2022 UT App 91

THE UTAH COURT OF APPEALS

DIVERSIFIED STRIPING SYSTEMS INC., KMB EQUIPMENT LLC, KEVIN 

BECK, AND PAMELA K. BECK,

Appellants and Cross-appellees,

v.

JOE KRAUS, FLJ LLC, AND NATIONAL STRIPING INC.,

Appellees and Cross-appellants.

Opinion

No. 20200309-CA

Filed July 21, 2022

Third District Court, Salt Lake Department

The Honorable Todd M. Shaughnessy

No. 120901549

Jonathan O. Hafen, Rita M. Cornish, David P. 

Mooers-Putzer, and Timothy M. Willardson, 

Attorneys for Appellants and Cross-appellees

Jeremiah R. Taylor, D. Scott Crook, Taylor Cutler, 

and Christopher S. Feuz, Attorneys for Appellees

and Cross-appellants

JUDGE JILL M. POHLMAN authored this Opinion, in which JUDGE 

RYAN D. TENNEY and JUSTICE DIANA HAGEN concurred.

1

POHLMAN, Judge:

¶1 This case arises from a complex business dispute that 

culminated in a bench trial, after which the district court found 

one side liable for breach of contract and breach of fiduciary duty. 

1. Justice Diana Hagen began her work on this case as a member

of the Utah Court of Appeals. She became a member of the Utah 

Supreme Court thereafter and completed her work on the case 

sitting by special assignment as authorized by law. See generally

Utah R. Jud. Admin. 3-108(4).
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Both sides now appeal. The court’s determinations on liability are 

not contested on appeal. Instead, the main issues before us focus 

on the court’s decisions regarding lost profits and damages, joint 

and several liability, the availability of prejudgment interest, the 

applicable postjudgment interest rate, punitive damages, and 

postjudgment attorney fees. We affirm in part, reverse and vacate 

in part, and remand.

BACKGROUND2

¶2 This dispute involves two groups in the pavement striping 

business. We first introduce the two groups and their joint 

venture, the four relevant documents, and the breakdown of the 

business relationship, followed by a description of the litigation 

and the resulting judgment and damages award.

The Beck Parties

¶3 Kevin and Pamela Beck own or control several entities. 

One of those entities, Diversified Striping Systems Inc. (DSS), is 

the successor to National Striping Company, Incorporated 

(NSCI), which was a joint venture, the formation of which we 

describe below.3 The Becks also own or control KMB Equipment 

LLC (KMB), which was formed to own construction equipment, 

which it would then lease to the Becks’ other companies.

2. “On appeal from a bench trial, we view the evidence in a light 

most favorable to the trial court’s findings, and therefore recite the 

facts consistent with that standard.” Grimm v. DxNA LLC, 2018 UT 

App 115, ¶ 2 n.1, 427 P.3d 571 (cleaned up).

3. Because DSS is NSCI’s successor, we refer to the joint venture 

as DSS throughout this opinion.
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The Kraus Parties

¶4 Joe Kraus owned or controlled National Striping Inc. (NSI), 

which provided striping services in California. He also partially 

owned or controlled FLJ LLC (FLJ), a company that provided 

pavement striping services for highways and airports. Kraus was 

the only member of FLJ with operational experience; the other two 

members provided only capital. But in late 2009 or early 2010, 

FLJ’s two capital investors left the company for reasons unrelated 

to this case, leaving Kraus with insufficient capital to achieve his 

business plans. Kraus needed to either scale back the operations 

of FLJ and NSI or secure an infusion of capital.

The Joint Venture

¶5 In mid-2010, Kraus and Kevin Beck began discussing the 

possibility of a joint venture. Kraus sought the Becks’ investment 

in his striping business, and while the Becks had no experience in 

that industry, they had substantial experience in construction and 

contracting generally. Eventually, the Becks and Kraus agreed 

that they would form a company together, with the Becks owning 

80% and Kraus owning 20%. The general nature of the agreement 

was that Kraus would contribute equipment and other assets

owned by FLJ or NSI, and the Becks would contribute capital.

¶6 In 2011, Kraus and the Becks formed DSS to provide 

highway and airport striping services. DSS would use the 

employees, location, customer lists, contact information, and web 

domain of Kraus’s existing striping business. It would also 

employ the general manager (Manager) of Kraus’s existing 

business and use the striping trucks and other equipment owned 

by FLJ. Kraus would bring his experience, knowledge, and 

relationships for the benefit of DSS. He would be involved in the 

marketing and business strategy as well as provide general 

oversight of the venture.
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¶7 The parties agreed that Kraus would not be an employee 

of DSS, nor would he draw a salary. Instead, Kraus’s return on his 

investment would be in the form of 20% ownership in DSS and its 

expected profits. In addition, Kraus would be an executive officer 

or director of the company. To provide Kraus some income while 

the venture got off the ground, the parties agreed that Kraus 

would be given an advance on his anticipated 20% of DSS’s 

profits. The advance would be equal to $70,000 per year for two 

years. 

¶8 The Becks agreed to provide the capital necessary to 

achieve Kraus’s business plan, including financing the purchase 

of an epoxy truck. An epoxy truck is a striping truck needed for 

certain jobs, such as the lucrative projects associated with striping 

airport runways and taxiways. Given that the Becks were running 

other businesses, they did not envision being heavily involved in 

DSS’s management. 

¶9 Kraus’s preexisting business, NSI, had outstanding debts 

to vendors and suppliers that arose in connection with its prior 

operations. Kraus was personally responsible for these debts, and 

he was concerned that vendors might be reluctant to do business 

with the new venture if they knew he was involved. For this 

reason, and to allow him more time to sort out his finances, Kraus 

agreed that he would receive his equity in DSS “a year or so” after 

the business was formed and was operational. But it was always 

understood that Kraus would be a 20% owner of DSS in return for 

his and his companies’ contributions.

The Documents Memorializing the Agreement

¶10 The parties’ agreement was memorialized in four 

documents: the asset purchase agreement, a promissory note, a 

stock sale agreement, and a profit advance agreement.

¶11 First, the asset purchase agreement (the Asset Purchase 

Agreement), dated January 19, 2011, was entered into by FLJ and 
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KMB. FLJ was controlled by Kraus, and it owned striping 

equipment and related assets. KMB was owned and controlled by 

the Becks and was formed at the time of the transaction for the 

purpose of leasing equipment to DSS and other businesses. 

¶12 Pursuant to the Asset Purchase Agreement, KMB agreed to 

pay FLJ $100,000 in exchange for the used equipment under the 

terms of the promissory note. The agreement states that the 

$100,000 is “payable without interest, when [KMB’s] lease income 

from the subject equipment equals $100,000.”4 The equipment was 

not appraised or valued for purposes of the transaction. And 

although Kraus later testified that he had paid over $500,000 for 

the equipment, the district court did not determine its fair market 

value. Rather, the court found only that the fair market value at 

the time of the transaction exceeded the $100,000 figure recited in 

the Asset Purchase Agreement.

¶13 Second, the promissory note (the Note), dated February 25, 

2011, reiterated the above payment terms. It stated that KMB 

would pay FLJ $100,000 “without interest, when [KMB’s] lease 

revenue from the equipment purchased for which this note is 

given equals $100,000.” The district court later found that KMB 

never paid FLJ the full $100,000 but that it made partial payments 

on the Note totaling $85,996.78, leaving an unpaid amount of 

$14,003.22.

¶14 Third, the stock sale agreement (the Stock Sale Agreement), 

dated February 18, 2011, was between DSS and Kraus. Under that 

agreement, DSS agreed to transfer to Kraus 200 shares of DSS

stock, equal to 20% of the issued and outstanding shares, in return 

for a payment of $100,000, due on or before December 1, 2012. The 

Stock Sale Agreement also recited that Kraus was to be made a 

director or executive officer of DSS prior to the sale. The district 

4. The parties do not appear to dispute that the lease revenue 

reached the $100,000 threshold at some point.
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court later found that Kraus was never issued his 20% of the DSS

shares. The parties disputed whether Kraus satisfied the 

conditions precedent to DSS’s obligation to issue the shares to 

him. Yet the parties ultimately stipulated that at all relevant times 

Kraus had a 20% ownership interest in DSS and at all times was 

entitled to a 20% share of its profits.

¶15 Fourth, Kraus and DSS signed the agreement for advances 

against profits (the Profit Advance Agreement) in April 2011. 

Under this agreement, DSS agreed to pay Kraus $70,000 per year, 

or $5,833.33 per month, for the period from January 2011 through 

December 2012, totaling twenty-four months. Further, Kraus 

agreed that if his 20% share of DSS’s profits fell below this 

amount, he would repay DSS for any overage. The district court 

later found that although DSS made some of these monthly 

payments until June 2011, DSS made no further payments after 

that month. The court found that the total unpaid amount under 

the Profit Advance Agreement was $108,833.31.

The Breakdown of the Joint Venture

¶16 After the formation of DSS, Kraus transferred all the 

employees of his prior business to DSS. The Becks, however, 

arranged for the employees to be employed not by DSS, but by a 

payroll and human resources company owned by them, 

Professional Consulting Services (PCS). The Becks did not 

disclose this to Kraus until after the fact. Although Kraus was “not 

too concerned” about this alternate arrangement, it mattered to 

him how much PCS was going to charge DSS for the employees, 

and the Becks alone determined the amount and did not disclose 

it to Kraus in advance.

¶17 Shortly after DSS’s formation, Manager began working as 

its general manager. DSS also began operating out of the location 

used by Kraus’s previous business. Kraus provided DSS with all 

his customer and contact lists. And in March and April 2011, 
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Kraus caused all the striping equipment used by his prior 

business to be transferred to KMB.

¶18 For DSS to rent this equipment from KMB, Pamela Beck 

had told Kraus that KMB would charge 1–2% above the cost of 

maintaining the equipment. DSS exclusively used the equipment;

it was not used by the Becks’ other businesses or regularly rented 

to others. After the above transactions closed, KMB charged DSS

$10,000 per month for renting this equipment. The district court 

found this “amount bore no relationship to the cost of maintaining 

the equipment” and, contrary to Pamela Beck’s assurance, “was 

vastly greater than 1–2% above the cost of maintaining it.” And, 

as it turned out, KMB also did not cover all the costs of repairing 

and maintaining the equipment; instead, KMB billed DSS for at 

least some repairs. Moreover, the Becks and their advisors 

determined the $10,000 amount without consulting Kraus. He 

found out about it after the fact and did not agree with the charge.

¶19 The Becks arranged for KMB to buy the epoxy truck for 

$510,000. KMB financed the purchase and paid $9,504.61 per 

month on the loan. KMB then charged DSS a $20,000 monthly 

rental fee for the epoxy truck. As with the $10,000 monthly charge 

for the other equipment, KMB, the Becks, or the Becks’ advisors 

determined the rental fee for the epoxy truck without consulting

Kraus in advance.

¶20 Under the foregoing arrangement, DSS did not own any of 

the equipment necessary to carry out its striping business. 

Instead, it would be obligated to pay KMB—an entity controlled 

and wholly owned by the Becks—at least $30,000 per month to 

rent the necessary equipment.

¶21 As DSS was launching, Kraus continued to pay various 

bills related to the business, including payroll and utilities. Kraus 

also paid DSS the proceeds from work that was already in 

progress. In total, Kraus contributed $122,614.61 in value to DSS. 
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But DSS did not reimburse him in full for these contributions. It 

paid him only $85,996.78, leaving a balance owing of $36,617.85.5

¶22 DSS bid for and obtained jobs, including in California, 

using NSI’s contractor’s license. According to Kraus, he never 

authorized DSS to use NSI’s contractor’s license.

¶23 Through the summer and fall of 2011, the Becks involved 

Kraus less and less in the joint venture. Kraus also faced 

increasing difficulty in getting reimbursed for expenses that he 

paid for DSS to operate.

¶24 Finally, in November 2011, the Becks caused DSS to move 

out of the facility owned by Kraus. They also instructed Manager 

and other employees not to give Kraus a key to the facility or 

allow him on the premises. Afterward, communication with 

Kraus was limited.

¶25 Meanwhile, PCS was charging markups and overhead 

costs associated with the employees working for DSS. These 

markup and overhead charges were designed to reflect services 

being provided by the “home office” in Salt Lake City. The district 

court found that DSS was, in effect, paying the salary and benefits 

of the Becks and upper management through these charges. 

Despite receiving their compensation indirectly through these 

overhead charges, the Becks also directly paid themselves at least 

$78,000 each from DSS in 2011. This sum was not a distribution of 

profits.

¶26 In late 2011 and early 2012, as the business relationship 

continued to sour, Kraus began contacting various contractors 

with whom DSS was doing business and from whom payments 

for contracts were owing. Kraus told them that DSS did not have 

5. Although the district court’s calculation of the balance appears 

to be two cents too high, we refer to $36,617.85 throughout this 

opinion because that is the amount stated in the judgment.
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a valid contractor’s license and was operating under NSI’s license. 

Kraus further directed these contractors to make payments to NSI, 

not DSS. He claimed that he did this because he had not given 

permission for DSS to use NSI’s license and because he wanted to 

pressure DSS and the Becks to deal fairly with him.

¶27 Soon after, the Becks’ representatives reached out to Kraus 

to try to finalize the remaining terms of the business relationship 

and inquire about payments owed to him. But Kraus refused to 

discuss the matter and did not return phone calls. Next, Kraus 

contacted and advised internet service providers that DSS was 

unlawfully using domain names because Kraus was still the 

registered owner of the websites. As a result, email 

communications with customers and vendors ceased. Kraus’s 

conversations with contractors also led to at least one contractor 

directly paying NSI.

¶28 The Becks responded by changing the name of the joint 

venture to DSS and by excluding Kraus from its operation. DSS 

continued to operate until April 2016, when the Becks shut it 

down. As part of its liquidation, the Becks caused KMB and DSS 

to sell the equipment, including the epoxy truck, to a competitor 

for $960,486.51.

The Litigation

¶29 In 2012, the Becks, DSS, and KMB (collectively, the Beck 

Parties) filed suit against Kraus, FLJ, and NSI (collectively, the 

Kraus Parties).6 The Beck Parties asserted causes of action for 

fraud, tortious interference with existing or prospective economic 

6. The Becks and KMB were not initially named as parties; they 

were added as plaintiffs when a third amended complaint was 

filed in 2015.
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advantage, and defamation. The Kraus Parties, in turn, raised 

counterclaims for breach of contract and breach of fiduciary duty.7

¶30 The matter was tried to the bench in 2019. At the conclusion 

of trial, the district court issued written findings of fact and 

conclusions of law, addressing each of the parties’ claims.

¶31 The district court first determined that the Beck Parties’ 

claims lacked merit. It therefore dismissed their claims with 

prejudice.

¶32 Next, the district court addressed the Kraus Parties’ 

counterclaims. With respect to the breach of contract claim, the 

court first found that the Kraus Parties had performed all their 

material obligations under the Asset Purchase Agreement 

(between KMB and FLJ), the Stock Sale Agreement (between DSS

and Kraus), and the Profit Advance Agreement (between DSS and 

Kraus), or, in the alternative, that the Kraus Parties’ performance 

was excused by the Beck Parties’ prior material breach. The court 

then found that KMB breached the Asset Purchase Agreement 

and the Note by failing to pay FLJ the amounts due thereunder; 

DSS had breached the Profit Advance Agreement by failing to pay 

Kraus the amounts due thereunder; and DSS also had breached 

the Stock Sale Agreement by failing to issue 20% of the shares to 

Kraus and to appoint him as an officer or director. Additionally, 

the court found that DSS breached its obligation to reimburse 

Kraus for amounts due to him. The court found that the Kraus 

Parties were harmed as a direct and proximate result of these 

breaches.

7. The Kraus Parties also raised counterclaims for breach of the 

implied covenant of good faith and fair dealing, promissory 

estoppel, fraudulent transfer, alter ego, conversion, fraud, and 

unjust enrichment. But those claims are not relevant to this 

appeal.
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¶33 As for Kraus’s claim for breach of fiduciary duty, the court 

found that the Becks caused the companies under their control to 

breach duties owed to Kraus. The court explained that, as majority 

shareholders in DSS, the Becks had a fiduciary duty to deal fairly 

and openly with Kraus, who was a minority shareholder in DSS. 

The Becks then caused KMB and PCS, companies in which they 

were the sole shareholders, to do business with DSS. The court 

found that the “terms of those business arrangements stood to 

benefit, directly and indirectly, the Becks and to damage or injure 

the interests of [DSS].” It further found that the Becks “had an 

economic interest in minimizing the profits of [DSS], to which 

they would only be entitled to 80%, and maximizing the profits of 

KMB and PCS, to which they would be entitled to 100%.” Because 

these transactions “were plainly self-interested,” the Becks “had a 

duty to ensure the fairness of the transaction to [DSS], along with 

a duty to disclose to Kraus, as a minority shareholder, the terms 

of those agreements.” The court found that although Kraus was 

advised that DSS would be doing business with KMB and PCS, 

“the Becks failed to disclose the terms of those arrangements and, 

in particular, the fact that [DSS] would be obligated to pay KMB 

and PCS substantial sums each month.” Those amounts “would 

come directly out of the potential profits of [DSS]”—profits in

which Kraus had a 20% interest.

¶34 In addition, the court found that the Becks breached their 

fiduciary duties by causing DSS to pay them “salaries” of at least 

$78,000 each in 2011. It also found that the Becks failed to show 

that the $10,000 monthly rental fee for equipment paid to KMB 

was “fair or commercially reasonable.” The court found this fee 

was “merely . . . a way to syphon [DSS]’s revenues to KMB.” 

Similarly, the court found that the $20,000 monthly amount that 

DSS paid to KMB for the epoxy truck was not fair or reasonable. 

It further found that the Becks violated their fiduciary duties by 

not disclosing to Kraus the terms of PCS’s contracts with DSS and 

by failing to “provide Kraus any information about the company, 

its operations, or its profits despite him being a 20% equity 
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owner.” The court thus concluded that clear and convincing 

evidence showed the Becks owed Kraus fiduciary duties, they 

breached those duties, and the breaches were the direct and 

proximate cause of harm to Kraus.

¶35 In summary, the district court determined that all the Beck 

Parties’ claims failed on their merits, and it therefore dismissed 

those claims with prejudice. And the court determined that the 

Kraus Parties’ claims for breach of contract and breach of 

fiduciary duty were meritorious.

¶36 On the question of damages, the district court determined 

that DSS owed Kraus $36,617.85 for unpaid reimbursements. It 

also considered whether to award lost profits to Kraus as a part 

owner in DSS. It acknowledged that new businesses, like DSS, 

“lack an actual record of past earnings,” making “accurate 

predictions of . . . lost profits extremely difficult,” but that perhaps 

other means existed to establish the requisite level of certainty to 

measure lost profits in this case. (Cleaned up.) At trial, Kraus 

presented an expert (Expert) to opine on the subject of lost profits. 

Expert opined that Kraus’s share of the profits in this case 

amounted to $681,000. But the court rejected Expert’s testimony 

as unreliable because “a number of [his] assumptions are 

speculative” and several of the adjustments in his analysis 

“tended to overstate the profitability of the company.”

¶37 Yet the court found that DSS was in fact profitable, and it 

“believe[d] that a reasonable, rational, lost profits calculation can 

be made from the assumptions and beliefs held by the parties at 

the time of contracting.” Specifically, the court found that at DSS’s 

inception, “all parties envisioned that the true profits of the 

venture would be at least $350,000 per year for the first two years 

of operation” and that “20% of that amount is $70,000, the amount 

the parties used in the [Profit Advance Agreement].” The court 

determined that this amount represented the parties’ “best 

estimate” of DSS’s “likely profits, at least for the first two years.” 
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Given that DSS operated for five and one quarter years, the court 

decided that a “conservative calculation of Kraus’s lost profits,” 

based on the Profit Advance Agreement, for the five-year period 

was $367,500. It then subtracted the $31,166.69 that DSS had 

actually paid Kraus under the Profit Advance Agreement, thus 

reducing his lost profits to $336,333.31. From this amount, the 

court also subtracted the $108,833.31, which was the unpaid 

amount under the Profit Advance Agreement and was awarded 

separately. That left Kraus’s lost profits at $227,500.

¶38 The district court then accounted for the amounts realized 

upon DSS’s liquidation. The court found that the equipment sold 

for $960,486.51, including the epoxy truck that KMB purchased 

for approximately $500,000. Because DSS never owned the epoxy 

truck, the court gave KMB credit for its full value, which meant 

that the rest of the equipment sold for approximately $450,000. 

The court decided that Kraus was entitled to 20% of that amount, 

which equaled $90,000. Adding this $90,000 to the $227,500 

calculated above totaled $317,500.

¶39 Regarding the breach of the Asset Purchase Agreement 

and the Note, the court entered judgment in favor of FLJ and 

against KMB in the principal amount of $14,003.22, plus 

postjudgment interest at the statutory rate. See supra ¶¶ 12–13. 

Regarding the breach of the Profit Advance Agreement, the court 

entered judgment in favor of Kraus and against DSS in the 

principal amount of $108,833.31, plus postjudgment interest at the 

statutory rate. See supra ¶ 15. And regarding Kraus’s claim for 

unpaid reimbursements, the court entered judgment in favor of 

Kraus and against DSS in the amount of $36,617.85, plus 

postjudgment interest. See supra ¶ 21. Notably, the court 

determined that for the Becks’ breaches of their fiduciary duties, 

they would be jointly and severally liable for the awarded

amounts described in this paragraph. For Kraus’s breach of 

fiduciary duty claim, the court also ordered judgment in favor of 
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Kraus and against the Becks, jointly and severally, in the principal 

amount of $303,496.78, plus postjudgment interest.8

¶40 Kraus requested punitive damages. But the district court 

did “not find, by clear and convincing evidence, that the Becks’

conduct was so extreme and outrageous as to warrant the 

imposition of punitive damages.” The court thus declined to 

award them.

¶41 Finally, the court determined that the Kraus Parties were 

entitled to recover their reasonable costs and attorney fees. It also 

ordered that all awarded amounts would bear postjudgment 

interest from the date of the original judgment at the statutory rate 

set forth in Utah Code section 15-4-1. Both sides appeal.

ISSUES AND STANDARDS OF REVIEW

¶42 On appeal, the Beck Parties raise two main issues. First, 

they challenge the district court’s lost profits award. “Whether the 

district court applied the correct rule for measuring damages is a 

question of law that we review for correctness.” Mahana v. Onyx 

Acceptance Corp., 2004 UT 59, ¶ 25, 96 P.3d 893. “Whether the 

amount awarded by the district court was supported by the 

evidence is a determination of fact that may be reversed on appeal 

only if clearly erroneous.” Id.

¶43 Second, the Beck Parties contend that the district court 

erred in concluding that the Becks were jointly and severally liable 

to FLJ and Kraus for KMB’s breach of the Asset Purchase 

Agreement and the Note. This issue involves the interpretation 

and application of statutory law and caselaw, which we review 

for correctness. See Biesele v. Mattena, 2019 UT 30, ¶ 13, 449 P.3d 1 

(reviewing a challenge to the imposition of joint and several 

8. The $303,496.78 total results from subtracting the $14,003.22 

(awarded separately) from the $317,500 above. See supra ¶ 38. 
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liability for correctness given that the argument raised “questions 

of the application and interpretation” of the Liability Reform Act); 

Ortega v. Ridgewood Estates LLC, 2016 UT App 131, ¶ 29, 379 P.3d 

18 (“The district court’s interpretation of case law presents a 

question of law, which we review for correctness.”).

¶44 On cross-appeal, the Kraus Parties raise four main issues. 

First, they contend that the district court incorrectly denied them 

prejudgment interest. “A trial court’s decision to grant or deny 

prejudgment interest presents a question of law which we review 

for correctness.” Cornia v. Wilcox, 898 P.2d 1379, 1387 (Utah 1995).

¶45 Second, the Kraus Parties contend that the district court 

applied the incorrect postjudgment interest rate, claiming that the 

rate of 10% should have been applied to the damages awarded for 

breach of contract. “Whether the trial court applied the correct 

interest rate is a question of law, which we review for 

correctness.” Knight Adjustment Bureau v. Lewis, 2010 UT App 40, 

¶ 2, 228 P.3d 754.

¶46 Third, the Kraus Parties contend that the district court 

erred by applying the wrong legal standard for punitive damages. 

“Whether the trial court employed the proper standards presents 

a legal question which is reviewed for correctness.” Chandler v. 

Blue Cross Blue Shield of Utah, 833 P.2d 356, 360 (Utah 1992).

¶47 Fourth, the Kraus Parties contend that the district court 

erred in denying them postjudgment attorney fees. This issue 

turns on the application of rule 73 of the Utah Rules of Civil 

Procedure. “[W]e review a district court’s interpretation and 

application of our rules of civil procedure for correctness.” Sanders 

v. Sanders, 2021 UT App 122, ¶ 4, 502 P.3d 1230.
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ANALYSIS

I. The Beck Parties’ Issues on Appeal

A. Lost Profits

¶48 The Beck Parties contend that the “district court erred in 

finding, calculating, and awarding damages for breach of 

fiduciary duty against the Beck Parties”—a damages award that 

was largely based on Kraus’s lost profits in the joint venture, DSS. 

The Beck Parties’ challenge is threefold. First, they contend that 

the court “erred in awarding Kraus lost profits in an amount 

based on a determination that twenty percent of DSS’s profits 

every year would be $70,000.” Second, the Beck Parties contend 

that “it was error for the district court to include 20% of the 

amount KMB realized upon the sale of its assets in the damages 

award.” Third, they contend that the flaws in the lost profits 

damages award are so intertwined with the damages awarded for 

breach of contract that this court should vacate the damages 

award in its entirety and remand for reconsideration. We address 

each argument in turn.

1. Whether the Lost Profits Were Reasonably Certain 

¶49 The Beck Parties challenge the district court’s 

determination that Kraus suffered $70,000 annually in lost profits, 

arguing that its calculation “was based on legally irrelevant 

evidence, was speculative, and was clearly erroneous.” The Beck 

Parties assert that the court “fashioned a lost profits analysis 

based solely on the parties’ pre-venture [Profit] Advance 

Agreement” and that, by doing so, the court “incorrectly 

transformed Kraus’s desired salary for DSS’s first two years of 

operation into a full-blown lost profits analysis.” According to the 

Beck Parties, the “figure the district court used for its lost profits 

finding—$70,000 per year—was never an actual estimate of 

Kraus’s profits.” Rather, it “was simply what Kraus thought he 

needed to live on while DSS got up and running, until Kraus 
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would receive a distribution of DSS’s actual profits.” They claim 

that the “extrapolat[ed]” figure is “speculative because neither 

Kraus nor the Becks made any calculation or relied on facts about 

the business in setting the $70,000 per year projection.” If we 

agree, the Beck Parties request that we remand the case to the 

district court for reconsideration of any lost profits damages.

¶50 Kraus defends the district court’s damages award, arguing 

that the lost profits were established with the requisite 

“reasonable certainty.” In his view, the Profit Advance 

Agreement “alone establishe[d] the reasonability of the court’s 

lost profit calculation” because the Becks themselves “agree[d] 

that a reasonable amount of advanced profits was $70,000 per 

year” and their willingness to advance that amount inherently 

reflected “their assumption that the company’s actual 

profitability would reasonably relate to the amount advanced.” 

Kraus also argues that the court properly took into consideration 

the totality of the circumstances, including that the Becks “did 

their own independent due diligence” on the equipment that 

Kraus contributed and the state of Kraus’s business during 

negotiations; that the Becks had “substantial experience in the 

construction business”; that the Profit Advance Agreement was 

executed three months into DSS’s operations such that the Becks 

“had already experienced first-hand the performance and 

potential of the joint venture”; that DSS was actually profitable; 

and that the Becks were able to syphon money away from DSS

(including paying themselves $78,000 each in 2011). Kraus also 

asserts that the Beck Parties’ arguments merely ask this court to 

“re-weigh the evidence.”

¶51 The district court determined that it could make a 

reasonable calculation of Kraus’s lost profits stemming from the 

Becks’ breaches of fiduciary duties, even though DSS was a new 

business that lacked an actual record of past earnings. It reasoned 

that it could do so based on “the assumptions and beliefs held by 

the parties at the time of contracting.” In particular, it found that 
Diversified Striping v. Kraus

20200309-CA 18 2022 UT App 91

“all parties envisioned that the true profits of the venture would 

be at least $350,000 per year for the first two years of operation.” 

Kraus’s 20% share of that amount is $70,000, which is the same 

amount that the parties used in the Profit Advance Agreement 

that they executed in April 2011. The court thus saw $70,000 as the 

parties’ own “best estimate at the time of the venture’s likely 

profits, at least for the first two years of operation.” It then 

multiplied that amount by the number of years that DSS operated, 

concluding that the total amount represented a “conservative 

calculation” of Kraus’s lost profits given that DSS was a start-up 

and other circumstances. We ultimately cannot affirm the court’s 

decision. 

¶52 “It is well settled that, although the plaintiff has the burden 

of proving the fact, causation, and amount of damages, [the 

plaintiff] need only do so with reasonable certainty rather than 

with absolute precision.” Alta Health Strategies, Inc. v. CCI Mech. 

Service, 930 P.2d 280, 286 (Utah Ct. App. 1996) (cleaned up). 

Further, “although damages may not be determined by 

speculation or guesswork, evidence allowing a just and 

reasonable estimate of the damages based on relevant data is 

sufficient.” Id. (cleaned up).

¶53 Lost profits damages in particular “must be established 

with reasonable certainty.” Cook Assocs., Inc. v. Warnick, 664 P.2d 

1161, 1165 (Utah 1983). Put differently, lost profits must be proved 

with “sufficient certainty that reasonable minds might believe 

from a preponderance of the evidence that the damages were 

actually suffered.” Id. (cleaned up); accord Kilpatrick v. Wiley, Rein 

& Fielding, 2001 UT 107, ¶ 76, 37 P.3d 1130.

¶54 Our supreme court has explained that “the pivotal 

question” surrounding lost profits “is not whether the plaintiff 

has proven an established earning record but whether [the 

plaintiff] has proven the damages for lost profits with reasonable 

certainty, although the former is often relevant to the latter.” Cook, 
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20200309-CA 19 2022 UT App 91

664 P.2d at 1166 (cleaned up). An established business’s “record 

of past earnings obviously increases the certainty with which one 

could predict future profits.” Id. “But that fact should not 

automatically preclude new businesses from recovering lost 

profits because they lack such a record.” Id. “Rather, new 

businesses should be allowed to try to prove lost profits up to a 

reasonable level of certainty by other means, just as established 

businesses are permitted to do.” Id. And “[o]nce a defendant has 

been shown to have caused a loss, [the defendant] should not be 

allowed to escape liability because the amount of the loss cannot 

be proved with precision.” Id.; accord Kilpatrick, 2001 UT 107, ¶ 76. 

“Consequently, the reasonable level of certainty required to 

establish the amount of a loss is generally lower than that required 

to establish the fact or cause of a loss.” Cook, 664 P.2d at 1166.

¶55 A lost profits claim cannot “rest[] on an assumption 

unsupported by the record” or be based on evidence that is 

“wholly speculative.” First Sec. Bank of Utah, NA v. J.B.J. Feedyards, 

Inc., 653 P.2d 591, 596 (Utah 1982). Yet, “while the evidence must 

not be so indefinite as to allow the [factfinder] to speculate as to 

[lost profits], some degree of uncertainty is tolerable.” Carlson 

Distrib. Co. v. Salt Lake Brewing Co., 2004 UT App 227, ¶ 19, 95 P.3d 

1171 (cleaned up). “It is, after all, the wrongdoer, rather than the 

injured party, who should bear the burden of some uncertainty in 

the amount of damages.” Atkin Wright & Miles v. Mountain States 

Tel. & Tel. Co., 709 P.2d 330, 336 (Utah 1985).

¶56 Importantly, the evidence of lost profits “must be evidence 

that rises above speculation and provides a reasonable, even 

though not necessarily precise, estimate of damages.” See id. Utah 

law thus allows for the amount of damages to be “based upon 

approximations, if the fact of damage is established, and the

approximations are based upon reasonable assumptions or

projections.” Id.; see also Francis v. National DME, 2015 UT App 119, 

¶ 28, 350 P.3d 615.
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20200309-CA 20 2022 UT App 91

¶57 Here, Kraus insists that the district court’s consideration of 

“all of the relevant circumstances surrounding the parties’ 

dealings” established the “reasonable certainty of [its] lost profit 

calculation.” We do not share this view. Although the court 

broadly acknowledged “the totality of the circumstances, 

including the start up nature of the venture,” it derived the 

$70,000 figure for Kraus’s annual lost profits directly from the 

Profit Advance Agreement. The court’s reference to DSS’s “start 

up nature,” in context, likely referred to how DSS did not have an 

actual record of past earnings and therefore any lost profits had 

to be established by other means. See Cook, 664 P.2d at 1166. And 

given that the court found that Expert—who testified on Kraus’s 

behalf—offered “speculative” and unreliable opinions on lost 

profits, the court ultimately relied on the Profit Advance 

Agreement as an alternative means of providing the basis for a 

lost profits calculation. In other words, we agree with the Beck 

Parties that the district court’s lost profits analysis was based 

solely on the Profit Advance Agreement. 

¶58 The Beck Parties assert that even if the Profit Advance 

Agreement “was based on the parties’ pre-venture estimate of 

profits,” the court’s reliance on it was still “inappropriate” 

because “[l]ost profits damages must be proven by expert 

testimony, as projecting potential profits requires technical or 

specialized knowledge.” We do not embrace this view. When a 

business is new and a past earnings record is thus unavailable, 

“[a]lternative means of establishing the certainty of lost profits 

include expert testimony of profit potential, evidence of the actual 

profits of similar businesses, and evidence of subsequent earnings 

of the business claiming lost profits.” Cook, 664 P.2d at 1166 n.4; 

see also Kilpatrick, 2001 UT 107, ¶¶ 76–77 (“One method of 

measuring damages in such a situation is by expert testimony.”). 

Although expert testimony may be one available means of 

showing lost profits, our caselaw does not necessarily require

expert testimony for lost profits to be used as a measure of 
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20200309-CA 21 2022 UT App 91

damages for a new business.9 See Cook, 664 P.2d at 1166 & n.4. By 

the same token, we do not read our caselaw to mean that the three 

methods mentioned above are the only possible methods of 

establishing the reasonable certainty of lost profits. See id.

¶59 The court used the Profit Advance Agreement to find that 

“all parties envisioned that the true profits of the venture would 

be at least $350,000 per year for the first two years of operation.” 

The court reasoned that because Kraus was entitled to 20% of 

DSS’s profits and because his annual advance under the Profit 

Advance Agreement was $70,000, the $350,000 represented the 

parties’ “best estimate” of DSS’s likely profits (20% of $350,000 = 

$70,000). But Utah law requires that this approximation be “based 

upon reasonable assumptions or projections” or be a “reasonable, 

even though not necessarily precise, estimate of damages.” See 

Atkin, 709 P.2d at 336.

¶60 We conclude that the district court’s calculation of Kraus’s 

annual lost profits of $70,000 was not based on “reasonable 

9. Yet the Beck Parties suggest that Ghidotti v. Waldron, 2019 UT 

App 67, 442 P.3d 1237, directs that “[l]ost profits damages must 

be proven by expert testimony.” In that case, the district court 

concluded that the new business owners there “could not prove 

their damages with the requisite degree of certainty because they 

did not have an expert to testify on profit potential.” Id. ¶¶ 7, 20 

(cleaned up). On appeal, the new business owners challenged the 

district court’s decision that they had failed to properly disclose 

an expert witness, but they did not argue that they should have 

been able to prove their damages through other available means. 

Id. ¶¶ 9, 13 & n.5. Because they relied solely on expert testimony 

as the method by which they intended to prove lost profits 

damages, see id. ¶¶ 13–14 & n.5, and because this court affirmed 

that their disclosure was inadequate, id. ¶ 15, we are not 

persuaded that Ghidotti stands for the broader proposition for 

which the Beck Parties advocate.
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assumptions or projections” of DSS’s likely profits. See id. The 

court relied on the $70,000 figure included in the Profit Advance 

Agreement, but that amount was not based on the parties’ preventure estimate of profits. The agreement itself says nothing to 

indicate that it was based on the parties’ estimate or projection of 

DSS’s profitability. It states only that Kraus was “entitled to 

receive an advance against profits totaling $70,000 per year” for 

two years and that Kraus would “be liable to repay [DSS] the 

shortfall if, at the end of two years, 20% of the actual profits 

earned by [DSS was] less than the total amount advanced” to 

Kraus under the Profit Advance Agreement.

¶61 Other evidence in the record similarly does not support a 

finding that the $70,000 figure was tethered to a projection of 

expected profits. Kraus himself testified that rather than 

becoming DSS’s salaried employee, he opted to receive the 

advances under the Profit Advance Agreement so that he could 

“live,” “get [his] bills paid,” and “run [his] other companies.” As 

Kraus explained, the $70,000 figure was merely “what [he] had 

asked for and [Kevin Beck] agreed.” The fact that the parties 

ultimately labeled it a “profit advance” does not demonstrate that 

$70,000 reflected the parties’ estimate of Kraus’s share of DSS’s 

likely profits, much less that it reflected a reasonable estimate. 

Rather, it was undisputed that the number was based entirely on 

what Kraus needed to live and pay his bills, the number was not 

“negotiable,” and he was to receive the amount during the first 

two years “regardless of whether [the joint venture] was 

profitable.” Kraus has pointed to no evidence to suggest that 

either side conducted a profitability analysis or that the $70,000 

figure was consistent with their expectations for the joint 

venture.10

10. Kraus invites this court to speculate that the Becks agreed that 

the $70,000 figure “was a reasonable approximation of . . . Kraus’s 

(continued...)
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20200309-CA 23 2022 UT App 91

¶62 As a result, the district court’s lost profits analysis “rests on 

. . . assumption[s] unsupported by the record.” See First Sec. Bank, 

653 P.2d at 596. We thus conclude that Kraus’s lost profits 

damages were not established with reasonable certainty, and we 

therefore reverse and vacate this portion of the district court’s 

award. Having agreed with the Beck Parties that the court’s 

decision on lost profits was infirm, we remand for the court to 

reconsider whether any other evidence would support a 

reasonably certain basis for lost profits damages.11

2. Whether Kraus Should Have Received 20% of the Value of 

KMB’s Liquidated Assets

¶63 The Beck Parties also complain that the “district court’s 

damages award for lost profits impermissibly included $90,000

share of profits” based on their “own expectations” and 

“assumptions of profitability.” But Kraus has not shown what the 

Becks’ expectations were or that in agreeing to the non-negotiable 

$70,000 advance, they engaged in any kind of profitability 

analysis. Further, Kraus has not shown that, even if the Becks had 

assumptions or projections about the venture’s profitability, those 

assumptions or projections were reasonable. See Atkin Wright 

& Miles v. Mountain States Tel. & Tel. Co., 709 P.2d 330, 336 (Utah

1985) (“The amount of damages may be based upon 

approximations . . . [if] the approximations are based upon 

reasonable assumptions or projections.”); Webb v. Utah Tour 

Brokers Ass’n, 568 F.2d 670, 677 (10th Cir. 1977) (applying Utah law 

and concluding that evidence failed to show “a tangible 

foundation” from which a factfinder could determine that a 

reasonable probability existed that profits would have been 

made).

11. The parties have not identified another basis for the lost profits 

award, and we express no opinion on whether any such basis 

exists in the evidence.
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20200309-CA 24 2022 UT App 91

that represented 20% of the amounts realized by KMB on the 

liquidation of its assets.” They make two points on this score. 

First, they assert that Kraus was not entitled to this amount 

because he did not own any interest in KMB. Second, they assert 

that the $90,000 impermissibly gave Kraus a double recovery 

because it was “duplicative of the lost profits awarded to Kraus 

and the contract damages awarded to FLJ, Kraus’s entity.”

¶64 On their second point, the Beck Parties argue that the 

$90,000 was duplicative of the lost profits award because the 

“injury to DSS (and, therefore, Kraus) flowing from” the Becks’ 

breach of fiduciary duty—which was causing DSS to enter into 

self-interested transactions with KMB related to renting the 

equipment—“is measured by the amount KMB overcharged DSS” 

and was already “captured in the lost profits measure of 

damages.” And a portion of the $90,000, they assert, is duplicative 

of the $14,003.22 awarded to FLJ for KMB’s breach of the Asset 

Purchase Agreement and the Note because the $14,003.22 

represented the shortfall on the $100,000 sale price and “fully 

compensated FLJ (and through it, Kraus) for the value of the 

equipment sold to KMB.” In other words, “[i]t is as though he/FLJ 

both sold the equipment to KMB for $100,000 but continued to 

own it until KMB liquidated it.”

¶65 Kraus responds that DSS and KMB, together, operated the 

striping business and that “[w]hile Mr. Kraus may not have 

owned any interest in KMB,” he placed the equipment with KMB 

and “he certainly was a partner in the joint venture” with the 

Becks. Kraus argues that if the Becks had not “forced [him] out” 

of DSS, he would have received 20% of the profits while DSS 

operated and would have received his fair share of the proceeds 

from the liquidation of the joint venture. He also argues that the 

Becks’ actions “with regard to KMB that undermined the joint 

venture would certainly justify an award of damages.” Kraus 

further argues that no double recovery occurred here because the 
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20200309-CA 25 2022 UT App 91

parties’ transactions and agreements were “interrelated” and 

“cannot be separated.”

¶66 The district court found that the Becks sold “the 

equipment” related to DSS’s striping business, including the 

epoxy truck, for $960,486.51. Under DSS and KMB’s business 

arrangement, DSS never owned any of the striping equipment. 

Rather, KMB owned the equipment and leased it to DSS. Because 

KMB originally purchased the epoxy truck and DSS did not own 

it, the court gave KMB credit for its full value. The court then 

found that the rest of the equipment sold for approximately 

$450,000, and it awarded Kraus 20% of that amount, which 

equaled $90,000.

¶67 Both sides agree that “the equipment” referred to in the 

court’s findings included other assets in addition to the striping 

equipment owned by KMB.12 But the court did not draw a 

distinction between the striping equipment and any other assets 

included in the liquidation.

¶68 This distinction matters because we agree with the Beck 

Parties that Kraus was not an owner of KMB and therefore was 

not entitled to a share of the sale proceeds of KMB’s equipment.

Cf. Utah Code Ann. § 48-3a-711(2)(b) (LexisNexis 2015) (providing 

that after discharging its obligations when winding up, a limited 

liability company will distribute any remaining surplus “in equal 

12. In support, Kraus relies on a trial exhibit of an asset purchase 

agreement related to the liquidation and attached it as an 

addendum to his brief. But the trial exhibits were not included in 

the record on appeal, and “this court’s power of review is strictly 

limited to the record presented on appeal.” See Reperex, Inc. v. 

May’s Custom Tile, Inc., 2012 UT App 287, ¶ 12, 292 P.3d 694 

(cleaned up). In any event, we need not consider this exhibit in 

light of the Beck Parties’ acknowledgment that other assets were 

part of the liquidation.
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20200309-CA 26 2022 UT App 91

shares among members and dissociated members”). Yet when the 

court awarded Kraus $90,000, Kraus received a portion of the 

proceeds related to assets that had belonged to KMB. Although 

Kraus believes that his ownership in the joint venture entitled him 

to recover this portion of the sale because “placing the equipment 

in KMB was part of that joint venture,” he provides no authority 

for the notion that his participation in the joint venture entitled 

him to recover under the circumstances here, particularly where 

he freely transferred ownership of the equipment so that he could 

acquire a 20% stake in DSS. We thus conclude that Kraus should 

not have received a portion of the sale of KMB’s equipment, and 

we vacate this portion of his award. 

¶69 Nevertheless, Kraus was a co-owner of DSS and therefore 

is entitled to 20% of the sale proceeds that related to any 

assets that had belonged to DSS. On remand, the district 

court should reassess the proceeds from the liquidation 

and exclude the amounts related to the sale of KMB’s equipment 

from Kraus’s award. It should also make specific findings 

regarding the amount of proceeds related to assets owned by DSS, 

and then the court may award Kraus a portion of those proceeds. 

See generally Bastian v. King, 661 P.2d 953, 957 (Utah 1983) 

(instructing district courts to provide factual findings that 

demonstrate that “there is a rational basis for the award of 

damages” and that “the findings support the judgment and that 

the evidence supports the findings”). Although we do not opine 

on the Beck Parties’ double recovery arguments, the district court 

should, if presented, consider any such arguments made on 

remand.

3. Whether the Entire Damages Award Should Be Vacated

¶70 Third, the Beck Parties contend that the entire damages 

award should be vacated because the flaws identified above are 

“intertwined with” the remainder of the award. Again pointing to 

the district court’s reliance on the Profit Advance Agreement to 
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20200309-CA 27 2022 UT App 91

project DSS’s profits as $350,000 per year, the Beck Parties contend 

that the court’s calculation of damages for the breach of the 

Profit Advance Agreement—$108,833.31—was likewise 

“impermissibly speculative.” This is true, the Beck Parties argue, 

because the terms of that agreement would have required 

Kraus to repay DSS if Kraus’s share of the actual annual profits 

fell below $70,000. The Beck Parties thus urge this court to 

vacate the award and remand for additional findings or a new 

hearing.

¶71 We agree that the district court needs to reassess the 

entire damages award, especially given that we have 

vacated other portions of the award. We also agree with the Beck 

Parties that the court should reevaluate the $108,833.31 related to 

the breach of the Profit Advance Agreement. Although that 

amount reflects the shortfall from the $140,000 that Kraus 

expected to receive under that agreement, the agreement’s 

repayment provision meant that Kraus would not necessarily 

keep that entire amount “if, at the end of two years, 20% of the 

actual profits earned by [DSS was] less than the total amount 

advanced.” The court found that DSS was profitable at some 

point, but the court did not make specific findings about what, if 

any, profits DSS realized or when. Further, it is unknown whether 

any such profits were sufficient for Kraus to have avoided liability 

for repayment. In other words, the $108,833.31 appears to 

presume that the $350,000 figure derived from the Profit Advance 

Agreement accurately reflected DSS’s profits and that Kraus 

would have no repayment obligation. But we have rejected the 

court’s reliance on the Profit Advance Agreement as a basis for 

determining lost profits, and that decision leaves the court’s 

award for breach of that agreement without a foundation. 

Accordingly, the court on remand should reassess the amounts to 

which Kraus is entitled under the Profit Advance Agreement, if 

any, and provide appropriately detailed findings. 
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20200309-CA 28 2022 UT App 91

B. Joint and Several Liability

¶72 As their last issue on appeal, the Becks contend that the 

district court erred in imposing joint and several liability on them 

for the $14,003.22 related to KMB’s breach of the Asset Purchase 

Agreement and the Note. According to the Becks, they cannot be 

held personally liable for KMB’s liabilities under corporate law.

¶73 The district court determined that KMB breached the Asset 

Purchase Agreement and the Note by failing to pay the amounts 

due thereunder in exchange for FLJ’s used equipment. 

Specifically, KMB fell short $14,003.22 of the amount due to FLJ. 

The court also determined that “the Becks breached fiduciary 

duties owed by them to Kraus, and caused the companies under 

their control to breach duties owed to Kraus, which itself amount 

to a breach of these contractual obligations.” And the court 

ultimately held the Becks jointly and severally liable for the 

$14,003.22 owed by KMB to FLJ.

¶74 Generally, a “member or manager [of a limited liability 

company] is not personally liable, directly or indirectly, by way of 

contribution or otherwise, for a debt, obligation, or other liability 

of the limited liability company solely by reason of being or acting 

as a member or manager.” Utah Code Ann. § 48-3a-304(1) 

(LexisNexis 2015). But a member or manager “may be held 

‘personally liable for his limited liability company’s contractual 

breaches if he assumed personal liability, acted in bad faith or 

committed a tort in connection with the performance of the 

contract.’” H&P Invs. v. iLux Cap. Mgmt. LLC, 2021 UT App 113, 

¶ 50, 500 P.3d 906 (quoting Reedeker v. Salisbury, 952 P.2d 577, 582 

(Utah Ct. App. 1998)). When the district court imposed joint and 

several liability for the $14,003.22 on the Becks—members of 

KMB—the court effectively imposed personal liability on them. 

¶75 The court appears to have premised its decision on its 

conclusion that the Becks breached their fiduciary duties to Kraus

in connection with KMB’s performance of the Asset Purchase 
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20200309-CA 29 2022 UT App 91

Agreement and the Note. See id. And the Becks have not carried 

their burden of persuasion to show error in the court’s decision. 

See generally 1600 Barberry Lane 8 LLC v. Cottonwood Residential O.P. 

LP, 2021 UT 15, ¶ 53, 493 P.3d 580 (explaining that appellants 

shoulder “the burden of persuasion to convince the reviewing 

court that the district court erred”). The Becks assert that their 

fiduciary duties to Kraus with respect to their joint venture 

“cannot be read so broadly as to require the Becks to ensure that 

other entities they control (like KMB) never breach an agreement 

with an entity that Kraus controls (like FLJ).” But beyond that, 

they do not explain why. Instead, they cite, without analysis, a 

string of cases from various jurisdictions that stand generally for 

the proposition that fiduciary duties between partners do not 

extend to unrelated business ventures. See, e.g., LG & E Cap. Corp. 

v. Tenaska VI, LP, 289 F.3d 1059, 1063–64 (8th Cir. 2002) (collecting 

cases indicating that a party’s fiduciary duties to another party are 

limited to dealings involving their joint venture). But here, KMB’s 

obligations and breach were tied to the joint venture, so it is not 

evident that the Becks’ authority is on point. And because the 

Becks have not shown that their breach of fiduciary duties could 

not support personal liability here, see H&P Invs., 2021 UT App 

113, ¶ 50, we cannot say that the district court erred in imposing 

joint and several liability on the Becks for the $14,003.22 award.

II. The Kraus Parties’ Issues on Cross-Appeal

A. Prejudgment Interest

¶76 The Kraus Parties contend that the district court erred in 

declining to award them prejudgment interest. Specifically, they 

assert that prejudgment interest should have been awarded with 

respect to three amounts in the judgment: (i) $14,003.22 relating to 

the breach of the Asset Purchase Agreement, (ii) $108,833.31 

relating to the breach of the Profit Advance Agreement, and 

(iii) $36,617.85 relating to the unpaid reimbursements. After we 
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20200309-CA 30 2022 UT App 91

set forth Utah law on prejudgment interest, we address each of 

these amounts in turn.

¶77 “The purpose of awarding prejudgment interest is to 

compensate a party for the depreciating value of the amount 

owed over time and, as a corollary, to deter parties from 

intentionally withholding an amount that is liquidated and 

owing.” Encon Utah, LLC v. Fluor Ames Kraemer, LLC, 2009 UT 7, 

¶ 67, 210 P.3d 263 (cleaned up). In Utah, prejudgment interest is 

recoverable “where the damage is complete, the amount of the 

loss is fixed as of a particular time, and the loss is measurable by 

facts and figures.” Id. ¶ 51 (cleaned up). This standard “focuses on 

the measurability and calculability of the damages,” id. ¶ 52, and 

it requires “the amount of the loss [to] be calculated with 

mathematical accuracy in accordance with well-established rules 

of damages,” USA Power, LLC v. PacifiCorp, 2016 UT 20, ¶ 100, 372 

P.3d 629 (cleaned up). 

¶78 Yet even though “all claims can be reduced eventually to 

monetary value,” not all claims are subject to prejudgment 

interest. See Canyon Country Store v. Bracey, 781 P.2d 414, 422 (Utah 

1989). Utah courts will not award prejudgment interest in cases 

“where the trier of fact has to use its ‘best judgment in assessing 

the amount to be allowed for past as well as for future injury.’” 

KTM Health Care Inc. v. SG Nursing Home LLC, 2018 UT App 152, 

¶ 81, 436 P.3d 151 (quoting USA Power, 2016 UT 20, ¶ 100). For 

example, cases involving wrongful death or defamation have 

“losses that cannot be calculated with mathematical accuracy” 

because the damage amounts are “determined by the broad 

discretion of the trier of fact.” USA Power, 2016 UT 20, ¶ 100 

(cleaned up).

¶79 When prejudgment interest is available, the applicable rate 

is typically dictated by statute. See Beckman v. Cybertary 

Franchising LLC, 2018 UT App 47, ¶ 64, 424 P.3d 1016. As relevant 

here, Utah Code section 15-1-1(2) provides, “Unless parties to a 
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20200309-CA 31 2022 UT App 91

lawful contract specify a different rate of interest, the legal rate of 

interest for the loan or forbearance of any money, goods, or chose 

in action shall be 10% per annum.” Utah Code Ann. § 15-1-1(2) 

(LexisNexis 2013). This statute was amended in 2019 to allow for 

a 10% interest rate for “a claim for breach of contract.” Id. (Supp. 

2021) (“Unless the parties to a lawful written, verbal, or implied 

contract expressly specify a different rate of interest, the legal rate 

of interest for the contract, including a contract for services, a loan 

or forbearance of any money, goods, or services, or a claim for 

breach of contract is 10% per annum.”). When a contract does not 

fall within the scope of section 15-1-1, the applicable interest rate 

is provided in section 15-1-4: “the federal postjudgment interest 

rate as of January 1 of each year, plus 2%.” Id. § 15-1-4(3)(a); see 

also USA Power, 2016 UT 20, ¶ 109. These same statutes apply to 

determining the rates for postjudgment interest. See USA Power, 

2016 UT 20, ¶ 106 n.187; see also Utah Code Ann. §§ 15-1-1, 15-1-4 

(LexisNexis Supp. 2021).

¶80 We now consider each portion of the judgment to which 

the Kraus Parties claim entitlement to prejudgment interest.

1. $14,003.22 Related to the Asset Purchase Agreement

¶81 FLJ argues that because KMB did not pay $14,003.22 of the 

$100,000 due under the Asset Purchase Agreement, the $14,003.22 

was measurable by facts and figures and that the district court 

therefore should have awarded prejudgment interest on this 

amount. Although it acknowledges that the Asset Purchase 

Agreement provides that the $100,000 would be “payable without 

interest, when [KMB’s] lease income from the subject equipment 

equals $100,000,” FLJ asserts that this zero-interest provision

“applies only to the extent that KMB timely paid the amount 

due,” and that the “repayment would be ‘without interest’ only 

until the time [KMB’s] lease revenue from the equipment equaled 

$100,000” and therefore was not intended to extend indefinitely. 

Further, because the agreement “does not specify an interest rate 
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20200309-CA 32 2022 UT App 91

applicable in the event of KMB’s breach,” FLJ contends that the 

court should have awarded 10% prejudgment interest under Utah 

Code section 15-1-1(2).

¶82 The Beck Parties respond that the “without interest” 

provision in the Asset Purchase Agreement shows that the parties 

agreed that the obligation would bear no interest at all. They also 

assert that the agreement “does not distinguish between predefault and default interest rates” and therefore the applicable 

interest rate for this claim is zero.

¶83 We agree with FLJ that the $14,003.22 shortfall under the 

Asset Purchase Agreement and the Note qualifies for 

prejudgment interest. It represents a loss that is complete, “fixed 

as of a particular time,” and readily “measurable by facts and 

figures.” See Encon Utah, 2009 UT 7, ¶ 51 (cleaned up).

¶84 The Asset Purchase Agreement and the Note provided that 

the $100,000 would be “payable without interest, when [KMB’s] 

lease income from the subject equipment equals $100,000.” 

Looking at this plain language, see Brady v. Park, 2019 UT 16, ¶ 53, 

445 P.3d 395 (explaining that when interpreting a contract, “we 

first look at the plain language of the contract” (cleaned up)), we 

disagree with the Beck Parties’ claim that this provision meant 

that interest would never accrue. Instead, we read this to mean 

that there is no interest until payment on the $100,000 note became 

due. Thus, interest would not accrue on the $100,000 until the time 

when KMB’s income from renting the equipment equaled 

$100,000. After that point, if the Note remained unpaid, nothing 

in the Asset Purchase Agreement and the Note precludes interest 

from accruing.

¶85 We further agree with FLJ that the $14,003.22 qualifies for 

the 10% interest rate under Utah Code section 15-1-1(2). Based on 

the Beck Parties’ concession that the Asset Purchase Agreement 

“does involve a loan,” we conclude that the 10% interest rate 

applies. See Utah Code Ann. § 15-1-1(2) (LexisNexis 2013); see also 
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USA Power, 2016 UT 20, ¶ 109. Accordingly, the district court 

should award FLJ prejudgment interest at 10% per annum on the 

$14,003.22 award. 

2. $108,833.31 Related to the Profit Advance Agreement

¶86 Kraus argues that given that DSS paid only $31,166.69 of 

the $140,000 it owed under the Profit Advance Agreement, the 

$108,833.31 award was measurable by facts and figures. He

asserts that prejudgment interest should apply to this amount at 

10% per year under Utah Code section 15-1-1.

¶87 The Beck Parties counter that the $70,000 per year “was not 

the actual amount owed Kraus under the agreement” because 

Kraus would have to repay some of this amount if DSS’s profits 

were “less than $350,000 per year.” They assert that because of the 

repayment provision, Kraus’s recovery under the Profit Advance 

Agreement “could not be calculated with mathematical certainty” 

and therefore Kraus’s award was not subject to prejudgment 

interest. Kraus responds that his “requirement to reconcile” the 

advance with the actual profits was “excused by [DSS’s] failure to 

perform” its payment obligations under the Profit Advance 

Agreement. Moreover, he asserts that he “likely would not have 

had to repay any advanced profits.”

¶88 As discussed above, we conclude that the district court, on 

remand, needs to reevaluate the $108,833.31 damages award 

related to the breach of the Profit Advance Agreement. Supra ¶ 71. 

Given that Kraus’s entitlement to $140,000 under that agreement 

was contingent on DSS’s actual profits, this aspect of Kraus’s 

damages is too uncertain for us to assess whether prejudgment 

interest is available. If, on remand, the district court again 

determines that Kraus is entitled to damages for breach of the 

Profit Advance Agreement, the court should reassess the 

propriety of prejudgment interest under the standards we have 

discussed above. Supra ¶¶ 77–79.
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3. $36,617.85 in Unpaid Reimbursements 

¶89 Kraus contends that the $36,617.85 in unpaid 

reimbursements also met Utah’s prejudgment interest standard. 

According to Kraus, DSS’s failure to reimburse Kraus was a 

breach of an oral agreement, and because that agreement did not 

specify an interest rate, the applicable rate should be 10% under 

Utah Code section 15-1-1.13 In contrast, the Beck Parties point to 

the lack of a specified interest rate and assert that it means “the 

amount of prejudgment interest is zero.”

¶90 We agree with Kraus that the $36,617.85 in unpaid 

reimbursements satisfies the prejudgment interest standard. The 

court calculated this amount by taking the value of Kraus’s 

reimbursable contributions ($122,614.61) and subtracting the 

amount he did receive ($85,996.78). Supra ¶ 21 & note 5. Thus, this 

damages award was “calculated with mathematical accuracy,” see 

USA Power, 2016 UT 20, ¶ 100 (cleaned up), and prejudgment 

interest should accrue on the $36,617.85.

¶91 However, we disagree with Kraus that the applicable 

prejudgment interest rate is 10% under Utah Code section 15-1-1. 

To qualify for the 10% rate under that provision, Kraus must 

demonstrate that the agreement involved “the loan or forbearance 

of any money, goods, or chose in action.” See Utah Code Ann. 

§ 15-1-1(2); see also USA Power, 2016 UT 20, ¶ 109. Unfortunately 

for Kraus, he has not engaged in that analysis.

¶92 Instead, he argues for the application of an amended 

version of the statute, which allows for a 10% interest rate for “a 

claim for breach of contract.” See Utah Code Ann. § 15-1-1(2) 

(LexisNexis Supp. 2021). But we “apply the law as it exists at the 

13. Citing the court’s findings, Kraus also claims the failure to 

reimburse was a breach of the Stock Sale Agreement. But it is 

unclear whether the court found that agreement to be a basis for 

this claim.
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time of the event regulated by the law in question.” State v. Clark, 

2011 UT 23, ¶ 13, 251 P.3d 829. Because prejudgment interest is 

available only when “the amount of the loss is fixed as of a 

particular time,” Encon Utah, 2009 UT 7, ¶ 51 (cleaned up), and all 

the Kraus Parties’ losses were allegedly fixed before the current 

statute came into effect in 2019, we apply the earlier version of 

Utah Code section 15-1-1, see Clark, 2011 UT 23, ¶ 13; cf. Gressman 

v. State, 2013 UT 63, ¶ 14, 323 P.3d 998 (concluding that provisions 

affecting postjudgment interest, in a different context, affected 

substantive rights because they “enlarge, eliminate, or destroy 

vested or contractual rights and do not merely dictate the practice 

and procedure or the legal machinery by which the substantive 

law is determined or made effective” (cleaned up)). Accordingly, 

the Kraus Parties’ claims to prejudgment interest cannot rely on 

the current statute’s provision allowing for interest at 10% per 

annum for “a claim for breach of contract.” See Utah Code Ann. 

§ 15-1-1(2).

14

14. Kraus suggests that we should give the current statute 

retroactive effect. But “[a] provision of the Utah Code is not 

retroactive, unless the provision is expressly declared to be 

retroactive.” Utah Code Ann. § 68-3-3 (LexisNexis 2016); see also

Gressman v. State, 2013 UT 63, ¶ 12, 323 P.3d 998. Kraus further 

argues that the current statute should be retroactive because the 

recent amendment merely “clarifies” the earlier enactment. Utah 

“case law has occasionally referred to amendments clarifying 

statutes as an exception to the retroactivity ban.” Gressman, 2013 

UT 63, ¶ 16 (cleaned up). To decide whether an amendment is a 

mere clarification, we ask “whether it alters or explains language 

already present in the original statute or whether the amendment 

added new language or subsections that did not exist in any form 

before the amendments were made.” Id. ¶ 17 (cleaned up). “An 

amendment that does the former is more likely clarifying in 

nature; one that does the latter is not.” Id. We conclude that the 

(continued...)
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20200309-CA 36 2022 UT App 91

¶93 Because Kraus has not established that section 15-1-1 

provides the appropriate rate of interest, we conclude that Utah 

Code section 15-1-4 provides the applicable rate for prejudgment 

interest on his unpaid reimbursements.15 See USA Power, 2016 UT 

20, ¶ 109.

B. Postjudgment Interest Rate

¶94 Next, the Kraus Parties challenge the district court’s choice 

of postjudgment interest rate, arguing that the court erred in 

picking the rate under Utah Code section 15-1-4. They contend 

that under the current version of Utah Code section 15-1-1, “a 

post-judgment interest rate of 10% should be applied to the 

current statute’s amendment providing that the 10% annual 

interest rate applies to “a claim for breach of contract” added new 

language to the statute and was not merely clarifying. See id.

Compare Utah Code Ann. § 15-1-1(2) (LexisNexis Supp. 2021), with 

id. (2013). For these reasons, we will not apply the current version 

of section 15-1-1 retroactively to this case.

15. Kraus also claims prejudgment interest with respect to the 

$90,000 that the district court awarded to him as his share of DSS’s 

liquidation. We have vacated the $90,000 award and remanded 

for reconsideration. Supra ¶¶ 68–69. If, on remand, the district 

court determines that Kraus is entitled to a portion of the

liquidation (while excluding proceeds from KMB’s equipment), 

the court should also reassess whether prejudgment interest 

would be appropriate under the standards we have discussed.

In addition, Kraus asserts that the court should have 

awarded prejudgment interest with respect to the $303,496.78 in 

lost profits. As discussed in detail above, we vacate the lost profits 

award and remand to the court for reconsideration. Supra ¶ 62. 

Should the court, on remand, again award lost profits to Kraus, it 

will need to consider any related claim for prejudgment interest 

anew.
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damages awarded for breach of contract,” namely, the $14,003.22 

for breach of the Asset Purchase Agreement, the $108,833.31 for 

breach of the Profit Advance Agreement, and the $36,617.85 for 

breach of the agreement to reimburse Kraus.

¶95 The Beck Parties oppose 10% postjudgment interest here, 

arguing that the Kraus Parties incorrectly rely on an amended 

version of the statute. In the Beck Parties’ view, the earlier version 

of the statute applies, and the agreements do not qualify for 

application of the 10% interest rate because they either specify an 

interest rate “or are not loan or forbearance contracts subject to 

the statute.”

¶96 As discussed above, we agree with the Beck Parties that the 

Kraus Parties’ claims to prejudgment interest cannot rely on the 

current statute’s provision allowing for interest at 10% per annum 

for a claim for breach of contract. Supra ¶ 92. Nevertheless, we 

have determined that FLJ is entitled to prejudgment interest 

under the earlier version of the statute regarding the $14,003.22 

related to the Asset Purchase Agreement because it involves a 

loan. Supra ¶ 85. For the same reasons, the 10% per annum interest 

rate applies for postjudgment interest on this amount, and the 

district court erred in imposing the rate under Utah Code section 

15-1-4. We reject, however, Kraus’s claim that the 10% per annum 

postjudgment interest rate applies to the $36,617.85 awarded for 

breach of the agreement to reimburse Kraus. Just as Kraus failed 

to demonstrate application of the 10% interest rate for 

prejudgment interest on this amount, see supra ¶ 91, he has failed 

to demonstrate that the district court erred in not applying this 

rate to this claim for postjudgment interest.16

16. Because we have vacated the district court’s award for 

damages for breach of the Profit Advance Agreement, supra

¶¶ 71, 88, we do not address Kraus’s argument relating to the 

(continued...)
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C. Punitive Damages

¶97 Kraus contends that the district court erred in denying his

request for punitive damages. He argues, first, that the court 

applied “the wrong legal standard in evaluating whether punitive 

damages were warranted” and, second, that the court should 

have awarded punitive damages under the correct standard. 

Because we agree with Kraus on his first point, we remand for 

reconsideration without reaching his second point.

¶98 “In Utah, punitive damages are available only upon clear 

and convincing proof of willful and malicious or intentionally 

fraudulent conduct, or conduct that manifests a knowing and 

reckless indifference toward, and disregard of, the rights of 

others.” Smith v. Fairfax Realty, Inc., 2003 UT 41, ¶ 27, 82 P.3d 1064 

(cleaned up). In fact, the Utah Code provides that punitive 

damages are generally available “only if compensatory or general 

damages are awarded and it is established by clear and 

convincing evidence that the acts or omissions of the tortfeasor 

are the result of willful and malicious or intentionally fraudulent 

conduct, or conduct that manifests a knowing and reckless 

indifference toward, and a disregard of, the rights of others.” Utah 

Code Ann. § 78B-8-201(1)(a) (LexisNexis 2018); accord Jones v. 

Mackey Price Thompson & Ostler, 2020 UT 25, ¶ 57, 469 P.3d 879.

¶99 Here, the district court declined to award punitive 

damages to Kraus, explaining that it did “not find, by clear and 

convincing evidence, that the Becks’ conduct was so extreme and 

outrageous as to warrant the imposition of punitive damages.” 

Although the court identified the correct burden of proof, it is not 

apparent from the court’s reference to conduct that was not 

postjudgment interest rate applied to that award. If, on remand, 

the court again awards damages for breach of that agreement, the 

court should assess the proper postjudgment interest rate under 

the standards we have discussed above. Supra ¶ 79.
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sufficiently “extreme and outrageous” that the court considered 

whether that same conduct fell short of the punitive damages 

standard of “willful and malicious or intentionally fraudulent 

conduct, or conduct that manifests a knowing and reckless 

indifference.” See Smith, 2003 UT 41, ¶ 27 (cleaned up). We thus 

agree with Kraus that it is unclear whether the court applied the 

correct standard for punitive damages. Given this lack of clarity, 

the court should revisit its punitive damages decision on remand 

and demonstrate that it has applied the correct standard.17

D. Postjudgment Attorney Fees

¶100 As their final issue on cross-appeal, the Kraus Parties 

contend that they are entitled to “post-judgment, pre-appeal 

attorney’s fees.” Relying on rule 73(f)(3) of the Utah Rules of Civil 

Procedure, they claim entitlement to “fees incurred in an effort to 

enforce the judgment.” The Beck Parties respond that the Kraus 

Parties’ request before the district court in this regard “was 

premature and overbroad.”

¶101 We agree with the Beck Parties that the Kraus Parties’ 

request was premature under rule 73(f)(3). That rule provides that 

“[w]hen a party has established its entitlement to attorney fees 

under any paragraph of [rule 73], and subsequently . . . applies for 

any writ” or “files a motion pursuant to Rules 64(c)(2) or 58C . . . , 

the party may request as part of its application for a writ or its motion

that the party’s judgment be augmented . . . , and the clerk or the 

court shall allow such augmented attorney fees request without a 

supporting affidavit if it approves the writ or motion.” Utah R. 

Civ. P. 73(f)(3) (emphasis added). Because the Kraus Parties’ 

request was not properly made as “part of [an] application for a 

writ or [a] motion,” they have not established their entitlement to 

17. The parties did not brief whether punitive damages would still 

be available to Kraus should he fail to prove lost profits. Thus, in 

remanding this issue, we express no opinion on that question. 
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augmented attorney fees under rule 73(f)(3) at this juncture. See 

id. We thus decline to award them postjudgment attorney fees.

III. The Kraus Parties’ Request for Appellate Attorney Fees

¶102 Lastly, the Kraus Parties request that this court award them 

attorney fees incurred on appeal. Noting that the district court 

awarded them attorney fees, they claim that success on appeal 

should entitle them to receive appellate attorney fees.

¶103 Generally, “when a party who received attorney fees below 

prevails on appeal, the party is also entitled to fees reasonably 

incurred on appeal.” Telegraph Tower LLC v. Century Mortgage LLC, 

2016 UT App 102, ¶ 52, 376 P.3d 333 (cleaned up). Because the 

Kraus Parties were awarded attorney fees below but prevailed 

only in part on appeal, they are entitled to only those appellate 

attorney fees associated with the issues on which they have 

prevailed. See id. We remand for the district court to calculate 

those reasonable fees.18

CONCLUSION

¶104 With respect to the Beck Parties’ appeal, we affirm the 

district court’s imposition of joint and several liability on the 

Becks. But we reverse and vacate the district court’s damages 

award and remand for reconsideration. On remand, the court 

should (1) reassess lost profits and ensure that any such damages 

are reasonably certain, (2) ensure that Kraus’s proceeds from 

18. The Kraus Parties also request an award of costs incurred on 

appeal. Rule 34(a)(4) of the Utah Rules of Appellate Procedure 

provides that “if a judgment or order is affirmed or reversed in 

part, or is vacated, costs are awarded only as the court orders.” 

Because the Kraus Parties did not exclusively prevail on appeal, 

and because of the difficulty in attributing costs to particular 

issues, we decline to award them costs.
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20200309-CA 41 2022 UT App 91

DSS’s liquidation do not include proceeds from the sale of KMB’s 

equipment, and (3) reevaluate whether Kraus is entitled to

damages under the Profit Advance Agreement.

¶105 On the Kraus Parties’ cross-appeal, we conclude that FLJ is 

entitled to prejudgment and postjudgment interest at 10% per 

annum on the $14,003.22 related to the Asset Purchase 

Agreement, and Kraus is entitled to prejudgment and 

postjudgment interest at the rate provided by Utah Code section 

15-1-4 on the $36,617.85 awarded for unpaid reimbursements. We 

also conclude that the district court should (1) revisit the interest 

issues with respect to the $108,833.31 related to the breach of the 

Profit Advance Agreement and any amounts it may award in lost 

profits or in connection with DSS’s liquidation and (2) reevaluate 

whether punitive damages are appropriate. The Kraus Parties are 

not entitled to postjudgment attorney fees at this point, but we 

award them the appellate attorney fees they incurred for the 

issues on which they have prevailed on appeal. The district court 

should determine the amount of those fees on remand.

¶106 Accordingly, we affirm in part, reverse and vacate in part,

and remand for further proceedings consistent with this opinion.