Court Opinion

ID: 4402039
Source: CourtListenerOpinion
Date Created: 2019-05-30 18:55:05.118249+00
Date Added: 2024-06-11T12:20:22.027582
License: Public Domain

This opinion is subject to revision before final
                      publication in the Pacific Reporter

                                 2019 UT 20

                                    IN THE

              SUPREME COURT OF THE STATE OF UTAH

                KEYSTONE INSURANCE AGENCY, LLC,
                            Appellant,
                                       v.
     INSIDE INSURANCE, LLC, SHUMWAY INSURANCE GROUP, INC.,
   JONATHAN SHUMWAY, SPENCER SHUMWAY, and CABE ATKINSON,
                            Appellees.

                               No. 20170677
                            Filed May 29, 2019

                            On Direct Appeal

                   Fourth District, Utah County
                The Honorable Christine S. Johnson
                          No. 150400767

                                 Attorneys:
               Aaron P. Dodd, Provo, for appellants
  Barry N. Johnson, Daniel K. Brough, Salt Lake City, for appellees

    JUSTICE HIMONAS authored the opinion of the Court in which
        CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE LEE,
            JUSTICE PEARCE, and JUSTICE PETERSEN joined.

   JUSTICE HIMONAS, opinion of the Court:
                           INTRODUCTION
    ¶1 Keystone Insurance Agency appeals the district court’s
decision to exclude all evidence of its alleged damages, pursuant to
Utah Rule of Civil Procedure 26(d)(4), in its suit against Inside
Insurance. Additionally, Keystone appeals the district court’s denial
of its motion for reconsideration. Lastly, Keystone appeals the
district court’s dismissal with prejudice of Inside’s counterclaim
seeking expulsion of Keystone as a member of Inside.
   ¶2 Because Keystone failed to provide Inside with a viable
computation of its claimed damages in compliance with Utah Rule of
                          KEYSTONE v. INSIDE
                         Opinion of the Court

Civil Procedure 26(a)(1)(C), we affirm the district court’s exclusion of
Keystone’s damages evidence under rule 26(d)(4). We also affirm the
district court’s denial of Keystone’s motion for reconsideration after
finding that the facts of this case are readily distinguishable from
those of Williams v. Anderson, 2017 UT App 91, 400 P.3d 1071. Lastly,
we hold that the district court did not abuse its discretion by
dismissing Inside’s expulsion counterclaim with prejudice pursuant
to Utah Rule of Civil Procedure 41(a)(2) and (c).
                          BACKGROUND
    ¶3 On May 23, 2012, Shumway Insurance Group, Inc. (SIG)
and Keystone entered into an operating partnership agreement. SIG
was owned and controlled by Scott Shumway and Keystone was
owned and controlled by Chad Johansson. Pursuant to the
agreement, SIG and Keystone became members of Inside, with SIG
owning seventy-five percent of Inside and Keystone owning twenty-
five percent. Additionally, the agreement provided that Keystone
would receive a 90/10 commission split on all new and renewal
business written by or brought over by Keystone’s principal,
Johansson. Keystone would also receive a fifty percent commission
from the initial fee for any satellite office brought on by Keystone.
Nearly three years later, a disagreement relating to commission
splits led to the termination of Johansson as an agent and sales
representative of Inside. Keystone, however, remained a member of
Inside despite the ousting of its principal from Inside. Following
Johansson’s departure, Keystone issued a demand letter to Inside,
requesting access to review and copy Inside’s organizational
documents, income tax returns, and financial records. Following
Inside’s refusal to meet Keystone’s demands to be treated as a
member of Inside, access Inside’s financial records, or be paid under
the operating agreement, Keystone filed its complaint in the district
court on May 27, 2015.
    ¶4 In the complaint, Keystone requested that the district court
declare Keystone a member of Inside and order SIG to buy out
Keystone’s membership interest in Inside at its fair market value.
Keystone also brought a number of other claims against Inside,
alleging breach of contract, gross negligence, and breach of fiduciary
duty. Keystone pled that it had sustained damages in an amount not
less than $300,000. On May 28, 2015, Keystone filed a motion for a
temporary restraining order and a preliminary injunction relating to
Inside’s refusal to make certain documents and materials available to
Johansson. The district court did not enter the injunction, but instead
ordered that Inside furnish Johansson access to his company laptop

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                        Opinion of the Court
or give him a copy of the hard drive so that he could obtain
information regarding his customer contacts. On June 19, 2015,
Inside provided Johansson a copy of the hard drive. Inside did not
furnish Keystone with its financial information.
    ¶5 On June 22, 2015, the district court issued a Notice of Event
Due Dates. It set February 29, 2016, as the deadline for completing
fact discovery and July 4, 2016, as the deadline for completing expert
discovery. Keystone served its initial disclosures on July 6, 2015.
Keystone did not set forth a damages computation in its initial
disclosures. 1 In response, Inside sent Keystone a letter on August 3,
2015, requesting that Keystone disclose a computation of its damages
pursuant to rule 26(a)(1)(C). 2 Following an amendment to Keystone’s
disclosures, which still did not include a computation of damages,
Inside again requested a computation of damages from Keystone on
September 22, 2015. On October 14, 2015, Keystone responded to
Inside’s request for a computation of damages by explaining that it
was working to determine the fair market value of its interest in
Inside as of the date of Johansson’s termination. Additionally,
Keystone said that it was “in the process of obtaining some expert
assistance” to assist in this determination. Keystone further
explained that it was unable to state what amounts it was owed
because Keystone did not have access to the information necessary to
calculate the commissions entitled to Johansson. Keystone stated that
once it received that information from Inside “either
voluntarily . . . or through discovery,” it would provide its damages
computation.
    ¶6 On January 27, 2016, the parties agreed to extend fact
discovery until March 31, 2016. Relevant to the third issue on appeal,
on December 4, 2015, Inside asserted several counterclaims and
third-party claims against Keystone and Johansson. Inside asserted
claims for tortious interference with contractual relations, requested
an injunction prohibiting Keystone from interfering with Inside’s
_____________________________________________________________
   1 Keystone included only the following paragraph related to

damages in its initial disclosures: “1. Defendant claims damages for
past and future pecuniary losses resulting from Defendants [sic]
unlawful actions. 2. Attorneys’ fees and costs which have been and
will be incurred in this matter. 3. Compensatory damages, which
have yet to be calculated.”
   2 Inside’s letter to Keystone states: “Keystone discloses no
computation, but simply three extremely general categories that
Keystone evidently believes constitute its damages.”

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                         KEYSTONE v. INSIDE
                        Opinion of the Court

business, and sought the expulsion of Keystone from Inside. On
March 2, 2016, Keystone served its first set of discovery requests,
formally requesting production of all of Inside’s financial records
and QuickBooks records. On March 3, 2016, Inside amended and
supplemented its initial disclosures to produce documents relevant
to its counterclaims and third-party claims. Among those documents
was a 197-page spreadsheet that tracked the commissions related to
Inside clients previously associated with Keystone and Johansson
from April 20, 2015, to the date of production. Inside further
produced a document summarizing the 197-page spreadsheet. This
summary document showed that, according to Inside’s records,
Keystone’s total commissions from its new and renewal business
between April 23, 2015, and February 19, 2016, was $74,796.14,
meaning that Keystone’s ninety percent commission split was
valued at $67,316.53.
    ¶7 The parties ultimately agreed to extend fact discovery to
May 26, 2016, and to extend expert disclosures to June 15, 2016.
Keystone served a final supplement to its initial disclosures on April
21, 2016, but that supplement still did not include a computation of
damages. Keystone did not furnish a computation of damages in any
disclosure or discovery response during fact discovery. 3 On June 15,
2016, the final day of expert disclosures, Keystone disclosed Jeremiah
Grant as an expert witness. Grant, using two different technical
models, valued Keystone’s twenty-five percent interest in Inside to
be between $133,228 and $330,718 or between $77,728 and $192,948,
respectively. Grant also estimated that Keystone’s unpaid ninety
percent commission split from May 2015 through March 2016 was
$67,177.25 and that Keystone was owed $3,561 for unpaid pre-
termination commissions and $34,908.95 for unpaid overrides.
    ¶8 On July 15, 2016, Inside, claiming that Keystone had failed
to disclose a computation of damages during discovery, filed a
motion in limine seeking exclusion of all of Keystone’s
damages-related evidence pursuant to rule 26(d)(4). On November
15, 2016, the district court granted Inside’s motion and excluded all
of Keystone’s damages-related evidence. The ruling also granted
Inside’s motion for partial summary judgment as to all of Keystone’s

_____________________________________________________________
    3 By April 22, 2016, Inside had responded to Keystone’s discovery

requests and disclosed all relevant documents and computer files. By
May 2, 2016, Keystone had received access to Inside’s QuickBooks
files.

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                          Opinion of the Court
claims with the exception of Keystone’s request for declaratory relief
to confirm its membership in Inside and its statutory rights to
records inspections. Keystone then filed a Rule 54(b) Motion to
Change Ruling and Order on December 13, 2016, which the district
court denied.
    ¶9 On July 21, 2017, Keystone filed a Motion to Reconsider
Ruling and Order Due to New Caselaw. In that motion Keystone
contended that the spreadsheet disclosed by Inside constituted
notice, to Inside, of the damages Keystone was seeking—at least as
to the unpaid commissions Keystone sought as damages. Keystone
argued that a recent court of appeals decision, Williams v. Anderson,
2017 UT App 91, 400 P.3d 1071, constituted new authority that
required the district court to reverse its earlier ruling excluding
Keystone’s damages evidence. The district court denied that motion
in an order entered August 15, 2017.
    ¶10 Previously on July 14, 2017, in light of the exclusion of
Keystone’s evidence of damages, Inside filed a motion to dismiss its
own counterclaims, including its claim to expel Keystone as a
member of Inside. The district court dismissed those counterclaims
with prejudice on August 15, 2017. The parties subsequently
stipulated to dismiss Keystone’s remaining claims. The district court
dismissed those claims on August 22, 2017. This appeal followed.
   ¶11 We exercise         jurisdiction   under   Utah    Code    section
78A-3-102(3)(j).
                       STANDARD OF REVIEW
    ¶12 We review a district court’s interpretation of our rules of
civil procedure, precedent, and common law for correctness. Holmes
v. Cannon, 2016 UT 42, ¶ 6, 387 P.3d 971; Ellis v. Estate of Ellis, 2007
UT 77, ¶ 6, 169 P.3d 441. We review a district court’s decision on
sanctions under rule 26(d)(4) and to reconsider an issue prior to any
appeal for an abuse of discretion. See, e.g., IHC Health Servs., Inc. v. D
& K Mgmt., Inc., 2008 UT 73, ¶ 27, 196 P.3d 588. We likewise review a
district court’s decision to dismiss a counterclaim under rule 41(a)(2)
and (c) with or without prejudice for an abuse of discretion. Nu-Med
USA, Inc. v 4Life Research, L.C., 2008 UT 50, ¶ 8, 190 P.3d 1264.
                               ANALYSIS
   ¶13 The      issues in this case are procedural. Rule 26(a)(1)(C) and
rule 26(d)(4)    set forth clearly defined directions for the discovery
process. It     is undisputed that Keystone never presented a
computation      of damages during the fact discovery period and
waited until    the close of expert discovery to present, for the first

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                          KEYSTONE v. INSIDE
                         Opinion of the Court

time, its damage estimates and methodologies. The district court
thoughtfully and faithfully applied the rules and found this failure
by Keystone not to be harmless to Inside or excused for good cause.
No new case law contradicts this ruling or alters the paradigm of
how district courts should apply the rules of civil procedure.
   ¶14 Finding no relief from or error in the district court’s
application of the rules, Keystone challenges Inside’s request for
dismissal of Inside’s counterclaim to expel Keystone. But throughout
the litigation Keystone consistently opposed Inside’s motion for
expulsion and suffered no prejudice in the dismissal of the
counterclaim. Keystone remains a member of Inside—the very
outcome it sought for the overwhelming majority of this case.
   ¶15 We find no error or abuse of discretion by the district court
on any of the issues on appeal and affirm on all counts.
   I. THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION
        BY GRANTING INSIDE’S MOTION TO EXCLUDE
   ¶16 A plaintiff must include a damages computation in its initial
disclosures. UTAH R. CIV. P. 26(a)(1)(C). Rule 26(a)(1) requires the
plaintiff to serve on the other parties “without waiting for a
discovery request . . . a computation of any damages claimed and a
copy of all discoverable documents or evidentiary material on which
such computation is based.” Rule 26 also provides further
elaboration on the duties it assigns. Rule 26(d)(3) states clearly that a
“party is not excused from making disclosures or responses because
the party has not completed investigating the case or because the
party challenges the sufficiency of another party's disclosures or
responses or because another party has not made disclosures or
responses.” UTAH R. CIV. P. 26(d)(3). Throughout the entirety of fact
discovery Keystone failed to disclose to Inside any computation of
the damages it was seeking, despite having a clear duty to do so. 4

_____________________________________________________________
   4 Although we attach no decisional authority to advisory

committee reports, the commentary on rule 26 is illustrative of the
defect in Keystone’s actions. The advisory committee notes on rule
26 state:
       “The penalty for failing to make timely disclosures is
       that the evidence may not be used in the party’s case-
       in-chief. To make the disclosure requirement
       meaningful, and to discourage sandbagging, parties
       must know that if they fail to disclose important
                                                           (continued . . .)

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                        Opinion of the Court
    ¶17 Regardless of what Keystone knew or did not know about
its damages, it was still incumbent on Keystone to disclose what it
had and, more crucially, its method and computation for damages.
As the district court noted, citing the court of appeals, “[e]ven if a
plaintiff cannot complete its computation of damages before future
events take place, ‘the fact of damages . . . and the method for
calculating the amount of damages’ must be apparent in initial
disclosures.” Sleepy Holdings LLC v. Mtn. W. Title, 2016 UT App 62,
¶ 14, 370 P.3d 963 (quoting Stevens-Henager Coll. v. Eagle Gate Coll.,
2011 UT App 23, ¶ 22, 248 P.3d 1025) (emphasis added) (alteration in
original). 5 Keystone’s failure to provide any such computation or
method for calculating damages is undisputed by the parties and
ultimately led the district court to consider and apply the sanction
provided by rule 26(d)(4).
    ¶18 Rule 26(d)(4) states that “[i]f 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.” UTAH R. CIV. P. 26(d)(4). Unfortunately,
Keystone did not disclose its damages or any computation until the
end of expert disclosures—nearly one year after filing its initial
disclosures. This left Inside to guess at what damages Keystone was
seeking and how they were to be calculated. As the district court
noted, “[f]or a defendant, disclosing one’s case-in-chief hinges to a
large extent upon the disclosures provided by the plaintiff . . . a
defendant must understand the claims brought by the plaintiff in
order to prepare a case-in-chief.” The need for the plaintiff to first
furnish its disclosures, computations, and theory of the case is by

       information that is helpful to their case, they will not
       be able to use that information at trial. The courts will
       be expected to enforce them unless the failure is
       harmless or the party shows good cause for the
       failure.”
UTAH R. CIV. P. 26 advisory committee’s note. Again, acknowledging
that we are not bound by these commentaries, the district court
wisely stated that “sanctions for failure to disclose are required
unless that failure is either harmless of justified by good cause.”
   5 Of course, Keystone could always supplement its damages
disclosure later on as more information was acquired through
discovery.

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                            KEYSTONE v. INSIDE
                           Opinion of the Court

design of the Rules. 6 Keystone’s neglect is only pardonable if found
to be “harmless” or for “good cause.” UTAH R. CIV. P. 26(d)(4). But
the district court did not abuse its discretion in finding that neither
exception applied to Keystone’s failure. 7
    ¶19 Keystone’s failure to offer its theory of damages or any
salient computation was found to be not harmless by the district
court, which stated that “there is clearly harm when a plaintiff
engages in this type of conduct and waits until the twilight hours of
fact discovery to engage in any meaningful discovery, indeed, in any
discovery at all, and then to provide the calculation in the expert
report for the first time.” Additionally, the district court exercised
care in fleshing out the harm done to Inside during oral argument on
Inside’s motion to exclude when it asked Inside, “was there truly
harm if you were able to get an expert report pulled together for
your own counterclaim that ended up being responsive to their
expert report, then was there really harm?” Inside responded with
several reasons that the court, in its discretion, found persuasive of
harm. These included an inability to adequately question Johansson,
uncorrected disparities between the parties’ valuations, and the
uncertainty as to which Tier status—with its accompanying
discovery rules and limitations—would even govern the case. 8
_____________________________________________________________
    6 The plaintiff’s burden is not simultaneous with the defendant’s

but comes first and early: “a party shall, without waiting for a discovery
request, serve on the other parties . . . a copy of all documents, data
compilations, electronically stored information, and tangible things
in the possession or control of the party that the party may offer in
its case-in-chief.” UTAH R. CIV. P. 26(a)(1) (emphasis added).
   7 Under a plain language reading of rule 26(d)(4), the burden to
demonstrate harmlessness or good cause is clearly on the party
seeking relief from disclosure requirements, in this case Keystone.
   8   This problem was summarized by counsel for Inside:
         And when you have a plaintiff that doesn't ever really
         engage early on with the fact or the number of
         discovery, which the comments to rule 26 require the
         plaintiff to do, that harms defendants as well. They're
         getting dragged through this by the plaintiff's request.
         And they're entitled to know what this case is about
         so that they can make decisions regarding how long
         it's going to last, how much discovery are we going to
         have to go through, and what are we going to have to
                                                            (continued . . .)

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                         Opinion of the Court
    ¶20 In short, any ability on the part of Inside to guess at
potential damages does not free Keystone from its obligation to
disclose a computation of damages. Keystone’s failure impaired
Inside’s ability to understand the nature and quantity of the
damages Keystone claimed, as well as the length, anticipated costs,
and scope of the litigation being pursued. The general categories
provided in Keystone’s initial disclosures were not enough for Inside
to properly build a defense against the damages claimed. The district
court was therefore well within its discretion to find that Keystone
failed to meet its burden to establish that its failure was harmless to
Inside. 9
    ¶21 Additionally, the district court did not abuse its discretion in
finding that Keystone also failed to meet its burden to establish good
cause for its neglect. Inside repeatedly notified Keystone of its failure
to provide a damages computation through written correspondence
and multiple requests during the discovery period. Keystone was
notified both on August 3, 2015, and again on September 22, 2015, of
the deficiency in its initial disclosures. Despite a later extension of
fact discovery until March 31, 2016, Keystone did not conduct any
discovery until March 2, 2016. Further discovery extensions allowed
Keystone time to amend its disclosures with the full cohort of
requested financial information made available to it by Inside. Still it
did not disclose a computation before the close of fact discovery on
May 26, 2016. As the appellees point out, Keystone had the
spreadsheet calculating Johansson’s commissions nearly three
months prior to the end of discovery, it had Johansson’s hard drive
for over seven months before the end of discovery, and it obtained
possession of Inside’s QuickBooks accounts just under a month

       do to get to the end here? Because it's not free for
       them either. And I think that's a pretty acute
       distinction.
   9 Additionally, if Keystone truly felt that it could not provide its
computation due to Inside’s failure to disclose material information,
a remedy existed in Utah Rule of Civil Procedure 37(a) which
provides that “[a] party or the person from whom discovery is
sought may request that the judge enter an order regarding any
discovery issue, including: (a)(1)(A) failure to disclose under
Rule 26 . . . (a)(1)(E) compelling discovery from a party who fails to
make full and complete discovery.” Keystone filed no such motion
and even such a filing of a statement of discovery issues “does not
suspend or toll the time to complete standard discovery.” Id. 37(a)(9).

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                          KEYSTONE v. INSIDE
                         Opinion of the Court

before the end of discovery. The district court was again within its
discretion to find no good cause to excuse Keystone’s failure to
provide a computation of damages.
      II. THE DISTRICT COURT DID NOT ERR BY DENYING
             KEYSTONE’S MOTION TO RECONSIDER
    ¶22 The district court did not err in denying Keystone’s Motion
to Reconsider Ruling and Order Due to New Caselaw. Keystone
argued in this motion that Inside’s own spreadsheet regarding
Johansson’s commissions gave Inside notice as to Keystone’s
damages at least with respect to commissions owed, and that a
recent court of appeals decision, Williams v. Anderson, 2017 UT App
91, 400 P.3d 1071, necessitated a reversal of the district court’s ruling.
In Williams the court of appeals found that a plaintiff’s disclosure of
damages—thirty percent of a company’s purchase price—was a
sufficient disclosure and satisfactory computation of damages. Id.
¶ 26. While we review the district court’s legal conclusions,
including its interpretation of Williams, de novo, it is clear that the
district court did not err by distinguishing this case from the facts in
Williams.
    ¶23 In Williams, the plaintiff’s disclosures stated that he was
seeking thirty percent of the purchase price of a recently acquired
company. Id. ¶ 3. The defendants in turn disclosed an asset purchase
agreement which listed the purchase price as $200,000. Id. ¶ 12. Both
parties agreed that theirs was a Tier 3 case. Id. ¶ 4. Because the
damages disclosure was an unambiguous and known value which
“described the precise components [the plaintiff] intended to factor
into his damages claim,” i.e., thirty percent of $200,000, the court of
appeals found the disclosure to be a sufficient computation of
damages. Id. ¶ 19. Here, however, the district court reasonably
concluded that Keystone’s claim for damages was more complex
than the one at issue in Williams, and that Keystone’s disclosure
lacked any computation by simple calculation. Keystone’s focus on
Inside’s possession of a spreadsheet detailing Johansson’s
commissions misunderstands the burden placed on the plaintiff by
rule 26. The spreadsheet contained information regarding
Johansson’s business dealings. But the sheet was a mere tool that
could aid in the calculation of damages—not a dispositive and clear
recitation of what damages Keystone was after. Without a clear
computation or theory of what Keystone was asking for, it was left to
the guesswork of Inside to determine how the spreadsheet might

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                         Opinion of the Court
inform Keystone’s theory of the case and what damages it was
seeking. 10 The district court did not err in determining this to be an
insufficient method of computing damages under the Williams
framework.
  III. THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION
          IN GRANTING INSIDE’S MOTION TO DISMISS
   ¶24 Finally, Keystone asserts that the district court abused its
discretion by granting Inside’s motion to dismiss its own
counterclaim for expulsion. This is curious, at the very least, seeing
as Keystone continuously took the position that it is, and should
remain, a member of Inside—which is the real-world consequence of
the dismissal of Inside’s counterclaim.
    ¶25 Utah Rule of Civil Procedure 41(a)(2) states that “an action
may be dismissed at the plaintiff’s request by court order only on
terms the court considers proper.” This rule applies equally to the
dismissal of a counterclaim. Id. 41(c). A Tenth Circuit opinion
formally adopted by our court of appeals, and that we also find
persuasive, defines what is meant by “proper” for purposes of
dismissal: “absent ‘legal prejudice’ to the defendant, the district
court normally should grant such a dismissal.” Ohlander v. Larson,
114 F.3d 1531, 1537 (10th Cir. 1997) (adopted in Rohan v. Boseman,
2002 UT App 109, ¶¶ 21--22, 46 P.3d 753). In Rohan, the court of
appeals articulated several factors meant to guide the court’s
determination as to whether a party would be legally prejudiced by
the dismissal of such an action. Id. ¶ 28. These include “the opposing
party’s effort and expense in preparing for trial; excessive delay and
lack of diligence on the part of the movant; insufficient explanation
of the need for a dismissal; and the present stage of the litigation.” Id.
¶ 21 (quoting Ohlander, 114 F.3d at 1537) (internal quotation marks
omitted). “The Ohlander factors are ‘by no means exclusive’ and
‘[a]ny other relevant factors should’ also be considered.” H&H
Network Servs., Inc. v. Unicity Int’l, Inc., 2014 UT App 73, ¶ 5, 323 P.3d
1025 (alteration in original) (citation omitted) (considering whether
claimants were attempting to dismiss a claim merely to bring
another suit or to circumvent earlier decisions). Keystone has failed
_____________________________________________________________
   10 This is different in kind from the straight forward equation

used in Williams. For example, Keystone’s own expert observed
discrepancies between Johansson’s hard drive and the QuickBooks
information furnished by Inside. Possessing all of a company’s
financial data does not obligate defendants to divine what matters to
a plaintiff.

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                          KEYSTONE v. INSIDE
                         Opinion of the Court

to persuade us that it was legally prejudiced by the dismissal of
Inside’s counterclaim.
     ¶26 Throughout the dispute, Keystone, as defendant to the
counterclaim, argued against expulsion. It loses no rights by the
dismissal of Inside’s claim, and the dismissal with prejudice bars
Inside from filing another claim to expel Keystone. 11 As the district
court noted, there is simply no “controversy that would even be
tried.” The district court, by dismissing Inside’s counterclaim, gave
Keystone the very remedy that it had originally sought. The Rohan
factors are largely inapplicable in this case. Because Keystone
continuously sought an order declaring it to be a member of Inside,
Keystone’s expenditure of time and money on this issue was
inevitable. Even if Inside had not sought expulsion through a
counterclaim, Keystone still would have been litigating the issue of
whether it was a member of Inside. And, any delay by Inside was
primarily the product of Keystone’s neglect of its own claims. The
district court was well within its discretion in not forcing Inside to
litigate a claim it no longer wished to pursue merely so that
Keystone could compensate for its failure to manage its own
claims. 12 After spending years seeking an order that it is a member of
Inside, Keystone now asks the court to: (1) expel it from Inside and
(2) liquidate its membership interest so that it can be paid for its
expulsion. The district court did not abuse its discretion by declining
to do so. Keystone remains a member of Inside and was not
prejudiced by the district court’s dismissal of Inside’s counterclaim.
                           CONCLUSION
   ¶27 Although we review the district court’s application of the
rules of civil procedure and conclusions of law de novo, we grant
significant deference to its findings of fact and review for abuse of
discretion the import that it assigns to the factual details relevant to
_____________________________________________________________
   11 As the appellees point out, Black’s Law Dictionary states that to

demonstrate legal prejudice, the “defendant may show that
dismissal will deprive the defendant of a substantive property right
or preclude the defendant from raising a defense that will be
unavailable or endangered in a second suit.” Legal prejudice, BLACK’S
LAW DICTIONARY (10th ed. 2014). Keystone has shown neither.
   12Because the district court excluded all of Keystone’s damages
evidence on its own claims, Keystone’s only remaining hope of
recovering any monetary damages was to be expelled from Inside
and to be paid the fair market value of its interest in Inside.

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                        Opinion of the Court
discovery. Keystone failed to meet the clearly articulated disclosure
requirements of rule 26 and the district court did not abuse its
discretion in finding that this failure was neither excused for good
cause nor harmless to the defendant Inside. So too did the district
court accurately differentiate this case’s complexity and Keystone’s
recalcitrance in providing a computation of its damages from the
more straightforward set of facts presented in Williams. Lastly,
Keystone has suffered no prejudice and has forfeited no rights by the
dismissal of Inside’s counterclaim for expulsion. Keystone remains a
member of Inside and the district court did not abuse its discretion
in dismissing Inside’s counterclaim. Affirmed.

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