Bailey v. BaileyBailey v. Bailey
HARRIS, Judge:
¶1 In 2019, nine years after her divorce, Amy L. Bailey (Amy) filed a petition to modify the child support provisions of the divorce decree, asserting that her ex-husband Danny Ray Bailey‘s (Danny)1 income had significantly increased. The matter proceeded to trial, where the district court sanctioned
¶2 Danny now appeals those findings and conclusions, as well as the court‘s underlying sanctions order. Danny asserts that the sanctions order was inappropriate and that he is entitled to a new trial at which he may present evidence regarding his income. We agree with Danny, and therefore vacate the court‘s modification order and remand the case for a new trial.
BACKGROUND
The Petition to Modify
¶3 Amy and Danny divorced in 2010; at that time, the parties were able to reach a negotiated settlement which was later incorporated into a decree of divorce (the Decree). The parties have three children together, all of whom were minors at the time of their divorce; only one of the children was a minor at the time of trial. Under the terms of the Decree, Amy was awarded primary physical custody of the children, and Danny was awarded certain parent-time. Danny is self-employed, and his income for child support purposes was determined to be $8,837 per month. Amy‘s earnings at that time were determined to be $4,071 per month. Using these income figures, Danny‘s child support obligation was calculated to be $1,485 per month.
¶4 In 2019, nine years after entry of the Decree, Amy filed a petition to modify, seeking, among other things, a modification of Danny‘s child support obligation. Discovery and disclosure deadlines were set, with fact discovery scheduled to close in November 2019 and expert discovery scheduled to close in March 2020. The expert discovery deadline passed, and neither party designated any expert witnesses. But in September 2020, Amy filed a statement of discovery issues, asserting that Danny had not disclosed certain financial documents, including his 2019 tax return, and asking that Danny be ordered to do so. Amy further requested that she be allowed “to designate an expert to opine on the limited issue of [Danny‘s] expenses versus business expenses.” Danny objected to this request, arguing that expert discovery deadlines were “far past” and that Amy “should not be allowed to re-open expert discovery and further extend this matter.” After a hearing, the court ordered both parties to disclose their 2018 and 2019 tax returns and associated financial documents to the other, but the court agreed with Danny on the expert disclosure issue, denying Amy‘s request and stating that it was “not inclined to extend discovery deadlines.”
¶5 Eventually, after some delays due to matters not relevant here, the court scheduled a one-day trial regarding the child-support-related issues to occur on November 10, 2021. In its pretrial order, the court ordered that, “at least 28 days before” trial, the parties were to “provide . . . pre-trial disclosures,” including “[t]he name . . . of each witness who will be called at trial,” “an updated financial declaration,” and “copies of their federal income tax returns for the two most recent tax years.”
¶6 On November 2, eight days before trial, Danny filed a motion to continue, asserting that he had “been unable to complete his 2020 tax return due to problems with his accounting software,” and requesting that the trial be continued so that the parties could “proceed with current and accurate income information.” Additionally, Danny brought to the court‘s attention that, on October 20, just twenty-one days before trial—and notwithstanding the court‘s previous reticence to extend discovery deadlines—Amy had, “for the first time,” identified two expert witnesses that she intended to call at trial. Danny asserted that these disclosures should have been made “within 14 days after the close of fact discovery,” which, in this case, was some two years earlier in November 2019. Danny asked the court to bar Amy from calling these witnesses at trial and, alternatively, stated that if the court was inclined to allow Amy to call these experts, he should be afforded “the appropriate disclosures
¶7 On the same day Danny filed his request for a continuance, Amy filed an objection. While pressing the court to move forward with the trial as scheduled, Amy simultaneously defended the timing of her expert disclosures. On this point, Amy argued that she was attempting to follow the court‘s pretrial order, which stated that the list of witnesses that would be called to testify only needed to be provided twenty-eight days before the trial. And, according to Amy, she was doing just that by identifying in her pretrial disclosures the two expert witnesses she intended to call at trial. She argued that these two witnesses were “absolutely necessary” because she intended to rely on “their expert opinion” to demonstrate Danny‘s “true income and the expenses being reported on his personal and business income taxes.”
¶8 Three days later, the court held a hearing on Danny‘s motion. At the conclusion of the hearing, the court granted Danny‘s request for a continuance of the trial date and rescheduled the trial to occur on March 1, 2022. The court also indicated that it would allow Amy to call the expert witnesses and it further observed that the continuance would give Danny time to consider whether he wanted to call a rebuttal expert witness of his own. At the conclusion of the hearing, the court noted that the main reason for continuing the trial was so that Danny could complete his 2020 tax return and disclose it to Amy, and it asked the parties whether they wanted to “set a deadline on the tax return.” Danny‘s attorney stated that he‘d rather not set a specific deadline, and Amy‘s attorney didn‘t argue for one either, stating that he and Danny‘s attorney had “worked well together on that kind of stuff” and that he didn‘t think any specific deadline for disclosure of the tax return would be necessary. The court pushed back a bit, asking, “Not a deadline? You‘re okay just leaving it out there?” Amy‘s attorney responded by stating that he was “fine with that.” In accordance with the parties’ wishes, the court set no specific deadline for Danny‘s production of his 2020 tax return. The court‘s previous pretrial order remained in place, however; as noted, it specified that all pretrial disclosures—including recent tax returns—were due “at least 28 days before” trial, which given the scheduled trial date would be February 1, 2022.
¶9 Not long after the November hearing on the motion to continue, Danny‘s attorney withdrew. Danny then elected to proceed to trial pro se.
¶10 On February 3, less than four weeks before the trial date, the court held a status conference. At the conference, Amy‘s attorney indicated that he had recently received Danny‘s newly-completed 2020 tax return—specifically stating that he “just got those the other day“—but that he was still waiting to receive certain bank statements from Danny. In response, Danny—now representing himself—raised certain issues with Amy‘s disclosures, indicating that he had not received all of her bank account information. After hearing from both parties, the court ordered Danny to provide Amy with the requested bank statements and ordered Amy “to do the same.”
¶11 During the status conference, the court also discussed the expert witness issue, and it asked Danny if he “had a chance to speak with or read the report from” Amy‘s experts. Danny indicated that he had not received any such report. Amy‘s attorney stated that he believed the report had been provided either to Danny or his previous counsel, but he offered to “resend” the report to Danny just in case.
The Trial
¶12 On March 1, the trial proceeded as scheduled, with Danny representing himself and Amy represented by counsel. At the start of the proceeding, before any evidence had been presented, Danny brought to the court‘s attention that, two weeks earlier, he had filed an objection to Amy‘s experts, asking that they be excluded from testifying
¶13 Concerned about possible disclosure failings on both sides, the court asked Amy‘s attorney whether it was “still the case” that Danny had failed to deliver “the documents, the returns, the information that [the court] ordered be delivered.” To this, Amy‘s attorney responded, “Not timely.” Seemingly dismayed at the lack of cooperation between the parties, the court reminded them that the reason it had continued the trial was so that the parties could “exchange documents,” yet they had apparently still failed to “timely” comply with its instructions. Addressing Danny, the court stated, “So if you‘re going to come to me and ask . . . that I exclude a witness, you‘ve got to come in with clean hands. If your hands are soiled because you yourself have not complied with the rule and you‘ve not told me that, that‘s a problem, because I‘m not going to apply the rules unevenly.” The court—without Amy making any specific request for a negative-inference sanction2—then told Danny that his apparent untimely disclosure of the 2020 tax return was “a problem that leads [the court] to think that perhaps a negative inference should be drawn against you . . . because why wouldn‘t you just turn over the information that is critical to the [c]ourt‘s determination on income since this is an income case?”
¶14 Before ruling on the matter, the court wanted to know how much time had elapsed between the completion of Danny‘s 2020 tax return and Danny‘s disclosure of that return to Amy. Danny indicated that “[p]robably two months” had elapsed between completion and disclosure. The court then asked, “Why wouldn‘t you have just disclosed [the return] immediately once you had them done? Why did you wait two months to disclose [it]?” Danny explained that he was looking for new counsel at that time and that his understanding was that his “obligation was to supply” those documents with his pretrial disclosures, twenty-eight days before trial, which he did. Danny also reminded the court—twice—that, at the conclusion of the November hearing, no specific deadline for disclosure of the tax return had been set. The court then, without prompting from Amy‘s attorney, began to read from
¶15 After allowing both sides to argue the matter, the court determined that “at the end of the day,” Danny was the one who “didn‘t disclose timely.” The court therefore told Danny that Amy “couldn‘t have given you a full expert report, because you hadn‘t given them the predicate information that was needed so the expert could do his or her job.”
¶16 After a recess to allow the parties one last opportunity to negotiate, the court considered what, if any, sanction should be imposed on Danny for his apparent untimely disclosure of his 2020 tax return. The court believed that it could impose any of the sanctions set forth in
¶17 Concerning Amy‘s experts, the court determined it would be appropriate to allow them to testify as fact witnesses. Amy ended up calling only one of the two expert witnesses she listed in her pretrial disclosures, a forensic accountant (Accountant). At the beginning of his testimony, Accountant was reminded that he was not permitted to give “expert opinion” because he would, as Amy‘s counsel described it, be a “factual witness.”
¶18 During his direct examination, Accountant was presented with exhibits containing Danny‘s tax returns—including his 2020 tax return—and other financial documents and was asked questions concerning those documents. For example, Accountant was asked about the purpose of lines “28 A and B” on one of the forms, and he responded, “Those are there to present to the IRS sources of income from businesses that the taxpayer owns.” At another point in the trial, Accountant was also asked whether the W-2 wage on another form was for Danny or if it was “a qualified deduction” from Danny‘s company. Accountant responded it was “neither,” and that “the income from the business” would be different from the amount represented on the form “because [it] specifically calculates adjusted income for [that] specific tax deduction.” Direct examination of Accountant continued in this fashion, with him testifying about several line items contained in Danny‘s tax returns and what information should or should not be contained therein.
¶19 Amy was the only other witness to testify at trial. After submission of the evidence, Amy‘s attorney made a closing argument. The court then went back and forth with Amy‘s attorney, discussing the various figures that had been presented and what implications they might have on the calculation of child support arrearages going back to the date Amy filed her petition. After completing the calculation, the court made an oral ruling that, for child support purposes, Danny‘s monthly income was $42,555 (as opposed to $8,837 under the original Decree) and that Amy‘s monthly income was $6,265 (as opposed to $4,071 under the original Decree). Based on those figures, the court then calculated Danny‘s ongoing child support obligation, as well as arrearages owed dating back to the month after Amy filed her petition to modify. Specifically, the court determined that Danny owed Amy $108,027 in back child support. Because of the “sizable back child support due and owing,” the court declined Amy‘s request for attorney fees. A few weeks later, the court entered a written order memorializing its oral ruling.
ISSUES AND STANDARDS OF REVIEW
¶20 Danny now appeals the court‘s modification order. In particular, Danny challenges the court‘s findings and conclusions regarding his own monthly income, and he asserts that the court‘s determinations in that regard are infirm because it improperly sanctioned him and did not allow him to present evidence supporting his position or refuting Amy‘s position on that issue. Thus, Danny‘s appeal centers on the court‘s application of Utah rules regarding discovery, disclosure, and sanctions.
¶21 A district court‘s interpretation of the
¶22 But when a district court‘s interpretation of the applicable rules is correct, we extend “a great deal of deference” to the
ANALYSIS
¶23 Danny‘s primary challenge on appeal concerns the district court‘s imposition of sanctions, which he contends were unwarranted. For the reasons discussed herein, we find merit in Danny‘s position, and agree that the court erred by imposing
¶24 There are two different rules of civil procedure that concern discovery sanctions:
¶25 The sanctions that a court may impose pursuant to
(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.
(5) If a party learns that a disclosure or response is incomplete or incorrect in some important way, the party must timely serve on the other parties the additional or correct information if it has not been made known to the other parties. The supplemental disclosure or response must state why the additional or correct information was not previously provided.
¶26 But the sanctions available under
¶27
¶28 But
¶29 In imposing sanctions on Danny, the district court applied
¶30 But under these circumstances, this sanction was improper.
¶31 Danny‘s sin, as perceived by the district court, was not the violation of any specific court order. Instead, the court was apparently upset with Danny for waiting some two months after the belated completion of his 2020 tax return to provide a copy of that return to Amy. This action was arguably a violation of
¶32 Under
were to assume, for purposes of the discussion, that under
¶33 And in this situation, the court‘s improper sanctions order prejudiced Danny. Prejudice is demonstrated when a party shows that the court‘s error “impacted the outcome of the dispute.” In re Western Ins. Co., 2022 UT 38, ¶ 55, 521 P.3d 851. In other words, a party is prejudiced if “there is a reasonable likelihood that, absent the error, the result would have been different.” Id. (quotation simplified). Danny asserts that his income is actually less than half of what the court found it to be after the one-sided evidentiary presentation, and he argues that, had he been able to present evidence as to his income, the court would not have made the same determination in that regard. Danny asserts that, if he had not been sanctioned, he would have presented (among other things) his earlier tax returns and evidence regarding his “necessary business expenses,” and would have been able to demonstrate that certain income had been improperly attributed to him. Danny plausibly contends that this would have likely made a difference, and here on appeal, Amy makes no argument to the contrary. And it appears that the district court more or less agreed with this notion, at one point stating that the sanctions imposed were “almost the equivalent of a default.”
¶34 In sum, then, the court entered an improper and unduly punitive sanctions order against Danny. That order prejudiced Danny because it prevented him from meaningfully engaging with the court and with Amy on the subject of his own income; absent the sanctions order, we think the court likely would have reached a different conclusion regarding Danny‘s income. Accordingly,
¶35 Our opinion could end here. But we elect to address one of Danny‘s other criticisms of the court‘s handling of Amy‘s petition to modify, in the hope that our guidance on this issue might prove useful on remand. See State v. Ogden, 2018 UT 8, ¶ 49, 416 P.3d 1132 (“Although it is unnecessary to our decision, we retain the authority to reach issues when we believe our analysis could prove helpful on remand.“); see also Young H2ORE LLC v. J&M Transmission LLC, 2024 UT App 10, ¶ 48, 543 P.3d 1264 (electing to “offer some guidance that we hope will prove useful” on remand where the issues in question “are certain to arise again“).
¶36 Danny asserts that the court acted improperly when it allowed Accountant to testify at trial as a “factual witness.”8 We agree with Danny that Accountant‘s testimony was improper.
¶37 After Amy made a late designation of expert witnesses (which the court eventually authorized Amy to do), Danny asked for a report from those witnesses, including Accountant, in lieu of taking their depositions. But despite certain initial incorrect
representations from Amy‘s attorney to the contrary, Amy never provided Danny with any report from Accountant.
¶38 Expert witnesses from whom reports have been requested should not be allowed—absent a showing of good cause or harmlessness—to testify about matters not “fairly disclosed in” the requested reports. See
¶39 In this case, the district court allowed Accountant to testify, despite the fact that Accountant never provided an expert report to Danny. The court allowed this, at Amy‘s request, on the ground that Accountant would not be asked to offer any expert opinion as to Danny‘s income but, instead, would merely be “a factual witness” who would offer testimony about “what a line means on a tax return.” But the court never engaged in any analysis of whether Amy‘s failure to provide an expert report from Accountant should be excused for “good cause.” See id.
¶40 And we are not persuaded by Amy‘s effort to characterize this kind of testimony as “fact testimony.” As an initial matter, even fact witnesses have to be disclosed in a timely manner, and—although Amy did obtain permission to make a late expert designation of Accountant—Amy did not disclose Accountant as a fact witness in a timely manner. Any such disclosure should have been made in Amy‘s initial disclosures, in order to give Danny the opportunity to depose
¶41 But more to the point, the testimony that Accountant ended up giving at trial was not fact testimony; it was expert testimony. A “fact witness” is someone “who has firsthand knowledge of something based on the witness‘s perceptions through one [or] more of the five senses.” Fact Witness, Black‘s Law Dictionary (11th ed. 2019). “Lay fact testimony“—which is the type of testimony that the district court and Amy assert that Accountant provided—is “factual testimony not based on scientific, technical, or other specialized knowledge.” State v. Rothlisberger, 2006 UT 49, ¶ 11, 147 P.3d 1176; see also Warenski v. Advanced RV Supply, 2011 UT App 197, ¶ 8, 257 P.3d 1096 (stating that testimony that is “clearly based on scientific, technical, or other specialized knowledge” should be considered as “expert testimony rather than fact testimony” (quotation simplified)), cert denied, 268 P.3d 192 (Utah 2011). A fact witness is thus only allowed to “testify in the form of fact or opinion” if the testimony “is helpful to the finder of fact” and is within the witness‘s “personal knowledge or perception.” State v. Sellers, 2011 UT App 38, ¶ 26, 248 P.3d 70; see also
¶42 Here, Accountant had no firsthand knowledge concerning the family in general or about Danny‘s income in particular, yet he was presented with various financial exhibits, including Danny‘s tax returns, and was allowed to offer testimony about them. Amy‘s attorney then questioned Accountant about certain line items in those documents. At one point, for instance, Accountant explained how a wage on a W-2 form was neither for Danny nor was it “a qualified deduction” from Danny‘s company, because “the income from [Danny‘s] business” would be different from the amount represented in the form which “specifically calculates adjusted income for [that] specific tax deduction.” We have no difficulty concluding that this sort of testimony was expert testimony, not fact testimony, because it was based not on Accountant‘s own personal observations but, instead, on his “technical” and “specialized knowledge.” See
¶43 Accountant should not have been allowed to provide this sort of testimony under these circumstances. Despite the court‘s stated intention not to “apply the [discovery] rules unevenly,” in our view that is exactly what happened here. The court imposed an inappropriately severe sanction on Danny, while at the same time allowing Amy to offer undisclosed expert testimony. We trust that, on remand, these errors will be corrected.
CONCLUSION
¶44 Because Danny did not violate any discovery or disclosure order, the court‘s effort
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