Usa Power LLC v. Pac.Orp
| Decision Date | 14 May 2010 |
| Docket Number | No. 20080176.,20080176. |
| Court | Utah Supreme Court |
| Parties | USA POWER, LLC; USA Power Partners, LLC; and Spring Canyon Energy, LLC, Plaintiffs and Appellants,v.PACIFICORP; Jody L. Williams; and Holme Roberts & Owen, LLP, Defendants and Appellees. |
COPYRIGHT MATERIAL OMITTED
Peggy A. Tomsic, Eric K. Schnibbe, J. Ryan Connelly, Salt Lake City, for plaintiffs.
Thomas R. Karrenberg, Stephen P. Horvat, Salt Lake City, for defendant Jody L. Williams Peter W. Billings, Sr., Michael G. Jenkins, P. Bruce Badger, Salt Lake City, for defendants PacifiCorp and Holme Roberts & Owen.
INTRODUCTION
¶ 1 In this appeal, we review a district court's grant of summary judgment on three claims: misappropriation of trade secrets, breach of a confidentiality and nondisclosure agreement, and breach of an attorney's fiduciary duties of confidentiality and loyalty.
¶ 2 In August 2002, USA Power, LLC, a power plant developer, entered into negotiations with PacifiCorp, a utility company, to construct a power plant named Spring Canyon in Mona, Utah. PacifiCorp signed a confidentiality and nondisclosure agreement as part of those negotiations. Within a year, PacifiCorp decided that rather than purchase Spring Canyon from USA Power, it would build a similar power plant named Currant Creek outside Mona. As a result, USA Power sued PacifiCorp for misappropriation of trade secrets and breach of the confidentiality and nondisclosure agreement.
¶ 3 USA Power also sued its water law attorney Jody Williams and her law firm Holme Roberts & Owen, LLP (“HRO”) for breach of their fiduciary duties of confidentiality and loyalty. USA Power alleges that Ms. Williams represented USA Power and PacifiCorp at the same time and disclosed to PacifiCorp confidential information that she obtained through her representation of USA Power.
¶ 4 The district court granted summary judgment in favor of PacifiCorp, Ms. Williams, and HRO. USA Power appeals. We reverse.
¶ 5 The first issue on appeal concerns whether USA Power provided PacifiCorp with information about developing a power plant that constituted a trade secret, and if so, whether PacifiCorp misappropriated that trade secret when it chose to develop its own power plant.
¶ 6 USA Power was formed in 1996 for the purpose of locating, acquiring, and developing electric power generation sites. As a general practice, USA Power accumulated the assets necessary for a power plant but did not necessarily develop or operate the plants. In 2001, USA Power decided to focus on developing a power plant in Utah. After researching the area, USA Power selected Mona, Utah, as a viable site for a power plant. USA Power named the project “Spring Canyon” and formed Spring Canyon Energy, LLC to hold the necessary assets.
¶ 7 After consulting with multiple engineering and feasibility experts, USA Power designated Spring Canyon as an approximately 550 megawatt, air-cooled, gas-fired, combined cycle plant in a 2x1 configuration with 7FA GE turbines, duct firing, and zero water discharge technology. USA Power then made efforts to accumulate other necessary assets, including securing an option to purchase the identified property, obtaining a zoning variance, securing options to purchase water rights, preparing documents to change the point of diversion for the purchased water rights, preparing and submitting an air quality permit application, designating a wastewater, gas line and power transmission corridor, and preparing development plans. USA Power also obtained a commitment from Questar corporation to provide natural gas to Spring Canyon and a Federal Energy Regulatory Commission (“FERC”) determination that Spring Canyon qualified as an exempt wholesale generator. Many of the documents filed, including the Notice of Intent (“NOI”) filed with the Utah Department of Environmental Quality's Division of Air Quality, are public documents. The NOI laid out many of the details of the proposed plant, including USA Power's planned technology.
¶ 8 One year later, USA Power marketed Spring Canyon. USA Power met with PacifiCorp on August 22, 2002, to discuss PacifiCorp's potential purchase and development of Spring Canyon. PacifiCorp was represented by Mr. Rand Thurgood. USA Power claims that it informed PacifiCorp that it would not discuss the project in detail until PacifiCorp signed a confidentiality agreement. After PacifiCorp signed a Confidentiality and Non-Disclosure Agreement at the parties' next meeting on September 11, 2002, USA Power provided PacifiCorp three binders of information concerning Spring Canyon marked “confidential.” About one month prior to receiving the three binders, PacifiCorp had already received a copy of the public NOI filed by USA Power, which revealed certain details about Spring Canyon.
¶ 9 On March 14, 2003, after a series of offers and counteroffers, PacifiCorp expressed interest in purchasing Spring Canyon for three million dollars and a five-year development agreement. On March 17, however, PacifiCorp informed USA Power that rather than purchase Spring Canyon, it would instead issue a Request for Proposals (“RFP”), a regulatory process by which a utility company may collect bids to fulfill its identified power needs. USA Power submitted four bid proposals. According to an e-mail between PacifiCorp employees, at least two of USA Power's bids came in second to the next best alternative.
¶ 10 Around the same time that USA Power was developing Spring Canyon, Panda Energy, a power plant developer from Texas, also initiated plans to develop a power plant adjacent to PacifiCorp's switching station near Mona, Utah. On February 20, 2003-after PacifiCorp had received the three confidential binders from USA Power-PacifiCorp purchased the assets accumulated by Panda, which included property purchase agreements, environmental assessment reports, as well as water, air, and meteorological data reports. USA Power alleges that in comparison to Spring Canyon, Panda's project was limited; it never obtained water rights, an air permit, rezoning, or a transmission agreement for the Mona substation.
¶ 11 In 2003, PacifiCorp hired the engineering firm Shaw/Stone & Webster to help convert the Panda assets into PacifiCorp's own power plant named Currant Creek. Shaw/Stone & Webster had recently designed, engineered, and constructed the Apex 1 power plant in Las Vegas, Nevada, for the Mirant Corporation. In April 2003-after PacifiCorp had decided to issue an RFP rather than purchase Spring Canyon from USA Power-PacifiCorp requested a cost analysis for Currant Creek from Shaw/Stone & Webster; the analysis was delivered to PacifiCorp on June 9, 2003. After combining the information from Shaw/Stone & Webster and its own experience, PacifiCorp submitted the Currant Creek plans as a “next best alternative” by which to measure other bids in the RFP process.
¶ 12 In support of its contention that it did not misappropriate any confidential information provided by USA Power, PacifiCorp argues that both the Apex 1 and Currant Creek designs are based on Shaw/Stone & Webster's standard design for a 2x1 combined-cycle power plant with air cooling and that both plants are virtually identical. PacifiCorp also argues that any peculiarities specific to Spring Canyon were publically disclosed in the NOI. In contrast, USA Power argues that the short time it took Shaw/Stone & Webster to prepare the cost analysis shows that PacifiCorp improperly used the confidential information USA Power disclosed in the three binders, especially information concerning the viability of a dry-cooled plant in Mona.
¶ 13 By August 2003, PacifiCorp determined that its own Currant Creek power plant, as the next best alternative, was more economically feasible than the other bids. In September 2003, PacifiCorp's board of directors approved Currant Creek for construction and announced that it had awarded itself the bid on November 3, 2003, when it filed an application with the Public Service Commission (“PSC”) for a Certificate of Convenience and Necessity (“CC & N”). The PSC awarded PacifiCorp the CC & N in March 2004, stating “review of the alternative actions discussed above [including Spring Canyon] shows no better alternative at the present time than proceeding with building [the Currant Creek plant].” Approval of the CC & N effectively eliminated the possibility of constructing any other power plant, including Spring Canyon, in Mona.
¶ 14 The second issue on appeal concerns USA Power's claim that attorney Jody Williams and her law firm HRO breached their fiduciary duties of confidentiality and loyalty. USA Power alleges that Ms. Williams represented both USA Power and PacifiCorp at the same time and disclosed to PacifiCorp confidential information she obtained in the course of her representation of USA Power.
¶ 15 In 2001, USA Power retained Ms. Williams, a water law attorney, as part of its efforts to develop Spring Canyon.1 The parties dispute both the scope of Ms. Williams' representation of USA Power and the date her representation terminated.
¶ 16 As to the scope of her representation, the parties agree that Ms. Williams (1) filed the necessary documents to form Spring Canyon Energy, LLC; (2) investigated potential water rights for use in Mona and helped to secure options to purchase water rights from two gentlemen, Mr. Keyte and Mr. Garrett, which have since expired; and (3) in connection with those purchase options, filed change applications with the State Engineer, a letter...
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