Slater Numismatics, LLC v. Driving Force, LLC

2012 COA 103, 310 P.3d 185, 2012 WL 2353847, 2012 Colo. App. LEXIS 1001
CourtColorado Court of Appeals
DecidedJune 21, 2012
DocketNo. 11CA0683
StatusPublished
Cited by7 cases

This text of 2012 COA 103 (Slater Numismatics, LLC v. Driving Force, LLC) is published on Counsel Stack Legal Research, covering Colorado Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Slater Numismatics, LLC v. Driving Force, LLC, 2012 COA 103, 310 P.3d 185, 2012 WL 2353847, 2012 Colo. App. LEXIS 1001 (Colo. Ct. App. 2012).

Opinion

Opinion by

Judge TERRY.

€ 1 Plaintiff, Slater Numismaties, LLC, appeals the trial court's summary judgment in favor of defendant, Driving Force, LLC, doing business as ANACS (ANACS). The court granted summary judgment for ANACS on Plaintiffs claims for intentional interference with contractual relations and unjust enrichment. It also entered an order awarding costs to ANACS. We reverse and remand for further proceedings.

T 2 As part of our analysis, we address and clarify the requirements for proof of the tort of intentional interference with contractual relations.

I. Evidence Presented to the Trial Court

113 Because Plaintiff seeks reversal of the summary judgment entered in favor of ANACS, we must review the evidence presented to the trial court in the light most favorable to Plaintiff, the nonmoving party. Rocky Mountain Festivals, Inc. v. Parsons Corp., 242 P.3d 1067, 1074 (Colo.2010). Viewed in that light, the following evidence was presented to the trial court.

T4 Plaintiff was in the business of purchase and sale of rare and modern coins. It had an ongoing relationship with Black Diamond Holding Company, doing business as Independent Coin Grading Company (ICG). After purchasing coins, Plaintiff sent them to ICG to be graded and packaged for sale. After these tasks were completed, ICG forwarded the graded and packaged coins to Plaintiff's eustomer, Cable Shopping Network (Cable), which purchased the coins from Plaintiff. Cable would sell the graded coins through television infomercials and call centers.

15 Initially, ICG did not have a direct business relationship with Cable. However, after learning that Cable was purchasing large quantities of coins from Plaintiff, ICG approached Plaintiff and asked to enter into a referral agreement that would allow ICG to deal directly with Cable.

16 As a result of those discussions, Plaintiff and ICG entered into the Referral Agreement in issue here. That agreement provided that Plaintiff would refer to ICG all of the coin grading and valuing work for Cable. ICG would, "in good faith and with reasonable diligence, complete the work requested by [Cable] and bill [Cable] directly for all work performed." In exchange, ICG would pay Plaintiff each month a referral fee equal to 25% of the net grading fees derived from sales of grading services to Cable. Once the Referral Agreement was in place, Cable began purchasing its own coins and sending them directly to ICG to be graded, and ICG paid the referral fees to Plaintiff.

17 James Taylor was one of ICG's founding members. He worked for ICG from 1998 until 2005, when he left to work as the CEO for ANACS, a different coin grading company. Taylor returned to ICG in the role of Chief Executive Officer in 2007. °

{8 Brett Williams was ICG's Chief Financial Officer for nine years. In that capacity, he was responsible for billing customers for grading services. ‘

19 While Taylor and Williams were employed by ICG, they signed employment agreements that prohibited the disclosure of confidential information that was obtained during the course of their employment at ICG.

1 10 Taylor learned of the Referral Agreement while he served as Chief Executive [188]*188Officer of ICG. Williams also knew about the Referral Agreement, and, as Chief Financial Officer of ICG, he was responsible for calculating the 25% fee due to Plaintiff each month under the Referral Agreement.

11 During Taylor's tenure as Chief Executive Officer of ICG, a dispute arose between ICG's shareholder representative and Taylor. In the wake of this dispute, Taylor began negotiations to purchase ICG. During the negotiations, Taylor discussed his intent to eventually purchase ANACS and merge that company with ICG. In a memorandum to other ICG principals, Taylor wrote: "We discussed purchasing ANACS and merging it, at the right time, with ICG.... This plan will likely include hiring away a number of the most important graders so ANACS [cannot] do its business, thereby being able [sic] to buy ANACS at a considerably lower price." The agreement to purchase ICG eventually collapsed.

{ 12 While CEO of ICG, Taylor recognized that maintaining Cable as a client was critical to ICG's success. Cable's business generated a significant percentage of ICG's revenue, and Taylor referred to Cable as ICG's "golden goose." In a memorandum circulated to ICG employees, Taylor stated, "The [Cable account and one other account] are what pay our salaries.... We cannot lose them or give them any reason for even considering going elsewhere." -

(18 After his attempt to purchase ICG failed, Taylor again left ICG in November 2007. He formed defendant, Driving Force, LLC, which purchased ANACS one month after his 2007 departure. Williams was hired to be the Chief Financial Officer of ANACS on the same day he left his job at ICG.

{14 Taylor and Williams, having taken over operation of ANACS, implemented a plan to render ICG noncompetitive, using similar tactics to those described in Taylor's earlier memorandum about a plan to hire away ANACS's employees. Drawing on his insider knowledge about ICG's operations, Taylor knew that a mass exodus of ICG staff would, as he stated in a memorandum, "leave[ ] [ICG] worthless and immediately unable to function," and ICG "[wJould be out of business in weeks, if not sooner." This was so because there are very few persons in the United States qualified to perform coin grading. With Taylor at the helm, ANACS hired away all but two of ICG's employees.

15 In addition to hiring away ICG's employees, Taylor moved ANACS's offices from Austin, Texas to Englewood, Colorado, two miles away from ICG's offices.

1 16 Because of their knowledge of Cable's purchase of coin grading services from ICG, the principals of ANACS were able to approach Cable with an offer to provide those same services And, because ANACS did not have any obligation to pay the 25% referral fee to Plaintiff, ANACS was able to combine this competitive advantage with its knowledge of ICG's pricing structure to un-dereut ICG's price and acquire Cable's business.

1 17 Within a few months of Taylor's purchase of ANACS, Cable transferred its modern coin grading business from ICG to ANACS.

18 The trial court's order granting summary judgment to ANACS stated:

For the purposes of this motion, the Court assumes that a reasonable jury could find that Mr. Taylor and Mr. Williams intentionally set out to take away ICG's business with [Cable] by hiring away ICG's employees and selling coins to [Cable] for less by avoiding the 25% Referral Fee, all in violation of their contractual and fiduciary duties to ICG.

We agree that this assumption is supported by the evidence, when viewed in the light most favorable to Plaintiff, However, we disagree with the trial court's conclusion that, notwithstanding that evidence, ANACS was entitled to summary judgment.

II. Standard of Review

119 We review de novo a trial court's entry of summary judgment. Aspen Wilderness Workshop, Inc. v. Colorado Water Conservation Bd., 901 P.2d 1251, 1256 (Colo.1995).

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2012 COA 103, 310 P.3d 185, 2012 WL 2353847, 2012 Colo. App. LEXIS 1001, Counsel Stack Legal Research, https://law.counselstack.com/opinion/slater-numismatics-llc-v-driving-force-llc-coloctapp-2012.