Dale K. Barker Co., P.C. v. Sumrall

FILED
United States Court of Appeals
Tenth Circuit
September 17, 2013
UNITED STATES COURT OF APPEALS
Elisabeth A. Shumaker
TENTH CIRCUIT Clerk of Court
DALE K. BARKER CO., P.C.,
Plaintiff - Appellant,
v.
VALLEY PLAZA,
Defendant - Appellee, No. 12-4147
(D.C. No. 2:03-CV-00903-CW)
LARRY J. SUMRALL, individually (D. Utah)
and d/b/a North Valley Feed;
PATRICIA A. SUMRALL,
individually,
Defendant-Cross-Claimants -
Appellees,
v.
DALE K. BARKER, JR., an
individual,
Cross-Claim-Defendant -
Appellant.
ORDER AND JUDGMENT *
Before TYMKOVICH, HOLLOWAY, and GORSUCH, Circuit Judges.
*
This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
We can’t say exactly when the trouble started for Larry and Patricia
Sumrall, but it had to be by the time they hired Dale K. Barker, Jr. and his
accounting firm. The Sumralls needed professional help with past-due tax returns
and other amounts they owed the IRS, and they turned to Mr. Barker. At the end
of the day, though, the Sumralls found themselves having to pay the IRS over
$222,000 in taxes, penalties, and interest. And then they found themselves named
as defendants in a lawsuit brought by Mr. Barker (for simplicity’s sake we use his
name to refer to him and his company collectively, except where the distinction is
relevant). In a diversity breach of contract claim, Mr. Barker contended that the
Sumralls failed to pay their bills in full. By this time, however, the Sumralls
were convinced that Mr. Barker had contributed to their problems with the IRS.
So they replied with counterclaims of their own — for breach of contract,
negligence, and breach of fiduciary duty, among other things.
After a bench trial, the district court concluded that Mr. Barker’s services
had been deficient and cost the Sumralls dearly. The court held that Mr. Barker’s
bills were unjustified; that he was entitled to no fees beyond those he’d already
been paid; and that the Sumralls were entitled to compensation from Mr. Barker
for their counterclaims. Mr. Barker now appeals virtually every aspect of that
judgment. We have considered all of his arguments closely, but we find none
persuasive and discuss here only the most salient.
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I
Mr. Barker begins by arguing that the district court should have dismissed
as time-barred the Sumralls’ claims for breach of fiduciary duty and negligence
against him personally. As he points out, the counterclaims the Sumralls
originally filed named only his accounting firm as a defendant. Not until well
into the litigation — and well after the applicable statute of limitations had run —
did the Sumralls seek (and obtain) the district court’s leave to amend their
counterclaims to add Mr. Barker personally as a counterclaim defendant.
Before analyzing this argument, it’s important to clear up a question of
classification. For reasons we’ll likely never know, after they received
authorization from the district court to add Mr. Barker as a counterclaim
defendant, the Sumralls instead styled Mr. Barker in their pleadings as a cross-
claim defendant. While this surely was wrong — cross-claims are filed “by one
party against a coparty,” Fed. R. Civ. P. 13(g), and Mr. Barker most certainly was
not the Sumralls’ coparty — no one did anything about it. The Sumralls’
taxonomical mistake, however, does not compel us to repeat the error. We may
“treat the [Sumralls’] pleading as though it were correctly designated” and
“construe[] [it] so as to do justice.” Id. R. 8(c)(2), (e). In other words, we
proceed as if the amendment added Mr. Barker as a counterclaim defendant, as
instructed by the district court.
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With that much cleared up, we reach the question of the amended
counterclaim’s timeliness. The addition of Mr. Barker was, we think, timely —
despite its late filing — because it “related back” to the filing of the Sumralls’
original counterclaims. Under the federal rules governing civil procedure, an
amended pleading “relates back to the date of the original pleading when . . . the
amendment asserts a claim or defense that arose out of the conduct, transaction,
or occurrence set out — or attempted to be set out — in the original pleading.”
Id. R. 15(c)(1)(B). Practice under Rule 15 also usually involves an “inquir[y]
into whether the opposing party has been put on notice regarding the [amended]
claim.” 6A Charles Alan Wright et al., Federal Practice & Procedure § 1497 (3d
ed. 2010). In this case, both of these inquiries are easily satisfied, just as the
district court held. There’s little question the amended counterclaims against Mr.
Barker arise out of the same conduct, transaction, or occurrence as the original
counterclaims against his accounting firm: the amended counterclaims are
identical but for the addition of Mr. Barker as a defendant alongside his company.
Just as clearly, Mr. Barker had notice of the counterclaims when they were first
filed against his firm.
Neither does a different result obtain if Utah’s corresponding relation-back
rule applies, because Utah R. Civ. P. 15(c) and Fed. R. Civ. P. 15(c) are
substantially similar. See Tucker v. State Farm Mut. Auto. Ins. Co., 53 P.3d 947,
950 n.2 (Utah 2002) (federal rules and interpretations are persuasive where Utah
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rules are “substantially similar”). So while there may be “considerable
uncertainty whether a federal court sitting in diversity jurisdiction is free to apply
the relation-back principle embodied in Rule 15(c) instead of a conflicting state
rule on the subject,” it matters little because both rules ask the same questions
and lead to the same result. 6A Wright et al., supra, § 1503.
Mr. Barker argues that Utah law requires a different result. The case he
cites, however, isn’t on point. Sharon Steel Corp. v. Aetna Cas. & Sur. Co., 931
P.2d 127, 132-33 (Utah 1997), doesn’t address the question we face, but a much
trickier one: When does a defendant’s cross-claim against a co-defendant
concern the same subject matter as the plaintiff’s complaint? As we have already
seen, our case — properly understood — involves counterclaims, not cross-
claims, and the question we face thus concerns whether the Sumralls’ amended
counterclaim arises out of the same transaction or occurrence as their first. As
we’ve explained, it does.
II
Mr. Barker says the district court erred in denying him damages for his
breach of contract claim. After trial, the court held that the Sumralls had already
paid the full value of his services and owed Mr. Barker no more. Mr. Barker
argues this was error because he sent periodic statements to the Sumralls
reflecting sums due, which they signed. It seems Mr. Barker is seeking to rely
here on “account stated” principles under which the parties to a contractual
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relationship may form a new and separate binding agreement about the
correctness of the amount due. See Dementas v. Estate of Tallas, 764 P.2d 628,
634 (Utah Ct. App. 1988). But, as the district court observed, Mr. Barker faces a
difficulty in deploying this theory: the Sumralls never acknowledged any
agreement about the amount due and its correctness. The boilerplate they signed
had the Sumralls “acknowledge[] and accept[] . . . the terms of . . . [the] Service
Agreement[s]” and the like. Aplt. App. at 1914. But none of this constituted “an
agreement between the parties as to the amount due and the correctness of that
amount.” Dementas, 764 P.2d at 634 (emphasis added).
Alternatively, Mr. Barker contends that the district court erred in finding
the Sumralls had already paid the full value of his services because (among other
things) the district court relied on payments the Sumralls made outside the statute
of limitations. We see no evidence of this in the record, however. The district
court explicitly stated it was excluding payments the Sumralls made outside the
limitations period. See Aplt. App. at 142. And Mr. Barker points to nothing that
suggests the court didn’t do what it says it did.
In his reply brief, Mr. Barker offers still other reasons why, he thinks, the
district court’s estimation of the value of his services was flawed. The Sumralls
have asked us to strike these arguments on the ground that they have been raised
too late in the process. Though the Sumralls have a point, even considering Mr.
Barker’s late-blooming arguments they do not persuade us (as they must to
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warrant reversal) that the district court’s factual findings about the value of his
services were “more than possibly or even probably wrong but pellucidly so.”
See United States v. Ludwig, 641 F.3d 1243, 1247 (10th Cir. 2011).
III
Next, Mr. Barker challenges the district court’s calculation of damages on
the Sumralls’ negligence and breach of fiduciary duty claims. The district court
awarded $70,296.91, and Mr. Barker says this award was speculative. In fact,
however, the Sumralls ultimately paid the IRS $222,001.27 in taxes, interest, and
penalties. Relying on the Sumralls’ expert’s testimony, the district court found
that, but for Mr. Barker’s misconduct, the Sumralls could have settled the claim
with the IRS for $151,704.36, meaning they needlessly incurred $70,296.91.
Mr. Barker replies that there’s no proof that the Sumralls’ tax liability
could have been settled, and no proof showing the Sumralls incurred additional
interest and penalties because of him. But one of the Sumralls’ experts testified
that Mr. Barker owed the Sumralls a duty to complete their civil matter “promptly
after 1996,” and that a resolution at that time “should have been vigorously
pursued . . . and [the matter] settled fairly quickly.” Aplt. App. at 1445, 1448.
The Sumralls’ experts also provided at least two estimates they believed were
reasonable “starting point[s]” for use as a “frame of reference” in calculating the
cost to the Sumralls of not settling earlier. Id. at 1530-33, 1548, 2269. Although
Mr. Barker disputes the best method of estimating damages, there is no question
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that evidence exists in the record to support the positions the district court took.
It is settled, too, that a “precise” amount of damages need not be proven; a district
court may estimate damages “based upon approximations, . . . reasonable
assumptions[,] or projections.” Atkin Wright & Miles v. Mountain States Tel. &
Tel. Co., 709 P.2d 330, 336 (Utah 1985). In our view, that’s what happened here.
IV
Mr. Barker next pursues various complaints about the exclusion and
admission of expert testimony.
To begin, Mr. Barker says the district court shouldn’t have struck his expert
report and excluded him from testifying as an expert. But Mr. Barker’s report did
not disclose a single expert opinion, as required by Rule 26, and the district court
acted within its discretion to prohibit him from testifying as an expert as a result.
See Fed. R. Civ. P. 26(a)(2)(B)(i). Mr. Barker replies that he didn’t need to file
an expert report in the first place because he wasn’t an expert “retained or
specially employed to provide expert testimony.” Id. R. 26(a)(2)(B). But even
experts who aren’t required to file reports still need to disclose “a summary of the
facts and opinions to which [they are] expected to testify” — something Mr.
Barker failed to do. Id. R. 26(a)(2)(C)(ii).
Mr. Barker says the district court also erred in excluding his (other) expert,
Michael Kaplan. When Mr. Kaplan had produced only a “preliminary” report by
the expert filing deadline, Mr. Barker sought an extension of time. The district
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court denied the request and effectively excluded Mr. Kaplan from the case after
concluding that Mr. Barker had failed to show good cause for an extension of
time because he hadn’t identified when he had retained Mr. Kaplan, what (if any)
work Mr. Kaplan had done up to that point, or even what Mr. Kaplan’s opinions
would be. Extending the filing deadline, the court also found, would require
postponing the trial. On these essentially undisputed facts we fail to see any
abuse of discretion in the district court’s chosen course.
Turning from his experts to the Sumralls’, Mr. Barker says the district court
erred by allowing their experts, Keith Prescott and Val Oveson, to file a joint
report. We see no reason to think the practice always and inherently
impermissible, as Mr. Barker seems to suppose. Co-authored expert reports aren’t
exactly uncommon. See, e.g., Miller v. Pfizer, Inc., 356 F.3d 1326, 1332-34 (10th
Cir. 2004); 103 Investors I, L.P. v. Square D Co., 372 F.3d 1213, 1215 (10th Cir.
2004); Ruff v. Ensign-Bickford Indus., Inc., 168 F. Supp. 2d 1271, 1286-87 (D.
Utah 2001). Here, Mr. Prescott and Mr. Oveson reviewed the same materials and,
working together, came to the same opinions. Because they were both prepared to
testify to all the opinions in the report, we see no reason why it would be
inherently impermissible for them to file a joint report. Perhaps the practice
could prove problematic in other circumstances — if, for example, it isn’t clear
whether both experts adhere to all of the opinions in the report and they do not
delineate which opinions belong to which expert — but Mr. Barker identifies no
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reason to fear such confusion here. Cf. Dan v. United States, No. CV-01-25MCA,
2002 WL 34371519, at *2-3, *5 (D.N.M. Feb. 6, 2002) (rejecting joint report that
included collective and individual opinions but didn’t identify an individual
expert).
Alternatively, Mr. Barker says the district court abused its discretion in
permitting various aspects of Mr. Prescott’s and Mr. Oveson’s testimony under
Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), and due
process principles. After carefully reviewing these claims, we can report that
none warrants reversal. By way of example, Mr. Barker says the experts were
allowed to testify about “a number of [professional] standards purportedly
violated,” despite having listed only one such standard in their report. Aplt. Br.
at 28. But the testimony Mr. Barker points us to includes each expert’s statement
that they reviewed multiple accounting standards in preparing their report — not
that, in their expert opinion, Mr. Barker violated all those standards. See Aplt.
Reply Br. at 8 (citing Aplt. App. at 1398, 1549). And it is not our role to hunt
through the record for testimony Mr. Barker doesn’t himself identify. See Aquila,
Inc. v. C.W. Mining, 545 F.3d 1258, 1268 (10th Cir. 2008) (“[R]eading a record
should not be like a game of Where’s Waldo?”).
V
Mr. Barker contests still other pre- and post-trial rulings. He contends, for
example, that the district court abused its discretion when it prohibited him from
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using certain documents at trial. But Mr. Barker failed to produce these
documents in discovery, despite requests and orders, and he disgorged them only
just before trial and well after the close of discovery. The decision to exclude
these materials from Mr. Barker’s case-in-chief (and permit the Sumralls to use
them for rebuttal and cross-examination) was, in these circumstances, easily
within the district court’s discretion. See Fed. R. Civ. P. 37(b)(2)(A)(ii); Lee v.
Max Int’l, LLC, 638 F.3d 1318, 1320 (10th Cir. 2011).
Turning to the district court’s post-trial decision to award the Sumralls
attorney fees, Mr. Barker says the Sumralls didn’t properly categorize all fees as
attributable to compensable, possibly compensable, or non-compensable claims,
as parties generally must under Utah law. See Foote v. Clark, 962 P.2d 52, 55
(Utah 1998). But categorization like that isn’t required when the fees incurred in
connection with compensable claims and non-compensable claims are closely
related and inextricably tied together. See Brown v. David K. Richards & Co.,
978 P.2d 470, 475 (Utah Ct. App. 1999). That’s the situation here. As the
district court explained: “Because the factual overlap among the[] causes of
action is significant, . . . it would not be feasible to allocate attorneys fees among
them.” Other than merely disagreeing with the court’s factual finding on this
score, Mr. Barker doesn’t try to explain how it is clearly erroneous, as he must for
us to reverse. See Ludwig, 641 F.3d at 1247. Neither do his many line-item
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challenges to the fee award convince us that the district court abused its
discretion in any of these particulars.
The appellees’ motion to strike is denied. The judgment is affirmed.
ENTERED FOR THE COURT
Neil M. Gorsuch
Circuit Judge
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