Trugreen Cos. v. Mower Bros., Inc.

• Decision Date: 18 June 2013
• Docket Number: Civil No. 1:06–CV–00024 BSJ.
• Citation: 953 F.Supp.2d 1223
• Parties: TRUGREEN COMPANIES, L.L.C., a Delaware limited liability company, et al., Plaintiff, v. MOWER BROTHERS, INC., a Utah corporation, et al., Defendants.
• Court: U.S. District Court — District of Utah

953 F.Supp.2d 1223

TRUGREEN COMPANIES, L.L.C., a Delaware limited liability company, et al., Plaintiff,

v.MOWER BROTHERS, INC., a Utah corporation, et al., Defendants.

Civil No. 1:06–CV–00024 BSJ.

United States District Court,

D. Utah,

Northern Division.

June 18, 2013.

Brian C. Johnson, James L. Colvin, III, William B. Ingram, Jacob C. Briem, Strong & Hanni, Salt Lake City, UT, Timothy S. McCoy, Headwaters Inc., South Jordan, UT, for Plaintiff.

Erik A. Olson, J. Mark Gibb, Jason R. Hull, Richard M. Hymas, Durham Jones & Pinegar, Salt Lake City, UT, for Defendants.

MEMORANDUM OPINION & ORDER RE: ATTORNEY'S FEES & COSTS

BRUCE S. JENKINS, Senior District Judge.

The plaintiff TruGreen Companies, L.L.C. (“TruGreen”) commenced the above-captioned action on February 8, 2006, alleging a number of claims against the defendants, including a number of former TruGreen employees, for breach of employment contracts, tortious interference with contract and with economic relationships, and unfair competition.¹ After pleadings were filed and discovery was largely completed, the court heard and considered the parties' Rule 56 motions and granted summary judgment or partial summary judgment in favor of most of the defendants.²

As the matter progressed, the court certified three questions to the Utah Supreme Court ³ concerning “the proper measure of damages for the breach of an employment agreement, tortious interference with contractual and economic relationships, and violation of Utah's Unfair Competition Act”; ⁴ the Utah court accepted certification of two of the three questions, ⁵ and subsequently answered them.⁶See TruGreen Companies, L.L.C. v. Mower Bros., Inc., 2008 UT 81, 199 P.3d 929.

On December 30, 2008, the defendants filed their Motion for Final Summary Judgment and Attorney Fees, addressing TruGreen's remaining claims for breach of contract, tortious interference and unfair competition and seeking an award of attorney's fees pursuant to the Utah reciprocal attorney's fees statute, Utah Code Ann. § 78B–5–826 (2008), as well as Idaho Code Ann. § 12–120(3).⁷ The motion was briefed by the parties and was then addressed at a hearing on February 27, 2009, together with a motion by TruGreen to file a supplemental expert report in light of the Utah Supreme Court's response. This court deferred consideration of the defendants' summary judgment motion pending the submission of supplemental materials.⁸

After TruGreen submitted its supplemental expert reports in April 2009, ⁹ the defendants renewed their motion for summary judgment and attorney's fees in July 2009.¹⁰ They also moved to strike and exclude the testimony of TruGreen's experts.¹¹ TruGreen filed memoranda in response,¹² and the defendants filed their reply memoranda.¹³ These motions were heard by the court on October 14, 2009, at which time the court requested further information on the question of net profits and took the matter under advisement.¹⁴

The court calendared the motions for further argument and consideration on February 25, 2010. At the February 25th hearing, the court heard argument and granted the defendants' motion for summary judgment on TruGreen's claims for breach of employment agreement, tortious interference, and unfair competition claims against the remaining defendants, and deferred ruling on the defendants' request for attorney's fees.¹⁵

On July 20, 2010, the eighteen former TruGreen employee defendants ¹⁶ filed a motion for an award of attorney's fees pursuant to DUCivR 54–2 and the applicable Utah and Idaho statutes, as well as their expert witness fees, ¹⁷ together with a memorandum,¹⁸ affidavit, declarations and exhibits in support.¹⁹ On August 6th, TruGreen filed its memorandum in opposition,²⁰ and on August 23rd, the employee defendants filed their reply.²¹ The motion as heard on August 31st, and the court took the matter under advisement pending the supplementation of the record with information concerning fees that the movants were not seeking to recover. ²² The employee defendants filed their supplemental memorandum on September 7th,²³ to which TruGreen responded on September 28th, ²⁴ followed on October 4th by the movants' reply.²⁵

The supplemental briefing called the court's attention to Hooban v. Unicity Int'l, Inc., 2009 UT App 287, 220 P.3d 485, a Utah appellate case addressing the scope of Utah's reciprocal attorney's fees statute, which was then pending on appeal before the Utah Supreme Court. On November 12, 2010, the court sent notice to the parties indicating that it would await the outcome of the pending appeal in Hooban and inviting supplemental briefing once that case had been decided.²⁶

On March 27, 2012, the Utah Supreme Court issued its opinion in the Hooban case, affirming the court of appeals' ruling. See Hooban v. Unicity Int'l, Inc., 2012 UT). On April 16th, counsel filed supplemental memoranda discussing the Hooban opinion,²⁷ and on June 21st, this court heard further argument on the pending motion and again took the matter under advisement. ²⁸

On July 3, 2012, the Utah Supreme Court issued an amended opinion in the Hooban case, superseding its March 27th opinion and altering paragraphs 10 and 26 of the opinion text. See Hooban v. Unicity Int'l, Inc., 2012 UT 40, 285 P.3d 766 (Utah 2012).²⁹

Having reviewed and considered the arguments of counsel and the parties' various written submissions (memoranda, affidavits, declarations, exhibits), as well as the Utah Supreme Court's amended Hooban opinion, this court concludes that as prevailing parties, the Idaho employee defendants are entitled to recover attorney's fees from TruGreen pursuant to Idaho Code Ann. § 12–120(3), but have not demonstrated an entitlement under Idaho law to an award of expert witness fees. The Utah employee defendants' claims for attorney's fees and expert witness fees, footed upon the language of their contracts with TruGreen and the Utah Reciprocal Fee Statute, should be denied because TruGreen's contract language would entitle TruGreen to reimbursement of attorney's fees and costs actually incurred, that is, fees and costs that the party actually paid or owes; the statute affords the Utah Employees the same access to attorney's fees and costs that the contract explicitly affords to TruGreen, but not greater access. The Utah employee defendants incurred no personal liability for attorney's fees and expert witness fees that were paid by their new employer in the defense of TruGreen's claims in this case, and have paid no fees or costs for which they may be reimbursed under the language of TruGreen's contract.

ANALYSIS

The eighteen former TruGreen employee defendants seek an award of attorney's fees in the amount of $876,170, together with expert witness fees of $286,354 and expenses of $3,732 for Mr. Rasmussen, and $45,621 in expert witness fees for Mr. Shumway.³⁰ They seek that award under either the Utah reciprocal attorney's fees statute, Utah Code Ann. § 78B–5–826 (2012), or Idaho Code Ann. § 12–120(3).³¹

A Tale of Two Statutes

The Utah Reciprocal Fee Statute reads:

A court may award costs and attorney fees to either party that prevails in a civil action based upon any promissory note, written contract, or other writing executed after April 28, 1986, when the provisions of the promissory note, written contract, or other writing allow at least one party to recover attorney fees.

Utah Code Ann. § 78B–5–826 (2012). “This provision consists of a conditional if/then statement: (a) If the provisions of a written contract allow at least one party to recover attorney fees in a civil action based upon the contract, (b) then a court may award attorney fees to either party that prevails.” Hooban v. Unicity Int'l, Inc., 2012 UT 40, ¶ 12, 285 P.3d 766, 768. The purpose of this statute is to eliminate “ ‘unequal exposure to the risk of contractual liability for attorney fees.’ ” Giusti v. Sterling Wentworth Corp., 2009 UT 2, ¶ 77, 201 P.3d 966, 980–81 (quoting Bilanzich v. Lonetti, 2007 UT 26, ¶ 19, 160 P.3d 1041, 1047).³² The statute thus “affords to the party not benefitted by a contractual attorney fee provision the same access to attorney fees that the provision explicitly affords to the other party.” PC Crane Service, LLC v. McQueen Masonry, Inc., 2012 UT App 61, ¶ 23, 273 P.3d 396, 407–08. While the language of the Utah Reciprocal Fee Statute is discretionary (a court “ may award costs and attorney's fees”), ³³ the Utah Supreme Court has explained that “to creat[e] a level playing field,” the “courts should award fees liberally under [the statute] where pursuing or defending an action results in an unequal exposure to the risk of contractual liability for attorney fees.” Bilanzich, 2007 UT 26, at ¶¶ 18, 19, 160 P.3d at 1046.

The Utah Reciprocal Fee Statute bears upon this case because TruGreen's employment agreements with its former employee defendants in Utah included a unilateral attorney's fees and costs provision: “Employee also acknowledges and agrees that Employee shall reimburse TruGreen for all attorneys' fees and costs incurred by it in enforcing any of its rights or remedies under this section or any other provision of this Agreement.” ³⁴

In contrast, the referenced Idaho statute provides a mandatory attorney's fee award to a prevailing party independent of the contractual terms:

(3) In any civil action to recover on an open account, account stated, note, bill, negotiable instrument, guaranty, or contract relating to the purchase or sale of goods, wares, merchandise, or services and in any commercial transaction unless otherwise provided by law, the prevailing party shall be allowed a reasonable attorney's fee to be set by the court, to be taxed and collected as costs. The term “commercial transaction” is defined to mean all transactions except transactions for personal or household purposes. The term “party” is defined to mean any person, partnership, corporation, association, private organization, the state of Idaho or...