Court Opinion

ID: 5138111
Source: CourtListenerOpinion
Date Created: 2021-12-21 14:53:52.424588+00
Date Added: 2024-06-11T08:24:11.802658
License: Public Domain

2016 UT App 197

               THE UTAH COURT OF APPEALS

                    CINDY L. THOMPSON,
                        Appellant,
                             v.
           WARDLEY CORPORATION, LYNN E. WARDLEY,
                  AND KENNETH U. TRAMP,
                        Appellees.

                            Opinion
                        No. 20140962-CA
                    Filed September 15, 2016

           Third District Court, Salt Lake Department
                 The Honorable Keith A. Kelly
                          No. 070908097

              Cindy L. Thompson, Appellant Pro Se
            John T. Anderson, Attorney for Appellees

  JUDGE J. FREDERIC VOROS JR. authored this Opinion, in which
    JUDGES MICHELE M. CHRISTIANSEN and JILL M. POHLMAN
                         concurred.

VOROS, Judge:

¶1     Appellant Cindy L. Thompson appeals from a district
court order denying her motion for relief from judgment under
rule 60(b) of the Utah Rules of Civil Procedure.1 The motion was

1. Delano S. Findlay, Thompson’s counsel below, also signed the
brief of appellant, identifying himself as an Intervenor.
However, “a party wishing to appeal from a final order must file
a notice of appeal in the district court that entered the order.”
McGibbon v. Farmers Ins. Exch., 2015 UT 3, ¶ 7, 345 P.3d 550. The
record contains no notice of appeal signed by Findlay or listing
him as an appellant. Accordingly, he is not a party to this appeal.
                 Thompson v. Wardley Corporation

filed nearly four and a half years after entry of summary
judgment and four years after entry of a sanctions order.
Notwithstanding the movant’s colorable assertions of fraud and
misconduct by the opposing parties and counsel, the district
court ruled the motion untimely. Because the motion was
untimely, the district court further ruled that it lacked
jurisdiction to impose sanctions against defendants Wardley
Corporation, Lynn E. Wardley (the majority shareholder,
president, and chairman of the board of directors of Wardley
Corporation), and Kenneth U. Tramp (a minority shareholder,
vice president, and a director of Wardley Corporation)
(collectively, Appellees) and defense counsel John T. Anderson.
We affirm.

                         BACKGROUND

¶2     In December 2005 Thompson obtained a judgment against
Wardley Corporation for unpaid commissions from her prior
employment (the Judge Peuler case). Thompson later discovered
that during the Judge Peuler case, Appellees had sold the real
estate brokerage and other Wardley Corporation assets.
Thompson suspected that Appellees had intentionally sold the
real estate brokerage and disposed of the assets either to avoid
paying her claim or because Appellees knew they would have
insufficient assets to pay her claim.

¶3     Consequently, in 2007, Thompson sued Appellees (the
Judge Medley case). Thompson’s first claim, asserting fraudulent
conveyance, alleged that Wardley Corporation had transferred
its assets with the intent to “hinder, delay, or defraud
[Thompson] . . . by placing its assets beyond reach of
[Thompson] as a creditor.” Thompson’s second claim, asserting
unjust enrichment, alleged that Thompson conferred a benefit on
Appellees in the form of services that Appellees accepted but did
not pay for.

¶4     Appellees then filed a motion for summary judgment,
asserting three grounds for relief: first, that the four-year statute

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                 Thompson v. Wardley Corporation

of limitation barred Thompson’s fraudulent transfer claim;
second, that the claim-preclusion branch of the doctrine of res
judicata barred Thompson’s unjust enrichment claim; and third,
that Thompson’s unjust enrichment claim lacked support in
Utah law. Appellees also filed a motion seeking sanctions
against Thompson and Thompson’s attorney pursuant to rule 11
of the Utah Rules of Civil Procedure on the ground that the
complaint was “devoid of factual or legal merit.”

¶5      The court stayed the rule 11 motion and allowed
discovery to go forward. Thompson served interrogatories on
Appellees seeking, among other things, a description of any
asset Wardley Corporation had disposed of since the filing of
Thompson’s original lawsuit in 1999. In their responses to the
interrogatories, Appellees failed to affirmatively disclose a key
fact: an assignment from Wardley Corporation to Lynn Wardley
in which the Wardley Corporation transferred certain assets to
Lynn Wardley in 2005. The Assignment states, “Assignor hereby
assigns to Assignee all of Assignor’s right, title, and interest in
and to the proceeds of any recovery obtained in connection with
the Gilbert Lawsuit . . . .” At the time of the assignment, the
Gilbert lawsuit was pending. If Wardley Corporation succeeded
in the lawsuit, the judgment was likely to exceed $400,000.

¶6     In November 2008 the court granted Appellees’ motion
for summary judgment. It ruled (1) that Thompson had failed to
“timely or properly file any opposition memorandum”; (2) that
Thompson’s “claim for fraudulent transfer [was] barred by the
four year and/or one-year from discovery limitation periods
contained in Utah Code Ann. § 25-6-10(1)”; and (3) that
Thompson’s “unjust enrichment claim [was] barred by the claim
preclusion branch of the doctrine of res judicata.” The court also
granted rule 11 sanctions against Thompson and her counsel.

¶7     In August 2009 Thompson filed a petition to place
Wardley Corporation in involuntary bankruptcy. The petition
was dismissed soon thereafter. In 2013 Wardley Corporation
settled the Gilbert lawsuit for $350,000. As a result of Wardley

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                Thompson v. Wardley Corporation

Corporation’s receipt of the Gilbert settlement funds, Thompson
reopened the bankruptcy case. The bankruptcy trustee
negotiated a settlement with Wardley Corporation for $190,000.
As a consequence, Thompson received approximately 90% of the
amount of her proof of claim.

¶8     In the course of the bankruptcy proceedings, Thompson
discovered the 2005 assignment and bank accounts associated
with Lynn Wardley and Tramp.2 In March 2013, after learning of
the assignment, Thompson filed a “Motion for Reconsideration”
pursuant to rule 60(b) of the Utah Rules of Civil Procedure.
Thompson filed the motion nearly four and a half years after
entry of summary judgment and four years after entry of the
sanctions order. Thompson sought to set aside the summary
judgment dismissing her claims in the Judge Medley case and to
set aside the sanction order entered against her and her counsel.
Thompson asserted that “Lynn Wardley and Kenneth Tramp,
along with their counsel, John T. Anderson, made false
representations and serious omissions in order to obtain
summary judgment and sanctions against Ms. Thompson and
Mr. Findlay and intentionally perpetuated a fraud upon the
court and Ms. Thompson in their attempts to hinder, delay, and
defraud Ms. Thompson.”

¶9     The district court denied the motion on the ground that it
was untimely. The district court also denied Thompson’s motion
for sanctions against Appellees and their counsel on the ground
that, having dismissed the rule 60(b) motion as untimely, it

2. KeyBank produced documentation of bank accounts
belonging to Wardley Properties, a company also owned by
Lynn Wardley and Tramp. Documentation shows a wire transfer
of $73,683.71 from Wardley Properties to Anderson’s Anderson
& Karrenberg trust account. Judge Peuler concluded that the
transfer was not improper because Wardley Corporation
successfully verified that the funds did not belong to it.

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                 Thompson v. Wardley Corporation

lacked jurisdiction to impose sanctions. Thompson appeals from
that order.

            ISSUES AND STANDARDS OF REVIEW

¶10 Thompson raises three claims on appeal.3 First, Thompson
contends that the district court erroneously denied her rule 60(b)
motion as untimely. A “district court has broad discretion in
ruling on a motion to set aside an order or judgment under rule
60(b), and [t]hus, we review a district court’s denial of a 60(b)
motion under an abuse of discretion standard.” Utah Res. Int’l,
Inc. v. Mark Techs. Corp., 2014 UT 60, ¶ 11, 342 P.3d 779
(alteration in original) (citation and internal quotation marks
omitted).

¶11 Second, Thompson contends that the district court
erroneously ruled that it lacked jurisdiction to impose sanctions
on Appellees. “Challenges to subject matter jurisdiction present
questions of law, which we . . . review for correctness.” State v.
Young, 2014 UT 34, ¶ 5, 337 P.3d 227 (omission in original)
(citation and internal quotation marks omitted).

¶12 Finally, Thompson contends that the district court erred
by failing to determine on summary judgment that Lynn
Wardley and Tramp used Wardley Corporation as an alter ego.
“An appellate court reviews a [lower] court’s legal conclusions
and ultimate grant or denial of summary judgment for
correctness and views the facts and all reasonable inferences
drawn therefrom in the light most favorable to the nonmoving
party.” Orvis v. Johnson, 2008 UT 2, ¶ 6, 177 P.3d 600 (citation and
internal quotation marks omitted).

3. Thompson divides her appeal into four claims, but we
combine two of those claims into a single claim for ease of
analysis.

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                 Thompson v. Wardley Corporation

                            ANALYSIS

                       I. Rule 60(b) Motion

¶13 Thompson first contends that the district court
improperly characterized her rule 60(b)(6) motion as a rule
60(b)(3) motion. The characterization matters because her rule
60(b)(3) motion needed to be filed within three months after
entry of judgment.4 Thompson contends that her rule 60(b)
motion should have been characterized as a rule 60(b)(6) motion
because “the material facts support that the exceptional
circumstances of this case are significantly more than mere
fraud, misrepresentation, and/or misconduct.” A district court’s
determination that a motion falls into a particular subparagraph
of rule 60(b)(6) is a conclusion of law reviewed for correctness.
Richins v. Delbert Chipman & Sons Co., 817 P.2d 382, 385 (Utah Ct.
App. 1991).

4. The time limit under the current rule is 90 days. In 2014 the
time limit for subparagraphs (1) through (3) of rule 60(b)
changed from “3 months” to the current “90 days.” Compare
Utah R. Civ. P. 60(b) (2013) (“The motion shall be made within a
reasonable time and for reasons (1), (2), or (3), not more than 3
months after the judgment, order, or proceeding was entered or
taken.”), with id. (2015) (“The motion shall be made within a
reasonable time and for reasons (1), (2), or (3), not more than 90
days after the judgment, order, or proceeding was entered or
taken.”). The 2016 version of rule 60(b) was restyled, but
retained the 90-day limit for subparagraphs (1) through (3); the
time limit was moved to subsection (c). Id. R. 60(c) (2016) (“A
motion under paragraph (b) must be filed within a reasonable
time and for reasons in paragraph (b)(1), (2), or (3), not more
than 90 days after entry of the judgment or order . . . .”). In this
opinion, we cite the version in effect at the time the motion was
filed.

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                 Thompson v. Wardley Corporation

¶14 Rule 60(b) lists various grounds on which the court may
relieve a party from a final judgment or order:

      On motion and upon such terms as are just, the
      court may in the furtherance of justice relieve a
      party or [its] legal representative from a final
      judgment, order, or proceeding for the following
      reasons: (1) mistake, inadvertence, surprise, or
      excusable neglect; (2) newly discovered evidence
      which by due diligence could not have been
      discovered in time to move for a new trial under
      Rule 59(b); (3) fraud (whether [previously called]
      intrinsic or extrinsic), misrepresentation or other
      misconduct of an adverse party; (4) the judgment is
      void; (5) the judgment has been satisfied, released,
      or discharged, or a prior judgment upon which it is
      based has been reversed or vacated, or it is no
      longer equitable that the judgment should have
      prospective application; or (6) any other reason
      justifying relief from the operation of the
      judgment.

Utah R. Civ. P. 60(b) (2014). A motion under rule 60(b) must be
filed within a reasonable time, and a motion based on the
reasons stated in subparagraphs (1), (2), or (3) needed to be filed
not more than three months after entry of the judgment. Id. See
supra note 4. If subparagraph (3) applies, a movant may not
attempt to avoid the time limit by relying upon subparagraph
(6). See St. Pierre v. Edmonds, 645 P.2d 615, 617–18 (Utah 1982)
(“Rule 60(b) authorizes the trial court, on motion, to relieve a
party from a final judgment or a decree procured by
fraud . . . but only if the motion is made within three months
after the judgment.”).

¶15 As “the residuary clause of rule 60(b),” subparagraph (6)
comprises three requirements: “First, that the reason be one other
than those listed in sub[paragraph] (1) through ([5]); second, that

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                 Thompson v. Wardley Corporation

the reason justify relief; and third, that the motion be made
within a reasonable time.” Laub v. South Central Utah Tel. Ass’n,
657 P.2d 1304, 1306–07 (Utah 1982). Rule 60(b)(6) “should be
very cautiously and sparingly invoked by the Court only in
unusual and exceptional circumstances.” Id. at 1307–08 (citation
and internal quotation marks omitted). And “a movant may not
attempt to circumvent the three-month filing period by relying
on another subsection.” Menzies v. Galetka, 2006 UT 81, ¶ 65, 150
P.3d 480.

¶16 Thompson filed her rule 60(b) motion more than four
years after entry of judgment. Accordingly, it matters whether
the motion is classed as one for relief based on fraud,
misrepresentation, or other misconduct under subparagraph (3)
or as one for relief based on “any other reason” under
subparagraph (6). See Utah R. Civ. P. 60(b). The district court
ruled that Thompson’s motion was based on the reasons stated
in subparagraph (3) and was, accordingly, time-barred.

¶17 Thompson contends that because “more than mere fraud,
misrepresentation, and/or misconduct” occurred in the Judge
Medley case, her motion properly rests on subparagraph (6), not
subparagraph (3). She argues that Appellees intentionally
obtained a summary judgment and a sanctions order by failing
to produce discovery, intentionally kept Thompson in the dark
about the assets of Wardley Corporation, and falsely represented
that Wardley Corporation bank accounts belonged to other
people or entities—in short, that Appellees intentionally and
maliciously acted in an egregious and reprehensible manner to
interfere with the administration of justice. This fraud, she
alleges, “is ongoing.” But Thompson does not explain how the
district court erred in ruling that these contentions allege fraud,
misrepresentation, or other misconduct of an opposing party
and thus fall within the purview of subparagraph (3). Instead,
she argues that Appellees’ actions amount to an “exceptional
circumstance” justifying relief under subparagraph (6). “Rule
60(b)(6) is designed to remedy a judgment when exceptional
circumstances are present.” Menzies, 2006 UT 81, ¶ 77.

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                 Thompson v. Wardley Corporation

¶18 Thompson’s challenge cannot succeed on appeal because
it ignores the structure of rule 60(b). As explained above,
subparagraph (6) applies only to a rule 60(b) motion based on
“any other reason that justifies relief,” that is, a reason other than
those listed in subparagraphs (1) through (5). See Utah R. Civ. P.
60(b)(6) (emphasis added). This rule prevents a movant from
circumventing the time limit applicable to motions based on
reasons listed in subparagraphs (1), (2), and (3) by repackaging
the claim as one under subparagraph (6). Menzies, 2006 UT 81,
¶ 65. Here, the district court in effect ruled that Thompson’s
motion, though ostensibly based on subparagraph (6), was in
substance merely a repackaged motion for relief under
subparagraph (3). Because Thompson has failed to address the
basis of the district court’s ruling, we reject this challenge. See
Golden Meadows Props., LC v. Strand, 2010 UT App 257, ¶ 17, 241
P.3d 375.

¶19 Menzies would not control here in any event. Thompson
relies on Menzies for the principle that “relief under 60(b)(6)
may . . . be sought where a lawyer’s performance is grossly
negligent,” 2006 UT 81, ¶ 101 and that “a client should not be
held liable for the attorney’s actions where those actions are
grossly negligent.” Id. ¶ 104. Thompson asserts that Anderson’s
“acts and omissions were just as, if not more so, egregious than
that of Menzies’ legal counsel.” But subsequent Utah Supreme
Court cases “have essentially limited Menzies to its facts.” Honie
v. State, 2014 UT 19, ¶ 91, 342 P.3d 182.

¶20 Those facts are striking. Unlike the summary judgment
Thompson faced, Menzies was facing a death sentence. See
Menzies, 2006 UT 81, ¶ 4. In addition, Menzies’ complaints were
against his own counsel, not opposing counsel. Menzies’ counsel
“virtually abandoned his client” and misled Menzies about the
procedural posture of the case, “the result being that Menzies
was not fully aware of [his attorney’s] failures until years after
they occurred.” Id. ¶ 105 (citation and internal quotation marks
omitted). Under these circumstances, the court determined that
Menzies’ rule 60(b) motion was filed “within a reasonable time,”

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                 Thompson v. Wardley Corporation

even though “it was not supported until sixteen months” after it
was filed, because the motion was initially filed within the three-
month limitation period and the subsequent delay for
supporting the motion “was due to *his counsel’s+ deficient
representation.” Id. ¶ 69. Here, Thompson has offered no reason
for her delay other than her characterization of Wardley’s
litigation tactics. She filed her rule 60(b) motion on March 26,
2013, nearly four and a half years after summary judgment was
entered (November 13, 2008) and four years after the sanction
order (March 23, 2009). In short, “[t]he facts before us bear little
resemblance to those in Menzies.” See Crane-Jenkins v. Mikarose,
LLC, 2015 UT App 270, ¶ 21, 374 P.3d 1024.

¶21 We conclude that Thompson has not shown that the
district court erred in ruling that her allegations rest on the
grounds stated in subparagraph (3) of rule 60(b). Therefore,
subparagraph (3)’s time limit applies. Thompson filed her rule
60(b) motion nearly four and a half years after the summary
judgment order and four years after the sanction order.
Therefore, the district court properly dismissed her rule 60(b)
motion as untimely.5

                           II. Sanctions

¶22 Thompson next contends that the district court erred in
denying her motion for sanctions against Wardley Corporation,
Lynn Wardley, Tramp, and Anderson. Her motion rested on the

5. While Thompson cannot pursue her claims under rule 60(b),
that rule by its terms “does not limit the power of the court to
entertain an independent action to relieve a party from a
judgment, order or proceeding or to set aside a judgment for
fraud upon the court.” Utah R. Civ. P. 60(b); see also St. Pierre v.
Edmonds, 645 P.2d 615, 617–19 (Utah 1982). We express no
opinion on whether her claims would support an independent
action for relief from judgment.

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                Thompson v. Wardley Corporation

Appellees’ conduct in the underlying case, chiefly for flouting
discovery rules.

¶23 When a court dismisses a rule 60(b) motion as untimely,
the court “lack*s+ jurisdiction to consider the merits of the
motion.” Richins v. Delbert Chipman & Sons Co., 817 P.2d 382, 387
(Utah Ct. App. 1991). Here, the district court did not abuse its
discretion in dismissing Thompson’s motion as untimely;
accordingly, it lacked jurisdiction to consider the merits of that
motion.

¶24 Thompson’s motion did not seek sanctions for appellees’
conduct in the rule 60(b) proceedings, but for appellees’ conduct
in the underlying litigation. But that litigation had ended in a
final judgment entered over four years earlier. The means of
seeking relief from a final judgment is a motion for relief of
judgment under rule 60(b), not a motion for sanctions. Having
denied her request for relief from judgment under rule 60(b) as
untimely, the court lacked jurisdiction to add to or subtract from
the judgment. Therefore, the court properly denied Thompson’s
motion for sanctions against Appellees.

                          III. Alter ego

¶25 Finally, Thompson contends that the district court
erroneously failed to determine that Appellees used Wardley
Corporation as an alter ego. As discussed above, the district
court lacked jurisdiction to consider the merits of the issues.
Accordingly, it properly declined to adjudicate the alter ego
question.

                         CONCLUSION

¶26 For the foregoing reasons, the judgment of the district
court is affirmed. We award no attorney fees on appeal.

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