Statements (“Petition”), and (2) a February 23, 2022 letter from counsel for Appellant requesti ng two of the same clarifications requested in the Petition. Upon careful consid eration, we direct as follows. As an initial matter, we construe the aforem entioned letter as a motion to clarify or correct the court’s February 7, 2022 opinion. So construed, the motion is GRANTED. In FILED United States Court of Appeals Tenth Circuit 

### April 19, 2022 Christopher M. Wolpert Clerk of Court Appellate Case: 19-4131 Document: 010110672844 Date Filed: 04/19/2022 Page: 12 addition, the Petition is GRANTED IN PART to the extent of the modifications in the attached revised opinion. The Clerk’s Office will replace the origin al opinion with the attached revised opinion effective nunc pro tunc to the date the original op inion was filed. The remainder of the relief sought in the Petition is DENIED.
Entered for the Court,

CHRISTOPHER M. WOLPERT, Clerk Appellate Case: 19-4131 Document: 010110672844 Date Filed: 04/19/2022 Page: 2PUBLISH
UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT

________________ _________________ BANNER BANK, succe ssor by merger of American West Bank which formerly did business in Utah as Far West Bank, Plaintiff Counter Defendant - Appellant,

v. JAMES M. SMITH, a Utah resident; LOREE C. SMITH, an individual, Defendant Counterclaimants - Appellees. No. 19-4131

________________ _________________ Appeal from the United States District Court for the District of Utah (D.C. No. 2:12-CV-00763-CW)

________________ _________________ Steven W. Call, Ray Quinney & Nebeker P.C., Salt Lake City , Utah (Jonathan A. Dibble, Ray Quinney & Nebeker P.C., Salt Lake City, Ut ah, with him on the briefs), for Plaintiff Counter Defendant - Appellant. Robert D. Drummond, Jr., Robert D. Drum mond, Jr. Law Office, Fairhope, Alabama (Dallis Nordstrom Rohde, Carm an Lehnhof Israelsen LLP, Salt Lake City, Utah, with him on the briefs), for Defendant Counterclaimants - Appellees.

________________ _________________ Before HARTZ , PHILLIPS , and EID , Circuit Judges.

________________ _________________ EID , Circuit Judge.

________________ _________________ FILED United States Court of Appeals Tenth Circuit 

### February 7, 2022 Christopher M. Wolpert Clerk of Court Appellate Case: 19-4131 Document: 010110672844 Date Filed: 04/19/2022 Page: 32 Banner Bank (“Banner”) provided a mu ltimillion-dollar loan to James and Loree Smith and th eir business entities. 1 As collateral, James Smith pledged several properties. Banner later contracted to rele ase Loree Smith from a ll actions associated with the loan. When the lo an entered default, Banner na med Loree in this diversity action to foreclose on the collateral, notw ithstanding the release. Loree brought a successful breach of contract counterclaim and recovered attorneys’ fees through Utah’s bad-faith fee-shifting statute. See Utah Code Ann. § 78B-5-825. After finding Loree satisfied every statutory requirement, the district court issued a judgment awarding $105,550 in fees to Lor ee. Banner appeals, arguing that every prong of the bad-faith statut e is unmet and the fee award was unreasonable. We also asked the parties to brief the question whet her the judgment below is final. Finding that it is, we exercise our jurisdiction under 28 U.S.C. § 1291. We do not reach any of Banner’s specific statutory arguments but reverse the fee award for a more fundamental reason. Section 78 B-5-825 is a procedural atto rneys’ fees statute, so it cannot be used to recover fees when a federal court sits in diversity.
I. James Smith owned a business: Real Esta te Investor Support (“REIS”). James Smith also owned real and personal propert y across the United States, some of which his ex-wife Loree Smith co-owned. Banner’s predecessor loaned m oney to REIS. As part of the agreement, REIS gave Banne r a promissory note worth $2.3 million in

1 Banner Bank is the successor by merg er of AmericanWest Bank, which formerly did business in Ut ah as Far West Bank. Appellate Case: 19-4131 Document: 010110672844 Date Filed: 04/19/2022 Page: 43 July 2009. James personally guaranteed the loan and signe d a Deed of Trust that put up several properties in Ore gon (eleven parcels of land, called the Eleven Parcels, and a condominium, called Unit 7) as collate ral. The Eleven Pa rcels were solely owned by James, while Unit 7 was at that time jointly owned by James and Loree. James signed the document but Loree re fused. Banner accepted the deed anyway and tried to record it in Oregon. The county reco rder’s office rejected the filing because Loree ha d not signed it. Banner revised the trust deed in Sept ember 2010 to remove Unit 7 from the property securing the loan and delete Lore e’s name and signature block. James signed the revised deed but only sent Ba nner an electronic copy of the signature page, retaining the original. Banner did no t receive or record the revised deed of

trust. Meanwhile, in December 2010, REIS, James, and Loree sold RE IS’s assets to Real Estate Investor Educa tion (“REIE”). REIE agreed to assume the Banner loan. It also agreed to release Lo ree from any lawsuits that mi ght arise in connection with it. The release states: In consideration of this Agreement, the Borrower and Lender, on behalf of themselves, their successors, assigns, le gal representatives (collectively and individually, the “ Releasing Parties ”), hereby fully, finally and completely RELEAS E and FOREVER DISCHARGE Loree Smith of and from any and all claims, controversies, disputes, liabilities, obligations, demands, damages, debts, liens, actions and causes of action of any and every nature what soever relating to the Loan. Aplt. App’x Vol. I at 150. Appellate Case: 19-4131 Document: 010110672844 Date Filed: 04/19/2022 Page: 54 REIE defaulted in March 2011. Jame s, the guarantor, did not make any payments on the loan. Banner’s only recourse was the property James pledged, so it “determined that it needed to record the defective Deed of Trust.” Aplt. App’x Vol. IV at 846. Through previous counsel, Banner made multiple changes to the original, defective deed using pen, pencil, and white -out. In July 2011, Banner recorded the altered document. In August 2012, Banner fi led this action against REIS, REIE, JMS Marketing, James, Loree, and ten John Do es to enforce the loan and foreclose on James’s interest in the Eleven Parcels and Unit 7. 2 To foreclose on solely James’s interest, Banner sought a declaratory judgment th at Loree did not hold any in terest in the collateral. Loree, as a third-party beneficiary of the release, brought several counterclaims, including breach of contract, against Banner. James also brought counterclaims. Banner attached a copy of the trust deed to its complaint, but the copy did not contain the alterations described above. The altera tions were likewise not visible in the copy certified by the Oregon county, or in any copy provided during discovery. The district court ruled that all defe ndants except Loree were liable for the loan amount. In 2014, the court entered default judgments against REIS, REIE, and JMS Marketing. Then, in 2017, the distri ct court entered summary judgment against James, holding him liable for the same sum. However, the court declined to enter summary judgment on the is sue of foreclosing on the Oregon property because of

2 The district court properly invoked its diversity jurisd iction because the parties were of diverse citizenship. See 28 U.S.C. § 1332. Appellate Case: 19-4131 Document: 010110672844 Date Filed: 04/19/2022 Page: 65 factual disputes concerning the altered deed. In that same order, the district court rejected all counterclaims brought by James and Loree except Loree’s counterclaim for breach of contract, on which it reserved judgment. In December 2014, Loree obtained sole ow nership of Unit 7 pursuant to a final order entered in the Smiths’ Florida divor ce case. In 2017, Banner released its interest in Unit 7, so the sole pending claim against Jame s concerned only the Eleven Parcels he owned in full. The other cl aim remaining at that point was Loree’s counterclaim for breach of contract. The district court held a three-day benc h trial on the two re maining claims in June 2017. Banner produced the original alte red version of the trust deed for the first time in this litigation on th e second day of trial. The parties submitted written closing arguments and the court schedul ed a hearing for October 2017. On September 5, 2017, James filed for bankruptcy. As a result, the di strict court stayed the case. See 11 U.S.C. § 362(a). Later, as the c ourt explained in a 2019 order, “the Trustee in James’s bankruptcy proceeding abandoned the Oregon Properties, thereby mooting Banner Bank’s request for an order to foreclose on the Eleven Parcels.” Aplt. App’x Vol. IV at 842. With the fo reclosure claim moot, that left only one cause of action: Loree’ s counterclaim for breach. The district court ruled that Loree prevailed on her breach of contract counterclaim because Banner sued her despite their unambiguous release agreement. The court explained that “[w]hile Banner Ba nk [wa]s certainly with in its legal rights to foreclose on property for which it ha[d] a secured interest[,] . . . the existence of Appellate Case: 19-4131 Document: 010110672844 Date Filed: 04/19/2022 Page: 76 this right does not negate the legal cons equences to Banner Ba nk for violating its promise to release Loree fr om such a controversy.” Id. at 853. Although Banner’s notice of appeal enco mpasses the district court’s decision on Loree’s counterclaim, Banner does not dire ctly challenge that ruling. Instead, Banner challenges the attorney s’ fees Loree recovered un der Utah’s bad-faith feeshifting statute. See Utah Code Ann. § 78B-5-825. The statute requires awarding “reasonable” attorneys’ fees to a “prevailing party if th e court determines that the action or defense to the action was without merit and not brought or asserted in good faith.” Id. § 78B-5-825(1). The stat ute contains exceptions th at are not relevant to this appeal. Loree’s breach of contract counterclaim is governed by Utah law. Utah follows the American Rule that attorneys’ fees are typical ly not recoverable, win or lose, unless law or contract provides otherwise. See USA Power, LLC v. PacifiCorp , 372 P.3d 629, 662 (Utah 2016). The Ut ah Supreme Court has not, it seems, addressed whether and when fees may be recovered as damages for breach of a release agreement, which some ju risdictions treat differently. See Sonja A. Soehnel, Annotation, Recovery of Attorn eys’ Fees and Costs of Liti gation Incurred as Result of Breach of Agreement Not to Sue , 9 A.L.R. 5th 933 (1993) (surveying different approaches). Leading up to trial, Loree sought to rec over attorneys’ fees as direct damages for Banner’s alleged breach of the release. See Defs.’ Resp. in Opp’n to Banner Bank’s Mot. to Alter and Amend at 4, Banner Bank v. Real Estate Investor Appellate Case: 19-4131 Document: 010110672844 Date Filed: 04/19/2022 Page: 87 Education, LLC, et al. , No. 2:12-CV-00763-CW (D. Ut ah) (May 11, 2017), ECF No. 219 (“[A]ttorney’s fees, as well as other costs and expe nses, incurred by Loree Smith are the damages as a result of a Breach of the Consent, Waiver and Release Agreement and are recoverable . . . because th ey are in and of themselves, in part, the damages as a direct result of Banner’s breach.”). 3 Loree’s pretrial brief likewise said nothing about claiming fees under the Utah statute. See Aplt. App’x Vol. IV at 796. At trial, however, Loree suggested she s ought fees under both Utah statutory law and the district court’s inherent powers. See Redacted Tr. at 13, Banner Bank , No. 2:12- CV-00763-CW (Aug. 8, 2017), ECF No. 251. In her closing brief, Loree formalized this request by invoking § 78B-5-825. See Loree Smith’s Br. as to Closing Arg. at 3, Banner Bank , No. 2:12-CV-00763-CW (Aug. 10, 2017), ECF No. 254. The district court awarded attorneys’ fees under the Utah statute, concluding that Banner’s action against Lo ree was both meritless and brought in bad faith. In a later order, the court rejected Banner’s argument that Loree was not a “prevailing party” under Utah law as she failed to satisfy the damages element of her breach claim. The court explained that the re lease’s “obvious” a nd “sole[] purpose” was “ensur[ing] that Loree was released and prot ected from ‘any and all’ legal claims ‘of any and every nature whatsoev er relating to the Loan.’” Aplt. App’x Vol. V at 1068 (quoting release). “[ T]he natural result of Banner Bank’s breach was that Loree had

3 We take judicial notice of arguments made in certai n district court documents that do not appear in the reco rd compiled by the parties. See St. Louis Baptist Temple, Inc. v. FDIC , 605 F.2d 1169, 1172 (10th Cir. 1979). Appellate Case: 19-4131 Document: 010110672844 Date Filed: 04/19/2022 Page: 98 to hire an attorney to defe nd her against Banner Bank’s clai ms,” so her at torneys’ fee claim was “a proper assertion of direct damages for a breach of contract.” Id. (internal quotation marks omitted). The district court reduced its initial fee award because of Loree’s lawyer’s travel time and entered judgment against Ba nner for her remaining attorneys’ fees in the amount of $105,550. Banner timely app ealed. Banner contests all three prongs of the fee statute as well as the reasonableness of the fee award. We also asked the parties to provide suppleme ntal briefing on whether we have jurisdiction under the final judgment rule. See 28 U.S.C. § 1291.
II. We begin with finality, which determin es our jurisdiction. Under the final judgment rule, we have jurisdiction over “appeals from all final decisions of the district courts.” Id. To be final, a district c ourt’s “decision must reflect the termination of all matters as to all parties and causes of action.” Dodge v. Cotter Corp. , 328 F.3d 1212, 1221 (10th Ci r. 2003) (internal quotation marks omitted). The judgment below was final with resp ect to all parties and claims. Banner’s case had five defendants: RE IS, REIE, JMS Marketing, James, and Loree. The latter two brought counterclaims. Finality is a pparent with respect to all parties and claims. First, the district court’s 2014 default judgments against REIS, REIE, and JMS Marketing terminated th e proceedings with respect to those defendants. Next, in 2017, th e district court rejected all claims by and against Loree Appellate Case: 19-4131 Document: 010110672844 Date Filed: 04/19/2022 Page: 109 except her breach of contract counterclaim. Upon adjudicating that counterclaim in 2019, all claims involving Lo ree were also resolved. In 2017, the district court gran ted summary judgment against James on Banner’s claim that he was liable as a gua rantor and on James’s counterclaims. Citing factual disputes, the court declined to enter summary judgment on Banner’s attempt to foreclose on the Oregon properties. Around that time, Banner released its interest in the condominium , so the foreclosure claim only concerned the Eleven Parcels owned by James. Then James file d for bankruptcy and the district court halted proceedings. Shortly thereafter, how ever, the estate ab andoned the Eleven Parcels, so Banner had nothing to go after. The district court explicitly recognized that this terminated Banner’s remaining claim against James, explaining in a 2019 order that “the Trustee in James’s ba nkruptcy proceeding abandoned the Oregon Properties, thereby mooting Banner Bank’s request for an order to foreclose on the Eleven Parcels.” Aplt. App’x Vol. IV at 842. That ended the proceedings with respect to James. All claims against all partie s were thus resolved or d eemed moot by the district court before Banner appealed, so the judgmen t is final and we have jurisdiction under 28 U.S.C. § 1291. The only claim on which the district court granted relief was Loree’s counterclaim for breach of contract , to the extent the court awarded fees under § 78B-5-825. We turn to that issue now.
III. Appellate Case: 19-4131 Document: 010110672844 Date Filed: 04/19/2022 Page: 1110 The district court awarded fees under Ut ah’s bad-faith statute, which provides that “[i]n civil actions, the court shall award reasonable a ttorney fees to a prevailing party if the court determines that the acti on or defense to the ac tion was without merit and not brought or asserted in good faith.” Utah Code Ann. § 78B-5-825(1). On appeal, “[w]e review a district court’s award of attorney fees for abuse of discretion.” Chieftain Royalty Co. v. Enervest Energy Institutional Fund XIII-A, L.P. , 888 F.3d 455, 459 (10th Cir. 2017). Ou r task “includes review de novo of the legal principles underlying the fee award—such as the choi ce of whether to apply state or federal law.” Id. In a diversity case like this, the Erie doctrine requires federal courts to apply federal procedural law and state substantive law. See Racher v. Westlake Nursing Home Ltd. P’ship , 871 F.3d 1152, 1162 (10th Cir. 2017); see also Erie R.R. Co. v. Tompkins , 304 U.S. 64 (1938). That m eans we cannot reach Banner’s arguments about Utah’s bad-faith statute unless we determine it was proper for the district court, sitting in dive rsity, to award fees pursuant to the statute in the first place. It is therefore immaterial that neither party has raised the Erie issue. As the Supreme Court has made clear, “a court may c onsider an issue ‘ant ecedent to . . . and ultimately dispositive of’ the dispute before it, even an issue th e parties fail to identify and brief.” U.S. Nat’l Bank of Or. v. I ndep. Ins. Agents of Am., Inc. , 508 U.S. 439, 447 ( 1993) (quoting Arcadia v. Ohio Power Co. , 498 U.S. 73, 77 (1990)). Whether the district court’s fee award was appropriate under Erie is precisely such an antecedent issue. Cf. Scottsdale Ins. Co. v. Tolliver , 636 F.3d 1273, 1277 (10th Cir. Appellate Case: 19-4131 Document: 010110672844 Date Filed: 04/19/2022 Page: 1211 2011) (“[In a case] grounde d on diversity jurisdiction, we are obligated by the Erie doctrine to apply . . . fe deral procedural law.”).
For Erie purposes, we have “distinguish[ed] between two different types of attorney fees, depending on the basis fo r the fee award”: s ubstantive fees and procedural fees. Chieftain Royalty Co. , 888 F.3d at 460. “If the statute is procedural, federal law applies, but if it is substantive, then the court must follow the law of the forum state.” Scottsdale Ins. Co. , 636 F.3d at 1279. “Substantive fees are part and parcel of the cause of action over which we have diversity jurisdiction,” while procedural fees “ha[ve] nothing to do with the nature of the cause of action and do[] not derive in any way from state substantive law.” Chieftain Royalty Co. , 888 F.3d at 460. Put another way, “[s]ubstantive fees are those which are tied to the outcome of the litigation, whereas proce dural fees are generally ba sed on a litigant’s bad faith conduct in litigation.” Scottsdale Ins. Co. , 636 F.3d at 1279 (i nternal quotation marks omitted). We draw th is distinction from the Supr eme Court’s observation that, in diversity cases, a “state la w denying the right to attorn ey’s fees or giving a right thereto, which reflects a substan tial policy of the state , should be followed.” Alyeska Pipeline Serv. Co. v. Wilderness Soc’y , 421 U.S. 240, 259 n.31 (1975) (emphasis added); see also Chambers v. NASCO, Inc. , 501 U.S. 32, 52 (1991) (clarifying that, under Alyeska , federal courts should only apply state “fee-shifting rules that embody a substantive policy, such as a statute wh ich permits a prevaili ng party in certain classes of litigation to recover fees”). Appellate Case: 19-4131 Document: 010110672844 Date Filed: 04/19/2022 Page: 1312 With these principles in mind, we pro ceed to decide whether Utah’s bad-faith statute is procedural or substantive, and whether it c onflicts with valid federal law. Starting with whether § 78B- 5-825 is procedural or s ubstantive, a bad-faith feeshifting statute like Utah’s is the quintessential pr ocedural attorneys’ fees statute. See Scottsdale Ins. Co. , 636 F.3d at 1279 (“[P]rocedural fees are generally based on a litigant’s bad faith conduct in litigati on.”) (internal quota tion marks omitted); Chieftain Royalty Co. , 888 F.3d at 460 (“[A]n attorn ey-fee award against bad-faith conduct in the litigation has nothing to do w ith the nature of th e cause of action and does not derive in any way from state substantive law.”) . Utah’s statute is no different. It applies in a ll “civil actions.” Utah Code Ann. § 78B-5-825(1). It embodies no apparent substantive policy judgment concerning certain kinds of claims. Rather, it polices the general conduct of litigation in the state’s courts. That renders it a core procedural provision. See Chambers , 501 U.S. at 52 (“[N]either of [ Erie ’s] twin aims” of “discouragement of forum-shopping and avoidance of inequitable administration of the laws . . . is implicated by the assessment of attorney’s fees as a sancti on for bad-faith conduct.”). It is true that § 78B-5-825’s fees are only available to pr evailing parties and we have previously held a different Utah prevailing-party fee-sh ifting provision to be substantive and thus app licable in diversity. See Xlear, Inc. v. Focus Nutrition, LLC , 893 F.3d 1227, 1239 (10t h Cir. 2018). In Xlear , we reasoned that a provision of the Utah Truth in Advertising Act (UTIAA) “awar d[ing] attorneys’ fees to the prevailing party” in UTIAA cases turned upon “an outco me-based reason for awarding fees that Appellate Case: 19-4131 Document: 010110672844 Date Filed: 04/19/2022 Page: 1413 is part and parcel of the state law cau se of action,” maki ng it substantive. Id. Critically, the fee-shifting provision in Xlearwas tied to the UTIAA. See id. That suggested the statute embodied a substantive judgment about a particular class of claim, specifically UTIAA cl aims. In contrast, § 78B-5 -825 applies to all civil litigation. More importantly, prevailing is insufficient to receive fees under § 78B-5- 825. Rather, the statute’s primary focus is on a claim’s merit and a litigant’s bad faith. That renders it pro cedural under our precedents. See Boyd Rosene and Assocs., Inc. v. Kan. Mun. Gas Agency , 174 F.3d 1115, 1125–26 (10th Cir. 1999) (“This court recognizes a distinction, as do other courts and co mmentators, between loser-pays attorney’s f ees, that is, attorney’s fees aw arded to a party simply because it prevailed, and attorney’s fe es assessed for a willful vi olation of a court order or against a losing party who acted in bad faith , vexatiously, wantonly, or for oppressive reasons.”). Turning to conflict, Utah’s bad-faith stat ute instructs a district court to award fees to a prevailing party if it finds a cl aim or defense meritles s and brought in bad faith. See Utah Code Ann. § 78B-5-825. Th at plainly conflicts with federal procedure. As the Fifth Circuit has explai ned, any procedural statute authorizing a fee award automatically conf licts with “federal policy, ” specifically with the American Rule that parties bear th eir own fees and costs in court. Camacho v. Tex. Workforce Comm’n , 445 F.3d 407, 412 (5th Cir. 2006). The validity of the American Rule in federal court cannot be seriously questioned. Appellate Case: 19-4131 Document: 010110672844 Date Filed: 04/19/2022 Page: 1514 The Utah statute thus al so conflicts with equally valid exceptions to the American Rule—sanctions und er Rule 11 and a federal c ourt’s inherent power to punish bad faith by shifting fees. See Fed. R. Civ. P. 11; Chambers , 501 U.S. at 45– 46. The problem is that § 78B-5-825 im poses a rival regime for bad-faith feeshifting that is beholden to the Utah S upreme Court’s definition of bad faith. Compare Pinder v. Du chesne Cty. Sheriff , 478 P.3d 610, 630 (Utah 2020) (“To find that a party acted in bad faith [under § 78 B-5-825], the court must conclude that at least one of the following fact ors existed: (i) The party lack ed an honest belief in the propriety of the activities in question; ( ii) the party intended to take unconscionable advantage of others; or (iii) the party intended to or acted with the knowledge that the activities in question would hinder, delay, or defraud others.”) (quoting Migliore v. Livingston Fin., LLC , 347 P.3d 394, 403 (Utah 2015)), with Nikols v. Chesnoff , 435 F. App’x 766, 773 (10t h Cir. 2011) (unpublished 4 ) (noting that “the standards for the Utah fee shifting statute [§ 78B-5- 825] and Rule 11 are not the same”), and Mountain W. Mines, Inc. v. Cl eveland-Cliffs Iron Co. , 470 F.3d 947, 954 (10th Cir. 2006) (noting that the Tenth Circuit “sets a high bar for bad faith awards” under the American Rule’s bad-faith ex ception by “insist[ing] that a trial judge make a finding of bad intent or improper motive”). B ecause these federal procedures are not controlled by the Utah definition of bad fa ith that covers § 78B-5-825, they cannot

4 Unpublished cases are not binding preceden t, but we consider them for their persuasive value. See Fed. R. App. P. 32. 1; 10th Cir. R. 32.1. Appellate Case: 19-4131 Document: 010110672844 Date Filed: 04/19/2022 Page: 1615 coexist with the Utah statute. 5 See Burlington N. R.R. Co. v. Woods , 480 U.S. 1, 7 (1987) (“[T]he purposes underlying the [fede ral procedure] are sufficiently coextensive with the asserted purposes of the [state ] statute to indicate that the [federal procedure] occupies the statute’s field of opera tion so as to preclude its application in federal diversity actions.”). This conflict between competing pro cedural rules—federal and state—means that Utah’s law has no application in fe deral court. The federal procedure is “‘sufficiently broad’ to cause a ‘direct co llision’ with the state law or, implicitly, to ‘control the issue’ . . . ther eby leaving no room for the operation of” Utah Code Ann. § 78B-5-825. Id. at 4–5 (quoting Walker v. Armco Steel Corp. , 446 U.S. 740, 749 (1980)). As a result, § 78 B-5-825 is displaced in the federal system and district courts sitting in diversity cannot award fees under it. See Taylor v. Nat’l Collegiate Student Loan Tr. 2007-1 , Case No. 2:19-CV-00120-BSJ , 2021 WL 872494 (D. Utah Mar. 9, 2021) (“[T]he Tenth Circuit has explaine d that in diversity ca ses, fees that are based on a litigant’s bad faith conduct are pr ocedural fees and are thus governed by the federal rules . . . [so § 78B-5-825 is] inappropriate to justify [a] sanction . . . for bad faith.”) (citing Chieftain Royalty Co. , 888 F.3d at 460–61). It is true that we have previously, albeit without any Erie analysis, affirmed a fee award under § 78B-5-825. See Cascade Energy and Metals Corp. v. Banks , 896

5 We do not consider affirming the fe e award on the basis of these federal alternatives because both are rooted in a di strict court’s discretionary determinations about litigants’ conduct. Appellate Case: 19-4131 Document: 010110672844 Date Filed: 04/19/2022 Page: 1716 F.2d 1557, 1579 (10th Cir. 1990). But inte rvening precedent clar ifying the interplay between attorneys’ fees and Erie doctrine demands a fresh look at whether the district court appropria tely awarded fees. See Chambers , 501 U.S. at 52; Chieftain Royalty Co. , 888 F.3d at 460–61. Having taken th at look, we conclude the decision below must be reversed and the fee aw ard pursuant to § 78B-5-825 vacated. Our opinion is limited to the Erie problems raised by applying § 78B-5-825, a state procedural statute, in a dive rsity case. On remand, the di strict court remains able to award fees pursuant to the bad-faith ex ception to the American Rule or the sanctioning mechanism of Rule 11. Recal ling how Loree briefed the case before trial, state law may also perm it an award of attorneys’ fe es as breach of contract damages. See, for example, Dallas Gas Partne rs, L.P. v. Prospect Energy Corp. , 733 F.3d 148, 158 (5th Cir. 2013). We express no opinion on these options or the propriety of the district court’s legal c onclusions and fee calculations under § 78B-5-
825.
IV. For the reasons above, we REVERSE the district court’s award of attorneys’ fees under § 78B-5-825 and RE MAND for further proceedings. Appellate Case: 19-4131 Document: 010110672844 Date Filed: 04/19/2022 Page: 18