Mitchell v. Arco Industrial Sales

2023 UT App 70
THE UTAH C OURT OF APPEALS
JOHN B. M ITCHELL,
Appellant and Cross-appellee,
v.
A RCO I NDUSTRIAL S ALES , A RCO PACKAGING/J ANITORIAL S ALES ,
AND JOHN A. M ITCHELL ,
Appellees and Cross-appellants.
Opinion
No. 20210726-CA
Filed July 6, 2023
Third District Court, Salt Lake Department
The Honorable Adam T. Mow
No. 170905725
Greggory J. Savage, James A. Sorenson, and
Carol Ann Funk, Attorneys for Appellant
and Cross-appellee
Robert W. Hughes, Attorney for Appellees
and Cross-appellants
JUDGE A MY J. O LIVER authored this Opinion, in which
JUDGES GREGORY K. O RME and D AVID N. M ORTENSEN concurred.
OLIVER, Judge:
¶1 	John B. Mitchell (John)1 appeals from the district court’s
ruling that barred him from presenting evidence of damages as a
sanction for failing to file supplemental discovery disclosures as
required by rule 26(a)(1)(C) of the Utah Rules of Civil Procedure.
We reverse the imposition of sanctions against John without
considering the issue on the merits because he presented a
1. Because the parties have the same surname, we refer to them by
their first names for clarity, with no disrespect intended by the
apparent informality.

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plausible basis for reversal and Defendants inadequately briefed
the argument. In their cross-appeal, Defendants challenge the
district court’s decision to strike their Answer and Counterclaim
as a sanction for their violation of the court’s discovery orders. We
affirm the district court’s entry of default against Defendants
because their challenge is unsupported by any reasoned analysis
of the district court’s ruling and, thus, they have failed to carry
their appellate burden.
BACKGROUND
¶2 	In 2006, John accepted a position with Arco Industrial Sales
(Arco) and moved from Pennsylvania to Utah. At the time, Arco
was wholly owned by John’s father, John A. Mitchell (Jack).
According to John, he took the job because Jack and Arco
(collectively Defendants) made multiple promises on which he
relied. 	These 	promises 	related 	to 	John’s 	compensation 	and
included representations that Jack would transfer ownership of
Arco to John within five years. During John’s tenure, additional
promises were made to induce him to remain employed at the
company, 	including 	assurances 	he 	would 	receive 	income,
bonuses, 	and 	profit 	sharing 	equal 	to 	Jack. 	John 	eventually
resigned from his position at Arco because Defendants failed to
fulfill all of their promises.
¶3 	In 2017, John filed this lawsuit, asserting claims for breach
of agreement, misrepresentation, promissory estoppel, breach of
fiduciary duty, unjust enrichment, and an accounting. Defendants
filed an answer to the complaint, raising multiple defenses to
John’s claims and asserting a counterclaim seeking repayment of
loans allegedly made to John by both Arco and Jack. John then
timely filed an initial, but incomplete, disclosure of damages as
required by rule 26(a)(1) of the Utah Rules of Civil Procedure. The
initial disclosure stated John was seeking “the value of the equity
in Arco that was promised to him,” income and benefits promised
but not paid, damages from lost business opportunities, and

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“emotional hardship and suffering in an amount to be determined
later.” As to the amount or calculation of these damages, the
disclosure only stated: “Plaintiff’s damages will be determined
after discovery and will be the subject of expert testimony.”
¶4 	John served Defendants with his first set of discovery
requests on October 30, 2017. Believing Defendants had not
produced all of the documents he requested, John subsequently
sought intervention from the district court. Among other things,
John represented to the court that Defendants failed to produce
financial 	statements, 	accounting 	records, 	tax 	returns, 	and
business valuations. John stated he needed this information to
calculate his damages. John also sought copies of Arco’s corporate
documents, 	including 	minutes 	taken 	at 	meetings 	of 	the
shareholders and the board of directors. The district court granted
John’s motion in part and ordered Defendants to produce the
documents within thirty days.
¶5 	Defendants turned over a handful of documents, but John
again doubted they had produced everything he requested.
Accordingly, he filed a Motion for Sanctions, asking the district
court to impose terminating sanctions by striking Defendants’
Answer and Counterclaim and entering default in his favor if all
the documents were not produced within seven days. The district
court 	granted 	John’s 	motion 	and 	detailed 	the 	documents
Defendants 	were 	required 	to 	produce. 	The 	court 	warned
Defendants that if they failed to comply with its discovery order,
the “likely next step is to strike [their] Answer and Counterclaim
and enter default judgment in favor of [John].”
¶6 	Despite 	the 	district 	court’s 	clearly 	worded 	order,
Defendants did not produce the requested documents within the
required timeframe. This prompted John to file a third motion
with the district court, again requesting terminating sanctions.
John’s motion detailed Defendants’ ongoing failure to produce
documents 	and 	also 	contained 	allegations 	that 	Defendants

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destroyed relevant evidence when they replaced Arco’s computer
server and scrubbed the laptop John used during his employment
at Arco.
¶7 	The district court denied John’s motion for terminating
sanctions, concluding there was no credible evidence Defendants
scrubbed his laptop after they were informed of their obligation
to preserve the information on it. The court also concluded John
failed to present credible evidence that Defendants intentionally
destroyed electronically stored information (ESI) or acted in bad
faith when they replaced Arco’s computer server. As to John’s
allegations that Defendants failed to comply with the district
court’s order compelling them to produce certain documents, the
court noted John failed to specifically identify the documents he
believed were being withheld. Accordingly, the court ruled John
was not entitled to sanctions pursuant to rule 37 of the Utah Rules
of Civil Procedure.
¶8 	John then filed a motion for reconsideration. He directed
the district court to statements Defendants made in response to
his motion for terminating sanctions wherein they represented
they had copied and preserved “all files and documents” from his
company laptop before it was scrubbed and had produced that
information in discovery. John argued the undisputed evidence
showed that, contrary to Defendants’ assertions, they had not
produced all the documents they allegedly backed up from his
laptop before it was scrubbed.
¶9 	The district court concluded it was unable to rule on John’s
motion for reconsideration because of the “competing narratives
of what has been produced.” The court ordered Defendants to
arrange for a time when John could inspect their “electronic
devices, including computers, software, emails, and servers, to
locate any additional ESI [John] believe[d was] missing.” When
John’s computer forensics vendor conducted the inspection, she
located numerous documents Defendants had not produced.

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According to John, the inspection confirmed that Defendants had
produced only a “small portion” of the documents backed up
when his laptop was scrubbed. The inspection also uncovered
other relevant and responsive documents that Defendants failed
to produce despite repeatedly assuring the district court they had
fully complied with John’s discovery requests.
¶10 	The 	district 	court 	heard 	oral 	argument 	on 	John’s
allegations of discovery violations. The court found Defendants
failed to produce documents and ESI requested by John, noting
their failure to do so was in violation of the court’s orders and was
“willful and due to the fault of Defendants.” As a sanction for
these willful violations, the district court struck Defendants’
Answer and Counterclaim and entered default against them. The
court stated it would hold an evidentiary hearing on the issue of
John’s damages. See Utah R. Civ. P. 55(b)(2) (permitting a district
court to conduct an evidentiary hearing on damages after default
is entered if it deems one “necessary and proper”).
¶11 	In a written order following its oral ruling, the district court
detailed the bases for its grant of terminating sanctions. The court
found “Defendants did not produce documents and electronically
stored information responsive to Plaintiff’s discovery requests” in
violation of “the Court’s orders entered on February 16, 2018, and
July 2, 2018.” The court further found Defendants willfully “failed
to meet” their discovery obligations and “intentionally failed to
conduct 	the 	level 	of 	inspection 	necessary 	to 	ensure 	that
responsive documents were produced.” Noting that Defendants
made their own determination of what information was relevant,
the court found that many of the documents Defendants failed to
produce were “at the heart of [the] dispute” and there was “no
basis for not producing those documents.”
¶12 	Nearly a year after default was entered against them but
before the evidentiary hearing on John’s claims for damages,
Defendants filed a motion in limine requesting an order barring

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John from introducing any evidence of damages because he failed
to 	supplement 	his 	damages 	disclosure 	as 	required 	by 	rule
26(a)(1)(C) of the Utah Rules of Civil Procedure. Specifically, they
alleged 	John 	failed 	to 	furnish 	any 	method 	or 	formula 	for
calculating damages. John opposed the motion, arguing it should
be denied because (1) he no longer had any obligations under rule
26 	once 	the 	default 	was 	entered 	against 	Defendants,
(2) Defendants waited too long to complain about his damages
disclosure, and (3) any deficiencies were the result of Defendants’
well-documented failures to meet their discovery obligations.
¶13 	At a hearing on Defendants’ motion, the district court ruled
that John had a continuing obligation under rule 26(a)(1)(C) to
supplement his damages disclosure but failed to do so. The court
then considered, but rejected, John’s arguments that his failure to
comply with rule 26 was either harmless or the result of good
cause. See id. R. 26(d)(4) (“If a party fails to disclose or to
supplement timely a disclosure or response to discovery, that
party may not use the undisclosed witness, document, or material
at any hearing or trial unless the failure is harmless or the party
shows 	good 	cause 	for 	the 	failure.”). 	The 	district 	court
subsequently 	entered 	an 	order 	dismissing 	John’s 	lawsuit,
concluding his violation of rule 26(a)(1)(C) was “fatal to his ability
to put on damages evidence.”
¶14 	John appeals the dismissal of his claims and Defendants
cross-appeal from the entry of default against them.
ISSUES AND STANDARDS OF REVIEW
¶15 	John challenges the district court’s decision to bar his
evidence of damages because he failed to comply with rule
26(a)(1)(C) of the Utah Rules of Civil Procedure. “[W]e review a
district court’s interpretation and application of our rules of civil
procedure for correctness.” Sanders v. Sanders, 2021 UT App 122,
¶ 4, 502 P.3d 1230.

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¶16 	Defendants’ cross-appeal challenges the district court’s
decision to strike their Answer and Counterclaim as a sanction for
their failure to obey the court’s discovery orders. We review this
ruling of the district court for abuse of discretion. Kilpatrick v.
Bullough Abatement, Inc., 2008 UT 82, ¶ 23, 199 P.3d 957.
ANALYSIS
I. Sanctions for Rule 26 Damages Disclosure
¶17 	Rule 26(a)(1)(C) of the Utah Rules of Civil Procedure
“require[s], at a minimum, a disclosure that damages are in fact
being 	claimed, 	the 	categories of 	any 	such 	damages, 	and 	a
description of the method by which the party intends to compute
those damages.” Butler v. Mediaport Ent. Inc., 2022 UT App 37,
¶ 22, 508 P.3d 619. If a party fails to meet its obligation under the
rule, “that party may not use the undisclosed witness, document,
or material at any hearing or trial unless the failure is harmless or
the party shows good cause for the failure.” Utah R. Civ. P.
26(d)(4).
¶18 	John’s primary argument on appeal is that his violation of
rule 26(a)(1)(C) was either harmless or excused by good cause
and, thus, the district court abused its discretion when it barred
all his evidence of damages. See Bodell Constr. Co. v. Robbins, 2009
UT 52, ¶ 35, 215 P.3d 933 (“When a party fails to make timely
disclosure, the district court is required to impose discovery
sanctions on that party unless the failure to disclose is harmless or
the party shows good cause for the failure to disclose.” (cleaned
up)). He makes an additional legal argument, however, that he
had no obligation under rule 26 to supplement his damages
disclosure once the district court struck Defendants’ Answer and
Counterclaim, and that because Defendants filed their motion in
limine many months after the default was entered, rule 26 was not
applicable at the time the court ruled on the motion.

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¶19 	According to John, a pleading that is stricken is treated as
never having had a legal life. See Hansen v. Department of Fin. Insts.,
858 P.2d 184, 187 n.3 (Utah Ct. App. 1993); see also Statewide Env’t
Services, Inc. v. Fifth Third Bank, 352 S.W.3d 927, 932 (Ky. Ct. App.
2011) (holding that once the district court struck a party’s deficient
answer, it was “as if no answer at all had been filed”). Thus, John
argues, when the district court struck Defendants’ Answer, it was
deleted from the record and should be treated as a nullity. From
that point forward, John reasons, rule 26 ceased to have any
application in this matter because a plaintiff’s obligations under
that rule are triggered by the filing of the defendant’s answer. See
Utah R. Civ. P. 26(a)(2)(A) (providing a party’s initial disclosures
must be served on the other parties within fourteen days after the
filing of the first answer to the plaintiff’s complaint). John argues
that once the default was entered, this matter was governed solely
by rule 55 of the Utah Rules of Civil Procedure—which details the
procedures to be followed when a party fails to file an answer. As
to damages, rule 55(b)(2) provides that the district court may
conduct a hearing “to determine the amount of damages” if it
deems one “necessary and proper.”
¶20 	Although 	the 	district 	court 	determined 	a 	hearing 	on
damages was necessary, John asserts there is no provision in rule
55 permitting Defendants—the defaulted parties—to conduct
discovery in preparation for the damages hearing. But even
assuming a district court has discretion to permit discovery, John
notes that Defendants did not seek such permission. Instead, they
inappropriately invoked rule 26 and asked the court to bar John
from presenting any evidence of damages. John argues the grant
of Defendants’ motion placed Defendants in a better position than
other defaulted defendants. Additionally, he contends, nothing in
the 	caselaw 	suggests 	Defendants 	should 	be 	treated 	more
favorably because they were defaulted as a sanction rather than
because they failed to participate in the litigation.

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¶21 	John presents a logical and facially persuasive argument.
Unfortunately, 	we 	cannot 	address it 	on the 	merits because
Defendants do not acknowledge it in their responsive brief, nor
do they present any opposing argument. Rather, Defendants’
appellate brief focuses exclusively on their argument that any
evidence of John’s damages was properly excluded by the district
court because John cannot show that his violation of rule 26 was
harmless or that he had good cause for the failure. See id. R.
26(d)(4). Defendants argue that they “had no way of determining
what amounts of damages [John] was claiming on any of his
causes of actions” and they were left to “make some educated
guesses about the types and amounts of damages.” But John’s
argument that rule 26 had no application in this matter once
default was entered is unrebutted by Defendants.
¶22 	Our 	supreme 	court 	has 	previously 	held 	that 	it 	is
appropriate to rule in favor of an appellant if the appellant
establishes “a prima facie showing of a plausible basis for reversal”
and the appellee fails to brief the argument. AL-IN Partners, LLC
v. LifeVantage Corp., 2021 UT 42, ¶ 19, 496 P.3d 76 (cleaned up).
“This is a lower standard than the typical burden of persuasion
on appeal.” Id. “[A] court may rule in favor of an appellant for
purposes of that case if the appellee inadequately briefs an
argument 	and 	the 	appellant 	provides 	a 	plausible 	basis 	for
reversal.” Utah Dep’t of Transp. v. Coalt, Inc., 2020 UT 58, ¶ 45, 472
P.3d 942. Because John has met his appellate burden of making a
prima facie showing of a plausible basis to rule in his favor, we
reverse 	the 	grant 	of 	Defendants’ 	motion 	in 	limine 	without
resolving John’s argument on the merits.2
2. Because we do not reach the merits of John’s argument, this is
“a non-merits decision that is not intended to have precedential
value.” Sumsion v. Bay Harbor Farm, 2018 UT App 114, ¶ 25 n.7,
427 P.3d 511.

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¶23 	Thus, in this case, John’s inadequate disclosure of the
amount and calculation of his damages does not prevent him
from proceeding against Defendants. On remand, we leave it to
the district court to establish the proper procedures to determine
damages consistent with rule 55.
II. Terminating Sanctions for Discovery Violations
¶24 	Defendants’ cross-appeal challenges the district court’s
entry 	of 	default 	against 	them. 	Defendants’ 	appellate 	brief,
however, fails to sufficiently address any of the bases on which
the district court’s ruling rests. For example, Defendants assert
John was told that information had been transferred to Arco’s new
servers and fault him for failing to take advantage of their offer to
inspect the new servers. This argument is unresponsive to the
district 	court’s 	determinations 	that 	(1) 	it 	was 	Defendant’s
responsibility—not 	John’s—to 	review 	the 	Arco 	server 	and
produce the documents delineated in John’s discovery requests,
(2) Defendants failed to produce documents and ESI responsive
to John’s discovery requests and the court’s orders, and (3) their
failure was willful because they made their own unilateral
determination of which documents were relevant.
¶25 	Defendants’ 	appellate 	brief 	also 	contains 	a 	lengthy
discussion 	of 	the 	reasons 	for 	scrubbing 	John’s 	laptop 	and
replacing Arco’s servers. It then lists some of the documents John
uncovered during the search conducted by his computer forensics
vendor, referring to them as “allegedly unproduced documents”
and summarily stating that John has failed to explain how these
documents 	were 	responsive 	to 	his 	discovery 	requests.
Defendants’ unsupported assertions cannot be reconciled with
the 	district 	court’s 	unchallenged 	finding 	that 	John’s 	review
ultimately uncovered information he had requested, the district
court had ordered, and Defendants willfully failed to produce.
Other than to simply state that the sanction imposed by the
district court was harsh and extreme, Defendants’ brief does not

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otherwise address the appropriateness of the sanction chosen by
the district court.
¶26 	In 	short, 	Defendants’ 	brief 	contains 	no 	reviewable
challenge 	to 	the 	district 	court’s 	conclusion 	that 	terminating
sanctions 	were 	appropriate 	pursuant 	to 	rule 	37 	because
Defendants violated the court’s orders when they willfully failed
to produce documents and ESI responsive to John’s discovery
requests. See Utah R. Civ. P. 37(b) (authorizing a district court to
“dismiss all or part of the action, strike all or part of the pleadings,
or render judgment by default on all or part of the action” if the
court determines the party failed to follow the court’s orders).
Although they purport to challenge the district court’s conclusion
that sanctions were appropriate under rule 37(b), Defendants’
brief contains only unresponsive statements largely unsupported
by record citations. In light of these deficiencies in their appellate
briefing, Defendants have failed to persuade this court “that the
district court’s ruling constituted error.” Duchesne Land, LC v.
Division of Consumer Prot., 2011 UT App 153, ¶ 8, 257 P.3d 441.
Accordingly, 	we 	affirm 	the 	district 	court’s 	order 	striking
Defendants’ Answer and Counterclaim as a sanction for their
discovery violations.
CONCLUSION
¶27 	The order of the district court granting Defendants’ motion
in limine and barring John from presenting evidence of his
damages at an evidentiary hearing is reversed. The district court’s
entry of default against Defendants for discovery violations is
affirmed. This matter is remanded to the district court for further
proceedings consistent with this opinion.