Case Title: Gem State Roofing, Incorp. v. United Components, Inc.

Citation: 

Docket Number: 47484

State: idaho

Court: Idaho Supreme Court (civil)

Date: 2021-06-07T00:00:00Z

Document:
1 
IN THE SUPREME COURT OF THE STATE OF IDAHO 
Docket No. 47484 
 
GEM STATE ROOFING,  
INCORPORATED, 
 
     Plaintiff-Appellant- 
     Cross Respondent, 
 
v. 
 
UNITED COMPONENTS,  
INCORPORATED, 
dba GEM STATE ROOFING, 
 
     Defendant-Respondent- 
     Cross Appellant. 
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Boise, December 2020 Term 
 
Opinion Filed: June 7, 2021 
 
Melanie Gagnepain, Clerk 
 
Appeal from the District Court of the Fourth Judicial District, State of Idaho, Ada 
County. Samuel A. Hoagland, District Judge.  
 
The decision of the district court is reversed in part and affirmed in part. The 
judgment is vacated and the case remanded. 
 
McFarland Ritter PLLC, Meridian, for appellant Gem State Roofing. Ryan T. 
McFarland argued.  
 
Pickens Law, P.A., Boise, for respondent, United Components Incorporated, dba 
Gem State Roofing. Terri Pickens Manweiler argued. 
_____________________ 
 
STEGNER, Justice. 
This is an appeal from a judgment entered after a bench trial. Beginning in the 1980s and 
1990s, two Idaho businesses did roofing work under substantially similar names. One, Gem State 
Roofing, Inc., performed work primarily in Blaine County. It will be referred to as Gem State-
Blaine. The other was a corporation operating under the name Gem State Roofing and Asphalt 
Maintenance, which also did business as Gem State Roofing. The latter was based in Boise, Idaho, 
and performed work in a significantly larger area. In 2011, Gem State Roofing and Asphalt 
Maintenance was succeeded in interest by United Components, Inc. (This corporation will be 
referred to as UCI.) Notwithstanding its change of name, it continued to do business as Gem State 
Roofing. 
2 
In 2005, prior to UCI’s name change, the two businesses with similar names entered into a 
Trademark Settlement Agreement (TSA). The agreement contained terms prohibiting UCI from 
advertising, soliciting, or performing business in Blaine County, with exceptions for warranty or 
maintenance work, work performed for previous customers, or public entity work obtained by bid. 
In addition, UCI agreed that if it received a request for work it was contractually unable to fulfil 
because of the TSA, it would refer the work to Gem State-Blaine. 
In 2018, Gem State-Blaine filed a lawsuit against UCI, alleging that it had breached the 
TSA when it advertised, solicited, bid on, and performed roofing work in Blaine County, and had 
failed to refer requests for work as required under the TSA. Gem State-Blaine brought claims for 
(1) breach of contract, (2) breach of the covenant of good faith and fair dealing implied in the TSA, 
(3) trademark infringement of a common-law trademark under 15 U.S.C. section 1125, (4) unjust 
enrichment, (5) a preliminary injunction, and (6) a permanent injunction. Gem State-Blaine also 
requested money damages, attorney fees, and costs. 
After discovery and cross-motions for summary judgment, a bench trial was conducted on 
the remaining issues and claims. Ultimately, the district court concluded that, despite UCI’s breach 
of the TSA and the implied covenant of good faith and fair dealing, Gem State-Blaine had failed 
to prove damages or that it was entitled to a permanent injunction. The district court further found 
that Gem State-Blaine had no protectable common-law trademark. Finally, the district court 
concluded that there was no prevailing party and declined to award attorney fees and costs. Gem 
State-Blaine timely appealed. UCI timely cross-appealed the district court’s denial of its request 
for attorney fees and costs.  
I. 
FACTUAL AND PROCEDURAL BACKGROUND 
A. Factual Background. 
In the early 1980s, Jeffrey Flynn (Flynn) started a roofing company in Nampa, Idaho, and 
named it “Gem State Roofing.” In 1987, he moved to Boise and continued his business, but also 
began to offer asphalt maintenance. In 1995, Flynn and his then-wife Michelle Flynn (Michelle) 
incorporated Flynn, Inc., by filing Articles of Incorporation with the Idaho Secretary of State.1 
Flynn and Michelle served as directors of the corporation. 
                                                 
1 In 2011, Gem State Roofing and Asphalt Maintenance, Inc., was succeeded in interest by United Components, Inc., 
but continued to do business as “Gem State Roofing.” As previously noted, it will be referred to as UCI; however, to 
avoid confusion, it will also be referred to as Gem State-Boise when describing events which occurred before UCI 
was created in 2011. 
3 
Two years later, in 1997, Rick Silvia (Silvia) filed a Certificate of Assumed Business Name 
with the Idaho Secretary of State, indicating he was doing business under the name “Gem State 
Roofing.” Silvia had been performing roofing work in Blaine County since approximately 1991, 
but it was not until 1997 that he began calling his business “Gem State Roofing.” 
In 1998, Flynn filed Articles of Amendment to change the name of his corporation—Flynn, 
Inc.—to “Gem State Roofing and Asphalt Maintenance, Inc.” (Gem State-Boise). In 1999, acting 
as secretary for the corporation, Michelle filed a Certificate of Assumed Business Name with the 
Idaho Secretary of State claiming the name “Gem State Roofing.” 
In 2000, Silvia filed Articles of Incorporation registering Gem State Roofing, Inc. (“Gem 
State-Blaine”) with the Idaho Secretary of State. Two years later, in 2002, the State of Idaho issued 
a Certificate of Registration Trademark Service Mark for “Gem State Roofing” to Gem State-
Blaine, stating that its first use had been in November 1997, and set the expiration of the trademark 
for May 2012.2 
In 2004, the State of Idaho issued a Certificate of Registration Trademark Service Mark to 
Gem State-Boise, stating that the mark’s first use had been in 1985, and set the expiration date in 
December 2014.3 The trademark was renewed in 2014. 
Sometime in the years before 2005, Silvia and Flynn realized that their roofing companies 
were performing similar services under the same name.4 The two companies entered into the TSA 
to address these concerns “by agreeing not to do business or advertise in the other’s primary 
market.” In particular, the companies agreed that their names were confusingly similar and that 
they provided similar services. As part of the TSA, Flynn and Silvia agreed they would not 
advertise or solicit business in each other’s primary market. Several exceptions applied, permitting 
warranty and maintenance work or repeat customer business, as well as work for public entities 
that was acquired by a qualified bid. The TSA was signed by Silvia and Michelle Flynn as 
presidents of Gem State-Blaine and Gem State-Boise, respectively. 
Throughout 2010, Flynn and Michelle’s marriage deteriorated, eventually leading to their 
divorce. At the same time, Gem State-Boise had incurred significant income tax liability. Flynn 
testified that in order to resolve the tax liability, the IRS directed him to dissolve Gem State-Boise 
                                                 
2 This trademark was never renewed. 
3 The trademark was then assigned to UCI in 2014 before the trademark’s renewal. 
4 Silvia testified that he first became aware that UCI’s predecessor was doing work in Blaine County in 2002. 
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and start a new company with a new name. In 2011, Flynn filed Articles of Incorporation with the 
Idaho Secretary of State creating United Components, Incorporated. UCI continued to operate 
using its predecessor’s business equipment and did not inform its clients of the change. 
In 2012, the predecessor corporation was administratively dissolved. Michelle Flynn had 
no ownership interest in UCI. 
Beginning in 2010, UCI bid on and performed roofing services for projects in Blaine 
County. Most significantly, in 2018, UCI bid on and received a subcontract with McAlvain 
Construction to perform over $200,000 in roofing work on the Wood River Animal Shelter in 
Hailey, Idaho. As of October 2018, UCI had been paid a total of $279,540 on that project alone. 
B. Procedural History. 
On July 20, 2018, Gem State-Blaine filed suit against UCI in Ada County. Gem State-
Blaine brought claims for (1) breach of contract, (2) breach of the covenant of good faith and fair 
dealing implied in the TSA, (3) trademark infringement of a common-law trademark under 15 
U.S.C. section 1125, (4) unjust enrichment, (5) a preliminary injunction, and (6) a permanent 
injunction. Gem State-Blaine also requested money damages, as well as attorney fees and costs 
under Idaho Code section 12-121 and the terms of the TSA. 
UCI filed its answer. Among the affirmative defenses asserted, UCI contended that because 
UCI was not a party to the TSA, it could not have breached it. Further, UCI alleged that Gem State-
Blaine’s trademark could not have been infringed because it expired in 2012. 
Discovery in this case was particularly contentious and is at the heart of several issues 
raised on appeal. It also overlapped with the parties’ cross-motions for summary judgment. To 
avoid confusion, the events relating to discovery will be explained separately from the events 
relating to summary judgment. 
1. Gem State-Blaine’s initial motion to compel. 
In September 2018, discovery commenced when Gem State-Blaine delivered several 
written discovery requests to UCI. In response to the request for copies of any correspondence or 
communication between UCI and potential or actual customers in Blaine County, UCI produced 
117 pages of documents in October and November 2018. 
In November and December 2018, Gem State-Blaine served eleven third-party subpoenas 
duces tecum upon several of UCI’s potential and existing customers in Blaine County, requesting 
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that they produce any correspondence with UCI. In response, the third parties produced hundreds 
of pages of documents, including emails and contracts that had not been produced by UCI. 
Gem State-Blaine filed a motion to compel on January 28, 2019, arguing that the third 
parties’ responses indicated that UCI had not fully produced its communications with Blaine 
County customers in its response to discovery. Gem State-Blaine requested attorney fees and costs 
associated with the additional subpoenas, as well as sanctions for UCI’s lack of responsiveness. 
In early March, UCI produced its third supplemental response to Gem State-Blaine’s first 
discovery requests, which consisted of more than a thousand pages of documents. Gem State-
Blaine stated in a later hearing that “virtually all of [these electronic communications] related to 
the large contract in the case, the [McAlvain]/Wood River Animal Shelter contract.” 
A hearing on Gem-State Blaine’s motion to compel was held on March 19, 2019. The thrust 
of Gem State-Blaine’s argument was that UCI had withheld requested discovery, while UCI 
countered that the email correspondence Gem State-Blaine requested had been routinely deleted 
and so it could not be produced. Following argument, the district court granted Gem State-Blaine’s 
motion to compel and ordered “the defense to fully and faithfully respond to any and all discovery 
requests.” However, the district court deferred its ruling on Gem State-Blaine’s request for 
sanctions. An order to this effect was entered on March 25, 2019, and re-entered as amended on 
April 3, 2019. 
2. Cross-motions for summary judgment. 
On February 6, 2019, Gem State-Blaine moved for partial summary judgment. On February 
13, 2019, UCI filed its cross-motion for summary judgment. UCI argued that there was no genuine 
issue of material fact that it was not a party to the TSA, and therefore it could not have breached 
the TSA or violated the covenant of good faith and fair dealing. Further, UCI argued there was no 
genuine issue of material fact as to whether Gem State-Blaine had a protectable trademark because 
the trademark registration had expired in 2012. Finally, UCI argued that there was no genuine 
issue of material fact as to Gem State-Blaine’s claim of unjust enrichment, and that Gem State-
Blaine did not meet any of the requirements for a preliminary or permanent injunction. 
Following a hearing, the district court entered its memorandum decision and order, 
granting in part the parties’ cross-motions for summary judgment. The district court first concluded 
that the TSA was enforceable against UCI because UCI was Gem State-Boise’s successor in 
interest. The district court further ruled that there was no genuine issue of material fact that UCI 
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had breached the TSA by performing work in Blaine County that was not warranty, maintenance, 
or work for returning customers; and further that UCI had not referred work it was contractually 
obligated to refer to Gem State-Blaine. The district court also concluded that UCI had breached 
the covenant of good faith and fair dealing. On these issues, the district court granted Gem State-
Blaine’s motion for partial summary judgment. 
The district court also denied summary judgment on several issues raised by UCI. In 
particular, the district court held that under 15 U.S.C. section 1127, Gem State-Blaine’s trademark 
did not need to be actively registered for a valid and enforceable trademark to exist. Because there 
was a genuine issue of material fact concerning whether Gem State-Blaine had a protectable 
common-law trademark, the district court denied UCI summary judgment on this issue. The district 
court also ruled that there was a genuine issue of material fact as to whether Gem State-Blaine was 
entitled to an injunction. 
Finally, the district court granted UCI’s motion for summary judgment as to Gem State-
Blaine’s claim for unjust enrichment, ruling that the doctrine of unjust enrichment did not apply 
under the facts of this case. 
3. Gem State-Blaine’s motion for sanctions; UCI moves for reconsideration and for a 
protective order, which is granted. 
After the district court’s April 3, 2019, order compelling UCI to fully respond to Gem 
State-Blaine’s discovery requests, UCI served its fourth supplemental responses on April 17, 2019. 
No new documents were produced in response to Gem State-Blaine’s requests; UCI continued to 
assert that it did not maintain or keep the electronic communications that Gem State-Blaine had 
received via subpoena from third parties, and that any deleted emails could not be recovered or 
produced. 
On May 30, 2019, Gem State-Blaine moved for sanctions under Idaho Rule of Civil 
Procedure (IRCP) 37(b). Gem State-Blaine argued that UCI had not made a good faith effort to 
produce all requested communication and had therefore failed to comply with the court’s April 3, 
2019, order compelling UCI to respond. As a proposed sanction, Gem State-Blaine requested that 
the court prohibit UCI from producing evidence on the issue of damages at trial, and to instruct 
the jury “to take it as established that, but for UCI’s . . . violation of the [TSA], Gem State-Blaine 
would have obtained the Blaine County jobs that UCI . . . obtained.” Gem State-Blaine also sought 
an award of costs and attorney fees incurred on discovery, third-party discovery, and discovery 
motions. 
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UCI responded, arguing that it had fully complied with the order compelling it to respond, 
and contended that the relief requested did not make sense because the case would not be tried by 
a jury. UCI stated that it was “at a loss as to how to convince [Gem State-Blaine] that it is not 
hiding documents or refusing to produce documents[.]” 
 A hearing was held on June 19, 2019. After argument, the district court granted Gem State-
Blaine’s motion for sanctions in part, and ordered UCI to produce its computers, electronic 
devices, and access to email accounts to a third party so that Gem State-Blaine could conduct its 
own digital search. However, the district court again did not order UCI to pay for Gem State-
Blaine’s digital search, stating that the decision to impose fees and costs was very “fact dependent” 
and there was insufficient evidence that UCI had not been acting in good faith. While the district 
court prohibited UCI from offering any emails or electronic communications that had not yet been 
produced, it stated that it was unprepared “to enter an order that there’s an inference that [Gem 
State-Blaine] would have obtained these jobs . . . that just depends upon the individual facts and 
circumstances[.]”  
UCI moved for reconsideration and requested that the court enter a protective order. UCI 
argued that the electronic search ordered by the district court was likely to reveal attorney-client 
communications, which would violate the rules governing professional conduct, civil procedure, 
and evidence. UCI requested a protective order allowing UCI sufficient notice and access to 
preserve attorney-client privilege, or alternatively to appoint a special master to ensure that any 
privileged communication subject to the search remained privileged. 
After conducting another hearing, the district court granted UCI’s motion for 
reconsideration and entered a protective order as requested by UCI. Ultimately, no responsive 
emails were uncovered. In response to the third-party subpoenas served by Gem State-Blaine, the 
email providers of AOL and Gmail refused to produce any additional emails. 
4. A bench trial is conducted. 
The parties filed a stipulation regarding undisputed facts on July 19, 2019, and the case 
proceeded to a bench trial on August 5, 2019. With several key issues already decided at summary 
judgment, the single-day trial focused on the remaining issues: (1) whether a permanent injunction 
was an appropriate remedy; (2) whether Gem State-Blaine had been damaged by the breach and if 
so, in what amount; (3) whether Gem State-Blaine had a protectable common-law trademark, and 
if so, whether Gem State-Blaine had sustained damages. 
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Gem State-Blaine presented Silvia as its only witness before resting its case. UCI moved 
for a directed verdict, arguing that Silvia’s testimony had been insufficient to establish any basis 
for relief. The district court denied this motion. UCI offered three witnesses: a project manager for 
McAlvain Construction, UCI’s corporate secretary, and Jeffrey Flynn.  
After trial concluded, the district court entered its findings of facts and conclusions of law 
on September 17, 2019. The district court determined that, despite UCI’s breach of the TSA and 
the covenant of good faith and fair dealing, Gem State-Blaine had not proved any resulting 
damages. As part of this analysis, the district court also concluded that an injunction was 
inappropriate because Gem State-Blaine was not actually threatened by irreparable injury as a 
result of the breach. Finally, the district court held that Gem State-Blaine had not established that 
it had a protectable common-law trademark in the name of “Gem State Roofing.” The district court 
also concluded that neither party had prevailed and declined to award attorney fees or costs. 
5. UCI seeks reconsideration of its request for costs and attorney fees. Gem State-Blaine 
seeks attorney fees for UCI’s discovery violations. 
After trial, both parties asked the court for an award of costs and attorney fees. On 
September 19, 2019, UCI sought all its costs and attorney fees under Idaho Code section 12-120(3). 
UCI first reasoned that it was, in fact, the prevailing party, as Gem State-Blaine had failed to 
establish damages. UCI alternatively argued that, because it had submitted a formal Offer of 
Judgment before trial, it should be entitled to recover all its attorney fees and costs incurred from 
July 10, 2019, pursuant to Idaho Rule of Civil Procedure 68. 
On September 24, 2019, Gem State-Blaine filed its memorandum of costs and attorney fees 
associated with the discovery violations it had previously alleged. Gem State-Blaine argued that 
IRCP 37(a)(5) required an award of costs and fees after Gem State-Blaine’s motion to compel was 
necessitated by UCI’s failure to disclose various documents. Gem State-Blaine further argued that 
under Rule 37(b)(2)(C), UCI was required to pay attorney fees and costs because it had not 
complied with the original order to compel. Gem State-Blaine finally argued that under Rule 
37(c)(2), attorney fees and costs were warranted because Gem State-Blaine had proved the truth 
of admissions UCI refused to admit. 
On November 12, 2019, a hearing was held. On December 13, 2019, the court denied both 
parties’ motions for costs and attorney fees. The court again held that neither party had prevailed, 
citing Trilogy Network Systems v. Johnson, 144 Idaho 844, 172 P.3d 1119 (2007). The court further 
concluded that IRCP 68 did not entitle UCI to attorney fees and costs, reasoning that the rule’s 
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reference to Rule 54(d)(1) included the requirement that the party seeking costs under Rule 68 be 
the prevailing party. 
Turning to Gem State-Blaine’s request for discovery sanctions, the district court concluded 
that UCI’s objections and failure to produce the documents that Gem State-Blaine sought “were 
substantially justified” and that there was no evidence that UCI engaged in foul play or hid any 
relevant communications. Further, the district court concluded that UCI was justified in its dispute 
of several requests for admissions relating to its liability under the TSA, because UCI’s status as a 
successor in liability was not law of the case until the court’s decision on summary judgment. 
Accordingly, the district court declined to award attorney fees and costs to either party. 
Gem State-Blaine filed its notice of appeal on October 7, 2019, followed by an amended 
notice of appeal on December 17, 2019. UCI filed its Notice of Cross-Appeal on December 24, 
2019. 
II. 
STANDARD OF REVIEW 
“The granting or refusal of an injunction is a matter resting largely in the trial court’s 
discretion.” Conley v. Whittlesey, 133 Idaho 265, 273, 985 P.2d 1127, 1135 (1999) (quotation 
omitted). This Court reviews a discretionary decision for “[w]hether the trial court: (1) correctly 
perceived the issue as one of discretion; (2) acted within the outer boundaries of its discretion; (3) 
acted consistently with the legal standards applicable to the specific choices available to it; and (4) 
reached its decision by the exercise of reason.” Lunneborg v. My Fun Life, 163 Idaho 856, 863, 
421 P.3d 187, 194 (2018) (citation omitted). 
On appeal, “[w]hen findings of fact are challenged, the appellant has the 
burden of showing error, and the reviewing court will review the evidence in a light 
most favorable to the respondent.” Higginson v. Westergard, 100 Idaho 687, 689, 
604 P.2d 51, 53 (1979). The Court will not disturb the district court’s finding of 
fact unless the finding is clearly erroneous. PacifiCorp v. Idaho State Tax Comm’n, 
153 Idaho 759, 767, 291 P.3d 442, 450 (2012). A finding is clearly erroneous if [it] 
is not supported by substantial and competent evidence. Id. “Substantial and 
competent evidence is relevant evidence that a reasonable mind might accept to 
support a conclusion.” Jarvis v. Rexburg Nursing Ctr., 136 Idaho 579, 583, 38 P.3d 
617, 621 (2001). 
Nw. Farm Credit Servs., FLCA v. Lake Cascade Airpark, LLC, 156 Idaho 758, 763, 331 P.3d 500, 
505 (2014). 
“The findings of the trial court on the question of damages will not be set aside when based 
on substantial and competent evidence.” Trilogy Network Sys., 144 Idaho at 846, 172 P.3d at 1121.  
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III. 
ANALYSIS 
A. UCI’s failures to produce requested documents were not substantially justified, and 
the district court’s ultimate ruling denying sanctions is therefore vacated and 
remanded. 
At several junctures, the district court deferred ruling on or denied Gem State-Blaine’s 
requests for discovery sanctions. Ultimately, the district court denied monetary sanctions on each 
basis Gem State-Blaine advanced. 
Gem State-Blaine first requested attorney fees and costs under IRCP 37(a)(5) and IRCP 
37(c)(2) when it filed its motion to compel in January 2019. Despite granting the motion to compel, 
the district court ruled from the bench that it would defer ruling until the matter was fully 
concluded: 
[A]s I mentioned earlier, if the defense essentially continues in its position at this 
point that there’s nothing more to produce or provide, and if the plaintiffs somehow 
are able to prove that it’s being withheld, then I’m interested not only in awarding 
fees, costs, sanctions, etcetera [sic] at that point in time, but maybe other sanctions 
which could include prohibiting the party from presenting evidence or striking 
claims or pleadings . . . . But I’m not going to do that at this point in time. I’m just 
going to enter the order and assuming that everything that could and should have 
been produced has already been produced, if the plaintiffs find later that there’s 
something that was not produced, then I guess we’ll take up the rest of it at that 
point in time. 
Gem State-Blaine then renewed its request for attorney fees and costs under IRCP 37(b) as 
part of its motion for sanctions in May 2019. The district court again granted the motion for 
sanctions, but the sanctions imposed required UCI to make available its electronic devices and 
account information for a third-party digital search. At the hearing, the district court again deferred 
ruling on whether it would award fees and costs. Three weeks later, the district court granted UCI’s 
motion for reconsideration regarding the order granting sanctions and entered a protective order to 
maintain privileged information. 
At the close of the trial, Gem State-Blaine sought attorney fees and costs in connection 
with its various motions to compel and for sanctions. However, the district court disallowed 
attorney fees and costs, concluding that UCI’s objections and failure to produce documents was 
justified, and that Gem State-Blaine had not uncovered any additional documents. The district 
court also held that UCI had disputed its liability under the TSA in good faith such that its denial 
of facts later proved at trial was also justified. 
11 
On appeal, Gem State-Blaine continues to argue that the district court was required by 
IRCP 37(a)(5), IRCP 37(b)(2)(C), and IRCP 37(c)(2) to award attorney fees and costs as a sanction 
for UCI’s breach of discovery rules. We begin with the admonition that discovery should not be a 
game played by lawyers. Violations of discovery rules must be dealt with as they arise and as they 
are acknowledged by the trial court. If they are not, the party unreasonably avoiding legitimate 
discovery will be rewarded for its intransigence, to the detriment of the innocent party. It is also 
conceivable that a party could unreasonably resist discovery and be subject to appropriate 
sanctions, but ultimately prevail on the merits of the case. Prevailing on the merits should not 
somehow exonerate a party from employing unfair tactics as the litigation proceeds. Thus, we 
conclude it was error for the district court to defer imposing sanctions against UCI when 
confronted with its discovery abuses. 
The standard of review for decisions to impose sanctions associated with discovery 
violations is characterized as “discretionary.” State Ins. Fund v. Jarolimek, 139 Idaho 137, 138–
39, 75 P.3d 191, 192–93 (2003). In addition, when we review a district court’s imposition of 
sanctions, we must decide if substantial and competent evidence supports the district court’s 
determination that a discovery violation has occurred, and then review the sanction itself for an 
abuse of discretion. Easterling v. Kendall, 159 Idaho 902, 909, 367 P.3d 1214, 1221 (2016).5 It is 
therefore axiomatic that when a trial court has not followed the applicable law or rule, it has abused 
its discretion. 
1. UCI’s nondisclosures related to the initial motion to compel were not substantially 
justified under Rule 37(a)(5). 
In its initial requests for production, Gem State-Blaine requested that UCI produce “any 
and all documents that support or relate” to roofing work “bid on, solicited, or performed” in Blaine 
County. UCI only disclosed 117 pages of documents in its initial response to Gem State-Blaine’s 
request for production; it was only after Gem State-Blaine’s motion to compel that UCI provided 
the bulk of the electronic communication regarding ongoing work that had initially been withheld. 
In its decision denying sanctions, the district court concluded: 
UCI’s objections and failure to produce documents were substantially justified and 
other circumstances make an award of expenses unjust. In viewing the litigation  
                                                 
5 The federal equivalent to IRCP 37 has been interpreted to give rise to a similar standard of review, considering the 
federal abuse of discretion standard. See, e.g., Marchand v. Mercy Med. Ctr., 22 F.3d 933, 936 (9th Cir. 1994) (“A 
district court abuses its discretion if it does not apply the correct law or if it rests its decision on a clearly erroneous 
finding of material fact.”). 
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as a whole, UCI consistently maintained it had nothing more to produce. Gem 
State[-]Blaine was not able to uncover any additional documents pertinent to its 
claims. There is no evidence that UCI deleted emails or hid any relevant documents 
or other evidence of foul play. Instead, Kuhn’s [UCI’s corporate secretary’s] 
unrebutted testimony was that it was UCI’s business practice to delete emails once 
a job is complete. 
On appeal, Gem State-Blaine argues that the district court was required by Idaho Rule of 
Civil Procedure 37(a)(5) to award attorney fees to Gem State-Blaine because, between the filing 
of the motion to compel and the motion hearing, UCI produced the bulk of its discovery responses. 
Gem State-Blaine argues that “[n]one of the stated Rule 37(a)(5) exceptions applied—certainly, 
the District Court never found that any applied[.]” 
UCI responds that the district court’s decision to defer ruling on the issue of attorney fees 
and costs associated with the motion made its decision on the motion to compel, in essence, a 
partial grant of the motion. UCI argues that because the ruling constituted a partial grant of the 
motion to compel, Rule 37(a)(5)(C) applied rather than Rule 37(a)(5)(A). Under Rule 37(a)(5)(C), 
it is left to the district court’s discretion whether to award reasonable expenses; in contrast, if IRCP 
37(a)(5)(A) applied, an award of reasonable expenses would be mandatory unless the court found 
that an exception was applicable. UCI contends that the district court properly exercised its 
discretion in denying reasonable expenses. 
Idaho Rule of Civil Procedure 37 governs sanctions for violations of the discovery rules. 
Rule 37(a)(5) provides that if a motion to compel is granted or if discovery is provided after filing 
the motion: 
(5) Payment of Expenses; Protective Orders. 
(A) If the Motion Is Granted (or Discovery Is Provided After Filing). If the 
motion is granted, or if the requested discovery is provided after the motion was 
filed, the court must, after giving an opportunity to be heard, require the party 
or deponent whose conduct necessitated the motion, the party or attorney 
advising that conduct, or both to pay the movant’s reasonable expenses incurred 
in making the motion, including attorney’s fees. But the court must not order 
this payment if: 
(i) the movant filed the motion before attempting in good faith to obtain the 
disclosure or discovery without court action; 
(ii) the opposing party’s nondisclosure, response, or objection was 
substantially justified; or 
(iii) other circumstances make an award of expenses unjust. 
I.R.C.P. 37(a)(5) (italics added). 
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The district court’s finding that UCI’s nondisclosure was substantially justified is clearly 
erroneous as it relates to Rule 37(a)(5)(A). The district court’s decision only addresses UCI’s 
proffered reason for not providing the additional electronic communications concerning closed 
projects. However, the district court did not address UCI’s justification for why the bulk of its 
discovery regarding the Wood River Valley Animal Shelter—an ongoing project and certainly the 
largest project by dollar volume—was not provided until after Gem State-Blaine filed its motion 
to compel. To the extent that UCI produced documents only after Gem State-Blaine filed a motion 
to compel, the district court erred in finding that an exception to Rule 37(a)(5)(A) applied. 
Accordingly, the district court was required by Rule 37(a)(5)(A) to enter an award of Gem State-
Blaine’s reasonable expenses incurred in filing the motion to compel. 
 
UCI’s argument that the district court’s decision constituted a partial grant of the motion 
to compel is not persuasive. The district court perceived its order to compel as a grant of Gem 
State-Blaine’s motion. The district court did not qualify its decision and did not justify its refusal 
to award attorney fees under Rule 37(a)(5)(C). Without substantial justification for UCI’s failure 
to produce discovery under Rule 37(a)(5)(A), more than an order attempting to cure discovery 
abuses was required; monetary sanctions were mandated in the form of reasonable expenses 
associated with the motion to compel. The district court clearly erred in denying these expenses. 
2. We defer to the district court’s credibility determination that UCI was substantially 
justified in its failure to produce any additional electronic documents after the 
motion to compel was granted but before the motion for sanctions was filed. 
In addition to asserting the applicability of Rule 37(a)(5)(A) Gem State-Blaine argues that 
because its motion for sanctions was ultimately granted the district court was required to hold UCI 
responsible for attorney fees and costs under IRCP 37(b)(2)(C). UCI argues that the district court 
made findings that UCI’s failure to produce was substantially justified. 
Rule 37(b)(2)(C) governs monetary expenses when a motion for sanctions is granted but 
uses a nearly identical standard to Rule 37(a)(5)(A). Once a motion for sanctions is granted, “the 
court must order the disobedient party, the attorney advising that party, or both to pay the 
reasonable expenses, including attorney’s fees, caused by the failure [to obey an order to provide 
or permit discovery], unless the failure was substantially justified or other circumstances make an 
award of expenses unjust.” I.R.C.P. 37(b)(2)(C) (italics added). 
While the district court’s “substantial justification” finding is clearly erroneous as it applies 
to Rule 37(a)(5)(A)—as discussed above—we do not conclude the same as it pertains to Rule 
14 
37(b)(2)(C). This is because the basis for Gem State-Blaine’s motion for sanctions was UCI’s 
failure to produce any additional electronic communications after UCI’s third supplemental 
discovery response. We defer to the district court’s determination of credibility in its conclusion 
regarding the veracity of UCI’s corporate secretary that emails relating to closed projects had been 
routinely deleted. As the trier of fact, the district court was entitled to weigh the evidence and 
gauge the demeanor of the witnesses. Wilson v. Mocabee, 167 Idaho 59, 467 P.3d 423, 432 (2020) 
(citation omitted). Accordingly, the district court’s finding that UCI’s failure to produce additional 
emails was substantially justified is not clearly erroneous.6 
3. The district court’s finding that UCI had “good reason” for its refusal to admit 
various requests for admission is clearly erroneous. As a consequence, the district 
court erred in refusing to enter sanctions under Rule 37(c)(2). 
In its order regarding attorney fees, the district court rejected Gem State-Blaine’s argument 
that IRCP 37(c)(2) required imposition of sanctions, stating: 
UCI vigorously (and in good faith) disputed its liability under the TSA. It was not 
until the Court issued its Memorandum Decision and Order on April 16, 2019[,] 
finding that UCI was bound by the TSA that such fact became the law of the case. 
Likewise, UCI did not admit to various Rule 36 requests for admission based on its 
contention that it was not bound by the TSA. The Court finds that UCI had a good 
reason for its failure to admit based on its defense strategy. 
(Italics added.) 
 
Gem State-Blaine argues that UCI denied three specific requests for admission (RFAs), 
and that the truth of those requests was proved at trial. Gem State-Blaine contends that the district 
court had no discretion to reject Gem State-Blaine’s request for fees because of UCI’s denial of 
the RFAs. Gem State-Blaine cites Ruge v. Posey, 114 Idaho 890, 892, 761 P.2d 1242, 1244 (Ct. 
App. 1988), for the proposition that an award of reasonable expenses is mandatory unless one of 
four exceptions apply. In response, UCI argues that it was justified in denying the RFAs. UCI first 
argues that the phrasing of the RFAs justified its denials. UCI further contends that “despite denials 
that should have been admitted, or at least partially admitted or clarified in an exercise of good 
faith, the Court found against awarding costs because the denial did not impact the proof ultimately 
presented at trial.” Gem State-Blaine responds, arguing that UCI’s concession is telling and that 
                                                 
6 Left unanswered in the district court’s analysis is whether UCI’s routine destruction of emails would constitute 
spoliation of evidence. UCI had entered into a non-compete agreement with Gem State-Blaine, an agreement that UCI 
clearly breached. While UCI could not produce something that had been destroyed, we are not faced with and do not 
answer whether a party may routinely destroy documents relating to a breach of an agreement and do so with impunity. 
15 
the district court’s only finding was that UCI’s failure to admit was justified because of “its defense 
strategy.” 
 
Idaho Rule of Civil Procedure 37(c)(2) provides: 
(2) Failure to Admit. If a party fails to admit what is requested under Rule 36 and 
if the requesting party later proves a document to be genuine or the matter true, the 
requesting party may move that the party who failed to admit pay the reasonable 
expenses, including attorney’s fees, incurred in making that proof. The court must 
so order unless: 
(A) the request was held objectionable under Rule 36(a); 
(B) the admission sought was of no substantial importance; 
(C) the party failing to admit had a reasonable ground to believe that it might 
prevail on the matter; or 
(D) there was other good reason for the failure to admit. 
I.R.C.P. 37(c)(2). “The rule is mandatory, subject only to the four exceptions set forth in the rule 
itself[.]” Ruge, 114 Idaho at 892, 761 P.2d at 1244. 
 
Gem State-Blaine was entitled to its reasonable expenses in relation to UCI’s denial of 
RFA Numbers 10, 12, and 17. The RFAs which UCI summarily denied and which Gem State-
Blaine considers objectionable are as follows: 
REQUEST FOR ADMISSION NO. 10: Admit that You are doing business under 
the assumed business name “Gem State Roofing.” 
. . . . 
REQUEST FOR ADMISSION NO. 12: Admit that since 2016, You have 
advertised, solicited, bid on, and performed roofing work in Blaine County under 
the assumed business name “Gem State Roofing.” 
. . . . 
REQUEST FOR ADMISSION NO. 17: Admit that despite Gem State’s written 
demands that You cease conducting Your roofing business in Blaine County, You 
continue to advertise, solicit, bid on, and perform roofing work in Blaine County. 
(Italics added). 
UCI argues that the phrasing of RFA Nos. 12 and 17 justified its summary denial because 
it was not advertising or soliciting business in Blaine County. UCI reasons that these two RFAs 
use the conjunctive “and”—meaning that if any one of the verbs “advertise, solicit, bid on,” or 
“perform[,]” were not true, it would not be entirely true to admit. These semantic justifications are 
not countenanced by Rule 36(a)(5), which governs answers to requests for admission: 
If a matter is not admitted, the answer must specifically deny it or state in detail 
why the answering party cannot truthfully admit or deny it. A denial must fairly 
respond to the substance of the matter; and when good faith requires that a party 
16 
qualify an answer or deny only a part of a matter, the answer must specify the part 
admitted and qualify or deny the rest. 
I.R.C.P. 36(a)(5) (italics added). The rule requires a fair response to the substance of the request 
for admission, specifically including why the answering party cannot truthfully admit or deny the 
specific request. UCI’s answer did not specify which parts of RFAs 12 and 17 were being denied 
and which were being admitted.7 Failure to follow a rule of civil procedure does not constitute, 
nor can it be justified as, a legitimate “defense strategy.” 
 
In addition, the district court’s reasoning about “defense strategy” has no application to 
UCI’s denial of RFA Number 10. UCI argues that it “was legally conducting business as UCI, not 
Gem State, providing a justified basis for denying all of the admissions.” The difference between 
the legal name of a business and the name in which it does business, while legally meaningful, is 
a distinction without a difference under these circumstances. Moreover, there is simply no 
justification for this denial. There is little indication from the record, from the district court’s order 
on attorney fees, or in UCI’s briefing as to how UCI could deny doing business under the name it 
had been using continuously for years. Accordingly, Gem State-Blaine is entitled to its reasonable 
expenses (including attorney fees) associated with proving that UCI improperly denied RFA 
Numbers 10, 12, and 17.  
B. The district court abused its discretion in denying a permanent injunction. 
The district court denied Gem State-Blaine’s request for a permanent injunction as a 
remedy for UCI’s breach of the TSA. In doing so, the district court concluded that Gem State-
Blaine had not “demonstrated that it has suffered irreparable injury by UCI’s conduct.” The district 
court pointed to Gem State-Blaine’s evidence that for the last 18 years, its profit margins had been 
increasing. The district court further noted that there was no evidence that the work UCI wrongfully 
undertook in Blaine County would have been obtained by Gem State-Blaine, and Gem State-
Blaine failed to prove what profit it would have made had it acquired that work. The district court 
also noted that there was no evidence that UCI had harmed Gem State-Blaine’s reputation by 
performing shoddy work, or that UCI had recently done work in Blaine County. The district court 
concluded that without evidence that UCI had “actually threatened” Gem State-Blaine with 
“irreparable injury[,]” it would not issue a permanent injunction. 
                                                 
7 On appeal UCI acknowledges that it would have been better had it partially admitted and clarified its responses due 
to the obligation contained in the rule requiring “good faith[.]” In doing so, UCI implicitly concedes it violated the 
rule.  
17 
On appeal, Gem State-Blaine argues that it satisfied several requirements of IRCP 65(e) 
and should have been awarded its requested permanent injunction. Gem State-Blaine contends that 
the district court abused its discretion by requiring it to provide evidence showing that it would 
have received the jobs UCI received and performed, or to provide testimony of the customers lost 
by UCI’s wrongful conduct. Gem State-Blaine also challenges the district court’s reasoning for 
seeming to conclude that UCI’s injury-causing behavior had resolved itself over time, or for at 
least relying on the “minimal” and non-recent nature of UCI’s breach of the TSA. 
In response, UCI argues that IRCP 65(e) only applies to the entry of a preliminary 
injunction, but that even Gem State-Blaine’s speculation that it “may have lost business” was 
insufficient to satisfy this rule. UCI argues that by the language of Rule 65(e), a preliminary 
injunction would only apply to ongoing conduct during litigation and that Gem State-Blaine could 
not show that any such conduct was occurring. UCI further asserts that the district court correctly 
found there had been no injury to Gem State-Blaine as a result of UCI’s breach of the TSA, and 
therefore no irreparable injury. UCI argues that the district court’s description of UCI’s breach of 
the TSA as “minimal” was accurate, particularly because without associated damage, there could 
be no injury. Finally, UCI defends the district court’s focus on Gem State-Blaine’s profit margins, 
arguing that the district court was entitled to examine Gem State-Blaine’s profit margins in the 
absence of evidence of profit loss. 
“The object of injunctive relief is to prevent injury, threatened and probable to result, unless 
interrupted.” Miller v. Ririe Joint Sch. Dist. No. 252, 132 Idaho 385, 388, 973 P.2d 156, 159 (1999) 
(citation omitted). 
Where the conduct causing injury has been discontinued, the dispute is moot 
and the injunction should be denied. [Id.] However, as the United States Supreme 
Court observed, the trial court must be convinced that “there is no reasonable 
expectation that the wrong will be repeated.” United States v. W.T. Grant Co., 345 
U.S. 629, 633, (1953)[.] 
O’Boskey v. First Fed. Sav. & Loan Ass’n of Boise, 112 Idaho 1002, 1007, 739 P.2d 301, 306 
(1987). Further, “injunctive relief looks to the future, and is designed to deter rather than punish[.]” 
Wright & Miller, Federal Practice and Procedure: Civil § 2942 (footnotes omitted). 
There is a distinction between the showing of injury required to obtain an injunction and 
damages required to prove monetary relief. See Cazier v. Econ. Cash Stores, 71 Idaho 178, 187, 
228 P.2d 436, 441 (1951) (quoting Bernstein v. Friedman, 160 P.2d 227, 234 (Wyo. 1945)) 
(“[T]here is an obvious distinction between injury and damage that is not always observed in 
18 
dealing with the question of injunctive relief, and courts of equity will interpose in a proper case 
to protect a right, without any reference to the question of actual damage.”). Further, “[w]e have 
not held that permanent injunctions cannot under any circumstances issue without a finding of 
irreparable harm.” Jacklin Land Co. v. Blue Dog RV, Inc., 151 Idaho 242, 248, 254 P.3d 1238, 
1244 (2011) (citing Cazier, 71 Idaho at 186–87, 228 P.2d at 441). 
 
As an initial observation, UCI’s reliance on the standard for a preliminary injunction is 
inapposite. Rule 65(e) enumerates five grounds for entry of a preliminary injunction. A preliminary 
injunction is a temporary injunction effective for the pendency of the litigation before the merits 
of the case are decided. I.R.C.P. 65(e). Preliminary injunctions are designed to protect clearly 
established rights from imminent or continuous violation during litigation. See Gordon v. U.S. 
Bank Nat’l Ass’n, 166 Idaho 105, 455 P.3d 374, 384 (2019) (quoting Brady v. City of Homedale, 
130 Idaho 569, 572, 944 P.2d 704, 707 (1997)) (“A district court should grant a preliminary 
injunction ‘only in extreme cases where the right is very clear and it appears that irreparable injury 
will flow from its refusal.’”). A permanent injunction, on the other hand, is entered at the resolution 
of the case, and requires a showing of threatened or actual irreparable injury; in addition, in order 
to deny a permanent injunction the trial court must be persuaded that there is “no reasonable 
expectation that the wrong will be repeated.” O’Boskey, 112 Idaho at 1007, 739 P.2d at 306. In 
other words, a trial court may appropriately deny a preliminary injunction at the outset of a case 
when there are complex issues of fact and law yet to resolve, but correctly grant a permanent 
injunction once those issues have been resolved in favor of the plaintiff. The two types of 
injunction serve different purposes and the distinction between the two and the different tests to 
be applied to them should not be conflated. 
The district court abused its discretion in denying Gem State-Blaine a permanent injunction 
for three reasons. First, the district court failed to make a finding that there was no reasonable 
expectation that UCI’s wrongs would be repeated. See O’Boskey, 112 Idaho at 1007, 739 P.2d at 
306. UCI’s ongoing work on the Wood River Valley Animal Shelter was a continuous breach of 
the TSA. As a breaching defendant, UCI bore the heavy burden of establishing no reasonable 
expectation of repeated wrongdoing; however, the district court made no such finding. The closest 
the district court came to making this finding was a determination that there was “no evidence that 
UCI has done work in Blaine County recently (other than on the animal shelter, upon which it has 
sustained a loss).” When a party is in active breach, as UCI was, the district court may not disregard 
19 
that breach, even if the breaching party has arguably sustained a loss as a result of the breach. 
Simply because UCI claimed it had suffered a loss as a result of its breach, in no way impacts Gem 
State-Blaine’s entitlement to a permanent injunction. As early as 2010, UCI (still Gem State-Boise 
at the time) bid on and performed work in Blaine County in contravention of the TSA. This 
breaching conduct only increased in frequency and scope after 2016. Consequently, the district 
court abused its discretion in denying Gem State-Blaine’s request for a permanent injunction 
without requiring UCI to bear its heavy burden of establishing no reasonable expectation of 
repeated wrongdoing. While the district court granted Gem State-Blaine summary judgment on its 
breach of contract claim and its claim of breach of the covenant of good faith and fair dealing, it 
inexplicably denied Gem State-Blaine a permanent injunction, notwithstanding UCI’s multiple 
breaches. 
Second, the district court abused its discretion by relying almost entirely on Gem State-
Blaine’s inability to establish monetary damages in its analysis regarding irreparable harm. This 
was an abuse of discretion because it was inconsistent with our case law relating to injunctions. 
See Cazier, 71 Idaho at 186–87, 228 P.2d at 441. Despite finding that UCI had breached the TSA 
and the implied covenant of good faith and fair dealing, including an ongoing breach in its work 
on the Wood River Valley Animal Shelter, the district court ultimately declined to enter an 
injunction because Gem State-Blaine’s proof of monetary damages was lacking: “[A] permanent 
injunction will not be issued as Gem State-Blaine has failed to prove any actual damages from 
UCI’s conduct.” However, injury may be shown without proving damages. See id. Difficult to 
prove damages are included in the type of irreparable harm that a permanent injunction is designed 
to prevent. This is especially true where the court has found a breach of the underlying contract, a 
breach of the covenant of good faith, and ongoing violation of the agreement. To permit a party to 
continue breaching a contract merely because the innocent party could not adequately prove its 
damages would be inconsistent with our legal principles; therefore, it constituted an abuse of 
discretion.  
Finally, it was an abuse of discretion for the district court to conclude that Gem State-
Blaine was not threatened by irreparable injury from UCI. There are not a wealth of Idaho cases 
explaining irreparable injury in the context of permanent injunctions requested for breach of non-
compete agreements. However, in other jurisdictions, courts presented with breaches of similar 
agreements “have identified the following as factors supporting irreparable harm determinations: 
20 
inability to calculate damages, harm to goodwill,” and “diminishment of competitive positions in 
[the] marketplace[.]” Dominion Video Satellite, Inc. v. Echostar Satellite Corp., 356 F.3d 1256, 
1263 (10th Cir. 2004) (italics added). The difficulty in establishing damages in these circumstances 
flows from Gem State-Blaine’s challenge in proving a causal connection between UCI’s breach 
and Gem State-Blaine’s loss. However, the inability to prove damages inures to Gem State-
Blaine’s benefit when the question of whether to issue a permanent injunction arises. This case 
involves the breach of a non-compete agreement in the TSA which was entered into because the 
threat of confusion had already been acknowledged by the parties. There was also undisputed 
evidence that customers had already confused the two businesses, which precipitated the need for 
the TSA. The harm sought to be prevented by the TSA is the harm threatened by every action 
breaching the TSA; the incalculable quality of monetary damages is what makes the harm 
irreparable because it is so difficult to prove. 
It is also important to recognize that the district court should have issued a permanent 
injunction to afford Gem State-Blaine the opportunity to enforce the TSA should UCI again breach 
it in the future. If it were to do so, Gem State-Blaine could seek contempt sanctions against UCI 
for its failure to abide by its agreement. This sanction alone could afford Gem State Blaine an 
enforceable remedy even given the difficulty of proving damages.  
Because the district court abused its discretion in denying the requested injunction, we 
reverse the district court’s order denying Gem State-Blaine a permanent injunction. On remand, 
the district court is directed to enter an appropriate permanent injunction enjoining UCI from any 
further breach of the TSA. 
C. The district court’s decision denying damages is affirmed. 
The district court concluded that the TSA was “essentially an anti-competition 
agreement[.]” As a result, the district court applied the law regarding damages for anti-competition 
agreements. The district court ultimately found that Gem State-Blaine had not established that it 
had sustained any loss relating to UCI’s breach of the TSA. Relying on Trilogy Network Systems 
v. Johnson, 144 Idaho 844, 172 P.3d 1119 (2007), the district court concluded that Gem State-
Blaine “failed to offer into evidence any proof as to what its costs and profits would have been had 
it been awarded the contracts” for the breaching projects. In particular, the district court pointed to 
Gem State-Blaine’s profit margin since the period of recession beginning in 2008, observing that 
there was no proven connection between UCI’s profits and any loss claimed by Gem State-Blaine. 
21 
The district court concluded that this rendered Gem State-Blaine’s claim for damages speculative, 
because it had “failed to prove its damages with reasonable certainty.”  
On appeal, Gem State-Blaine argues that the district court ignored this Court’s decision in 
Saint Alphonsus Diversified Care, Inc. v. MRI Associates, LLP [hereinafter Saint Alphonsus], 157 
Idaho 106, 334 P.3d 780 (2014). Gem State-Blaine argues that the district court focused on its 
relative profit margin, an “irrelevant” fact “to the question of lost profits.” Gem State-Blaine 
contends that the court’s conclusion that damages could not be proven with “reasonable certainty” 
should have supported a monetary award because UCI created the uncertainty itself. Instead, Gem 
State-Blaine argues, the district court should have first determined whether it was more likely than 
not that Gem State-Blaine’s lost profits were caused by UCI’s conduct, and then examined the 
amount of damages. 
UCI responds, arguing that the district court’s analysis of profit margins was necessary 
because that was the only evidence Gem State-Blaine presented to support its claim for damages. 
UCI also contends that its failure to refer work was insufficient evidence that Gem State-Blaine 
would have actually received the work referred. UCI further argues that the district court properly 
kept the burden of proof on Gem State-Blaine, and that without proof of injury or damage, Gem 
State-Blaine was not entitled to recover money damages. 
In response, Gem State-Blaine contends that it did show losses, “including sustained losses 
during the period in and after 2010 when the contract-breaching activity began (so far as UCI’s 
produced records show).” Gem State-Blaine argues that it could not show evidence about lost 
projects “it never learned about, never evaluated, that are years old, and that UCI itself failed to 
produce documents about[.]” 
Ordinarily, “[t]he measure of damages for the breach of an anti-competition clause is the 
amount that the plaintiff lost by reason of the breach, not the amount of profits made by the 
defendant.” Trilogy Network Sys., Inc., 144 Idaho at 846, 172 P.3d at 1121. However, “[t]he profits 
realized by the defendant may be considered by the trier-of-fact, if shown to correspond with the 
loss of the plaintiff.” Id. (citation omitted). “The party seeking to recover lost profits is not required 
to obtain the testimony of the customers allegedly lost as a result of the wrongdoer’s conduct.” 
Saint Alphonsus, 157 Idaho at 116, 334 P.3d at 790 (citing Gen. Auto Parts Co., Inc. v. Genuine 
Parts Co., 132 Idaho 849, 859, 979 P.2d 1207, 1217 (1999)). 
22 
[T]he law does not require “accurate proof with any degree of mathematical 
certainty . . . .” Vancil v. Anderson, 71 Idaho 95, 105, 227 P.2d 74, 80 (1951). 
Damages need be proved only with a “reasonable certainty[,]” and this means “that 
[the] existence of damages must be taken out of the realm of speculation.” Anderson 
& Nafziger v. G.T. Newcomb, Inc., 100 Idaho 175, 182–83, 595 P.2d 709, 716–17 
(1979) (citations omitted). 
Trilogy Network Sys., Inc., 144 Idaho at 846, 172 P.3d at 1121. 
 
This Court found insufficient evidence of lost profits in Trilogy Network Systems, Inc. See 
id. There, after employee Johnson ended his work with Trilogy, the parties entered into a non-
compete agreement stipulating that Johnson could not do business with particular clients of Trilogy 
for a year. Id. In contravention of the agreement, Johnson submitted a bid to one such client, for 
which Trilogy also submitted a bid. Johnson was awarded the work. Id. At trial, Trilogy established 
that Johnson had breached the agreement, but on the issue of damages the company only presented 
the testimony of its president stating that Trilogy would have made a comparable profit on the 
project. Id. at 847, 172 P.3d at 1122. This Court affirmed the district court’s decision denying 
damages observing that Trilogy had not presented sufficient evidence to take the issue of damages 
out of the realm of speculation by simply stating a conclusion. Id. 
We affirm the district court’s finding that damages were not sufficiently proven to be 
brought outside the realm of speculation. Gem State-Blaine’s evidence at trial about lost profits 
consisted entirely of its profits and profit margins over time as supported by Silvia’s testimony. Its 
evidence about other damages, like that to its reputation, consisted entirely of hearsay statements 
that were ultimately not admitted at trial. Gem State-Blaine relied on the amounts that were paid 
to or bid by UCI for work in Blaine County as the benchmark for damages owed it, multiplying it 
by Gem State-Blaine’s 19-year track record of profits to reach its requested damages of $220,000. 
Gem State-Blaine conceded loss of profit as a result of the recession in the years after 2008, but 
argued in its opening statement that UCI’s breaching conduct caused Gem State-Blaine’s losses to 
“[fall] further and stay[ ] down longer[.]” However, there is nothing in the record to support this 
assertion, much less enough to render the district court’s conclusion clearly erroneous. 
Gem State-Blaine asserts that the district court committed legal error when it relied on Gem 
State-Blaine’s relative profit margin starting when the breaching conduct began. Gem State-Blaine 
argues that the threshold inquiry was whether Gem State-Blaine lost profits, relying on this Court’s 
language in Saint Alphonsus: 
23 
The party seeking to recover lost profits is not required to obtain the testimony of 
the customers allegedly lost as a result of the wrongdoer’s conduct. General Auto 
Parts Co., Inc. v. Genuine Parts Co., 132 Idaho 849, 859, 979 P.2d 1207, 1217 
(1999). There only need be sufficient evidence in the record to allow the jury to 
conclude that the inference linking the wrongdoer’s conduct to the claimant’s 
damages is more probable than the inference connecting such loss to other factors. 
Id. 
Saint Alphonsus, 157 Idaho at 116, 334 P.3d at 790. 
 
Saint Alphonsus is distinguishable. In that case, a disassociated partner violated a non-
compete agreement and usurped a partnership opportunity by opening an MRI facility in Meridian, 
Idaho, a market it had originally prevented the partnership from entering. See Saint Alphonsus, 
157 Idaho at 114–15, 334 P.3d at 788–89. Here, Gem State-Blaine and UCI were not fiduciaries 
to each other in a partnership. Nor is the nature of the breaching activity the same. Saint Alphonsus 
presented the unique situation where a partnership was dissuaded by a former partner from entering 
a particular market, in which the former partner subsequently opened a facility in violation of a 
non-compete agreement. See id. This constituted usurpation of a partnership activity in addition to 
breach of a non-compete agreement. In this case, UCI’s wrongful activity was limited to breach of 
the TSA, however flagrant. The district court did not err as a matter of law in applying the measure 
of damages from Trilogy rather than Saint Alphonsus. As a result, we affirm the district court’s 
denial of damages. 
D. UCI is estopped from denying Gem State-Blaine’s protectable trademark because of 
the TSA. 
On Gem State-Blaine’s claim of trademark infringement, the district court denied UCI’s 
motion for summary judgment because, even though Gem State-Blaine’s trademark had expired 
in 2012, there was still a genuine issue of material fact as to the existence of a protectable common-
law trademark. However, following the bench trial, the district court concluded that Gem State-
Blaine did not have a protectable common-law trademark because it had not shown first use in 
Blaine County, and further that the name “Gem State Roofing” was only geographically 
descriptive, rather than having acquired a secondary meaning. 
On appeal, Gem State-Blaine argues that it established first use of the name “Gem State 
Roofing” in Blaine County, having begun and continued to work in Blaine County in the late 
1990s, while UCI’s first use of the mark in Blaine County did not begin until “around 2002.” 
Further, Gem State-Blaine contends that by signing the TSA, UCI’s predecessor conceded that 
Gem State-Blaine had a protectable trademark prior in right to UCI’s, which would estop UCI 
24 
from challenging the trademark. (Gem State-Blaine cites MWS Wire Indus., Inc. v. California Fine 
Wire Co., 797 F.2d 799, 800–04 (9th Cir. 1986) as authority of its position.) 
In response, UCI contends that 2002 was merely the first year that Gem State-Blaine 
became aware that UCI had been working in Blaine County. UCI also attempts to distinguish these 
facts from MWS Wire Industries, by arguing that in MWS Wire Industries, there was an express 
provision by which the parties recognized the validity of the registered mark in question, unlike 
here, in which the TSA only referenced the registered trademark. UCI also contends that Gem 
State-Blaine did not challenge the district court’s conclusion that the mark was only geographically 
descriptive. 
Gem State-Blaine counters by arguing that UCI did not present any evidence that it used 
the “Gem State Roofing” mark in Blaine County prior to Gem State-Blaine. Gem State-Blaine also 
points out that by the language of the TSA, the parties specifically recognize the “word mark” of 
“Gem State Roofing.” 
The elements of quasi-estoppel are set out in Thomas v. Arkoosh Produce, which  
states as follows: 
[T]he doctrine of quasi-estoppel requires that the offending party must have gained 
some advantage or caused a disadvantage to the party seeking estoppel; induced the 
party seeking estoppel to change its position to its detriment; and, it must be 
unconscionable to allow the offending party to maintain a position which is 
inconsistent from a position from which it has already derived a benefit. 
137 Idaho 352, 357, 48 P.3d 1241, 1246 (2002) (quoting City of Sandpoint v. Sandpoint Indep. 
Highway Dist., 126 Idaho 145, 151, 879 P.2d 1078, 1084 (1994)). 
Gem State-Blaine cites MWS Wire Industries to argue that, by entering into the TSA UCI 
conceded that Gem State-Blaine had what amounted to a common-law trademark prior in right to 
UCI’s mark, and UCI should now be estopped from denying its existence. In MWS Wire Industries, 
MWS registered the mark “multifilar” with the United States Patent and Trademark Office. 797 
F.2d at 800. The next year, California Fine Wire (CFW) published an article which used the similar 
term “multifiler.” Id. MWS contacted CFW by letter, advising it of the registry of “multifilar,” 
asserting CFW’s use was an infringement, and demanding a written acknowledgment of the 
trademark as well as a promise to make no further use of it. Id. Counsel for CFW replied to this 
letter, acknowledging that the “multifilar” trademark appeared valid and that he had advised CFW 
not to infringe the trademark. Id. The next year, however, CFW added the word “multi-filar” to its 
listing in a trade product directory. MWS sued, alleging, among other things, trademark 
25 
infringement. Id. The district court entered summary judgment against MWS, declaring its 
trademark invalid, cancelling the trademark registration, and dismissing all MWS’s claims for 
damages. Id. at 801. 
On appeal, the Ninth Circuit reversed the grant of summary judgment de novo and 
remanded, concluding the district court had “erred in inquiring into the validity of the trademark 
before resolving the question of whether the exchange of letters” had created a contract. Id. If on 
remand the district court found that the letters constituted a settlement contract, CFW would be 
“estopped by virtue of that agreement from asserting the invalidity of the trademark as a defense 
to MWS’s claims.” Id. at 804. 
Here, quasi-estoppel applies to preclude UCI’s challenge of Gem State-Blaine’s common-
law trademark. MWS Wire Industries is indistinguishable from these facts and persuasive in its 
analysis. First, UCI gained the advantage of maintaining its primary market outside Blaine County 
without the threat of litigation due to its concurrent use of the business name “Gem State Roofing.” 
Second, in return, Gem State-Blaine gave up its right to challenge UCI’s registered trademark or 
to enter UCI’s primary market. Now, UCI has taken the position that Gem State-Blaine has no 
protectable trademark, despite having entered into a contract recognizing an analogous right. 
UCI’s argument is that the subject of the TSA was the registered trademark—that is, the symbol 
along with the business name—and that quasi-estoppel does not apply because Gem State-Blaine 
allowed the mark’s registration to lapse. However, this position is belied by the TSA. Clause 7 in 
the TSA states that neither business would oppose the other’s “concurrent use and registration of 
the word mark ‘Gem State Roofing[.]’
the 
 
(Italics added.) In other words, the TSA memorialized
” 
business name “Gem 
use of the 
 
obligations of the parties to each other with respect to concurrent
 
”
.
State Roofing
Gem State-Blaine may have let its claimed trademark lapse vis-à-vis the outside 
world; however, it has not lapsed with regard to UCI. Gem State-Blaine has a contract with UCI 
which explicitly acknowledges UCI’s recognition of Gem State-Blaine’s mark. 
Finally, it is unconscionable in this case to allow UCI to change position regarding this 
matter. Black’s Law Dictionary provides several definitions of “unconscionable,” as follows: 
1. (Of a person) having no conscience; unscrupulous . . . . 2. (Of an act or 
transaction) showing no regard for conscience; affronting the sense of justice, 
decency, or reasonableness . . . . Cf. conscionable. 3. Much more than is acceptable 
or reasonable . . . . 4. Shockingly unjust or unfair[.] 
26 
Unconscionable, BLACK’S LAW DICTIONARY (11th ed. 2019). The TSA was entered into because 
the parties agreed there were protectable marks involved and sought to enter into an agreement to 
avoid litigation surrounding these marks. And yet, despite the TSA’s terms, UCI flagrantly 
breached the TSA on multiple occasions over a long period of time. Now, UCI denies that Gem 
State-Blaine has any protectable trademark. Notably, the precise reason we have trademark laws 
is to protect the owners of marks who have not reached agreements with unknown competitors. 
Allowing UCI to change positions on this matter would be unjust, unfair, and would effectively 
remove Gem State-Blaine’s protection from unfair competition protected by the TSA. 
Accordingly, we vacate the district court’s decision dismissing Gem State-Blaine’s trademark 
infringement claim, and remand for further proceedings. Gem State-Blaine has a protectable 
trademark because UCI is estopped from denying its existence. 
E. Because we are directing a different result than that found by the district court, we 
are vacating and remanding the district court’s determination that neither party 
prevailed.  
Before trial, UCI submitted a formal offer of judgment in the amount of $5,000, pursuant 
to Rule 68. Gem State-Blaine rejected this offer. After the district court’s decision following the 
bench trial, UCI moved for an award of attorney fees and costs on two bases: (1) that UCI was the 
prevailing party in the case; and (2) that under Rule 68, UCI was entitled to all attorney fees and 
costs incurred after the offer of judgment. The district court denied UCI’s request for attorney fees, 
concluding that there was no prevailing party. 
When Gem State-Blaine appealed, UCI filed a cross-appeal, arguing that it was entitled to 
attorney fees and costs as the prevailing party, or at least those incurred after the offer of judgment 
was submitted. UCI has also argued at length on appeal about the applicability of Idaho Code 
section 12-120(3), which it argued to the district court but on which the district court never ruled. 
Idaho Code section 12-120(3) still requires that the party seeking attorney fees under this provision 
be the prevailing party. I.C. § 12-120(3). 
Because we are reversing the district court’s denial of the permanent injunction and holding 
that UCI is estopped from denying that Gem State-Blaine has a protectable common-law 
trademark, we are vacating the district court’s determination that there was no prevailing party. 
We observe that as a result of these determinations, the balance of rulings has shifted towards Gem 
State-Blaine. See Todd v. Sullivan Const. LLC, 146 Idaho 118, 126, 191 P.3d 196, 204 (2008). On 
27 
remand, the district court is instructed to decide anew whether there is a prevailing party after the 
different resolution of Gem State-Blaine’s claims. 
F. Gem State-Blaine is the prevailing party on appeal and is accordingly awarded its 
attorney fees and costs under the terms of the TSA. 
Both parties seek attorney fees on appeal; their requests are set out in their initial briefs as 
required by Idaho Appellate Rule 41. Gem State-Blaine seeks attorney fees and costs under the 
terms of the TSA. In response, UCI argues that Gem State-Blaine is not entitled to attorney fees 
under the terms of the TSA because Gem State-Blaine is not the prevailing party, having “failed 
to prevail on a single claim of the six it brought.” 
UCI asserts it is entitled to attorney fees and costs under Idaho Appellate Rule 41 because 
Gem State-Blaine “pursued an entire case . . . without meeting its requisite statutory burden of 
proof” for any of its claims, and brought an appeal “with no justification for its failure to meet the 
burden of proof.” UCI also contends, without additional argument, that it is entitled to attorney 
fees on appeal under Idaho Code section 12-120(3).8 
“Attorney fees may be awarded to the prevailing party on appeal if provided for in a 
contract or statute.” Davis v. Tuma, 167 Idaho 267, 279, 469 P.3d 595, 607 (2020) (citation 
omitted). However, Idaho Appellate Rule 41 “is not authority alone for awarding fees.” Shawver 
v. Huckleberry Estates, L.L.C., 140 Idaho 354, 365, 93 P.3d 685, 696 (2004) (citation omitted). 
The TSA reads, in pertinent part, 
If any litigation or proceeding is commenced between or among the parties 
or their representatives arising out of, or relating to, this Agreement, including, 
without limitation, a breach of any covenant, condition, representation, warranty, 
agreement, or provision of this Agreement, the prevailing party shall be entitled, in 
addition to such other relief as may be granted, to have and recover from the other 
party reasonable attorneys’ fees and all costs of such action. 
Gem State-Blaine has shown that the district court abused its discretion in refusing to enter 
a permanent injunction, that the district court erred in denying sanctions relating to the initial 
motion to compel, and that UCI should be estopped from denying the existence of Gem State-
Blaine’s common-law trademark. UCI has only prevailed on the issue of damages. We ultimately 
conclude Gem State-Blaine is the prevailing party on appeal. We therefore conclude Gem State-
Blaine is entitled to its attorney fees and costs on appeal, based on the terms of the TSA. 
                                                 
8 This is not to say that UCI has provided no argument on the issue at all, only to note that UCI’s argument that the 
TSA is a “commercial transaction” for purposes of Idaho Code section 12-120(3) is part of its argument about why it 
was entitled to attorney fees below. 
28 
IV. 
CONCLUSION 
For the reasons stated, the district court’s decision is reversed in part, affirmed in part, 
vacated in part, and remanded for further proceedings. The district court’s refusal to enter a 
permanent injunction is reversed. The district court is directed to enter a permanent injunction to 
enjoin UCI from any further breach of the TSA. The district court’s refusal to award attorney fees 
and costs as a sanction for UCI’s discovery violations is reversed. Likewise, we reverse the district 
court’s conclusion that Gem State-Blaine did not have a protectable common-law trademark 
against UCI. We vacate the district court’s determination that neither party prevailed. We also 
remand the case to the district court to determine whether there is now a prevailing party and to 
determine if attorney fees and costs should be awarded. The district court’s decision denying 
damages is affirmed. The case is remanded for further proceedings. 
Chief Justice BEVAN, Justices BURDICK, BRODY, and MOELLER CONCUR.