Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-05-02224/USCOURTS-ca8-05-02224-0/pdf.json

Parties Involved:
Kforce
Appellant
Surrex Solutions Corporation
Appellee

Document Text:

1

The Honorable Stephen N. Limbaugh, United States District Judge for the

Eastern District of Missouri.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 05-2224

___________

Kforce, Inc., *

* Appeal from the United States

Plaintiff-Appellant, * District Court for the

* Eastern District of Missouri.

v. *

*

Surrex Solutions Corporation, * 

* 

Defendant-Appellee. *

___________

Submitted: December 16, 2005

Filed: February 9, 2006

___________

Before BYE, BOWMAN, and GRUENDER, Circuit Judges.

___________

BYE, Circuit Judge.

Kforce, Inc. (Kforce) appeals a final order from the district court1

 granting

summary judgment to Surrex Solutions Corporation (Surrex). We affirm.

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I

Kforce and Surrex are competitors. They provide personnel staffing solutions

in the information technology industry. In January 2004, Kforce’s St. Louis account

manager, Richard Albert, resigned. In March 2004, Kforce discovered Albert

accepted a position with Surrex, in violation of the non-compete agreement between

Albert and Kforce. 

Kforce filed suit in state court against Albert in Kforce, Inc. v. Richard A.

Albert, Cause No. 04CC-001327, Division No. 32 (St. Louis County Cir. Ct. May 18,

2004) (Kforce I). The parties settled and the court entered a Final Judgment and

Permanent Injunction on May 18, 2004. The judgment included liquidated damages

in the amount of $20,000 and made no mention of attorneys’ fees.

On May 28, 2004, Kforce filed this action against Surrex in federal court,

Kforce, Inc. v. Surrex Solutions Corp., No. 4:04-CV-669-SNL (E.D. Mo. March 28,

2005) (Kforce II). It alleged violations of state law including tortious inference with

contract, conspiracy to breach contract, and violation of the Missouri Uniform Trade

Secrets Act (MUTSA), Mo. Ann. Stat. §§ 417.450-.467 (West 2006). Pursuant to the

Missouri collateral litigation doctrine, it also claimed attorneys’ fees it spent enforcing

the non-compete agreement against Albert in Kforce I.

The district court granted Surrex’s motion to dismiss under Federal Rule of

Civil Procedure 12(b)(6). It first concluded the election of remedies did not apply and

thus did not bar the suit because the theories of recovery were consistent with one

another—but a doctrine prohibiting double recovery did bar the claims. Second, the

district court found res judicata barred Kforce’s claims. Third, it held the collateral

litigation exception was inapplicable.

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II

We review a district court’s dismissal de novo. Stone Motor Co. v. General

Motors Corp., 293 F.3d 456, 464 (8th Cir. 2002) (citations omitted). “‘In determining

whether the district court properly granted the motion, we must accept all of the

allegations set forth in [the plaintiff’s] complaint as true, and we will affirm only if it

appears beyond doubt that he cannot prove any set of facts in support of his claim

which would entitle him to relief.’” Id. (alteration in original) (quoting Sisley v.

Leyendecker, 260 F.3d 849, 850 (8th Cir. 2001)).

A

It is well settled in Missouri that a party cannot be compensated for the same

injury twice. E.g., Ross v. Holton, 640 S.W.2d 166, 173 (Mo. Ct. App. 1982). In

Perez v. Boatmen’s National Bank of St. Louis, 788 S.W.2d 296, 299 (Mo. Ct. App.

1990), the court held:

In general, where a plaintiff can choose to proceed in tort or contract on

a course of conduct involving two possible defendants and he chooses

to proceed to a final judgment against one defendant in contract, he may

not later attempt to pursue a tort action against the second defendant; the

initial waiver of tort waived tort for all purposes. 

Similarly, in Norber v. Marcotte, 134 S.W.3d 651, 661 (Mo. Ct. App. 2004) (citations

omitted), the court held:

A party cannot be compensated for the same injury twice. . . . whether

the injury arises out of contract or tort. Although a plaintiff is entitled

to proceed on various theories of recovery, he or she cannot receive

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duplicative damages; instead he or she must establish a separate injury

on each theory. While a single transaction may invade more than one

right, a plaintiff may not be made more than whole or receive more than

one full recovery for the same harm. 

Here, the course of conduct was Albert’s breach of the non-compete agreement,

and the damages in both cases arose directly from the breach. As the district court

held: “While Albert and Surrex may have acted independently in committing separate

and distinct wrongful acts, such acts caused an indivisible injury . . .” 

Further, the actual and compensatory damages sought in Kforce I and Kforce

II are the same. In Kforce I, Kforce sought injunctive relief and damages for breach

of the non-compete agreement. The injunctive relief is not at issue here. Regarding

damages for breach of contract, “[u]nder the contract claim the injured party can

recover actual damages for the direct and natural consequences of the breach, or for

damages that were within the contemplation of the contracting parties.” Ross, 640

S.W.2d at 173. Kforce alleged the contract breach damaged Kforce by soliciting and

diverting business from Kforce’s clients and forcing it to expend attorneys’ fees to

enforce the non-compete agreement. The non-compete agreement also contemplates

damages due in part to the “training and access to trade secrets provided . . . to

Employee.”

In Kforce II, Kforce sought relief for tortious interference with contract, civil

conspiracy, and violation of MUTSA. Kforce sought damages under a theory of

tortious interference for its lost business from one or more of its customers doing

business with Surrex, attorneys’ fees expended in Kforce I, and punitive damages.

The damages recoverable for intentional interference are: the pecuniary loss of the

benefits of the contract; consequential losses for which the interference is the legal

cause; and, emotional distress or actual harm to reputation if they are reasonably

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expected to result from the interference. Restatement (Second) Torts § 774 A (cited

in Ross, 640 S.W.2d at 173). Kforce sought damages under a theory of civil

conspiracy for attorneys’ fees related to Kforce I, the loss of business from losing

customers and their business due in part to misappropriating goodwill and confidential

information, and punitive damages. Kforce sought damages under the MUTSAfor the

misappropriation of confidential trade secret information (such as customer contact

information and the needs and preferences of its customers) that Albert disclosed to

Surrex, as well as punitive damages.

Therefore, regarding actual and compensatory damages, Kforce is seeking the

same damages from the same transaction in Kforce II as it sought in Kforce I. “The

nexus between the two [sets of] causes of action is the breach of the contract[;] . . .

[t]his is the element from which the injured party’s actual damages flow on both the

contract and tort claims.” Ross, 640 S.W.2d at 173. As to the actual and

compensatory damages from the tortious interference and conspiracy claims, Kforce

is seeking coextensive damages with the first litigation (with the exception of punitive

damages) because such tort damages are the direct and natural consequences of the

breach as per the contract claim. Actual and compensatory damages for

misappropriation of trade secrets “can include both the actual loss caused by

misappropriation and the unjust enrichment caused by misappropriation that is not

taken into account in computing actual loss,” Mo. Ann. Stat. § 417.457 (West 2006),

and are similarly thus coextensive with the contract claim.

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2

 However, as the district court noted, the non-compete agreement provided for

attorneys’ fees should the employer bring a court action and prevail in any aspect of

such action. Whether attorneys’ fees were included in the liquidated damages award,

they were available to Kforce in Kforce I and there was a full recovery.

3

“Missouri follows the general rule that no punitive damages can be awarded

absent an award of actual or nominal damages.” Williams v. Williams, 99 S.W.3d

552, 556 (Mo. Ct. App. 2003) (citations omitted). Thus, when there is a full recovery

in the first action there are no actual or nominal damages recoverable in a later suit to

attach punitive damages to, regardless of whether punitive damages were available in

the first litigation.

-6-

Although Kforce claims it neither received attorneys’ fees2

 nor alleged punitive

damages in Kforce I,

3

 this is irrelevant under Perez. It received a full recovery under

a contract claim and cannot now pursue a tort or MUTSA action for the same injury

arising from the same course of conduct. Thus, the district court correctly dismissed

Kforce II. Because we affirm the district court on this basis, we need not address

Kforce’s claim the district court improperly found res judicata barred Kforce II.

B

Kforce also argues the district court erred in finding the collateral litigation

exception did not apply. “The general rule is that ‘absent statutory authorization or

contractual agreement, with few exceptions, each litigant must bear his attorney’s

fees.’ The few exceptions [include] . . . where the natural and proximate result of a

breach of duty is to involve the wronged party in collateral litigation.” Mo. Prop. &

Cas. Ins. Guar. Ass’n v. Pott Indus., 971 S.W.2d 302, 306 (Mo. 1998). When “the

natural and proximate result of a wrong or breach of duty is to involve the wronged

party in collateral litigation, reasonable attorney’s fees necessarily and in good faith

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incurred in protecting [one]self from the injurious consequence thereof are proper

items of damages.” Id. (citation omitted).

Without addressing the underlying merits of the collateral litigation claim, we

find Missouri law implicitly provides, although no Missouri court has so explicitly

held, the collateral litigation doctrine does not afford a separate cause of action and

instead provides a party may recover attorneys’ fees expended in a prior action in a

collateral action. In City of Cottleville v. Charles County, 91 S.W.3d 148, 151 (Mo.

Ct. App. 2002), the court held “the collateral litigation exception allows a plaintiff, in

a case alleging a breach of duty against a defendant, to recover the attorneys’ fees.”

Implicitly, the cause of action is the breach of duty and not a claim for attorneys’ fees

under the collateral litigation doctrine. Moreover, previous Missouri cases involve

causes of action other than a claim under the collateral litigation doctrine.

This follows from a reading of the doctrine, stating the “result of a wrong or

breach of duty is to involve the wronged party in collateral litigation, reasonable

attorney’s fees . . . incurred in protecting [one]self from the injurious consequence

thereof are proper . . . damages.” Mo. Prop., 971 S.W.2d at 306 (citation omitted).

Here, the result of Surrex’s wrong was to involve the wronged party, Kforce, in the

collateral litigation against Albert, Kforce I. Hence, if Kforce could now maintain a

suit against Surrex, attorneys’ fees would be proper damages—not a proper cause of

action.

III

For the reasons stated above, the judgment of the district court is affirmed.

______________________________

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