Poulson P.C. v. Smith

2026 UT App 54

THE UTAH COURT OF APPEALS

COOK MARTIN POULSON PC,
Appellee,
v.
DANIEL G. SMITH,
Appellant.

Opinion
No. 20230024-CA
Filed April 9, 2026

Second District Court, Ogden Department
The Honorable Brandon J. Maynard
The Honorable Cristina P. Ortega
No. 220903740

Troy L. Booher, Beth E. Kennedy, and
Russell S. Walker, Attorneys for Appellant
Thomas J. Burns and Aaron R. Harris,
Attorneys for Appellee

JUDGE JOHN D. LUTHY authored this Opinion, in which
JUDGES GREGORY K. ORME and RYAN M. HARRIS concurred.

LUTHY, Judge:

¶1 This case centers on the relationship between Daniel G.
Smith, an accountant, and Cook Martin Poulson PC (CMP), the
accounting firm for which he once worked and of which he was
(and may still be) a shareholder. CMP sued Smith, and Smith filed
counterclaims against CMP. Smith also filed a third-party
complaint against CMP’s other shareholders (the Other
Shareholders). The case now comes to us on appeal for the third
time. See Cook Martin Poulson PC v. Smith, 2020 UT App 57, 464
P.3d 541 (Smith I); Cook Martin Poulson PC v. Smith, 2021 UT App
60, 493 P.3d 698 (Smith II).
Cook Martin Poulson PC v. Smith

¶2 In this appeal, Smith challenges the district court’s
dismissal of his third-party complaint against the Other
Shareholders as a discovery sanction under rule 37 of the Utah
Rules of Civil Procedure. He also challenges the district court’s
grant of summary judgment in favor of CMP on CMP’s claims
against Smith for breach of an employment agreement, breach of
a shareholders agreement, and related declaratory relief. As part
of its summary judgment ruling, the court determined that
because Smith failed to produce initial disclosures during the
discovery period, he was barred under rule 26 of the Utah Rules
of Civil Procedure from presenting any evidence. Smith
challenges that ruling as well.

¶3 We conclude that the district court exceeded its discretion
by dismissing Smith’s third-party complaint against the Other
Shareholders as a rule 37 discovery sanction, because the Other
Shareholders did not move for rule 37 sanctions. We determine
that the court again exceeded its discretion when it barred
Smith under rule 26 from presenting his own declarations and
a spreadsheet as evidence, because Smith’s failure to disclose
himself as a potential witness and the spreadsheet as potential
evidence was harmless. We further conclude that when Smith’s
declarations and the spreadsheet are considered, CMP was
not entitled to summary judgment on its claim against Smith
for breach of the employment agreement. And we likewise
conclude that CMP was not entitled to a declaration on summary
judgment that it had already purchased Smith’s shares. On the
other hand, we affirm the district court’s grant of summary
judgment in favor of CMP on its claim against Smith for breach of
the noncompete provision in Article 9.01 of the shareholders
agreement because Smith does not challenge that ruling on
appeal. Accordingly, we affirm in part, reverse in part, and
remand this matter for additional proceedings consistent with this
opinion.

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BACKGROUND 1

The Terms of Smith’s Employment Agreement with CMP

¶4 Smith began working as an accountant for CMP in 1995.
Each year through 2004, he signed an employment agreement.
The 2004 agreement (the Employment Agreement) stated that
Smith would be paid “as compensation for services the sum of
$5,200 per month ($62,400 on an annual basis).” The Employment
Agreement permitted Smith’s termination if he failed “to
faithfully [and] diligently perform the duties of his employment.”
It also included a noncompete provision prohibiting Smith—
during his employment with CMP and for a period of two years
following his termination—from providing “accounting services
to any client for whom [CMP had] performed accounting services
during the twelve-month period immediately preceding the
termination of [Smith’s] employment.” The Employment
Agreement further provided that in the event Smith breached the
noncompete provision, CMP would be entitled to liquidated
damages equal to 150% of what it had billed—during the twelve-
month period immediately preceding Smith’s termination—the
clients to whom Smith provided services in violation of the
noncompete provision.

The Terms of the CMP Shareholders Agreement

¶5 In 2005, Smith became one of five shareholders in CMP,
pursuant to a shareholders agreement (the Shareholders
Agreement). Article 2.05 of the Shareholders Agreement, titled
“Pro Rata Participation in Dividends,” provided,

1. Portions of this Background section are borrowed verbatim, or
essentially so, from the Background sections of Smith I, 2020 UT
App 57, 464 P.3d 541, and Smith II, 2021 UT App 60, 493 P.3d 698,
without further attribution.

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Dividends and other forms of distributions from
[CMP] (whether involving share, cash or other
property) shall be made pro-rata (when considered
on an annual basis) with respect to each share of
capital stock of [CMP] held by Shareholders so that
all Shareholders will participate in proportion to the
number of [CMP’s] shares then held by
Shareholders.

Article 2.06 of the Shareholders Agreement contained a clause
titled “Salary,” which stated, “So long as a Shareholder is actively
engaged in the business either in the form of an employee or
pursuant to another agreed to relationship, the Shareholder shall
be entitled to an annual salary from [CMP] in an amount as
determined by the majority of the Shareholders.” Article 9.01 of
the Shareholders Agreement included a noncompete clause in
which each shareholder agreed to not “provide accounting
services” for two years following termination of employment
with CMP to any client for whom CMP or the shareholder had
“performed accounting services during the five year period
immediately preceding” termination of the shareholder’s
employment.

¶6 Additionally, Article 5.01 of the Shareholders Agreement
granted CMP the “right to purchase” a shareholder’s shares if the
shareholder “engage[d] in one or more acts that in the unanimous
opinion of the remaining Shareholders, [were] discreditable.”
Article 7.03 of the Shareholders Agreement outlined how the
value of the shares would be calculated as well as the manner and
timeframe in which the buyout would be paid. As to the manner
and timeframe for accomplishing such a buyout, Article 7.03
provided that CMP’s purchase of a shareholder’s shares following
a discreditable-acts determination would take the form of 120
monthly installment payments beginning one year after CMP
exercised its right to purchase the shares. Finally, Article 7.03
provided that if a shareholder “perform[ed] any services for

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clients of [CMP], which client list [would] be determined as of the
date of the sale, during the five year period following [CMP]
giving the selling Shareholder notice of [its] intent” to buy back
the shareholder’s shares, then “the balance remaining on the note
payable” for the buyout would “be deemed paid in full” and CMP
would “have no further obligation” to that shareholder.

CMP Terminates Smith’s Employment, and the Other Shareholders
Determine that Smith Engaged in Discreditable Acts

¶7 In July 2014, CMP terminated Smith’s employment for
“failure to diligently perform the duties of [his] employment
despite repeated requests for improvement.” Subsequently, in
December 2014, the Other Shareholders unanimously determined
that Smith had engaged in “discreditable acts” under the
Shareholders Agreement. On December 12, 2014, they notified
Smith of this determination and informed him that they had
“elected to repurchase [his] shares” under the relevant provisions
of the Shareholders Agreement. They also informed Smith that
they based their discreditable-acts determination on, among other
things, the fact that “[f]ollowing his termination as an employee
of CMP, [Smith had] engaged with CMP clients, in violation of the
non-compete, non-solicitation provisions of the Shareholders
Agreement.”

The Lawsuit and the TRO and Preliminary Injunction

¶8 On December 15, 2014, CMP filed a lawsuit against Smith,
alleging causes of action for (1) declaratory relief related to the
parties’ rights and obligations under the Employment Agreement
and the Shareholders Agreement, including a declaration that
“CMP is entitled to exercise its option to purchase Smith’s shares
in CMP under [Article 7.03] of the Shareholders[] Agreement”;
(2) breach of the Employment Agreement; (3) breach of the
Shareholders Agreement; (4) breach of the implied covenant of
good faith and fair dealing; (5) breaches of fiduciary duty; and
(6) injunctive relief in the form of a temporary restraining order

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(TRO) and injunction prohibiting Smith from providing
accounting services to CMP clients and from influencing any
CMP clients to terminate their relationship with CMP in violation
of the relevant agreements.

¶9 Smith filed an answer, along with counterclaims against
CMP and a third-party complaint against the Other Shareholders.
Smith based his counterclaims and third-party complaint on
allegations that CMP and the Other Shareholders had breached
the Employment Agreement and the Shareholders Agreement by
improperly reducing Smith’s salary and distributions and forcing
him out of the company. He further asserted that CMP and the
Other Shareholders had unjustly deprived him of his shares in
CMP. Smith opposed CMP’s claims by contending that CMP had
been the first to breach both the Employment Agreement and the
Shareholders Agreement, thereby excusing any later breaches by
him. Smith did not assert as an affirmative defense to CMP’s claim
for breach of the Employment Agreement that the Employment
Agreement had been abandoned or superseded.

¶10 In response to CMP’s request for injunctive relief, the
district court issued a TRO and preliminary injunction, which
enjoined Smith

from directly or indirectly, for himself or any third
party, soliciting or having any contact with any
current client of CMP, or soliciting any person, firm,
or corporation who was a customer of CMP within
the 12 month period immediately preceding the
termination of Smith’s employment, with regard to
accounting or other services of the type CMP
provides.

The Discovery Dispute

¶11 The case proceeded to discovery. CMP served Smith with
its initial disclosures and an initial set of written discovery

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requests. Smith provided no initial disclosures and made no
written discovery requests. The Other Shareholders likewise
appear to have provided no initial disclosures and to have made
no written discovery requests.

¶12 After Smith produced responses to CMP’s discovery
requests, CMP filed a statement of discovery issues alleging that
Smith’s responses “were incomplete and evasive.” The district
court issued an order giving Smith seven days to “respond[] in
full to the information requested by” CMP and to “produce all
documents . . . responsive to the Requests for Production
propounded by” CMP. Smith failed to meet the court-ordered
deadline.

¶13 Three days after the deadline, Smith’s counsel contacted
CMP’s counsel and offered to allow CMP’s counsel to view the
requested documents at Smith’s counsel’s office on Smith’s
computer. CMP’s counsel noted that the court’s deadline had
passed and informed Smith’s counsel that CMP expected the
documents to be provided as ordered. Smith’s counsel continued
to insist, however, that the documents should be inspected on
Smith’s computer “as they are kept in the usual course of
business.” CMP’s counsel maintained that the documents should
be “produced in hard copy or electronic format,” and CMP’s
counsel requested that Smith’s counsel arrange for CMP to
“image the hard drive” of Smith’s computer. Smith’s counsel
refused this request.

Smith Is Sanctioned for Violating the Court’s Discovery Order and
Allegedly Violating the TRO and Preliminary Injunction

¶14 CMP filed a motion for an order to show cause, asking the
court to sanction Smith and suggesting that those sanctions
include “striking Smith’s pleadings from the record and entering
default in favor of CMP.” In the meantime, CMP also received
information indicating that Smith had “continued to provide
accounting services for several clients of CMP,” in violation of the

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TRO and the preliminary injunction. Thus, CMP filed another
motion for an order to show cause, this one requesting that Smith
be held in contempt for his alleged violation of these court orders.

¶15 In response, Smith admitted that he had provided
accounting services to over 400 of CMP’s former clients, but he
insisted that he had not solicited any current CMP client, that he
had served only “clients who approached him,” and that he had
not yet invoiced them. With respect to the production of
documents, Smith argued that he could not be held in contempt
because he had “repeatedly offered to provide CMP’s counsel
access to [Smith’s] computer” but CMP’s counsel had “refused to
meet to inspect the information on Smith’s computer.”

¶16 The court was unimpressed with Smith’s excuses. It found
that Smith had “blatantly ignored the [c]ourt” and violated both
the preliminary injunction and the discovery order. Based on
these findings, the court held Smith in contempt and imposed
sanctions. Specifically, it ordered Smith’s counterclaims stricken
and entered CMP’s proposed findings of fact. Those findings
included, among other things, a determination that Smith had
violated the Shareholders Agreement by engaging in the
discreditable acts alleged by CMP, that CMP had followed the
appropriate protocol outlined in the Employment Agreement in
terminating Smith’s employment, that Smith had violated the
Employment Agreement and the Shareholders Agreement by
providing accounting services to CMP clients after his
termination, and that Smith’s conduct had relieved CMP of any
obligation to pay him for his shares. The court then entered final
judgment in favor of CMP on its claims against Smith.

¶17 Relying on the findings the district court had entered as a
discovery sanction, the Other Shareholders then moved for
summary judgment on Smith’s claims against them. The court
granted their motion, determining that its findings that Smith
breached the Employment Agreement and the Shareholders

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Agreement precluded Smith’s claims against the Other
Shareholders.

The First Appeal

¶18 Smith appealed to this court, asserting (1) “that the district
court erred by finding him in contempt for violating the
preliminary injunction and for failing to comply with the court’s
discovery order,” (2) “that the sanctions imposed for his
violations were unduly harsh,” and (3) “that the district court’s
default findings were insufficient to support the summary
judgments against Smith on CMP’s claims and Smith’s third-
party complaint.” Smith I, 2020 UT App 57, ¶¶ 16–18, 464 P.3d 541.

¶19 Regarding Smith’s alleged violation of the preliminary
injunction, we determined that “the plain language of the
preliminary injunction order did not prohibit Smith from working
for former CMP clients, so long as he did not solicit them”; that
while Smith admitted “he performed accounting-related services
for former CMP clients,” he “consistently maintained that the
clients approached him independently and that he ‘provided
accounting services for certain former CMP clients . . . who
approached him to do the work’”; that the “district court did not
make a finding that Smith worked for current CMP clients or that
he solicited former CMP clients”; and, therefore, that “the district
court plainly erred[2] when it determined that Smith’s admitted
actions violated the terms of the preliminary injunction.” Id. ¶ 27.
We therefore concluded that the district court “exceeded its

2. We applied plain error review in Smith I “without opining on
the propriety of doing so” because CMP had “not challenged the
applicability of civil plain error review.” 2020 UT App 57, ¶ 22 n.3.
We have since held that “unless expressly authorized by rule,
[plain error review] does not properly extend to ordinary civil
appeals.” Kelly v. Timber Lakes Prop. Owners Ass’n, 2022 UT App
23, ¶ 41, 507 P.3d 357 (cleaned up).

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discretion in holding Smith in contempt for violating the
preliminary injunction based solely on a finding that he provided
accounting services to former clients.” Id. ¶ 36.

¶20 On the other hand, we determined that the court acted well
within its discretion when it held Smith in contempt for violating
the discovery order. See id. ¶¶ 28–35. However, because there was
“no way for [us] to know whether the district court would have
employed the same sanction[s] based on the discovery violations
alone” and because it was “possible that the court would have
entered other sanctions in response to the discovery violation
alone,” we vacated the sanctions. Id. ¶ 36. Additionally, because
the district court’s entry of “summary judgment was based on the
default findings that were imposed as a sanction,” we
“necessarily also reverse[d] the court’s summary judgment
rulings.” Id. ¶ 37. We then remanded for further proceedings
consistent with our opinion in that appeal. See id. ¶¶ 37, 44.

¶21 In the meantime—while the first appeal was pending—
CMP had taken steps to enforce its judgment, and Smith had
moved for a stay of execution. In his motion for a stay, Smith
asserted that he owned a “current 20% shareholder interest in
CMP.” CMP responded, claiming, “[L]ong ago CMP repurchased
[Smith’s shares] from him. He has no shares . . . .” Ultimately,
Smith was unable to obtain a stay because he could not post a
bond or other security. 3

3. After denying Smith’s motion for a stay, the district court
ordered Smith not to dispose of his non-exempt property, and it
issued a writ of execution. When the sheriff attempted to execute
on Smith’s non-exempt property, Smith refused to turn some of it
over and claimed he no longer had access to some of it. The district
court issued two orders holding Smith in contempt for disposing
of portions of his property, and Smith appealed from those
(continued…)

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The Proceedings on Remand

¶22 On remand from the first appeal, CMP asked the district
court to “reinstate all of the sanctions that it [had] previously
entered against” Smith. 4 In response, the court found that “based
on Smith’s violation of the [c]ourt’s discovery order, . . . it [was]
appropriate to reaffirm the striking of Smith’s counterclaim
[against CMP] and [his] third party complaint” against the Other
Shareholders as a discovery sanction under rule 37 of the Utah
Rules of Civil Procedure. Apparently because the court had not
actually stricken Smith’s third-party complaint previously as a
sanction but, rather, dismissed it on summary judgment based on
CMP’s proposed findings of fact that it had entered as a sanction,
the court clarified as follows:

[T]he [c]ourt finds it appropriate to note that Smith
did not separate, or otherwise differentiate between,
his counterclaims and third party complaint in his
Amended Answer to Complaint, Counterclaim and Third
Party Complaint. Thus, to the extent the [c]ourt
previously “order[ed] that [Smith’s] Counterclaim
be stricken from the record,” the [c]ourt finds it
appropriate to clarify that the striking of Smith[’s]
“Counterclaim” also includes the striking of his
third party complaint.

¶23 CMP and Smith also filed cross-motions for summary
judgment on CMP’s causes of action for (1) declaratory relief
related to the parties’ rights and obligations under the

orders—his second appeal in this matter. In the second appeal, we
reversed those contempt orders. See Smith II, 2021 UT App 60,
¶ 22. The issues raised in the second appeal are not relevant here.

4. By the time the case returned to the district court on remand, a
new judge had been assigned to the matter.

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Employment Agreement and the Shareholders Agreement,
(2) Smith’s breach of the Employment Agreement, and (3) Smith’s
breach of the Shareholders Agreement.

¶24 In support of its motion and in opposition to Smith’s, CMP
set forth the following—in addition to relevant terms of the
Employment Agreement and the Shareholders Agreement—as
undisputed facts and supported those facts with citations to
material in the record:

• After Smith signed the Employment Agreement and until
his termination, “CMP paid a salary to Smith every month”
and the salary was “more than the Employment
Agreement required.”

• CMP terminated Smith’s employment and notified him of
that termination in July 2014.

• “After CMP terminated [Smith’s] employment (and
through July 31, 2016), [Smith] continued to perform
accounting related and tax services for CMP clients who
had been CMP clients during” the twelve-month period
immediately prior to Smith’s termination.

• In December 2014, after Smith’s employment was
terminated, the Other Shareholders “voted and
unanimously determined that [Smith’s] actions were
discreditable acts under the terms of the Shareholder[s]
Agreement.” At the same time, CMP “exercised its option
to purchase [Smith’s] shares pursuant to [Article] 7.03 of
the Shareholders[] Agreement.”

• “On December 12, 2014, CMP notified Smith in writing of
the [Other Shareholders’] decision that he had engaged in
discreditable acts and also [of] the decision for CMP to
acquire his shares pursuant to the terms of the
Shareholder[s] Agreement.”

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• Smith “admitted in documents filed with the [c]ourt and in
testimony given during the [p]reliminary [i]njunction
hearing that he provided accounting related and tax
services . . . after CMP terminated him” for people who had
been CMP clients during the twelve months prior to his
termination.

• “Smith provided CMP with a list of the clients for whom
he admitted performing accounting related and tax
services after his termination,” “approximately 80% of
whom had been CMP clients [during] . . . the one year
period prior to [Smith’s] termination as an employee of
CMP.” 5

• CMP “calculated the total billings that it submitted to these
clients during the twelve-month period immediately
preceding [Smith’s] termination,” and “that amount [was]
$298,903.”

Smith disputed only the first of the foregoing factual assertions
with citation to evidence in the record. See infra ¶ 26.

¶25 CMP argued that under rule 26 of the Utah Rules of Civil
Procedure, Smith should be “barred from presenting any
evidence” because he “did not serve initial disclosures at any
point during the fact discovery period” and his “failure to disclose
evidence [as required] under [r]ule 26 [was] not harmless.” CMP
then contended that based on the facts it had set forth—as
outlined above—“[s]ummary judgment [was] appropriate” on its
claims against Smith for breach of the Employment Agreement,
breach of the Shareholders Agreement, and related declaratory
relief. CMP further asserted that under the Employment
Agreement it was entitled to liquidated damages of $448,354

5. Smith’s list included over 500 names, roughly 350 of whom
CMP identified as having been its clients during the year
preceding Smith’s termination.

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“(which is $298,903 multiplied by 150%)” as a matter of law. CMP
averred that the liquidated damages it was due under the
Employment Agreement’s noncompete provision were greater
than the actual damages it was due under the noncompete
provision in the Shareholders Agreement.

¶26 In support of his cross-motion and in opposition to CMP’s,
Smith submitted declarations from himself, including one
wherein he averred that the amount CMP paid him for salary after
July 2005 “was never equal to or greater than” the compensation
set forth in the Employment Agreement and, specifically, that in
2013 he received a salary of $48,000, rather than the $62,400 he was
guaranteed under the Employment Agreement. Smith further
averred, in the same declaration, that CMP did not pay
distributions to shareholders on a pro rata basis in 2013. In
support of these averments, Smith attached a document he
described as “a spreadsheet presented by [the] . . . president of
CMP . . . to the shareholders of CMP in connection with a meeting
of shareholders in February of 2014” (the Spreadsheet). The
Spreadsheet indicated that in 2013, the shareholders each received
equal “CMPC LLC INCOME” and “CMP INC DIVIDENDS,”
totaling $152,800, and equal payments for “SALARY-
SHAREHOLDER” of $48,000 and for “SALARY-WIFE” of $9,600.
The Spreadsheet also indicated, however, that in 2013 one
shareholder received $24,001 more for “HEALTH INSURANCE
AND CONTRACT” than the other shareholders.

¶27 Smith argued that he should not be barred under rule 26
from relying on his declarations and the Spreadsheet because the
fact that he “would be called as a witness [could not have]
surprise[d] CMP” and because “[a]ny of the documents put
forward by [Smith were] either duplicative of CMP’s exhibits . . .
or documents that [were] in CMP’s possession and control.”
Smith then asserted that the “Employment Agreement was no
longer enforceable due to abandonment or supersession”; that
even if the Employment Agreement survived, CMP breached it

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first by “not paying [Smith] the compensation owed him under
the Employment Agreement”; that under the Shareholders
Agreement and Utah law, shareholder “distributions” include
shareholder “salaries” and CMP breached the Shareholders
Agreement first because, when shareholder “salaries” are
included as part of “distributions,” CMP did not pay Smith
distributions in 2013 in proportion to the shares he owned; and
that Utah’s Professional Corporation Act prohibited CMP’s
purchase of his shares.

¶28 Essentially contemporaneously with his cross-motion for
summary judgment, Smith separately moved to dismiss CMP’s
claim for a declaratory judgment that CMP was “entitled to
exercise its option to purchase Smith’s shares in CMP.” Smith
stated that “[t]he point of CMP’s first claim [was] to have the
[c]ourt declare CMP the owner of [Smith’s] shares,” and he again
argued that such a purchase was prohibited by Utah’s
Professional Corporation Act. The district court denied Smith’s
motion to dismiss.

¶29 On August 26, 2021, the district court also denied Smith’s
summary judgment motion and granted CMP’s. In doing so, it
stated that “[r]ule 26 applies to” Smith and that Smith’s “failure
to properly disclose evidence during fact discovery bar[red] him
from relying upon undisclosed evidence to oppose summary
judgment.” The court also stated that Smith “was required to raise
both [the abandonment and supersession] affirmative defenses in
his response to CMP’s Complaint in this matter, but he did not.”
Thus, the court concluded that Smith had waived those
affirmative defenses. The court then made the following
additional rulings based on the facts that were supported by
CMP’s evidence alone:

• Smith signed the Employment Agreement, it “is a valid
and binding contract,” and the parties never terminated it.

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• “When [Smith] signed the [Shareholders Agreement], he
entered into a second valid and binding contract between
himself and CMP” and “remained subject to the terms of
the Employment Agreement.”

• Smith breached the noncompete provisions of both the
Employment Agreement and the Shareholders Agreement.

• Smith “presented no evidence that CMP breached the
Employment Agreement, and CMP . . . presented
undisputed evidence that it complied with the
Employment Agreement’s obligations (including the
payment of salary).”

• Smith “presented no evidence that CMP breached the
[Shareholders] Agreement, and CMP . . . presented
undisputed evidence that it complied with the
[Shareholders] Agreement’s obligations (including the
payment of distributions).”

• “Based on CMP’s assertion at oral argument, the monetary
damages caused by [Smith’s] violation of the
Shareholder[s] Agreement’s covenant not to compete do
not exceed the amount that CMP calculated based on the
methodology within . . . the Employment Agreement.”

• CMP “presented sufficient evidence to calculate the
damages as contemplated in . . . the Employment
Agreement,” and those damages “total[ed] $448,354.”

• “CMP followed the Shareholder[s] Agreement’s
provisions for determining that [Smith] had engaged in
discreditable acts, for exercising its option to purchase
[Smith’s] shares, . . . and for determining that [Smith], after
he continued to perform accounting or tax services for
CMP clients, was paid in full for his purchased shares.”

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The court awarded CMP $448,354 in damages and declared that
CMP had “properly repurchased [Smith’s] shares” under the
Shareholders Agreement.

¶30 Smith filed a motion to amend the court’s summary
judgment ruling or grant a new trial. In that motion, he argued
again (among other things) that the court should not have ruled
that CMP properly repurchased Smith’s shares because (1) “that
is not the relief CMP requested in this case”; (2) that relief is not
proper under Utah law; and (3) Article 7.03 of the Shareholders
Agreement “provide[d] the procedure for how CMP [would]
repurchase the shares, including detailed instructions for how to
calculate the share price,” and “CMP ha[d] not yet followed those
required steps.” The court denied Smith’s motion, responding as
follows to Smith’s foregoing arguments:

The [c]ourt finds that the relief it granted to [CMP]
regarding the [buyback] provisions was
appropriate: [Smith] committed discreditable acts
pursuant to Article 7.03 of the Shareholder[s]
Agreement, which triggered CMP’s right to
purchase. The purchase was deemed complete due
to [Smith’s] ongoing refusal to comply with the
covenant not to compete.

¶31 CMP filed a motion for voluntary dismissal of its fourth,
fifth, and sixth causes of action against Smith. The court granted
that motion and declared that “[a]ll claims originally asserted in
[this matter had been] fully and finally litigated.” Smith then
appealed.

ISSUES AND STANDARDS OF REVIEW

¶32 On appeal, Smith first contends that the “district court
lacked discretion to strike [his] third-party complaint as a
discovery sanction” under rule 37 of the Utah Rules of Civil

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Procedure “because the discovery dispute—and all related
motions and orders—concerned only CMP, not the [Other
Shareholders].” “As a general rule, district courts are granted a
great deal of deference in selecting discovery sanctions, and [an
appellate court will] overturn a sanction only in cases evidencing
a clear abuse of discretion.” Kilpatrick v. Bullough Abatement, Inc.,
2008 UT 82, ¶ 23, 199 P.3d 957. “An abuse of discretion may be
demonstrated by showing that the district court relied on an
erroneous conclusion of law . . . .” Id. (cleaned up).

¶33 Smith next asserts that the district court abused its
discretion when—in connection with its summary judgment
ruling—it excluded his declarations and the Spreadsheet as a
sanction under rule 26 of the Utah Rules of Civil Procedure.
Specifically, he asserts that “rule 26 does not require a party to
disclose himself as a witness” and that, “even if it did, [his] failure
to disclose himself was harmless.” He further contends that when
he filed his summary judgment motion, the Spreadsheet “was
already in the record” and should have therefore still been
considered. “Interpretations of the Utah Rules of Civil Procedure
are questions of law reviewed for correctness.” RJW Media Inc. v.
Heath, 2017 UT App 34, ¶ 18, 392 P.3d 956 (cleaned up). On the
other hand, when reviewing a district court’s determination
under rule 26 as to whether a party’s failure to make initial
disclosures was harmless, we apply an abuse of discretion
standard. See Cougar Canyon Loan LLC v. Walker, 2020 UT App 176,
¶¶ 14, 33, 482 P.3d 227.

¶34 Smith raises the following four issues regarding the district
court’s summary judgment ruling itself:

• First, he contends that if his declarations are considered,
they “create[] a dispute concerning whether the
Shareholders[] Agreement superseded the Employment
Agreement” and, thus, preclude judgment as a matter of
law that he breached the Employment Agreement.

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Cook Martin Poulson PC v. Smith

• Second, he argues that if his declarations and the
Spreadsheet are considered, they create a factual dispute as
to whether CMP breached the Employment Agreement
first by failing to pay Smith the salary to which he was
entitled, thereby precluding judgment as a matter of law
on CMP’s claims for breach of the Employment Agreement
and any related declaratory relief.

• Third, Smith asserts that under the Shareholders
Agreement, shareholder “distributions” include
shareholder “salaries” and, therefore, that his declarations
and the Spreadsheet create a material factual dispute as to
whether CMP breached the Shareholders Agreement first
by failing to pay Smith distributions on a pro rata basis in
2013, thereby precluding judgment as a matter of law on
CMP’s claims for breach of the Shareholders Agreement
and any related declaratory relief.

• Finally, Smith contends that “the district court erred when
it ruled, on summary judgment, that ‘CMP properly
repurchased [Smith’s] shares’” under the Shareholders
Agreement because (1) “CMP never asked the court for a
declaratory judgment that it had purchased [Smith’s]
shares,” (2) “[u]nder Utah law, a shareholder within a
professional corporation cannot voluntarily sell his [or her]
shares back to the corporation,” and (3) “it is not
undisputed that [Smith] . . . worked for any clients on the
‘client list’ contemplated in the contract.”

“Appellate courts review a district court’s legal conclusions and
ultimate grant or denial of summary judgment for correctness,
viewing the facts and all reasonable inferences drawn therefrom
in the light most favorable to the nonmoving party,” Penunuri v.
Sundance Partners, Ltd., 2017 UT 54, ¶ 14, 423 P.3d 1150 (cleaned
up), who in this context is Smith.

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ANALYSIS

I. Dismissal of the Third-Party Complaint as a Rule 37 Sanction

¶35 Smith first contends that the district court exceeded its
discretion by dismissing his third-party complaint against the
Other Shareholders as a discovery sanction under rule 37 of the
Utah Rules of Civil Procedure. The Other Shareholders have not
filed a brief or otherwise participated in this appeal; thus, they
have presented no argument in opposition to Smith’s on this
point. “When an appellee fails to present us with any argument,
an appellant need only establish a prima facie showing of a
plausible basis for reversal.” AL-IN Partners, LLC v. LifeVantage
Corp., 2021 UT 42, ¶ 19, 496 P.3d 76 (cleaned up). “This is a lower
standard than the typical burden of persuasion on appeal.” Id. We
conclude that Smith has met this lower burden here.

¶36 Rule 37 allows a district court to impose sanctions in
response to a party’s violation of a discovery order. It states that
“[u]nless the court finds that the failure was substantially
justified, the court, upon motion, may impose appropriate
sanctions for the failure to follow” an order regarding disclosure
or discovery. Utah R. Civ. P. 37(b). The rule also provides a list of
possible sanctions, including deeming “designated facts to be
established in accordance with the claim or defense of the party
obtaining the order,” “prohibit[ing] the disobedient party . . . from
introducing designated matters into evidence,” and “dismiss[ing]
all or part of the action.” Id. R. 37(b)(1), (2), (4).

¶37 Generally, “district courts have broad discretion in
selecting and imposing sanctions” under rule 37. Ford v. Ford, 2016
UT App 127, ¶ 10, 379 P.3d 14 (cleaned up). However, there are
three prerequisites to a court’s exercise of that discretion: (1) there
must be an existing discovery or disclosure order, (2) the sanction
must be “for the failure to follow” the existing order, and (3) the
sanction must be imposed “upon motion.” Utah R. Civ. P. 37(b).
Smith asserts that the district court lacked discretion to dismiss

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his claims against the Other Shareholders as a discovery sanction
because that dismissal was not imposed “upon motion.” This
argument establishes a prima facie showing of a plausible basis
for reversal.

¶38 CMP was the only party in this matter to serve written
discovery requests. CMP alone moved for an order requiring
Smith to fully respond to those requests. When Smith failed to
comply with the resulting discovery order, only CMP moved for
sanctions against Smith. The specific sanctions CMP asked the
district court to “consider” were “striking Smith’s pleadings from
the record and entering default in favor of CMP.” When the court
granted CMP’s motion, the resulting sanctions order did not
include dismissal of Smith’s claims against the Other
Shareholders, and after that order was vacated on appeal, CMP
asked the court on remand to simply “reinstate all of the sanctions
that it [had] previously entered.”

¶39 In other words, when the court sanctioned Smith by
dismissing his claims against the Other Shareholders, there
had been no motion by the Other Shareholders seeking
dismissal of Smith’s claims against them or any other sanction in
their favor. Additionally, when CMP’s motion for sanctions was
readdressed on remand, it did not include a request for sanctions
in favor of the Other Shareholders. Therefore, it is at least
plausibly correct to say that the dismissal of Smith’s claims
against the Other Shareholders was not a sanction imposed “upon
motion” and, thus, that the dismissal ran afoul of the
requirements of rule 37(b).

¶40 Indeed, Smith cites an opinion of the Commonwealth
Court of Pennsylvania that endorses the argument he relies on
here. In Smith v. Philadelphia Gas Works, 740 A.2d 1200 (Pa.
Commw. Ct. 1999), a personal injury plaintiff sued six

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defendants. 6 Id. at 1201. One of the defendants (the requesting
defendant) served a discovery request on the plaintiff, to which
the plaintiff did not respond. Id. at 1202. Thus, the requesting
defendant filed a motion to compel, which the trial court granted,
ordering the plaintiff to respond within twenty days. Id. After
twenty days passed without a response, the requesting defendant
filed a motion for sanctions. Id. The trial court granted that motion
and ordered the plaintiff to respond to the discovery request
within forty-five days, “indicating that, if [the plaintiff] failed to
comply, she [might] be prohibited from introducing any type of
evidence.” Id. (cleaned up). The plaintiff again failed to respond,
and the requesting defendant filed another motion for sanctions.
Id. The trial court granted this motion by issuing an order
prohibiting the plaintiff “from introducing any type of evidence”
at trial. Id. (cleaned up). When the case came to trial, the trial court
enforced its sanctions order, barred the plaintiff from presenting
evidence, and—although “nothing in the record indicate[d] that
any of the five other defendants formally adopted or joined [the
requesting defendant’s] motions”—dismissed the plaintiff’s case
against all six of the defendants. Id.

¶41 The plaintiff appealed. Id. On appeal, she “concede[d] that
the trial court correctly dismissed her case against” the requesting
defendant. Id. But she argued “that the trial court erred by
dismissing her case against the five other [d]efendants who were
not parties to [the requesting defendant’s] motion to compel or its
motions for sanctions.” Id. The Commonwealth Court of
Pennsylvania agreed. Id. Like Utah’s rule 37(b), rule 4019(a)(1) of
the Pennsylvania Rules of Civil Procedure provided that a court
could, “on motion, make an appropriate order if . . . a party or
person . . . fail[ed] to make discovery or to obey an order of court

6. The Smith plaintiff initially sued seven defendants, but the
claims against one of the defendants were dismissed before the
relevant events in the case transpired. See Smith v. Philadelphia Gas
Works, 740 A.2d 1200, 1201 (Pa. Commw. Ct. 1999).

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Cook Martin Poulson PC v. Smith

respecting discovery.” Pa. R. Civ. P. 4019(a)(1) (emphasis added). 7
Against the backdrop of that rule, the Pennsylvania court
explained, “Nothing in [rule] 4019 intimates that a court may
impose sanctions in favor of non-moving parties. Rather, a motion
must be presented to the court.” Smith, 740 A.2d at 1203 (cleaned
up). It then elaborated,

[Rule] 4019(a)(1) directs the court to exercise its
discretion in fashioning an appropriate order upon
consideration of the motion for sanctions before it,
and the trial court’s authority does not extend to
concerns or matters extraneous to the motion before
it. In other words, a trial court may not sua sponte
impose a sanction order for violations of pretrial
discovery orders; rather, the sanction order must be
imposed pursuant to a motion of a party. Here, the
effect of the trial court’s dismissal of [the plaintiff’s]
case against all [the] defendants was to sua sponte
impose a discovery sanction in favor of parties who
did not file motions for the sanction. Thus, here, . . .
the trial court lacked authority to consider the effect
of [the plaintiff’s] noncompliance with its discovery
order upon defendants who neither filed motions
themselves nor formally adopted or joined in the
motions filed.

Id. (cleaned up). This reasoning is sound and confirms that Smith
has established a prima facie showing of a plausible basis for

7. The Pennsylvania rule has been amended since Smith, but those
amendments did not change the relevant language that we quote
here. See Pa. R. Civ. P. 4019; 29 Pa. Bull. 2281 (Apr. 12, 1999); 33
Pa. Bull. 5506 (Oct. 24, 2003). We therefore cite the current version
of the rule for convenience.

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Cook Martin Poulson PC v. Smith

reversal of the district court’s dismissal of his claims against the
Other Shareholders.

¶42 Although the Other Shareholders have presented no
arguments on this point, CMP has. However, even assuming that
CMP has standing to make such arguments, CMP’s arguments do
not persuade us that Smith has failed to meet his lowered burden
of persuasion in this appeal.

¶43 CMP first notes that in this case “Smith refused to provide
even rudimentary initial disclosures,” while in the Pennsylvania
case cited above, there was no indication that the plaintiff had
similarly failed to provide any initial disclosures. CMP then
argues that “[t]here is a significant difference in a party refusing
to provide initial disclosures (which are required without a
discovery request) and a party’s refusal to provide responses to
discovery requests from one party.” However, a party’s failure to
provide initial disclosures triggers “automatic and mandatory”
sanctions under rule 26(d) of the Utah Rules of Civil Procedure
that “do not require a predicate discovery order,” while rule 37(b)
sets up a separate regime of “more expansive sanctions” that are
“not self-executing” for a party’s failure to comply with a
discovery order. Bailey v. Bailey, 2024 UT App 51, ¶¶ 25, 27, 548
P.3d 519 (cleaned up). Thus, while the factual distinction between
this case and the above-referenced Pennsylvania case might
prompt different outcomes under rule 26(d), it does not form the
basis for a different outcome under rule 37(b).

¶44 CMP’s second assertion is that “[t]o the extent that any
foreign authority might apply to this situation, Payne v. Exxon
Corp., 121 F.3d 503 (9th Cir. 1997), provides a much more
appropriate analysis.” CMP contends—apparently correctly so—
that “Payne stands for the proposition that a federal district court
acts within the scope of the authority granted it by [r]ule 37(b)(2)
of the Federal Rules[] when it dismisses a plaintiff’s claims against
all defendants[] based on the plaintiff’s failure to obey a court

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Cook Martin Poulson PC v. Smith

order compelling discovery requested by only one defendant.”
(Citing Payne, 121 F.3d at 509–10.) However, we find Payne
unpersuasive both because federal rule 37(b)(2) is materially
different from Utah’s rule 37(b) and because the facts of Payne are
materially different from the facts here.

¶45 In Payne, a set of plaintiffs sued two defendants. See id. at
505. The first defendant sent discovery requests to the plaintiffs.
See id. After the plaintiffs failed to respond, the first defendant
filed a motion to compel, which was granted. See id. The second
defendant “filed a similar motion, which the district court [also]
granted.” Id. The first defendant subsequently filed two more
motions to compel, which were each granted. See id. Later,
“dissatisfied with the responses it received from the plaintiffs,
[the first defendant] filed a motion to dismiss.” Id. (cleaned up).
In response, the district court issued an order giving the plaintiffs
“one last chance to comply with the court’s previous orders” and
warning that if the plaintiffs failed to comply this time, the “action
[would] be dismissed in its entirety without further notice.” Id. at
506. The plaintiffs thereafter “paid the outstanding sanctions
orders, provided some additional discovery responses, and filed
a Notice of Compliance.” Id. Upon reviewing the plaintiffs’
additional discovery responses, the first defendant “filed an
objection to the Notice of Compliance,” and the second defendant
“joined in the objection,” asking the district court “to dismiss [the]
claims against it pursuant to the court’s [latest] order.” Id. The
district court “treated these objections as a renewed motion to
dismiss” and granted the motion as to both defendants. Id. The
plaintiffs appealed. See id. at 507.

¶46 On appeal, the plaintiffs argued that dismissal of their
claim against the second defendant as a sanction “for discovery
noncompliance was inappropriate because there were no
outstanding discovery requests from” the second defendant. Id. at
509. The Ninth Circuit disagreed. See id. at 509–10. It noted that
under rule 37(a)(2)(B) of the Federal Rules of Civil Procedure,

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“only the discovering party[] . . . may bring a motion to compel a
response to specific interrogatories, requests for production, and
the like” but that “the sanctions provisions of [federal] rule
37(b)(2) contain no such standing limitation.” Id. at 510 (cleaned
up). The Ninth Circuit demonstrated the lack of such a limitation
on sanctions in federal rule 37(b)(2) by quoting the version of that
rule then in effect, in relevant part, as follows:

If a party . . . fails to obey an order to provide or
permit discovery . . . [,] the court in which the action
is pending may make such orders in regard to the
failure as are just, and among others the following:

...

(C) An order . . . dismissing the action or proceeding
or any part thereof . . . .

Id. (quoting Fed. R. Civ. P. 37(b)(2) (1997)). It then elaborated, “If
Congress had intended to limit the district court’s dismissal
authority to claims against the party who propounded discovery,
it would not have chosen such sweeping language.” Id. The Ninth
Circuit also concluded “that the district court did not abuse its
discretion by dismissing the claim against” the second defendant
because the second defendant “brought its own successful motion
to compel discovery early in the discovery process, cooperated in
[the first defendant’s] later efforts to secure adequate responses,
and joined in [the first defendant’s] final motion to dismiss.” Id.

¶47 Significantly, federal rule 37(b)(2)—both as quoted in
Payne and as written now—is materially different from Utah’s
rule 37(b), which controls here. Specifically, the federal rule
contains no requirement that sanctions for failure to comply with
a discovery order be imposed “upon motion.” See Fed. R. Civ. P.
37(b)(2); Payne, 121 F.3d at 510. Additionally, unlike the second
defendant in Payne, the Other Shareholders in this case did not file
their own motion to compel, did not participate in CMP’s efforts

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to secure adequate discovery responses, and did not join in CMP’s
motions for sanctions. Thus, we do not agree with CMP that Payne
provides a more appropriate analysis for purposes of this case or
that it otherwise renders Smith’s argument on this issue less than
plausible. 8

8. As noted above, the district court stated its view that “Smith
did not separate, or otherwise differentiate between,” his
counterclaims and his third-party complaint and, thus, that the
striking of Smith’s counterclaims necessarily “include[d] the
striking of his third party complaint.” See supra ¶ 22. On appeal,
Smith maintains that his counterclaims were “distinct from his
third-party complaint” and that the district court “erred in ruling
that striking [Smith’s] counterclaim necessarily entailed striking
his third-party complaint.” CMP concedes that Smith’s “third-
party claims are distinct from his counterclaims,” but it contends
that his third-party claims are nevertheless improper because
Smith has not alleged that the Other Shareholders “[are] or may
be liable to him for all or part of [CMP’s] claim[s] against him.”
Utah R. Civ. P. 14(a); see also Windsor Mobile Estates, LLC v.
Sweazey, 2019 UT App 44, ¶ 7, 440 P.3d 864 (“A third-party claim
may be asserted under rule 14(a) only when the third party’s
liability is in some way dependent on the outcome of the main
claim or when the third party is secondarily liable to the
defending party.” (cleaned up)). Because the Other Shareholders
did not seek dismissal of Smith’s third-party claims on this basis
in the district court, we decline to address this argument here. See
generally Richmond v. Bateman, 2024 UT App 103, ¶ 31, 554 P.3d 341
(“We are mindful that we are a court of review, not of first view.”
(cleaned up)).

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Cook Martin Poulson PC v. Smith

¶48 For the foregoing reasons, we reverse the district court’s
dismissal of Smith’s third-party complaint against the Other
Shareholders. 9

II. Exclusion of Smith’s Evidence Under Rule 26

¶49 Smith next argues that the district court abused its
discretion when it excluded his declarations and the Spreadsheet
because he failed to provide initial disclosures during the
discovery period. In Smith’s view, rule 26 of the Utah Rules of
Civil Procedure “does not require a party to disclose himself as a
potential witness” and, even if it does, his “failure to disclose
himself [in this case] was harmless.” And he contends that the
Spreadsheet should not have been excluded because it “was
already in the record” when the court ruled on the cross-motions
for summary judgment.

¶50 Rule 26 requires that as part of a party’s initial disclosures,
the party must provide, among other things, “the name and, if
known, the address and telephone number of . . . each fact witness
the party may call in its case-in-chief and . . . a summary of the
[witness’s] expected testimony.” Utah R. Civ. P. 26(a). In the event
“a party fails to disclose or to supplement timely a disclosure . . . ,
that party may not use the undisclosed witness . . . at any hearing
or trial unless the failure is harmless or the party shows good
cause for the failure.” Id. R. 26(d)(4). Here, we disagree with
Smith’s assertion that a party never needs to disclose himself or
herself as a witness who may be called in the party’s case-in-chief.
But we conclude that under the circumstances of this case, the

9. Because we decide the rule 37 sanctions issue based on “the
lowered appellate burden of making a prima facie showing of a
plausible basis for reversal,” our decision on this issue “is a non-
merits decision that is not intended to have any precedential
value.” State v. Coleman, 2025 UT App 33, ¶ 20, 566 P.3d 772
(cleaned up).

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Cook Martin Poulson PC v. Smith

district court exceeded its discretion by not determining that
Smith’s failure to disclose himself as a potential witness was
harmless.

A. No Per Se Rule that a Party’s Failure to Disclose Himself or
Herself as a Potential Witness Is Always Harmless

¶51 “Rule 26(d)(4) expressly provides that a district court need
not exclude evidence or witnesses when disclosures have not been
made if that failure is ‘harmless’ or ‘good cause’ is shown.” Hansen
v. Kurry Jensen Props. LLC, 2021 UT App 54, ¶ 43, 493 P.3d 1131
(Mortensen, J., concurring). We have previously declined,
however, to adopt a per se rule that failure of one party to disclose
the opposing party as a potential witness is always harmless. See
Johansen v. Johansen, 2021 UT App 130, ¶¶ 2, 15, 19, 504 P.3d 152.
We now decline to adopt a per se rule that failure of a party to
disclose himself or herself as a potential witness is always
harmless.

¶52 In Johansen, a divorce action, after the husband failed to
disclose the wife as a potential witness in his initial disclosures,
the husband urged adoption of a rule that “it is always harmless
to omit from initial disclosures the fact that the plaintiff plans to
call the opposing party as a witness because that party will always
know their own testimony.” Id. ¶ 19. We declined. See id. We
explained that such an “approach [would] essentially eviscerate[]
the rule that explicitly requires parties to designate the opposing
party as a witness if they intend to call the opposing party in their
case-in-chief at trial, albeit with a less extensive disclosure duty
than with other witnesses.” Id. (explaining that Utah Rule of Civil
Procedure 26(a)(1)(A)(ii) requires parties to designate “each fact
witness the party may call in its case-in-chief and, except for an
adverse party, a summary of the expected testimony”). We
further explained that while “a party may well know the content
of their own testimony, . . . the fact that they will or will not be
called as a witness by the other side in the other side’s case-in-

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chief undoubtedly will dictate how they prepare to prosecute or
defend at trial.” Id. (cleaned up). Thus, we reasoned, “an opposing
party can be harmed” when the other party fails to disclose the
opposing party as a potential witness in the other party’s case-in-
chief. Id. We therefore concluded that “the district court exceeded
its discretion in determining that [the husband’s] failure to
provide initial disclosures naming [the wife] as his only case-in-
chief witness was harmless.” Id.

¶53 Relatedly, in Segota v. Young 180 Co., 2020 UT App 105, 470
P.3d 479, we implicitly rejected a per se rule that it is always
harmless for an initially non-disclosing party—in that case the
plaintiff—to belatedly provide initial disclosures that are
“identical to [the opposing party’s] own disclosures.” Id. ¶ 21
(cleaned up). We stated that “although the defendants might
have—before receiving [the plaintiff’s] disclosures—made some
assumptions, or even had suspicions, about the identity of the
witnesses and evidence [the plaintiff] might use in an attempt to
prove her claims, they did not actually know the scope of [the
plaintiff’s] case until finally receiving her belated disclosures.” Id.
(cleaned up). We then held that “one party’s ability to guess at
what the other party’s disclosures might be, had they been timely
made, does not relieve the other party from its obligation to
definitively inform her litigation opponent, through disclosures,
about the witnesses and documents she plans to use to prove her
case.” Id. (cleaned up). Ultimately, we declined to hold that the
district court had abused its discretion “by concluding that the
defendants—who, at the conclusion of the fact discovery period,
knew nothing specific about the scope of [the plaintiff’s] case—
had been harmed by [the plaintiff’s] failure to disclose.” Id.

¶54 Rule 26 requires a party to disclose “each fact witness the
party may call in its case-in-chief.” Utah R. Civ. P. 26(a)(1)(A)(ii).
While rule 26 does not separately identify the disclosing party
himself or herself as a witness who must be disclosed, the term
“each fact witness” plainly includes the disclosing party when the

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Cook Martin Poulson PC v. Smith

party is a natural person. Additionally, by explicitly relaxing the
disclosure requirement when a party discloses “an adverse party”
as a potential witness, the drafters of rule 26 strongly suggested
that if they had intended any other exception to the witness
disclosure requirement, they would have made that exception
explicit as well. Moreover, just as one party’s knowledge “that [he
or she] will or will not be called as a witness by the other side in
the other side’s case-in-chief undoubtedly will dictate how [that
party] prepare[s] to prosecute or defend at trial,” a party’s
knowledge as to whether the opposing party plans to testify in his
or her own case-in-chief undoubtedly will dictate how the party
prepares for trial. Johansen, 2021 UT App 130, ¶ 19. Finally, our
holding in Segota that “one party’s ability to guess at what the
other party’s disclosures might be, had they been timely made,
does not relieve the other party from its obligation to definitively
inform her litigation opponent, through disclosures, about the
witnesses and documents she plans to use to prove her case,” 2020
UT App 105, ¶ 21 (cleaned up), essentially demands that we reject
a per se rule that failure of a party to disclose himself or herself as
a potential witness in his or her own case-in-chief is always
harmless. For all of these reasons, we do not adopt such a rule.

B. Smith’s Failure to Disclose Himself as a Potential Witness
in this Case Was Harmless

¶55 While we decline to adopt a per se rule that it is always
harmless for a party to fail to disclose himself or herself as a
potential witness in the party’s case-in-chief, we conclude that the
district court exceeded its discretion by not determining that
Smith’s failure to disclose himself as a potential witness was
harmless under the particular circumstances of this case. The case
of Sabour v. Koller, 2024 UT App 26, 546 P.3d 28, provides a useful
starting point for our analysis in this regard.

¶56 In Sabour, the plaintiffs disclosed that they might call
themselves as witnesses in their case-in-chief, but they failed to

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provide adequate summaries of their expected testimony as
required by rule 26(a). See id. ¶¶ 28–33. Thus, the defendant
moved to exclude the plaintiffs from “providing any opinions at
trial that they could and should have disclosed.” Id. ¶ 17 (cleaned
up). The district court denied that motion. See id. After losing at
trial, the defendant appealed the district court’s determination
that the plaintiffs’ “witness disclosures were sufficient” and its
ruling “allowing the [plaintiffs] to testify in their case-in-chief.”
Id. ¶ 25.

¶57 On appeal, we held that the plaintiffs did not adequately
disclose the substance of their anticipated testimony, but we
determined that the district court did not abuse its discretion by
deeming that failure to be harmless because—notwithstanding
the deficient disclosure—the defendant had deposed the
plaintiffs. See id. ¶¶ 34–40. We explained that “the deficiencies of
the expected testimony summaries were remedied by the fact that
[the defendant] deposed each witness and thus was able to gain
sufficient knowledge of their testimony to proceed with his
defense at trial and address their evidence.” Id. ¶ 35 (cleaned up).
We concluded that the defendant had failed to carry “his burden
of demonstrating harm largely because he [had] not addressed
how, despite having deposed each of the [plaintiffs], their trial
testimony took him by surprise.” Id. ¶ 38.

¶58 Based on reasoning similar to what we employed in Sabour,
we conclude that the district court here exceeded its discretion by
not deeming Smith’s failure to disclose himself as a potential
witness and his failure to disclose the Spreadsheet harmless. With
several months remaining in fact discovery, Smith testified at a
hearing on CMP’s motion for a preliminary injunction and
submitted a declaration in opposition to that motion. Thereafter,
he submitted two more declarations, all before the court issued its
first discovery sanctions. Given these actions and the fact that
Smith is the only party to the Employment Agreement and the
Shareholders Agreement who is able to provide his version of

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events, the fact that Smith planned to call himself as a witness in
his case-in-chief could not have taken the Other Shareholders by
surprise. Moreover, given the detailed allegations in Smith’s
counterclaim and third-party complaint, along with the facts to
which he testified in the preliminary injunction hearing and
which he averred in his declarations, we cannot say that CMP and
the Other Shareholders were prejudiced by Smith’s failure to
separately provide “a summary of [his] expected testimony” by
way of initial disclosures. Utah R. Civ. P. 26(a)(1)(A)(ii); cf. Al-
Imari v. Utah Dep’t of Transp., 2026 UT App 15, ¶ 22 (stating that “a
‘summary’ of a witness’s ‘expected testimony should be just
that—a summary’” and that “‘[t]he rule does not require prefiled
testimony or detailed descriptions of everything a witness might
say at trial’” (alteration in original) (quoting Utah R. Civ. P. 26
advisory committee’s note to 2011 amendment)), petition for cert.
filed, Mar. 5, 2026 (No. 20260261). Finally, Smith included the
Spreadsheet as an attachment to a declaration he submitted three
years before the summary judgment motions at issue here, and
CMP has made no argument that Smith’s failure to disclose the
Spreadsheet earlier—as part of initial disclosures during the
discovery period—has prejudiced its ability to respond to the
document. Accordingly, we conclude that the district court
exceeded its discretion by not determining that Smith’s failure to
include that document in an initial disclosure was also harmless.

¶59 Given the foregoing, on remand, Smith should not be
prohibited under rule 26 from serving as a fact witness in this
matter or from introducing the Spreadsheet into evidence.
Additionally, we will consider Smith’s declarations and the
Spreadsheet as we address Smith’s challenges to the district
court’s summary judgment rulings.

III. The Grant of Summary Judgment in Favor of CMP

¶60 We now turn to the court’s grant of summary judgment in
favor of CMP on CMP’s causes of action against Smith for breach

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of the Employment Agreement, breach of the Shareholders
Agreement, and related declaratory relief. Smith offers four
arguments for why we should reverse at least some of the court’s
summary judgment rulings. We address each of them in turn.

A. Smith’s Argument that the Employment Agreement Was
Superseded

¶61 First, Smith argues that if his declarations and testimony
from the preliminary injunction hearing are considered, they
“create[] a dispute concerning whether the [Shareholders]
Agreement superseded the Employment Agreement” and, thus,
preclude judgment as a matter of law that he breached the
Employment Agreement. In its summary judgment ruling, the
district court rejected Smith’s supersession theory for two
alternative reasons. First, it noted that “Smith failed to timely or
properly raise . . . [his] abandonment and supersession affirmative
defenses . . . in his response to CMP’s Complaint in this matter,”
and it held that he had thus “waived the right to argue . . .
supersession.” Second, the court determined that “even if [Smith]
had not waived these affirmative defenses, both arguments
fail[ed] on their merits.” On appeal, Smith again argues the merits
of his supersession theory, but he fails to address the alternative
basis the district court gave for rejecting this theory—namely, that
Smith had waived it by not raising it as an affirmative defense in
his answer. Because an appellate court “will not reverse a ruling
of the district court that rests on independent alternative grounds
where the appellant challenges only one of those grounds,” Gilbert
v. Utah State Bar, 2016 UT 32, ¶ 24, 379 P.3d 1247, we do not disturb
the district court’s determination that Smith waived the right to
argue that the Employment Agreement was superseded and,
thus, that he cannot be deemed to have breached it.

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B. Smith’s Argument that CMP Breached the Employment
Agreement First, Thereby Precluding Summary Judgment
on CMP’s Claim for Breach of the Employment Agreement

¶62 Smith contends that when his declarations and the
Spreadsheet are considered, they create a factual dispute as to
whether CMP breached the Employment Agreement first by
failing to pay Smith the salary to which he was entitled, thereby
precluding judgment as a matter of law on CMP’s claims for
breach of the Employment Agreement and related declaratory
relief. See generally Cross v. Olsen, 2013 UT App 135, ¶ 25, 303 P.3d
1030 (“Under the first breach rule[,] a party first guilty of a
substantial or material breach of a contract cannot complain if the
other party thereafter refuses to perform.” (cleaned up)). We
agree with Smith on this point.

¶63 As part of its summary judgment papers, CMP cited
evidence in the record suggesting that after Smith signed the
Employment Agreement and until his termination, “CMP paid a
salary to Smith every month” and the salary was “more than the
Employment Agreement required.” In contrast, Smith averred in
one of the declarations he submitted as part of his summary
judgment papers that the amount CMP paid him for salary after
July 2005 “was never equal to or greater than” the compensation
set forth in the Employment Agreement and, specifically, that in
2013 he received a salary of $48,000 rather than the $62,400 he was
guaranteed under the Employment Agreement. Because any
failure by CMP to pay Smith the salary to which he was entitled
under the Employment Agreement would have occurred prior to
Smith’s post-termination breach of the Employment Agreement’s
noncompete provision, on which the award of liquidated
damages was based, the competing evidence regarding the salary
Smith was actually paid creates a genuine issue of material fact as
to whether CMP was the first to breach the Employment
Agreement. Accordingly, we reverse the district court’s summary
judgment ruling in favor of CMP on CMP’s claim for breach of the

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Employment Agreement and any related declaratory relief at
odds with our analysis here.

¶64 On remand, the following issues should be addressed in
order: (1) the factual question of whether CMP was the first to
breach the Employment Agreement and (2) if so, the related legal
question of whether the first breach rule applies to preclude
CMP’s claims against Smith for breach of the Employment
Agreement and related declaratory relief. See generally Larson v.
Stauffer, 2022 UT App 108, ¶ 26, 518 P.3d 175 (“The first breach
rule provides that when one party materially breaches a provision
of a contract, the other party’s subsequent failure to perform a
specific obligation is excused if the promises are mutually
dependent.” (cleaned up)); Richard Barton Enters., Inc. v. Tsern, 928
P.2d 368, 374–78 (Utah 1996) (addressing as a matter of law
whether under “the contract doctrine of mutually dependent
covenants,” a tenant’s “obligation to pay rent” was dependent on
the landlord’s “covenant to repair” the premises).

¶65 If the court determines (1) that CMP was the first to
breach the Employment Agreement and (2) that the first breach
rule applies, then CMP will be precluded from receiving
liquidated damages for Smith’s post-termination breach of the
Employment Agreement’s noncompete clause. On the other hand,
if the court determines that the first breach rule does not apply,
then CMP may still be entitled to an award of liquidated damages
under the terms of the Employment Agreement. Any application
of the first breach rule to CMP’s claims for breach of the
Employment Agreement will not preclude CMP’s recovery of
damages for Smith’s breach of the Shareholders Agreement’s
noncompete provision or a declaratory judgment as to CMP’s
reacquisition of Smith’s shares under the terms of the
Shareholders Agreement.

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C. Smith’s Argument that CMP Breached the Shareholders
Agreement First, Thereby Precluding Summary Judgment
on CMP’s Claim for Breach of that Agreement and Related
Declaratory Relief

¶66 In one of the declarations Smith submitted with his
summary judgment papers, he asserted that shareholder
“[d]istributions were not paid on a pro rata basis for 2013 . . . , as
illustrated in [the Spreadsheet].” Viewed in a light most favorable
to Smith, the Spreadsheet indicates that in 2013, one shareholder
was paid more for “HEALTH INSURANCE AND CONTRACT”
than were the other shareholders despite the fact that the
shareholders each owned an equal number of shares. Smith
contends that this evidence raises a material dispute of fact as to
whether CMP was the first to breach the Shareholders Agreement,
thereby excusing Smith’s subsequent breach of that agreement.
As the parties acknowledge, the validity of Smith’s argument
turns on whether under the Shareholders Agreement a
shareholder’s “distributions” include the shareholder’s
“salary.” 10 Smith contends that the district court erred by
implicitly ruling that “distributions” do not include “salary.” We
disagree.

¶67 “When interpreting a contract, a court first looks to the
contract’s four corners to determine the parties’ intentions, which
are controlling. If the language within the four corners of the
contract is unambiguous[,] a court determines the parties’

10. As noted, the extra compensation paid to one of the
shareholders in 2013 was identified on the Spreadsheet as being
for “HEALTH INSURANCE AND CONTRACT.” Smith affirmed
in his reply brief, however, that this extra payment indicated that
“in 2013, CMP’s shareholders were not paid equal salaries.”
Accordingly, we likewise treat the payment in 2013 to one of the
shareholders of an unequal amount for “HEALTH INSURANCE
AND CONTRACT” as the payment of unequal salaries.

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intentions from the plain meaning of the contractual language as
a matter of law.” Fairbourn Com., Inc. v. American Housing Partners,
Inc., 2004 UT 54, ¶ 10, 94 P.3d 292 (cleaned up). In evaluating a
contract’s plain meaning, “a court is to consider each provision in
relation to all of the others, with a view toward giving effect to all
and ignoring none.” Id. (cleaned up). “A contract provision is
ambiguous if it is capable of more than one reasonable
interpretation because of uncertain meanings of terms, missing
terms, or other facial deficiencies.” Id. (cleaned up). Here, the
Shareholders Agreement’s language plainly indicated that
shareholder “salaries” are distinct from shareholder
“distributions.”

¶68 Article 2.05 of the Shareholders Agreement expressly tied
“distributions” to a shareholder’s ownership of “capital stock,”
requiring that “distributions” be paid “pro-rata . . . with respect
to each share” owned. In contrast, Article 2.06 expressly tied a
shareholder’s “salary” to the shareholder’s status as “an
employee” or to some other “agreed to relationship” and
provided that the “salary” to be paid would be “determined by
the majority of the [s]hareholders.” Interpreting a shareholder’s
distributions to include the shareholder’s salary would render
superfluous the provision in Article 2.06 that tied salary to
employment or to some other yet-to-be-agreed-upon relationship
because a shareholder’s salary would always have to conform to
ownership status, regardless of any other relationship. Likewise,
interpreting distributions to include salaries would make
meaningless the provision in Article 2.06 for salaries to be
determined by a majority vote of the shareholders because the
shareholders would be required to always vote for salaries that
accorded exactly pro rata with respect to each share owned. We
must therefore conclude that under the plain meaning of the
Shareholders Agreement, a shareholder’s “distributions” do not
include the shareholder’s “salary.” Accordingly, even when
Smith’s declarations and the Spreadsheet are considered, the
district court did not err by implicitly concluding that the first

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breach rule did not apply and preclude summary judgment in
favor of CMP on its claims for breach of the Shareholders
Agreement and related declaratory relief.

¶69 In his principal brief, Smith resisted this conclusion by
pointing to various definitions of the term “distributions” found
in the Utah Code. However, because our conclusion is based on
the plain meaning of the Shareholders Agreement, we do not look
to other sources for a definition of its relevant terms. See Saleh v.
Farmers Ins. Exch., 2006 UT 20, ¶ 23, 133 P.3d 428 (“Since the clause
was unambiguous, there is no need to try to divine its meaning
from evidence outside the four corners of the contract.”). In his
reply brief and at oral argument, Smith resisted this conclusion by
arguing that if there was “any ambiguity” as to whether
distributions include salaries, “it is conclusively resolved by
CMP’s course of performance.” But we have determined that the
Shareholders Agreement is not ambiguous in this regard, and in
any event, we generally will not consider an argument raised for
the first time in a reply brief. See, e.g., Lindsay v. Walker, 2015 UT
App 184, ¶ 28, 356 P.3d 195.

D. Smith’s Argument that the District Court Improperly
Ruled that CMP Already Repurchased Smith’s Shares

¶70 Finally, Smith asserts that the district court erred when it
ruled, on summary judgment, that “CMP properly purchased
[Smith’s] shares.” He contends that this is true for three reasons:
(1) “CMP never asked the court for a declaratory judgment that it
had purchased [Smith’s] shares,” (2) “[u]nder Utah law, a
shareholder within a professional corporation cannot voluntarily
sell his [or her] shares back to the corporation,” and (3) even if a
shareholder can voluntarily sell his or her shares back to a
professional corporation, “it is not undisputed that [Smith] . . .
worked for any clients on the ‘client list’ contemplated in the
contract,” thereby triggering the buyback provision of the
Shareholders Agreement. We are not persuaded by the first and

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second of Smith’s arguments, but we are by the third. Specifically,
we determine that CMP’s request for a declaratory judgment that
it had purchased Smith’s shares was tried by consent and that a
shareholder of a professional corporation may voluntarily sell his
or her shares back to the corporation but that a material dispute
remains as to whether Smith worked for clients on the
contemplated client list after CMP exercised its right to purchase
his shares. Based on this last conclusion, we ultimately reverse the
district court’s declaration on summary judgment that CMP
already purchased Smith’s shares.

1. CMP’s Request for a Declaratory Judgment that It Had
Purchased Smith’s Shares Was Tried by Consent

¶71 Smith argues that the district court erred when it ruled that
CMP had properly purchased Smith’s shares because “CMP
never asked the court for a declaratory judgment that it had
purchased [Smith’s] shares.” He asserts that “a court may grant
relief only if (i) the relief was requested in the complaint . . . or
(ii) the claim was tried by express or implied consent.” He
contends that neither of these things happened here. We disagree.

¶72 Rule 15(b)(1) of the Utah Rules of Civil Procedure states
that “[w]hen an issue not raised in the pleadings is tried by the
parties’ express or implied consent, it must be treated in all
respects as if raised in the pleadings.” Under this rule, “if the trial
court determines that the party had notice of the claim presented
and did not object to the introduction of evidence related to the
claim, then the trial court has no discretion . . . and must treat the
claim as if it were properly raised in the pleadings.” Fisher v.
Davidhizar, 2011 UT App 270, ¶ 9, 263 P.3d 440 (cleaned up). Rule
15(b) does not lose its application when claims are litigated and
dismissed before trial. See id. ¶ 10. “Although rule 15(b) uses the
word ‘tried,’ the Utah Supreme Court has applied rule 15(b) to a
case that was adjudicated at the summary judgment stage of
litigation.” Id. (citing Ward v. Intermountain Farmers Ass’n, 907 P.2d

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264, 267 n.5 (Utah 1995)). Thus, “rule 15(b) is applicable to a case
such as this one where claims were litigated by motions for
summary judgment rather than at trial.” Id.

¶73 By the time of the summary judgment proceedings at issue,
Smith was plainly on notice of CMP’s request for a declaratory
judgment that it had purchased Smith’s shares. While the first
appeal was pending, Smith moved for a stay of execution and
asserted that he owned “a current 20% shareholder interest in
CMP.” CMP responded by saying, “[L]ong ago CMP repurchased
[Smith’s shares] from him. He has no shares . . . .” Thereafter,
clearly aware of CMP’s claim, Smith himself informed the court—
in connection with his motion to dismiss CMP’s first cause of
action, which he filed essentially contemporaneously with his
cross-motion for summary judgment—that “[t]he point of CMP’s
first claim is to have the [c]ourt declare CMP the owner of
[Smith’s] shares.” Having himself informed the court that CMP
was seeking a declaratory judgment that it had purchased Smith’s
shares, Smith cannot credibly claim he lacked notice of such a
claim.

¶74 Moreover, Smith did not object to the introduction of
evidence related to the assertion that CMP had already purchased
his shares. Specifically, in support of its summary judgment
motion, CMP recited the language of the Shareholders Agreement
providing that if a shareholder whose conduct had been deemed
discreditable and as to whom CMP had exercised its right to
repurchase his or her shares “perform[ed] accounting or tax
services for any client of [CMP] during the five year [buyout]
period[,] . . . the balance remaining on the note payable to the
selling [s]hareholder [would] be deemed paid in full and [CMP
would] then have no further obligation to the selling
[s]hareholder.” CMP then identified evidence in the record in
support of the following facts:

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• After Smith’s employment was terminated, the Other
Shareholders “voted and unanimously determined that
[Smith’s] actions were discreditable acts under the terms of
the Shareholder[s] Agreement.”

• At the same time, CMP “exercised its option to purchase
[Smith’s] shares.”

• “On December 12, 2014, CMP notified Smith in writing of
the [Other Shareholders’] decision that he had engaged in
discreditable acts and also [of] the decision for CMP to
acquire his shares pursuant to the terms of the
Shareholder[s] Agreement.”

• Smith “admitted in documents filed with the [c]ourt and in
testimony given during the [p]reliminary [i]njunction
evidentiary hearing that he provided accounting related
and tax services . . . after CMP terminated him” for people
who were CMP clients during the one year prior to Smith’s
termination.

• Smith’s representation of such clients continued through
July 31, 2016.

In response, Smith did not object to the introduction of any of the
foregoing evidence on the ground that it related to a claim or
requested remedy that was not properly before the court.

¶75 In sum, Smith was on notice that CMP was asking for a
declaratory judgment that it had purchased Smith’s shares, and
he did not object to introduction of the evidence supporting that
request on the ground that the request was not properly before
the court. Accordingly, we conclude that CMP’s request for a
declaratory judgment that it had already purchased Smith’s
shares was litigated during the summary judgment proceedings
by the consent of the parties.

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2. A Shareholder in a Professional Corporation Can
Voluntarily Sell His or Her Shares Back to the Corporation

¶76 Smith also argues that “[u]nder Utah law, a shareholder
within a professional corporation cannot voluntarily sell his [or
her] shares back to the corporation.” Again, we disagree.

¶77 The Utah Revised Business Corporation Act (the Business
Corporation Act) provides that “[a] corporation may acquire its
own shares.” Utah Code § 16-10a-631(1). At the same time, Utah’s
Professional Corporation Act states that a shareholder of a
professional corporation “may voluntarily transfer shares of
capital stock in a professional corporation only to . . . persons who
are duly licensed to render the same specific professional services
as those for which the corporation was organized.” Id. § 16-11-
7(1). The Professional Corporation Act provides that the
provisions of the Business Corporation Act “shall be applicable to
professional corporations, . . . except where inconsistent with [the
Professional Corporation Act].” Id. § 16-11-5. Thus, the question
of whether CMP can lawfully purchase Smith’s shares turns on
whether the provision in the Business Corporation Act allowing
corporations generally to “acquire [their] own shares,” id. § 16-
10a-631(1), is inconsistent with the Professional Corporation Act’s
provision limiting a shareholder’s voluntary transfer of shares in
a professional corporation to “only . . . persons who are duly
licensed to render the same specific professional services as those
for which the corporation was organized,” id. § 16-11-7(1). We
conclude that when these provisions are considered in context
and as a whole, they are not inconsistent and, thus, that under the
Business Corporation Act’s provision allowing a corporation to
acquire its own shares, CMP may lawfully acquire Smith’s shares.

¶78 When we interpret a statute, we read its plain language “as
a whole . . . and interpret its provisions in harmony with other
statutes in the same chapter and related chapters.” State v.
Rushton, 2017 UT 21, ¶ 11, 395 P.3d 92 (cleaned up). We therefore

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examine the whole of sections 16-10a-631(1) and 16-11-7 and the
statutes related to them.

¶79 Section 16-10a-631(1) states in full, “A corporation may
acquire its own shares and shares so acquired constitute
authorized but unissued shares.” Utah Code § 16-10a-631(1).
Section 16-11-7 reads in full as follows:

(1) A professional corporation may issue the shares
of its capital stock and a shareholder may
voluntarily transfer shares of capital stock in a
professional corporation only to:

(a) persons who are duly licensed to render the
same specific professional services as those for
which the corporation was organized; or

(b) persons other than those meeting the
requirements of Subsection (1)(a) to the extent
and in the proportions allowed by the applicable
licensing act for the profession for which the
corporation is organized.

(2) Any shares issued in violation of this section are
void.

Id. § 16-11-7.

¶80 Section 16-11-7 deals with the issuance of shares and the
transfer of those issued shares. On the other hand, section 16-10a-
631(1) employs different language, speaking in terms of acquiring
shares that are rendered unissued by the acquisition. Plainly the
provisions address different concerns. Section 16-11-7 appears to
be aimed at “assur[ing] that corporate control will remain with
persons licensed in [a particular] profession, and bound by the
same professional standards and ethics, by restricting the sale or
transfer of stock to members of the profession.” Berrett v. Purser

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& Edwards, 876 P.2d 367, 368–69 (Utah 1994) (cleaned up), while
section 16-10a-631(1) allows a corporation to absorb issued shares
to increase ownership concentration and act as a defense
against ownership by someone who may be hostile to the
corporation.

¶81 In Berrett, our supreme court, in holding that professional
corporations are not required to redeem a departing shareholder’s
shares, assumed that they nevertheless could “provide by
agreement . . . for the disposition [i.e., acquisition] of shares in case
of [a shareholder’s] employment termination.” Id. at 371.
Additionally, in support of its related holding, the Berrett court
relied on a Florida case that had answered—in light of statutory
language similar to that at issue here—the specific question raised
by this case. See id. (citing Corlett, Killian, Hardeman, McIntosh
& Levi, PA v. Merritt, 478 So. 2d 828 (Fla. Dist. Ct. App. 1985)).
Specifically, Florida’s analogous statute provided, “No
shareholder of a [professional corporation] may sell or transfer his
[or her] shares in such corporation except to another individual
who is eligible to be a shareholder of such corporation.” Corlett,
478 So. 2d at 831 n.6 (cleaned up). Yet the Florida court stated, “[A
professional corporation’s] articles of incorporation, as always,
may provide for redemption or purchase of [a shareholder’s]
shares by the corporation.” Id.

¶82 Given the fact that sections 16-11-7 and 16-10a-631(1)
employ distinct and contrasting language; the fact that these
sections are aimed at differing concerns; the fact that our supreme
court has already assumed that a professional corporation can
reacquire its own shares; and the fact that our supreme court has
cited approvingly extra-jurisdictional authority that has expressly
said—in light of a statute similar to Utah’s—that a professional
corporation can reacquire its own shares, we hold that sections 16-
11-7 and 16-10a-631(1) are not inconsistent and, therefore, that a
professional corporation can reacquire its own shares. We agree
with CMP that “[t]his is the only interpretation that complies with

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the [Professional Corporation Act’s] directive that it ‘be so
construed as to effectuate its general purpose of making available
to professional persons the benefits of the corporate form for the
business aspects of their practices while preserving the
established professional aspects of the personal relationship
between the professional person and those he [or she] serves.’”
(Quoting Utah Code § 16-11-3.)

3. A Material Dispute Remains as to Whether Smith Worked
for Clients on the Contemplated Client List After CMP
Exercised Its Right to Purchase His Shares

¶83 Finally, Smith argues that even if a shareholder of a
professional corporation can legally sell his or her shares to the
corporation, the district court erred when it ruled that CMP had
purchased his shares because “it is not undisputed” that he
worked for “clients on the ‘client list’ contemplated in the
contract” after CMP exercised its right to purchase his shares. In
this regard, Smith notes that the “paid in full” provision of Article
7.03 of the Shareholders Agreement says that a buyout will be
deemed “paid in full” if “during the five year period following
[CMP] giving the selling [s]hareholder notice of [CMP’s] intent to
exercise its [buyout] right” the selling shareholder “perform[s]
any services for clients of [CMP], which client list will be determined
as of the date of sale.” (Emphasis added.) Smith then contends that
(1) “it is not clear when the court believes a sale occurred” but “[i]t
could not have occurred before August 26, 2021, because that is
when CMP finally received a ruling on its claim that it had a right
to purchase [Smith’s] shares” and (2) “there is no evidence in the
record of CMP’s client list as of that date or of [Smith’s] work
thereafter.” We disagree with Smith that the sale of his shares to
CMP did not occur until August 26, 2021. We nevertheless agree
that there is no evidence in the record of CMP’s client list as of the
date of sale, and, absent that evidence, summary judgment on this
claim was improper.

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¶84 For us to determine that the date of sale did not occur until
after the district court ruled that CMP could purchase Smith’s
shares would require us to conclude that the date of sale could not
occur until CMP made payment. We reject that conclusion. Article
7.03 provided that CMP’s purchase of a shareholder’s shares
following a discreditable-acts determination would take place by
120 monthly installment payments beginning one year after CMP
notifies the shareholder that it intends to exercise its right to
purchase the shares. At the same time, however, the “paid in full”
provision would be triggered if the shareholder performed work
for a CMP client during the five years immediately after CMP
gave notice of its intent to purchase the shares. Because the selling
shareholder would need to know as of the date CMP gave notice
which clients he or she could not work for without triggering the
“paid in full” provision, the “date of sale” in Article 7.03 must be
the date on which CMP gave notice of its intent to exercise its right
to purchase the shares—in this case, December 12, 2014. No other
date makes sense.

¶85 Having determined that December 12, 2014, was the “date
of sale,” we nevertheless agree with Smith that it is not
undisputed in the summary judgment record that Smith triggered
the “paid in full” provision. Under Article 7.03, the “paid in full”
provision would be triggered if Smith “perform[ed] any services
for clients of [CMP], which client list [would] be determined as of
the date of the sale, during the five year period following [CMP]
giving [Smith] notice of [its] intent to exercise its right” to
purchase his shares. Notably, the relevant clients under the “paid
in full” provision—namely, those who were CMP clients “as of
the date of sale”—are not necessarily the same clients identified
in the noncompete provision of the Shareholders Agreement—
namely, those for whom CMP or the shareholder had
“perform[ed] accounting or tax services for any client of [CMP]
during the five year period” immediately preceding termination
of the shareholder’s employment. Nor are they necessarily the
same clients identified in the Employment Agreement’s

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noncompete provision, who are “any client[s] for whom [CMP]
. . . performed accounting services during the twelve-month
period immediately preceding [Smith’s] termination.”

¶86 While the summary judgment record contains a list of
roughly 350 clients for whom CMP worked during the one-year
period immediately prior to Smith’s termination and for whom
Smith continued to work after his termination, the summary
judgment record does not contain a list of CMP’s clients as of
December 12, 2014, five months after Smith’s termination.
Admittedly, there may be some probability that at least one of the
350 or so clients for whom CMP worked during the year prior to
Smith’s termination and for whom Smith worked after his
termination remained a CMP client through at least December 12,
2014. But to base summary judgment on a judicial assessment of
that probability would be impermissibly speculative. See generally
State v. Hester, 2000 UT App 159, ¶ 16, 3 P.3d 725 (noting “a
difference between drawing a reasonable inference and merely
speculating about possibilities”), abrogated on other grounds by State
v. Clark, 2001 UT 9, 20 P.3d 300. Yet, whether consciously or not,
that is essentially what occurred here. Accordingly, we reverse the
district court’s grant of a summary declaratory judgment that
CMP had already purchased Smith’s shares under the “paid in
full” provision of Article 7.03.

CONCLUSION

¶87 The district court exceeded its discretion by dismissing
Smith’s third-party complaint against the Other Shareholders as a
rule 37 discovery sanction, because the Other Shareholders did
not move for rule 37 sanctions. The court again exceeded its
discretion when it barred Smith under rule 26 from presenting his
own declarations and the Spreadsheet as evidence, because
Smith’s failure to disclose himself as a potential witness and the
Spreadsheet as potential evidence was harmless. When Smith’s
declarations and the Spreadsheet are considered, CMP was not

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entitled to summary judgment on its claims against Smith for
breach of the Employment Agreement and any related claims for
declaratory relief at odds with our analysis herein. We therefore
reverse those claims. Additionally, CMP was not entitled to a
declaration on summary judgment that it has already purchased
Smith’s shares, because there remain disputed issues of material
fact on that claim. We therefore reverse that ruling. But because
we conclude that a professional corporation may reacquire its
own shares, CMP remains free to develop the factual record and
pursue that claim on remand. Finally, we affirm the district
court’s grant of summary judgment in favor of CMP on its claim
against Smith for breach of the noncompete provision in Article
9.01 of the Shareholders Agreement because Smith did not
challenge that ruling on appeal. In short, we affirm in part, reverse
in part, and remand this matter for additional proceedings
consistent with this opinion.

20230024-CA 49 2026 UT App 54