Backus Elec., Inc. v. Hubbartt Elec., Inc.

• Decision Date: 20 May 2015
• Docket Number: No. 2014AP1789.,2014AP1789.
• Citation: 364 Wis.2d 408,866 N.W.2d 405 (Table)
• Parties: BACKUS ELECTRIC, INC., Plaintiff–Appellant, v. HUBBARTT ELECTRIC, INC., Jason L. Hubbartt, John M. Lepich and Joseph D. Stauffer, Defendants–Respondents.
• Court: Wisconsin Court of Appeals

364 Wis.2d 408

866 N.W.2d 405 (Table)

BACKUS ELECTRIC, INC., Plaintiff–Appellant

v.HUBBARTT ELECTRIC, INC., Jason L. Hubbartt, John M. Lepich and Joseph D. Stauffer, Defendants–Respondents.

No. 2014AP1789.

Court of Appeals of Wisconsin.

May 20, 2015.

Opinion

¶ 1 PER CURIAM.

Backus Electric, Inc. appeals from an order dismissing its claims that three former employees, Jason Hubbartt, John Lepich, and Joseph Stauffer, breached a union contract and were unjustly enriched when they abruptly left their employment with Backus and started working for Hubbartt Electric, Inc. Backus argues that the circuit court prematurely stayed discovery and thereby cut off its ability to offer evidence in opposition to the summary judgment motion and that it has viable claims for breach of contract and unjust enrichment. We affirm that part of the order dismissing the breach of contract claim, reverse the dismissal of the unjust enrichment claim, and remand for further proceedings.

¶ 2 Hubbartt, Lepich and Stauffer worked for Backus as union electricians until April 2013. When Hubbartt was terminated he started Hubbartt Electric, Inc. Lepich and Stauffer then left Backus and began working for Hubbartt Electric. Backus commenced this action claiming that the former employees planned or engaged in competing business while still in Backus's employ and thereafter utilized proprietary information gained through their employment to compete with Backus. Nine causes of action were alleged.¹

¶ 3 After the action was started, Hubbartt was deposed.² Discovery requests and objections were pending when the employees moved for partial summary judgment dismissing the claims of breach of the union contract and unjust enrichment. At the hearing on discovery motions, the employees requested a stay of discovery pending the outcome of their partial summary judgment motion. The circuit court stayed all discovery, including scheduled depositions of Hubbartt, Lepich and Stauffer.

¶ 4 Ultimately the circuit court granted the employees' partial summary judgment motion. It concluded that there was no cause of action under the union contract because there was no contract privity and the contract required other remedies. With respect to the unjust enrichment claim, the court determined that Backus had made no showing that the employees took any trade secrets with them. It concluded that there was no cause of action for unjust enrichment when based on nothing more than the employees' use of training and experience gained on the job. Backus's petition for leave to appeal the partial summary judgment order was granted. Wis. Stat. Rule E 809.50.

¶ 5 We review the circuit court's grant of summary judgment using the same methodology as the circuit court. City of Beaver Dam v. Cromheecke, 222 Wis.2d 608, 613, 587 N.W.2d 923 (Ct.App.1998). There is no need to repeat the well-known methodology; the controlling principal is that when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law, summary judgment is appropriate. Id.; Wis. Stat . § 802.08(2).

¶ 6 As to the unjust enrichment claim, Backus argues that it was not allowed discovery necessary to oppose the motion for summary judgment. Thus we examine the circuit court's decision to stay discovery.³ The circuit court exercises its discretion in granting a motion to stay discovery. Cf. State v. Beloit Concrete Stone Co., 103 Wis.2d 506, 511, 309 N.W.2d 28 (Ct.App.1981) (the decision to grant a protective discovery order is discretionary). Similarly, the circuit court exercises its discretion in determining if sufficient discovery has occurred before ruling on a motion for summary judgment. See Kinnick v. Schierl, Inc., 197 Wis.2d 855, 865, 541 N.W.2d 803 (Ct.App.1995) ; Mathias v. St. Catherine's Hosp., Inc., 212 Wis.2d 540, 554–55, 569 N.W.2d 330 (Ct.App.1997). A proper exercise of discretion is made if the circuit court examined the relevant facts, applied a proper standard of law, and, using a demonstrated rational process, reached a conclusion that a reasonable judge could reach. See Jorgensen v. Water Works, Inc., 218 Wis.2d 761, 772, 582 N.W.2d 98 (Ct.App.1998). “[T]here should be evidence in the record that discretion was in fact exercised and the basis of that exercise of discretion should be set forth.” State v. Hutnik, 39 Wis.2d 754, 764, 159 N.W.2d 733 (1968).

¶ 7 The motion to stay discovery came before the circuit court as an oral request at the hearing to consider discovery disputes. Not only did Backus not have any notice that the request would be made, Backus had not yet seen the partial summary judgment motion filed two days before the hearing. The circuit court granted in part Backus's motion to compel answers to interrogatories but then stayed all discovery. In granting the request to stay discovery, the circuit court only considered that the scheduled depositions of the employees were only a month before the anticipated decision on the summary judgment motion. It appears the circuit court wanted to put off further disagreements about the scope and breadth of discovery in the event the issues were narrowed by granting partial summary judgment. The court did not consider what impact the stay of discovery would have on the pending summary judgment motion and the need to create a record on that motion. Although there may be a preference to take up summary judgment early in the action to conserve judicial resources, see Jorgensen, 218 Wis.2d at 773, 582 N.W.2d 98, there was no consideration here of whether the motion for partial summary judgment only presented questions of law not needing any factual development. The circuit court's decision was not reasonable in light of the pending motion for partial summary judgment. See Park Bancorporation, Inc. v. Sletteland, 182 Wis.2d 131, 146, 513 N.W.2d 609 (Ct.App.1994) (additional discovery appropriate after determination of standing to raise claim); A & B Pipe and Supply Co. v. Turnberry Towers Corp., 500 So.2d 261, 262 (Fla.Dist.Ct.App.1986) (premature to grant summary judgment when plaintiff was unable to depose defendants).

¶ 8 Backus's complaint alleged that the employees used Backus's trucks, cell phones, credit accounts, tools and other resources to do work not benefitting Backus. Its unjust enrichment claim alleged that the employees were provided with training, introductions to Backus's customers, and valuable information about the customers' electrical needs and that Hubbartt and Hubbartt Electric received a benefit by taking key employees with such training and information. In support of summary judgment, the employees filed affidavits stating that they did not take any client list or other property of Backus when they left and that they knew customers by memory and could look them up in the phonebook. The employees argued that...