FILED
                                                           United States Court of Appeals
                                                                   Tenth Circuit

                                                                  April 27, 2010
                      UNITED STATES COURT OF APPEALS
                                                   Elisabeth A. Shumaker
                                                                   Clerk of Court
                             FOR THE TENTH CIRCUIT




    JEFFREY A. HEIL, an individual;
    PAULA M. HEIL, an individual,

                Plaintiffs-Appellants,

    v.                                            Nos. 09-4029 & 09-4073
                                               (D.C. No. 2:07-CV-00598-DS)
    IRON COUNTY, a political                             (D. Utah)
    subdivision of the State of Utah,

                Defendant-Appellee,

    and

    STATE BANK OF SOUTHERN
    UTAH,

                Defendant.


                             ORDER AND JUDGMENT *


Before LUCERO, PORFILIO, and MURPHY, Circuit Judges.




*
      After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
these appeals. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The cases are
therefore ordered submitted without oral argument. This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. It may be cited, however, for its persuasive value
consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
      Jeffrey A. Heil and Paula M. Heil (the Heils), proceeding pro se, appeal the

district court’s order dismissing Claim Nine of their amended complaint filed

against Iron County, a political subdivision of the State of Utah. We affirm.

                                     Background

      We provide only a brief description of the facts necessary to our review.

The Heils filed two federal lawsuits, one against Iron County, and the other

against State Bank of Southern Utah (the Bank). The cases were later

consolidated in the district court. The Heils made various claims against both

defendants arising out of their ownership of land and water rights in Utah.

Eventually, the Heils voluntarily dismissed all claims against the Bank and all but

one claim against Iron County. That claim is based on allegations in the Heils’

amended complaint that, in 1994, they split off 20 acres from a larger parcel and

built a home on it, but Iron County failed to record this transaction and did not

register those 20 acres on the land plats or tax rolls as a separate parcel. The

single claim preserved for appeal is Claim Nine, in which the Heils alleged that

an employee of Iron County intentionally or negligently informed a potential

buyer of the Heil’s land “that the 20-acre lot split did not exist and that the Heils’

property could not be developed.” Aplee. App. at 246. The Heils claimed

damages against Iron County for their consequent economic loss.

      The district court held that Claim Nine was barred by the Governmental

Immunity Act of Utah (GIAU), providing that immunity from suit is not waived

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“if the injury arises out of, in connection with, or results from: . . . a

misrepresentation by an employee whether or not it is negligent or intentional.”

Utah Code Ann. § 63G-7-301(5)(f) (2008) (formerly Utah Code Ann.

§ 63-30d-301). On appeal, the Heils argue that (1) the district court lacked

subject-matter jurisdiction so the court should have dismissed Claim Nine without

prejudice, thus permitting them to refile it in state court; (2) the district court did

not address Iron County’s failure to recognize and record the 20-acre lot split,

resulting in the loss of their property; (3) discovery would have supported their

claims concerning the 20-acre lot; and (4) the district court erred in consolidating

the two cases.

                          Iron County’s Motion for Sanctions

      As a preliminary matter, we consider Iron County’s motion for sanctions

because it suggests that the automatic bankruptcy stay may apply to this appeal.

See 11 U.S.C. § 362. Iron County seeks sanctions against the Heils for their

failure to promptly inform it that their bankruptcy case had been reopened, which

caused Iron County to waste resources in preparing an appellate brief. Iron

County also argues that the automatic stay does not apply.

      The bankruptcy stay does not apply to this appeal filed by the debtors.

“The automatic stay does not apply to the continued prosecution of actions by the

trustee or debtor in possession. Those entities may continue or pursue litigation

without leave of court (or release of stay under section 362).” Morganroth &

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Morganroth v. DeLorean, 

, 1310 (10th Cir. 2000) (quotation and

alteration omitted). Therefore, Iron County did not waste its resources in

preparing an appellee’s brief. The motion for sanctions is denied.

                                     Discussion

      The Heils have challenged the federal court’s subject-matter jurisdiction.

“[W]e have a duty to ascertain whether we have jurisdiction prior to reaching the

merits of an appeal.” Governor of Kan. v. Kempthorne, 

, 841

(10th Cir. 2008). In their two original complaints and their amended complaint,

the Heils alleged that they were residents of California, Iron County was a

political subdivision of Utah, and the Bank was formed pursuant to Utah’s

banking laws and had its principal place of business in Utah. Aplee. App. at 19,

142-43, 224-25. They further alleged that the amount in controversy exceeded

$75,000. These allegations were uncontroverted. Accordingly, the federal

district court had diversity jurisdiction pursuant to 28 U.S.C. § 1332(a). This

court has jurisdiction pursuant to 28 U.S.C. § 1291.

      We do not address the merits of the Heils’ remaining appellate arguments

because they were not preserved for appeal. A federal appellate court will not

consider an issue not passed upon in the district court. Singleton v. Wulff,

, 120 (1976). “Consequently, when a litigant fails to raise an issue

below in a timely fashion and the court below does not address the merits of the




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issue, the litigant has not preserved the issue for appellate review.” F.D.I.C. v.

Noel, 

, 915 (10th Cir. 1999).

      Claim Nine asserted only that an employee of Iron County intentionally or

negligently misrepresented to a potential buyer the status of the Heils’ 20-acre

lot, resulting in economic loss. It did not encompass the Heils’ appellate

arguments concerning Iron County’s alleged failure to recognize and record the

lot split. Moreover, the Heils did not seek discovery on this point, nor did they

object to consolidating the two cases. Accordingly, we do not address these

claims.

      This court’s review is limited to the single issue of whether Claim Nine

was correctly dismissed under the GIAU. We review de novo the district court’s

order dismissing Claim Nine as barred by the GIAU. See Ordinance 59 Ass’n v.

U.S. Dep’t of Interior Sec’y, 

, 1152 (10th Cir. 1998). “Our

independent determination of the issues uses the same standard employed by the

district court. Accepting the [amended] complaint’s allegations as true, we

consider whether the complaint, standing alone, is legally sufficient to state a

claim upon which relief may be granted.” 

Based on a

review of the record, the parties’ briefs, and the applicable law, we conclude that

the district court’s order dismissing Claim Nine pursuant to the GIAU was

correct.




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                                 Conclusion

      Iron County’s motion for sanctions is DENIED. The judgment of the

district court is AFFIRMED.


                                                Entered for the Court



                                                Michael R. Murphy
                                                Circuit Judge




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