Erickson v. Erickson

2022 UT App 27
THE UTAH COURT OF APPEALS
DEAN ERICKSON ,
Appellee,
v.
JANICE ERICKSON ,
Appellant.
Opinion
No. 20200193-CA
Filed March 3, 2022
Third District Court, Salt Lake Department
The Honorable Todd M. Shaughnessy
No. 174901105
Albert N. Pranno, Attorney for Appellant
Jordan M. Putnam, Attorney for Appellee
JUDGE DIANA H AGEN authored this Opinion, in which
JUDGES GREGORY K. O RME and M ICHELE M. C HRISTIANSEN
F ORSTER concurred.
HAGEN, Judge:
¶1 	During their thirty-four years of marriage, Dean and
Janice 	Erickson 	acquired 	substantial 	assets, 	including 	a
veterinary pharmaceutical business.1 But, in anticipation of their
divorce, Janice engaged in an intentional scheme to dissipate
those assets and devalue the marital estate. Solely because of
Janice’s misconduct, 	the district 	court appointed a 	receiver,
ordered a valuation of the couple’s business, and sanctioned
1. As is our practice when parties share the same last name, we
refer to each by their first names, intending no disrespect to
either party.

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Janice with the obligation to pay all Dean’s attorney fees and
costs.
¶2 	Janice now contends that the court erred when it failed to
deduct her personal goodwill when calculating the value of the
couple’s business, excluded her rebuttal expert on valuation, and
imposed sanctions against her that were greater than the injury
her misconduct caused Dean. We affirm on the first two issues
and remand on the third.
BACKGROUND2
¶3 	Dean filed for divorce from Janice in early 2017. The
couple’s marital estate consisted of substantial assets, including a
veterinary pharmaceutical business, Meds for Vets, LLC (Meds).
Meds “is a pharmaceutical compounding business with many
employees.” The company “does the majority of its business
online through its website” and sells “to customers throughout
the country.” At the time of the divorce, Meds employed three
pharmacists who held the necessary licenses to conduct the
business. Janice was one of those pharmacists and held “the
majority of the licenses.” Janice also functioned “as the sole
manager and chief executive officer of Meds.”
¶4 	Around the time Dean filed for divorce, Janice entered
into a series of fake business contracts with a friend for the
purpose of dissipating marital assets. Dean moved the court for
2. “On appeal from a bench trial, we view the evidence in a light
most favorable to the trial court’s findings, and therefore recite
the 	facts 	consistent 	with 	that 	standard, 	and 	we 	present
conflicting evidence to the extent necessary to clarify the issues
raised on appeal.” Nakkina v. Mahanthi, 2021 UT App 111, n.2,
496 P.3d 1173 (cleaned up).

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a temporary restraining order, asking the court to appoint a
receiver for Meds. The court denied the temporary restraining
order but appointed a receiver for Meds in an effort “to prevent
further irreparable injury/harm to the marital estate through
waste/dissipation of marital assets.” At the recommendation of
the receiver, Janice was allowed to continue her role in the
company due to her “familiarity with the industry, regulatory
environment and existing relationship[] with the customer base
. . . so as to not disrupt [Meds’] operations and employees.”
¶5 	In addition to the oversight of Meds, the receiver had
authority to conduct an “investigation concerning whether and
how the joint marital assets . . . were used or misused and how
to effectively separate the parties and their marital estate in all
business regards.” In its final report to the court, the receiver
concluded 	that 	Janice 	had 	dissipated 	known 	marital 	assets
totaling $2,247,274. Janice accomplished that feat, in part, by
unilaterally entering into a fraudulent “business relationship
which 	resulted 	in 	a 	substantial 	and 	ongoing 	dissipation 	of
marital assets.”
¶6 	The 	receiver 	was 	also 	charged 	with 	“perform[ing] 	a
valuation of the normalized operation of Meds.” The final report
included a business valuation placing Meds’ value at $1,560,000.
The valuation report explained the different factors considered,
including “whether or not the enterprise has goodwill or other
intangible value.” Ultimately, the valuation did not include any
amounts associated with goodwill.
¶7 	The court scheduled a trial on December 2, 2019, the
Monday after the Thanksgiving holiday, to determine the final
division of the marital estate. The pretrial disclosure deadline
was 	set 	for 	November 	4, 	but 	Janice 	moved 	to 	extend 	the
deadline. The court granted her motion, extending the deadline
to Tuesday, November 26 at 5:00 p.m.

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¶8 	Just before 5:00 p.m. on November 26, Janice filed a
disclosure that identified a valuation expert she intended to call
as a rebuttal witness. But she did not serve the disclosure on
Dean’s attorney until after the deadline had passed. In addition,
she did not provide the expert’s report to Dean’s attorney until
the afternoon of Wednesday, November 27—the day before
Thanksgiving and less than five days before trial.
¶9 	On the first day of trial, Janice asked to call her valuation
rebuttal expert as the first witness because it was the only day he
was available to testify. Dean objected to the admission of the
expert’s testimony because it was untimely disclosed, giving
Dean insufficient time to prepare. The court allowed Janice to
call the expert out of order and reserved its ruling on Dean’s
objection until after the expert testified. During his testimony,
the expert opined that the receiver’s valuation had overstated
Meds’ value as an ongoing business by improperly considering
Janice’s personal goodwill.
¶10 	The 	court 	ultimately 	excluded 	the 	expert’s 	testimony
based 	on 	Janice’s 	untimely 	disclosure. 	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 expert had testified that it
had taken him only a few weeks to prepare his report, but
that 	Janice 	had 	not 	hired 	him 	until 	shortly 	before 	trial.
Accordingly, 	the 	court 	found 	that 	Janice 	“had 	ample
opportunity to seek an independent valuation of the marital
businesses 	at 	her 	own 	expense” 	and 	noted 	that 	it 	had
“addressed this issue with [Janice] several times.” The court
further found that Dean had an “understandable inability to be
able to fully address [that information] in the limited time that
remained prior to trial.”

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¶11 	The court alternatively ruled that even if 	it had not
excluded 	Janice’s valuation 	rebuttal 	expert 	as untimely, 	his
testimony was unpersuasive. The court rejected the expert’s
opinion, based on Janice’s own representations, that Meds’ value
was dependent on Janice’s personal goodwill. The court noted
that Utah case law generally associates personal goodwill with
“sole proprietorships essentially run by one person” and that
such businesses are not “comparable to the situation here with
[Meds].” The court also found that it had “not been provided
any evidence from which [it could] draw a conclusion that
[Janice’s] presence at [Meds], given the point to which its grown,
is essential for that business to continue, given the number of
employees and the extent of the operations that it has.”
¶12 	After 	trial, 	the 	court 	entered 	a 	supplemental 	decree
regarding the division of marital assets. The court “affirm[ed]
and accept[ed] all recommendations, valuations, findings, and
conclusions 	contained” 	in 	the 	receiver’s 	reports, 	unless 	the
decree stated otherwise, “and incorporate[d] them by reference”
into the decree, including the receiver’s $1,560,000 valuation of
Meds.
¶13 	Due to Janice’s “intentional efforts to dissipate marital
assets,” the court also assigned the cost of the receivership and
Dean’s attorney fees to Janice as a sanction for contempt and
other misconduct. The court found that Janice’s behavior was
sanctionable because she “engaged in substantial dissipation of
marital assets” that was, “in some cases, in direct violation of
this Court’s orders.” Indeed, “the approximately $2.5 million
[she] dissipated . . . was one of the largest, if not the largest,
blatant dissipation of marital assets the Court ha[d] ever seen.”
¶14 	With respect to Dean’s legal fees, the court found that
Janice’s 	contemptuous 	conduct 	forced 	Dean 	to 	incur
“extraordinary 	legal 	costs 	in 	enforcing 	Court 	orders 	and
attempting to track down and preserve marital assets” and that a

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“substantial 	amount 	of 	additional 	work 	[was] 	required 	to
address the dissipation issues in this case” because of Janice. The
court found that it was therefore appropriate and equitable to
assign all Dean’s attorney fees to Janice because “[t]he lion’s
share of [Dean’s] legal costs were incurred in connection with
issues surrounding the dissipation of marital assets and the
nefarious conduct engaged in by [Janice] in this case.”
¶15 	More than three months after trial, Janice filed a motion
for new trial pursuant to rule 59 of the Utah Rules of Civil
Procedure, 	arguing 	that 	there 	was 	irregularity 	in 	the 	trial
proceedings, that there was insufficient evidence to support the
valuation of Meds, and that the court erred in awarding Dean
attorney fees. The court dismissed that motion as untimely
without reaching the merits.
ISSUES AND STANDARDS OF REVIEW
¶16 	Janice 	now 	appeals, 	raising 	three 	issues. 	First, 	she
contends the district court erred in the value it assigned to Meds
because it failed to exclude the value of her personal goodwill. A
district court is “entitled to a presumption of validity in its
assessment and evaluation of evidence, and we defer to the
district court’s findings of fact related to property valuation and
distribution unless they are clearly erroneous.” Marroquin v.
Marroquin, 2019 UT App 38, ¶ 10, 440 P.3d 757 (cleaned up).
¶17 	Second, she contends the court erred in excluding her
valuation rebuttal expert as a sanction for untimely disclosure.
“We review a district court’s decision [to impose] sanctions
under rule 26(d)(4) for an abuse of discretion.” Segota v. Young
180 Co., 2020 UT App 105, ¶ 10, 470 P.3d 479 (cleaned up). We
will find abuse of discretion where there exists an erroneous
conclusion of law or “where there is no evidentiary basis for the
trial court’s ruling.” Arreguin-Leon v. Hadco Constr. LLC, 2018 UT

Erickson v. Erickson
20200193-CA 	7 	2022 UT App 27
App 225, ¶ 15, 438 P.3d 25 (cleaned up), aff’d 2020 UT 59, 472
P.3d 927.
¶18 	Third, she contends that the court erred when it ordered
her to pay all Dean’s attorney fees and costs, rather than limiting
the award to the amounts caused by her sanctionable conduct.
“Both the decision to award attorney fees and the amount of
such fees are within the sound discretion of the trial court.” Taft
v. Taft, 2016 UT App 135, ¶ 86, 379 P.3d 890 (cleaned up).
ANALYSIS
I. The Valuation of Meds
¶19 	In her challenge to the district court’s valuation of Meds,
Janice argues that the court failed to consider the value of her
personal 	goodwill.3 “When 	valuing 	a 	business 	in 	marriage
3. 	Janice 	also 	argues 	that 	there 	was 	“[i]rregularity 	in 	the
proceedings” because the receiver “hire[d] a business valuator
who is . . . a partner with the receiver at the [same] firm.” But
this issue was not preserved. See Brookside Mobile Home Park, Ltd.
v. Peebles, 2002 UT 48, ¶ 14, 48 P.3d 968 (explaining that for an
issue to be preserved “(1) the issue must be raised in a timely
fashion; (2) the issue must be specifically raised; and (3) a party
must introduce supporting evidence or relevant legal authority”
(cleaned up)). Janice did not challenge this alleged irregularity
below. It appears that Janice may have attempted to raise the
issue in a motion pursuant to rule 59 of the Utah Rules of Civil
Procedure, see Utah R. Civ. P. 59(a)–(a)(1) (providing that “a new
trial may be granted to any party on any issue” because of
“irregularity in the proceedings of the court, jury or opposing
party, or any order of the court, or abuse of discretion by which
a party was prevented from having a fair trial”), but the district
(continued…)

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dissolution cases, district courts must consider whether goodwill
is institutional or personal to one spouse.” See Marroquin v.
Marroquin, 2019 UT App 38, ¶ 15, 440 P.3d 757. Goodwill is
personal when the business “is dependent for its existence upon
the individual who conducts the enterprise and would vanish
were the individual to die, retire or quit work.” Stevens v.
Stevens, 	754 	P.2d 	952, 	956 	(Utah 	Ct. 	App. 	1988). 	Personal
goodwill 	is 	based 	on 	an 	individual’s 	“reputation 	for
competency.” Marroquin, 2019 UT App 38, ¶ 15. And unlike
institutional 	goodwill, 	personal 	goodwill 	is 	not 	subject 	to
distribution in the marital estate. Id.
¶20 	Janice contends that the district court erred as a matter of
law by failing to consider whether the value of the business
depended on goodwill that was personal to her and thus not
divisible. We disagree. The district court did consider goodwill
in valuing the business, but specifically found that there was no
personal goodwill associated with Meds. Unless the court clearly
erred, we presume this assessment is valid and we defer to its
findings. See id. ¶ 10.
¶21 	In finding that there was no personal goodwill associated
with Meds, the court rejected Janice’s contention that Meds was
comparable to a sole proprietorship and that her “personal
goodwill, as opposed to entity or enterprise goodwill,” should
have 	been 	excluded 	in 	valuing 	the 	company. 	The 	court
concluded 	that 	Meds 	was 	unlike 	“sole 	proprietorships
(…continued)
court properly refused to consider that motion as untimely, and
the issue is therefore unpreserved for appeal, see Tschaggeny v.
Milbank Ins. Co., 2007 UT 37, ¶ 30, 163 P.3d 615 (holding that an
issue raised in an untimely posttrial motion was not preserved
for appellate review where district court “properly refused to
address the” untimely motion).

Erickson v. Erickson
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essentially run by one person”—where the value of the company
rests 	primarily 	on 	the 	work 	and 	professional 	reputation
developed by the proprietor—“given the number of [Meds]
employees and the extent of its operations.”
¶22 	On appeal, Janice claims that the court failed to consider
the personal goodwill engendered by her own “management
and licensure role” in Meds. Before the receiver’s appointment,
Janice “had acted as sole manager and chief executive officer of
the company,” but there was no evidence to suggest that placing
someone else in that role would diminish the value of the
company. Indeed, the court specifically found that it had not
been “provided any evidence from which [it could] draw the
conclusion that her presence at the business, given the point to
which it’s grown, is essential for that business to continue given
the number of employees and the extent of operations it has.”
Janice has not demonstrated that those findings were clearly
erroneous.
¶23 	As evidence of her personal goodwill, Janice cites the
receiver’s report that some Meds employees “attributed the
company’s declining revenue, in part, to [Janice] being distracted
by the divorce.” But the decline in Meds’ revenue during this
period 	does 	not 	suggest 	that 	the 	company’s 	value 	was
dependent 	on 	Janice 	being 	in 	a 	management 	role. 	To 	the
contrary, the court found that Janice’s continued involvement
was detrimental because she “continue[d] to take steps to harm
and devalue” Meds, even after the appointment of the receiver.
In other words, Meds’ declining revenue during that time was
caused not by Janice’s inattention to her management role, but
by her deliberate efforts to devalue the company.
¶24 	Janice also points to the fact that the company used her
licenses to operate in multiple states. The court found, however,
that Meds holds the necessary pharmacy licenses among three
pharmacists. And there was no evidence that Janice’s licenses

Erickson v. Erickson
20200193-CA 	10 	2022 UT App 27
could not be obtained by the other pharmacists already on staff
or that Meds could not hire a replacement pharmacist with those
licenses. Thus, the fact that some licenses were historically held
by Janice does not undermine the court’s finding that the value
of Meds as an ongoing business did not depend on Janice’s
involvement.
¶25 	In sum, the record shows that the court considered and
rejected 	Janice’s 	contention 	that 	her 	personal 	goodwill 	was
included in the valuation of the business, and Janice has not
shown that those findings were clearly erroneous. Therefore,
there is no basis on which to disturb the court’s valuation of
Meds.
II. Excluding Janice’s Rebuttal Expert
¶26 	Next, Janice challenges the court’s ruling excluding her
valuation rebuttal expert based on her untimely disclosure.
Expert disclosures are governed by rule 26 of the Utah Rules of
Civil Procedure. Under that rule, proper disclosure of an expert
witness requires the timely disclosure of “(i) the expert’s name
and qualifications, . . . (ii) a brief summary of the opinions to
which the witness is expected to testify, (iii) the facts, data, and
other information specific to the case that will be relied upon by
the witness in forming those opinions, and (iv) the compensation
to be paid for the witness’s study and testimony.” Utah R. Civ. P.
26(a)(4)(A). “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.” Id. R. 26(d)(4). “Thus, Utah law mandates that a
trial court exclude an expert witness disclosed after expiration of
the 	established 	deadline 	unless 	the 	district 	court, 	in 	its
discretion, determines that good cause excuses tardiness or that
the failure to disclose was harmless.” Solis v. Burningham Enters.
Inc., 2015 UT App 11, ¶ 21, 342 P.3d 812 (cleaned up); see also

Erickson v. Erickson
20200193-CA 	11 	2022 UT App 27
Arreguin-Leon v. Hadco Constr. LLC, 2018 UT App 225, ¶ 22, 438
P.3d 25 (“[I]f a party fails to disclose or supplement a discovery
response, the evidence or testimony may not be used.”), aff’d
2020 UT 59, 472 P.3d 927.
¶27 	Janice 	does 	not 	dispute 	that 	the 	disclosure 	of 	her
valuation expert and his report was untimely. The question is
whether 	Janice 	established 	an 	exception 	to 	the 	otherwise
mandatory 	sanction 	of 	exclusion 	under 	rule 	26(d)(4). 	We
conclude that the district court did not exceed its discretion in
rejecting Janice’s claim that her untimely expert disclosure was
either harmless or justified.
¶28 	First, the record amply supports the court’s conclusion
that the untimely expert disclosure was not harmless. The court
enlarged Janice’s time to serve her disclosures, extending her
deadline from November 4 to November 26 at 5:00 p.m.—a mere
six days before trial. On November 26, “shortly before 5:00 p.m.”
Janice filed her expert disclosure with the court, but she did not
serve that disclosure on Dean’s counsel until after the 5:00 p.m.
deadline. Moreover, she did not serve the expert report until the
following afternoon, the day before Thanksgiving. The timing
left only the holiday weekend for Dean’s counsel to review the
expert report and prepare to meet that testimony before the trial
began on Monday. On the first day of trial, Janice called her
rebuttal expert witness out of order, depriving Dean of any
additional time he might have had to prepare during the course
of the trial. The purpose of rule 26 is to eliminate unfair surprise
and provide the opposing party with a reasonable opportunity
to prepare for trial. Drew v. Lee, 2011 UT 15, ¶ 28, 250 P.3d 48.
Here, 	the 	late 	disclosure 	deprived 	Dean 	of 	a 	reasonable
opportunity to prepare to rebut the newly disclosed expert’s
testimony. Under these circumstances, the district court acted
well within its discretion in concluding that the late disclosure
was not harmless.

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¶29 	Second, 	the 	record 	also 	supports 	the 	court’s
determination that Janice had no good reason to delay disclosing
her expert and his report. The court found that it gave Janice
“months” to “call an expert to dispute the valuation that was
done by the court-appointed receiver,” yet she waited until “a
couple weeks” before trial to hire her valuation rebuttal expert.
Moreover, the court found that Janice’s excuse for not hiring an
expert—that she was waiting because she wanted the marital
estate to pay for the expert—“carrie[d] no water with [the
court]” because the court had made clear, at least since the
previous August, that Janice had to pay for her own rebuttal
valuation expert. Under these circumstances, the district court
did not exceed its discretion in finding that the delay was
unjustified.
¶30 	We conclude that the district court did not abuse its
discretion 	in 	finding 	that 	Janice’s 	untimely 	disclosure 	was
neither excused for good cause nor harmless to Dean. Therefore,
the 	district 	court 	correctly 	applied 	the 	automatic 	sanction
dictated by rule 26(d)(4) and excluded the expert’s testimony.
III. Sanction of Attorney Fees and Costs
¶31 	On appeal, Janice does not challenge the court’s finding
that she engaged in sanctionable conduct and acknowledges that
“the bulk of the court’s award of fees and allocation of costs
were within the court’s authority.” Instead, she argues that the
award was excessive because it included some attorney fees and
costs not attributable to her sanctionable conduct. Because we
cannot determine whether the attorney fees award exceeded the
costs that Dean incurred as a result of Janice’s sanctionable
conduct, we remand to the district court for further proceedings.
¶32 	“[W]hen a court imposes an award of fees or costs as a
sanction, its award must be limited to the amount actually
incurred by the other party” as a result of the sanctionable

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conduct. Goggin v. Goggin, 2013 UT 16, ¶ 36, 299 P.3d 1079. In
Goggin, 	the 	district 	court 	awarded 	the 	former 	wife 	all 	her
attorney fees and costs after finding that they were “largely due
to 	[her 	former 	husband’s] 	untoward 	and 	contemptuous
behavior.” See id. ¶ 38 (cleaned up). Our supreme court reasoned
that “this language implies that [the former wife] may have been
awarded at least some attorney fees and out-of-pocket costs that
were 	not 	caused 	by 	[the 	former 	husband’s] 	contemptuous
behavior.” Id. (cleaned up). The supreme court therefore held
that the district court had exceeded its discretion by awarding
costs 	and 	fees 	in 	excess 	of 	the 	amount 	attributed 	to 	the
sanctionable conduct. Id.
¶33 	Here, it is not clear whether the district court limited the
award to the fees and costs that Dean incurred as a result of
Janice’s sanctionable conduct. In assigning the entire cost of
Dean’s attorney fees and expenses to Janice, the court found that
Dean had incurred “extraordinary legal costs in enforcing Court
orders and attempting to track down and preserve marital
assets” and that a “substantial amount of additional work [had
been] required to address the dissipation issues in this case.” Yet
the court also found that Dean’s legal fees and costs “incurred in
connection with issues surrounding the dissipation of marital
assets and the nefarious conduct engaged in by [Janice]” merely
constituted the “lion’s share” of Dean’s legal fees. Like the
district court’s use of the term “largely” in Goggin, the use of the
term “lion’s share” here suggests that a portion of Dean’s fees
and costs were not the direct result of Janice’s sanctionable
conduct. To the extent that the attorney fees award included
such additional costs, it exceeded the district court’s discretion.
¶34 	Accordingly, 	we 	vacate 	the 	attorney 	fee 	award 	and
remand for further proceedings. On remand, the district court
should either make findings to support the determination that
all Dean’s legal expenses were caused by Janice’s sanctionable

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conduct or modify the award to exclude any amounts not caused
by that conduct.4
CONCLUSION
¶35 	Janice has not shown that the court failed to consider
goodwill in valuing the business or that it clearly erred in
finding that there was no personal goodwill associated with
Meds. Nor has she shown that the court exceeded its discretion
in determining that her untimely expert disclosure was not
harmless or justified. However, to the extent that the attorney
fees award exceeded the costs Janice’s sanctionable conduct
caused 	Dean 	to 	incur, 	the 	court 	exceeded 	its 	discretion 	in
granting 	that 	award. 	Therefore, 	we 	remand 	for 	further
proceedings on that issue consistent with this opinion.5
4. Dean argues that even if the district court awarded attorney
fees 	and 	costs 	not 	attributable 	to 	Janice’s 	contemptuous
behavior, that error was harmless because a mathematical error
resulted in Janice not paying the intended award. If the district
court determines that “a clerical mistake or a mistake arising
from oversight or omission” has occurred, the court may correct
the mistake on remand. See Utah R. Civ. P. 60(a).
5. “Although [Dean] requests attorney fees on appeal, because
the trial court awarded [him] attorney fees only as a sanction for
[Janice’s] conduct during litigation, we deny that request.” Liston
v. Liston, 2011 UT App 433, ¶ 27, n.6, 269 P.3d 169.