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Russell/Packard Development9/18/2003
alleges that despite the presence of CMT's name in the closing documents and the recorded deeds, Russell did not and should not have known of its claims at closing, and therefore that the threshold requirement is met for application of the discovery rule. Russell argues it is commonplace to use multiple legal entities in complex development transactions, and therefore the Appellees' use of CMT's name did not, of itself, alert Russell of any potential or actual problems. Because of the standard of review on a rule 12(b)(6) dismissal, we accept Russell's assertions that it should not have known of its claims simply because CMT was listed in the PRP contract and the deeds. Hence, we conclude Russell has satisfied the threshold showing for purposes of surviving a motion to dismiss.
b. The Concealment Prong of the Discovery Rule
Our supreme court has held that application of the concealment prong of the discovery rule to toll a statute of limitations requires the plaintiff to "make a prima facie showing of fraudulent concealment and then demonstrate that, given the defendant's actions, a reasonable plaintiff would not have discovered his or her claim earlier." Berenda v. Langford, 914 P.2d 45, 53 (Utah 1996). This standard requires consideration of "the difficulty a plaintiff may have in recognizing and diligently discovering a cause of action when a defendant affirmatively and fraudulently conceals it." Id. at 54. Significantly, the Berenda court "explicitly acknowledge that weighing the reasonableness of the plaintiff's conduct in light of the defendant's steps to conceal the cause of action necessitates the type of factual findings which preclude summary judgment in all but the clearest of cases." Id. at 53. "Close calls are for juries, not judges, to make." Id. at 54 (quotations and citations omitted).
To support the contention that the Appellees concealed their wrongful conduct after defrauding Russell via the "flip purchase and sale," Russell alleges in its complaint that:
At the time the CMT contract, signed on November 4, 1996, and the PRP contract, signed on November 8, 1996, were executed, Carson, Bustos, and Thomas set on a course of conduct through agreement to conceal from plaintiffs and Saratoga CMT's relationship to the defendants and CMT's lack of relationship to the plaintiffs and Saratoga.
This concealment was a necessary part of the scheme and device to permit the CMT contract to be signed by Saratoga on November 4, 1996, and to "flip the sale" to PRP on November 8, 1996.
This intentional concealment and failure to disclose to plaintiffs the fact that CMT was not owned by or controlled through Saratoga or, as to Saratoga, CMT was not owned by or in the control of plaintiffs, plaintiffs and Saratoga would not have permitted the flip purchase and sale through CMT while Carson and Thomas were acting as agents and fiduciaries of plaintiffs or to benefit Bustos.
Plaintiffs did not discover that CMT was not the agent for . . . Saratoga, in connection with the sale of the lots, until spring of 2000, when an accountant working for Saratoga discovered the possibility of a flip sale and purchase which prompted discussions between Russell on the one hand, and a representative of Saratoga on the other hand.
At all times previous to that, defendant formulated a scheme in which plaintiffs were introduced to Saratoga by the defendants and always referred to as the builder or buyer, and Saratoga's representatives were introduced to plaintiffs by the defendants and always referred to as the seller or developer.
On information and belief, in the spring of 2000, an accountant for Sarato
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