Court Opinion

ID: 5138761
Source: CourtListenerOpinion
Date Created: 2021-12-21 15:12:36.336513+00
Date Added: 2024-06-11T08:24:15.492085
License: Public Domain

2018 UT App 41

              THE UTAH COURT OF APPEALS

             THE FRUGAL FLAMINGO QUICK STOP,
                        Appellant,
                           v.
         FARM BUREAU MUTUAL INSURANCE COMPANY,
                        Appellee.

                           Opinion
                       No. 20160540-CA
                     Filed March 22, 2018

          Second District Court, Ogden Department
             The Honorable Michael D. DiReda
                       No. 110908653

            Brian E. Arnold, Attorney for Appellant
       Paul M. Belnap and Nicholas E. Dudoich, Attorneys
                         for Appellee

 JUDGE RYAN M. HARRIS authored this Opinion, in which JUDGES
       GREGORY K. ORME and DIANA HAGEN concurred.

HARRIS, Judge:

¶1      In this case, we are asked to determine whether the
district court properly denied a convenience store’s motion to
amend its complaint to add claims against its insurance
company. The district court denied the motion to amend after
concluding that the new claims would be time-barred. The
convenience store argues on appeal that the “relation back”
doctrine operates to render its new claims timely. We disagree
and affirm.

                       BACKGROUND

¶2     Beginning in 2010, and continuing periodically for some
fourteen months, an employee (Employee) allegedly stole cash
 Frugal Flamingo Quick Stop v. Farm Bureau Mutual Insurance Co.

and merchandise from his employer, The Frugal Flamingo Quick
Stop (Store). At the time, Store was insured by Farm Bureau
Mutual Insurance Company (Insurance Company) under a
policy that included coverage for “employee dishonesty.”
Pursuant to the terms of that policy, Insurance Company was
obligated to pay up to $5,000 “for loss or damage in any one
occurrence” of employee dishonesty.

¶3     On November 10, 2011, Store’s owner (Owner) notified
Insurance Company that Store had suffered over $121,000 in
damages from Employee’s repeated thefts. Just five days later,
on November 15, 2011, Insurance Company delivered to Owner
a check for $5,000, apparently based on Insurance Company’s
assumption that Employee’s thefts were all part of one
“occurrence” and that $5,000 was the entire policy limit available
to Store. The record establishes that Owner received the check at
some point in November 2011, but it does not establish what day
he received the check or whether he negotiated it. However, it is
undisputed that Insurance Company delivered the check to
Owner at some point during November 2011.

¶4     A few weeks later, on December 7, 2011, Store filed this
lawsuit. In its complaint, Store named only one defendant—
Employee—and stated claims against Employee for conversion,
fraud, and civil conspiracy. At the time, Store did not allege any
claims against Insurance Company, or attempt to make
Insurance Company a party to the case. For the next two years,
the case sat dormant.

¶5      Finally, on January 27, 2014, Store filed a motion asking
the district court to join Insurance Company as a party to the
case. In support of its motion, Store asserted that Insurance
Company might be entitled to indemnification and, therefore,
Insurance Company should be made a party to the case in order
to “preserve its rights against” Employee. At that time, Store had
still not stated any claims against Insurance Company, and did
not by this motion seek to add any such claims. Store certified
that it mailed a copy of its motion to join Insurance Company as
a party to Employee’s counsel, but does not claim to have mailed

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 Frugal Flamingo Quick Stop v. Farm Bureau Mutual Insurance Co.

the motion to Insurance Company itself. The district court took
no immediate action on this unusual motion and, for more than
a year, the case again sat dormant.

¶6      In June 2015, at a pre-trial conference, Store presented the
district court with an “Agreement to Judgment and Settlement,”
which indicated that Employee had agreed to the entry of a
judgment against him and in favor of Store in the amount of
$233,421.14. 1 A few weeks later, in August 2015, Store finally
submitted for decision its January 2014 motion to join Insurance
Company as a party, which motion had not drawn any
opposition. This time, Store certified that it had mailed a copy of
the request to submit not only to Employee, but also to
Insurance Company’s registered agent. On August 31, 2015, the
district court granted Store’s apparently unopposed motion. On
September 23, 2015, Store served Insurance Company with (1) a
copy of the district court’s August 31, 2015 order joining it as a
party and (2) a copy of Store’s original December 7, 2011
complaint against Employee, which contained no claims against
Insurance Company.

¶7     On December 11, 2015, Insurance Company filed a motion
to dismiss, pointing out that Store’s complaint did not state any
claims against Insurance Company. In response, on January 11,
2016, Store finally moved for leave to amend its complaint to
state such claims, and attached a proposed amended complaint
containing causes of action against Insurance Company for
breach of contract, breach of the covenant of good faith and fair
dealing, and bad faith, asserting generally that Insurance

1. This amount is nearly twice the amount Store sought from
Employee in its original complaint. At a subsequent hearing,
counsel for Store explained that “this is an ongoing case” against
Employee in which Store had spent significant time “trying to
ascertain the full scope of the thefts.” Apparently, by the time
Employee agreed to the judgment, Store had determined the
extent of the thefts was greater than it initially thought.

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 Frugal Flamingo Quick Stop v. Farm Bureau Mutual Insurance Co.

Company had improperly denied and/or mishandled Store’s
insurance claim for reimbursement related to Employee’s thefts.
Insurance Company opposed amendment, arguing, among other
things, that Store’s new claims against it were barred by the
applicable statute of limitations.

¶8      After briefing and oral argument, the district court noted
that the operative complaint stated no claims against Insurance
Company, and further determined that the new claims in Store’s
proposed amended complaint accrued in November 2011, when
Insurance Company delivered the $5,000 check to Owner. The
district court also determined that Store’s motion to amend was
untimely and that it had no justification in waiting so long to file
its motion to amend. Based on these determinations, the district
court granted Insurance Company’s motion to dismiss the
original complaint (due to the absence of any claims against
Insurance Company), and denied Store’s motion to amend, both
because it considered any amendment futile (due to the fact that
the new claims were time-barred) and because it concluded that
the motion to amend was neither timely nor justified.

            ISSUES AND STANDARDS OF REVIEW

¶9     Store now appeals, and asks us to review the district
court’s decision to deny its motion for leave to amend.2 As

2. In the first section of its opening brief on appeal, in a section
heading, Store also asserted that the district court “improperly
granted [Insurance Company’s] motion to dismiss.” However, in
the body of its brief, it never mounts any serious argument on
this point, and specifically never attempts to explain why
dismissal of a complaint that failed to state any claim
whatsoever against Insurance Company was improper. Instead,
Store devotes the entirety of the body of its brief to argument
about the district court’s decision to deny its motion for leave to
amend. Accordingly, we treat Store’s appeal as though it raised
                                                     (continued…)

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 Frugal Flamingo Quick Stop v. Farm Bureau Mutual Insurance Co.

noted, the district court denied that motion on two separate
grounds: (1) because allowing amendment would have been
futile due to the fact that the new claims were time-barred, and
(2) because the motion to amend was neither timely nor justified.
Store takes issue with both of the district court’s grounds for
denying its motion.

¶10 Ordinarily, we review the district court’s conclusion
regarding the futility of amendment for correctness, because the
futility question is ultimately governed by the same standards
that govern the granting of a motion to dismiss. See Nelson v.
Target Corp., 2014 UT App 205, ¶ 12, 334 P.3d 1010. Here,
however, we apply a different standard, because the argument
Store mounts on appeal in hopes of persuading us that the
district court erred was not raised below. Specifically, Store
argues that its new claims against Insurance Company are not
time-barred, because those claims “relate back” to its original
complaint against Employee. Store concedes that the relation
back issue was unpreserved for appellate review, and therefore
invites us to review this issue for plain error. 3 In order to

(…continued)
just one issue—denial of the motion to amend—and we consider
any argument about the granting of the motion to dismiss to
have been inadequately briefed. See Utah R. App. P. 24(a)(8).

3. Our supreme court recently noted the “ongoing debate about
the propriety of civil plain error review,” but did not take the
opportunity to resolve that debate for purposes of Utah law. See
Utah Stream Access Coal. v. Orange St. Dev., 2017 UT 82, ¶ 14 n.2.
We decline to engage in that debate here, however, chiefly
because Insurance Company does not ask us to—indeed,
Insurance Company appears to assume the propriety of plain
error review under the circumstances presented here. Utah
appellate courts, including our supreme court, have previously
applied plain error review in civil cases in which neither party
challenges its application, see, e.g., Hill v. Estate of Allred, 2009 UT
                                                          (continued…)

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 Frugal Flamingo Quick Stop v. Farm Bureau Mutual Insurance Co.

demonstrate that the district court committed plain error, Store
must establish that (1) an error exists, (2) the error should have
been obvious to the district court, and (3) the error is harmful.
State v. Johnson, 2017 UT 76, ¶ 20. Unless all three of these
elements are met, “plain error is not established.” Id. (citation
and internal quotation marks omitted).

¶11 Store’s second argument was raised below, and therefore
we review that issue as we would ordinarily do. We review for
abuse of discretion the district court’s determination that Store’s
motion to amend was neither timely nor justified, and therefore
subject to denial on that basis. Lewis v. Nelson, 2017 UT App 230,
¶ 9, 409 P.3d 149.

                            ANALYSIS

                                 A

¶12 Store first asserts that the district court plainly erred by
not considering the “relation back” doctrine when it determined
that the claims raised in Store’s proposed amended complaint
were barred by the applicable statute of limitations. We find this
argument unpersuasive.

¶13 Store does not challenge the district court’s conclusion
that the claims it tried to bring against Insurance Company—for
breach of contract and for bad faith—accrued in November 2011,
when Insurance Company delivered the $5,000 check to Owner.
Likewise, Store does not challenge the district court’s conclusion
that those claims are subject to a three-year statute of limitations,
because actions based on written insurance policies must be

(…continued)
28, ¶¶ 30–31, 216 P.3d 929; Danneman v. Danneman, 2012 UT App
249, ¶ 10 & n.5, 286 P.3d 309, and we do so here without opining
on the propriety of such review.

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 Frugal Flamingo Quick Stop v. Farm Bureau Mutual Insurance Co.

“commenced within three years after the inception of the loss.”
See Utah Code Ann. § 31A-21-313(1)(a) (LexisNexis 2017). Store
therefore concedes that, in the absence of some doctrine tolling
or extending the statute of limitations, the period within which
Store could have brought its claims against Insurance Company
expired in November 2014, more than a year prior to the date on
which Store finally attempted to bring claims against Insurance
Company. Now, for the first time on appeal, Store claims that
the “relation back” doctrine extended the time for filing its
amended complaint.

¶14 Rule 15 of the Utah Rules of Civil Procedure provided, at
the time the motion to amend was filed, 4 that an amended
pleading would “relate back” to the filing of the original
pleading if it “arose out of the conduct, transaction, or

4. Effective November 1, 2016, rule 15(c) of the Utah Rules of
Civil Procedure was substantively amended and significantly
lengthened. The advisory committee note regarding the
amendment states that the amendment was intended to “adopt
the approach of Federal Rule 15(c) regarding the relation back of
an amended pleading when the amended pleading adds a new
party.” See Utah R. Civ. P. 15 advisory committee’s note to 2016
amendment. Store cites the version of the rule in effect at the
time of the district court’s decision, and Insurance Company
appears to cite the current version of the rule. Neither side
makes any argument about which version of the rule ought to
apply here, or about whether application of the current rule
would alter the analysis in any meaningful way. We apply the
version of the rule in effect at the time Store’s motion to amend
was filed, because “[m]atters of procedure are governed by the
law in effect at the time of ‘the underlying procedural act.’”
Howick v. Salt Lake City Corp., 2013 UT App 218, ¶ 38, 310 P.3d
1220 (quoting State v. Clark, 2011 UT 23, ¶ 14, 251 P.3d 829). We
express no opinion as to whether the outcome or analysis of this
case would have been different had we applied the current
version of the rule.

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 Frugal Flamingo Quick Stop v. Farm Bureau Mutual Insurance Co.

occurrence set forth . . . in the original pleading.” See Utah R.
Civ. P. 15(c) (2014). The rule itself makes no mention of the
possibility of adding new parties by way of the “relation back”
doctrine, and the doctrine is therefore “typically limited to”
situations where a party seeks to add new claims against an
existing party. See Ottens v. McNeil, 2010 UT App 237, ¶ 42, 239
P.3d 308; see also Doxey-Layton Co. v. Clark, 548 P.2d 902, 906
(Utah 1976) (stating that the “relation back” doctrine will
generally “not apply to an amendment which substitutes or adds
new parties,” because “such would amount to the assertion of a
new cause of action, and if such were allowed to relate back to
the filing of the complaint, the purpose of a statute of limitation
would be defeated”).

¶15 Under certain limited circumstances, however, our case
law interprets rule 15(c) to allow claims against new parties to
“relate back” to the filing of the original complaint. Specifically,
“Utah courts have allowed the relation back of amendments to
complaints incorporating newly named parties in two types of
cases: (1) in so called ‘misnomer cases,’ and (2) [in cases] where
there is a true ‘identity of interest’” between the new party and
an existing party. Ottens, 2010 UT App 237, ¶ 43 (citation and
internal quotation marks omitted). Store does not claim that the
circumstances of this case involve any sort of “misnomer,” but it
does assert that Insurance Company shares an “identity of
interest” with Employee.

¶16 In order to prevail on such an argument, Store must
establish both (1) that its “amended pleading allege[s] only
claims that arose out of the conduct, transaction, or occurrence
set forth or attempted to be set forth in the original pleading,”
and (2) that Insurance Company, as the party to be added by the
amendment, “received (actual or constructive) notice that it
would have been a proper party to the original pleading such
that no prejudice would result from preventing [Insurance
Company] from using a statute of limitations defense that
otherwise would have been available.” See id. (first alteration in

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 Frugal Flamingo Quick Stop v. Farm Bureau Mutual Insurance Co.

original) (citation and internal quotation marks omitted). On the
record before us, Store is unable to establish either element.

                                1

¶17 The new claims in Store’s proposed amended complaint
do not arise out of the same “conduct, transaction, or
occurrence” as the claims set forth in Store’s original complaint.
The original complaint stated claims—for conversion and
fraud—only against Employee related to Employee’s actions in
stealing cash and merchandise from Store in 2010 and early 2011.
Store’s claims in the proposed amended complaint, in contrast,
accuse Insurance Company of breaching the insurance contract
entered into between Store and Insurance Company. Store
alleges that the actions constituting breach occurred in the
months following Employee’s thefts, and specifically accuses
Insurance Company of mishandling the claims process related to
Store’s claim for insurance coverage for Employee’s thefts.

¶18 The “conduct” that forms the basis for Store’s claims in its
original complaint is Employee’s acts of theft. The “conduct”
that forms the basis for Store’s claims in its amended complaint
is Insurance Company’s post-theft denial and/or mishandling of
insurance claims. In our view, these are completely different
“transactions” and “occurrences,” involving events that took
place at different times, in different places, and involving
different actors. Certainly, there is some connection between the
two sets of events—there would have been no reason for Store to
even make its insurance claim if Employee had not committed
theft. But we simply cannot conclude that an insurance
company’s coverage decision is part of the same “conduct,
transaction, or occurrence” as the underlying event that triggers
the coverage inquiry. See Utah R. Civ. P. 15(c); see also, e.g.,
Highlands at Jordanelle, LLC v. Wasatch County, 2015 UT App 173,
¶¶ 51–52, 355 P.3d 1047 (concluding that “[a]llegations of new or
different acts of misconduct amount to new claims that cannot
relate back to the original complaint” (citation and internal

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 Frugal Flamingo Quick Stop v. Farm Bureau Mutual Insurance Co.

quotation marks omitted)). Accordingly, Store cannot meet the
requirements of the first element of the “identity of interest” test.

                                 2

¶19 And Store cannot meet the requirements of the second
element either, because Insurance Company did not ever receive
adequate notice—actual or constructive—of Store’s potential
claims against it before the expiration of the limitations period.
On this record, there is no evidence that Insurance Company
received actual notice of Store’s affirmative claims against it until
January 2016, when Store filed its motion to amend. Moreover,
there is no evidence that Insurance Company even had notice of
Store’s lawsuit against Employee—let alone any claims against
Insurance Company—until August or September 2015, when
Store mailed to Insurance Company a copy of Store’s efforts to
join Insurance Company as a party. Indeed, Store does not claim
that Insurance Company had actual notice.

¶20 Store does claim, however, that Insurance Company had
constructive notice of its claims, due to the fact that Store had
submitted “a claim for reimbursement” to Insurance Company
regarding Employee’s thefts, which claim it asserts was
“subsequently denied.” We find this argument wholly
unpersuasive. Insurance Company does not dispute that Store
made an insurance claim; indeed, Insurance Company delivered
to Owner a $5,000 check on that claim. There is no indication in
the record that Store—at least not until January 2016—expressed
to Insurance Company any dissatisfaction with the manner in
which Insurance Company had handled the claim. And even if
such evidence existed (say, in the form of a demand letter), such
evidence, standing alone, would ordinarily not be enough to
invoke the “relation back” doctrine to excuse Store from the
obligations of the applicable statute of limitations.

¶21 Another way in which a movant can establish
constructive notice is by “proving that the original and new
party share the same interest concerning the litigation, including

20160540-CA                     10                 2018 UT App 41
 Frugal Flamingo Quick Stop v. Farm Bureau Mutual Insurance Co.

their legal defenses and positions such that notice of the action
against one serves to provide notice of the action to the other.”
Ottens, 2010 UT App 237, ¶ 45 (citations and internal quotation
marks omitted). It is unclear from Store’s brief whether Store
intends to make this argument, but we find any such argument
meritless on the facts of this case. Employee and Insurance
Company did not share the same interest in this litigation, and
did not share the same claims and defenses. Indeed, as noted
above, the claims against Employee did not even arise out of the
same “conduct, transaction, or occurrence” as the proposed
claims against Insurance Company. To prove its claims against
Employee, Store would have had to prove that there had been a
series of thefts by Employee. To prove its claims against
Insurance Company, Store would have had to demonstrate a
breach of a written insurance contract. Employee’s defenses of
the claims against him would have been different, in the posture
of this case, from the defenses Insurance Company would have
likely mounted against the claims stated against it. Thus,
Employee and Insurance Company simply did not “share the
same interest concerning the litigation.” See id.; see also Penrose v.
Ross, 2003 UT App 157, ¶ 19, 71 P.3d 631 (concluding that a
motorist could not avail herself of the “relation back” doctrine
when she initially sued a son’s father rather than the son because
the father’s defense would have been “that he was not negligent
or liable because he was not the driver” and the son’s defense
would have “focuse[d] on the running of the statute of
limitations”).

¶22 Accordingly, because Store cannot establish either of the
necessary elements, Store’s proposed amended complaint did
not relate back to its original complaint. The district court did
not err by failing to apply the “relation back” doctrine to the
facts of this case, let alone commit a plain or obvious error.

                                  B

¶23 Next, Store argues that, even if the “relation back”
doctrine does not apply, the district court nevertheless erred in

20160540-CA                      11                2018 UT App 41
 Frugal Flamingo Quick Stop v. Farm Bureau Mutual Insurance Co.

denying its motion to amend. This argument fails for two
reasons. First, without application of the “relation back”
doctrine, Store’s claims against Insurance Company are time-
barred, and the district court correctly determined that any
amendment to add such claims would be futile. See Shah v.
Intermountain Health Care, Inc., 2013 UT App 261, ¶ 9, 314 P.3d
1079 (observing that a court may deny a motion to amend if the
proposed amendment would not withstand a motion to
dismiss). Second, we see no error or infirmity in the district
court’s alternative ruling that the motion to amend should have
been denied in any event, because the motion was not timely
(having been brought more than four years after the case was
filed, and after the original claims against Employee had already
been resolved) and because Store had no good justification for
failing to bring the claims earlier (given that Store knew all of the
relevant facts about its insurance claim allegedly having been
denied and/or mishandled as early as 2011). Therefore, the
district court did not abuse its discretion in denying Store’s
motion for leave to amend.

¶24    Affirmed.

20160540-CA                     12                 2018 UT App 41