Court of Appeals hears dispute over whether HOA harms are fiduciary or individual, and scope of attorney-fee award

A three-judge panel of the Utah Court of Appeals heard oral argument in Fleming v. Delante over whether the harms alleged by condominium owner George Fleming are individualized claims for gross negligence under the Utah Revised Nonprofit Corporations Act or derivatives of fiduciary breaches, and whether earlier rulings justify an award of roughly $250,000 in attorney fees. Troy Gore, counsel for Fleming, and John Morris, counsel for Jim Delante, disputed how to characterize the pleading history and the legal standard for gross negligence.

The question at the center of argument was whether Fleming alleged harms that are personal and therefore actionable directly, or whether the complaint primarily alleged breaches of fiduciary duty that belong to the association and must be brought derivatively. "There are individualized harms remaining," Troy Gore argued, citing impaired enjoyment of Fleming's unit and testimony that information was concealed from the board. "Concealment is the key that pushes it over the line here," Gore said, urging that a jury could find gross negligence based on alleged concealment and control of the project by Delante.

The panel pressed both sides on how to read the district court's earlier rulings. A judge observed that the question turns on "exactly how we characterize Judge Holmberg's ruling in January of 2019," asking whether the earlier order effectively dismissed a fiduciary duty claim and invited a different statutory negligence claim, or whether Fleming had always intended a non‑fiduciary statutory claim.

John Morris responded that the pleadings, read as a whole, reflect a fiduciary‑duty claim: "Anybody reading this complaint goes, yeah, this is a breach of fiduciary duty claim and there's nothing else," he said, pointing to language in the original and first amended complaints that described Delante as a fiduciary and recited the statutory provisions Fleming cited. Morris argued that the Utah Supreme Court's approach in related cases requires drawing common‑law fiduciary principles into the statutory text, and that the state of mind requirement in the statute (gross negligence, willful or intentional conduct) functions as the claim's mens rea.

Both sides acknowledged some factual overlap: the record contains hundreds of documents, and both counsel pointed to deposition testimony and board minutes. Gore emphasized testimony that Delante allegedly created and controlled a subcommittee, minimized problems, and steered a New Jersey contractor into the project without full disclosure to the board. Morris countered that the record shows substantial communications and meeting minutes inconsistent with a finding of "utter indifference," the standard he said the court should require for gross negligence.

The parties also debated the district court's allocation of attorney fees. Counsel for Delante defended the trial judge's decision to award fees up to a 2019 cutoff on the ground that earlier complaints were properly characterized as fiduciary‑duty claims; counsel for Fleming argued that the drafting and amendment history shows the complaint was always intended to allege statutory negligence and that fee allocation should be revisited.

The panel did not rule from the bench. "We will take this matter under advisement and render a written decision as soon as we can," the court told the attorneys at the close of argument.

Why it matters: The way the Court of Appeals interprets the complaint and prior orders will determine whether claims against individual HOA board members can proceed directly for individualized harms under the Nonprofit Corporations Act or whether those claims are derivative and therefore subject to different procedural limits. The decision will also clarify the scope of recoverable attorney fees when pleadings and orders evolve over multi‑year litigation.

What happened next: The court took the case under advisement and will issue a written opinion; no ruling was announced at oral argument.