Plantations at Haywood 1 v. Cottonwood Residential

2023 UT App 7
THE UTAH C OURT OF APPEALS
PLANTATIONS AT H AYWOOD 1 LLC, PLANTATIONS AT HAYWOOD 2
LLC, PLANTATIONS AT HAYWOOD 13 LLC, AND PLANTATIONS AT
HAYWOOD 23 LLC,
Appellants,
v.
C OTTONWOOD R ESIDENTIAL OP LP, C OTTONWOOD C APITAL
PROPERTY MA, C OTTONWOOD C APITAL M ANAGEMENT, AND
DANIEL S HAEFER ,
Appellees.
Opinion
No. 20210498-CA
Filed January 20, 2023
Third District Court, Salt Lake Department
The Honorable Todd M. Shaughnessy
No. 200903397
Eric V. Anderton, Andrew G. Deiss, and Sean N.
Egan, Attorneys for Appellants
Matthew L. Lalli, Sarah Anne Hafen, and
Henry H. Oh, Attorneys for Appellees
JUDGE M ICHELE M. C HRISTIANSEN F ORSTER authored this Opinion,
in which J UDGES DAVID N. M ORTENSEN and R YAN D. TENNEY
concurred.
CHRISTIANSEN FORSTER, Judge:
¶1 	Plantations at Haywood 1 LLC, Plantations at Haywood 2
LLC, 	Plantations 	at 	Haywood 	13 	LLC, 	and 	Plantations 	at
Haywood 23 LLC (collectively, Plaintiffs) filed a lawsuit in
California 	against 	several 	entities, 	including 	Cottonwood
Residential 	OP 	LP, 	Cottonwood 	Capital 	Property 	MA,
Cottonwood 	Capital 	Management, 	and 	Daniel 	Shaefer
(collectively, the Cottonwood Defendants), alleging causes of

Plantations v. Cottonwood Residential
20210498-CA 	2 	2023 UT App 7
action arising from a refinancing transaction related to property
located in South Carolina. When the Cottonwood Defendants
were dismissed from the California case, Plaintiffs refiled their
claims against them in Utah. That case was eventually dismissed,
without prejudice, for failure to prosecute. When Plaintiffs again
refiled their claims, the Cottonwood Defendants filed motions to
dismiss on grounds of failure to state a claim and failure to
prosecute. The district court granted both motions. We are asked
to determine whether the district court committed reversible error
in dismissing Plaintiffs’ claims. Because we determine that the
district 	court 	did 	not 	exceed 	its 	discretion 	in 	granting 	the
Cottonwood 	Defendants’ 	motion 	to 	dismiss 	for 	failure 	to
prosecute, we affirm.
BACKGROUND
¶2 	In 	2008, 	Plaintiffs, 	along 	with 	several 	other 	entities,
acquired 	tenant-in-common 	interests 	in 	a 	South 	Carolina
apartment complex (the Property). In 2011, to facilitate a refinance
of their purchase money loan, the various tenants in common
“rolled up” their interests in the Property by exchanging them for
membership 	interests 	in 	a 	new 	entity 	called 	Plantations 	at
Haywood 	M, 	LLC 	(Plantations). 	They 	also 	entered 	into 	an
operating 	agreement 	(the 	Operating 	Agreement) 	to 	govern
Plantations. 	In 	2012, 	the 	Cottonwood 	Defendants 	acquired
contract rights to manage the Property.
¶3 	In 2016, Plaintiffs sued numerous defendants in California,
alleging that the defendants had conspired to fraudulently induce
the tenants in common to roll up their interests into Plantations.
The Cottonwood Defendants were named in that suit, and the
causes of action pleaded against them included breach of the
Operating Agreement, breach of the covenant of good faith and
fair dealing, breach of fiduciary duty, constructive fraud, fraud
and deceit, negligent misrepresentation, and negligence. A few
months after the suit was filed, the California Superior Court

Plantations v. Cottonwood Residential
20210498-CA 	3 	2023 UT App 7
dismissed the Cottonwood Defendants from the suit for lack of
personal jurisdiction.
¶4 	Approximately 	a 	year 	later, 	Plaintiffs 	refiled 	their
complaint against the Cottonwood Defendants in Utah. The
Cottonwood Defendants filed a motion to dismiss, which District
Judge Su Chon granted in part and denied in part, leaving only
Plaintiffs’ claims for breach of the Operating Agreement and
breach of the covenant of good faith and fair dealing.
¶5 	Plaintiffs then filed a motion to stay the Utah action
pending the outcome of the litigation against the other defendants
in California. This motion was never submitted for decision, and
a Notice of Events Due Dates setting the fact discovery deadline
for January 15, 2019, was entered. The Cottonwood Defendants
attempted 	to 	move 	forward 	with 	discovery 	but 	allegedly
struggled to obtain responses from Plaintiffs.
¶6 	In 	November 	2018, 	some 	of 	the 	defendants 	in 	the
California action (the Debtor Defendants) filed for bankruptcy in
Florida. Once that occurred, Plaintiffs filed a notice of stay in the
Utah 	case, 	asserting 	that 	the 	bankruptcy 	proceedings
automatically 	stayed 	the 	Utah 	litigation. 	In 	December, 	the
Cottonwood Defendants moved to strike the notice on the ground
that they were not debtors in the bankruptcy.
¶7 	Neither party took further action in the case, and in August
2019, Judge Chon issued a Notice of Intent to Dismiss stating that
“due to inactivity,” the matter “may be dismissed for lack of
prosecution 	pursuant 	to 	Rule 	4-103, 	Code 	of 	Judicial
Administration[,] [u]nless a written statement is received by the
court within 20 days of this notice showing good cause why this
should not be dismissed.” Plaintiffs did not respond to the Notice,
allegedly because their local Utah counsel did not forward it to
their California counsel. In October 2019, Judge Chon dismissed
the remaining claims without prejudice for failure to prosecute.

Plantations v. Cottonwood Residential
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¶8 	Plaintiffs did not file a motion to set aside Judge Chon’s
dismissal, 	attempt 	to 	amend 	their 	complaint, 	or 	otherwise
complain about the lack of notice of the court’s intention to
dismiss. Instead, they waited until May 2020 to refile their
complaint. The newly filed case was assigned to District Judge
Todd M. Shaughnessy. In addition to the claims for breach of
contract and breach of the covenant of good faith and fair dealing,
the refiled complaint realleged all the causes of action that Judge
Chon had previously dismissed. After filing this third complaint,
Plaintiffs 	then 	waited 	another 	four 	months 	to 	serve 	the
Cottonwood Defendants. Plaintiffs took no further action to move
the refiled case forward.
¶9 	In the meantime, the Cottonwood Defendants had become
a 	plan 	sponsor 	for 	the 	Debtor 	Defendants 	in 	their 	Florida
bankruptcy 	case 	and 	had 	negotiated 	a 	settlement 	with 	the
bankruptcy trustee that, if adopted, would include “a bar order
prohibiting all present and future litigation arising out [of] or
related to the debtors.” However, the settlement reached with the
trustee was ultimately not approved by the bankruptcy court.
Though it expressed sympathy for what it characterized as
“relentless, or perhaps even vexatious litigation” by Plaintiffs, the
court rejected the settlement at a December 2020 hearing in which
it concluded the case did not meet the high standard required for
a bar order.
¶10 	In January 2021, the Cottonwood Defendants filed two
motions to dismiss the refiled Utah case. The first requested
dismissal of the complaint for failure to prosecute under rule 41(b)
of the Utah Rules of Civil Procedure (the Rule 41(b) Motion), and
the second requested dismissal of the complaint for failure to state
a claim under rule 12(b)(6) of the Utah Rules of Civil Procedure
on various grounds including the expiration of the statute of
limitations (the Rule 12(b)(6) Motion).

Plantations v. Cottonwood Residential
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¶11 	Plaintiffs did not file a written response to the Rule 41(b)
Motion,1 but they opposed the Rule 12(b)(6) Motion, raising
arguments regarding the appropriate choice of law with respect
to the statute of limitations as well as the applicability of the Utah
savings statute. At no point in either their pleadings or at oral
argument 	did 	Plaintiffs 	assert 	that 	the 	ongoing 	Florida
bankruptcy negotiations justified their lack of action in the Utah
case.
¶12 	Judge Shaughnessy granted both motions to dismiss with
prejudice. He granted the Rule 12(b)(6) Motion based on his
conclusion that the refiled complaint was barred by the Delaware
statute of limitations—which he found to be the statute applicable
to the claims at issue—and that the Utah savings statute did not
apply. Judge Shaughnessy also granted the Rule 41(b) Motion as
“an independent basis for dismissing the claims in this case.”
¶13 	Plaintiffs now appeal.
ISSUE AND STANDARD OF REVIEW
¶14 	Plaintiffs challenge the district court’s ruling with respect
to the Rule 12(b)(6) Motion and the Rule 41(b) Motion. However,
as we ultimately affirm the district court’s ruling on the Rule 41(b)
Motion, which was an “independent basis” for dismissal, we need
not address the propriety of the district court’s grant of the Rule
12(b)(6) Motion. “[W]e review for abuse of discretion the trial
court’s decision to dismiss for failure to prosecute.” Cheek v. Clay
Bulloch Constr., Inc., 2011 UT App 418, ¶ 6, 269 P.3d 964.
1. Plaintiffs allege on appeal that, as with Judge Chon’s Notice of
Intent to Dismiss, their California counsel did not receive the Rule
41(b) Motion. However, they took no steps in the district court to
rectify this alleged error, such as asking for more time to respond
or moving to set aside the court’s ruling on the Rule 41(b) Motion.

Plantations v. Cottonwood Residential
20210498-CA 	6 	2023 UT App 7
ANALYSIS
¶15 	Rule 41(b) of the Utah Rules of Civil Procedure provides,
“If the plaintiff fails to prosecute or to comply with these rules or
any court order, a defendant may move to dismiss the action or
any claim against it.” Utah R. Civ. P. 41(b). In determining
whether a district court has exceeded its discretion by dismissing
a case for failure to prosecute, we consider “(1) the conduct of both
parties; (2) the opportunity each party has had to move the case
forward; (3) what each party has done to move the case forward;
(4) the amount of difficulty or prejudice that may have been
caused to the other side; and (5) most important, whether injustice
may result from the dismissal.” Cheek v. Clay Bulloch Constr., Inc.,
2011 UT App 418, ¶ 7, 269 P.3d 964 (quotation simplified). The
burden is on the party “attacking a dismissal for failure to
prosecute [to] offer a reasonable excuse for its lack of diligence.”
Meadow Fresh Farms, Inc. v. Utah State Univ., 813 P.2d 1216, 1218
(Utah Ct. App. 1991).
¶16 	The court made the following findings with respect to the
failure-to-prosecute factors:
• 	Conduct of both parties: “[T]he record shows that [Plaintiffs
have] not been diligent, and [have] offered no convincing
reasons 	for 	the 	various 	delays 	in 	the 	case. 	The
[Cottonwood Defendants], on the other hand, [have] been
diligent in prosecuting the case.”
• 	Opportunity to move the case forward: “[I]t’s clear from the
record that [Plaintiffs] had a full and fair opportunity to
move the case forward, in particular during the time that
that case was pending before Judge Chon.”
• 	What each side has done to move the case forward: “[Plaintiffs
have] done little to nothing to move the case forward in the
years 	in 	which 	it 	has 	been 	pending; 	and 	again, 	the
[Cottonwood Defendants have] been diligent.”

Plantations v. Cottonwood Residential
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• 	Difficulty or prejudice to the defendant: “[T]he parties have
been litigating this case for around five years. The events
in question occurred a decade ago. The evidentiary record
in this case is undoubtedly cold. The recollections will have
faded, . . . relevant documents are likely gone forever. Also
. . . [the Cottonwood Defendants have] been required to
expend [substantial sums] in attorney’s fees to defend
[themselves] against claims that despite the length of time
in which they have been pending, have so far never gotten
out of the starting gate.”
• 	Injustice to the plaintiff: “[T]here’s no injustice to [Plaintiffs]
because [Plaintiffs] had a full and fair opportunity to
litigate these claims.”
¶17 	On appeal, Plaintiffs challenge these findings on the basis
that 	the 	court 	failed 	to 	take 	into 	account 	the 	Cottonwood
Defendants’ “obstructionist efforts” to seek a bar order in the
Florida bankruptcy that would prevent Plaintiffs from pursuing
their claims against the Cottonwood Defendants in the Utah case.
Plaintiffs 	assert 	that 	had 	the 	Cottonwood 	Defendants 	been
successful in obtaining the Florida bankruptcy court’s approval of
their settlement agreement with the bankruptcy trustee, it would
have made all Plaintiffs’ efforts to prosecute the Utah case moot.
And for this reason, they assert they were justified in delaying
prosecution of their Utah claims until the issues in the Florida
bankruptcy could be resolved.
¶18 	But Plaintiffs never raised this argument to the district
court. In fact, they never filed a written response to the Rule 41(b)
Motion at all. We generally consider it “unfair to reverse a district
court for a reason presented first on appeal.” Patterson v. Patterson,
2011 UT 68, ¶ 16, 266 P.3d 828. “Under our adversary system, the
responsibility for detecting error is on the party asserting it, not
on the court.” Id. Because Plaintiffs did not provide the district
court 	with 	any 	justification 	for 	their 	delays, 	let 	alone 	the

Plantations v. Cottonwood Residential
20210498-CA 	8 	2023 UT App 7
justifications they now assert on appeal, we decline to reverse the
district court’s ruling on the basis of their new arguments
regarding the Florida litigation.
¶19 	But even if we were to consider Plaintiffs’ arguments, we
are not convinced that the district court exceeded its discretion in
granting the dismissal here. There is nothing about the Florida
bankruptcy proceedings that actively prevented Plaintiffs from
pursuing litigation in Utah. And if they believed that the Florida
case might render their efforts in the Utah case moot, they should
have taken steps to formally delay the Utah litigation rather than
simply neglect it. But they did not request a stay of this action
pending the outcome of the Florida bankruptcy; they appear to
have dragged their feet on discovery in the initial case before
Judge Chon even before the Florida bankruptcy was filed; they
took no steps to avoid having their previous case dismissed by
Judge Chon or to set aside the dismissal after it occurred; and they
waited seven months to refile their claim after it was dismissed,
waited another four months to serve the Cottonwood Defendants
with 	the 	claim, 	and 	then 	took 	no 	further 	action 	until 	the
Cottonwood Defendants filed their motions to dismiss. The
Cottonwood Defendants, on the other hand, made initial efforts
to conduct discovery and stopped working to move the case
forward only after Plaintiffs resisted their discovery attempts.
And ultimately, the Cottonwood Defendants did not have the
same responsibility to move the case forward that Plaintiffs had.
See Cheek, 2011 UT App 418, ¶ 8 (“[T]he plaintiff bears the primary
responsibility for advancing the case and . . . the defendant’s
responsibility in this area is limited . . . to responding timely to the
action, expeditiously attending to discovery, and moving any
counterclaim along. The defendant has no general responsibility
to 	move 	[the] 	plaintiff’s 	action 	to 	judgment.” 	(quotation
simplified)). Given the length of time this case has been pending
and Plaintiffs’ complete lack of effort to move it forward, we do
not believe the district court abused its discretion in dismissing
the case for lack of prosecution.

Plantations v. Cottonwood Residential
20210498-CA 	9 	2023 UT App 7
CONCLUSION
¶20 	Because Plaintiffs presented the district court with no
justification for their delays in prosecuting their case, we conclude
that the district court did not exceed its discretion in dismissing
their claims under rule 41(b) of the Utah Rules of Civil Procedure.
Accordingly, we affirm and award the Cottonwood Defendants
their costs on appeal.

CERTIFICATE OF MAILING
I hereby certify that on the 20th day of January, 2023, a true and correct copy of the
attached OPINION was sent by standard or electronic mail to be delivered to:
ERIC V ANDERTON
CATANZARITE LAW FIRM
eanderton@catanzarite.com
SEAN N EGAN
ATTORNEY AT LAW
SEANNEGAN@SNEGANLAW.COM
MATTHEW L. LALLI
SARAH ANNE HAFEN
SNELL & WILMER LLP
MLALLI@SWLAW.COM
SAHAFEN@SWLAW.COM
HENRY H OH
SHUMENER ODSON & OH LLP
hoh@soollp.com
HONORABLE TODD M. SHAUGHNESSY
THIRD DISTRICT, SALT LAKE
THIRD DISTRICT, SALT LAKE
ATTN: CHERYL AIONO
cheryla@utcourts.gov
TRIAL COURT: THIRD DISTRICT, SALT LAKE, 200903397
APPEALS CASE NO.: 20210498-CA