Ghidotti v. Waldron , 442 P.3d 1237 ( 2019 )

2019 UT App 67THE UTAH COURT OF APPEALS
DARNELL GHIDOTTI AND GREG GHIDOTTI,
Appellants,
v.
MELODIE WALDRON AND RE/MAX METRO,
Appellees.
Opinion
No. 20180045-CA
Filed May 2, 2019
Third District Court, West Jordan Department
The Honorable James D. Gardner
No. 150900601
Lincoln W. Hobbs and Sarah H. Orme, Attorneys
for Appellants
Stuart H. Schultz and Nicholas E. Dudoich,
Attorneys for Appellees
JUDGE KATE APPLEBY authored this Opinion, in which
JUDGES MICHELE M. CHRISTIANSEN FORSTER and DAVID N.
MORTENSEN concurred.
APPLEBY, Judge:
¶1 Darnell and Greg Ghidotti appeal the district court’s grant
of summary judgment in favor of Melodie Waldron and Re/Max
Metro (collectively, Re/Max). The court ruled that the Ghidottis
were unable to prove their damages with the requisite degree of
Ghidotti v. Waldron
certainty and had not properly disclosed Darnell 1 as an expert
witness prior to trial. We affirm.
BACKGROUND
¶2 The Ghidottis were looking to purchase a house where
they could live and operate a dog training and boarding
business. They specifically wanted to find one in a community
that was not controlled by a homeowners’ association (HOA)
because they anticipated an HOA would not allow them to
operate this type of business from their home. One of the listings
the Ghidottis reviewed with their real estate agent was for a
property (Property) that apparently was not subject to an HOA:
the listing left “blank[s]” after “HOA contact,” “HOA phone,”
and “HOA remarks,” and the section identifying “Restrictions
on the property” was marked “No.”
¶3 The Ghidottis signed a real estate purchase contract for
the Property in May 2014. The contract required the sellers
(Sellers) to make various disclosures including providing “a
copy of any restrictive covenants (CC&Rs) [and] rules and
regulations affecting the property.” In their disclosures, the
Sellers represented the Property was not “part of a
condominium or other [HOA].” The Ghidottis allege they were
never provided copies of any CC&Rs or rules and regulations
affecting the Property. Based on the representations in the real
estate purchase contract and the Sellers’ disclosures that the
Property was not subject to an HOA, the Ghidottis closed the
deal on the Property.
¶4 After purchasing the Property, the Ghidottis applied for a
conditional use permit, which they needed for keeping dogs on
1. As is our practice when parties share a last name, we
sometimes refer to them by their first names with no disrespect
intended by the apparent informality.
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the Property. After becoming aware of the permit application,
members of the Country Lane Ranchette’s Homeowners’
Association objected to its issuance, asserting that the Property
was subject to CC&Rs. Further research revealed the Property
was in fact subject to CC&Rs, which prohibited the Ghidottis
from keeping their own dogs on the Property and precluded
them from operating a training and kennel business there.
¶5 The Ghidottis filed a lawsuit in 2015 against the Sellers,
Re/Max, and their real estate agent and broker. 2 In March 2015,
the Ghidottis served their initial disclosures. The disclosures
designated Darnell as a fact witness who potentially would
testify about the Ghidottis’ desire to purchase property not
subject to an HOA, their efforts to ensure the Property was not
subject to an HOA, the information provided to them about the
Property, and how they discovered it was subject to an HOA.
Neither Ghidotti was identified as an individual who would
testify about damages. Darnell was mentioned among the
“individuals who the plaintiffs may call in their case in chief”
along with the phrase, “See summary of expected testimony
above.” The “computation of damages” section stated that the
Ghidottis had “not yet had an opportunity to ascertain their
damages.” Further, it stated that the damages calculation would
“depend upon if and when the [Ghidottis were] able to sell their
Property” and “upon the expenses [the Ghidottis were] forced to
incur in defending the action brought against them by their
neighbors who [were] seeking to enforce the [CC&Rs].”
¶6 As fact discovery progressed, Darnell testified in her
deposition about her calculation of damages resulting from their
inability to run the business out of their home. Darnell
acknowledged this was a new business operation. She also
testified there were no other businesses in the area that offered
similar services. After Darnell’s deposition the Ghidottis filed
2. The claims against the Sellers and the Ghidottis’ agent and
broker were resolved prior to this appeal.
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their first supplemental disclosures, which included financial
documents “the [Ghidottis] may offer in their case-in-chief.” The
documents were labeled but no explanation was provided along
with them. The Ghidottis filed their second supplemental
disclosures, which provided the following damages calculation:
The [Ghidottis] have computed their damages
based on the difference in revenue their
business . . . would have earned, had they been
able to operate the business as originally planned,
and what it will earn in light of the required
changes to its business plan. Because the
[Property] . . . is in the Country Lane Ranchette’s
Homeowners’ Association and is subject to
restrictive covenants—a fact that was concealed
from and thus unbeknownst to [the Ghidottis] at
the time of their purchase, despite their efforts to
avoid purchasing a property in a homeowners
association—[the Ghidottis] cannot operate the
business on their property, as originally intended,
but will have to operate the business at an off-site
location. Operating at an off-site facility changes
the services [the Ghidottis] can offer and increases
operation costs. The [Ghidottis] calculate that the
total damages, over the 20 years that [they] intend
to run their business, will be $2,784,159.[3]
The Ghidottis did not disclose any expert witnesses and
acknowledge they never intended to do so.
¶7 In late 2015, the Ghidottis’ real estate agent and broker
filed a motion for summary judgment arguing the Ghidottis
were unable to prove their damages with reasonable certainty. 4
3. This is the entire damages calculation.
4. Re/Max joined the motion.
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The district court granted the motion and dismissed the
Ghidottis’ claims against their real estate agent and broker as
well as Re/Max. The court ruled that the Ghidottis could not
prove their damages with the requisite degree of certainty
because they did “not have an expert to testify on profit
potential.” And although the Ghidottis suggested that “Darnell
planned to offer expert testimony at trial,” they did not properly
disclose her as an expert witness under the Utah Rules of Civil
Procedure. The Ghidottis appeal.
ISSUE AND STANDARD OF REVIEW
¶8 The Ghidottis argue the district court erred in granting
summary judgment on the grounds that Darnell was not
properly disclosed as an expert witness under the Utah Rules of
Civil Procedure and therefore they failed to prove their damages
with the requisite degree of certainty. “Interpretation of the Utah
Rules of Civil Procedure is a question of law that we review for
correctness.” Pete v. Youngblood, 2006 UT App 303, ¶ 7, 141 P.3d
629. This court also “reviews a [district] court’s entry of
summary judgment for correctness and gives its conclusions of
law no deference.” Utah Farm Bureau Ins. Co. v. Crook, 1999 UT
47, ¶ 3, 980 P.2d 685. Further, “in reviewing a grant of summary
judgment, we view the facts and all reasonable inferences drawn
therefrom in the light most favorable to the nonmoving party.”
GLFP, Ltd. v. CL Mgmt., Ltd., 2007 UT App 131, ¶ 5, 163 P.3d 636(quotation simplified).
ANALYSIS
¶9 The Ghidottis challenge the district court’s finding that
they failed to timely disclose their intent to rely on Darnell as a
non-retained expert witness. They acknowledge they did not
properly disclose her as a retained expert but argue they
“implicitly and sufficiently identified [Darnell] as an unretained
expert witness to testify regarding the Ghidottis’ damages.” The
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Ghidottis argue that Darnell was properly disclosed as a
non-retained expert when they listed her as a potential fact
witness in their initial disclosures, when she testified about their
damages during her deposition, and when they disclosed their
financial documents in their first supplemental disclosures. The
Ghidottis argue summary judgment was improper because these
disclosures gave Re/Max “ample notice” that they intended to
have Darnell testify about their damages as an expert at trial. We
disagree.
¶10 Summary judgment is appropriate when “the moving
party shows that there is no genuine dispute as to any material
fact and the moving party is entitled to judgment as a matter of
law.” Utah R. Civ. P. 56(a). The district court “should not weigh
disputed evidence” and must view “the facts and all reasonable
inferences to be drawn therefrom in a light most favorable to the
nonmoving party.” Pigs Gun Club, Inc. v. Sanpete County, 2002 UT
17, ¶ 24, 42 P.3d 379 (quotation simplified).
¶11 In this case, Re/Max argued the Ghidottis were unable to
prove damages with the requisite degree of certainty and
therefore their claims should be dismissed on summary
judgment. To recover damages, a plaintiff must prove both the
fact of damages and the amount of damages. Atkin, Wright
& Miles v. Mountain States Tel. & Tel. Co., 709 P.2d 330, 336 (Utah
1985). “The level of persuasiveness required to establish the fact
of loss is generally higher than that required to establish the
amount of a loss.” Id. (quotation simplified). But “there still must
be evidence that rises above speculation and provides a
reasonable, even though not necessarily precise, estimate of
damages.” Id.
¶12 The Ghidottis sought damages in the form of lost profits,
which “must be established with . . . sufficient certainty that
reasonable minds might believe from a preponderance of the
evidence that the damages were actually suffered.” Kilpatrick v.
Wiley, Rein & Fielding, 2001 UT 107, ¶ 76, 37 P.3d 1130 (quotation
simplified). In particular, new businesses, such as the Ghidottis’,
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“lack an actual record of past earnings, which decreases the
certainty with which one could predict future profits.” Id.(quotation simplified). But this does not “automatically preclude
new businesses from recovering lost profits” and “new
businesses should be allowed to try to prove lost profits up to a
reasonable level of certainty by other means.” Id. (quotation
simplified). “Alternative means of establishing the certainty of
lost profits include expert testimony of profit potential, evidence
of the actual profits of similar businesses, and evidence of
subsequent earnings of the business claiming lost profits.” Cook
Assocs., Inc. v. Warnick, 664 P.2d 1161, 1166 n.4 (Utah 1983).
¶13 In this case, the Ghidottis desired to start a new business.
Because they did not have any record of past earnings they
needed to prove their damages through other means. 5 See id. It
also was undisputed that the Ghidottis did not retain an expert
to testify about profit potential. In its ruling the district court
noted that during the hearing on the motion for summary
judgment the Ghidottis “seemed to suggest that [Darnell]
planned to offer expert testimony on profit potential at trial.” But
as the district court ruled, the Ghidottis never properly disclosed
Darnell as a non-retained expert under rule 26(a)(4)(E) of the
Utah Rules of Civil Procedure, which provides,
If a party intends to present evidence at trial under
Rule 702 of the Utah Rules of Evidence from any
person other than an expert witness who is
retained or specially employed to provide
testimony . . . that party must serve on the other
parties a written summary of the facts and
opinions to which the witness is expected to testify.
5. The Ghidottis challenge only the court’s finding that they did
not properly disclose Darnell as an expert witness. They do not
argue that they should have been able to prove their damages
through the other two means mentioned in Cook Assocs., Inc. v.
Warnkick, 664 P.2d 1161, 1166 n.4 (Utah 1983).
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¶14 The Ghidottis argue they adequately disclosed “a written
summary of the facts and opinions to which [Darnell was]
expected to testify.” Utah R. Civ. P. 26(a)(4)(E). But contrary to
this argument, such a disclosure is not enough. This court has
consistently held that disclosing a witness as a fact witness, by
itself, is insufficient to allow that witness to also present expert
testimony. See Solis v. Burningham Enters. Inc., 2015 UT App 11,
¶ 19, 342 P.3d 812 (explaining that disclosing a witness as a fact
witness but omitting the witness from the expert witness list
“did not fairly inform [the opposing parties] that opinion
testimony may be offered from [the witness]” (quotation
simplified)); Hansen v. Harper Excavating, Inc., 2014 UT App 180,
¶ 17, 332 P.3d 969 (“[A party’s] disclosure of his intent to call
treating physicians as fact witnesses is not sufficient to allow the
admission of their expert opinions.”); Ladd v. Bowers Trucking,
Inc., 2011 UT App 355, ¶ 13, 264 P.3d 752 (“Without an expert
witness designation, [the plaintiff] cannot establish causation.”);
Pete v. Youngblood, 2006 UT App 303, ¶¶ 15–16, 141 P.3d 629(determining that the plaintiff was required to “identify [a
witness] as a person who may be used at trial to present expert
testimony” despite the plaintiff’s argument that she
“substantially complied with the requirements of [the expert
witness disclosure rule] because [the witness] was named as a
fact witness”). Here, the Ghidottis produced a summary of what
Darnell was expected to testify about as a fact witness, not as an
expert. We conclude that this was insufficient to disclose Darnell
as a non-retained expert witness under rule 26(a)(4)(E).
¶15 The Ghidottis also argue that they implicitly disclosed
Darnell as an expert witness and the substance of her potential
testimony was properly disclosed through her deposition and
financial documents. This argument is contrary to our precedent.
In Solis, this court held that implicit disclosures are insufficient
to qualify a fact witness as an expert witness. 2015 UT App 11,
¶ 19. The plaintiff in Solis claimed she adequately notified the
defendants of her intent to use a designated fact witness as an
expert witness because her initial disclosures included diagrams
she expected the witness to testify about. Id. ¶ 18. Relying on
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Pete, this court determined that designating a fact witness and
also providing supplemental records or diagrams is insufficient
to designate that witness as an expert. Id. Ultimately, if a party
designates a fact witness but fails to include that witness on an
expert witness list, that party fails to satisfy the expert disclosure
requirements under rule 26. Id. ¶ 19. Here, the Ghidottis failed to
include Darnell as an expert in their disclosures. Thus, their
“implicit” disclosure through other means did not comply with
rule 26.
¶16 The Ghidottis argue that such a narrow interpretation of
expert disclosure requirements is inconsistent with rule 1, which
states that the rules of civil procedure “shall be liberally
construed and applied to achieve the just, speedy, and
inexpensive determination of every action.” Utah R. Civ. P. 1.
We recognize that “‘all [the disclosure rules] require is that a
party fairly inform its opponent that opinion testimony may be
offered from a particular witness.’” RJW Media Inc. v. Heath, 2017
UT App 34, ¶ 23, 392 P.3d 956 (quoting Utah R. Civ. P. 26
advisory committee notes). But the requirement to “‘fairly
inform . . . includes ‘that such witnesses be identified and the
information about their anticipated testimony should include . . .
any opinion testimony that a party expects to elicit from them at
trial.’” Id. ¶ 24 (quoting Utah R. Civ. P. 26 advisory committee
notes). Importantly, “[a]long with the expert designation, there
must be some disclosure of expected opinion and fact
testimony.” Id. (emphasis added). That did not happen here.
Darnell was never designated as an expert and her opinions
were not adequately disclosed. Adhering to the requirements of
the disclosure rule is not, under these circumstances,
inconsistent with rule 1.
¶17 As this court noted in RJW, disclosure requirements are
“not merely a matter of form.” Id. ¶ 25. The disclosure
requirements “serve the beneficial purpose of . . . giving the
opposing party the confidence to not engage in further
discovery. But this is only true if the potential for surprise is
reduced by at least minimum compliance with the rule 26
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disclosure requirements.” Id. These minimal disclosure
requirements are necessary so “parties can make better informed
choices about the discovery they want to undertake or, just as
important, what discovery they want to forgo.” Id. Here, Re/Max
relied on the Ghidottis’ representation that they had no intention
of using experts in not hiring any experts of their own. Such
strategic decisions are a key aspect of discovery and must be
carefully safeguarded by strictly following the disclosure
requirements.
¶18 Finally, the district court ruled that the Ghidottis did not
demonstrate that their failure to disclose Darnell as an expert
was harmless or that there was good cause for the omission. See
Utah R. Civ. P. 26(d)(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.”). The court ruled
that late disclosure of Darnell as an expert would be harmful
because the time set for trial was approaching and none of the
defendants had retained experts in reliance on the Ghidottis not
disclosing any expert witnesses. We conclude the court did not
abuse its discretion in making this determination. See Townhomes
at Pointe Meadows Owners Ass’n v. Pointe Meadows Townhomes,
LLC, 2014 UT App 52, ¶ 17, 329 P.3d 815 (holding that the district
court did not abuse its discretion in finding the failure to disclose
an expert was not harmless when “a substantial amount of
discovery would need to be revisited or performed . . . well after
the deadline for completing these steps had passed”), superseded
by rule as stated in Baumann v. Kroger Co., 2016 UT App 165, 381
P.3d 1135. This finding also supports strict enforcement of the
disclosure requirements because allowing parties to designate
witnesses at this stage in the litigation would not promote a just,
speedy, and inexpensive determination of an action as
envisioned by rule 1 of the Utah Rules of Civil Procedure.
¶19 We conclude that Darnell’s testimony about damages in
her deposition, the financial exhibits, and the statement of
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damages in the supplemental disclosures are insufficient to
support a conclusion that Darnell was properly disclosed as a
non-retained expert witness under the Utah Rules of Civil
Procedure.
CONCLUSION
¶20 The district court properly granted summary judgment in
favor of Re/Max when the Ghidottis failed to prove their
damages with the requisite degree of certainty by failing to
properly disclose Darnell as an expert witness. Affirmed.
20180045-CA 11 2019 UT App 67