Prince, Yeates & Geldzahler v. Young

• Citation: 2004 UT 26,94 P.3d 179
• Decision Date: 30 March 2004
• Docket Number: No. 20020347.,20020347.
• Parties: Prince, Yeates & Geldzahler, a professional corporation, Plaintiff, Counterclaim Defendant, Appellant, and Cross-Appellee, v. Robert S. Young, Defendant, Counterclaimant, Appellee, and Cross-Appellant.
• Court: Supreme Court of Utah

2004 UT 26

94 P.3d 179

Prince, Yeates & Geldzahler, a professional corporation, Plaintiff, Counterclaim Defendant, Appellant, and Cross-Appellee, v. Robert S. Young, Defendant, Counterclaimant, Appellee, and Cross-Appellant.

No. 20020347.

Supreme Court of Utah.

FILED March 30, 2004.

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

M. David Eckersley, Salt Lake City, for plaintiff.

Samuel O. Gaufin, Daniel L. Berman, Salt Lake City, for defendant.

WILKINS, Justice:

¶1 Plaintiff Prince, Yeates & Geldzahler ("Prince Yeates" or "the firm") appeals the district court's denial of the firm's motion for summary judgment on defendant Robert S. Young's counterclaim for breach of express contract and its grant of partial summary judgment to Young on the firm's breach of fiduciary duty claim. We reverse.

FACTUAL AND PROCEDURAL HISTORY

¶2 In April 1995, Prince Yeates hired Young as an associate attorney. Previously, Young had spent the majority of his twelve-year legal career as general counsel for Rocky Mountain Helicopters, where he acquired considerable experience in helicopter crash litigation. Prior to joining Prince Yeates, Young met with John Ashton, the firm's then-president, to discuss compensation. Under the terms of his original employment agreement, which was never reduced to writing, Young accepted a starting salary of $70,000 per year. During their discussions, Ashton also indicated to Young that the firm would evaluate his performance after the first year and that, as a general rule, attorneys at Prince Yeates typically received increased compensation based on performance and positive results. In addition, with respect to becoming a shareholder, Ashton told Young that, depending upon his performance, the usual partnership track for a lateral hire with Young's experience ranged from two to three years.

¶3 In 1996, Young agreed to represent Charles Krause, who had sustained serious injuries in a helicopter crash, in a personal injury action in Texas. At approximately the same time, Young also undertook the representation of Mountain West Helicopters, the owner of the helicopter involved in Krause's accident, in a related lawsuit filed in federal court in Utah. As well as being the originating attorney, Young was the only lawyer at Prince Yeates who performed any work on either case.

¶4 For the next two years, Young spent considerable time on these two contingent fee cases, which resulted in lower collections and higher work-in-process figures compared to other Prince Yeates attorneys. As a result, some members of the firm began to question Young's overall profitability and readiness to become a shareholder. In September 1998, perhaps sensing this tension, Young inquired as to how the contingent fee in the Krause case (assuming a successful outcome) would be divided between himself and Prince Yeates. The firm's Board of Directors ("the Board") responded by assigning Ashton and John Chindlund, Prince Yeates' then-president, to explore the possibility of reaching an agreement with Young on the Krause fee.

¶5 Between December 1998 and May 1999, Ashton and Chindlund met with Young on several occasions to negotiate an appropriate allocation of the Krause fee. Throughout these meetings, both Prince Yeates (represented by Ashton and Chindlund) and Young communicated their intention to be "fair" with each other in attempting to determine the amount of "fair and equitable" compensation that Young would receive from the Krause fee. Ultimately, the two parties reached a tentative verbal agreement under which Young would take one-third of the Krause fee, with the remaining two-thirds going to the firm. On May 5, 1999, Chindlund memorialized this proposal in writing and requested that Young sign it to acknowledge his acceptance. Young did not sign.

¶6 On June 14, 1999, Young learned that the Krause case had settled three days earlier at a mediation in Texas, which he did not attend, and that the contingent fee recovery would be nearly $650,000. The following day, June 15, without disclosing his knowledge of the settlement to his employer, Young made a counteroffer to the firm's May 5 proposal. In his counteroffer, Young agreed to divide the Krause fee one-third to himself and two-thirds to the firm, provided Prince Yeates made him a shareholder, allowed him a voice in that year's bonus distribution, and guaranteed an increased salary for the next two years. According to Young, over the course of their numerous meetings, Ashton and Chindlund promised him that the firm would fulfill these additional conditions upon the successful resolution of the Krause case. Ashton and Chindlund denied making such promises, and the firm did not respond to Young's proposal. Finally, on July 2, Young wrote a memo to the Board, informing them that he would leave Prince Yeates in two weeks if an agreement could not be reached on his counteroffer. The firm accepted Young's resignation on July 7.

¶7 After his departure, Prince Yeates learned that Young had represented certain clients during 1998 and 1999 without disclosing the representation to the firm, while simultaneously using firm resources and filing pleadings in the firm's name in connection with these matters. In addition, Young retained all fees derived from these cases for himself. Prince Yeates then filed suit against Young for breach of fiduciary duty, and Young counterclaimed alleging, among other causes of action, breach of oral contract. The firm twice moved for summary judgment on Young's counterclaim, and the district court denied both motions with respect to the contract claims. Prince Yeates and Young also each moved for partial summary judgment on the breach of fiduciary duty claim. The district court denied the firm's motion, granted Young's, and the case proceeded to trial.

¶8 At trial, the special verdict form asked the jury to determine if Young "was entitled to additional compensation as a result of the Krause fee either under his original oral employment contract or a valid contract with regard to the helicopter cases." The jury answered in the affirmative and determined that $280,000 represented "the fair and reasonable amount of the fee" owed to Young.

¶9 On appeal, Prince Yeates challenges (1) the district court's denial of its two summary judgment motions on Young's breach of contract counterclaim; (2) the district court's grant of partial summary judgment to Young and denial of partial summary judgment to the firm on its breach of fiduciary duty claim; (3) the district court's denial of Prince Yeates' motion for a directed verdict on the counterclaim; (4) the sufficiency of the evidence presented by Young to support the jury verdict; and (5) the district court's refusal to allow the firm to introduce evidence of Young's competing law practice. On cross-appeal, Young asserts that the district court erred when it denied his post-trial request for attorney fees, expenses, and prejudgment interest. Because the case is fully resolved by our analysis of the district court's summary judgment rulings, we do not address the other issues raised.

ANALYSIS

I. STANDARD OF REVIEW

¶10 We review the district court's rulings on summary judgment motions for correctness. Surety Underwriters v. E & C Trucking, Inc., 2000 UT 71, ¶ 14, 10 P.3d 338; see Utah R. Civ. P. 56(c). In the context of cross-motions for summary judgment, we examine each motion separately, viewing the facts and reasonable inferences drawn therefrom in the light most favorable to the non-moving party. Surety Underwriters, 2000 UT 71 at ¶ 15.

II. BREACH OF EXPRESS CONTRACT

¶11 Young asserts that Prince Yeates entered into two separate express contracts with him: (1) the original 1995 oral employment agreement; and (2) the discussions between Ashton, Chindlund, and Young regarding the "fair and equitable" division of the Krause fee. We review each in turn.

A. The Original Employment Agreement

¶12 Under the terms of his original oral employment agreement, Young accepted Prince Yeates' offer to become an associate attorney at a starting salary of $70,000 per year. In previous conversations, Ashton indicated to Young that, as a general rule, attorneys at the firm typically received increased compensation based on performance, and that the usual shareholder track for a lateral hire with Young's experience ranged from two to three years. Although nothing was ever reduced to writing, Young claims that these representations created an express contract under which Prince Yeates agreed to pay him additional compensation contingent upon positive performance. Young then argues that his recovery of the Krause fee constitutes contractual performance sufficient to warrant increased remuneration. We disagree.

¶13 In Nielsen v. Gold's Gym, we noted that "`a meeting of the minds on the integral features of an agreement is essential to the formation of a contract'" and, consequently, "`[a]n agreement cannot be enforced if its terms are indefinite.'" 2003 UT 37, ¶ 11, 78 P.3d 600 (quoting Richard Barton Enters. v. Tsern, 928 P.2d 368, 373 (Utah 1996)). Here, Ashton and Young discussed the general relationship between performance and compensation at Prince Yeates. At no point in these conversations did Ashton represent to Young that the firm would pay him a specific amount of additional compensation in the future, or that Young was guaranteed to become a shareholder. Furthermore, Ashton never provided, nor did Young ask for, clarification on what exactly constituted "performance" sufficient to trigger increased compensation. Rather, Ashton merely communicated Prince Yeates' usual practice; namely, that as a general rule, attorneys at the firm typically received additional compensation if they performed well.

¶14 Without some definite language addressing the amount, timing, or conditions of Young's potential additional compensation, Ashton's comments represent "only the...