Northgate Vill. Dev., LC v. City of Orem

• Decision Date: 02 October 2019
• Docket Number: No. 20180465,20180465
• Citation: 450 P.3d 1117
• Parties: NORTHGATE VILLAGE DEVELOPMENT, LC, Appellee, v. CITY OF OREM, Appellant.
• Court: Utah Supreme Court

450 P.3d 1117

NORTHGATE VILLAGE DEVELOPMENT, LC, Appellee,

v.CITY OF OREM, Appellant.

No. 20180465

Supreme Court of Utah.

Filed October 2, 2019

J. Craig Smith, Kathryn J. Steffey, Clayton H. Preece, Salt Lake City, for appellee

Jody K. Burnett, Robert C. Keller, Salt Lake City, for appellant

Justice Petersen authored the opinion of the Court in which Chief Justice Durrant, Associate Chief Justice Lee, Justice Himonas, and Judge Valencia joined.

Having recused himself, Justice Pearce does not participate herein. District Judge Jennifer L. Valencia sat.

On Certiorari to the Utah Court of Appeals

Justice Petersen, opinion of the Court:

INTRODUCTION

¶1 Ten years ago, Northgate Village Development, LC sued the City of Orem to recover the cost of cleaning up property Northgate had purchased from the City. Northgate contends that when it began to excavate the property to prepare it for sale to a developer, it found subsurface asphalt and "urban detritus." This litigation centers on who was responsible for cleaning up the property under the parties’ agreement.

¶2 After a grant of summary judgment, an appeal, and a reversal and remand, this case was back in the district court. Northgate filed an interlocutory appeal, challenging two of the district court’s pretrial evidentiary rulings. The court of appeals reversed, holding that the district court incorrectly excluded expert testimony and other evidence proposed by Northgate. The City petitioned for certiorari, which we granted.

¶3 Because we agree with the court of appeals’ reasoning regarding both evidentiary rulings, we affirm.

BACKGROUND

¶4 Northgate purchased a parcel of property from the City that the City had used to operate a public works facility. When Northgate began excavating the property, it found

car bumpers, bicycles, tires, water heaters, washing machines, car engines, car parts, asphalt, galvanized pipes, asbestos-containing transit pipe, trees, bushes, medical waste products, brick, mason blocks, concrete, toilets, electrical panels, refrigerators, silverware, 50-gallon drums, conduit, general garbage, storm drains, ADS pipe, slag, barbed wire, field fence, cedar fence posts, railroad ties, plywood, carpet, transformers, mercury-containing ballasts, gas cables, truck mud flaps, plastic sheeting, car doors, pallets, rebar, pop bottles, sewer pipe, metal t-posts, fire hydrants, water valves, ductile iron, copper

parts and valves, brass parts, fiberglass insulation, twine, rubber traffic cones, concrete manhole sections, metal rings and lids for manholes, valve boxes, bags of leaves, and metal sheeting for roofs.

¶5 Northgate demanded that the City reimburse its clean-up costs or perform the work itself. The City refused, disputing Northgate’s characterization of the parties’ agreement. Ultimately, Northgate incurred approximately $3 million in clean-up costs.

¶6 In 2009, Northgate sued the City, alleging breach of contract. The parties filed competing summary judgment motions disputing the terms of their agreement. The parties’ contract provided that the City was to "complete any environmental clean-up responsibilities specified in the written action plan." Northgate argued that the "written action plan" referred to both an Environmental Site Assessment referenced elsewhere in the contract and an Environmental Clean-Up List (Clean-Up List) attached to the agreement. The City argued that the Clean-Up List was the only "written action plan."

¶7 The Clean-Up List outlined certain obligations including: (1) "Landfilling construction materials with pieces of asphalt"; (2) "Permit required for continued landfilling"; (3) "Site assessment and application required for closure of site"; (4) "Landfill operations—burial of asphalt materials—Check permitting & closure requirements including Coordination with State of Utah Division of Solid & Hazardous Waste"; and (5) "Landfill operations—burial of electrical transformers with PCB’s."¹

¶8 The district court agreed with the City that the "written action plan" referred only to the Clean-Up List. Further, the court interpreted the Clean-Up List to require the City to remove only buried transformers. For the remaining debris and landfill material, the court concluded that the agreement obligated the City only to procure the necessary permits to leave it in place.

¶9 Northgate appealed. The court of appeals affirmed the district court’s determination that the agreement obligated the City to perform only the clean-up identified in the Clean-Up List, but it disagreed that the list unambiguously required the City to remove only buried transformers. Northgate Vill. Dev., LC v. Orem City (Northgate I ), 2014 UT App 86, ¶ 36, 325 P.3d 123. The court of appeals noted that the parties had "ascribe[d] contrary meanings" to a section of the Clean-Up List that could impose additional obligations on the City:

1. Landfilling construction materials with pieces of asphalt

2. Permit required for continued landfilling

3. Site assessment and application required for closure of site

Id. ¶ 37. With regard to these items in the Clean-Up List, Northgate argued that the first and second entries imposed separate requirements on the City to both remove construction materials with pieces of asphalt and obtain the proper permit for continued landfilling. Id. In contrast, the City argued that the first and second entries should be read together, meaning that the City would fulfill any obligation associated with subsurface asphalt by procuring any necessary permits.² Id. The court of appeals found both interpretations to be plausible and reversed and remanded to the district court for fact-finding on the parties’ intent regarding these ambiguous contract provisions. Id. ¶¶ 38–39.

¶10 On remand, the City made pretrial motions to exclude some of Northgate’s proposed evidence. First, the City moved under Utah Rule of Evidence 403 to exclude evidence relating to the clean-up of any debris and material other than asphalt (Fill Material Evidence). The district court granted the motion primarily under Utah Rule of Evidence 401, finding that the evidence was irrelevant because it "contributes nothing to the fact in question: whether the City was bound under the Agreement to remove asphalt from the property." The court also stated that the Fill Material Evidence "would be more prejudicial than probative."

¶11 Second, the City moved to exclude the testimony of two of Northgate’s proposed expert witnesses under Utah Rule of Evidence 702, arguing that their expert opinions were based on an unreliable study. Northgate asserted that its experts did not rely on the study in question and attached declarations from each expert explaining the methodology they used to calculate damages. The district court found that the new declarations were sufficient to show the experts’ methodology was reliable under rule 702. But the court excluded the experts as a discovery sanction because the initial expert reports had not contained the information in the declarations, and without it, "[t]he expert reports failed to contain all data and other information that will be relied upon by the witness in forming those opinions."

¶12 Northgate petitioned for permission to file an interlocutory appeal, which the court of appeals granted. Northgate challenged both of these evidentiary orders, and the court of appeals agreed and reversed both. Northgate Vill. Dev., LC v. Orem City (Northgate II ), 2018 UT App 89, ¶ 35, 427 P.3d 391.

¶13 The City petitioned this court for certiorari, which we granted. We exercise jurisdiction pursuant to Utah Code section 78A-3-102(3)(a).

STANDARD OF REVIEW

¶14 "When a case is before us on certiorari review, we review the decision of the court of appeals ... de novo to determine whether the court of appeals correctly applied the appropriate standard of review to the district court’s determinations." Brown v. Div. of Water Rights of Dep’t of Nat. Res. , 2010 UT 14, ¶ 9, 228 P.3d 747. "Two different standards of review apply to [Northgate’s] claims regarding the admissibility of evidence. The first standard of review, correctness, applies to ‘the legal questions underlying the admissibility of evidence.’ " State v. Griffin , 2016 UT 33, ¶ 14, 384 P.3d 186 (citation omitted). "The second standard of review, abuse of discretion, applies to the [district] court’s decision to admit or exclude evidence ... and to the [district] court’s determination regarding the admissibility of expert testimony." Id. (citations omitted).

ANALYSIS

I. EXPERT TESTIMONY

¶15 We agree with the court of appeals that the district court erred in excluding Northgate’s proposed expert testimony as a discovery sanction, because it applied the wrong version of rule 26.

¶16 In 2011, the Utah Rules of Civil Procedure were revised. "Due to the significant changes in the discovery rules," the 2011 amendments are effective only as to cases filed on or after November 1, 2011. UTAH R. CIV. P. 1 advisory committee notes. Because this case was filed in 2009, the parties are subject to the pre-2011 discovery rules.

¶17 Relevant here are the substantive revisions to the expert discovery provisions in rule 26. The pre-2011 rule 26 (Old Rule) required expert disclosures to be accompanied by a written report that "contain[s] the subject matter on which the expert is expected to testify; the substance of the facts and opinions to which the expert is expected to testify; [and] a summary of the grounds for each opinion." Id. 26(a)(3)(B) (2010). That language changed with the 2011 amendments.

¶18 The post-2011 rule 26 (New Rule) mandates that expert disclosures contain "a brief summary of the opinions to which the witness is expected to testify" and "all data and other information that will be relied upon by the witness in forming those opinions." Id. 26(a)(4)(A)(ii)–(iii).

¶19 In the City’s motion to exclude the testimony of two of Northgate’s proposed expert witnesses, it argued that the expert opinions were based on an unreliable...