Keystone Insurance Agency v. Inside Insurance
445 P.3d 434
Utah2019Background
- Keystone and Shumway (SIG) entered an operating agreement making them members of Inside Insurance (Keystone 25%, SIG 75%); Keystone claimed contractual entitlements to commission splits tied to its principal Johansson.
- After Johansson was terminated as an agent, Keystone sought access to Inside’s financial records and brought suit (May 2015) seeking declaratory relief, breach claims, and damages alleged to be at least $300,000.
- The court set discovery deadlines; Keystone’s initial disclosures (July 2015) did not include any computation of damages and Keystone repeatedly failed to provide a damages computation during fact discovery despite Inside’s requests.
- Inside produced detailed commission spreadsheets and QuickBooks data during discovery; Keystone waited until the close of expert disclosures to disclose an expert valuation and damages figures.
- Inside moved to exclude Keystone’s damages evidence under Utah R. Civ. P. 26(d)(4); the district court granted exclusion and later denied Keystone’s motion to reconsider (arguing Williams v. Anderson compelled a different result).
- Inside then dismissed with prejudice its counterclaim to expel Keystone; the district court’s rulings were appealed by Keystone and are affirmed by the Utah Supreme Court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Keystone’s failure to provide a damages computation warranted exclusion under Utah R. Civ. P. 26(d)(4) | Keystone argued it lacked necessary info and would compute damages after obtaining records; later provided expert computation at expert-disclosure deadline | Inside argued Keystone never provided a required damages computation during fact discovery despite requests and produced relevant records early enough for Keystone to calculate damages | Court held exclusion appropriate: Keystone failed to disclose a damages computation during fact discovery and did not show harmlessness or good cause |
| Whether Inside’s production of a commissions spreadsheet provided sufficient notice of Keystone’s damages (relying on Williams v. Anderson) | Keystone argued Inside’s spreadsheet gave adequate notice of commission damages and Williams requires reversal | Inside argued the spreadsheet was merely data, not Keystone’s computation or theory of damages; Williams is distinguishable | Court held Williams distinguishable; raw data ≠ plaintiff’s computation or damages methodology |
| Whether district court abused discretion in denying Keystone’s motion to reconsider based on Williams | Keystone argued new appellate authority (Williams) mandated reconsideration | Inside argued Williams materially different and court correctly applied rule 26 standards | Court denied reconsideration; found no error in distinguishing Williams or in applying rules |
| Whether dismissal with prejudice of Inside’s counterclaim to expel Keystone was improper under Rule 41 | Keystone argued dismissal of counterclaim prejudiced it or altered rights | Inside sought dismissal of its own counterclaim; Keystone continued to oppose expulsion and retained membership status | Court held dismissal with prejudice was proper and not legally prejudicial to Keystone; Keystone retained desired membership status |
Key Cases Cited
- Williams v. Anderson, 400 P.3d 1071 (Utah Ct. App.) (plaintiff’s disclosure of a mathematically certain percentage of a known purchase price can satisfy damage computation requirement)
- Holmes v. Cannon, 387 P.3d 971 (Utah 2016) (standard for reviewing district court interpretation of rules)
- Ohlander v. Larson, 114 F.3d 1531 (10th Cir. 1997) (factors bearing on whether dismissal should be permitted absent legal prejudice)
- Rohan v. Boseman, 46 P.3d 753 (Utah Ct. App.) (adopts Ohlander factors for evaluating prejudice in voluntary dismissal)
- Sleepy Holdings LLC v. Mountain W. Title, 370 P.3d 963 (Utah Ct. App.) (even incomplete future-dependent computations must disclose fact of damages and calculation method)
- Stevens-Henager Coll. v. Eagle Gate Coll., 248 P.3d 1025 (Utah Ct. App.) (discusses adequacy of disclosures regarding damages computation)