Holbrook v. Master Protection Corp.

• Citation: 883 P.2d 295
• Decision Date: 30 September 1994
• Docket Number: No. 920216-CA,920216-CA
• Parties: RICO Bus.Disp.Guide 8670 Bard N. HOLBROOK, Plaintiff, Appellee, and Cross-Appellant, v. MASTER PROTECTION CORPORATION dba Firemaster, a California corporation; Robin D. Phillips; and John Does 1-20, Defendants, Appellant, and Cross-Appellee.
• Court: Court of Appeals of Utah

Page 295

883 P.2d 295

RICO Bus.Disp.Guide 8670

Bard N. HOLBROOK, Plaintiff, Appellee, and Cross-Appellant, v. MASTER PROTECTION CORPORATION dba Firemaster, a California

corporation; Robin D. Phillips; and John Does

1-20, Defendants, Appellant, and Cross-Appellee.

No. 920216-CA.

Court of Appeals of Utah.

Sept. 30, 1994.

John T. Anderson (argued), Parsons, Behle & Latimer, Salt Lake City, for appellant.

Richard N. Bigelow (argued), Salt Lake City, for cross-appellant.

Before BENCH, JACKSON and ORME, JJ.

ORME, Associate Presiding Judge:

Briefly stated, the several issues on appeal here arise from a contractual relationship between the parties established pursuant to several related agreements. The franchisor, defendant Master Protection Corporation, a California corporation doing business as Firemaster ("Firemaster"), appeals from several adverse or allegedly inconsistent verdicts rendered at the conclusion of a jury trial. The franchisee, plaintiff Bard Holbrook, cross-appeals from the trial court's decision dismissing Holbrook's racketeering claim and awarding attorney fees to Firemaster for successfully defending that claim. Both parties complain about the implications of the jury's award of liquidated damages to Firemaster pursuant to the agreements, as well as the trial court's determination that neither party was the prevailing party for

purposes of awarding attorney fees. We affirm.

FACTS

Firemaster is engaged in the business of selling commercial and industrial fire prevention and suppression services through a network of dealers. Under a Territory Agreement dated June 30, 1987, Holbrook became an independent contractor for Firemaster, serving customers in Utah, Idaho, and Wyoming. Holbrook also signed a "Trade Secret Agreement" dated July 9, 1987, which contained a confidentiality provision restricting Holbrook's use of names, addresses, and the "service due" dates of Firemaster's customers.

In April of 1988, Holbrook's status changed to that of a franchisee pursuant to two separate franchise agreements executed by the parties. Franchise Agreement Number 1 established Holbrook as a franchisee for the Salt Lake City territory, and Franchise Agreement Number 2 granted Holbrook rights as a franchisee for the "Rural Utah and Idaho" territory. In order to purchase the franchises, Holbrook executed two promissory notes in the amounts of $70,000 and $40,000, respectively. ¹ The two promissory notes were specifically incorporated by reference into the Franchise Agreements.

Holbrook performed services in accordance with the Franchise Agreements until a dispute arose as to the proper calculation of Holbrook's commissions. Unable to resolve the dispute, Holbrook terminated his franchise relationship with Firemaster in January 1990 and began his own business, in direct competition with Firemaster. Holbrook subsequently filed this suit against Firemaster to recover, inter alia, earned but unpaid commissions. On the several claims pursued by Holbrook, the jury returned the following special verdicts: (1) Firemaster breached paragraphs 4 and 8 of the Territory Agreement, and thus should pay Holbrook $5,889.35; ² (2) Firemaster breached paragraphs 4 and 8 of the Franchise Agreements, and should pay Holbrook damages of $1.00 for each agreement breached; ³ (3) Firemaster was liable for conversion of Holbrook's earned but unpaid commissions in the amount of $30,032.71, and was also liable for punitive damages of $5,872.36 for its tortious conduct; (4) Firemaster breached the covenant of good faith and fair dealing and should pay Holbrook $50,000 in damages; and (5) Firemaster materially breached the agreements between the parties and therefore, Holbrook should be relieved of any further obligations under the agreements. ⁴

The following special verdicts were entered on Firemaster's counterclaim: (1) Holbrook breached the confidentiality provisions of the Trade Secret Agreement, Territory Agreement, and Franchise Agreements and should pay Firemaster $10,000 as liquidated damages and (2) Holbrook was liable for conversion of Firemaster's supplies and materials and should pay Firemaster $5,271.47.

Additionally, the trial court awarded Firemaster attorney fees and costs of $8,124.50 for successfully defending against the racketeering claim. The trial court also dissolved a temporary injunction against Holbrook concerning use of Firemaster's customer lists upon requiring him to remit an "equitable payment" of $11,014 to Firemaster. The court, in view of the jury's determination that Holbrook should be relieved of any further obligations under the agreements, absolved him of further liability on the promissory notes. Also, although both parties claimed to be the prevailing party for purposes of Both parties filed post-trial motions: Holbrook moved for judgment notwithstanding the verdict, and Firemaster moved for a new trial, an amendment of the judgment, and remittitur of the $50,000 award for breach of the covenant of good faith and fair dealing. The trial court denied the motions.

awarding attorney fees for the breach of contract claims, the trial court found neither party to be the prevailing party for that purpose.

On appeal, Firemaster advances the following arguments: (1) the trial court erred in denying Firemaster's pre-trial motion for a continuance; (2) the trial court erred in not granting a new trial based on inconsistent and irreconcilable jury verdicts; (3) the jury award of $50,000 for breach of the implied covenant of good faith and fair dealing is not supported by the evidence; and (4) Holbrook should not be excused from further payment on the promissory notes. ⁵ Holbrook cross-appeals, claiming: (1) the trial court erred in dismissing Holbrook's racketeering claims and awarding Firemaster attorney fees in defending against those claims and (2) the trial court erred in denying Holbrook's motion to strike the jury's verdict awarding Firemaster $10,000 in liquidated damages for breach of Holbrook's confidentiality obligations. ⁶ We now consider these claims.

DENIAL OF REQUEST FOR CONTINUANCE

Firemaster moved the court for a continuance, requesting an additional thirty-day postponement of the trial. ⁷ The motion was denied by the trial court, and the trial commenced as then scheduled. Notwithstanding a brief continuance granted Firemaster during trial, Firemaster now claims the trial court abused its discretion by denying its pretrial motion. We are not persuaded.

Granting a motion to continue a trial is within the trial court's discretion.

Utah R.Civ.P. 40(b). Therefore, in determining whether the trial court abused its discretion, this court must review the reasonableness of the trial court's decision, Bairas v. Johnson, 13 Utah 2d 269, 373 P.2d 375, 377 (1962), and should not disturb the decision unless it was "clearly unreasonable and arbitrary." Page v. Utah Home Fire Ins. Co., 15 Utah 2d 257, 391 P.2d 290, 293 (1964). See Hardy v. Hardy, 776 P.2d 917, 925-26 (Utah App.1989).

Firemaster based its motion on the fact that documents generated by Holbrook and his accountant (who was engaged specifically for the purpose of auditing Firemaster's records in view of the instant litigation) were not made available to Firemaster in a timely manner. Thus, Firemaster argues, it was prevented from determining the proper amount of commissions owed to Holbrook and from effective cross-examination of the accountant. We disagree.

The documents in question were tabulations and summaries of Firemaster's own accounting records, prepared by Holbrook's retained expert in preparation for trial. Based on the terms of the Franchise Agreements, Holbrook was required to submit his invoices and billing statements to Firemaster from which Firemaster was fully responsible for billing customers and collecting accounts receivable. It was from these invoices and billing statements that Firemaster presumably calculated Holbrook's commissions for the prior two and one-half years. Holbrook's accountant merely summarized Firemaster's own calculations of commissions paid to Holbrook. In other words, Firemaster was in possession, all along, of the documents Holbrook's accountant used, in preparation for trial, to determine what Holbrook should have been paid.

Firemaster's claim that it was disadvantaged by not being able to review Holbrook's "documents" is untenable. These documents were only summaries and extrapolations from Firemaster's own records. It is difficult to see how Firemaster, who was in control of the documents necessary to calculate proper payment, could have been "prejudicially unprepared to conduct an adequate cross-examination" of Holbrook's accountant at trial. Christensen v. Jewkes, 761 P.2d 1375, 1378 (Utah 1988). Moreover, by reason of its concerns in this regard, Firemaster was granted two continuances--a thirty-day continuance prior to commencement of the trial and a brief continuance during trial. As a matter of admitted trial strategy, Firemaster's counsel expressly declined any interest in a longer continuance during trial. In light of the foregoing, we do not see how the trial court's decision can be regarded as unreasonable and arbitrary. Even if it were, we fail to perceive any prejudice of which Firemaster should now be heard to complain.

INCONSISTENT AND IRRECONCILABLE VERDICTS

Both parties contend the jury's award of $10,000 to Firemaster for breach of the confidentiality provisions in the agreements, and the jury's special verdict precluding Firemaster from enforcing the non-competition and liquidated damages provisions of the agreements, are inconsistent and irreconcilable. Each party argues the inconsistent verdicts cannot stand and urges this court to strike the award favoring the other party. Firemaster argues that the more general findings of the jury suggesting that Holbrook should be released from any further obligations or performance under the agreements should give way to the...