UHLIG LLC v. Shirley et al
ORDER denying 1005 Motion for Constructive Trust and Accounting. Signed by Honorable J Michelle Childs on 7/9/12.(awil)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
JOHN ADAM SHIRLEY, PRISM
CONTENT SOLUTIONS, LLC,
Civil Action No. 6:08-cv-01208-JMC
OPINION AND ORDER
This matter is currently before the court on Plaintiff Uhlig, LLC’s (“Uhlig”) Motion for
Constructive Trust and an Accounting [Doc. 1005]. Having carefully considered this motion, the
record in this case, and the applicable law, the court denies Uhlig’s request for the imposition of a
constructive trust and for an accounting of assets.
FACTUAL AND PROCEDURAL BACKGROUND
Uhlig is in the business of designing and creating newsletters for residents of multi-unit
residential and apartment complexes and franchise businesses throughout the United States. On
February 29, 2008, Uhlig acquired substantially all of the assets of Cox CustomMedia, Inc. (“CCM”)
and CCM’s corporate parent, Cox Newspapers, Inc. Prior to Uhlig’s acquisition of CCM, Shirley
was employed by CCM as its Vice President and as CCM’s highest paid full-time employee. As a
result of the acquisition, CCM ceased all active operations but agreed to retain all employees,
including Shirley, for a period of up to four months to permit the orderly transition of its accounts
to Uhlig. At the beginning of the transition period, Shirley continued acting as the Vice President,
with access to all CCM information. However, Shirley abruptly resigned in March 2008 and began
a competing business, Defendant Prism Content Solutions, LLC. Shortly after Shirley’s resignation,
Uhlig discovered that Shirley had copied certain customer information from company computer files.
On April 3, 2008, Uhlig filed suit against Defendants, alleging that Shirley was using trade
secrets and confidential information of CCM to solicit CCM’s customers and unfairly compete
against Uhlig. Uhlig asserted, inter alia, causes of action for misappropriation of trade secrets,
breach of employment agreement, tortious interference with employment agreements, breach of
fiduciary duty and/or duty of loyalty, aiding and abetting breach of fiduciary duty and/or duty of
loyalty, and tortious interference with prospective contractual relationships.1
The matter was tried by jury in December 2011. The jury returned a verdict in favor of Uhlig
on all claims and awarded damages. Uhlig filed the instant post-trial motion as a means to ensure
that Defendants maintain adequate resources to satisfy the damages award rendered by the jury.
Uhlig’s Request for an Accounting
An accounting is an equitable remedy “designed to prevent unjust enrichment by disclosing
and requiring the relinquishment of profits received as the result of a breach of a confidential or
fiduciary duty.” Rogers v. Salisbury Brick Corp., 299 S.C. 141, 144, 382 S.E.2d 915, 917 (1989).
It is a remedy frequently used “(1) in actions involving long and complicated accounts where it
would not be practicable for a jury to comprehend the issues and correctly make adjustment, and (2)
when there is a need for a discovery.” Id. Generally, “[a]n accounting is not available in an action
Uhlig originally asserted several other causes of action against Defendants and various
third-parties. Prior to trial, the court disposed of some claims on the parties’ respective summary
judgment motions. Uhlig also withdrew claims against all other defendants prior to trial and
submission of the matter to the jury.
where the amount due is readily ascertainable.” 1 AM . JUR. 2D Accounts and Accounting § 54. To
prevail on a claim for an accounting, a plaintiff must demonstrate “the absence of an adequate
remedy at law” May v. Peninger, No. 2:07–cv–00864–CWH, 2008 WL 509470, at *12 (D.S.C.
February 22, 2008).
Uhlig requests that the court order an accounting of Defendants’ revenues and assets as a
remedy for Defendants’ breach of trust and misappropriation of trade secrets and confidential
information. Uhlig specifically asks the court to: 1) appoint a neutral accountant to perform the
accounting, at the expense of Defendants; 2) order Defendants to disclose all of their financial
information from March 2010 to the present, with mandatory bi-monthly supplementation; and 3)
require the accountant to submit a written report to Uhlig and the court detailing the financial
information disclosed by Defendants, with monthly supplementation. Uhlig contends the need for
an accounting is especially important here to ensure that Defendants are not further unjustly enriched
by their wrongful actions. Additionally, Uhlig complains that Defendant Shirley has not disclosed
any personal financial information in this litigation and Defendant Prism has only disclosed financial
information through December 2010.
The court finds that Uhlig has failed to demonstrate that an accounting is appropriate under
the circumstances of this case. First, Uhlig has already obtained an adequate remedy at law through
the jury’s award of monetary damages as a result of Defendants’ wrongful conduct. Additionally,
as demonstrated by the expert testimony presented at trial, Uhlig was able to ascertain and present
evidence of the amount of its loss. Upon review of Uhlig’s memoranda in support of this motion,
it appears that the primary purpose of Uhlig’s request for an accounting at this point in the litigation
is simply to obtain additional discovery which was previously disallowed by the court.
disclosure of additional financial information from Defendants would not aid in determining the
amount of damages suffered by Uhlig because the jury has already made that determination.
Accordingly, because the purpose of an accounting is to determine the amount due to the aggrieved
party, an accounting of assets would be improper here.
Uhlig’s Request for a Constructive Trust
A constructive trust is a flexible remedy which may be enforced in the equitable discretion
of the court to prevent unjust enrichment. Hale v. Finn, 388 S.C. 79, 694 S.E.2d 51, 90 (Ct. App.
2010). Such a trust is formed “entirely by operation of law without reference to any actual or
supposed intentions of creating a trust." SSI Med. Servs. v. Cox, 301 S.C. 493, 500, 392 S.E.2d 789,
793 (1990). It "arises whenever a party has obtained money which does not equitably belong to him
and which he cannot in good conscience retain or withhold from another who is beneficially entitled
to it as where money has been . . . acquired through a breach of trust or the violation of a fiduciary
duty." Id. at 500, 392 S.E.2d at 793-94. It is essential that the property subject to the trust, or the
trust res, be ascertainable and sufficiently identifiable. 76 AM . JUR. 2D Trusts § 175.
Uhlig argues that it is necessary for this court to impose a constructive trust on Defendants'
revenues and assets to prevent Defendants from dissipating their assets prior to satisfying the damage
award rendered in this case. Uhlig asserts that it would be inequitable and unjust to allow
Defendants to retain any ongoing benefit from their unlawful conduct. Uhlig further acknowledges
that it seeks the constructive trust in an effort to conserve Defendants’ assets for the satisfaction of
the judgment rendered in this case. Uhlig asks this court to 1) impose a constructive trust on all of
Defendants’ assets and revenues, regardless of whether such assets or revenues include or are related
to the misconduct at issue in this case, and require Defendants to obtain court approval for any
expenditure in excess of two thousand dollars; 2) appoint an accountant to oversee the constructive
trust, at the expense of Defendants; and 3) require that all funds held in the trust be paid to Uhlig on
a monthly basis to satisfy the judgment.
Here, the jury found Defendants liable for a breach of trust and that Defendants have
wrongfully obtained the benefit of information belonging to Uhlig. However, Uhlig has obtained
redress for their loss in the form of money damages. Although the award of monetary damages does
not preclude the imposition of a constructive trust, Uhlig has not identified any particular fund or
property to which the constructive trust should apply. Instead, Uhlig seeks a very broad constructive
trust upon all of Defendants’ assets and revenues. Additionally, while the court does posses broad
discretion in the enforcement of a judgment, a constructive trust is not the appropriate method for
enforcing the judgment rendered in this case. See Fed. R. Civ. P. 69(a) (providing that a "money
judgment is enforced by a writ of execution, unless the court directs otherwise") (emphasis added).
Therefore, the court does not find it appropriate to impose a constructive trust in this case.
For the reasons set forth above, Plaintiff Uhlig, LLC’s Motion for Constructive Trust and
Accounting [Doc. 1005] is DENIED.
IT IS SO ORDERED.
United States District Judge
July 9, 2012
Greenville, South Carolina
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