SIRQ, Inc. v. Layton Companies, Inc.

2016 UT 30, 379 P.3d 1237, 816 Utah Adv. Rep. 34, 2016 Utah LEXIS 72, 2016 WL 3647799
CourtUtah Supreme Court
DecidedJuly 1, 2016
DocketCase No. 20140136
StatusPublished
Cited by9 cases

This text of 2016 UT 30 (SIRQ, Inc. v. Layton Companies, Inc.) is published on Counsel Stack Legal Research, covering Utah Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
SIRQ, Inc. v. Layton Companies, Inc., 2016 UT 30, 379 P.3d 1237, 816 Utah Adv. Rep. 34, 2016 Utah LEXIS 72, 2016 WL 3647799 (Utah 2016).

Opinion

Associate Chief Justice Lee,

opinion of the Court:

"1 This is a business tort suit between a large construction company and a break-off company founded by a former president of the larger entity. The claimants in the suit are Alan Peterson and SIRQ, Inc. Peterson is a former president of The Layton Companies, Inc. and Layton Construction Co. (Lay-ton). He had a falling out with Layton management in 2002 and later founded SIRQ, a competing construction company.

12 Layton's relationship with SIRQ and Peterson quickly soured. Layton eventually asked applicants for management positions to sign an agreement not to enter into business with SIRQ or Peterson. It also cireulated a memorandum explaining its basis for requesting signatures on that agreement, which made statements that SIRQ and Peterson found objectionable. In time SIRQ and Peterson each sued Layton for intentional interference with economic relations and "false light" invasion of privacy.

13 A theme at trial on these claims was the allegation by Peterson and SIRQ that Layton exhibited a malicious, wrongful intent in its interactions with its former president and the company he founded. That allegation formed a key basis of the claims for tortious interference. Understandably so. At the time of trial *1240 in this case, our law of intentional interference recognized two separate branches of a claim for intentional interference-one based on a showing of improper means and another based on proof of improper purpose. See Leigh Furniture & Carpet Co. v. Isom, 657 P.2d 293, 304 (Utah 1982).

4 SIRQ and Peterson emphasized the allegation of improper purpose throughout trial. From opening statements to direct- and cross-examination of most of the witnesses, counsel drew the jury's attention to Layton's alleged animosity toward Peterson and SIRQ and to its motive of driving them out of business. The point was likewise emphasized in closing argument. And the jury was instructed that it could base a determination of tortious interference on a showing of either improper means or improper purpose.

15 That instruction was correct when it was given. But in the interim, while this case was pending on appeal, we revised the common law of intentional interference with economic relations. In Aldridge v. Johndrow we eliminated the improper purpose branch of the tort of intentional interference with economic relations. 2015 UT 21, 1% 46-64, 345 P.3d 558. In so doing we noted the imprecision and unworkability of a test that opened the door to tort liability for "every angry or malicious action" by a business competitor. Id. T 46. And we emphasized the difficulty that improper purpose liability introduced for those who seek to organize their business activities in a manner aimed at minimizing their exposure under tort law. Id. T 51 (not ing that because "improper-purpose findings are so dependent on fact-finders' personal sympathies, and so insulated from appellate review," it is "impossible for private parties to understand their rights and duties under tortious interference law"). With these and other concerns in mind we conclusively held in Eldridge that "in the absence of any improper means, an improper purpose is not grounds for tortious interference lability" under Utah law. Id. I 70.

16 We have long followed the presumption that an alteration of the common law in one of our opinions applies retroactively to the parties who seek it. See Malan v. Lewis, 693 P.2d 661, 676 (Utah 1984). And that principle leads to a strong corollary-that parties to other cases pending on appeal are also entitled to the benefit of such a change in the law. See Labrum v. Utah State Bd. of Pardons, 870 P.2d 902, 914 (Utah 1993). Appel-lees have not challenged the applicability of this corollary here. We accordingly apply it-proceeding on the premise that the Eldridge standard governs even though that decision was not handed down until after trial, And we reverse and remand for a new trial on the tortious interference claim.

Ti We also reverse and remand on the "false light" invasion of privacy claim. Where such claims are predicated on defamatory speech, the judge plays an important gatek-eeping role-assuring that the jury considers only statements that are capable of defamatory meaning and avoiding the risk of a party being punished for speech that is unpopular but not actionable. We conclude that the judge failed to fulfill this role adequately in this case, and we reverse and remand for a new trial on this claim as well.

I

T8 Layton is one of the largest construction companies in Utah. Until Peterson was promoted to the office of president in 2000, only members of the Layton family had run the company. In time Peterson began to clash with members of the Layton family. The clash came to a head in late 2002. At that time Peterson had an "emotional, highly charged, and personal" falling out with the leadership of Layton. He left and then formed his own rival construction company, SIRQ.

T9 Peterson asked some members of the Layton management team to work for SIRQ. And he used forms and documents he acquired while working at Layton.

10 In response, in mid-2007 Layton began to ask its management level employees and prospective employees to sign a noncom-petition agreement. The agreement forbade Layton employees from working for SIRQ or contracting with SIRQ within two years after leaving Layton. But it had no application to any other construction companies. Employees were free to work for any rival company except SIRQ,

*1241 {11 The noncompetition agreement was presented to all prospective management-ley-el employees. Signing it was a condition of employment. This practice continued from 2007 until the time of trial, almost six years later.

12 When Layton presented the noneom-petition agreement to prospective employees, it also provided a memorandum asserting its grounds for requiring its workers to sign the document. The memorandum included statements allegedly placing SIRQ and Peterson in a defamatory, false light, Layton accused SIRQ and Peterson of engaging in various unsavory practices, for example, and claimed that these practices, "if permitted to continue, would threaten our very existence."

13 Layton also made several other remarks that were critical of SIRQ and Peterson. Layton's president commented, for example, that SIRQ's approach to valuing stock was "inappropriate" and a "farce," and accused SIRQ investors of having "SIRQ blind ness." Other Layton officials criticized SIRQ for "using documents and procedures taken from Layton," and said that SIRQ's stock plan was "not a good plan." And another Layton official told the owner of a local car wash (who had employed SIRQ on a construction job) that SIRQ "wasn't trustworthy," was "dishonest," and "didn't do quality work."

14 Layton also undertook other actions that SIRQ challenged as improper. It filed this lawsuit, which SIRQ challenged as mali-clous and unfounded. It also successfully urged SIRQ's bonding agent to drop SIRQ as a client.

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Cite This Page — Counsel Stack

Bluebook (online)
2016 UT 30, 379 P.3d 1237, 816 Utah Adv. Rep. 34, 2016 Utah LEXIS 72, 2016 WL 3647799, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sirq-inc-v-layton-companies-inc-utah-2016.