Mountain Dudes v. Split Rock et al

Filing 165

DEFAULT JUDGMENT-vAccordingly, it is hereby ORDERED, ADJUDGED, RULED, AND DECREED that judgment be entered in favor of Plaintiff, Mountain Dudes, LLC, against Defendant and Consolidated-Plaintiff Split Rock, Inc. in the amount of $1,175,507.98. Signed by Judge Clark Waddoups on 11/9/12. (jmr)

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION

MOUNTAIN DUDES, LLC, a Missouri
limited liability company,
Plaintiff,

MEMORANDUM DECISION AND
ORDER OF DEFAULT AS TO
DEFENDANT SPLIT ROCK, INC.

vs.
Case No. 2:08-cv-00940
SPLIT ROCK, INC., a Utah corporation, et
al.,

Judge Clark Waddoups

Defendants.
By Order dated November 19, 2009 [Dkt. No. 60], the court granted Plaintiff’s motion
for partial summary judgment against Defendant Split Rock, Inc. on the issue of liability for
breach of the Real Estate Purchase Contract dated October 4, 2006 (the “REPC”) alleged in the
First Cause of Action in Plaintiff’s Complaint. On April 21, 2011, the court further held that
Defendant Split Rock, Inc. was liable for a specific breach of the REPC and found that “the only
issue left for trial is damages related to Split Rock’s breach of contract.” (Memorandum Decision
and Order dated April 21, 2011 at 28) [Dkt. No. 136]. The court refers to the recitation of facts in
the April 21, 2011 Order for purposes of the present Order.
Thereafter, counsel for Split Rock, Inc. withdrew [Dkt. No. 142] and when Defendant
Split Rock, Inc. failed to appoint new counsel and show cause as to why default judgment should
not be entered in Plaintiff’s favor by March 30, 2012 as required by the court, the court issued an
Order dated April 2, 2012 entering default of Defendant Split Rock, Inc. [Dkt. No. 150]. Before

the court now is Plaintiff’s Application for entry of the Default Judgment against Defendant Split
Rock, Inc. [Dkt. No. 152.]
In the papers supporting its Application, Plaintiff argues that the Default Judgment
should relate to “Split Rock, Inc. and its successors” so that Plaintiff can “protect and not waive
its rights under the doctrine of successor liability.” (Req. Sub. Dec. on Appl. for Default
Judgment, 2) [Dkt. No. 163] (citing Decius v. Action Collection Serv., 105 P.3d 956 (Utah App.
2004)). The court finds this unnecessary and, in fact, notes that Utah has adopted “the traditional
rule of successor nonliability and its four exceptions as outlined in section 12 of the Restatement
(Third) of Torts.” Tabor v. Metal Ware Corp., 168 P.3d 814, 817 ¶ 11 (Utah 2007) (emphasis
added) (examining successor liability in the product liability context and upholding the four
traditional exceptions rather than expanding them to include a “product line exception” or
“continuity of enterprise exception”); accord Ekotek Site PRP Comm. v. Self, 948 F.Supp. 994,
1001 (D. Utah 1996) (rejecting plaintiff’s claim of successor liability under the “mere
continuity” exception).
This is consistent with Decius, cited by Plaintiff, which held that “[w]here one company
sells or otherwise transfers all its assets to another company, the latter is not responsible for the
debts and liabilities of the transferor” subject to the same four exceptions listed in the
Restatement. 105 P.3d at 958 ¶ 8 (emphasis added). These exceptions are “(1) the purchaser
expressly or impliedly agrees to assume such debts; (2) the transaction amounts to a
consolidation or merger of the seller and purchaser; (3) the purchasing corporation is merely a
continuation of the selling corporation; or (4) the transaction is entered into fraudulently in order
to escape liability for such debts.” Id. at 958-959 ¶ 8. Thus, Decius supports the general rule of
successor nonliability subject to the four exceptions that must be proven separately. Making

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room for such an eventuality is not appropriate in this Order because Plaintiff would need to
bring an action and marshal the evidence at that time in support of its claim that one of the
exceptions applies if necessary to collect this judgment.
Also in support of its Application, Plaintiff provides by affidavit evidence of the amount
which it is entitled to receive from Defendant Split Rock, Inc., including as to attorneys’ fees and
expenses. (Decl. Derek E. Anderson Supp. Appl. Default Judgment, 4-5, 8) [Dkt. No. 154]. The
court notes its previous ruling that “[a]s a matter of contractual interpretation, the Settlement
Agreement anticipates that Mountain Dudes would retain any payments Split Rock made until
the damages issue in this action is resolved.” (Order dated April 21, 2011 at 26) [Dkt. No. 136].
But this also contemplates, as was argued by Plaintiff in support of its motions for summary
judgment, that the amounts that Split Rock, Inc. paid to Plaintiff under the Settlement Agreement
before failing in its continued performance of that Agreement—totaling $50,304.25 (see
Complaint in consolidated action 2:09-cv-00540-DS at 6) [Dkt. No. 59-4]—are to be “credited to
any judgment Mountain Dudes obtains against Split Rock, if any.” (Settlement Agreement,
Section 4 at 4) [Dkt. No. 154-2]. Plaintiff’s materials in support of the amount of the Default
Judgment, however, do not account for the sums already paid by Split Rock, Inc. under the
Settlement Agreement. The proposed amount of the Default Judgment will therefore be reduced
by the amount of $50,304.25 paid by Split Rock, Inc. under the Settlement Agreement.
Accordingly, it is hereby ORDERED, ADJUDGED, RULED, AND DECREED that
judgment be entered in favor of Plaintiff, Mountain Dudes, LLC, against Defendant and
Consolidated-Plaintiff Split Rock, Inc. in the amount of $1,175,507.98.

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SO ORDERED this 9th day of November, 2012.
BY THE COURT:

____________________________________
Clark Waddoups
United States District Judge

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