Copper Hills Custom Homes, LLC v. Countrywide Bank, FSB

428 P.3d 1133

COPPER HILLS CUSTOM HOMES, LLC, Appellant,

v.COUNTRYWIDE BANK, FSB,¹ Appellees.

No. 20160803

Supreme Court of Utah.

Filed September 27, 2018

Troy L. Booher, Beth E. Kennedy, Alexandra Mareschal, Salt Lake City; Nate D. Ashcraft, Lehi, for appellant

Chandler P. Thompson, Alan M. Hurst, Salt Lake City; Bradley L. Tilt, Sara E. Bouley, Salt Lake City; Brett N. Anderson, Salt Lake City, for appellees

Justice Himonas authored the opinion of the Court, in which Chief Justice Durrant, Associate Chief Justice Lee, Justice Petersen, and Judge Harris Joined.

Having recused himself, Justice Pearce does not participate herein; Court of Appeals Judge Ryan M. Harris sat.

On Direct Appeal

AMENDED OPINION^*

Justice Himonas, opinion of the Court:

¶ 1 Acting pursuant to rule 54(b) of the Utah Rules of Civil Procedure, the district court sought to certify as final and appealable several orders related to the disposition of mechanic's liens. The plaintiff, Copper Hills Custom Homes, then appealed those orders to this court. But we may not act on an appeal, including an appeal of a putative final order under rule 54(b), unless we are satisfied that we have appellate jurisdiction. And our review of the 54(b) certifications here reveals them to be flawed. This circumstance is by no means unique to this appeal—improper 54(b) certifications have proven to be a recurring source of jurisdictional complications.² Therefore, we dismiss the appeal for lack of appellate jurisdiction, but take the time to readdress and refine the steps that the parties and district courts must take to ensure proper certification under rule 54(b) in order to avoid unnecessary remands.

¶ 2 We are not oblivious to the fact that our decision today will leave the parties feeling that form has triumphed over substance. In a sense, they would not be wrong. But "we cannot fabricate the power to hear a case simply because it seems more palatable than acknowledging that we lack jurisdiction." DFI Props. LLC v. GR 2 Enters. LLC , 2010 UT 61, ¶ 23, 242 P.3d 781. And "[t]he lost time and effort occasioned by the briefing and oral argument in [such a] case is a small price to pay for insisting that the parties comply with the rules of procedure so that the proper relationship between" appellate courts and the district courts "may be maintained." Id. (first alteration in original) (citation omitted). It is therefore "incumbent upon us when we find that we lack jurisdiction to hear a case," as is the situation here, to dismiss the appeal. Id.

I

¶ 3 The germane facts are scant and not in dispute. "Copper Hills provided construction contracting services to Morningside Developers ... on eight separate parcels of real property in 2006." Morningside Developers, LLC v. Copper Hills Custom Homes, LLC , 2015 UT App 99, ¶ 2, 348 P.3d 726. Claiming that "Morningside failed to pay [it] for its work, Copper Hills recorded mechanic[']s liens against each of the parcels and ultimately filed eight separate lien foreclosure actions." Id. In response, Morningside sued "Copper Hills for breach of contract, fraud, and related claims." Id. The district court consolidated Morningside's claims and Copper Hills's foreclosure actions in October 2009. Id.

¶ 4 After two years of inaction and an intervening "order to show cause why the case should not be dismissed[,] ... the district court dismissed the case without prejudice." Id. ¶¶ 3–4. Copper Hills moved to set aside that dismissal. The district court granted the motion. Id. ¶ 4.

¶ 5 After the dismissal had been set aside, "Copper Hills filed an amended complaint adding twenty-five additional parties." Id. ¶ 5. This prompted the district court to issue "a new order to show cause ... ordering the parties to address whether" its prior decision to set aside the order of dismissal should be vacated. Id. And, "[f]ollowing a hearing, the district court issued an order in which it vacated the [order to set aside] and dismissed the case with prejudice." Id.

¶ 6 On appeal, the court of appeals vacated the district court's decision "insofar as it dismisse[d] the case with prejudice." Id. ¶ 12. Then it reinstated the district court's order dismissing the case without prejudice. Id.

¶ 7 One day shy of 180 days from when the court of appeals issued its decision, but more than eight years from when the liens were initially recorded, Copper Hills filed the action that now comes before us. Shortly thereafter, appellees Countrywide Bank and Mortgage Electronic Registration Systems (MERS) moved to dismiss the claims against them, arguing that "Copper Hills ... violated the 180-day limitation" in Utah Code section 38-1-11(2) (2007).³ Other appellees followed suit.

¶ 8 Based on appellees' argument, the district court concluded that several of Copper Hills's liens were "time-barred, void, and unenforceable." And, as a result, it issued the five orders presently before us.⁴

¶ 9 The district court sought to certify each of these orders as final and appealable under rule 54(b). To this end, it sought to grant 54(b) certification to the first three items by an order dated September 27, 2016. And it sought to grant 54(b) certification as to the fourth and fifth orders with language in the orders themselves. As we explain below, each of these certifications was ineffectual.

II

¶ 10 As a general rule, an appellate court does not have jurisdiction to consider an appeal unless the appeal is taken from a final order or judgment that "end[s] the controversy between the litigants." Anderson v. Wilshire Invs., L.L.C. , 2005 UT 59, ¶ 9, 123 P.3d 393 (citation omitted); see also Kennecott Corp. v. Utah State Tax Comm'n , 814 P.2d 1099, 1101 (Utah 1991) ("The historical rule is that except in a narrow category of situations, no order of a trial court is appealable until a final judgment is entered on all issues." (citation omitted) ); Williams v. State , 716 P.2d 806, 807 (Utah 1986) ("Under traditional principles of appellate review, ... an appeal may be taken only from a final judgment concluding all of the issues in the case." (citation omitted) ). This tenet is often referred to as "the final judgment rule."

¶ 11 The obvious and "principal rationale for limiting the right to appeal in this way is to 'promote [ ] judicial economy by preventing piecemeal appeals in the same litigation to this Court.' " Anderson , 2005 UT 59, ¶ 9, 123 P.3d 393 (alteration in original) (citation omitted). We are also concerned that multiple rulings in the same litigation on "narrow issues taken out of ... context" may needlessly increase the risk of inconsistent or erroneous decisions. Kennecott , 814 P.2d at 1101. Moreover, "[s]trict adherence to the final judgment rule ... maintains the proper relationship between this Court and the [district] courts." Powell v. Cannon , 2008 UT 19, ¶ 12, 179 P.3d 799 (citation omitted) (internal quotation marks omitted).

¶ 12 "This court has consistently upheld the final judgment rule." Bradbury v. Valencia , 2000 UT 50, ¶ 10, 5 P.3d 649 (citations omitted). But, as with nearly every general rule, there are exceptions. See Wash. Townhomes, LLC v. Wash. Cty. Water Conservancy Dist. , 2016 UT 43, ¶ 6, 388 P.3d 753. The final judgment rule has three.

¶ 13 The first exception to the final judgment rule "is when the legislature provides a statutory avenue for appealing nonfinal orders." Powell , 2008 UT 19, ¶ 13, 179 P.3d 799 (citation omitted). For example, Utah Code section 78B-11-129(1)(a)–(e) allows for appeals from several specific types of court orders in addition to "a final judgment." UTAH CODE § 78B-11-129(1).

¶ 14 The second exception is an interlocutory appeal. Our rules of appellate procedure prescribe when an interlocutory appeal may be requested:

An appeal from an interlocutory order may be sought by any party by filing a petition for permission to appeal from the interlocutory order with the clerk of the appellate court with jurisdiction over the case within 20 days after the entry of the order of the trial court, with proof of service on all other parties to the action.

UTAH R. APP. P. 5(a). An interlocutory appeal is a discretionary appeal of a non-final order, meaning that the appellate court has the discretion to hear the appeal as it is not an appeal as a matter of right. See Williams , 716 P.2d at 807 (noting the existence of an exception for "any interlocutory order or decision, but only at this Court's discretion").

¶ 15 The third exception, and the one with which we concern ourselves in this opinion, is an appeal brought under rule 54(b) of the Utah Rules of Civil Procedure. It provides:

When an action presents more than one claim for relief—whether as a claim, counterclaim, cross claim, or third party claim—and/or when multiple parties are involved, the court may enter judgment as to one or more but fewer than all of the claims or parties only if the court expressly determines that there is no just reason for delay. Otherwise, any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties, and may be changed at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties.

UTAH R. CIV. P. 54(b) ; see also Williams , 716 P.2d at 807 (noting another exception to the general rule is "set forth in [r]ule 54(b) of the Utah Rules of Civil Procedure"). This exception to the final judgment rule is similar to the interlocutory appeal exception in that it allows an appellate court to weigh in on a matter even though not all of the causes of action for all of the parties have been adjudicated. It differs, primarily, in that (1) an order properly certified under rule 54(b) is considered final and appealable by right and (2) it is the district court and not the appellate court that has the discretion (at least in the first instance) to decide whether an...