Court Opinion

ID: 6317445
Source: CourtListenerOpinion
Date Created: 2022-02-24 22:15:39.488342+00
Date Added: 2024-06-11T09:00:35.836250
License: Public Domain

2022 UT App 6

               THE UTAH COURT OF APPEALS

                     NEAL K. OSTLER,
                        Appellant,
                             v.
             DEPARTMENT OF PUBLIC SAFETY, ET AL., 1
                        Appellees.

                            Opinion
                        No. 20200395-CA
                     Filed January 21, 2022

           Third District Court, Salt Lake Department
                 The Honorable Robert P. Faust
                          No. 190905617

             Aaron C. Garrett, Attorney for Appellant
          Sean D. Reyes and Joshua Davidson, Attorneys
                          for Appellees

   JUDGE RYAN D. TENNEY authored this Opinion, in which
JUDGES MICHELE M. CHRISTIANSEN FORSTER and RYAN M. HARRIS
                        concurred.

TENNEY, Judge:

¶1      Neal K. Ostler sued a group of state actors for allegedly
violating the terms of a prior settlement agreement. After the
district court dismissed Ostler’s complaint, Ostler moved to
amend it. The court denied the motion to amend without
specifying its reasoning.

1. The parties on appeal are not limited to those listed, but also
include other parties whose names appear on the notice of
appeal or who have otherwise entered appearances in this court.
                  Ostler v. Dept. of Public Safety

¶2    Ostler now appeals the denial of his motion to amend. In
response, the state actors argue that the denial was appropriate
because the amended complaint would have been dismissed as a
matter of law and was therefore futile. Because we conclude
otherwise, we reverse the court’s ruling.

                        BACKGROUND

                      The Release Agreement

¶3     Ostler was employed by various public entities in Utah
for over two decades. After he was placed on a reduction in force
list in the early 1990s, Ostler sued, alleging, among others,
wrongful termination and breach of contract. Ostler included the
Utah Department of Commerce, the Utah Department of
Corrections, the Utah Department of Public Safety, and the then-
heads of those departments as defendants (the Defendants). 2

¶4     In 1996, Ostler and the Defendants entered into a release
agreement. In exchange for Ostler dismissing his suit, the
Defendants agreed to pay Ostler $50,000 and reinstate him “on
paper only” for a specified timeframe so that he could apply for
retirement.

¶5     The agreement also included a provision that set forth the
Defendants’ obligations if they were ever contacted by “potential
or prospective employers of Ostler” (the Contact Provision). In
this Contact Provision, the parties agreed that

2. Ostler’s original complaint and the 2019 complaint discussed
below both named the same State departments as defendants.
The complaints named different individuals, however, because
department leadership changed in the interim. For simplicity,
we refer to both groups collectively as “the Defendants,” even
though different individuals were named in the complaints.

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                   Ostler v. Dept. of Public Safety

       [i]f the Defendants and/or the State of Utah are
       contacted by any potential or prospective
       employers of Ostler, or any other third party
       concerning prospective employment, the State of
       Utah shall comply with all laws, rules and
       regulations, concerning the disclosure of
       information pertaining to Ostler, including DHRM
       Human Resource management rules.

                      Ostler’s 2019 Complaint

¶6      In 2019, Ostler filed a complaint against the Defendants.
In this complaint, Ostler alleged that the Defendants had
breached the release agreement and the covenant of good faith
and fair dealing. According to Ostler, the Defendants had agreed
to not “interfere with Mr. Ostler’s ability to seek reemployment
(within the State system or otherwise).” He then alleged that
“the State [had] yet to fulfill its obligation to appoint Mr. Ostler
to a position for which he is qualified” and that it had also
“stifled or blocked his efforts, in violation of the 1996 [release]
agreement.” Ostler also alleged that he had tried to apply for
public positions but had “experienced such occurrences such as
suspiciously ‘lost’ applications, inexplicably ‘deleted’ profiles,
and the like.”

                The Defendants’ Motion to Dismiss

¶7    The Defendants moved to dismiss Ostler’s complaint,
arguing that the complaint did “not allege breach of actual
contract terms.”

¶8      While Ostler had asserted that the release agreement
envisioned him seeking reemployment “within the State system
or otherwise,” the Defendants argued that the Contact Provision
applied only if Ostler sought “new employment from third
parties, not the State of Utah.” (Emphasis in original.) According
to the Defendants, even if state actors “did block an application

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                  Ostler v. Dept. of Public Safety

for state employment from Ostler, it would not breach the”
release agreement or any implied covenant. The Defendants also
argued that, even if Ostler’s interpretation was correct, he had
not alleged that the Defendants disclosed information to any of
his “potential or prospective employers.”

¶9     In response, Ostler argued that the Contact Provision’s
“prohibition on interference” applied “to the State of Utah, its
subdivisions, and to other third party employers.” Alternatively,
Ostler contended that his claims could not be dismissed because
the Contact Provision “contains a certain level of ambiguity.”

          The District Court Dismisses Ostler’s Complaint

¶10 The district court held a hearing on the motion to dismiss.
At the hearing, the court asked Ostler’s counsel about Ostler’s
attempts to find employment. In response, counsel admitted that
Ostler had not “applied to positions outside of the state system.”

¶11 In a subsequent written decision, the court dismissed
Ostler’s claims with prejudice. On the breach of contract claim,
the court concluded that the Contact Provision was “not
implicated” by Ostler’s claims because Ostler did not allege “that
one of [Ostler’s] prospective employers or another third party
contacted Defendants.”

¶12 On Ostler’s allegation that the Defendants breached the
implied covenant of good faith and fair dealing, the court
concluded that the release agreement does not “contemplate the
obligations alleged in the Complaint” and “does not impose an
implied covenant of good faith and fair dealing concerning
[Ostler’s] applications for State employment.” The court also
concluded that the release agreement was “not ambiguous.”

                   Ostler’s Amended Complaint

¶13 After the court’s dismissal, Ostler moved for leave to file
an amended complaint. In his proposed amended complaint,

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                   Ostler v. Dept. of Public Safety

Ostler alleged that he had applied for jobs with the Utah
Department of Transportation, the Utah Department of
Corrections, and Salt Lake Community College. Ostler alleged
that each of these “potential employers” had “contacted
Defendants to inquire about Mr. Ostler’s prior employment” and
that the Defendants had “disclosed and released false,
fraudulent, defamatory, or otherwise incorrect information
about Mr. Ostler’s prior work history with the State of Utah . . .
contrary to DHRM Human Resource management rules.” In his
motion to amend, Ostler then asserted that these new allegations
“cure[d] the pleading deficiencies” in his 2019 Complaint
because they asserted that (i) potential State employers had
contacted the Defendants and (ii) the Defendants had disclosed
information to those potential employers in violation of the
Contact Provision.

¶14 The Defendants opposed Ostler’s motion to amend for
three reasons.

¶15 First, the Defendants argued that Ostler could not file an
amended complaint because the court had dismissed his claims
with prejudice. The Defendants reasoned that before Ostler
could “seek leave to amend,” he needed to “seek
reconsideration” under rule 60 of the Utah Rules of Civil
Procedure. Because Ostler did not present grounds for
reconsideration under rule 60, the Defendants argued that he
was not entitled to his requested relief.

¶16 Second, the Defendants contended that leave to amend
should be denied even “by the comparatively liberal standards
of Rule 15.” See Utah R. Civ. P. 15; see also ASC Utah, Inc. v. Wolf
Mountain Resorts, L.C., 2013 UT 24, ¶ 26, 309 P.3d 201 (explaining
what factors a court must weigh when ruling on a motion to
amend). Applying the traditional rule 15 factors, the Defendants
asked the court to conclude that the request to amend was
untimely, that Ostler was not justified in the delay, and that any
amendment would be prejudicial to the Defendants.

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                  Ostler v. Dept. of Public Safety

¶17 Third, the Defendants asserted that Ostler’s proposed
amendment was “futile.” The Defendants again argued that the
Contact Provision did not apply if “the State of Utah or its
agencies” contacted the Defendants. Because Ostler’s amended
complaint only alleged that he applied for jobs with the State of
Utah, the Defendants argued that he had “not alleged a viable
claim.”

¶18 The court denied Ostler’s motion to amend. The court’s
reasoning was contained in just one sentence: “For reasons set
out in Defendants’ Opposition, Plaintiff’s Motion for Leave to
File Amended Complaint is denied.” The court did not
otherwise clarify which of the reasons given by the Defendants it
was relying on.

¶19   Ostler timely appealed.

             ISSUE AND STANDARD OF REVIEW

¶20 The sole issue on appeal is whether the court erred when
it denied Ostler’s motion for leave to file an amended complaint.
We ordinarily review the “denial of motions for leave to amend
under an abuse of discretion standard.” Haik v. Jones, 2018 UT 39,
¶ 11, 427 P.3d 1155. But when “the purported futility of the
amendment justifies the denial of a motion to amend, we review
for correctness.” Id. ¶ 16. 3

3. Ostler’s notice of appeal included the district court’s ruling
granting the Defendants’ motion to dismiss Ostler’s 2019
Complaint. In his brief, Ostler likewise argued that the court
erred when it granted the motion to dismiss. But at oral
argument, Ostler clarified that he was only appealing the court’s
denial of his motion to amend. We therefore do not review the
court’s decision to grant the Defendants’ motion to dismiss.
                                                    (continued…)

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                   Ostler v. Dept. of Public Safety

                            ANALYSIS

¶21 Ostler challenges the district court’s decision denying his
motion to amend his complaint. Before we can address the
merits of that ruling, however, we must first decide what the
basis for that ruling actually was.

¶22 The Defendants asked the district court to deny Ostler’s
motion to amend for three reasons. But when the court later
denied the motion, it did so “[f]or reasons set out in Defendants’
Opposition.” The court did not clarify whether it was relying on
all or just some of the reasons given by the Defendants.

¶23 When there are multiple possible bases for a ruling, a
district court should explain which of those bases it is (or is not)
relying on. Such specificity is important in any case to facilitate
meaningful appellate review. See, e.g., Veracity Networks LLC v.
MCG S. LLC, 2019 UT App 53, ¶ 37, 440 P.3d 906 (“Because we
lack insight into the district court’s rationale for its decision, we
cannot effectively review it.”). And this is particularly important
where “our ability to meaningfully review” an issue is in any
way “dependent upon the trial court’s reasons for its ruling.”
State v. De La Rosa, 2019 UT App 110, ¶ 11 n.6, 445 P.3d 955. This
would be the case, for example, when the different possible
rationales for the decision are subject to different standards of
review on appeal. Id. ¶¶ 5–6, 11 n.6.

(…continued)
       Ostler also claims that “the trial court erroneously denied
the motion for leave to file an amended complaint by
considering an untimely opposition and not letting Mr. Ostler
reply.” (Quotation simplified.) Because we reverse, we need not
consider this alternative argument. See McNair v. State, 2014 UT
App 127, ¶ 6 n.5, 328 P.3d 874.

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                  Ostler v. Dept. of Public Safety

¶24 This is so here. When a district court denies a motion to
amend, we ordinarily review that denial under an abuse of
discretion standard, but if the denial is based on “the purported
futility of the amendment,” we instead review for correctness.
Haik v. Jones, 2018 UT 39, ¶¶ 11, 16, 427 P.3d 1155. As noted, the
Defendants here gave the district court three rationales for
denying the motion to amend. One of them was futility, which
would be subject to a different standard of review on appeal
than the others.

¶25 Nevertheless, it is settled that we “treat a district court’s
order as an abuse of discretion when the district court fails to
articulate its reasoning for denying leave to amend, unless the
court’s reasoning is apparent from the record.” Hudgens v.
Prosper, Inc., 2010 UT 68, ¶ 19, 243 P.3d 1275. In the ordinary
case, the district court’s silence would thus require us to
determine whether we can ascertain the basis for its decision
from the record.

¶26 We need not make that determination in this case,
however, because the Defendants have advanced only one
rationale for the district court’s ruling in their appellate brief:
futility. As noted, the Defendants did offer two other rationales
to the district court below, but they did not mention those in
their brief. Instead, their sole argument to us was that “Ostler’s
proposed amendment was futile and would not survive a
motion to dismiss.”

¶27 At oral argument, the Defendants nevertheless suggested
that we could still affirm based on the other two rationales. But
our briefing rules require a party to “explain, with reasoned
analysis supported by citations to legal authority and the record,
why [it] should prevail on appeal.” Utah R. App. P. 24(a)(8),
(b)(3). We accordingly retain “discretion to not address” an
argument that is inadequately briefed. Broderick v. Apartment
Mgmt. Consultants, L.L.C., 2012 UT 17, ¶ 11, 279 P.3d 391
(quotation simplified).

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                   Ostler v. Dept. of Public Safety

¶28 Moreover, the two non-briefed rationales would be
subject to different standards of review if we addressed them.
And they also implicate distinct legal rules and lines of authority
that the Defendants have not provided us in their brief. Given all
this, and given the Defendants’ decision to focus on just one of
those rationales in their brief, we limit our review accordingly.

¶29 The sole question before us, then, is whether Ostler’s
motion to amend would have been futile.

¶30 “It is well settled that a court may deny a motion to
amend as futile if the proposed amendment would not
withstand a motion to dismiss.” Jensen v. IHC Hosps., Inc., 2003
UT 51, ¶ 139, 82 P.3d 1076 (quotation simplified). And a
proposed amendment will not withstand a motion to dismiss if it
fails to “allege facts sufficient to satisfy each element of a claim.”
Harvey v. Ute Indian Tribe of the Uintah & Ouray Rsrv., 2017 UT 75,
¶ 60, 416 P.3d 401; see also First Interstate Fin. LLC v. Savage, 2020
UT App 1, ¶ 10, 458 P.3d 1161.

¶31 When a case turns on the interpretation of a contract, an
amended complaint will withstand a motion to dismiss if the
operative contract language is ambiguous. See Haynes v.
Department of Public Safety, 2020 UT App 19, ¶ 11, 460 P.3d 565.
The reason for this is that, when “an ambiguity exists, the intent
of the parties becomes a question of fact upon which parol
evidence of the parties’ intentions should be admitted.” E & H
Land, Ltd. v. Farmington City, 2014 UT App 237, ¶ 21, 336 P.3d
1077 (quotation simplified).

¶32 “Whether contract language is ambiguous is a question of
law.” Dixon v. Pro Image Inc., 1999 UT 89, ¶ 14, 987 P.2d 48. And
a contract “is facially ambiguous if its terms are capable of more
than one reasonable interpretation because of uncertain
meanings of terms, missing terms, or other facial deficiencies.”
Mind & Motion Utah Invs., LLC v. Celtic Bank Corp., 2016 UT 6,
¶ 24, 367 P.3d 994 (quotation simplified). Thus, a court cannot

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                  Ostler v. Dept. of Public Safety

conclude that a motion to amend would be futile based on a
contract’s language if that language is susceptible to multiple
reasonable interpretations. See Jensen, 2003 UT 51, ¶¶ 139–42;
Haynes, 2020 UT App 19, ¶ 11.

¶33 Again, the language at issue here is the Contact Provision,
which applied if “the Defendants and/or the State of Utah are
contacted by any potential or prospective employers of Ostler, or
any other third party concerning prospective employment.” So
the question before us is whether that provision is susceptible to
multiple reasonable interpretations as to its application to
prospective State employers. If it is, then Ostler’s motion to
amend was not futile.

¶34 The parties obviously have different answers to that
question.

¶35 From Ostler’s perspective, if the Contact Provision only
applied to non-State employers, then the phrase “any potential
or prospective employers” would be rendered meaningless.
(Emphasis added.) After all, the word “any” commonly means
“one or some indiscriminately of whatever kind,” so in his view,
the Contact Provision broadly applies to “potential or
prospective employers” “indiscriminately of whatever kind.” See
Any, Merriam-Webster, https://www.merriam-webster.com/dicti
onary/any [https://perma.cc/H4ZB-XYZU](definition 1).

¶36 Moreover, the phrase “any potential or prospective
employers” is separated from the phrase “any other third party”
by the disjunctive “or.” Because “or” is commonly “used as a
function word to indicate an alternative,” Ostler suggests that
“any other third party” could plausibly refer to other non-
employer entities like investigators and headhunters, for
example, who might contact the Defendants. See Or, Merriam-
Webster, https://www.merriam-webster.com/dictionary/or [https
://perma.cc/6T36-M9QV] (definition 1).

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                   Ostler v. Dept. of Public Safety

¶37 We conclude that this is a reasonable interpretation of this
provision—i.e., that, on its face, “any potential or prospective
employers” could mean “any potential or prospective
employers,” including State employers. And the phrase “or any
other third party” could be separately referring to those who are
not “potential or prospective employers” but nonetheless might
still contact the Defendants about Ostler.

¶38 Because Ostler’s interpretation is reasonable, we must
decide if the Defendants’ interpretation forecloses Ostler’s
interpretation.

¶39 According to the Defendants, the phrase “potential or
prospective employers” is “illustrative of, and limited by, the
catchall phrase” “any other third party.” So according to the
Defendants, State employers do not qualify as “potential or
prospective employers” because they are not third parties.

¶40 To support this interpretation, the Defendants rely on
“reverse ejusdem generis.” Reverse ejusdem generis is a method
of interpretation that some courts have recognized as a canon of
construction. See, e.g., United States v. Williams-Davis, 90 F.3d 490,
508–09 (D.C. Cir. 1996); SMI Realty Mgmt. Corp. v. Underwriters at
Lloyd’s, London, 179 S.W.3d 619, 624–25 (Tex. App. 2005); see
generally Jay Wexler, Fun with Reverse Ejusdem Generis, 105 Minn.
L. Rev. 1 (2020). With reverse ejusdem generis, a “general term
reflects back on the more specific” term. Williams-Davis, 90 F.3d
at 509. For example, “the phrase ‘A, B, or any other C’ indicates
that A is a subset of C.” Id. If applied to the Contact Provision,
reverse ejusdem generis would therefore mean that “any
potential or prospective employers” is a subset of “any other
third party”—i.e., the Contact Provision applies only if Ostler’s
“potential or prospective” employer is also a “third party.”

¶41 We conclude that this is also a reasonable interpretation
of the Contact Provision. The word “other” in “any other third
party” could indeed limit “any potential or prospective

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                   Ostler v. Dept. of Public Safety

employers” to third parties who are not State employers. See
Other, Merriam-Webster, https://www.merriam-webster.com/dic
tionary/other [https://perma.cc/9XNH-FB28] (definition 1a)
(defining “other” as “being the one (as of two or more)
remaining or not included”).

¶42 But the problem for the Defendants is that their
reasonable interpretation does not foreclose Ostler’s reasonable
interpretation. Because no Utah appellate decision has yet
recognized reverse ejusdem generis as a canon of construction,
we question the fairness of allowing it to dictate, as a matter of
law, the outcome of this contract dispute. Cf. Olsen v. Eagle
Mountain City, 2011 UT 10, ¶ 19, 248 P.3d 465 (“Canons of
construction . . . are not formulaic, dispositive indicators of
statutory meaning. They are merely tools that guide our
construction of statutes in accordance with common, ordinary
usage and understanding of language . . . . Such tools must be
understood as one of several contextual indicators of statutory
meaning.”).

¶43 Moreover, one of the justifications for the canons of
construction is that they are so entrenched in our legal system
that we can expect lawyers to have them in mind while drafting.
See Antonin Scalia & Bryan A. Garner, Reading Law: The
Interpretation of Legal Texts 51 (2012) (“When it is widely
understood in the legal community that, for example, a word
used repeatedly in a document will be taken to have the same
meaning throughout, . . . you can expect those who prepare legal
documents competently to draft them accordingly.”).

¶44 But the term “reverse ejusdem generis” was not even
coined until 1996. See Williams-Davis, 90 F.3d at 509. That is the
same year that the parties entered into the release agreement, so
we cannot necessarily expect that they drafted the release
agreement with this particular canon in mind. We also note that
canons of construction are most typically used to resolve
ambiguity, not to suggest that it never existed at all. See Thayer v.

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                   Ostler v. Dept. of Public Safety

Washington County School Dist., 2012 UT 31, ¶ 37, 285 P.3d 1142
(Lee, J., dissenting) (“Canons of construction are not universal
rules of grammar or syntax. They are rules of thumb that
provide potentially useful cues for resolving ambiguity in
written text.”); see also Brady v. Park, 2019 UT 16, ¶ 131, 445 P.3d
395 (Lee, A.C.J., concurring in part and dissenting in part)
(explaining that a “judicial determination of ambiguity opens the
door to extrinsic evidence” like “the possible application of a
canon of construction”); Graves v. North E. Services, Inc., 2015 UT
28, ¶ 55, 345 P.3d 619 (“But [ejusdem generis] comes into play
only in cases of ambiguity as to the general term.”).

¶45 What’s more, some courts have rejected reasoning like the
Defendants’. The United States Supreme Court’s decision in
United States v. Palmer, 16 U.S. 610 (1818), is illustrative. There,
the Supreme Court interpreted a statute that provided that any
person who committed “upon the high seas . . . murder or
robbery, or any other offence, which, if committed within the
body of a county, would, by the laws of the United States, be
punishable with death” could be convicted, in turn, of piracy
and thereby sentenced to death. Id. at 626. In the case at issue,
some mariners had committed robbery at sea and argued on
appeal that they could not be convicted of piracy because
robbery committed on land was not “punishable with death.” Id.
at 627. In other words, they argued that the phrase “any other
offence, which . . . would . . . be punishable with death” was a
catchall phrase that limited the meaning of “robbery,” meaning
that the mariners could only be convicted of piracy if robbery on
land was punishable by death. Id. at 626–27. In this sense, their
argument relied on the same interpretive principle that we
would now refer to as reverse ejusdem generis.

¶46 The Supreme Court acknowledged that the mariners’
interpretation was “entitled to great respect on every account”
because it was the only way to give the word “other” any
meaning. Id. at 628. But the Court nevertheless concluded that
“robbery” was not limited by the phrase that followed. Id. at 629.

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Because Congress clearly specified “murder or robbery,” the
Court chose to not read the statute in such a way that would
exclude those crimes. Id. at 628–29.

¶47 The analysis in Palmer thus suggests that, like the other
canons, reverse ejusdem generis can be a useful tool—but it is
not an inexorable command. See also Chickasaw Nation v. United
States, 534 U.S. 84, 93 (2001) (“Canons are not mandatory rules.
They are guides that need not be conclusive.” (quotation
simplified)). So here, while the Defendants’ application of
reverse ejusdem generis to the Contact Provision has some
persuasive force, it’s not enough to demonstrate that Ostler’s
contrary interpretation is not a reasonable one too. As a result,
we conclude that the motion to amend was not futile. 4

4. In their brief, the Defendants also argue that Ostler’s amended
complaint was futile because it “fails to sufficiently allege how
the State of Utah—in contravention of the obligation in
Paragraph 10 of the Agreement—failed to comply with the laws,
rules, and regulations concerning the disclosure of information
pertaining to Ostler.” But “pleadings are ‘sufficient’ where they
give fair notice of the nature and basis of the claim asserted and
a general indication of the type of litigation involved.” Southern
Utah Wilderness All. v. San Juan County Comm’n, 2021 UT 6, ¶ 40,
484 P.3d 1160 (quotation simplified); see also Utah R. Civ. P. 8.
This is a “liberal standard.” Harvey v. Ute Indian Tribe of the
Uintah & Ouray Rsrv., 2017 UT 75, ¶ 24, 416 P.3d 401 (quotation
simplified). The Defendants have not persuaded us that Ostler’s
amended complaint fails this liberal standard, because Ostler did
allege that the Defendants “disclosed and released false,
fraudulent, defamatory, or otherwise incorrect information
about Mr. Ostler’s prior history with the State of Utah to the
Utah Department of Transportation[, Adult Probation and
Parole, and Salt Lake Community College] contrary to DHRM
Human Resource management rules.”

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                         CONCLUSION

¶48 Because both sides have put forth reasonable
interpretations of the Contact Provision, that provision is
ambiguous. See Dixon v. Pro Image Inc., 1999 UT 89, ¶ 14, 987 P.2d
48. Because it’s ambiguous, Ostler’s amended complaint would
not be subject to dismissal as a matter of law and his motion to
amend therefore would not have been futile. See Haynes v.
Department of Public Safety, 2020 UT App 19, ¶ 11, 460 P.3d 565.
Because futility is the only justification for the district court’s
ruling advanced by the Defendants in their brief, and because
that ruling cannot stand, we reverse. See Jensen v. IHC Hosps.,
Inc., 2003 UT 51, ¶¶ 139–42, 82 P.3d 1076.

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