Court Opinion

ID: 5137183
Source: CourtListenerOpinion
Date Created: 2021-12-21 14:37:30.34166+00
Date Added: 2024-06-11T08:24:00.908740
License: Public Domain

IN THE UTAH COURT OF APPEALS

                                      ‐‐‐‐ooOoo‐‐‐‐

Lori Blum,                                  )         MEMORANDUM DECISION
                                            )
      Plaintiff and Appellant,              )            Case No. 20110116‐CA
                                            )
v.                                          )                    FILED
                                            )                 (July 19, 2012)
Rainer Dahl,                                )
                                            )               2012 UT App 198
      Defendant and Appellee.               )

                                           ‐‐‐‐‐

Third District, Salt Lake Department, 070914252
The Honorable Robin W. Reese

Attorneys:      Patrick J. Ascione and Tyna‐Minet Anderson, Provo, for Appellant
                Gregory N. Hoole, Salt Lake City, for Appellee

                                           ‐‐‐‐‐

Before Judges Voros, Orme, and Christiansen.

ORME, Judge:

¶1     Lori Blum challenges the district court’s award of attorney fees to Rainer Dahl,
the successful defendant in this lawsuit. Blum argues that the court considered trial
evidence in determining whether the lawsuit was filed in bad faith, in violation of an
alleged stipulation that the issue would be determined solely on the basis of post‐trial
affidavits. We reject this argument and affirm.

¶2    Blum and Dahl resided in the same condominium complex in Salt Lake City.
Blum alleges that after a meeting of the condominium association in October 2006, Dahl
made vulgar and insulting comments to Blum’s daughter. Blum claims that she then
approached Dahl to speak with him and that he lunged at her, shouted at her, and spit
on her. Dahl later filed a police report against Blum’s daughter, also a resident of the
complex, concerning events arising from that same incident.

¶3      Blum alleges that she was then the target of harassment, discrimination, and
hostility from several persons, the condominium association, and the management
company for the condominium. Blum further claims that Dahl used his position as the
president of the board of directors of the association to harass Blum by falsely alleging
that she violated condominium rules and by selectively enforcing rules against her and
her daughter that were not enforced against others.

¶4      Blum filed a lawsuit seeking $200,000 in damages from Dahl for assault and
battery based upon the alleged shouting and spitting incident. In responding to Blum’s
complaint, Dahl provided notice of his intent to seek attorney fees for “defending
against the Complaint which is frivolous as set forth [in] Utah R. Civ. P. 11, and is filed
in bad faith . . . pursuant to Utah Code Ann. § 78‐27‐56.” Dahl’s counsel attempted to
settle the case before trial on more than one occasion, but all offers were rejected.

¶5      On appeal, Blum claims that the trial court failed to adhere to the parties’
stipulation when it considered evidence other than Blum’s post‐trial affidavit in
deciding whether the lawsuit was filed in bad faith. “The question of whether, under
the second prerequisite of 78‐27‐56, a claim was brought in ‘bad faith’ is a ‘question of
fact’ that we review under a clearly erroneous standard.” Still Standing Stable, LLC v.
Allen, 2005 UT 46, ¶ 8, 122 P.3d 556 (ellipses omitted) (quoting In re Sonnenreich, 2004
UT 3, ¶ 45, 86 P.3d 712). Blum contends that even if this court concludes that the trial
court was permitted to consider evidence beyond Blum’s post‐trial affidavit, the record
does not contain evidence legally sufficient to support the trial court’s finding of bad
faith. “When challenging a district court’s findings of fact, the challenging party must
show that the evidence, viewed in a light most favorable to the [district] court, is legally
insufficient to support the contested finding.” In re Sonnenreich, 2004 UT 3, ¶ 45 n.14
(citation and internal quotation marks omitted) (alteration in original).

¶6      As a threshold matter, we must determine whether the court acted outside the
bounds of the alleged stipulation when it considered trial evidence in making its
determination of bad faith. Dahl argues in his brief that “[t]he court instructed the
parties that [bad faith] evidence could be submitted, if necessary, after trial. However,
the trial court never entered any order, nor was a stipulation ever proposed, that would
have precluded the court from considering evidence admitted on the merits at trial that

20110116‐CA                                  2
also happened to shed light on the issue of bad faith, as merits evidence often does.”
Upon our review of the record, we agree with Dahl.

¶7     At the court’s suggestion, the parties agreed not to present evidence specifically
related to Blum’s good or bad faith in bringing the lawsuit, so as to avoid confusing the
issues for the jury and to avoid possible prejudice to Blum. Counsel and the court
further agreed to exclude Dahl’s arguments related to attorney fees from the general
presentation of merits evidence to the jury. The court concluded by stating: “I just kind
of hope we stay away from that stuff. If it becomes relevant later on, I’ll let you do it
with an affidavit.” It is apparent that the court’s rationale for precluding bad faith
evidence during the jury phase of the trial was to simplify the jury’s consideration of the
matters it would decide. But we see no indication in the transcript that post‐trial
affidavits, while anticipated, were to be the sole evidence the court would consider in
evaluating bad faith.

¶8     After the jury was excused following its verdict in favor of Dahl, Dahl’s counsel
again raised the issue of attorney fees with the court:

                      [Counsel for Dahl]: I’m happy to make my argument
              to the Court at this point. I don’t think there’s additional
              evidence that I would introduce other than what’s already
              been introduced. I think it’s a pretty straightforward issue.
              Your Honor may want to take it under advisement, but
              that’s completely up to you. . . .

                     THE COURT: Sure. I understand why you wouldn’t
              want to expend any other time or resources to come back
              later on, so I’m happy to proceed that way. Counsel, how do
              you want to proceed?

                      [Counsel for Blum]: Your honor, frankly, I had
              thought that we would be doing it the way that the [c]ourt
              suggested originally, which is to simply hand in affidavits to
              that effect.

                   THE COURT: If there were additional affidavits that
              you wanted to submit?

20110116‐CA                                 3
                     [Counsel for Blum]: Yes, presumably from my client
              with regards to her intentions and so forth.

                      [Counsel for Dahl]: If there’s additional evidence that
              wasn’t elicited in trial because of those (inaudible) that’s
              fine. I hate to draw this out and incur even more expense
              and that sort of thing, but—

                    THE COURT: Yeah. We did talk about that at the
              beginning that there would be certain evidence that we
              wouldn’t bring into the trial for fear of prejudice to the jury,
              but Counsel could bring that up later.

It is clear from the statements of the trial court and counsel that the purpose of the
pretrial stipulation was only to avoid presenting evidence strictly related to bad faith
during trial—an issue that the parties agreed that the court, not the jury, should resolve.
Thus, the court was not precluded from considering trial evidence in determining
whether Dahl was entitled to attorney fees under the statute. See Utah Code § 78B‐5‐825
(2008).

¶9     We next consider whether the trial court’s finding of bad faith was clearly
erroneous. See Still Standing Stable, 2005 UT 46, ¶ 8 (stating that bad faith is a factual
question determined by the trial court, which we review under the clearly erroneous
standard). In doing so, we recognize that the bad faith attorney fee statute is not
intended to be routinely utilized to award fees to prevailing defendants:

              Section 78‐27‐56 is narrowly drawn and not meant to be
              applied to all prevailing parties. While an action must be
              meritless to award attorney fees under section 78‐27‐56, the
              mere fact that an action is meritless does not necessarily
              mean that the action is also brought in bad faith. A finding
              of bad faith turns on a factual determination of a party’s
              subjective intent.

Id. ¶ 9 (citations, internal quotation marks, and brackets omitted). The determinations
of merit and bad faith are the subjects of independent analyses. See id. ¶ 12 (citing In re
Sonnenreich, 2004 UT 3, ¶ 48). “A party acts in bad faith when he brings an action and

20110116‐CA                                   4
either (1) lacks an honest belief in the propriety of the activities in question, (2) intends
to take unconscionable advantage of others, or (3) intends to or has knowledge of the
fact that his actions will hinder, delay, or defraud others.” Wardley Better Homes &
Gardens v. Cannon, 2002 UT 99, ¶ 29, 61 P.3d 1009 (citing Cady v. Johnson, 671 P.2d 149,
151 (Utah 1983)). A finding of bad faith is upheld when “there is sufficient evidence in
the record to support a finding that at least one of these three factors applies.” Still
Standing Stable, 2005 UT 46, ¶ 13 (citing Cady, 671 P.2d at 152). Blum does not challenge
the court’s determination that her case lacked merit. Nor does she challenge the
amount awarded. It follows that the attorney fee award must be upheld if the court had
a sufficient basis for finding bad faith. See Wardley, 2002 UT 99, ¶ 31 (“Where a party
has acted on a meritless claim and in bad faith, in most cases it would be inequitable not
to award attorney fees.”) (emphasis in original).

¶10 Here, ample evidence suggested that Blum was motivated to bring this lawsuit
against Dahl not to recover damages for an intentional tort he committed, but in an
effort to end perceived harassment and discrimination from the condominium
association. Blum even stated at trial that this was her “hope” and that she “filed the
lawsuit to try to get [the condominium association] to stop harassing me.” Blum
testified that “the management company and the [condominium association] were
doing everything they could to harass us to the point where we would move from our
condo” and that she was the “target of extreme aggression, discrimination, hostility and
false gossip throughout the building.” While Blum claimed that Dahl was involved in
this campaign against her because he “ha[d] great influence in the building, because he
was president” of the condominium association, she testified at trial that she filed her
lawsuit against Dahl because she wanted the condominium association and those she
felt were persecuting her and her daughter to “leave us alone.”1 According to her brief,
“[w]hen Ms. Blum realized that the management company would not stop sending

       1
         The first instance of such discrimination claimed by Blum involved an attempt
to “forc[e]” Blum’s daughter to remove her dog, a Chihuahua, from the complex, even
though she claimed that the dog was a “service animal.” (The trial court found it odd
that Blum, a nurse, could not identify any medical condition her daughter had that
would warrant a service animal.) Additionally, Blum felt Dahl singled out her daughter
in filing public intoxication charges against her after the condominium association
meeting, at which wine was served. Blum also claimed to have received “numerous
notices” for “various alleged rule violations” over the course of months before filing
this lawsuit.

20110116‐CA                                   5
notices regarding alleged rule violations, she thought that if she filed a lawsuit the
alleged harassment would stop.” Blum testified at trial that she “just wanted them to
shut up and leave us alone and quit persecuting us.” Blum did not explain how filing a
lawsuit against Dahl individually would culminate in her obtaining relief as against the
management committee and the condominium association.

¶11 At trial, Blum testified that she endured “extreme emotional distress and
anxiety” from the “untold fear and terror” that she experienced as a result of Dahl’s
alleged attack. Blum, however, never sought medical or mental health treatment
following the claimed attack. Witnesses to the incident testified that they did not see
Dahl act in an intimidating and threatening manner. There was also conflicting
testimony, even from Blum herself, about whether Dahl spat on her during the
interaction.2 Additionally, Blum did not contact the police until after she learned that
Dahl and others had filed criminal complaints against her daughter arising from the
events that transpired after the condominium association meeting.3

¶12 Blum was also unable to provide a basis for why she felt entitled to damages
totaling $200,000 other than that she incurred attorney fees in the litigation and costs in
readying her condominium for sale and in selling her condominium. Although Blum’s
post‐trial affidavit claimed that she had a subjective belief in the propriety of her claims
against Dahl, the record supports the finding of the trial court that “Ms. Blum was
unhappy with the way she and her daughter were treated by the [condominium]
association, but for some reason decided to sue Mr. Dahl instead of the association.” Cf.

       2
        While Blum alleged in her complaint that Dahl spat on her during the altercation
following the condominium association meeting, much of her conduct suggests
otherwise. Following the incident, she sent a letter to the condominium association
about the alleged assault and battery but did not claim in the letter that Dahl had spit on
her. In a police report filed after the incident, Blum did not include anything about
spitting. In insisting later that Dahl spit on her, Blum admitted that she did not know
whether Dahl did so intentionally. And in her pretrial declaration, Blum did not allege
that Dahl had intentionally spit on her.
       3
       The police report states that Blum “didn’t report [the incident] until now
because she just learned that the suspect, meaning Mr. Dahl, filed a report against her
and her daughter . . . and the suspect is attempting to evict [Blum’s daughter] from the
condominium complex.”

20110116‐CA                                  6
Webster v. Sill, 675 P.2d 1170, 1172‐73 (Utah 1983) (stating that in reviewing a motion for
summary judgment, the trial court may disregard a subsequent affidavit when it does
not explain an apparent discrepancy with earlier deposition testimony). Although
Blum insisted that she had a good faith basis for filing her lawsuit, the record
evidence—including some of her own testimony—supports the trial court’s assessment
that Blum could not have had an “honest belief in the propriety” of her lawsuit against
Dahl. See Wardley, 2002 UT 99, ¶ 29.

¶13 Additionally, there was adequate support in the record to find that Blum testified
untruthfully regarding a number of issues related to her claims. Blum contends that
“[a]t most these facts can support only a finding regarding Ms. Blum’s credibility.” She
is incorrect. “[T]he trial court’s belief that [Blum] testified untruthfully is sufficient to
support [a] finding [of bad faith,] and we will not disturb it on appeal.” Gallegos v.
Lloyd, 2008 UT App 40, ¶ 17, 178 P.3d 922. Given that Blum has not successfully
challenged the trial court’s findings that she lacked an honest belief in the propriety of
her claims and that her testimony was incredible, the trial court’s finding that Blum
acted in bad faith was not clearly erroneous.

¶14    Affirmed.

____________________________________
Gregory K. Orme, Judge

                                            ‐‐‐‐‐

¶15    WE CONCUR:

____________________________________
J. Frederic Voros Jr.,
Associate Presiding Judge

____________________________________
Michele M. Christiansen, Judge

20110116‐CA                                  7