Court Opinion

ID: 5137680
Source: CourtListenerOpinion
Date Created: 2021-12-21 14:43:17.735522+00
Date Added: 2024-06-11T08:24:07.618813
License: Public Domain

2014 UT App 259
_________________________________________________________

               THE UTAH COURT OF APPEALS

                        JAMES GILES,
                   Plaintiff and Appellee,
                               v.
           MINERAL RESOURCES INTERNATIONAL, INC.,
                 Defendant and Appellant.

                             Opinion
                         No. 20130694-CA
                      Filed October 30, 2014

           Second District Court, Ogden Department
                The Honorable Ernest W. Jones
                        No. 110907786

         Zane S. Froerer and Paul H. Johnson, Attorneys
                          for Appellant

            Donald L. Dalton, Attorney for Appellee

 JUDGE JOHN A. PEARCE authored this Opinion, in which JUDGES
  GREGORY K. ORME and MICHELE M. CHRISTIANSEN concurred.

PEARCE, Judge:

¶1      This appeal concerns a breach of fiduciary duty claim that
was the subject of a successful summary judgment motion.
Mineral Resources International, Inc. (MRI) challenges the
district court’s grant of summary judgment in favor of James
Giles and award of attorney fees to Giles. The district court ruled
that MRI had not presented sufficient evidence of actual
damages caused by the alleged breach of the duty Giles owed
MRI. On appeal, MRI contends that it presented sufficient
evidence of damages to survive summary judgment. MRI further
contends that even if the evidence of actual damages was
insufficient, summary judgment was inappropriate because MRI
            Giles v. Mineral Resources International, Inc.

claimed it was entitled to nominal damages. Lastly, MRI posits
that the award of attorney fees was improper because the
underlying attorney fees clause was part of a contract between
Giles and MRI and the breach of fiduciary duty claim sounded
in tort rather than contract.

¶2      ‚On appeal from a district court’s summary judgment
ruling, we view the facts and all reasonable inferences drawn
therefrom in the light most favorable to the nonmoving party
and review the court’s legal conclusions and ultimate grant or
denial of summary judgment for correctness.‛ Judge v. Saltz
Plastic Surgery, PC, 2014 UT App 144, ¶ 13, 330 P.3d 126 (citation
and internal quotation marks omitted).

¶3     MRI employed Giles from 1995 to 2010 as an international
sales representative. Giles signed non-compete and non-
disclosure agreements that MRI prepared. MRI assigned Giles to
handle sales in Asia and the Pacific Rim. During this time, Giles
developed a strong relationship with a regional distributor, HCI,
which sold MRI’s products in the Philippines. HCI and MRI
entered into a five-year broker agreement in September 2003.

¶4      MRI’s product line included the dietary supplement
Concentrated Mineral Drops. In February 2008, Giles helped
HCI file an application to use a logo depicting the stylized letters
‚CMD‛ as a trademark. MRI started using the CMD trademark
for its Concentrated Mineral Drops ‚no later than July of 2008.‛1
In September 2009, MRI discovered HCI’s trademark application
and confronted Giles about it. Giles claimed that HCI had filed
the application on behalf of MRI and that HCI would resolve the
situation by allowing its application to lapse. The application did

1. Presumably, MRI’s plans to use the CMD trademark predated
HCI’s application and Giles was aware of those plans when he
helped HCI apply for the trademark.

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           Giles v. Mineral Resources International, Inc.

not lapse until the spring of 2012, although HCI apparently took
no further action to advance the application.

¶5      In December 2009, MRI asked Giles to sign a revised non-
compete agreement, but he refused. Giles then terminated his
employment with MRI in February 2010. In November 2011,
Giles brought an action seeking a declaration that the original
non-compete agreement was unenforceable. MRI filed a
counterclaim against Giles combined with a third-party
complaint naming ten John Does as defendants. Giles moved to
dismiss the combined counterclaim and third-party complaint.
After a hearing in February 2012, the district court dismissed
without prejudice MRI’s third-party complaint and the breach-
of-contract portion of MRI’s counterclaim. The remainder of the
counterclaim is the breach of fiduciary duty cause of action
currently before us on appeal.2 At a June 2013 hearing, the
district court noted that MRI had not conducted any discovery in
the nineteen months since the case had been filed in November
2011. The district court ruled that the claimed damages were ‚all
speculation‛ and that there was no evidence ‚to support the
claim that somehow Mr. Giles is responsible for the loss of
sales.‛ It therefore granted Giles’s motion for summary
judgment and awarded him attorney fees. MRI appeals those
decisions.

                       I. Actual Damages

¶6    MRI first contends that the district court erred in
determining that MRI had failed to present sufficient evidence of
actual damages caused by Giles’s actions. We review this

2. The parties have also litigated a contentious contract dispute
that was the subject of another appeal. See generally Giles v.
Mineral Resources International, Inc., 2014 UT App 37, 320 P.3d
684.

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            Giles v. Mineral Resources International, Inc.

determination for correctness. Judge v. Saltz Plastic Surgery, PC,
2014 UT App 144, ¶ 13, 330 P.3d 126. To prove a breach of
fiduciary duty claim, a plaintiff must demonstrate that the
defendant owed a duty, the defendant breached the duty, the
plaintiff suffered damages, and the plaintiff’s damages were
actually and proximately caused by the defendant’s breach. See
Christensen & Jensen, PC v. Barrett & Daines, 2008 UT 64, ¶ 23, 194
P.3d 931. The district court did not address the first three
elements, because it determined that no reasonable finder of fact
could conclude that Giles’s actions caused the damages MRI
alleged.

¶7      ‚Proximate cause is an issue of fact.‛ Harline v. Barker, 854
P.2d 595, 600 (Utah Ct. App. 1993). Where summary judgment is
sought due to a lack of evidence of causation, such judgment is
appropriate ‚only if there is no evidence upon which a
reasonable jury could infer causation.‛ Id. However, ‚*o+n
appeal from a district court’s summary judgment ruling, we
view the facts and all reasonable inferences drawn therefrom in
the light most favorable to the nonmoving party.‛ Judge, 2014 UT
App 144, ¶ 13 (emphasis added) (citation and internal quotation
marks omitted). Reasonable inferences must be more than
speculation and conjecture. State v. Cristobal, 2010 UT App 228,
¶ 7, 238 P.3d 1096. ‚It is well established that an inference would
be unreasonable if it would permit a jury to base its verdict on
mere speculation and conjecture.‛ Owen v. Burcham, 599 P.2d
1012, 1019 (Idaho 1979) (citing cases from three federal circuits).
‚While a plaintiff facing summary judgment ‘is entitled to all
favorable inferences, [a plaintiff] is not entitled to build a case on
the gossamer threads of whimsy, speculation and conjecture.’‛
Judge, 2014 UT App 144, ¶ 15 (quoting Ladd v. Bowers Trucking,
Inc., 2011 UT App 355, ¶ 7, 264 P.3d 752). ‚Plaintiffs therefore
must spin together myriad facts into a durable thread that
reasonably connects defendant’s breach to plaintiffs’ injury.‛
Kilpatrick v. Wiley, Rein & Fielding, 909 P.2d 1283, 1292 (Utah Ct.
App. 1996) (emphasis added).

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            Giles v. Mineral Resources International, Inc.

¶8     MRI argued that Giles breached his fiduciary duties in
2008 by helping HCI file the trademark application and that it
was ‚reasonable to conclude‛ that Giles’s actions ‚directly
contributed to creating a conflict between‛ MRI and HCI. MRI
claims that this conflict caused HCI to reduce its orders from
MRI by ten percent between 2010 and 2011 and by
approximately fifty percent between 2011 and 2012. In 2013, after
the onset of this litigation, HCI stopped communicating with
MRI and instead announced plans to buy similar products from
a different company.3 MRI admitted that it was ‚not certain
exactly what portion of . . . lost sales‛ could be attributed to
Giles’s actions but asserted that ‚it is reasonable to conclude that
[those] actions were a substantial factor in losing [HCI] as a
customer, and that [MRI] has suffered damages as a result.‛

¶9      The district court ruled that MRI had not established
sufficient facts to allow a reasonable jury to infer causation.
According to the district court, the causal thread between Giles’s
actions and the alleged damages was ‚all speculation.‛ The court
stated that it could not ‚find any proximate cause here that Mr.
Giles is responsible‛ for MRI’s loss of sales to HCI.4 On appeal,
MRI renews its assertion that Giles ‚assist*ed+ *HCI+ in
breaching their broker agreement with MRI in an apparent
attempt to ‘pirate’ one of MRI’s most valuable trademarks.‛ MRI
argues that the trademark dispute ‚created a reasonable
inference—based on circumstantial evidence—that Giles took
actions during the period of his employment with MRI . . . which
ultimately resulted in MRI losing *HCI+ as a customer.‛

3. MRI claims that this new supplier was ‚affiliated with Giles.‛

4. As previously noted, the district court was also troubled that
MRI had ‚done absolutely nothing in this case as far as
discovery in 19 months.‛

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           Giles v. Mineral Resources International, Inc.

¶ 10 The district court did not err in determining that these
speculative and conclusory claims are insufficient to permit a
reasonable finder of fact to conclude that the alleged breach
actually caused the alleged damages. Viewing the facts in the
light most favorable to MRI, Giles helped HCI file a trademark
application in 2008 that infringed on MRI’s intellectual property.
Giles left MRI in 2010, and any contractual obligation he owed
MRI expired two years later. In 2013, HCI decided to stop
buying MRI’s products after placing progressively smaller
orders with MRI for the two preceding years. MRI has adduced
no evidence linking HCI’s purchasing decisions to Giles’s role in
the trademark application. Instead, MRI speculates that Giles’s
assistance in 2008 may have fueled a slow-burning conflict that
resulted in a loss of business some four years later. These events,
standing alone, are too far removed in type and time for a
reasonable inference to be drawn that one caused the other. It
follows that MRI has not carried its burden on appeal of
demonstrating error in the district court’s determination.

                      II. Nominal Damages

¶ 11 MRI next contends that the district court inappropriately
granted summary judgment, because MRI demonstrated at least
the possibility that it was entitled to pursue an award of nominal
damages. MRI’s argument in support of this contention is
limited to a single sentence:

      Moreover, even if the Court of Appeals were to
      determine that MRI’s claimed damages were too
      speculative to meet the standard necessary to
      prove proximate cause in this case, and
      accordingly, that MRI did not meet its burden to
      avoid summary judgment on the issue of
      compensatory damages, MRI has the right to
      proceed with its claim of breach of fiduciary duty
      against Giles, and to seek a judgment for nominal
      damages.

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            Giles v. Mineral Resources International, Inc.

MRI provides a string citation to five cases but does not analyze
those cases or explain how they are analogous to the instant case.

¶ 12 Rule 24(a)(9) of the Utah Rules of Appellate Procedure
requires an appellant to support its brief with citations to the
authorities relied upon. ‚Case law applying this rule makes clear
that it requires not just bald citation to authority but
development of that authority and reasoned analysis based on
that authority.‛ Hale v. Big H Constr., Inc., 2012 UT App 283, ¶ 51,
288 P.3d 1046 (citation and internal quotation marks omitted).
‚Citing relevant provisions and cases without any meaningful
analysis of this authority falls short.‛ Id. (citation and internal
quotation marks omitted). Cf. Wohnoutka v. Kelley, 2014 UT App
154, ¶ 6, 330 P.3d 762 (‚An appellate court should not be asked
to . . . save an appeal by remedying the deficiencies of an
appellant’s brief.‛). MRI’s single-sentence contention in this
regard inadequately briefs an otherwise interesting question of
law. MRI has failed to carry its burden of persuasion on appeal.
We reject MRI’s nominal-damages argument for that reason
alone.

¶ 13 But even if we were to reach the merits of this claim, it is
far from clear that Utah law allows a plaintiff alleging breach of
fiduciary duty to proceed to trial purely on the issue of nominal
damages. The cases in MRI’s string citation do not address
whether Utah law would permit a breach of fiduciary duty claim
to proceed solely on nominal damages. The first three cases MRI
cites sounded in contract. Foote v. Clark, 962 P.2d 52, 53 (Utah
1998); Turtle Mgmt., Inc. v. Haggis Mgmt., Inc., 645 P.2d 667, 670
(Utah 1982); Snyderville Transp. Co. v. Christiansen, 609 P.2d 939,
940 (Utah 1980). The fourth case involved the tort of trespass.
Boyer v. Boyer, 2008 UT App 138, ¶ 22, 183 P.3d 1068. And the
fifth involved a claim for wrongful use of civil proceedings.
Gilbert v. Ince, 1999 UT 65, ¶ 1, 981 P.2d 841.

¶ 14 Generally, ‚*n+ominal damages are not recoverable in
cases in which actual damages are an element of the cause of

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           Giles v. Mineral Resources International, Inc.

action and [the] plaintiff has failed to prove those damages.‛
1 Stein on Personal Injury Damages Treatise § 1:3 (3d ed. 2014).
‚In such a case, nominal damages are not awarded, because the
plaintiff has failed to prove one essential element in his or her
cause of action,‛ id., namely, that actual damages were
sustained. However, courts in other jurisdictions are split on the
availability of nominal damages in breach of fiduciary duty
cases. Compare, e.g., Chimney Rock Pub. Power Dist. v. Tri-State
Generation & Transmission Ass’n, No. 10-cv-02349-WJM-KMT,
2014 WL 811566, at *5 (D. Colo. March 3, 2014) (district court’s
order explaining that ‚nominal damages for non-economic
harm, where no actual damages exist, are not available for a
breach of fiduciary duty under Colorado law‛), AMERCO v.
Shoen, 907 P.2d 536, 542 (Ariz. Ct. App. 1995) (‚We have no basis
for concluding that, in the absence of actual damage or unjust
enrichment, Nevada would encourage internecine corporate
litigation by permitting a nominal damage claim.‛), John E. King
& Assocs. v. Toler, 675 S.E.2d 492, 496 (Ga. Ct. App. 2009)
(‚*P+laintiffs must still show some injury to prevail on a breach
of fiduciary duty claim.‛), and Nelson v. Alliance Hospitality
Mgmt., LLC, No. 11 CVS 3217, 2013 WL 4506222, at *10 (N.C.
Super. Ct. Aug. 20, 2013) (North Carolina business court’s order
ruling that Georgia law applied and noting that under Georgia
law ‚nominal damages are only available upon a showing of
injury‛ (citations and internal quotation marks omitted)), with,
e.g., Continuum Condo. Ass’n v. Continuum VI, Inc., 549 So. 2d
1125, 1127 (Fla. Dist. Ct. App. 1989) (‚*N+ominal damages can be
awarded where a legal wrong has been proven, but the
aggrieved party suffered no damages . . . .‛), and Brian E. Weiss,
D.D.S., PC v. Miller, 564 N.Y.S.2d 110, 111 (N.Y. App. Div. 1990)
(‚[N]ominal damages will be awarded to a plaintiff where the
law recognizes a technical invasion of his right or a breach of
defendant’s duty, but where the plaintiff has failed to prove
actual damages or a substantial loss or injury to be
compensated.‛). This split may be partly attributable to courts’
occasional use of ‚the term ‘nominal damages’ broadly to
describe situations where . . . plaintiffs experienced actual

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            Giles v. Mineral Resources International, Inc.

damages insusceptible to reasonable calculation.‛ Chimney Rock,
2014 WL 811566, at *5 (citation and internal quotation marks
omitted).

¶ 15 In short, MRI has failed to cite, much less to properly
analyze and explain, any authority demonstrating that it was
entitled to pursue a breach of fiduciary duty claim in the absence
of proof of actual damages. Consequently, MRI has not met its
burden on appeal of showing error in the district court’s ruling
on nominal damages.

                         III. Attorney Fees

¶ 16 MRI next contends that the district court erred in
awarding attorney fees to Giles because there was no contractual
basis for doing so. We review the propriety of an award of
attorney fees for correctness. Jones v. Riche, 2009 UT App 196, ¶ 1,
216 P.3d 357.

¶ 17 ‚As a general rule, attorney fees are recoverable only if
authorized by contract or statute.‛ Hahnel v. Duchesne Land, LC,
2013 UT App 150, ¶ 16, 305 P.3d 208 (citation and internal
quotation marks omitted).5 ‚If the legal right to attorney fees is

5. The Utah Supreme Court has noted that breach of fiduciary
duty is ‚a well-established exception to the American rule
precluding attorney fees in tort cases generally.‛ Campbell v. State
Farm Mut. Auto. Ins. Co., 2001 UT 89, ¶ 122, 65 P.3d 1134, rev’d on
other grounds, 538 U.S. 408 (2003). However, Campbell discussed
whether attorney fees were recoverable by a prevailing plaintiff
who demonstrated a breach of fiduciary duty. Here, neither
party argues that the exception Campbell articulates should apply
to this dispute, in which the prevailing party defeated a breach
of fiduciary duty claim. Given our resolution of the case before
                                                     (continued...)

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           Giles v. Mineral Resources International, Inc.

established by contract, Utah law clearly requires the court to
apply the contractual attorney fee provision and to do so strictly
in accordance with the contract’s terms.‛ Id. (citation and
internal quotation marks omitted). We ‚first look to the writing
alone to determine its meaning and the intent of the contracting
parties.‛ Id. (citation and internal quotation marks omitted).

¶ 18 The non-compete agreement Giles signed provided that
Giles would not compete with MRI for two years following the
termination of his employment and that he would not share or
use MRI’s trade secrets.6 The non-compete agreement also
provided, ‚If any legal action arises under this agreement or

us on other grounds, we need not answer that unbriefed
question.

6. The operative terms of the non-compete agreement stated:
       The undersigned shall not engage in designing,
       manufacturing, and selling of any products or
       services that are similar to our [sic] compete with
       the present products or MRI and those products or
       services under design, production, marketing,
       directly or indirectly for himself or herself or in
       behalf of or in conjunction with, any other person,
       firm, partnership, entity, or corporation, within the
       United States of America, or in the country(ies) or
       Nation(s) where the undersigned is providing a
       service for MRI, for the period of two (2) years
       immediately following the termination of
       contractual or other working arrangements with
       MRI, or the full extent of the law, which ever [sic]
       is applicable for said services, regardless of the
       reason for termination or the party initiating
       termination, and as to information which is
       properly a trade secret of MRI.

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             Giles v. Mineral Resources International, Inc.

relating thereto, . . . [t]he prevailing party shall be entitled to costs
and reasonable attorney’s fees . . . .‛ (Emphases added.) A non-
disclosure agreement that Giles signed the same day contained a
similar provision.

¶ 19 Giles sought a declaratory judgment that certain
provisions within the agreements were unenforceable and thus
invalid—an action that arose from or related to the agreements.
MRI brought two counterclaims against Giles: a claim for breach
of fiduciary duty (the Fiduciary Duty Claim) and a claim for
injunctive relief on the basis of the agreements (the Contract
Claim). The Contract Claim was eventually dismissed without
prejudice, and Giles prevailed on summary judgment on the
Fiduciary Duty Claim. The district court awarded attorney fees
to Giles, prompting MRI to request clarification of the basis for
the award. The court stated that the written agreements allowed
for an award of attorney fees to a prevailing party and that Giles
had prevailed in the lawsuit. MRI argued that Giles had
prevailed only on the Fiduciary Duty Claim and that that claim
was not related to the non-compete and non-disclosure
agreements. The district court disagreed and awarded attorney
fees of $9,547.50 to Giles.

¶ 20 On appeal, MRI asserts that the Fiduciary Duty Claim did
not arise ‚under the non-competition agreement between the
parties and was not related thereto. Rather, it was an action
based strictly on a tort theory . . . .‛ According to MRI, the
Fiduciary Duty Claim was ‚based solely on the
agency/employment relationship of the parties, independent of
the contract between the parties.‛ MRI explains that it did not
‚assert in [the Fiduciary Duty Claim] any type of violation of the
non-compete/non-disclose agreement.‛ Accordingly, MRI argues
that ‚any attorney’s fees expended by Giles in litigating [the
Fiduciary Duty Claim] did not tangibly relate to any breach of
contract claims that may have been originally asserted.‛

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            Giles v. Mineral Resources International, Inc.

¶ 21 But the attorney fees provisions at issue are not limited to
litigation arising from the contract claims. Rather, they are
broadly worded and allow an award of such fees to the
‚prevailing party‛ in ‚any legal action aris[ing] under . . . or
relating‛ to the non-compete and non-disclosure agreements.
Under this broad contractual language, attorney fee awards are
not limited to the specific claims a party prevails upon but
instead may be awarded to the party who prevails in an action
that arises out of or relates to the agreements. Cf. Energy Claims
Ltd. v. Catalyst Inv. Group Ltd., 2014 UT 13, ¶¶ 11, 45, 325 P.3d 70
(holding that a breach of fiduciary duty claim fell within the
scope of a contract’s forum selection clause, which provided that
‚‘[a]ny dispute, controversy or claim arising out of or related to
the agreement shall be brought exclusively before the courts of
England [and] Wales,’‛ because the clause’s language did not
‚support a distinction between contract claims and tort claims‛
(alterations in original)).

¶ 22 We conclude that MRI’s claims constituted a legal action
arising under the agreements. There is no question that Giles’s
suit seeking declaratory relief freeing him from the agreements
is properly understood as a legal action arising under or relating
to those agreements. Nor is there any doubt that the Contract
Claim portion of MRI’s counterclaim was also a legal action
arising under the agreements. To describe the manner in which
Giles ‚misuse*d+ his position of employment and MRI’s
confidential proprietary information or trade secrets . . . for his
own purposes, to the detriment of MRI,‛ the Contract Claim
incorporated by reference all of the material allegations of the
Fiduciary Duty Claim. MRI itself characterized both claims as
mandatory counterclaims, i.e., claims that arose out of the same
transaction or occurrence as Giles’s declaratory-relief action. See
Utah R. Civ. P. 13(a). MRI has not convinced us that the
dismissal of a portion of that counterclaim—the Contract
Claim—could retroactively change the nature of the filing. We
therefore conclude that the Contract Claim and the Fiduciary
Duty Claim were filed together as a ‚legal action aris[ing]

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           Giles v. Mineral Resources International, Inc.

under‛ the agreements ‚or relating thereto‛ and that, as the
prevailing party in the action, Giles was entitled to an award of
attorney fees.

¶ 23 Finally, it is not clear that the district court awarded fees
only for Giles’s defense of the Fiduciary Duty Claim. Although
the Contract Claim was dismissed before the summary judgment
hearing, Giles incurred the expense of his attorney researching,
drafting, and filing a motion to dismiss it. He was therefore
entitled to recover ‚costs and reasonable attorney’s fees‛ for
those actions under the non-compete agreement.7

¶ 24 In light of these considerations and under these facts, MRI
has not carried its burden of demonstrating error in the district
court’s decision to award attorney fees to Giles.

¶ 25 Giles requests an award of his attorney fees incurred on
appeal. Generally, a party that received attorney fees below and
prevails on appeal is entitled to fees reasonably incurred on
appeal. See Giles v. Mineral Resources International, Inc., 2014 UT
App 37, ¶ 12 n.4, 320 P.3d 684. Here, the district court awarded
Giles attorney fees, and we affirm that award and the district
court’s grant of summary judgment. Accordingly, we also
determine that Giles is entitled to an award of his attorney fees
reasonably incurred on appeal. We remand to the district court
with instructions to ascertain the amount of those fees and enter
a judgment awarding them.

                          ____________

7. On appeal, MRI does not challenge the district court’s
calculation of the amount of the attorney fees award.

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