Cent. Trust & Inv. Co. v. Signalpoint Asset Mgmt., LLC

• Decision Date: 25 February 2014
• Docket Number: No. SC93182.,SC93182.
• Citation: 422 S.W.3d 312
• Parties: CENTRAL TRUST AND INVESTMENT COMPANY, Appellant, v. SIGNALPOINT ASSET MANAGEMENT, LLC, Respondent.
• Court: Missouri Supreme Court

422 S.W.3d 312

CENTRAL TRUST AND INVESTMENT COMPANY, Appellant,

v.SIGNALPOINT ASSET MANAGEMENT, LLC, Respondent.

No. SC93182.

Supreme Court of Missouri,

En Banc.

Feb. 25, 2014.

Eric M. Trelz, Polsinelli, PC, Clayton, Jay M. Dade and Jennifer R. Growcock, Polsinelli, PC, Springfield, for Central Trust.

Warren E. Harris and Lance A. Roskens, Taylor, Stafford, Clithero, Fitzgerald & Harris LLP, Springfield, for SignalPoint.

Ronald Baird and Brett W. Roubal, Baird Lightner Millsap & Harpool PC, Springfield, for Troy Kennedy and ITI Financial.

ZEL M. FISCHER, Judge.

This appeal concerns, primarily, whether a company can be liable for misappropriation of trade secrets, pursuant to the Missouri Uniform Trade Secrets Act, §§ 417.450 to 417.467, RSMo 2000¹ (MUTSA), for affiliating with an ex-employee of another company. Central Trust and Investment Co. (“Central Trust”), which is the plaintiff, had purchased another company prior to this suit. Central Trust sued SignalPoint Asset Management, LLC (“SignalPoint”) for affiliating with the predecessor company's ex-employee, who acquired the predecessor's client list. Central Trust appeals the circuit court's entry of summary judgment in favor of SignalPoint. This Court holds that Central Trust has not demonstrated that a genuine issue of material fact exists as to whether SignalPoint “misappropriated” the client list of Central Trust as that term is defined by the MUTSA. This failure also justified the circuit court's grant of summary judgment against Central Trust's claim of tortious interference with business relations. Furthermore, Central Trust's civil conspiracy claim is moot because the other remaining defendants have been dismissed from the case, and the circuit court did not abuse its discretion in overruling Central Trust's motion for reconsideration of summary judgment and for a new trial alleging newly discovered evidence. The circuit court's judgment is affirmed.

Factual Background

In 2009, Central Trust purchased Springfield Trust & Investment Company (STC), which was a company that provided financial management services. Troy Kennedy worked for STC as a director and executive officer before the business's sale. His primary job responsibilities were to develop new business and act as a relationship manager to existing clients. Although Kennedy signed an employment agreement to work for STC through 2013, which contained a covenant not to compete, the agreement stated that the covenant not to compete did not apply if the company was sold.²

Kennedy left STC's employment on November 20, 2009, the day Central Trust purchased STC via a stock purchase agreement. The next day, Kennedy founded a new company, ITI Financial Management, LLC (ITI), which provides financial advice and investment management services in competition with Central Trust. Kennedy then began soliciting Central Trust's clients. As of May 2010, 85 of ITI's 90 clients were former clients of STC or Central Trust.

Kennedy knew about the merger negotiations while he was still an employee of STC, and he prepared for his potential departure. He told clients he planned to leave the company if the sale of STC was consummated, and he solicited other STC employees to leave with him. Kennedy placed a list of the clients, for whom he provided services while at STC, in a safe deposit box. This list was attached as an exhibit to his employment contract. Kennedy also placed in a safe deposit box, upon advice of counsel, a cell phone containing the contact information of approximately 200 STC clients and 39 pages of documents containing information about STC's clients, including names, addresses, telephone numbers, email addresses, and confidential financial information. ³ Kennedy also admitted that he compiled a list of client names from memory after leaving STC.

Instead of registering himself or ITI with the Securities and Exchange Commission (SEC) as an “investment adviser,” Kennedy began affiliating with SignalPoint, which is a registered investment adviser.⁴ On February 22, 2010, Kennedy signed an agreement with SignalPoint naming him an “Independent Advisor Representative” of SignalPoint. The agreement allows Kennedy, through SignalPoint, to solicit and receive, from his clients, orders to buy and sell securities or to facilitate other types of securities transactions. Kennedy invests in mutual funds for clients and offers other investment services through SignalPoint. In addition, all of his emails go through SignalPoint, and he tells clients he is affiliated with SignalPoint. In exchange, SignalPoint receives a set fee per trade of securities and also 10% of the total amount of the fees Kennedy charges his clients. The agreement states that Kennedy is an independent contractor of SignalPoint, not an employee, and that Kennedy has no right to bind SignalPoint by his actions. ⁵

Central Trust filed a petition against Kennedy and ITI, alleging a myriad of claims; it later filed a first amended petition adding SignalPoint as a defendant. The first amended petition alleges three claims against SignalPoint: (1) misappropriation of trade secrets, (2) tortious interference with business relations, and (3) civil conspiracy.

The first amended petition alleges that Kennedy, ITI, and SignalPoint had a business relationship, but it does not state that Kennedy or ITI acted as an agent of SignalPoint. For the misappropriation of trade secrets claim against SignalPoint, the first amended petition states that only SignalPoint “used and continues to misappropriate” Central Trust's trade secrets. For the second claim, tortious interference with business relations, the first amended petition states: that “SignalPoint has a business arrangement with ... Kennedy in which ... Kennedy has solicited and continues to solicit Central Trust's customers to transfer their accounts to ... SignalPoint;” that SignalPoint received trade secret information from Kennedy; that SignalPoint knew “Kennedy was misappropriating Central Trust's trade secrets to solicit Central Trust's clients;” and that SignalPoint “assist[ed] and work[ed] with ... Kennedy to induce ... Central Trust's clients” to transfer their accounts to SignalPoint. For the third claim, civil conspiracy, the first amended petition alleges that Kennedy, ITI, and SignalPoint “reached an agreement, understanding, and meeting of the minds whereby ... Kennedy and ... ITI ... agreed to solicit Central Trust's customers to transfer their accounts to ... SignalPoint.” No statement appears in the first amended petition alleging that Kennedy or ITI was SignalPoint's agent or employee, and there is no allegation that SignalPoint had the right to control Kennedy or ITI.⁶

Kennedy and ITI filed a joint motion for summary judgment, and SignalPoint filed its own separate motion for summary judgment. The circuit court overruled the motion filed by Kennedy and ITI, but it sustained SignalPoint's motion and entered summary judgment in SignalPoint's favor. The circuit court's judgment states that there is no genuine issue of material fact and that SignalPoint is entitled to judgment as a matter of law as to all three of the claims asserted against it.⁷ Central Trust gained access to the contents of the safe deposit box after the circuit court entered its judgment, and it moved for reconsideration of SignalPoint's motion for summary judgment and for a new trial in light of the allegedly newly discovered documents and cell phone. The circuit court overruled Central Trust's motion.

Central Trust filed an appeal. While the appeal was pending in the court of appeals, Central Trust voluntarily dismissed its claims against Kennedy and ITI in the circuit court. This Court ordered transfer after the court of appeals issued an opinion and, therefore, has jurisdiction. See Mo. Const. art. V, § 10.

Standard of Review

This Court set out the summary judgment standard in Goerlitz v. City of Maryville:

The trial court makes its decision to grant summary judgment based on the pleadings, record submitted, and the law; therefore, this Court need not defer to the trial court's determination and reviews the grant of summary judgment de novo. ITT Commercial Fin. Corp. v. Mid–Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993); Rule 74.04. In reviewing the decision to grant summary judgment, this Court applies the same criteria as the trial court in determining whether summary judgment was proper. Id. Summary judgment is only proper if the moving party establishes that there is no genuine issue as to the material facts and that the movant is entitled to judgment as a matter of law. Id. The facts contained in affidavits or otherwise in support of a party's motion are accepted “as true unless contradicted by the non-moving party's response to the summary judgment motion.” Id. Only genuine disputes as to material facts preclude summary judgment. Id. at 378. A material fact in the context of summary judgment is one from which the right to judgment flows. Id.

A defending party ... may establish a right to summary judgment by demonstrating: (1) facts negating any one of the elements of the non-movant's claim; (2) “that the non-movant, after an adequateperiod for discovery, has not been able and will not be able to produce sufficient evidence to allow the trier of fact to find the existence of any one” of the elements of the non-movant's claim; or (3) “that there is no genuine dispute as to the existence of the facts necessary to support movant's properly pleaded affirmative defense.” Id. at 381. Each of these three methods individually “establishes the right to judgment as a matter of law.” Id. ...

“The record below is reviewed in the light most favorable to the party against whom summary judgment was entered, and that party is entitled to the benefit of all reasonable inferences from the record. However, facts contained in affidavits or otherwise in support of the party's motion are accepted as...