Taylor v. Taylor
| Decision Date | 06 January 2022 |
| Docket Number | 48380 |
| Court | Idaho Supreme Court |
| Parties | DAVID R. TAYLOR, an individual, and ROBERT R. TAYLOR, an individual, Plaintiffs-Counterdefendants-Appellants, v. TROY M. TAYLOR, an individual, Defendant-Counterclaimant-Respondent. |
Appeal from the District Court of the Sixth Judicial District of the State of Idaho, Bannock County. Robert C. Naftz, District Judge.
The decision of the district court is affirmed in part, reversed in part and remanded for further proceedings.
Benoit, Alexander, Mollerup & Danielson, PLLC, Twin Falls, for Appellants. Bren E. Mollerup argued.
Racine Olson, PLLP, Pocatello, for Respondent. Brent O. Roche argued.
This appeal concerns the enforceability and severability of a noncompetition provision of a contract. Robert, David, and Troy Taylor were partners in a commercial fire prevention business based in Alaska. Troy later formed his own business that directly competed with the partnership. In January 2015 Robert, David, and Troy signed an eight-paragraph agreement ("the Agreement") that settled all potential legal claims relating to Troy's competing business. The Agreement provided that Robert and David would buy Troy's interest in the partnership. In exchange, Troy agreed to pay Robert and David $30, 000 each and not work in the fire prevention industry in Alaska and Nevada. In March 2018 Robert and David brought this action alleging, among other things, that Troy had breached the Agreement by working for a competing fire prevention business in Nevada. Troy counterclaimed, asserting Robert and David had breached the Agreement. Robert and David voluntarily dismissed some claims and the district court dismissed the rest. In addition, the district court granted summary judgment in Troy's favor on his breach of contract counterclaim. Robert and David appeal, challenging the district court's rulings that: (1) the noncompete provision in the Agreement was unenforceable, (2) the Agreement was severable and enforceable without the noncompete provision, and (3) they could not assert an affirmative defense of excusable nonperformance based on their allegation that Troy materially breached the Agreement. We affirm in part and reverse in part.
This matter concerns an agreement between Appellants, Robert and David Taylor, and Respondent, Troy Taylor, to settle a dispute over a family-owned business, Frontier State Fire ("Frontier State"). The family-Robert is the father of David and Troy-works in the fire prevention and suppression industry, operating several businesses, including Frontier State, which operated in Alaska, [1] and Silver State Fire ("Silver State"), which is owned and operated by David in Nevada. Robert founded Frontier State in 2010 as a partnership between himself and David. In 2011, Troy joined as a partner in Frontier State and relocated to Alaska to manage the business. Prior to working with Frontier State, Troy spent roughly six months working without pay at Silver State to learn the fire suppression business.
By 2014, management disputes arose between the parties, which culminated in Troy starting his own limited liability company ("LLC") that directly competed with Frontier State. Upon learning of Troy's LLC, Robert and David traveled to Alaska, confronted Troy, and ultimately negotiated the Agreement at the heart of this litigation. The Agreement, drafted without the assistance of legal counsel, states:
Key to this matter are paragraph 2 ("the noncompete clause") and paragraph 5 ("the forfeiture clause").[2] The parties signed the Agreement on January 20, 2015. Soon after, Troy paid $30, 000 apiece to Robert and David. On February 1, 2015, Robert and David began making $3, 000 monthly payments to Troy. The payments continued until October 2017, when Robert decided, and David agreed, to stop making payments to Troy.
Around the same time that Robert and David stopped making the $3, 000 monthly payments to Troy, Troy accepted a job with State Fire Sales and Service ("State Fire") in its Salt Lake City, Utah, office. State Fire performs fire suppression work, similar to Silver State or Frontier State, in Utah, Idaho, Oregon, Wyoming, Arizona, and Nevada.[3] While Troy did not initially perform work for State Fire in Nevada, he testified that between November 13, 2017, and November 22, 2017, he worked for five days in Nevada. Troy also stated that by the end of November 2017, he was working for State Fire in Elko, Nevada, performing construction work (as opposed to fire prevention work) on a building the company had recently purchased. Then, beginning February 1, 2018, Troy started a position with State Fire as the manager of its fire extinguisher and kitchen suppression department in Elko.
The next day, Troy sent a demand letter to Robert and David, seeking reimbursement for the five missed monthly payments. Robert and David, in turn, filed a four-count complaint against Troy in Bannock County district court on March 15, 2018.
Robert and David's complaint asserted four counts against Troy: (1) fraud in the inducement; (2) constructive and/or actual fraud; (3) breach of contract; and (4) breach of fiduciary duty. Relevant to these proceedings, Robert and David's breach of contract claims alleged that Troy had breached the Agreement's noncompete clause. Troy answered and filed a counterclaim, alleging that Robert and David breached the contract when they stopped making monthly payments to Troy. Robert and David answered Troy's counterclaim, asserting an affirmative defense of excusable nonperformance based on Troy's alleged breach of the noncompete provision.
On March 27, 2019, Troy moved for summary judgment, requesting that the district court dismiss Robert and David's claims against him and grant judgment in his favor on his counterclaim. Robert and David moved for a continuance under Idaho Rule of Civil Procedure 56(d), and the district court granted their motion in an oral ruling on April 29, 2019. Following additional discovery, Robert and David voluntarily dismissed both of their fraud claims against Troy, leaving only their breach of contract and breach of fiduciary duty claims.
The district court heard oral argument on Troy's motion for summary judgment on September 9, 2019. The district court later issued a memorandum decision and order, granting the motion in part and denying it in part. The district court determined that Robert and David had failed to submit evidence to dispute Troy's claim that he had not breached any fiduciary duty owed to them and granted summary judgment against them on this claim. However, the district court concluded that there was a genuine issue of material fact as to whether Troy had worked in Nevada in violation of the noncompete clause prior to Robert and David stopping their monthly payments to Troy. Accordingly, the district court denied summary judgment on Robert and David's breach of contract claim. As to Troy's counterclaim, the district court found a genuine issue of material fact existed regarding which party had breached the Agreement first and denied Troy's motion for summary judgment.
In preparation for trial, each party submitted a pretrial statement. In Troy's pre-trial statement, he requested that the district court issue a written ruling regarding the enforceability of the portion of the noncompete clause relating to Nevada and the enforceability of the forfeiture clause. In their pretrial statement, Robert and David explained that they were abandoning their breach of contract claim in order to focus exclusively on defending against Troy's breach of contract counterclaim. Additionally, in their objection to Troy's pretrial statement, Robert and David agreed that the enforceability of the forfeiture clause in the Agreement should be determined before trial. However, they argued that the district court had already determined the noncompete clause was enforceable when it denied summary judgment on the competing breach of contract claims. The district court subsequently vacated the scheduled trial and took the parties' pretrial issues under advisement.
On January 21, 2020, the district court issued a memorandum decision and order on the parties' pretrial issues. With respect to the noncompete clause, the district court framed the issue before it as whether "the Nevada prong of the noncompete provision [is] enforceable." However, the district court ruled...
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