Pratt v. Prodata, Inc.

• Decision Date: 25 August 1994
• Docket Number: No. 910248,910248
• Citation: 885 P.2d 786
• Parties: 9 IER Cases 1509 John P. PRATT, Plaintiff and Appellee, v. PRODATA, INC., an Idaho corporation doing business in Utah as Pro-Star, Will McCoy, an individual, and Does 1 through 5, Defendants and Appellants.
• Court: Utah Supreme Court

Page 786

885 P.2d 786

9 IER Cases 1509

John P. PRATT, Plaintiff and Appellee, v. PRODATA, INC., an Idaho corporation doing business in Utah

as Pro-Star, Will McCoy, an individual, and Does 1

through 5, Defendants and Appellants.

No. 910248.

Supreme Court of Utah.

Aug. 25, 1994.

Berne S. Broadbent, Salt Lake City, for plaintiff.

Eric C. Olson, Salt Lake City, for defendants.

ZIMMERMAN, Chief Justice:

Defendants Will McCoy and Prodata, Inc., appeal from a jury verdict in favor of plaintiff John Pratt. The jury found that defendants intentionally interfered with Pratt's prospective economic relations with the Utah Department of Transportation ("UDOT"). On appeal, defendants contend that (i) several of the jury's findings are not supported by sufficient evidence; (ii) the jury's finding on proximate cause is unsound as a matter of law; and (iii) a judgment for intentional interference with economic relations cannot be based on the transmission of truthful information. We reject each of defendants' contentions and affirm the jury verdict.

On appeal from a jury verdict, we view the evidence and all reasonable inferences drawn therefrom in the light most favorable to that verdict. State v. Dunn, 850 P.2d 1201, 1205-06 (Utah 1993); State v. Hamilton, 827 P.2d 232, 233-34 (Utah 1992). We recite the facts of this case accordingly.

Prodata provides computer programmers to government agencies and private industry on a contract basis. Prodata hired Pratt, a computer programmer, in September of 1985. In connection with his employment, Pratt signed a contract entitled "Non-Disclosure/Non-Compete Employment Agreement" (the "Employment Agreement"). In part, this agreement prohibited Pratt from forming or participating in a competing business within fifty miles of Salt Lake City for one year following its termination (the "Noncompete Covenant"). The Noncompete Covenant provided for liquidated damages in the amount of $25,000 as the exclusive remedy for a violation of its terms. Pratt terminated the Employment Agreement on May 1, 1988. ¹

On February 27, 1989, approximately two months before the Noncompete Covenant was to expire, Pratt began working as an independent contractor for UDOT. McCoy, Prodata's Salt Lake City manager, first became aware that Pratt was employed at UDOT during the summer of 1989. McCoy testified that after learning of Pratt's employment at UDOT, he immediately reviewed the Employment Agreement and concluded that Pratt had not violated any part of the agreement, including the Noncompete Covenant. Indeed, Pratt's subsequent work at UDOT did not hinder Prodata from performing work for UDOT during that same period. Nevertheless, during this period McCoy asserted that Pratt had taken contract work away from Prodata and stated that Prodata was going to "make an example" of Pratt. McCoy also told at least one Prodata employee to stay away from Pratt and openly accused Pratt of unethical conduct.

On September 27, 1989, McCoy approached UDOT and asked for a meeting regarding Pratt. ² McCoy had been employed at UDOT as its comptroller and was acquainted with the management personnel. He told UDOT that he believed it had hired Pratt in violation of his Noncompete Covenant. McCoy also indicated to UDOT that he thought the payment of money to Pratt for services completed between February 27th and April 30th was in violation of state procurement procedures because there was not a written contract between UDOT and Pratt during that period.

UDOT agreed to investigate Prodata's claims. On September 29, 1989, a UDOT employee prepared and presented a memorandum to Eugene H. Findlay, the director of UDOT, which concluded that the procedures used in selecting, contracting with, and paying Pratt violated the Utah Procurement Code. See Utah Code Ann. §§ 63-56-1 to -73. That same day, Neal Christensen, a member of UDOT management, met with McCoy at Prodata's offices and requested to see Pratt's contract. McCoy refused to provide the actual document and instead provided a blank contract showing the essential terms of the Noncompete Covenant.

Based on the memorandum and the contract information provided by Prodata, Findlay concluded that Pratt should be terminated until he resolved his differences with Prodata. On October 2, 1989, UDOT notified Pratt that it was terminating his contract because of the Noncompete Covenant and that UDOT would be happy to reinstate Pratt when he had resolved his problems with Prodata. This was the first time Pratt was made aware that he had a contractual disagreement with Prodata.

After UDOT terminated Pratt, he met with McCoy to discuss the contract dispute. McCoy told Pratt that if Pratt would pay Prodata $4000 for his violation of the Noncompete Covenant, Prodata would clear Pratt to work at UDOT. Pratt felt that he had not violated the agreement and refused to pay. UDOT never rehired him because he could not work out his problems with Prodata. Pratt subsequently filed this suit, claiming that Prodata and McCoy had intentionally interfered with his prospective economic relations.

Under our decision in Leigh Furniture & Carpet Co. v. Isom, 657 P.2d 293, 304 (Utah 1982), a defendant is liable for intentional interference with prospective economic relations if the plaintiff proves "(1) that the defendant intentionally interfered with the plaintiff's existing or potential economic relations, (2) for an improper purpose or by improper means, (3) causing injury to the plaintiff." This case focuses on the second of these three elements: Leigh 's "improper purpose or improper means" requirement. An "improper means" is shown when the plaintiff proves that the defendant's means of interference were contrary to statutory, regulatory, or common law or violated " 'an established standard of a trade or profession.' " Id. at 308 (quoting Top Serv. Body Shop, Inc. v. Allstate Ins. Co., 283 Or. 201, 582 P.2d 1365, 1371 & n. 11 (1978)). The alternative, "improper purpose," is satisfied when the plaintiff proves that the defendant's ill will predominated over all legitimate economic motivations. Id. at 307. According to Leigh, a finding of improper purpose is entirely consistent with a finding that the defendant's means were proper. Id.

At trial, Pratt contended both that the defendants had utilized an improper means and that they had acted with an improper purpose. As the basis for his improper-means claim, Pratt relied on the common law tort of intentional misrepresentation. To prevail under this common law theory, the jury would have had to find that the statements were false. The jury found that Prodata did not make false statements to UDOT and, therefore, rejected Pratt's improper-means claim. The jury did find, however, that defendants acted with an improper purpose in interfering with Pratt's relations with UDOT. On the improper-purpose prong of the claim, Pratt adduced evidence of McCoy's and Prodata's ill will toward him and suggested that defendants' primary motivation in interfering with Pratt's employment by calling attention to his breach of the Noncompete Covenant was hostility toward Pratt rather than any valid economic concern. The jury found an improper purpose, and the district court entered judgment for Pratt. Defendants appeal.

We begin our analysis by examining defendants' claim that several findings of the jury are not supported by sufficient evidence. This argument is directed to each of the following findings: (i) defendants acted for an improper purpose in interfering with Pratt's economic relations; (ii) defendants' actions were the proximate cause of Pratt's damages; (iii) defendants failed to act in good faith and were thus not privileged to interfere with Pratt's economic relations; and (iv) Pratt neither recognized the risk of harm to himself by reason of defendants' actions nor intentionally or heedlessly failed to protect his own interests. Prodata also assails, on the ground that it is not supported by sufficient evidence, the jury's conclusion that Prodata did not suffer any damages as a result of Pratt's breach of the Noncompete Covenant.

We dispose of defendants' sufficiency-of-the-evidence claims by adhering to a well-established principle of appellate review: This court will upset a jury verdict "only upon a showing that the evidence so clearly preponderates in favor of the appellant that reasonable people would not differ on the outcome of the case." E.A. Strout W. Realty Agency, Inc. v. W.C. Foy & Sons, Inc., 665 P.2d 1320, 1322 (Utah 1983); accord Bundy v. Century Equip. Co., 692 P.2d 754, 758 (Utah 1984). "The burden on an appellant to establish that the evidence does not support the jury's verdict and the factual findings implicit in that verdict ... is quite heavy." Cambelt Int'l Corp. v. Dalton, 745 P.2d 1239, 1242 (Utah 1987). "To successfully attack the verdict, an appellant must marshal all the evidence supporting the verdict and then demonstrate that, even viewing the evidence in the light most favorable to that verdict, the evidence is not sufficient to support it." Von Hake v. Thomas, 705 P.2d 766, 769 (Utah 1985) (citing Scharf v. BMG Corp., 700 P.2d 1068, 1070 (Utah 1985)).

There is substantial credible evidence in the record to support the jury's determination that defendants interfered with Pratt's economic relations for an improper purpose and without privilege, that defendants' interference was the proximate cause of Pratt's damages, and that Pratt did not intentionally or heedlessly fail to protect his own interests. Defendants expressed a consistent and open hostility for Pratt after he disassociated himself from Prodata. Rather than suing Pratt for breach of the Noncompete Covenant as it was legally entitled to do, Prodata utilized its contacts at UDOT to have Pratt fired. Prodata took this course of action even though the Noncompete Covenant had already expired and therefore could no longer be legally used to bar Pratt from...