National Title Agency v. JPMorgan Chase

2018 UT App 145
THE UTAH COURT OF APPEALS
NATIONAL TITLE A GENCY LLC AND WILLIAM D. R OWLEY ,
Appellants,
v.
JPM ORGAN C HASE B ANK NA,
Appellee.
Opinion
No. 20160806-CA
Filed July 27, 2018
Third District Court, Salt Lake Department
The Honorable Todd M. Shaughnessy
No. 160901812
Sean A. Monson, Ryan M. Merriman, and Jeremy C.
Reutzel, Attorneys for Appellants
Gary E. Doctorman and Nicholas U. Frandsen,
Attorneys for Appellee
JUDGE GREGORY K. O RME authored this Opinion, in which
JUDGES M ICHELE M. C HRISTIANSEN and D AVID N. M ORTENSEN
concurred.
Orme, Judge:
¶1 	Appellants National Title Agency LLC and William D.
Rowley (collectively, Plaintiffs) appeal the district court’s order
dismissing their complaint against Appellee JPMorgan Chase
Bank NA (Chase Bank) on the ground that their claims were
barred by the statute of limitations. We affirm.
BACKGROUND
¶2 	National Title, formed by Rowley in 2006, was a licensed
escrow and title agent that closed real estate transactions in

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Utah.1 As a licensed escrow agent, National Title held funds in
escrow for its clients in trust accounts at several banks, including
a trust account at Chase Bank (the Trust Account).
¶3 	Two unrelated suits were brought against National Title
in 2010, and because it failed to appear in either suit, the district
court entered default judgments against it. Shortly after the
default 	judgments, 	the 	district 	court 	issued 	two 	writs 	of
garnishment 	to 	Chase 	Bank, 	which, 	National 	Title 	alleges,
mindlessly complied with the writs, releasing over $600,000
belonging to National Title’s clients from the Trust Account to
National Title’s judgment creditors. The last such release was in
September 2010.
¶4 	National 	Title 	periodically 	received 	statements 	from
Chase Bank regarding the Trust Account. Somehow, National
Title did not notice the substantial shortfall in the Trust Account
until 	October 	2013. 	It 	then 	alerted 	its 	underwriter, 	First
American Title Insurance Company (First American), that it
would 	need 	assistance 	in 	compensating 	clients 	for 	their
escrowed funds that were lost as a result of the Trust Account’s
garnishments. First American promptly sent a written demand
and 	then 	filed 	suit 	in 	November 	2013 	in 	federal 	court,
demanding that National Title reimburse First American for any
payments it would have to make to cover the shortfall. First
American then terminated its relationship with National Title,
resulting in National Title’s closure.
¶5 	In September 2015, Plaintiffs filed a third-party complaint
against Chase Bank—in the federal case First American brought
1. When reviewing a motion to dismiss, “we accept the factual
allegations in the complaint as true,” and so we recite the facts
“in a light most favorable to the plaintiff as the nonmoving
party.” Russell Packard Dev., Inc. v. Carson, 2005 UT 14, ¶ 3, 108
P.3d 741.

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20160806-CA 	3 	2018 UT App 145
against Plaintiffs—alleging breach of fiduciary duty, breach of
contract, and negligence per se. But the federal court, citing
principles 	of 	federal 	abstention, 	dismissed 	the 	suit 	without
prejudice. When Plaintiffs filed those same claims in state district
court, Chase Bank moved to dismiss under rule 12(b)(6) of the
Utah Rules of Civil Procedure on the ground that the suit was
barred by the general four-year statute of limitations. See Utah
Code Ann. § 78B-2-307(3) (LexisNexis Supp. 2017) (specifying
that a four-year statute of limitations applies to claims “for relief
not otherwise provided for by law”). Plaintiffs opposed the
motion to dismiss, arguing that the statute of limitations began
to run in 2013 when First American sued National Title—not in
2010 when the Trust Account was garnished. They also sought to
file an amended complaint.
¶6 	Concluding that the statute of limitations began to run in
2010, the district court determined that the breach of contract
claim was subject to a two-year contractual limitation and that
the claims for breach of fiduciary duty and negligence per se
were subject to the general four-year statute of limitations.2 And
because Plaintiffs sued in 2015, the district court held that the
claims were barred by the applicable statutes of limitations. As a
result, it granted Chase Bank’s motion, dismissed the suit, and
denied Plaintiffs’ motion to amend. This appeal followed.
ISSUES AND STANDARDS OF REVIEW
¶7 	Plaintiffs 	contend 	that 	the 	district 	court 	erred 	in
dismissing their complaint, on the rationale that all three claims
were time-barred. “When reviewing a rule 12(b)(6) motion to
dismiss, we accept the factual allegations in the complaint as
2. 	National 	Title 	also 	brought 	a 	claim 	for 	equitable
indemnification, but the district court concluded that this claim
had not yet accrued. Plaintiffs do not raise this issue on appeal.

National Title Agency v. JPMorgan Chase
20160806-CA 	4 	2018 UT App 145
true and interpret those facts, and all reasonable inferences
drawn therefrom, in a light most favorable to the plaintiff as the
nonmoving party.” Russell Packard Dev., Inc. v. Carson, 2005 UT
14, ¶ 34, 108 P.3d 741. “Because the propriety of a motion to
dismiss is a question of law,” we review the dismissal for
correctness. Id.
¶8 	Plaintiffs also contend that the district court erred in
denying their motion to amend. “Typically, the standard of
review of a denial to amend pleadings is abuse of discretion.”
Ottens v. McNeil, 2010 UT App 237, ¶ 20, 239 P.3d 308 (quotation
simplified). But “when the trial court’s denial is based on its
conclusion that the amendment would be futile because the
statute of limitations bars the claim,” we review the application
of the statute of limitations for correctness. Id. “To the extent that
the statute of limitations analysis involves subsidiary factual
determinations, we review those factual determinations using a
clearly erroneous standard.” Id. (quotation simplified).
ANALYSIS
I. The Statutes of Limitations
¶9 	Determining that Plaintiffs’ damages arose upon Chase
Bank’s release of the funds in 2010, the district court concluded
that National Title “was damaged as soon as the garnished
funds left the Trust Account” as “National Title was overdrawn
and would no longer be able to furnish the escrowed funds back
to its customers.”3 But Plaintiffs, overlooking their ultimate
3. Plaintiffs assert that the district court’s analysis does not apply
to plaintiff Rowley’s claims because he was never considered a
trustee or listed by name on the Trust Account. These facts
surely suggest his individual standing to sue is questionable,
but, in any event, the complaint does not identify any differences
(continued…)

National Title Agency v. JPMorgan Chase
20160806-CA 	5 	2018 UT App 145
liability as fiduciaries, contend that it was actually their clients
who were harmed upon the release of the escrowed funds and
that the statutes of limitations did not start running on Plaintiffs’
claims 	until 	2013, 	when 	First 	American 	terminated 	its
relationship with National Title, filed suit, and forced National
Title out of business.
¶10 	Damages are a necessary element in Plaintiffs’ claims for
negligence, breach of contract, and breach of fiduciary duty. See
Hunsaker 	v. 	State, 	870 	P.2d 	893, 	897 	(Utah 	1993) 	(elements
required 	for 	a 	negligence 	cause 	of 	action); 	Carmichael 	v.
Higginson, 2017 UT App 139, ¶ 10 n.5, 402 P.3d 146 (elements
required for a breach of contract cause of action); Giles v. Mineral
Res. Int’l, Inc., 2014 UT App 259, ¶ 6, 338 P.3d 825 (elements
required for a breach of fiduciary duty cause of action). Because
a “cause of action accrues when the last event necessary to
complete the legal claim occurs,” damages would indeed have to
arise for there to be a cause of action. Olsen v. Hooley, 865 P.2d
1345, 1347 (Utah 1993). And once a cause of action accrues, the
statute of limitations begins to run. Id.
¶11 	Quoting 	Seale 	v. 	Gowans, 	923 	P.2d 	1361 	(Utah 	1996),
Plaintiffs assert that when Chase Bank garnished the funds, their
damages were “in the form of an enhanced risk of future harm,”
which damages “are not sufficient to start the running of the
statute of limitations.” Id. at 1365 (quotations simplified). But
damages of this character are only relevant in personal injury
cases where, in rare circumstances, a negligent act may occur but
a plaintiff 	has yet to show symptoms of an 	injury and 	is
(…continued)
in 	the 	claims 	asserted 	by 	Rowley 	and 	National 	Title. 	We
therefore conclude that the district court did not err in applying
its analysis to Rowley’s claims as well.

National Title Agency v. JPMorgan Chase
20160806-CA 	6 	2018 UT App 145
therefore unable to produce evidence of actual or future harm.4
See id. at 1365‒66; Lee v. Williams, 2018 UT App 54, ¶ 36, 420 P.3d
88; Riggs v. Asbestos Corp., 2013 UT App 86, ¶¶ 14‒15, 304 P.3d
61. Thus, damages for an enhanced risk of future injury are
intended to reduce the number of speculative claims among
plaintiffs facing uncertainty as to whether an injury will arise.
Seale, 923 P.2d at 1365. The same cannot be said, however, for
cases 	where 	a 	plaintiff 	seeks 	damages 	for 	a 	financial 	loss,
because there is no occasion for speculation as to whether the
plaintiff has suffered an injury.
¶12 	Generally, 	“damages 	serve 	the 	important 	purpose 	of
compensating an injured party for actual injury sustained, so
that she may be restored, as nearly as possible, to the position
she was in prior to the injury.” Mahmood v. Ross, 1999 UT 104,
¶ 19, 990 P.2d 933 (quotation simplified). General damages are
those that flow naturally and are a necessary result of a breach or
injury. Id.; Cohn v. J.C. Penney Co., 537 P.2d 306, 307 (Utah 1975).
And a plaintiff who has sustained a financial loss has standing to
immediately bring an action to recover its damages once that
loss has occurred. Although Plaintiffs assert that Chase Bank’s
improper release of funds from the Trust Account did not
initially harm them, the garnishing of escrowed funds from the
Trust Account to satisfy a judgment against National Title is the
breach 	and 	the 	proximate 	cause 	of 	the 	alleged 	injuries
underlying Plaintiffs’ claims. Had Chase Bank not released the
funds, or had it immediately restored them upon National Title’s
timely demand, the Trust Account would not have experienced a
shortfall and the events of 2013 would not have unfolded. As
soon 	as 	the 	improper 	garnishment 	occurred, 	National 	Title
4. Moreover, damages for enhanced risk of future injury are
available only when “a plaintiff seeks to recover damages for a
possible future injury without having suffered any presently
cognizable injury.” Medved v. Glenn, 2005 UT 77, ¶ 14, 125 P.3d
913.

National Title Agency v. JPMorgan Chase
20160806-CA 	7 	2018 UT App 145
remained on the hook for those amounts, vis-a-vis its clients to
whom the funds belonged, and it immediately had standing, as
trustee of the account, to demand restoration of the amounts
misappropriated by Chase Bank. Like the district court, we
conclude that damages accrued and the statutes of limitations
began running on Plaintiffs’ claims in 2010 when Chase Bank
garnished 	funds 	in 	the 	Trust 	Account 	to 	satisfy 	unrelated
judgments against National Title.
¶13 	Plaintiffs insist that what they seek in this action is not
recovery 	of 	the 	garnished 	funds 	but 	rather 	special 	or
consequential damages for harms that the loss of those funds
eventually caused. Special damages and consequential damages,
as opposed to general damages, are just “two ways of naming
the damages that occur as a natural consequence of the harm,”
USA Power, LLC v. PacifiCorp, 2016 UT 20, ¶ 93 n.128, 372 P.3d
629 (quotation simplified), above and beyond general damages.
These 	terms 	are 	“essentially 	synonymous,” 	with 	special
damages being the term traditionally used in tort law and
consequential damages being the term used in contract law. Id.
Unlike 	general 	damages, 	special 	or 	consequential 	damages
“‘include items of loss that are more or less peculiar to the
particular plaintiff and would not be expected to occur regularly
to other plaintiffs in similar circumstances.’” State v. Corbitt, 2003
UT App 417, ¶ 20, 82 P.3d 211 (Orme, J., concurring) (quoting
Dan B. Dobbs, Handbook on the Law of Remedies § 3.2, at 138 (West
1973)).
¶14 	Here, First American’s lawsuit and termination of its
relationship 	with 	National 	Title 	was 	perhaps 	a 	natural
consequence of the loss of $600,000 from the Trust Account, but
this is not a loss that would be routinely expected in every case
like 	this 	one. 	Quite 	extraordinarily, 	in 	our 	judgment, 	the
substantial shortfall in the Trust Account went unnoticed by
Plaintiffs for almost three years, and upon learning that it would
have 	to 	reimburse 	the 	garnished 	funds, 	First 	American
demanded that National Title transfer all escrowed funds in

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National Title’s possession. It also subsequently terminated its
relationship with National Title and brought suit. The unnoticed
loss of a significant amount of money, the failure to monitor and
diligently superintend those funds, National Title’s inability to
reimburse First American, and First American filing suit and
terminating its relationship with National Title all did eventually
happen in this case. But these were not typical results of an
improper garnishment, and it is unlikely that these same events
would occur in every circumstance where a bank improperly
garnishes 	a 	trust 	account. 	Rather, 	while 	being 	a 	natural
consequence of the events as they unfolded, these events were
unique to National Title’s situation.
¶15 	Of course, in contract actions special or consequential
damages are an adjunct to general damages. Cohn, 537 P.2d at
308. Special or consequential damages must be pleaded in the
same suit as the action claiming general damages.5 Seale, 923
P.2d 	at 	1364 	(providing 	that 	“once 	some 	injury 	becomes
actionable, a plaintiff must plead all damages” in one suit)
(emphasis in original). And because “a cause of action accrues
upon the happening of the last event necessary to complete the
cause of action,” Myers v. McDonald, 635 P.2d 84, 86 (Utah 1981),
5. Unlike general damages, which “may be recovered under a
general allegation of damage,” special or consequential damages
must be pleaded with particularity. Cohn v. J.C. Penney Co., 537
P.2d 306, 308 (Utah 1975). See Utah R. Civ. P. 9(h). For special
damages, 	a 	plaintiff 	“must 	plead 	each 	type 	of 	damage
specifically 	so 	that 	the 	opposing 	party 	has 	an 	adequate
opportunity to defend against the plaintiff’s claims.” Hodges v.
Gibson Products Co., 811 P.2d 151, 162 (Utah 1991). And to
recover consequential damages, a plaintiff must not only prove
that damages were caused by the contract breach but that “they
were foreseeable at the time the parties contracted” and that the
amount can be proven with reasonable certainty. Mahmood v.
Ross, 1999 UT 104, ¶ 20, 990 P.2d 933.

National Title Agency v. JPMorgan Chase
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general damages are the only damages necessary to complete a
cause of action and start the running of the statute of limitations.
Moreover, “mere ignorance of the existence of a cause of action”
will not toll the statute of limitations. Id.
¶16 	In sum, the statutes of limitations started to run in 2010
when Plaintiffs sustained the loss of the escrowed funds for
which they were responsible—not in 2013 when aspects of their
claimed 	special 	or 	consequential 	damages 	at 	last 	came 	to
fruition. Plaintiffs brought this suit on March 15, 2016, almost six
years 	after 	the 	escrowed 	funds 	entrusted 	to 	them 	were
improperly 	released 	from 	the 	Trust 	Account. 	Because 	their
breach of contract claim is subject to a two-year contractual
limitations provision and their breach of fiduciary duty and
negligence claims are subject to the general four-year statute of
limitations, Plaintiffs’ claims are time-barred. See Utah Code
Ann. § 78B-2-307(3) (LexisNexis Supp. 2017) (providing that
“[a]n action may be brought within four years” when “not
otherwise provided for by law”); Lilley v. JP Morgan Chase, 2013
UT App 285, ¶ 11, 317 P.3d 470 (providing that a negligence
claim is subject to the general four-year statute of limitations);
Russell/Packard Dev., Inc. v. Carson, 2003 UT App 316, ¶ 11, 78
P.3d 616 (providing that a breach of fiduciary duty claim is
subject to the general four-year statute of limitations), aff’d on
other grounds, 2005 UT 14, 108 P.3d 741. For these reasons, the
district court properly dismissed Plaintiffs’ complaint.
II. Motion to Amend
¶17 	Plaintiffs argue that, because their claims are all timely,
the district court erred in denying their motion to amend their
complaint. Permission for a party to amend its complaint should
be freely given when justice requires. Utah R. Civ. P. 15(a)(2).
But “justice does not require that leave be given if doing so
would be futile.” Jensen v. IHC Hospitals, Inc., 2003 UT 51, ¶ 139,
82 P.3d 1076 (quotation simplified). And “it is well settled that a
court may deny a motion to amend as futile if the proposed

National Title Agency v. JPMorgan Chase
20160806-CA 	10 	2018 UT App 145
amendment would not withstand a motion to dismiss.” Id.
(quotation simplified). Because Plaintiffs’ claims are barred by
the statute of limitations, a restatement of their claims would not
have helped them, and the district court did not err in denying
their motion to amend.
CONCLUSION
¶18 	We conclude that Plaintiffs’ claims for breach of contract,
breach of fiduciary duty, and negligence per se are barred by the
statutes of limitations. And because these claims are time-barred,
the district court did not err in its denial of Plaintiffs’ motion to
amend. Accordingly, we affirm.