507 P.3d 824
Utah Ct. App.2022Background
- Dean filed for divorce from Janice after 34 years of marriage; the marital estate included Meds for Vets, LLC (Meds), a nationwide veterinary compounding pharmacy.
- Janice, a licensed pharmacist and Meds’ CEO/manager, engaged in a scheme of fraudulent contracts and other transfers that the court/receiver found dissipated approximately $2.25–$2.5 million of marital assets.
- A court-appointed receiver took control of Meds, performed a valuation, and concluded Meds’ normalized value was $1,560,000; the receiver’s valuation did not include any personal goodwill.
- Shortly before trial Janice belatedly disclosed a rebuttal valuation expert (filed at the extended deadline but served late and whose report arrived on the holiday), and the court excluded the expert under Utah R. Civ. P. 26(d)(4).
- The district court found Janice’s dissipation sanctionable, incorporated the receiver’s valuation into the decree, and ordered Janice to pay the receivership costs and all of Dean’s attorney fees and costs.
- Janice appealed, arguing (1) the valuation improperly included her personal goodwill, (2) the court abused discretion by excluding her rebuttal expert, and (3) the attorney-fee sanction exceeded the fees actually caused by her misconduct.
Issues
| Issue | Janice's Argument | Dean's Argument | Held |
|---|---|---|---|
| Whether the valuation of Meds improperly included Janice's personal goodwill | Valuation should exclude personal goodwill tied to Janice’s licensure/management | Receiver and court: Meds’ value is enterprise-based, not dependent on Janice alone | Court affirmed: no personal goodwill; findings not clearly erroneous |
| Whether exclusion of Janice’s rebuttal valuation expert was improper | Exclusion was unjustified; expert testimony relevant to goodwill issue | Disclosure was untimely and prejudicial; exclusion proper under Rule 26 | Court affirmed exclusion: tardiness was neither harmless nor for good cause |
| Whether award of all Dean’s attorney fees exceeded sanctionable costs | Award exceeds fees directly caused by Janice’s sanctionable conduct | Janice’s misconduct generated extraordinary fees justifying award | Vacated and remanded: court must limit award to fees caused by sanctionable conduct or make findings supporting full award |
Key Cases Cited
- Marroquin v. Marroquin, 440 P.3d 757 (Utah Ct. App. 2019) (distinguishing personal vs. institutional goodwill in marital valuations)
- Stevens v. Stevens, 754 P.2d 952 (Utah Ct. App. 1988) (definition of personal goodwill)
- Solis v. Burningham Enters. Inc., 342 P.3d 812 (Utah Ct. App. 2015) (rule 26 requires exclusion absent good cause or harmlessness)
- Arreguin-Leon v. Hadco Constr. LLC, 438 P.3d 25 (Utah Ct. App. 2018) (sanction/exclusion principles for discovery violations)
- Drew v. Lee, 250 P.3d 48 (Utah 2011) (purpose of expert-disclosure rules: avoid unfair surprise and permit preparation)
- Goggin v. Goggin, 299 P.3d 1079 (Utah 2013) (fee awards as sanctions must be limited to amounts caused by sanctionable conduct)
- Segota v. Young 180 Co., 470 P.3d 479 (Utah Ct. App. 2020) (standard of review for Rule 26 sanctions)