Hogan v. Utah Telecommunications Open Infrastructure Agency et al

Filing 103

MEMORANDUM DECISION AND ORDER denying 88 Defendant's Motion for Summary Judgment and granting in part and denying in part 95 Plaintiff's Amended Motion for Partial Summary Judgment. Signed by Judge Ted Stewart on 4/15/13. (ss)

IN THE UNITED STATES COURT FOR THE DISTRICT OF UTAH
NORTHERN DIVISION

CHRIS HOGAN,
Plaintiff,

MEMORANDUM DECISION AND
ORDER ON CROSS MOTIONS FOR
SUMMARY JUDGMENT

vs.

UTAH TELECOMMUNICATION OPEN
INFRASTRUCTURE AGENCY, AKA
UTOPIA, AND TODD MARRIOTT,
EXECUTIVE DIRECTOR OF UTAH
TELECOMMUNICATION OPEN
INFRASTRUCTURE AGENCY AND DOES
1-5,

Case No. 1:11-CV-64 TS

Defendants.

This matter is before the Court on Defendant Utah Telecommunication Open
Infrastructure Agency’s (“UTOPIA”) Motion for Summary Judgment and Plaintiff Chris Hogan’s
Amended Motion for Partial Summary Judgment. For the reasons set forth below, the Court will
deny Defendant’s Motion and grant in part and deny in part Plaintiff’s Motion.

1

I. FACTUAL BACKGROUND
The following facts are uncontroverted. Immaterial facts and factual averments not
properly supported by the record are omitted.
On or about May 12, 2009, UTOPIA and Plaintiff entered into an Agreement for
Professional Services (the “Agreement”) whereby Hogan would provide services as an
independent contractor to UTOPIA. The term of the Agreement was for two years. UTOPIA’s
duties under the Agreement included payment of $11,500 per month to Hogan and
reimbursement of expenses, upon receipt of invoices from Hogan. To limit such expenses,
UTOPIA leased an apartment in Salt Lake City, Utah, and allowed Hogan use of the apartment
when he was in Utah on UTOPIA business.
In the spring of 2011, Hogan complained to Chris Pantier, UTOPIA’s outside plant
manager and full-time employee, about certain actions of Todd Marriott, UTOPIA’s executive
director. Pantier communicated Hogan’s complaints to Marriott on March 16, 2011. On March
17, 2011, Marriott met with Hogan and confronted him about his conversation with Pantier. A
few hours after the meeting, Marriott and UTOPIA general counsel David Shaw offered Hogan a
termination agreement, which Hogan declined to sign. Marriott informed Hogan that his “dayto-day interaction with staff would immediately cease,” and that Hogan’s only contact with
UTOPIA would be through Marriott.1 Hogan asked for twenty-four hours to propose an
extension of the Agreement, and Marriott agreed.

1

Docket No. 95, at 6, 12; Docket No. 99, at 11, 25.
2

On or shortly after March 17, 2011, Marriott ordered that Hogan be locked out of
UTOPIA’s offices and systems. That order was carried out by March 18, 2011. Marriott denied
that the order was related to Hogan’s decision not to enter into a termination agreement, instead
stating that it “would be customary for somebody with as much information and knowledge as
Mr. Hogan had . . . that [UTOPIA] change the locks and passwords and those things that would
have been necessary to secure a network such as [UTOPIA’s].”2
On March 18, 2011, even though it had not heard anything from Hogan, UTOPIA
terminated the lease on the apartment that it was allowing Hogan to use while he worked for
UTOPIA. On March 21, 2011, UTOPIA hired Gary Jones, at least on a temporary basis, to
perform some of the work that Hogan had been performing. The next day, UTOPIA hired Brett
Iverson to assist Gary Jones in that work.
On March 21, 2011, Hogan served UTOPIA with a notice of claim that included a draft
complaint. The notice of claim also included a claim for breach of contract. After receiving the
notice of claim, UTOPIA, through Marriott, mailed Hogan a notice of expiration on March 24,
2011. The notice of expiration reiterated UTOPIA’s offer of March 17, 2011, to enter into a
termination agreement, but also offered Hogan the option of finishing the term of the Agreement
by working on “Web Portal Design and Implementation” and “Organizational Development.”3
The notice of expiration also stated that, if Hogan did not enter into a termination agreement, he
“will need to communicate with [Marriott] your plan to satisfactorily complete the unfinished

2

Docket No. 95-6, at 46–47.

3

Docket No. 85-5, at 3.
3

Services by May 12, 2011.”4 Finally, the notice of expiration requested the return of a cell phone
and laptop, which UTOPIA claimed were company property.
After March 17, 2011, Hogan did not perform services for UTOPIA and did not submit
invoices for such services to UTOPIA. Instead, on March 21, 2011, Hogan conditioned further
work upon UTOPIA either paying him damages or rehiring him and replacing the executive
director. UTOPIA paid all invoices it received from Hogan. If Hogan had continued to work for
UTOPIA from March 17, 2011, to May 12, 2011, he would have received $23,000.
In a Memorandum Decision and Order,5 this Court dismissed all but Plaintiff’s breach of
contract and breach of the covenant of good faith and fair dealing claims. The parties have filed
cross motions for summary judgment as to these two remaining claims and Plaintiff has moved
for summary judgment on his claim for attorney fees.
II. SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate “if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.”6 In considering
whether genuine issues of material fact exist, the Court determines whether a reasonable jury
could return a verdict for the nonmoving party in the face of all the evidence presented.7 The

4

Id.

5

Docket No. 41.

6

Fed. R. Civ. P. 56(a).

7

See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986); Clifton v. Craig, 924
F.2d 182, 183 (10th Cir. 1991).
4

Court is required to construe all facts and reasonable inferences in the light most favorable to the
nonmoving party.8
III. DISCUSSION
A.

BREACH OF CONTRACT
An action for breach of contract requires proof of four elements: (1) the existence of a

valid contract, (2) performance by the plaintiff, (3) breach of the contract by the defendant, and
(4) resulting damages to the plaintiff.9
The parties agree that the Agreement is a valid contract and that Plaintiff suffered
damages in the amount of $23,000. The disputed elements, therefore, are whether Defendant
breached the Agreement, and whether Plaintiff performed his obligations under the Agreement.
1.

Breach

Plaintiff argues that Defendant breached the Agreement by (1) unilaterally terminating the
Agreement and (2) failing to pay $11,500 per month during April and May of 2011, as required
by the Agreement.
A.

Unilateral termination

The Court finds that Defendant breached the Agreement by unilaterally terminating it. By
March 18, 2011, within one day of Plaintiff’s refusal to sign the termination agreement and
Marriott’s promise to give Hogan twenty-four hours to propose an extension of the Agreement,

8

See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986);
Wright v. Sw. Bell Tel. Co., 925 F.2d 1288, 1292 (10th Cir. 1991).
9

Bair v. Axiom Design, 20 P.3d 388, 392 (Utah 2001) (citing Nuttall v. Berntson, 30 P.2d
738, 741 (Utah 1934)).
5

UTOPIA locked Hogan out of its offices, denied him access to its systems, and terminated the
lease on the apartment UTOPIA had rented for Hogan’s use while working for UTOPIA. By
March 22, 2011, UTOPIA had hired two people to take over at least some of Hogan’s
responsibilities. On March 24, 2011, UTOPIA demanded the return of the cell phone and laptop
UTOPIA had provided Hogan to assist him with his work. In light of these facts, the Court
determines that a reasonable jury would be compelled to conclude that Defendant terminated the
Agreement.
Defendant argues that Plaintiff waived his argument that UTOPIA breached the
Agreement based on the facts recited in the preceding paragraph. According to Defendant,
Plaintiff did this by failing to mention these facts in response to Defendant’s discovery request
that Plaintiff “State all facts in support of the allegation in paragraph 146 of the Complaint that
‘Marriott unilaterally terminated the contract between Hogan and UTOPIA.’”10
In support of this argument, Defendant cites to the Supreme Court’s decision in
Cleveland v. Policy Management Systems Corp.11 In Cleveland, the Court stated that “a party
cannot create a genuine issue of fact sufficient to survive summary judgment simply by
contradicting his or her own previous sworn statement (by, say, filing a later affidavit that flatly
contradicts that party’s earlier sworn deposition) without explaining the contradiction or
attempting to resolve the disparity.”12

10

Docket No. 97, at 8.

11

526 U.S. 795 (1999).

12

Id. at 806.
6

Here, unlike in Cleveland, Hogan is not contradicting his discovery responses. The
theory that UTOPIA breached the Agreement by locking Hogan out of UTOPIA offices and
systems is not inconsistent with the alternative theory—which Hogan did state in his discovery
responses—that UTOPIA breached the Agreement when it sent Hogan the notice of expiration.
Plaintiff has identified several facts supporting his argument, none of which Defendant
disputes.13 Thus, unlike in Cleveland, there is no question that this evidence is “sufficient to
warrant a reasonable juror’s concluding” that Defendant breached the Agreement.14
2.

Failure to pay

Hogan next argues that UTOPIA breached the Agreement by failing to pay Hogan
$11,500 per month during April and May of 2011. Defendant responds that, because Plaintiff
neither worked during those months nor submitted corresponding invoices, it was not obliged to
pay him. To this, Plaintiff retorts that Defendant’s prior breach excused his performance of these
requirements.
Generally speaking, to prevail on a breach of contract claim, a plaintiff must tender his or
her own performance.15 To qualify, the tender “must be complete and unconditional,”16 and it
must not “impose on the other party a new condition or requirement not already imposed by the

13

The Court also notes that the facts supporting this theory of breach were disclosed in
Plaintiff’s Amended Complaint. Thus, Defendant cannot be heard to argue that it is unfairly
surprised or prejudiced by this theory.
14

Id. at 807.

15

Kelley v. Leucadia Fin. Corp., 846 P.2d 1238, 1243 (Utah 1992).

16

Century 21 All W. Real Estate & Inv. v. Webb, 645 P.2d 52, 56 (Utah 1982).
7

contract.”17 But, “[o]ne party cannot by willful act or omission make it impossible or difficult for
the other to perform and then invoke the other’s nonperformance as a defense.”18 In such cases,
the nonbreaching party’s performance is excused.19
In this case, Hogan failed both to perform the work and submit the invoices required by
the Agreement during the months of April and May of 2011. That, however, is not the end of the
matter. Plaintiff has submitted uncontested evidence showing that Defendant, at the very least,
made it difficult for Plaintiff to perform his obligations under the Agreement. Such evidence
includes the fact that UTOPIA locked Hogan out of its offices and systems, terminated the lease
on the apartment it had provided for Hogan’s use while working for UTOPIA, requested the
return of the cell phone and laptop it provided Hogan, and hired two people to perform at least
some of Hogan’s job responsibilities. The Court finds that a reasonable jury could not conclude
that these actions did not make it more difficult for Hogan to perform his responsibilities under
the contract. Accordingly, the contractual requirements that Hogan perform the work and submit
the invoices required by the Agreement are excused.
Defendant vigorously argues that it did not impair Hogan’s ability to perform under the
Agreement. According to UTOPIA, it was willing to allow Plaintiff to work the remainder of his
contractual term with minimum responsibilities that “may have been as simple as communicating

17

Kelley, 846 P.2d at 1243.

18

Cahoon v. Cahoon, 641 P.2d 140, 144 (Utah 1982).

19

See Nielsen v. Chin-Hsien Wang, 613 P.2d 512, 514 (Utah 1980).
8

with UTOPIA’s Executive Director on a daily basis.”20 This easy assignment would not
necessarily have required access to UTOPIA’s systems or offices. Further, although UTOPIA
had recently kicked Hogan out of the apartment UTOPIA had provided him, UTOPIA asserts that
Hogan was free to rent another at UTOPIA’s expense.
The Court is not persuaded by this line of reasoning. As discussed above, UTOPIA
unilaterally terminated the Agreement when it locked Hogan out of UTOPIA’s offices, systems,
and apartment. There can be no doubt that it was difficult or impossible for Hogan to perform
under the Agreement in such a circumstance. UTOPIA recognized this difficulty when it hired
individuals to perform in Hogan’s place. UTOPIA’s belated offer to allow Hogan to complete
his contractual term with UTOPIA by performing simple tasks does not cure its earlier breach.
2.

Performance

UTOPIA argues that Hogan’s breach of contract claim fails because he did not perform
his obligations under the Agreement. As discussed above, however, UTOPIA’s prior breach
excused Plaintiff’s obligations. The Court therefore finds that this factor is satisfied.
As the parties do not dispute the existence of a contract or that Plaintiff incurred $23,000
in damages, and the Court has determined that Defendant breached and Plaintiff’s performance
was excused, the Court will grant summary judgment in favor of Plaintiff and against Defendant
on Plaintiff’s claim for breach of contract.

20

Docket No. 97, at 15.
9

B.

BREACH OF COVENANT OF GOOD FAITH AND FAIR DEALING
Hogan next argues that UTOPIA breached the covenant of good faith and fair dealing

when it locked Hogan out of UTOPIA’s systems and offices, terminated the lease on the
apartment he was using, requested the return of the laptop and cell phone UTOPIA had provided,
and hired others to perform at least some of his responsibilities.
The covenant of good faith and fair dealing inheres in every contract.21 The covenant
includes “an implied duty that contracting parties ‘refrain from actions that will intentionally
‘destroy or injure the other party’s right to receive the fruits of the contract.’”22
In a previous order, this Court stated that “to the extent Defendant[] took actions that
would prevent Plaintiff from performing his obligations under the Agreement, such is sufficient
to maintain an action for breach of the covenant of good faith and fair dealing.”23 As discussed
above, the Court has determined that a reasonable jury would be compelled to conclude that
Defendant took such actions when it removed Plaintiff’s access to UTOPIA’s resources. The
Court will therefore grant summary judgment in favor of Plaintiff on this claim.
C.

ATTORNEY FEES
Plaintiff has moved for summary judgment on his claim that he is entitled to his attorney

fees incurred in litigating this action. “In general, Utah follows the traditional American rule that
attorney fees cannot be recovered by a prevailing party unless a statute or contract authorizes
21

Young Living Essential Oils, LC v. Marin, 266 P.3d 814, 819 (Utah 2011).

22

Id. at 816 (quoting Oakwood Vill. LLC v. Albertsons, Inc., 104 P.3d 1226, 1239 (Utah

23

Docket No. 41, at 18.

2004)).

10

such an award.”24 Here, Hogan does not identify any statute entitling him to fees, and the
Agreement does not contain such a provision. Plaintiff instead relies on an exception to the
American rule stated in Heslop v. Bank of Utah.25
In Heslop, the Utah Supreme Court allowed a former Bank of Utah employee who had
been wrongfully terminated to recover attorney fees despite the absence of a contractual or
statutory provision to that effect.26
Unlike the plaintiff in Heslop, Hogan is not an employee whose claims derive from an
employment contract. As has been explained previously, Hogan was an independent contractor.
Nevertheless, Plaintiff argues that Heslop should be expanded to allow an independent contractor
to recover attorney fees as consequential damages. To the Court’s knowledge, no Utah court has
addressed this precise issue.
At the outset, the Court notes that because no Utah court has recognized an independent
contractor exception to the American rule for attorney fees, the Court is hesitant to recognize

24

Hughes v. Cafferty, 89 P.3d 148, 152 (Utah 2004) (quoting Stewart v. Utah Pub. Serv.
Comm’n, 885 P.2d 759, 782 (Utah 1994)).
25

839 P.2d 828 (Utah 1992).

26

Id. at 841.
11

such an exception.27 Furthermore, it appears that Utah courts are reticent to find that Heslop
applies outside the context of an employment contract.28
Nevertheless, the Court is persuaded that, if a Utah court were to address this argument, it
would determine that the employment contract exception to the American rule articulated in
Heslop should not be extended to independent contractors. In Heslop, the court noted that it had
previously recognized an exception to the American rule allowing a party to recover attorney fees
as consequential damages in first-party insurance claims. According to the court, “[t]he rationale
for allowing attorney fees as recoverable damages within the contemplation of the parties in
first-party insurance claims is also applicable to employment claims. Terminated employees, like
injured insurance claimants, find themselves in a particularly vulnerable position once the
employer breaches the employment agreement.”29
Independent contractors, however, generally do not find themselves in the same
vulnerable circumstances an employee does upon an employer’s breach of an employment
contract. Indeed, this is one reason that employees and independent contractors are not afforded
the same rights of recovery under the law. As the rationale for allowing attorney fees in the
context of first-party insurance and employment claims does not apply to an independent

27

See Aclys Int’l v. Equifax, 438 F. App’x 689, 693 (10th Cir. 2011) (unpublished)
(holding that “as a federal court, we are generally reticent to expand state law without clear
guidance from its highest court” (internal quotation marks and citation omitted)).
28

See Smith v. Grand Canyon Expeditions Co., 84 P.3d 1154, 1162 (Utah 2003) (“[W]e
decline to create an additional exception to accommodate the facts presented in the record before
us.”).
29

Heslop, 839 P.2d at 840.
12

contractor’s claim for breach of contract, the Court finds that a Utah court would not except
independent contractors from the American rule for attorney fees. The Court will therefore deny
Plaintiff’s Motion as it relates to attorney fees.
It is therefore
ORDERED that Defendant’s Motion for Summary Judgment (Docket No. 88) is
DENIED. It is further
ORDERED that Plaintiff’s Amended Motion for Partial Summary Judgment (Docket No.
95) is GRANTED IN PART AND DENIED IN PART.
The Clerk of the Court is directed to enter judgment in favor of Plaintiff and against
Defendant in the amount of $23,000 on Plaintiff’s claims for breach of contract and breach of the
covenant of good faith and fair dealing and close this case forthwith.
DATED April 15, 2013.
BY THE COURT:

_____________________________________
TED STEWART
United States District Judge

13