Sleepy Holdings LLC v. Mountain West Title
370 P.3d 963
Utah Ct. App.2016Background
- In 2007–08 The Lakes at Sleepy Ridge obtained two construction loans; Mountain West Title (escrow agent) recorded the loans’ trust deeds but failed to record subordinations, leading to defaults and clouded title.
- A prospective buyer canceled a $2,000,000 contract for twenty lots because the Lakes could not deliver marketable title; the Lakes assigned their interest to Sleepy Holdings.
- In October 2010 Sleepy Holdings sued Mountain West and its owner for breach of contract, breach of fiduciary duty, and negligence; initial disclosures merely stated “damages are described in the complaint” and promised later supplementation.
- Discovery cutoff was June 30, 2012; Sleepy Holdings changed counsel and did not serve a supplemental damages disclosure until August 2013 (over a year after the cutoff), asserting the lost $2 million sale as a damage theory.
- The district court struck the untimely supplemental disclosures under Utah R. Civ. P. 26/37, denied reconsideration, and entered summary judgment for Mountain West for lack of admissible damage evidence; Sleepy Holdings appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) Were Sleepy Holdings’ disclosures a timely and sufficient computation of damages under Rule 26? | The complaint’s allegation of a $2,000,000 failed sale ("$2 million minus 0 equals $2 million") sufficed as a damages computation. | Disclosures lacked the required method/computation (market value at forfeiture vs. contract price); plaintiff failed to timely supplement. | Held: Not timely or sufficient—initial disclosure and complaint did not meet Rule 26 requirements. |
| 2) Which sanctions regime applies for untimely supplemental disclosures: mandatory Rule 26/37(f) or discretionary Rule 16/37(b)? | Court should have applied discretionary Rule 16 sanctions rather than mandatory exclusion. | Rule 26 governs initial disclosures; its mandatory exclusion sanction (Rule 37(f)) controls. | Held: Rule 26/37(f) applies; exclusion is mandatory unless harmless or good cause shown. |
| 3) Was the Rule 26 violation harmless or excused by good cause? | Any prejudice could be mitigated (e.g., depositions could have proceeded); no meaningful harm shown. | Late disclosure prejudiced Mountain West because discovery was closed and it could not pursue rebuttal discovery; no good cause shown. | Held: Violation was not harmless and plaintiff did not show good cause; exclusion proper. |
| 4) Should a witness have been allowed to testify about assignment/standing despite sanctions? | Excluding the witness was an abuse because testimony was necessary to establish assignment/standing. | The witness disclosure was untimely and barred under the same Rule 26/37(f) analysis. | Held: Moot—affirmance of sanctions prevented trial; court’s exclusion of damages (and thus related testimony) stands. |
Key Cases Cited
- Bodell Constr. Co. v. Robbins, 215 P.3d 933 (Utah 2009) (late supplemental damage theories disclosed after discovery cutoff are prejudicial; exclusion may be appropriate)
- Coroles v. State, 349 P.3d 739 (Utah 2015) (Rule 16 governs sanctions for violations of scheduling orders; discretionary remedies)
- Dahl v. Harrison, 265 P.3d 139 (Utah Ct. App. 2011) (exclusion under Rule 37(f) is automatic unless violation is justified or harmless)
- Stevens-Henager Coll. v. Eagle Gate Coll., 248 P.3d 1025 (Utah Ct. App. 2011) (plaintiff must disclose fact of damages and method for computation in initial disclosures)
- TruGreen Cos., LLC v. Mower Bros., Inc., 199 P.3d 929 (Utah 2008) (damages estimates must be more than speculation; provide reasonable method of calculation)
- Glezos v. Frontier Invs., 896 P.2d 1230 (Utah Ct. App. 1995) (loss-of-bargain damages measured by difference between contract price and fair market value at forfeiture)