2017 UT App 234

THE UTAH COURT OF APPEALS

AUSTIN G. HEYWOOD JR.,

Petitioner,

v.

DEPARTMENT OF COMMERCE, DIVISION OF REAL ESTATE,

Respondent.

Opinion

No. 20160289-CA

Filed December 21, 2017

Original Proceeding in this Court

Harold L. Reiser and Adam H. Reiser, Attorneys

for Petitioner

Sean D. Reyes and Brent A. Burnett, Attorneys

for Respondent

JUDGE DIANA HAGEN authored this Opinion, in which JUDGES

MICHELE M. CHRISTIANSEN and JILL M. POHLMAN concurred.

HAGEN, Judge:

¶1 In 2006, a bankruptcy court found that Austin G. 

Heywood Jr., a real estate agent, committed fraud by concealing 

a bona fide purchase offer from his client so that he could force a 

short sale of the property to his own investment group (the 2006 

transaction). Several years later, in November 2014, Heywood 

submitted an application to the Utah Department of Commerce, 

Division of Real Estate (the Division) to renew his license as a 

real estate sales agent. In light of the bankruptcy court’s finding, 

the Division found that Heywood did not demonstrate the 

“honesty, integrity, truthfulness, reputation, and competency” 

required for renewal and denied his renewal application. After 

exhausting his administrative review options, Heywood now 

petitions this court to review the denial of his license. We decline 

to disturb the Division’s decision.
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BACKGROUND

The 2006 Transaction

¶2 In 2006, Heywood acted as a real estate agent for a client 

who wanted to sell her home. The client was delinquent on her 

mortgage payments and had been unsuccessful in finding a 

buyer. Heywood told the client that he knew of a group of shortsale investors who were interested in purchasing her home.

Heywood did not disclose that he had a personal interest in this 

group of investors, which included Heywood and his spouse.

¶3 In March 2006, Heywood listed the client’s property as 

under contract, although no offer had been made at that time.

The house was ultimately sold to Heywood’s investment group 

for $352,000—a price below its appraised value of $380,000. Prior 

to the short sale, Heywood had received an offer from another 

buyer to purchase the property for $441,000, but he did not 

disclose the offer to the client or her lenders. The same day that 

the investment group purchased the property, Heywood resold

it to the other buyer for a substantial profit.

The Bankruptcy Proceedings

¶4 Shortly after the 2006 transaction, the client filed a 

petition for relief under chapter 7 of Title 11 of the United States 

Code in the United States Bankruptcy Court for the District of 

Utah. The bankruptcy trustee eventually brought several causes 

of action against Heywood, including a claim for common law 

fraud. Heywood was represented by counsel and had the 

opportunity to present evidence during a five-day bench trial.

¶5 Following briefing and oral argument, the bankruptcy 

court entered a memorandum decision in July 2009 (the 2009 

Memorandum Decision), concluding that Heywood was liable to 

the bankruptcy estate under common law fraud because his 

conduct was “intentionally fraudulent or manifested a knowing 
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20160289-CA 3 2017 UT App 234

and reckless indifference toward and disregard of [the client’s]

rights.”

¶6 Heywood did not appeal the bankruptcy court’s findings 

of fact and conclusions of law. Instead, he elected to enter into a 

settlement agreement with the bankruptcy trustee. Heywood 

agreed to pay damages to the trustee in exchange for the trustee 

releasing Heywood from “all claims, demands, debts,

obligations, liabilities, costs, expenses, rights of action, causes of 

action, or judgments of any kind or character whatsoever” 

arising out of the client’s bankruptcy estate. The bankruptcy 

court approved the settlement agreement and then dismissed the 

case against Heywood. In doing so, the bankruptcy court did not 

vacate the 2009 Memorandum Decision.

Licensing and Disciplinary Proceedings before the Division

¶7 In November 2009, the Division received a complaint 

about Heywood’s conduct during the 2006 transaction. The 

Division notified Heywood that it had initiated an investigation.

¶8 In 2010, Heywood applied for and was issued a renewed 

license. In his license renewal application, Heywood disclosed 

that the Division was conducting an investigation into the 2006

transaction.

¶9 In 2012, Heywood again applied for and was issued a 

renewed license. In completing his online application, Heywood 

did not disclose that the Division’s investigation was still 

ongoing.

¶10 On the same day Heywood renewed his license online, 

the Division filed a notice of agency action and petition,

initiating a disciplinary proceeding against Heywood to revoke 

his license. A year later, the parties stipulated to the dismissal of 

the disciplinary action to allow for further review and 

investigation.
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20160289-CA 4 2017 UT App 234

¶11 In 2014, Heywood submitted another license renewal 

application. This time, the Division denied his application.

Heywood subsequently filed a request for agency review.

Review by the Utah Real Estate Commission

¶12 On review, Heywood moved for summary disposition, 

arguing that the doctrine of laches applied because the Division 

unreasonably delayed taking action against him. The Presiding 

Officer of the Utah Real Estate Commission found that the 

doctrine of laches was inapplicable in an administrative context 

and, in any event, the passage of time in this case could not “be

considered unreasonable or prejudicial, particularly where 

[Heywood] was at all times on notice of the investigation and 

was allowed to work on an unrestricted license.”

¶13 The Presiding Officer then granted the Division’s motion 

in limine to give preclusive effect to the 2009 Memorandum 

Decision. Heywood argued that the doctrine of issue preclusion 

did not apply because the 2009 Memorandum Decision, which 

left open the calculation of punitive damages, expressly stated 

that it was not a final judgment. Nevertheless, the Presiding 

Officer ruled that the 2009 Memorandum Decision became final 

as soon as “the 30-day deadline by which the trustee was 

required to request further hearing [on punitive damages] 

passed.” As the Presiding Officer noted, Heywood elected to 

settle the amount of damages owed to the estate rather than 

preserve his right to appeal. The Presiding Officer concluded 

that the parties did not stipulate to vacatur of the 2009 

Memorandum Decision as part of the settlement, nor did the 

bankruptcy court vacate its prior decision when it dismissed the 

case.

¶14 Following a hearing, the Presiding Officer entered a 

written order affirming the Division’s decision to deny 

Heywood’s 2014 license renewal application. The Presiding 

Officer based the decision not only on the 2006 transaction but 
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20160289-CA 5 2017 UT App 234

also on Heywood’s lack of remorse and refusal to take 

responsibility for his conduct. Heywood “repeatedly attempted 

to defend the deal in its entirety” and “claimed he made full and 

appropriate disclosures.” He refused to acknowledge any 

wrongdoing and instead criticized the Division for not pursuing 

its concerns earlier. The Presiding Officer found that Heywood 

“does not appear to realize just how egregious his conduct was, 

despite having years to reflect upon it,” and that under those 

circumstances he “cannot be trusted to act in the public interest 

under a real estate license.” In addition to denying Heywood’s 

license renewal, the Presiding Officer ruled that he “may not 

reapply for a license with the Division for at least three years 

from the date of this order.” Following this decision, Heywood 

filed a request for further administrative review.

Review by the Department of Commerce

¶15 On review to the Department of Commerce, Heywood 

raised, among other things, the same three issues presented on 

judicial review: (1) whether the doctrine of laches barred the 

Division’s denial of his license, (2) whether the Presiding Officer 

properly considered the 2009 Memorandum Decision, and 

(3) whether the three-year ban on applying for license renewal 

was unconstitutionally excessive. As to the third issue, which 

was not supported by “any legal authority or analysis,” the 

Executive Director of the Department of Commerce ruled that 

Heywood had failed to “meet the briefing requirements” and 

declined to consider that challenge.

¶16 The Executive Director rejected Heywood’s arguments 

regarding laches and the preclusive effect of the 2009 

Memorandum Decision. First, the Executive Director agreed 

that, even if the doctrine of laches could apply to a disciplinary 

proceeding where the agency is acting to protect public welfare, 

the renewal was not a disciplinary proceeding but a request for 

agency action initiated by Heywood. The Executive Director also 
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concluded that Heywood had not suffered any prejudice as a 

result of the Division’s failure to pursue the disciplinary action. 

Second, the Executive Director agreed that the 2009 

Memorandum Decision was final and that the Presiding Officer 

properly considered the bankruptcy court’s findings of fraud in 

denying Heywood’s 2014 license renewal application. Heywood 

filed a request for judicial review.

ISSUES AND STANDARDS OF REVIEW

¶17 Heywood asks this court to review three issues, two of 

which we address on the merits. First, Heywood claims that the 

denial of his license was untimely and should be barred by the 

doctrine of laches. Second, he argues that he should not have 

been precluded from challenging the findings made in the 2009 

Memorandum Decision because it was not a final order. Both of 

these legal issues were raised below and addressed in the 

Executive Director’s order. We review an administrative 

agency’s legal decisions for correctness, giving no deference to 

the agency. Hughes Gen. Contractors, Inc. v. Utah Labor Comm'n, 

2014 UT 3, ¶ 25, 322 P.3d 712.

¶18 Heywood’s third issue is whether the Division “abused its 

discretion by imposing an unreasonably harsh penalty upon 

[him] in barring him from reapplication until 2018.” While 

Heywood attempted to raise this issue below, the Executive 

Director declined to consider it due to Heywood’s inadequate 

briefing. To obtain judicial review, petitioners must 

“appropriately address their opening brief and arguments to the 

Executive Director’s final order.” Utah Physicians for a Healthy 

Env't v. Executive Dir. of the Utah Dep't of Envtl. Quality, 2016 UT 

49, ¶ 16, 391 P.3d 148. Here, Heywood does not challenge the 

Executive Director’s refusal to reach the merits but instead takes 

issue with the Presiding Officer’s initial decision to impose the 

three-year ban. Because Heywood does not attack the basis for 
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the Executive Director’s order, we do not reach the merits of this 

issue.

ANALYSIS

I. Timeliness

¶19 Heywood argues that the Division’s denial of his license

is an “untimely licensing action” and should be barred by the 

doctrine of laches.1 In making this argument, Heywood draws 

no distinction between the dismissed disciplinary action 

initiated by the Division and the 2014 licensing renewal 

application initiated by Heywood. He argues that characterizing 

the disciplinary proceeding and the license renewal as separate 

actions is “strictly semantics,” because the denial of his license 

renewal ultimately produced the same sanction that would have 

resulted from the dismissed disciplinary action—revocation of 

his real estate license. But disciplinary proceedings and denial of 

a renewal application are distinct agency actions.

¶20 Disciplinary proceedings are governed by sections 61-2f401 to -410 of the Utah Code. While a disciplinary proceeding 

may result in the revocation of a license, other civil penalties can 

be assessed as well, including a fine of up to $5,000 per violation 

or the amount of any gain or economic benefit derived from each 

violation. See Utah Code Ann. § 61-2f-407 (LexisNexis 2011).

 

1. In his opening brief, Heywood makes an alternative argument 

that “the Division’s denial of Heywood’s license fails its own 

standards for timeliness pursuant to Utah Administrative Code 

Rule 151-4-108.” Because this argument was not raised in the 

administrative proceedings, we do not separately address it 

except to note that it rests on the same mistaken assumption that 

the disciplinary action that was later dismissed and the 2014 

licensing renewal application were the same “agency action.”
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¶21 On the other hand, license renewal is governed by 

sections 61-2f-201 to -208 of the Utah Code. Unlike a disciplinary 

action initiated by the Division, a renewal request is triggered by 

the licensee’s application. An applicant is not automatically 

entitled to renewal and the Division must consider the honesty, 

integrity, truthfulness, reputation, and competency of the 

applicant before granting the renewal. See Utah Code Ann. § 61-

2f-203(1)(c) (LexisNexis Supp. 2017).

¶22 The distinction between an agency-initiated disciplinary 

action and a request for agency action by a licensee is fatal to 

Heywood’s laches argument. Heywood attempts to invoke 

laches to require the Division to renew his license because the 

Division did not act to revoke his license sooner. Laches is an 

“equitable doctrine by which a court denies relief to a claimant 

who has unreasonably delayed in asserting the claim, when the 

delay has prejudiced the party against whom relief is sought.” 

Laches, Black’s Law Dictionary (10th ed. 2014). “To successfully 

assert a laches defense, a defendant must establish both that the 

plaintiff unreasonably delayed in bringing an action and that the 

defendant was prejudiced by that delay.” Veysey v. Nelson, 2017 

UT App 77, ¶ 8, 397 P.3d 846 (citation and internal quotation 

marks omitted). In other words, laches is a defense to an action 

brought by a dilatory party, not a basis for affirmative relief.

¶23 Here, the denial of Heywood’s license renewal was not 

the result of an action brought by the Division against Heywood. 

Instead, Heywood requested agency action when he submitted 

his license renewal application in 2014. Even assuming that the 

doctrine of laches could bar an administrative agency from 

initiating—or reviving—a disciplinary action where there was 

inexcusable delay and demonstrated prejudice,2 it would not 

 

2. This court has previously recognized “the institutional 

reluctance of Utah courts to apply equitable doctrines against 

(continued...)
Heywood v. Department of Commerce

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apply in the context of a request for agency action. Regardless of 

the Division’s decision not to pursue disciplinary proceedings, it

still had an obligation under the statute to consider Heywood’s

honesty, integrity, truthfulness, reputation, and competency

before granting his 2014 request for license renewal.

¶24 While framed as a timeliness argument, the crux of 

Heywood’s grievance is that it was unfair for the Division to 

base its decision on misconduct that occurred eight years earlier.

To the extent Heywood is challenging the staleness of the 

evidence, Utah Code section 61-2f-203 places no time limitation 

on the evidence that the Division can consider in assessing the 

“honesty, integrity, truthfulness, reputation, and competency of 

the applicant.” See Utah Code Ann. § 61-2f-203(1)(c). Although 

staleness might decrease the probative value of such evidence, 

the bankruptcy court’s findings of misconduct were not viewed 

in isolation but in light of Heywood’s attitude and behavior at 

the time of the Division hearing. As the Presiding Officer noted, 

Heywood did not accept responsibility or recognize the 

seriousness of his misconduct. This bears heavily on whether he 

is currently fit for licensure. Thus, the Division properly

considered this evidence in reaching its decision.

 

(...continued)

municipal bodies and governmental subdivisions.” Tooele Assocs. 

Ltd. P’ship v. Tooele City, 2011 UT App 36, ¶ 3, 251 P.3d 835. Even 

if this were a review from a disciplinary action initiated by the 

Division, it is doubtful that we would apply laches to prevent an 

agency from taking action to protect public welfare. “As a 

general rule, laches or neglect of duty on the part of officers of 

the government is no defense to a suit by it to enforce a public 

right or protect a public interest.” Utah Power & Light Co. v. 

United States, 243 U.S. 389, 409 (1917).
Heywood v. Department of Commerce

20160289-CA 10 2017 UT App 234

II. Issue Preclusion

¶25 Heywood claims that the Division erred as a matter of 

law in giving preclusive effect to the bankruptcy court’s 2009 

Memorandum Decision, which found he had committed fraud in 

connection with the 2006 transaction. “Issue preclusion, often 

referred to as collateral estoppel, prevents relitigation of issues 

already determined in a previous action.” Collins v. Sandy City 

Board of Adjustment, 2000 UT App 371, ¶ 8, 16 P.3d 1251. “In 

effect, once a party has had his or her day in court and lost, he or

she does not get a second chance to prevail on the same issues.” 

Buckner v. Kennard, 2004 UT 78, ¶ 12, 99 P.3d 842. A party may be 

precluded from relitigating an issue if four criteria are met:

(i) the party against whom issue preclusion is 

asserted was a party to or in privity with a party to 

the prior adjudication; (ii) the issue decided in the 

prior adjudication was identical to the one 

presented in the instant action; (iii) the issue in the 

first action was completely, fully, and fairly 

litigated; and (iv) the first suit resulted in a final 

judgment on the merits.

Gressman v. State, 2013 UT 63, ¶ 37, 323 P.3d 998 (citation and 

internal quotation marks omitted).

¶26 Heywood does not contest the first three criteria of issue 

preclusion. He challenges only the fourth criterion, claiming that 

the 2009 Memorandum Decision is not a final judgment on the 

merits. Heywood argues that the “2009 Memorandum Decision 

was never final, but was rather interlocutory in nature and 

remained subject to appeal.” He also contends that the 

bankruptcy court’s approval of the parties’ settlement agreement 

was “a de facto vacatur” of its 2009 Memorandum Decision, given 

that the language of the settlement released him from “all claims, 

demands, debts, obligations, liabilities, costs, expenses, rights of 
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20160289-CA 11 2017 UT App 234

action, causes of action, or judgments of any kind or character 

whatsoever.”

¶27 The fact that Heywood ultimately elected to settle with 

the bankruptcy trustee does not affect the finality of the 2009 

Memorandum Decision. In accordance with persuasive authority 

from other jurisdictions, we hold that a decision that fully 

resolves an issue on the merits, after giving the parties an 

opportunity to be heard, is final for purposes of issue preclusion 

even if the parties agree to a settlement that results in dismissal 

before the entry of final judgment. Even assuming that a prior 

decision vacated as part of a settlement would lose its preclusive 

effect, we conclude that no such vacatur occurred here. As a 

result, the 2009 Memorandum Decision was properly accorded 

preclusive effect on the issue of whether Heywood committed 

fraud.

A. A Sufficiently Firm Decision May Have Preclusive Effect 

Even Where the Parties Settled Prior to Entry of Final 

Judgment.

¶28 A “final judgment” for purposes of issue preclusion 

“includes any prior adjudication of an issue in another action 

that is determined to be sufficiently firm to be accorded 

conclusive effect.” Restatement (Second) of Judgments § 13 

(1982) (Am. Law Inst. 1982). The prior adjudication of the issue is 

considered sufficiently firm if “[(1)] it was not tentative, [(2)] the 

parties had an opportunity to be heard, and [(3)] there was an 

opportunity for review.” Carpenter v. Young, 773 P.2d 561, 568

(Colo. 1989). Here, each of these factors supports the conclusion 

that the 2009 Memorandum Decision was final for purposes of 

precluding relitigation of whether Heywood committed fraud in 

connection with the 2006 transaction.

¶29 First, the 2009 Memorandum Decision was not “avowedly 

tentative,” at least not with respect to the issue of Heywood’s 

liability. See id. at 566. “A judgment is upon the merits when it 
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20160289-CA 12 2017 UT App 234

amounts to a declaration of the law as to the respective rights 

and duties of the parties based on . . . facts and evidence upon 

which the rights of recovery depend, irrespective of formal, 

technical, or dilatory objections or contentions.” State v. 

Sommerville, 2013 UT App 40, ¶ 32, 297 P.3d 665 (omission in 

original) (citation and internal quotation marks omitted). The 

2009 Memorandum Decision is a reasoned opinion setting forth 

detailed findings of fact and conclusions of law that support the 

bankruptcy court’s determination that Heywood committed 

fraud. The bankruptcy court concluded that Heywood’s conduct 

was “intentionally fraudulent or manifested a knowing and 

reckless indifference toward and disregard of [his client’s] 

rights” and that Heywood was jointly and severally liable for the 

full amount of the client’s damages.

¶30 The only issue that remained unresolved was a possible 

award of punitive damages. Specifically, the bankruptcy court 

found that “punitive damages may be awarded” and allowed 

the trustee thirty days to request a hearing to determine the 

appropriate amount, noting that “[f]ailure to timely request and 

set the hearing shall be a bar to any award of punitive damages.” 

Given that punitive damages had not yet been determined, the 

bankruptcy court stated:

This ruling is specifically intended to be 

interlocutory and no judgment will be entered at 

this time. Final judgment will be entered following 

the above-described process and possible hearing 

on punitive damages.

¶31 Leaving open the issue of damages did not render the 

bankruptcy court’s decision on liability tentative. See Zdanok v. 

Glidden Co., 327 F.2d 944, 955 (2d Cir. 1964) (holding that the

mere fact that the damages had not yet been assessed should not 

deprive a ruling on liability of preclusive effect); Aetna Cas. & 

Surety Co. v. Jeppesen & Co., 440 F. Supp. 394, 399–405 (D. Nev. 
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20160289-CA 13 2017 UT App 234

1977) (applying collateral estoppel on the fully litigated issue of 

liability even though the prior case settled on the issue of 

damages before entry of final judgment), vacated and remanded on 

other grounds, 642 F.2d 339 (9th Cir. 1981). The ruling was a firm 

declaration of law as to Heywood’s liability for common law 

fraud.

¶32 Second, Heywood had an opportunity to be fully heard 

on this issue. During the bankruptcy proceeding, Heywood, who 

was represented by counsel, had the opportunity to present 

testimony and exhibits over the course of a five-day bench trial, 

to fully brief the issues, and to be heard at oral argument prior to

issuance of the 2009 Memorandum Decision.

¶33 Third, the finding of fraud would have been subject to 

appeal upon entry of final judgment, but Heywood chose to 

forego any appeal in favor of settlement. Heywood 

acknowledges that the 2009 Memorandum Decision “remained 

subject to appeal prior to dismissal” of the action and that, “if the 

parties had not settled and instead had proceeded to judgment, 

those judgments likely could have been appealed.” A party’s 

“tactical decision to settle the case rather than seeking the entry 

of judgment and an appeal does not warrant the preclusion of 

collateral estoppel.” Ossman v. Diana Corp., 825 F. Supp. 870, 876 

(D. Minn. 1993).

¶34 While Utah courts have not considered this issue, the 

weight of authority from other jurisdictions supports our 

conclusion that

[i]f a court reaches a decision on the merits that is 

supported by a reasoned opinion, and the parties 

are fully heard and the issues fully litigated, the 

decision is final for collateral estoppel even if the 

parties enter into a settlement and stipulate to 

dismissal with prejudice prior to the entry of a final 

judgment.
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20160289-CA 14 2017 UT App 234

American Family Mut. Ins. Co. v. Clancy, No. CV-09-01077-PHXROS, 2011 WL 13077359, at *3 (D. Ariz. Mar. 9, 2011); see also

Ossman, 825 F. Supp. at 878 n.21 (collecting cases).3 In the present 

case, the 2009 Memorandum Decision would have been subject 

to review had the parties not settled prior to the entry of final 

judgment. We conclude that the fact that Heywood chose to 

waive his right to review by entering into a settlement 

 

3. See also Bates v. Union Oil Co., 944 F.2d 647, 651 (9th Cir. 1991) 

(applying collateral estoppel where party assumed the risk that 

the judgment would have preclusive effect by settling and not 

pursuing appeal); Chemetron Corp. v. Business Funds, Inc., 682 

F.2d 1149, 1191–92 (5th Cir. 1982) (applying collateral estoppel 

even though prior case had been settled and dismissed with 

prejudice before the entry of final judgment); Siemens Med. Sys., 

Inc. v. Nuclear Cardiology Sys., Inc., 945 F. Supp. 1421, 1436 

(D. Colo. 1996) (applying issue preclusion to partial summary 

judgment where issue was fully litigated but defendant chose to 

forego appeal by settling before final judgment was entered); 

Abbott Labs. v. Thermo Chem, Inc., 790 F. Supp. 135, 139–40 (W.D. 

Mich. 1991) (applying collateral estoppel even though the parties 

in the prior action reached a settlement agreement); Donovan v. 

United States Postal Service, 530 F. Supp. 894, 899 (D.D.C. 1981) 

(applying collateral estoppel to rulings that would have been 

subject to appeal had the defendant not settled and stipulated to 

dismissal); Carpenter v. Young, 773 P.2d 561, 568 (Colo. 1989) 

(applying collateral estoppel to issues decided on summary 

judgment even though the parties ultimately entered into a 

settlement agreement). But see Glidden Co. v. Lumbermens Mutual 

Cas. Co., 861 N.E.2d 109, 118 (Ohio 2006) (holding that 

interlocutory order could not be given preclusive effect because 

case was ultimately settled and dismissed, given that, under 

Ohio law, “all prior interlocutory orders are dissolved after a 

dismissal”).
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20160289-CA 15 2017 UT App 234

agreement does not affect the finality of the decision for 

purposes of issue preclusion. See Carpenter, 773 P.2d at 568.

¶35 Significantly, no issues remained pending at the time the 

bankruptcy action was dismissed. Heywood cites to cases where 

courts refused to apply collateral estoppel because the 

interlocutory ruling was not necessarily subject to appeal at the 

time of settlement. See, e.g., Continental Airlines, Inc. v. American 

Airlines, Inc., 824 F. Supp. 689, 706–09 (S.D. Tex. 1993) (refusing 

to apply collateral estoppel where the additional issues 

remained pending at the time of settlement, making it unclear 

whether the interlocutory order would have ultimately been 

essential to any final judgment); Garcia v. General Motors Corp., 

990 P.2d 1069, 1072–75 (Ariz. Ct. App. 1999) (refusing to apply 

collateral estoppel to a motion in limine that was not 

independently appealable). Here, by the terms of the 2009 

Memorandum Decision, once the thirty-day period for seeking a 

further hearing had passed, punitive damages were barred. At 

that point, there were no remaining issues and all that was left 

for the bankruptcy court was the ministerial act of entering the 

final judgment. There is no dispute that the bankruptcy court’s 

finding of fraud would have been reviewable had Heywood not 

chosen to forego appeal in favor of settlement.

¶36 With respect to the issue of fraud, the 2009 Memorandum 

Decision was not tentative, the parties were fully heard, and 

there was an opportunity for appellate review, which Heywood 

waived by settling prior to the entry of final judgment. As a 

result, Heywood was properly precluded from relitigating the 

issue of fraud.

B. The 2009 Memorandum Decision Was Not Vacated.

¶37 Heywood argues the 2009 Memorandum Decision can 

have no preclusive effect because it was vacated, but the record 

does not support this contention. Heywood fails to identify any 
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20160289-CA 16 2017 UT App 234

order, docket entry, or other record showing that the bankruptcy 

court vacated its decision.

¶38 Heywood suggests that we should view the approval of 

the settlement and subsequent dismissal by the court as “a de 

facto vacatur,” but he provides no authority for that proposition.

While he argues that “parties are entitled to stipulate to the 

vacatur of a judgment in order to effectuate settlement,” he cites 

no language in the settlement agreement where the parties 

conditioned the settlement on vacatur. More importantly, the 

parties never moved the bankruptcy court to set aside the 2009 

Memorandum Decision, and the court never did so.4

¶39 Nonetheless, Heywood claims that the settlement 

agreement “clearly contemplated vacatur of the 2009 

Memorandum Decision” because it released Heywood from “all 

claims, demands, debts, obligations, liabilities, costs, expenses, 

rights of action, causes of action, or judgments of any kind or 

character whatsoever.” This provision does not condition the 

settlement on vacatur of the 2009 Memorandum Decision nor 

does it purport to limit the preclusive effect of the bankruptcy 

court’s decision.

 

4. Some courts have held that issue preclusion may apply even 

where the prior decision was set aside as part of the settlement. 

See, e.g., Bates, 944 F.2d at 650 (holding that a judgment vacated 

as a condition of settlement can still have preclusive effect); 

Chemetron Corp., 682 F.2d at 1191–92 (reasoning that a party who 

makes a tactical decision to risk an adverse decision by fully 

litigating an issue should not be able to avoid offensive collateral 

estoppel by later settling the case). We need not decide whether, 

and under what circumstances, a settlement conditioned on 

vacatur will preclude collateral estoppel because Heywood’s 

settlement was not conditioned on vacatur and the 2009 

Memorandum Decision was never set aside.
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20160289-CA 17 2017 UT App 234

¶40 Because the 2009 Memorandum Decision was never 

vacated, the bankruptcy court’s findings that Heywood engaged 

in fraud were entitled to preclusive effect.

CONCLUSION

¶41 On the issues presented for review, we hold that the 

Division’s denial of Heywood’s license renewal was not 

untimely or barred by the doctrine of laches and that the 

bankruptcy court’s finding that Heywood committed fraud 

during the 2006 transaction was entitled to preclusive effect. We 

decline to review the issue of whether the Presiding Officer 

imposed an unreasonably harsh penalty because Heywood has 

failed to challenge the Executive Director’s ruling that the issue 

was inadequately briefed. Accordingly, we decline to disturb the 

Executive Director’s decision.