Maxwell v. Woodall

2014 UT App 125
_________________________________________________________
THE UTAH COURT OF APPEALS
NATALIE MAXWELL,
Plaintiff and Appellant,
v.
JAMES H. WOODALL,
Defendant and Appellee.
Memorandum Decision
No. 20130136-CA
Filed June 5, 2014
Third District Court, Salt Lake Department
The Honorable John Paul Kennedy
No. 120902202
Walter T. Keane, Attorney for Appellant
K. Bradley Carr, Attorney for Appellee
JUDGE MICHELE M. CHRISTIANSEN authored this Memorandum
Decision, in which JUDGES GREGORY K. ORME and JOHN A.
PEARCE concurred.
CHRISTIANSEN, Judge:
¶1 Plaintiff Natalie Maxwell appeals from the district court’s
award of attorney fees in favor of James H. Woodall. We affirm.
¶2 On April 2, 2012, Maxwell filed a declaratory-judgment
action against Woodall, claiming that Woodall had attempted to
conduct an unauthorized nonjudicial foreclosure of her property.
Maxwell’s complaint alleged that pursuant to Utah Code section
57-1-21, Woodall was an unqualified trustee who did not have the
legal authority to conduct a sale of Maxwell’s property. In
response, Woodall moved to dismiss Maxwell’s complaint, arguing
that he was a qualified trustee by virtue of the original lender’s
reassignment of the trust deed. Maxwell’s attorney, Walter T.

Maxwell v. Woodall
1. It is unclear from the record why Keane, as the attorney for the
nonprevailing party, prepared the proposed order. See Utah R. Civ.
P. 7(f)(2) (“[U]nless otherwise directed by the court, the prevailing
party shall . . . serve upon the other parties a proposed order in
conformity with the court’s decision.”); see Central Utah Water
Conservancy Dist. v. King, 2013 UT 13, ¶ 9, 297 P.3d 619.
20130136-CA 2 2014 UT App 125
Keane, hired another attorney, Eric S. Allen, to appear as substitute
counsel at the oral arguments held on Woodall’s motion to dismiss.
The district court determined that regardless of whether Woodall
was a qualified trustee, Maxwell’s suit was not ripe because the
property had not been sold and no foreclosure occurred. The court
therefore did not reach the merits of the case and dismissed
Maxwell’s complaint without prejudice.
¶3 After discussing the hearing with Allen, Keane drafted a
proposed order that included the following statement: “The Court1
specifically finds that the plaintiff’s action was brought in good-
faith.” Woodall objected to Keane’s proposed order, asserting that
the district court never found Maxwell’s suit to have been brought
in good faith. Woodall also alleged that Keane’s strategy was to file
frivolous lawsuits hoping to cause foreclosing lenders to refrain
from taking a property to sale until the litigation had been
resolved. Woodall supported his allegation with a screenshot of
Keane’s website, which advertised, “Walter [Keane] has clients
living rent-free for over 36-months,” and asked, “Would you like
to live rent-free?” Based on his argument that Keane’s proposed
order was flawed and that the underlying lawsuit was meritless,
Woodall requested in his objection that “[Keane] be sanctioned as
the Court deems appropriate.”
¶4 After a hearing on Woodall’s objection to Keane’s proposed
order, the district court ruled in Woodall’s favor and awarded him
$1,750 in attorney fees. The court docket reflected that the award
was to be imposed against Keane’s client, Maxwell, as the
judgment debtor instead of Keane. Keane filed a rule 59 motion to
correct the apparent mistake. See Utah R. Civ. P. 59. The court then

Maxwell v. Woodall
20130136-CA 3 2014 UT App 125
held another hearing to address Keane’s rule 59 motion. Following
that hearing, the court denied the rule 59 motion but nevertheless
amended its prior order to clarify that the attorney fees award was
against Keane personally and not against Maxwell. The court
explained that the award was “based not on Rule 11, but based on
the frivolous, unnecessary aspect of the proceedings up to this
point.”
¶5 Though officially not a party on appeal, we refer to Keane
throughout this decision as though he were the appellant because
Maxwell’s appeal challenges only the attorney fees award against
Keane. On appeal, Keane argues that the district court improperly
awarded the attorney fees pursuant to Utah Code section 78B-5-
825. “In civil actions, the court shall award reasonable attorney fees
to a prevailing party if the court determines that the action or
defense to the action was without merit and not brought or
asserted in good faith . . . .” Utah Code Ann. § 78B-5-825
(LexisNexis 2008). However, nothing in the court’s order indicates
that the court based its attorney fees award on section 78B-5-825.
The basis for the court’s entry of sanctions was not a determination
that Maxwell asserted the action in bad faith but a “subsequent
finding of bad faith on the part of [Keane].” And the court’s final
order imposed sanctions against Keane alone for that conduct and
not against Maxwell for bringing the action. Accordingly, we do
not agree that the court awarded attorney fees under section 78B-5-
825, and we do not analyze the award under that framework.
Rather, we conclude that the district court’s award of attorney fees
should properly be construed as an exercise of the court’s inherent
power to sanction attorney conduct, and we review the court’s
exercise of that power for an abuse of discretion. See Goggin v.
Goggin, 2013 UT 16, ¶¶ 35, 26, 299 P.3d 1079.
¶6 Our supreme court has explained that “courts of general
jurisdiction,” such as the district court here, “possess certain
inherent power to impose monetary sanctions on attorneys who by
their conduct thwart the court’s scheduling and movement of cases
through the court.” Barnard v. Wasserman, 855 P.2d 243, 249 (Utah

Maxwell v. Woodall
20130136-CA 4 2014 UT App 125
1993); accord Griffith v. Griffith, 1999 UT 78, ¶ 13, 985 P.2d 255. This
inherent power is
continuing, and plenary, and exists independently of
statute or rules of equity, and ought to be assumed
and exercised as the exigencies and necessity of the
case require, not only to maintain and protect the
integrity and dignity of the court, to secure obedience
to its rules and process, and to rebuke interference
with the conduct of its business, but also to control
and protect its officers, including attorneys.
In re Evans, 130 P. 217, 225 (Utah 1913). In order for a court to fully
exercise its inherent sanction power, an implicit “mechanism for
enforcement” must exist. Barnard, 855 P.2d at 249. “That
mechanism may take a variety of forms, one example of which is
the assessment of attorney fees.” Id.; see also Goggin, 2013 UT 16,
¶ 35 (“[A] court may be able to award attorney fees as a sanction
under its inherent sanction powers.”). Such enforcement sanctions
are important because without them, “the power to enforce would
be meaningless.” Barnard, 855 P.2d at 249. An award of attorney
fees pursuant to a court’s inherent sanction power is appropriate
even in the absence of a statutory or contractual authorization.
Goggin, 2013 UT 16, ¶¶ 32, 35.
¶7 Based on our review of the record, we conclude that the
district court did not abuse its discretion in awarding attorney fees
to Woodall. We reach this conclusion without explicitly analyzing
the court’s determinations that Maxwell’s underlying suit was
“frivolous” and that Keane acted in “bad faith” during the course
of litigation. Rather, we are convinced that, irrespective of a finding
of bad faith or frivolity, the district court’s attorney fees award was
a permissible exercise of its inherent power to control “the conduct
of attorneys and litigants” whose “actions interfered with the
administration of justice and resulted in wasted time and effort by
opposing counsel.” See Barnard, 855 P.2d at 249; see also Griffith,
1999 UT 78, ¶ 14 (affirming an award of attorney fees under the

Maxwell v. Woodall
2. In his objection, Woodall argued that Keane’s “insertion of a
finding of good faith will undoubtedly result in [the district court’s]
order being offered in other matters as ‘evidence’ that Mr. Keane
is acting in good faith.”
20130136-CA 5 2014 UT App 125
court’s inherent sanction power to “compensate for delay,
inconvenience and the expense resulting from [the attorney’s]
behavior” (alteration in original) (citation and internal quotation
marks omitted)).
¶8 Upon determining at the conclusion of the hearing on
Woodall’s motion to dismiss that Maxwell’s complaint was not ripe
for adjudication, the district court warned both parties about the
possibility of sanctions if the court were to discover that either
party was “playing games.” With this warning in place, Keane
drafted the proposed order, which erroneously stated that the
court had specifically found Maxwell’s complaint to have been
brought in good faith. Because Woodall considered the flaw in the
proposed order to be a material error—as he believed Keane’s
behavior to be manipulative —Woodall filed an objection to2
Keane’s proposed order on June 19, 2012. For over two months,
Keane took no action to correct the apparent mistake in his
proposed order. On the morning of the hearing on Woodall’s
objection on August 29, 2012, Keane presented a new proposed
order; however, no copy of the new proposed order is included in
the record, and it is therefore impossible for us to ascertain whether
it would have cured the flaw in the original proposed order. At the
August 29 hearing, Woodall’s counsel asked the court “for some
sort of sanctions to be assessed” due to the delay caused by Keane’s
flawed proposed order and Keane’s “waiting until an hour before
the hearing to finally make attempts to comply.” Woodall’s counsel
claimed that the delays and additional litigation resulted in
Woodall incurring unnecessary fees. The court expressed some
confusion over Keane’s inclusion of the good-faith language in the
original proposed order and asked Keane if the court had
previously made such a finding. Keane responded, “Yeah, I think,
your honor, I didn’t request a transcript, but I did speak with Mr.

Maxwell v. Woodall
20130136-CA 6 2014 UT App 125
Allen subsequent to the hearing. . . . And by the way, my clients
have reinstated the loan and so, we’ve acted, I feel in good faith in
this entire action.” Nevertheless, the court expressed its concern
that the parties and the court were required “to delay things
further” to resolve the matter. Accordingly, the district court
agreed with Woodall and granted his request for attorney fees.
¶9 At the hearing on Keane’s rule 59 motion, held more than
four months later on January 2, 2013, the district court further
questioned Keane about the inclusion of the good faith finding in
the original proposed order. The questioning commenced after
Keane admitted that inclusion of that finding was a mistake:
THE COURT: Well, now, today is the first time I
think I’ve heard that there was no good faith
reference and that you’ve abandoned that argument.
MR. KEANE: Yes, I have.
THE COURT: Today is the first time I’ve heard that;
is that true?
MR. KEANE: I—yes. It is.
THE COURT: So what—what does it take—why has
it taken you this long to—to respond on that issue?
MR. KEANE: I—your Honor, I thought I did.
THE COURT: Well, I—I just asked you if today was
the first time.
MR. KEANE: I think I said—I think in the—in the
materials I sent in and once I obtained the record, I
believe—
THE COURT: Well, when did you get the record?

Maxwell v. Woodall
20130136-CA 7 2014 UT App 125
MR. KEANE: I’ll have to look at it. As soon as I got
the record, I filed for the rule 59, I believe. If you’ll
give me a moment, your Honor. Your Honor, I
thought I have filed a transcript in the matter and I
may not have filed it in this litigation, but referenced
it in another matter before the Court. The—but I’m
not sure if it was mentioned, but I thought if it was in
the transcript, the Court would discern that. And one
other point, your Honor—
THE COURT: Well, no. No.
MR. KEANE: Oh.
THE COURT: Mr. Woodall objected to the form of
the order last June.
MR. KEANE: Right.
THE COURT: And his objection was very simply,
there’s nothing in there that talks about good faith
and you shouldn’t be including that in the order;
right?
MR. KEANE: Correct. Yes, your Honor.
THE COURT: So now—now, it’s six, seven months
later.
MR. KEANE: Yes, your Honor.
THE COURT: And today, for the first time, I’m
hearing, there isn’t anything in the transcript that
said good faith.
MR. KEANE: The transcript itself was ordered and
was available—

Maxwell v. Woodall
20130136-CA 8 2014 UT App 125
THE COURT: Well,—
MR. KEANE: —to the Court—
THE COURT: —I don’t go around reading files
randomly.
MR. KEANE: Okay.
THE COURT: Okay. I depend on lawyers to present
the information to me. Now, today, I’m being
presented for the first time verbally, that there is no
good faith—
MR. KEANE: Uh-huh (affirmative).
THE COURT: . . . And—and it’s been six months, okay?
In the meantime, Mr. Woodall and his co-counsel have had
to come in here, they’ve had to submit affidavits and
they’ve had to do a lot of unnecessary work.
(Emphasis added.) This exchange clearly evidences the district
court’s frustration with Keane’s conduct. The court was
particularly concerned about the length of time that it took for
Keane to resolve the flaw in his original proposed order, the
resulting delay and expenses incurred by Woodall and Woodall’s
co-counsel in having to pursue correction of that proposed order,
and the overall waste of judicial resources. The court reiterated
these concerns when it clarified at the conclusion of the hearing
that it was awarding sanctions “based not on Rule 11, but based on
the frivolous, unnecessary aspect of the proceedings up to this
point, which seem to be continuing.” The court’s displeasure with
Keane’s conduct is also manifest in the court’s finding that Keane
acted in bad faith.
¶10 Both before the district court and on appeal, Keane attempts
to shift the blame for his flawed proposed order to Allen, the

Maxwell v. Woodall
20130136-CA 9 2014 UT App 125
attorney who appeared in Keane’s place at the hearing on
Woodall’s motion to dismiss. Keane asserts that he relied on
Allen’s representations that the district court had made a finding
of good faith in Maxwell’s favor. Keane argues that it “seems
manifestly unfair to impose liability on Keane where he acted in
good faith on [Allen’s] representations.” However, the
responsibility for ensuring that the proposed order was “in
conformity with the court’s decision” was Keane’s, not that of a
substitute attorney such as Allen. See Utah R. Civ. P. 7(f)(2).
Moreover, Keane’s responsibility included an obligation “to correct
a false statement of material fact” previously made to the court. See
Utah R. Prof’l Conduct 3.3(a)(1). That the district court was unable
to fully resolve the factual discrepancy contained in Keane’s
proposed order until nearly seven months after Woodall filed his
objection supports the court’s use of its inherent sanction power
against Keane. Furthermore, the facts and statements from the
hearing transcripts described above demonstrate that the court was
concerned with how Keane’s “actions interfered with the
administration of justice and resulted in wasted time and effort by
opposing counsel.” See Barnard, 855 P.2d at 249. We therefore
conclude that the district court acted within its discretion by
awarding attorney fees under its inherent sanction power in order
to compensate Woodall for the delay, inconvenience, and expense
resulting from Keane’s conduct. See Griffith, 1999 UT 78, ¶ 14.
¶11 Woodall argues that pursuant to rule 33 of the Utah Rules
of Appellate Procedure, Keane should be required to pay
Woodall’s attorney fees incurred in defending the district court’s
judgment on appeal. Rule 33 provides that if an appellate court
determines that an appeal is frivolous, the court “shall award just
damages” to the prevailing party, which may include costs and
reasonable attorney fees. See Utah R. App. P. 33(a). While it is true
we have previously held that “an appeal brought from an action
which is properly determined to be in bad faith is necessarily
frivolous under [rule 33],” “it does not follow that a frivolous
action is an action in bad faith” that would equate to a frivolous
appeal. See Utah Dep’t of Soc. Servs. v. Adams, 806 P.2d 1193, 1197–98

Maxwell v. Woodall
20130136-CA 10 2014 UT App 125
& n.6. (Utah Ct. App. 1991). Here, the district court in its final order
clarified that the fees were awarded “based on the frivolous nature
of plaintiff’s suit, together with a subsequent finding of bad faith on
the part of” Keane. Even assuming that we agree with the district
court’s conclusion that Maxwell’s complaint was frivolous—a
determination we do not make—there was never a finding by the
court that the complaint was brought in bad faith. Thus, Keane’s
appeal is not frivolous on this ground. Furthermore, we are not
persuaded that Keane’s argument that the attorney fees were
awarded pursuant to Utah Code section 78B-5-825 is frivolous,
although we ultimately reject that claim. Accordingly, Woodall is
not entitled to attorney fees incurred on appeal under rule 33.
Woodall also requests fees under the general rule that when a party
who received attorney fees below prevails on appeal, the party is
also entitled to fees reasonably incurred on appeal. See Valcarce v.
Fitzgerald, 961 P.2d 305, 319 (Utah 1998). However, because the
district court awarded attorney fees pursuant to its inherent
sanction power stemming from Keane’s conduct during litigation,
and not pursuant to a rule, statute, or contract, we decline
Woodall’s request for attorney fees incurred on appeal on this
ground. See Liston v. Liston, 2011 UT App 433, ¶ 27 n.6, 269 P.3d
169.
¶12 Affirmed.