454 P.3d 83
Utah Ct. App.2019Background
- RBI (a construction company) sued Summer Raass for theft after Stan Raass (Summer’s then-husband and RBI co-owner) confessed to embezzling corporate funds and relinquished his ownership interest.
- Summer served broad discovery requests including SBA loan forms (SBA Forms), financial/accounting records, and complete TKL job files (TKL Job Files).
- The district court granted Summer’s discovery motions and entered a March 1, 2017 order requiring RBI to produce all responsive SBA Forms, TKL Job Files, and related accounting records within RBI’s possession, custody, or control.
- RBI certified compliance but produced numerous documents late, incompletely, or not at all; Summer moved for sanctions. The court held a three-day evidentiary hearing (plus supplemental briefing and argument).
- The district court found RBI (and its agents) at fault and engaging in persistent dilatory tactics, ordered production of outstanding items, held parties in contempt, and awarded Summer attorney fees and costs; after reconciling objections the court awarded $235,286.73.
- RBI appealed, arguing (1) sanctions were not warranted and (2) the fee award was unreasonable; the Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument (Summer) | Defendant's Argument (RBI) | Held |
|---|---|---|---|
| Whether discovery sanctions under Utah R. Civ. P. 37(b) were warranted | RBI repeatedly failed to comply with the March 1 order; its SBA Forms and TKL Job Files were within its control and it engaged in dilatory tactics | RBI complied with discovery obligations or lacked the documents; any missing materials were destroyed or not in RBI’s possession and there was no spoliation | Affirmed. Court found ample evidence RBI violated the March 1 order, was at fault, and engaged in persistent dilatory tactics; sanctions justified and within discretion |
| Whether the amount of attorney fees awarded was unreasonable | The fees sought were reasonably incurred to compel RBI’s compliance; requested rates were not contested | The award was excessive: fees before March 17, 2017 and unrelated work should be excluded; entries were duplicative or vague | Affirmed. Court reduced the requested fees substantially after an evidentiary hearing but did not abuse its discretion in awarding $235,286.73 as reasonable |
Key Cases Cited
- Kilpatrick v. Bullough Abatement, Inc., 199 P.3d 957 (Utah 2008) (describes two-step appellate review and deference for discovery sanctions)
- Morton v. Continental Baking Co., 938 P.2d 271 (Utah 1997) (requires finding of willfulness, bad faith, fault, or persistent dilatory tactics before Rule 37 sanctions)
- Shcherbakovskiy v. Da Capo Al Fine, Ltd., 490 F.3d 130 (2d Cir. 2007) (a party need not produce documents it does not possess; control analysis for third-party records)
- Prokosch v. Catalina Lighting, Inc., 193 F.R.D. 633 (D. Minn. 2000) (documents are under a party’s control when the party has the practical ability to obtain them from a nonparty)
- Wilson v. Wright, 30 P. 754 (Utah Terr. 1892) (possession/control principles—legal right to possession equates to control)
- Tuck v. Godfrey, 981 P.2d 407 (Utah Ct. App. 1999) (recognizing practical control where a party can direct a custodian to produce documents)
- Dixie State Bank v. Bracken, 764 P.2d 985 (Utah 1988) (discusses factors for assessing reasonableness of attorney fees)
- PC Crane Service, LLC v. McQueen Masonry, Inc., 273 P.3d 396 (Utah Ct. App. 2012) (deference to district courts in selecting discovery sanctions)
- KB Squared LLC v. Memorial Bldg. LLC, 442 P.3d 1168 (Utah Ct. App. 2019) (fee awards must be supported by evidence and factual findings)