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Russell/Packard Development9/18/2003
105, 107 (Utah 1978) (holding that the plaintiff's reasonable reliance on the defendant's misrepresentations tolled the statute of limitations until discovery of the cause of the damage) (other citations omitted)).
a. Threshold Issue
"The first step in determining whether the discovery rule applies is to examine whether [Russell] made the threshold showing that [Russell] did not know, nor should have known," of its causes of action against the Appellees prior to being put on notice of a potential fraudulent transaction by Saratoga in spring 2000. Sevy v. Security Title Co., 902 P.2d 629, 634 (Utah 1995); see also O'Neal v. Division of Family Serv., 821 P.2d 1139, 1144 (Utah 1991) (noting that "a threshold showing that [the plaintiff] did not know and could not reasonably have known of the existence of a cause of action . . . seem a definitional prerequisite to reliance on any version of the discovery rule").
The Utah Supreme Court has held that a plaintiff's actual knowledge of a cause of action prevents the plaintiff from satisfying the threshold showing. See O'Neal, 821 P.2d at 1144 (citing Brigham Young Univ. v. Paulsen Constr. Co., 744 P.2d 1370, 1374 (Utah 1983); Auerbach Co. v. Key Sec. Police, Inc., 680 P.2d 740, 743-44 (Utah 1984); Becton Dickinson & Co. v. Reese, 668 P.2d 1254, 1257 (Utah 1987); Lord v. Shaw, 665 P.2d 1288, 1290-91 (Utah 1983)). In the case before us, neither party alleges, nor does the record reflect, that Russell had or should have had actual knowledge of its claims against the Appellees at the time of the execution of the PRP contract.
However, there is no dispute that the PRP contract and the deeds for the lots indicate CMT's involvement in the transactions. The Appellees argue that because CMT was named in these documents, Russell should have been aware of its injury and cannot satisfy the threshold showing.
The case of Sevy v. Security Title Co., 902 P.2d 629 (Utah 1995), is instructive. In Sevy, the plaintiffs satisfied the threshold showing even where there were "some undisputed facts indicat that [the plaintiffs] should have become aware of their injury at closing." Id. at 634, 636 (quotations and citation omitted). In that case, the plaintiff was awarded damages by the district court for a title company's negligent failure to deliver stock certificates to the plaintiff at closing, pursuant to the terms of a real estate purchase contract. See id. at 631. Even though the statute of limitations would normally have run on the plaintiff's claim, the plaintiff asserted the discovery rule applied to toll the statute of limitations. See id. at 634. The plaintiff contended that he met the discovery rule's threshold showing--that he did not and should not have known of the negligence at the time of closing--because the recording of a trust deed led him to believe his security interest was perfected regardless of the defendant title company's failure to deliver the stock certificates. See id. at 636. The defendant title company argued that the plaintiff should have known of the negligence, and that his security interest was not perfected at closing when no stock certificates were forthcoming. See id. at 634. Noting that the district court's finding was a question of fact, see id. at 634, the Sevy court affirmed the district court's ruling, holding that despite evidence tending to show that the plaintiff should have known of his claim upon the defendant title company's failure to deliver the stock certificates, the plaintiff "neither knew nor should have known of [the defendant title company's] negligence until after the statute of limitations period had run." Id. at 636.
Similarly in our case, Russell
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