Mitchell v. Arco Industrial Sales

2026 UT App 75

THE UTAH COURT OF APPEALS

JOHN B. MITCHELL,
Appellee,
v.
ARCO INDUSTRIAL SALES, ARCO PACKAGING/JANITORIAL SALES,
AND JOHN A. MITCHELL,
Appellants.

Opinion
No. 20240635-CA
Filed May 7, 2026

Third District Court, Salt Lake Department
The Honorable Adam T. Mow
No. 170905725

Troy L. Booher, Taylor P. Webb, Caroline A. Olsen,
and Robert W. Hughes, Attorneys for Appellants
Greggory J. Savage, James A. Sorenson, and
Stephen R. Arroyo, Attorneys for Appellee

JUDGE AMY J. OLIVER authored this Opinion, in which
JUDGES GREGORY K. ORME and DAVID N. MORTENSEN concurred.

OLIVER, Judge:

¶1 In 2017, John B. Mitchell (John) 1 sued his father, John A.
Mitchell (Jack), and his father’s companies—Arco Industrial Sales
and Arco Packaging/Janitorial Sales (collectively, Arco)—
asserting various claims of unfulfilled promises from John’s time
working at Arco. Following an earlier appeal affirming the district
court’s entry of default against Jack and Arco (collectively,
Appellants), the district court awarded damages to John based on

1. Because two of the parties have the same surname, we refer to
them by their first names for clarity, with no disrespect intended
by the apparent informality.
Mitchell v. Arco Industrial Sales

affidavits. On appeal, Appellants assert the award should be
vacated because they were entitled to an evidentiary hearing, the
award of damages for lost past earnings was unsupported, and
the award of prejudgment interest was improper. We disagree
that Appellants were entitled to an evidentiary hearing. But
because a defaulted defendant is entitled to be fully heard on the
issue of damages and Appellants were not afforded such an
opportunity, we vacate the damages award on that ground and
remand the matter for further proceedings.

BACKGROUND 2

¶2 Following this court’s decision affirming the entry of
default against Appellants, the parties returned to the district
court for a determination of damages. The district court
concluded it did not need to hold a hearing on evidentiary issues
concerning damages and would instead take evidence through
declarations submitted by the parties. Appellants agreed that the
court could forgo a hearing and simply take declarations, saying
they “[had] no problem with submitting [evidence] under
declarations.” The court later decided there was “not a role for
[Appellants] to play” and they did not “have a right to contest or
do something more than just hear [the] . . . evidence.”

¶3 John then submitted a declaration and report from an
expert (Expert) in support of his claim for damages for lost past
earnings and fifty percent of the sales proceeds of Arco, along
with prejudgment interest. John also submitted a proposed
judgment, per the court’s request, based on this report. Appellants
objected to the proposed judgment and Expert’s declaration,
raising various concerns with Expert’s calculations. The court

2. This is the second appeal in this case. For a more fulsome
recitation of the factual background and the resolution of the first
appeal, see Mitchell v. Arco Industrial Sales, 2023 UT App 70, 533
P.3d 394.

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overruled Appellants’ objections and entered judgment
consistent with Expert’s calculations.

¶4 Appellants then moved to alter or amend the judgment.
They asserted for the first time, and in contravention of their prior
statements to the court, that they were entitled to an evidentiary
hearing on damages under rule 55 of the Utah Rules of Civil
Procedure. They also asserted that the statute of limitations for
John’s claims had expired, the awards of lost past earnings and
sales proceeds were unsupported by the complaint, the award of
prejudgment interest was inappropriate, and even if such interest
was appropriate, the court used the incorrect interest rate.

¶5 The district court granted the motion in part and denied it
in part. First, the court concluded “the judgment complie[d] with
rule 55” because the court was not required under the rule to hold
an evidentiary hearing. Second, it determined the statute of
limitations was an affirmative defense that had been waived
when Appellants’ answer was struck and Appellants could “not
now revive such [a] defense.” Third, the court concluded John
was “entitled to all” lost past earnings contained in Expert’s
report. Fourth, the court accepted Appellants’ argument that the
calculation of damages for the Arco sales proceeds should have
accounted for John’s cost to purchase potential shares.
Accordingly, the court set aside that portion of damages and
instructed John to “provide . . . evidence sufficient to accurately
calculate this damage figure.” Finally, the court determined an
award of prejudgment interest was appropriate but agreed it had
used the incorrect interest rate for its calculation. Therefore, the
court amended its previous judgment to reflect the lower
prejudgment interest rate.

¶6 John then submitted a supplemental report from Expert to
comply with the court’s order. Appellants objected to this
supplemental report as well. They argued John claimed new
damages in the supplemental report and the prejudgment interest

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was still miscalculated. The court agreed with Appellants and
ordered John to “present evidence on the number of Arco shares”
to which he was entitled and to “provide an updated prejudgment
interest calculation using” the proper prejudgment interest rate.

¶7 John then submitted a third report from Expert, and
Appellants once again objected, claiming the report still did not
comply with the court’s orders because it did not provide
evidence of the shares John was entitled to and again
miscalculated the prejudgment interest. The court determined the
evidence John submitted was “insufficient for the [c]ourt to
determine the sales proceed damages” and John was therefore
“not entitled to an award” of such damages. The court also
accepted Appellants’ calculation of prejudgment interest, which
had previously been accepted by John in his response to
Appellants’ objection.

¶8 The court issued an amended judgment awarding John
$619,807 in lost past earnings and $305,616 in prejudgment
interest, for a total of $925,423.

ISSUES AND STANDARDS OF REVIEW

¶9 Appellants raise three arguments on appeal. First,
Appellants assert they were entitled to an evidentiary hearing on
damages under rule 55 of the Utah Rules of Civil Procedure. We
review “issue[s] involv[ing] the application and interpretation of
a rule of civil procedure . . . for correctness.” Jenco, LC v. Valderra
Land Holdings, LLC, 2025 UT 20, ¶ 15, 572 P.3d 381 (cleaned up).

¶10 Second, Appellants assert the district court erred by
awarding lost past earnings damages because the statute of
limitations had expired for the claim. Waiver of an affirmative
defense, such as the statute of limitations, is a legal conclusion we
review for correctness. See James v. Galetka, 965 P.2d 567, 570 (Utah
Ct. App. 1998).

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¶11 Third, Appellants assert the district court erred when it
awarded prejudgment interest. “A [district] court’s decision to
grant or deny prejudgment interest presents a question of law
which we review for correctness.” Diversified Striping Sys. Inc. v.
Kraus, 2022 UT App 91, ¶ 44, 516 P.3d 306 (cleaned up). 3

ANALYSIS

I. Rule 55 Default

¶12 Appellants’ first argument challenges the district court’s
interpretation and application of rule 55 of the Utah Rules of Civil
Procedure. Rule 55 states, “[T]he court may conduct such hearings
or order such references as it deems necessary and proper” “to
determine the amount of damages” following entry of default.
Utah R. Civ. P. 55(b)(2). Appellants argue the rule requires the
district court to hold an evidentiary hearing on damages and the
court erred by not doing so. We evaluate their argument in two
parts, first addressing the caselaw interpreting rule 55 and then
addressing the district court’s application of the rule in this
situation.

A. Caselaw

¶13 When a party has been defaulted—either by failing to
appear and defend or, as in this case, as a sanction for discovery
abuses, see Mitchell v. Arco Indus. Sales, 2023 UT App 70, 533 P.3d
394—judgment may be entered against that party in one of two
ways. “When the plaintiff’s claim against a defendant is for a sum
certain,” default may be entered by the clerk if “the default of the
defendant is for failure to appear” and certain other conditions

3. Appellants also challenge the sufficiency of the evidence for the
court’s award of damages. Because we remand this matter to the
district court to redetermine damages, we do not address this
argument.

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are met. Utah R. Civ. P. 55(b)(1). In “all other cases,” the default
must be entered by the district court. Id. R. 55(b)(2). Specifically,

the party entitled to a judgment by default shall
apply to the court therefor. If, in order to enable the
court to enter judgment or to carry it into effect, it is
necessary to take an account or to determine the
amount of damages or to establish the truth of any
averment by evidence or to make an investigation of
any other matter, the court may conduct such
hearings or order such references as it deems
necessary and proper.

Id.

¶14 Utah appellate courts have previously considered the
practical implications of this rule on a district court’s entry of
default judgment on several occasions, including the manner in
which the district court receives evidence establishing the
plaintiff’s damages.

¶15 In Synergetics v. Marathon Ranching Co., the plaintiffs sued
to rescind an agreement that provided “for the exchange of [a]
sailboat for [real] property” and to seek monetary damages. 701
P.2d 1106, 1108 (Utah 1985). Following the entry of default for the
defendants’ failure to comply with discovery orders, the district
court ordered “that judgment would enter for damages based
upon the filing of appropriate affidavits concerning punitive and
actual damages.” Id. at 1112 (cleaned up). The plaintiffs then
submitted an affidavit in support of their damages. Id. at 1109.
“Based on [the] affidavit, the plaintiffs were awarded $352,000 in
damages for conversion of the sailboat, $100,000 for rental of the
boat, $200,000 in punitive damages, and costs.” Id. On appeal, the
defendants asserted “the district court erred in assessing damages
against [them] without a hearing.” Id. at 1112. The supreme court
concluded “[t]his contention [was] without merit.” Id. Although
the defendants did not object to the plaintiff’s affidavit nor submit

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any affidavits of their own, the district court had “invited them to
do so” and thus “afforded defendants full opportunity to be heard
on the issue of damages.” Id. The supreme court also upheld the
district court’s award of $200,000 in punitive damages—based
only on the plaintiff’s affidavit—because it was “eminently
reasonable.” Id. at 1113.

¶16 A few years later, our court followed the holding in
Synergetics in Amica Mutual Insurance Co. v. Schettler, 768 P.2d 950
(Utah Ct. App. 1989). In Amica, the plaintiff filed suit against its
insured, asserting claims for “fraud, misrepresentation, breach of
contract, and conversion” and seeking monetary and punitive
damages. Id. at 954. After the district court entered default
judgment for failure to comply with discovery orders, the
defendant “demanded a jury trial on the issue of damages.” Id. at
955. The district court “denied [the] jury demand and instructed
the parties to submit affidavits on the issue of damages.” Id. After
considering the memoranda and affidavits submitted by both
parties, the district court awarded $98,579.24 in general damages
and $100,000 in punitive damages. Id. On appeal, the defendant
asserted that “even if he [did] not have a right to a jury trial, it was
error to submit the issue of damages on affidavits.” Id. at 963.
Citing Synergetics, we concluded the district court offered the
defendant “a full opportunity to be heard on the issue of
damages” when it allowed him to submit a competing affidavit
on damages following the entry of default judgment against him.
Id. at 964 (cleaned up). Thus, while we vacated a portion of the
court’s award of damages for other reasons, see id. at 964–68, we
nonetheless concluded the district court “did not err in awarding
damages based on affidavits,” id. at 964.

¶17 The supreme court further clarified the contours of what is
required to award damages in cases of default in Skanchy v.
Calcados Ortope SA, 952 P.2d 1071 (Utah 1998). In Skanchy, the
district court had initially entered default judgment for the
amount alleged in the complaint. Id. at 1074. But after the

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defendant filed a motion to set aside the judgment, the court held
a “bench trial . . . on the issue of damages” because “there [was]
no sworn statement or other evidentiary submission before the
[c]ourt as to the amount of damages.” Id. On appeal, the
defendant challenged the subsequent award of damages on one
of the plaintiff’s claims. Id. In assessing the merits of that
challenge, the supreme court acknowledged that in cases
involving unliquidated damages, “a default judgment can be
entered only by a judge.” Id. at 1076. When doing so,

a judge must review the complaint, determine
whether the allegations state a valid claim for relief,
and award damages in an amount that is supported
by some valid evidence. In other words, the
allegations in the complaint are not a sufficient basis
for awarding unliquidated damages. That usually
means a hearing must be held so that the plaintiff
can provide evidentiary support for the award of
damages.

Id. (emphasis added) (cleaned up). Importantly, even though a
bench trial had been held by the district court on the issue of
damages, the supreme court stated only that a hearing is usually
required, not that it is mandatory. See id.

¶18 We next turn to Sewell v. Xpress Lube, 2013 UT 61, 321 P.3d
1080. Appellants rely on this decision to support their argument
that the district court was required to hold an evidentiary hearing
before awarding damages. In Sewell, the defendant failed to
answer or otherwise respond to the complaint, and the district
court entered default judgment for $600,000, the full amount
requested by the plaintiff in his complaint (“$45,000 for medical
expenses, $420,000 in lost present and future earnings, and
$135,000 for pain and suffering”). Id. ¶¶ 8–9 & n.2. The district
court received no evidence in support of the damages and did not
hold a hearing. Id. ¶ 9. The court later denied the defendant’s

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motions to set aside the default judgment. Id. ¶¶ 11–12. As
relevant here, the defendant asserted on appeal that the district
court erred in awarding the plaintiff’s damages “without holding
an evidentiary hearing.” Id. ¶ 13.

¶19 The supreme court first noted that “it is still incumbent
upon the non-defaulting party to establish by competent evidence
the amount of recoverable damages and costs he claims.” Id. ¶ 36
(quoting Amica, 768 P.2d at 965). The court then stated that “even
defaulting defendants should usually be afforded an evidentiary
hearing whenever the amount owed is unliquidated under rule
55(b)(2).” Id. (emphasis added) (cleaned up) (quoting Cadlerock
Joint Venture II, LP v. Envelope Packaging of Utah, Inc., 2011 UT App
98, ¶ 10, 251 P.3d 837). 4

¶20 The supreme court then went on to state,

Although the language of rule 55(b)(2) appears to be
permissive by stating that the court may conduct a
hearing on damages, a district court does not have
discretion to avoid a hearing when the damages are
unliquidated, regardless of the allegations in the
complaint. Liquidated damages are those that can
be precisely determined. In such cases, an
evidentiary hearing is not always required. But
where the damage claim is for other than a sum
certain, the district court has an “obligation under
rule 55(b)(2) to conduct such hearings and take such

4. In Cadlerock Joint Venture II, LP v. Envelope Packaging of Utah, Inc.,
our court cited the supreme court’s holding in Skanchy v. Calcados
Ortope SA, 952 P.2d 1071, 1076 (Utah 1998), for the proposition that
“[o]ur precedent states that even defaulting defendants should
usually be afforded an evidentiary hearing whenever the amount
owed is unliquidated under rule 55(b)(2).” 2011 UT App 98, ¶ 10,
251 P.3d 837.

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evidence as it deems advisable for determining the
damages.”

Id. ¶ 37 (cleaned up) (quoting Cadlerock, 2011 UT App 98, ¶ 11). 5
The supreme court then explained that “personal injury cases
almost always involve elements of damages that are incomplete
or cannot be calculated with mathematical accuracy. This is
particularly true where the damages sought include amounts for
pain and suffering and lost future wages.” Id. ¶ 38 (cleaned up).
The supreme court concluded “the district court erred when it
entered default judgment for the full amount of damages alleged
in the complaint without holding an evidentiary hearing.” Id.
¶ 41. Thus, we read Sewell to require an evidentiary hearing where

5. This quoted language from Cadlerock was, in turn, a quote from
Pitts v. Pine Meadow Ranch, Inc., 589 P.2d 767 (Utah 1978). See 2011
UT App 98, ¶ 11. But the court in Cadlerock did not fully quote the
supreme court’s opinion in Pitts. The word “may,” which appears
immediately before the phrase “conduct such hearings and take
such evidence as it deems advisable for determining the
damages” in Pitts, was not included in the quotation by the
Cadlerock court and thus was not included in the quotation by the
Sewell court. The relevant passage in Pitts reads, in full,

Rule 55(b)(2) provides that where plaintiff’s claim is
other than a sum certain or an amount which by
computation can be made certain, judgment by
default may not be entered by the clerk of the Court,
but must be entered by the Court, which may
conduct such hearings and take such evidence as it
deems advisable for determining the damages.

589 P.2d at 769 (emphasis added).

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the damages sought are of the type that “are incomplete or cannot
be calculated with mathematical accuracy.” Id. ¶ 38 (cleaned up). 6

¶21 Having examined the relevant caselaw, we conclude that
broadly reading the language in Sewell to require an evidentiary
hearing in all cases of default where damages are unliquidated, as
advocated by Appellants, is inconsistent with our caselaw as a
whole and with Sewell itself. Accordingly, depending on whether
the damages sought can be calculated with mathematical
certainty, a district court may have discretion as to whether to
hold an evidentiary hearing in determining the amount of
unliquidated damages to award for a default judgment.

B. Application

¶22 Having concluded that rule 55 of the Utah Rules of Civil
Procedure does not require a district court to hold an evidentiary
hearing to determine damages in every case involving
unliquidated damages, we turn to the facts of this case. Here, John
seeks damages for lost past earnings, proceeds from the sale of
Arco, and prejudgment interest. All of these types of damages can
be calculated with mathematical accuracy. 7 Cf. Bjork v. April

6. The supreme court in Sewell did not engage in any analysis of
the holdings in Synergetics, Amica, or Skanchy—all prior cases that
had determined it was not error for the trial court to award
unliquidated damages for a default judgment based on affidavits
alone. Nor did it explain why Synergetics and Skanchy were not
binding and should be set aside. And it did not evaluate any of
the factors that appellate courts consider when overruling
precedent. See Eldridge v. Johndrow, 2015 UT 21, ¶ 22, 345 P.3d 553.
We therefore do not read Sewell as overruling prior precedent on
this issue.

7. Indeed, Appellants checked Expert’s math and pointed out to
the district court that “the math d[id] not add up.”

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Indus., Inc., 560 P.2d 315, 317 (Utah 1977) (“[W]here damages are
incomplete or cannot be calculated with mathematical accuracy,
such as in case of personal injury, wrongful death, defamation of
character, false imprisonment, etc., the amount of the damages
must be ascertained and assessed by the trier of the fact at the
trial.”). None of them are of the type that “are incomplete or
cannot be calculated with mathematical accuracy,” such as the
damages for pain and suffering and lost future wages sought in
Sewell. See 2013 UT 61, ¶ 38. Thus, the district court was not
required to hold an evidentiary hearing to determine the amount
of John’s damages.

¶23 While we conclude the district court was not required to
hold an actual hearing on John’s claims for damages, Appellants
were entitled to a “full opportunity to be heard on the issue of
damages.” Synergetics v. Marathon Ranching Co., 701 P.2d 1106,
1112 (Utah 1985). As our caselaw bears out, the full opportunity
to be heard can take many forms, whether through a hearing,
sworn affidavits, expert reports, or otherwise. See supra ¶¶ 13–20.

¶24 Here, the district court determined there was “not a role for
[Appellants] to play” when determining damages and they did
not “have a right to contest or do something more than just hear
[the] evidence.” As a result, the district court allowed only John
to submit an expert affidavit in support of his damages
calculation. Although the court did receive objections and
motions from Appellants and amended its judgment in response,
Appellants were never able to submit their own expert report or
affidavits. They should have been given that opportunity.

¶25 Because Appellants were not afforded a full opportunity to
be heard on the issue of damages, we vacate the damages award.
On remand, the district court “may conduct such hearings or
order such references as it deems necessary and proper” to allow
both parties to be fully heard on this issue. See Utah R. Civ. P.
55(b)(2).

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II. Issues on Remand

¶26 Although our decision on the first issue is dispositive in
this case, we choose to address Appellants’ two remaining issues
as they are likely to arise again on remand. See, e.g., State v. Low,
2008 UT 58, ¶ 61, 192 P.3d 867.

A. Statute of Limitations

¶27 Appellants assert that because the statute of limitations for
all of John’s claims had expired, the lost past earnings damages
were unrecoverable. Appellants resist the district court’s
conclusion that this defense was waived when their answer was
struck by arguing that affirmative defenses should be treated
differently in the context of default. We are unpersuaded. Utah
caselaw firmly establishes that the statute of limitations is a
waivable defense. See Staker v. Huntington Cleveland Irrigation Co.,
664 P.2d 1188, 1190 (Utah 1983) (“The statute of limitations
defense must be pleaded as an affirmative defense in a responsive
pleading, or it is waived . . . .” (cleaned up)); State v. Jackson, 2011
UT App 318, ¶ 22, 263 P.3d 540 (holding that “a statute of
limitations defense is not jurisdictional and that it can be waived”
(cleaned up)); James v. Galetka, 965 P.2d 567, 571 (Utah Ct. App.
1998) (“In civil cases, a statute of limitations must be pleaded as
an affirmative defense, or it is waived.” (cleaned up)).

¶28 Because we previously affirmed the district court’s
decision to strike Appellants’ answer, see Mitchell v. Arco Indus.
Sales, 2023 UT App 70, ¶ 26, 533 P.3d 394, we conclude the district
court did not err in its determination that the statute of limitations
defense had been waived since the answer asserting the
affirmative defense was no longer valid.

B. Award of Prejudgment Interest

¶29 “A prejudgment interest award is proper when the damage
is complete, the loss can be measured by facts and figures, and the

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amount of loss is fixed as of a particular time.” Harris v. IES
Assocs., Inc., 2003 UT App 112, ¶ 52, 69 P.3d 297 (cleaned up).
Appellants argue that because their calculation of damages
differed from John’s, the damages in this case are speculative and
not subject to prejudgment interest. But disagreement about the
appropriate calculation is not the same as a loss being speculative.
“Where damage figures are subject to calculation, . . . even if the
method of calculating is uncertain, or the damage figures change,
prejudgment interest is appropriate.” Encon Utah, LLC v. Fluor
Ames Kraemer, LLC, 2009 UT 7, ¶ 55, 210 P.3d 263. Although the
parties disagree on how to properly calculate the lost earnings, the
damages are calculable. Therefore, the district court did not err in
awarding prejudgment interest.

CONCLUSION

¶30 While an evidentiary hearing was not mandatory,
Appellants were entitled to be fully heard on the issue of
damages. Because they were denied this opportunity, we vacate
the damages award and remand the matter to the district court to
reassess damages, allowing both sides to be fully heard.
Furthermore, any statute of limitations defense was waived when
Appellants’ answer was struck, and an award of prejudgment
interest is appropriate because the damages in this case are
calculable.

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