CDC Restoration & Construction, LC v. Tradesmen Contractors, LLC

2016 UT App 43, 369 P.3d 452, 807 Utah Adv. Rep. 5, 2016 Utah App. LEXIS 44, 2016 WL 869031
CourtCourt of Appeals of Utah
DecidedMarch 3, 2016
Docket20130097-CA
StatusPublished
Cited by3 cases

This text of 2016 UT App 43 (CDC Restoration & Construction, LC v. Tradesmen Contractors, LLC) is published on Counsel Stack Legal Research, covering Court of Appeals of Utah primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
CDC Restoration & Construction, LC v. Tradesmen Contractors, LLC, 2016 UT App 43, 369 P.3d 452, 807 Utah Adv. Rep. 5, 2016 Utah App. LEXIS 44, 2016 WL 869031 (Utah Ct. App. 2016).

Opinion

*455 Opinion

TOOMEY, Judge:

T1 Tradesmen Contractors, LLC appeals from a jury verdict in favor of CDC Restoration & Construction, LC. The jury found that Tradesmen misappropriated CDC's, information. We affirm.

BACKGROUND 1

12 CDC specializes in concrete repair and coatings. , Between 2008 and 2005, it had a contract to perform conerete repair and restoration work at a refinery owned by Ken-necott Utah Copper Corporation (Kennecott). As part of this arrangement, CDC and Ken-necott entered into a Preferred Provider Agreement (PPA). The PPA was a confidential document that, among other things, set forth the rates for CDC's work, the pricing information for CDC's hourly employees, and for the hourly, daily, weekly, and monthly rates for various pieces of equipment.

{8 Paul Carsey began working at CDC in 1992 and served as a foreman during the time of CDC's work for Kennecott. In the course of his duties, Carsey regularly delivered sealed envelopes that contained confidential information. But, although he was informed that information related to CDC's projects was confidential, Carsey never signed a confidentiality agreement.

T4 At the beginning of January 2006, Car-sey gave Ralph Midgley, CDC's co-owner, two weeks' notice of his intent to resign from CDC. Carsey explained to Midgley that he was "burned out" and "tired of working at Kennecott." He told Midgely of his plan to earn a living by buying, refurbishing, and selling houses instead, Unbeknownst to Midgely, Carsey had already become a co-owner and director of a new competing company, Tradesmen, with Kenneth Allen.

115 Allen was a subcontractor for Kenne-cott who acted as the project supervisor overseeing CDC's work there, In this role, Allen received CDC's invoices for its projects and verified that its rates conformed to those specified in CDC's PPA. Consequently, Allen received and had access to CDC's pricing information. Although Allen had worked as a contractor at Kennecott for twenty-eight years, he met with Carsey and other potential business associates sometime in mid-2005 to discuss forming a company to perform work at Kennecott Allen stopped working at the refinery in December 2005. The same month, he finalized his ownership interest in Tradesmen and instructed another partner not to disclose to Kennecott his status with Tradesmen. 2

T 6 In late 2005, Kemiecott opened a competitive bid process on a project known as E-Bay (the Project) at its refinery. Kennecott invited a pre-bid walkthrough of the Project site on Monday, January 9, 2006. Together, Mldgely and Carsey participated in the walkthrough on behalf of CDC. Tradesmen also had. two representatives participate in the walkthrough When Midgley asked questions about Tradesmen, Carsey responded that he had "never heard of them."

17 After the walkthrough, Midgley and Carsey developed CDC's bid and assessed the equipment needs and the amount of time and labor that would be required to complete the Project. Although Carsey had "a better grasp" on what needed to be done and had expertise in estimating labor and equipment needs, the two "combined [their] knowledge" in "debating out what it took to do [the Project.]." Onee Midgley and Carsey made these calculations, Midgley formulated the bid by taking those figures and entering them into a spreadsheet with the labor and equipment rates, The rates used in the spreadsheet matched the pricing information in CDC's PPA. Before submitting the final bid on Friday, January 18, Midgley increased it after Carsey told Midgley that more labor hours were needed

*456 18 Midgley believed both CDC's PPA and its final bid were confidential, and he shared CDC's labor and equipment. estimates with only Carsey and Kennecott. In addition, Midgley kept the details of CDC's bid in his locked office to prevent someone from having "an advantage [by] trying to underbid" CDC.

T9 Meanwhile, Carsey and Allen were in frequent telephone contact when the two companies were formulatlng their bids. According to a partner at Tradesmen, Carsey gave Allen input on the numbers for Tradesmen's bid the night before bids were due.

10 CDC, Tradesmen, and another company submitted bids for the Project. CDC's bid was the highest at $179,729.82, Tradesmen's was the second highest at $141,575.00, and a third, company's was the lowest. On January 23 2006, Kennecott awarded the Project to Tradesmen. Dan Larsen, who had replaced Allen as the superwsor at Ken-necott, mformed Mldgley that Tradesmen won the. contract because it was "the lowest icompetent bidder" owing to the fact that Carsey worked there. Until this p‘omt Midgley did not know Carsey was involved with Tradesmen.

1 11 CDC brought suit against Tradesmen, Allen, and Carsey (collec’mvely, Defendants), alleging, among other things, misappropriation of trade secrets for improper use of its labor and equipment rates and bid information. The trial court granted summary judgment to Defendants on all claims. On appeal from that order, this court affirmed in part and reversed in part, CDC Restoration & Constr., LC v. Tradesmen Contractors, LLC, 2012 UT App 60, ¶¶ 60-61, 274 P.3d 317. This court affirmed with regard to the misappropriation of labor and equipment pricing information, concluding that these details are not job-specific and "not, as a matter of law, entitled to trade secret protection." Id. TT 27, 28 n, 2. Nevertheless, without opining on the merits of the issue, this court determined that CDC presented enough evidence to create a genuine issue of material fact to preclude summary . judgment regarding CDC's claim for misappropriation of bid information,. Id. ¶¶ 28, 32, 61 & n. 7.

{12 The case proceeded to a jury trial. CDC argued that its labor and equipment estimates for the Project and its total bid were trade secrets. CDC further argued that although Tradesmen never had access CDC's actual bid, Tradesmen 'misappropriated the pricing information and the labor and equipment estimates used to compute CDC's bid. Specifically, CDC argued that Tradesmen inappropriately used Carsey's knowledge of CDC's estimates and Allen's familiarity with CDC's pricing information to formulate Tradesmen's lower bid for the Project,. In contrast, Tradesmen argued it did not misappropriate the bid information because it had no access to CDC's actual bid and because Carsey's general knowledge about estimating labor and equipment needs for projects is not a trade secret.

-T18 At the close of CDC's case-in-chief, Tradesmen moved for a directed verdict, arguing CDC failed to provide any competent evidence showing that its bid information was a trade secret and that Tradesmen misappropriated and used CDC's bid. In opposing the motion, CDC argued the bid was a trade secret because it resulted from a collaborative effort and circumstantial evidence showed Tradesmen used the bid information, The court denied Tradesmen's motion, ruling that enough cireumstantial evidence created a question for the jury on CDC's claim.

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2016 UT App 43, 369 P.3d 452, 807 Utah Adv. Rep. 5, 2016 Utah App. LEXIS 44, 2016 WL 869031, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cdc-restoration-construction-lc-v-tradesmen-contractors-llc-utahctapp-2016.