Rudder Holding Company et al v. Christensen et al

Filing 50

MEMORANDUM DECISION AND ORDER granting in part and denying in part 30 Motion to Dismiss Certain Parties and Claims; granting 30 Motion for More Definite Statement; denying 45 Motion to Amend/Correct Complaint. Plaintiff must file an Amended Complaint within 28 days or this action will be dismissed. Signed by Judge David Nuffer on 3/27/21 (alt)

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH
RUDDER HOLDING COMPANY, LLC, and
ICEBERG FRANCHISING, LLC,
Plaintiffs,
v.
F. KELLY CHRISTENSEN; ANCHOR
HOLDING COMPANY, LLC; 4C SHAKE
COMPANY, LLC; FOUR C FAMILY
INVESTMENT, LLC, SHAKING IT UP
MANAGEMENT COMPANY, LLC;
MOTOR CITY SHAKE COMPANY, LLC;
OREM SHAKE COMPANY, LLC;
TAYLORSVILLE SHAKE COMPANY,
LLC; CALEY’S CATERING & EVENTS,
LLC; SHAKEMAKERS, LLC;
SHAKEMAKERS II, LLC, ICEBERG
OPPORTUNITIES, LLC, ICEBERG, INC.,
JOLYNN CHRISTENSEN, SHERRI
CROPPER, HOLLIE JOHANSON, and
DEAN LEHWALDER,

MEMORANDUM DECISION AND
ORDER
• GRANTING IN PART AND
DENYING IN PART
[30] DEFENDANTS’ PARTIAL
MOTION TO DISMISS CERTAIN
PARTIES AND CLAIMS IN
PLAINTIFFS’ COMPLAINT OR,
IN THE ALTERNATIVE, A
MOTION FOR A MORE
DEFINITE STATEMENT ON
CERTAIN CLAIMS; AND
• DENYING [45] PLAINTIFFS’
MOTION FOR LEAVE TO FILE
AN AMENDED COMPLAINT

Case No. 2:17-cv-00678-DN
District Judge David Nuffer

Defendants.

Defendants 1 filed the Partial Motion to Dismiss, or in the alternative, a Motion for a
More Definite Statement on Certain Claims (Partial Motion to Dismiss). 2 Defendants seek the

1

F. Kelly Christensen (Kelly Christensen), Anchor Holding Company, LLC (“Anchor”), 4C Shake Company, LLC
(4C Shake), Four C Family Investment, LLC (Four C), Shaking It Up Management Company, LLC (Shaking It Up);
Motor City Shake Company, LLC (Motor City LLC), Orem Shake Company, LLC (Orem LLC), Taylorsville Shake
Company, LLC (Taylorsville LLC), Caley’s Catering & Events, LLC (Caley’s Catering), Shakemakers, LLC
(Shakemakers), Shakemakers II, LLC (Shakemakers II), Iceberg Opportunities, LLC (Iceberg Opportunities),
Iceberg, Inc. (Iceberg Inc.), Jolynn Christensen, Sherri Cropper, Hollie Johanson, and Dean Lehwalder (collectively,
Defendants).

2

Defendants’ Partial Motion to Dismiss Certain Parties and Claims in Plaintiffs’ Complaint or, in the Alternative, a
Motion for a More Definite Statement on Certain Claims, docket no 30, filed August 4, 2017.

dismissal of some of the named Defendants from a majority of the causes of action in Plaintiffs’
Complaint 3 as well as the dismissal of some of Plaintiffs’ causes of action. As an alternative
form of relief for some of these requests, Defendants also seek an order requiring Plaintiffs to
offer a more definite statement regarding certain causes of action. Plaintiffs Rudder Holding
Company, LLC (Rudder), and Iceberg Franchising, Inc. (Iceberg Franchising) (collectively,
Plaintiffs) oppose Defendants’ Partial Motion to Dismiss. 4 Defendants replied in support. 5
After filing their memorandum in opposition to the Partial Motion to Dismiss, and after
Defendants’ Reply was filed, Plaintiffs also filed the Motion for Leave to File an Amended
Complaint (Motion for Leave to Amend) 6 along a proposed amended complaint (“Proposed
Amended Complaint”). 7 Defendants opposed the Motion for Leave to Amend 8 and Plaintiffs
replied in support. 9
Although Plaintiffs requested oral argument on the Motion for Leave to Amend, 10 after
having reviewed the supplied briefing on these two motions it is determined that both motions
can be decided on the supplied briefing. As provided in the following decision, Defendants’

3

Complaint, docket no. 2, filed June 23, 2017.

4

Plaintiffs’ Opposition to Defendants’ Partial Motion to Dismiss Certain Parties and Claims in Plaintiffs’ Complaint
or, in the Alternative, a Motion for a More Definite Statement on Certain Claims (Opposition to Partial Motion to
Dismiss), docket no. 37, filed September 29, 2017.

5

Defendants’ Reply Memorandum in Further Support of Partial Motion to Dismiss Certain Parties and Claims in
Plaintiffs’ Complaint or, in the Alternative, A Motion for a More Definite Statement on Certain Claims,
(Defendants’ Reply) docket no 44, filed November 22, 2017.
6

Memorandum in Support of Motion for Leave to File an Amended Complaint, docket no. 45, filed January 29,
2018.

7

Motion for Leave to Amend, Exhibit 1, Amended Complaint, docket no. 45-1, filed January 29, 2018.

8

Defendants’ Memorandum in Opposition to Plaintiffs’ Motion for Leave to File an Amended Complaint
(Opposition to Motion for Leave to Amend), docket no. 46, filed February 12, 2018.

9

Reply Memorandum in Support of Motion for Leave to File an Amended Complaint, docket no. 47, filed February
26, 2018.

10

Motion for Leave to Amend at 1.

2

Partial Motion to Dismiss is GRANTED IN PART AND DENIED IN PART and Plaintiffs’
Motion for Leave to Amend is DENIED.
Contents
BACKGROUND ............................................................................................................................ 3
APPLICABLE STANDARDS OF REVIEW ................................................................................. 6
DISCUSSION ................................................................................................................................. 7
1.
Dismissal of Some Defendants from Certain Causes of Action is Appropriate
Based on the Identified Paragraphs of the Settlement Agreement. ........................ 9
A.
Plaintiffs’ First Cause of Action for Breach of Contract .......................... 10
B.
Plaintiffs’ Sixth and Seventh Causes of Action for Violation of Federal
and State Misappropriation of Trade Secret Law. .................................... 15
C.
Plaintiffs Eighth and Ninth Claims for False Designation of Origin and
Unfair Competition. .................................................................................. 17
2.
Staying—Rather Than Dismissing—the Causes of Action Subject to Arbitration
is Procedurally Appropriate .................................................................................. 17
3. Because the Parties Have Stipulated that Certain Claims are to be Arbitrated,
Plaintiffs’ Twelfth Cause of Action is No Longer Viable .................................... 19
4. Dismissal of Plaintiffs’ Thirteenth Cause of Action for Civil Conspiracy Is Appropriate
Because It Does Not Include the Required Detailed Allegations of Specific Acts
............................................................................................................................... 20
5.
Plaintiffs Must Provide a More Definite Statement as to the Eleventh Cause of
Action in the Complaint ........................................................................................ 22
6.
Denial of Plaintiffs’ Proposed Amended Complaint is Appropriate Because It
Does Not Address Deficiencies Identified in this Decision.................................. 24
ORDER ......................................................................................................................................... 26
BACKGROUND
Rudder is the holding company that owns and operates the Iceberg Drive Inn restaurant
brand enterprise via franchises created by Iceberg Franchising. 11 Plaintiffs had been in a prior
business agreement with Kelly Christensen and some of the Defendant entities (which were
under his control) regarding franchised Iceberg restaurants. 12
Citing concerns with the operation of those restaurants in violation of their business
agreement, Plaintiffs filed suit in the Utah Third District Court against nearly all of the named

11

Complaint at ¶6.

12

Id. at ¶22.

3

Defendants in this case (Kelly Christensen, Anchor, Shaking it Up, Motor City, Orem LLC,
Taylorsville LLC, Caley’s Catering, Shakemakers, Shakemakers II, LLC and Iceberg
Opportunities). 13 The parties to that state court lawsuit as well as Defendants Iceberg, Inc.
(another entity connected to Kelly Christensen), JoLynn Christensen, and Sherri Cropper entered
into a binding Settlement Agreement 14 on April 12, 2016. 15
At the time that the Settlement Agreement was signed, Defendant Iceberg Opportunities
owned and operated five Iceberg Drive Inn Restaurants at the following locations in Utah:
Taylorsville, Syracuse, Orem, Sandy, and Motor City. 16 The Settlement Agreement defines these
five restaurants collectively as the Christensen Iceberg Stores. 17 The main focus of the
Settlement Agreement was to transition Defendants from owning and operating any stores as
Iceberg stores, save one Iceberg restaurant location at 3906 South 900 East in Salt Lake City,
Utah (the 3900 South Iceberg). 18 The Settlement agreement required all Christensen Iceberg
Stores to be adequately debranded into non-Iceberg restaurants no later than April 17,
2017,which was 365 days after the date the Settlement Agreement had been signed (the
Transition Date). 19
The Settlement Agreement also required that Defendants transfer all ownership and
control of Iceberg intellectual property to Plaintiffs, although the Settlement Agreement included

13

Id. at ¶2.

14

Exhibit to Complaint—Confidential Settlement Agreement Between the Parties (Settlement Agreement), docket
no 23-1, filed under seal June 27, 2017.
15

Complaint at ¶2.

16

Id. at ¶22.

17

Id.

18

Id.at ¶24.

19

Id.

4

a limited license for limited grandfathered activity in connection with the 3900 South Iceberg. 20
Under the terms of the Settlement Agreement, Defendants were prohibited from engaging in any
activities that would confuse customers and the public as to Iceberg franchise operations,
products, stores, and services, with any businesses that Defendants had or would operate (save
for the 3900 South Iceberg location). 21 The Settlement Agreement also provided that Caley’s
Catering was granted a perpetual, nonexclusive, and royalty-free license to sell Iceberg
products. 22
Plaintiffs’ Complaint in this case alleges that the Defendants breached the obligations set
forth in the Settlement Agreement. Based on those allegations, Plaintiffs bring fourteen causes of
action: (1) breach of contract, 23 (2) breach of the covenant of good faith and fair dealing; 24 (3)
accounting pursuant to Settlement Agreement; 25 (4) infringement of trademark; 26 (5)
infringement of trade dress; 27 (6) misappropriation of trade secrets under federal law; 28 (7)
misappropriation of trade secrets under Utah law; 29 (8) false designation of origin and unfair
competition; 30 (9) false advertising in violation of the Lanham Act; 31 (10) violation of the Utah

20

Id.

21

Id. at 23.

22

Settlement Agreement ¶ 9.

23

Complaint at ¶¶ 71-73.

24

Id. at ¶¶ 74-78.

25

Id. at ¶¶ 79-81.

26

Id. at ¶¶ 82-96.

27

Id. at ¶¶ 97-113.

28

Id. at ¶¶ 114-128.

29

Id.

30

Id. at ¶¶ 129-135.

31

Id. at ¶¶ 136-142.

5

Deceptive Trade Practices Act; 32 (11) intentional interference with economic relations; 33 (12)
declaration regarding scope of arbitration clause and order to arbitration pursuant to the
Settlement Agreement and the Federal Arbitration Act; 34 (13) civil conspiracy; 35 and (14)
declaratory judgment. 36
Defendants seek relief on all but the second, third, and fourteenth causes of action. 37 As
to the Motion to Amend. Plaintiffs argue that the Proposed Amended Complaint would render
the Partial Motion to Dismiss moot, as Plaintiffs offer that it sufficiently addresses Defendants’
arguments for dismissal in addition to correcting certain typographical errors. 38
APPLICABLE STANDARDS OF REVIEW
Resolving these two motions requires the application of three legal standards.
A motion to dismiss is brought under Rule 12(b)(6) of the Federal Rules of Civil
Procedure. Defendants are entitled to dismissal under Rule 12(b)(6) when the complaint,
standing alone, is legally insufficient to state a claim for which relief may be granted. 39 When
considering a motion to dismiss for failure to state a claim, the thrust of all well-pleaded facts in
the complaint is presumed, but conclusory allegations need not be considered. A court is not

32

Id. at ¶¶ 143-146.

33

Id. at ¶¶ 147-159.

34

Id. at ¶¶ 160-163.

35

Id. at ¶¶ 164-172.

36

Id. at ¶¶ 173-175.

37

Partial Motion to Dismiss at 1.

38

Motion to Amend at 5.

39

See Sutton v. Utah State Sch. for the Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir. 1999).

6

bound to accept the complaint’s legal conclusions and opinions, even if they are couched as
facts. 40
A motion for a more definite statement is brought under Rule 12(e) of the Federal
Rules of Civil Procedure. Under that rule, [a] party may move for a more definite statement of a
pleading to which a responsive pleading is allowed but which is so vague or ambiguous that the
party cannot reasonably prepare a response.” 41 Although “[m]otions for a more definite
statement are generally disfavored in light of liberal discovery available under the federal . . . the
standard to be applied is whether the claims alleged are sufficiently specific to enable a
responsive pleading in the form of a denial or an admission.” 42
Finally, a motion to amend is brought under Rule 15(a)(2) of the Federal Rules of
Procedure. The rule provides that “[t]he court should freely give leave” to amend pleadings
“when justice so requires.” 43 .“A district court should refuse leave to amend only [upon] a
showing of undue delay, undue prejudice to the opposing party, bad faith or dilatory motive,
failure to cure deficiencies by amendments previously allowed, or futility of amendment.” 44 The
following discussion will apply these guiding standards.
DISCUSSION
Even for a Partial Motion to Dismiss, Defendants’ request is rather involved, given that
multiple Defendants raise issues pertaining to all but three of Plaintiffs’ causes of action. And the
number of parties here is centrally complicating: Plaintiffs maintain that all, or nearly all, of the

40

See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). See also Brown v. Zavaras, 63 F.3d 967, 972 (10th Cir.
1995).
41

Swimwear Sol., Inc. v. Orlando Bathing Suit, LLC, 309 F. Supp. 3d 1022, 1044 (D. Kan. 2018) (internal citations
omitted).

42

Id.

43

Fed. R. Civ. P. 15(a)(2).

44

Wilkerson v. Shinseki, 606 F.3d 1256, 1267 (10th Cir.2010).

7

named Defendants are liable under each cause of action in the Complaint. Defendants seek
dismissal of certain Defendants from specific causes of action because Plaintiffs have failed to
demonstrate that those particular Defendants could be liable under the facts alleged.
Specifically, Defendants seek the dismissal of Defendants Anchor, 4C Shake, Four C,
Shaking it Up, Caley’s Catering, Shakemakers II, and Iceberg Inc. from Plaintiffs’ first cause of
action for breach of contract. 45 Defendants argue that, because that those parties do not owe
obligations under the specific paragraphs of the Settlement Agreement that Plaintiffs allege have
been breached, the breach of contract cause of action can be dismissed against those parties. 46
Defendants also seek to dismiss Defendants Kelley Christensen, Anchor, 4C Shake, Four C,
Shaking it Up, Caley’s Catering, Shakemakers II, and Iceberg Inc., Hollie Johanson, and Dean
Lehwalder, from the sixth, seventh, eighth, and ninth causes of action. 47 As an alternative to
dismissal, Defendants seek more definite statements from the Plaintiffs on these causes of
action. 48
Defendants also seek dismissal of Plaintiffs’ fourth, fifth, tenth, and twelfth causes of
action 49 because the terms of the Settlement Agreement specify that the parties agreed to resolve
these claims through arbitration. 50 As an alternative form of relief, Defendants seek an order
requiring a more definite statement from the Plaintiffs regarding these causes of action. 51

45

Partial Motion to Dismiss at ii.

46

Id.

47

Id. at ii-iv. These causes of action allege misappropriation of trade secrets under Utah law; false designation of
origin and unfair competition; and false advertising in violation of the Lanham Act.
48

Id.

49

These causes of action allege infringement of trademark; infringement of trade dress; violation of the Utah
Deceptive Trade Practices Act; and declaration regarding scope of arbitration clause and order to arbitration
pursuant to the Settlement Agreement and the Federal Arbitration Act.
50

Id. at iii.

51

Id at iv.

8

Defendants also seek an order for the Plaintiffs to provide a more definite statement
regarding the eleventh cause of action for intentional interference with economic relations. 52
Defendants maintain that, in its present form, the eleventh cause of action does not plead a
plausible cause of action against the named defendants. 53
To address these myriad issues in an organized fashion, the discussion will proceed as
follows: 1) determining which Defendants or causes of action should be dismissed; 2)
determining how to address the arbitrability of certain claims; 2) determining which claims
require more definite statements from the Plaintiffs; and 4) whether to permit the filing of the
Proposed Amended Complaint.
1. Dismissal of Some Defendants from Certain Causes of Action is Appropriate Based
on the Identified Paragraphs of the Settlement Agreement.
The operative question in considering the sufficiency of a complaint under Rule 12(b)(6)
is whether the complaint contains enough facts to state a claim for relief that is plausible on its
face. 54 To survive a motion to dismiss under this standard, a plaintiff must “nudge [its] claims
across the line from conceivable to plausible.” 55 In these instances, it is also important to
consider the requirements of Fed. R. Civ. P. 8, which provides that the complaint must contain “
a short and plain statement of the claim showing that the pleader is entitled to relief.” 56 “The
degree of specificity necessary to establish plausibility and fair notice, and therefore the need to
include sufficient factual allegations, depends on context.” 57 In analyzing the sufficiency of the

52

Id.

53

Id.

54

Ridge at Red Hawk, L.L.C. v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007).

55

Id. (internal citation omitted).

56

Fed. R. Civ. P. 8(a)(2).

57

Robbins v. Oklahoma ex rel. Dept. of Human Services, 519 F.3d 1242, 1248 (10th Cir. 2008).

9

complaint, the court is not limited to the four corners of the complaint, but may also consider
documents referred to in the complaint. 58
As explained below, it is appropriate to dismiss some of the named Defendants from
certain causes of action in the Complaint because Plaintiffs have not stated plausible claims
against them, particularly given the obligations detailed in the Settlement Agreement.
A. Plaintiffs’ First Cause of Action for Breach of Contract
Regarding the first cause of action, Plaintiffs claim that the majority of the named
Defendants breached paragraphs 2, 4, 4.b, 4c, 5, 6, 7, 7a, 7b, 7d, 7h, 7i, 7j, 9e, 12,18, and 33 of
the Settlement Agreement. 59 Defendants argue in the Partial Motion to Dismiss that only some of
those Defendants named in the first cause of action are obligated under those paragraphs of the
Settlement Agreement. 60 In support of this argument, Defendants assert that, under Utah law, the
Settlement Agreement is a several contract meaning that certain obligations are owed by some
Defendants, and other obligations are owed by other Defendants. 61 Defendants are correct.
“Whether a contract is joint, joint and several, or several, depends upon the construction
of the language used and the intention of the parties as manifested by the language used. That
language must be followed by the court.” 62 Most contracts bind only those who bargain for
them. 63
As a general rule, where two or more parties to a contract promise the same
performance to the same promisee, each is bound for the whole performance [of
the contract], whether his duty [is expressed as] joint, several, or joint and several.
Unless a contrary intention is manifested, a promise by two or more promisors is
58

Pace v. Swerdlow, 519 F.3d 1067, 1072 (10th Cir. 2008).

59

Complaint at ¶72. The Settlement Agreement is docket no 23-1, filed under seal June 27, 2017.

60

Defendants’ Reply at 3.

61

Id.

62

Fed. Deposit Ins. Corp. v. Bismarck Inv. Corp., 547 P.2d 212, 214 (Utah 1976).

63

Bybee v. Abdulla, 189 P.3d 40, 43 (Utah 2008).

10

presumed to be joint. This is the consistent view of the various treatises on
contract law and the Restatement (Second) of Contracts. A several obligation, by
contrast, has the effect of creating two separate liabilities on a single contract.
Accordingly, when a several obligation is entered into by two or more parties in
one instrument, it is the same as though each has executed separate instruments.
Under these circumstances, each party is bound separately for the performance
which it promises and is not bound jointly with anyone else. Finally, a joint and
several contract is a contract made by the promisee with each promisor and a joint
contract made with all the promisors, so that parties having a joint and several
obligation are bound jointly as one party, and also severally as separate parties at
the same time. 64
Based on that guidance, the Settlement Agreement here is a several contract because the
Settlement Agreement deals with multiple relationships of multiple entities. Although multiple
parties signed the Settlement Agreement, individual paragraphs create separate liabilities for
separate parties. In their first cause of action, Plaintiffs seek to hold certain defendants liable
under paragraphs of the Settlement Agreement that do not impose duties on those defendants.
Each paragraph of the Settlement Agreement identified in Plaintiffs’ first cause of action is
examined below.
Paragraph 2 of the Settlement Agreement addresses the transfer of the Iceberg Trademark
and obligates Iceberg Opportunities to facilitate that transfer. 65 Paragraphs 4 and 5 describe the
operation, repair, and maintenance obligations by Iceberg Opportunities, Motor City LLC,
Taylorsville LLC, and Orem LLC in conjunction with the operation of the Christensen Iceberg
Stores. 66 Therefore, the only Defendants that are liable for breaches of these paragraphs are those
Defendants who are specifically obligated: Defendants Iceberg Opportunities, Motor City LLC,
Taylorsville LLC, and Orem LLC.

64

Tel. Tower LLC v. Century Mortg. LLC, 376 P.3d 333, 343 (Utah Ct. App. 2016) (internal citations and quotations
omitted.)

65

Settlement Agreement at ¶ 2.

66

Id.at ¶¶4-5.

11

Paragraph 7 and its subsections all relate the operation of the 3900 South Iceberg by
Shakemakers and its associated obligations. 67 However, Plaintiffs allege that actions by the
Christensen Iceberg Stores amounted to a breach of this paragraph. 68 It is unclear in the
Complaint how Shakemakers breached its obligations. Absent allegations that Shakemakers
breached its duties under the Settlement Agreement., Defendant Shakemakers must be dismissed
from the first cause of action as presently pleaded in the Complaint.
Paragraph 9(e) of the Settlement Agreement addresses how Caley’s Catering may use the
Iceberg IP. 69 But despite the allegations that Caley’s Catering has breached this paragraph, 70
those allegations are conclusory: nothing in the complaint articulates how Caley’s Catering is
allegedly misusing the Iceberg IP. Therefore, Plaintiffs’ alleged claims against Caley’s Catering
are not plausible on its face and Caley’s Catering must be dismissed from the first cause of
action.
Plaintiffs state that “Provision” 12 of the Settlement Agreement entitle them to an
accounting “concerning all profits, revenues, income, and royalties obtained by Defendants”. 71
But it is unclear what provision of the Settlement Agreement Plaintiffs are referring to because
Paragraph 12 of the Settlement Agreement is a mutual release by all parties regarding any
obligations outside the Agreement. None of the alleged facts in the show how Paragraph 12 was
violated. And because it is unclear which paragraph of the Settlement Agreement contains the

67

Id. at ¶7.

68

Complaint at ¶¶38–55, 57-59, and 60–70.

69

Settlement Agreement at ¶9.

70

Complaint at ¶72.

71

Id.

12

accounting language that Plaintiffs seek to enforce, this claim must be dismissed from the first
cause of action.
Paragraph 18 of the Settlement Agreement prohibits the Christensen Iceberg Stores from
use of the same menus after the Transition Date. 72 But that paragraph also specifies that
Shakemakers and the 3900 South Iceberg enjoy a perpetual right to retain use of the same menus
and menu formats after the Settlement Agreement was signed. 73 If there was a breach of the
identified obligations of this paragraph, only the Christensen Iceberg Stores operated by Iceberg
Opportunities, Motor City LLC, Taylorsville LLC, or Orem LLC would owe duties. The
Complaint is not clear how the other Defendants named under the first cause of action are
obligated under this paragraph.
Paragraph 33 is an attorneys’ fees provision which allows for collection of fees by a
prevailing party. 74 But again, it appears that the only parties that could be held liable for
breaching the identified paragraphs of the Settlement Agreement are Iceberg Opportunities,
Motor City LLC, Taylorsville LLC, or Orem LLC. And so only those Defendants would be
associated with a determination of the collection of attorneys’ fees.
In response to Defendants’ argument regarding this first cause of action, and despite the
clear language of the Settlement Agreement, Plaintiffs argue that Kelly Christensen can still be
liable under this first cause of action because he signed the Settlement Agreement not only
personally but also in a representative capacity for the Defendant businesses and because the
alter ego doctrine provides that owners may be liable for a breach of contract by their business

72

Settlement Agreement at ¶18.

73

Id.

74

Id. at ¶33.

13

entity. 75 These arguments fail. Kelly Christensen’ personal obligations under the Settlement
Agreement are separate from the entity obligations. He signed no guaranty of the entity
obligations.
The Utah case that Plaintiffs cite for the proposition that Kelly Christensen could be held
personally liable based on his signature, Anderson v. Gardner, 76 considered an alleged ambiguity
arising from an individual signing a contract without indicating he was signing for his
employer. 77 “The signature is that of defendant alone, without any indication that he is signing
for any other party or in any other capacity than for himself.” 78 In that instance, the Utah
Supreme Court determined that individual who signed the contract at issue was personally
liable. 79 There is no such ambiguity here. As to each of these business entities, Kelly Christensen
indicated his position as manager or president for each of these entities. 80
And as to the alter ego argument, Plaintiffs have not brought any claim for alter ego in
the Complaint. At most, Plaintiffs have alleged that “[Kelly] Christensen has held and
maintained various key positions of influence, decision making and control over the various
entities[.]” 81 But this is not enough. Under Utah law, the requirements for an alter ego claim are
proof of “such a unity of interest and ownership that the separate personalities of the corporation
... no longer exist[s].” and the demonstration that the “court’s observance of the corporate form”

75

Opposition to Partial Motion to Dismiss at 5-7.

76

647 P.2d 3 (Utah 1982).

77

Id. at 4-5.

78

Id. at 4.

79

Id. at 5.

80

Settlement Agreement at 25-27.

81

Compliant at ¶ 21.

14

would “sanction a fraud, promote injustice, or [cause] an inequitable result” 82. As to each of
these requirements, the factual allegations must be detailed enough to put a defendant on notice
of the claim. 83 Plaintiffs’ allegations that Kelly Christensen has “held key positions of influence”
falls short of the detail required under Utah law.
Therefore, as to the first cause of action for breach of contract, the only appropriately
named Defendants in this cause of action are those that specifically owe obligations under the
identified Paragraphs of the Settlement Agreement: Iceberg Opportunities, Motor City LLC,
Taylorsville LLC, and Orem LLC. The Partial Motion to Dismiss is Granted as to Defendants
Kelly Christensen, Anchor, Four C, Shaking it Up, Caley’s Catering, Shakemakers, Shakemakers
II, and Iceberg, Inc. These Defendants are dismissed from Plaintiffs’ first cause of action without
prejudice. Furthermore, Plaintiffs’ claim of breach of “Provision 12” of the Settlement
Agreement is also dismissed without prejudice.
B. Plaintiffs’ Sixth and Seventh Causes of Action for Violation of Federal and State
Misappropriation of Trade Secret Law.
Plaintiffs’ sixth and seventh cause of action are for the violation of Utah state and federal
trade secret law. 84 Again, however, Plaintiffs’ allegations against certain defendants are not
enough to nudge those claims from being conceivable to plausible.
In support of the claims that Defendants violated Utah and federal trade secret law
Plaintiffs argue that, because Kelley is alleged to have maintained positions of influence over the
Defendant business entities, 85 “Defendants, on information and belief, have disclosed and

82

Prows v. State, 822 P.2d 764, 767 (Utah 1991) (internal citations and quotations omitted).

83

Id.

84

Complaint at ¶¶ 114-128.

85

Opposition to Partial Motion to Dismiss at 6.

15

continue to disclose Iceberg Trade Secrets with their employees who are not Iceberg franchise
employees without the consent of Iceberg.” 86
However, these broad allegations overlook that the Settlement Agreement provides that
Shakemakers was granted a perpetual and royalty free license to use the Iceberg IP. 87 And as set
forth in the Settlement Agreement, Shakemakers continues to run the 3900 South Iceberg. 88
Under the terms of the Settlement Agreement regarding the Iceberg IP, it is neither conceivable
nor plausible that Shakemakers could be liable for a violation of trade secret law. Furthermore,
under the Settlement Agreement, Caley’s Catering was granted a perpetual, nonexclusive, and
royalty-free license to sell Iceberg products. 89
As Defendants point out, 90 naming the majority of the Defendants under these causes of
action is too broad. Considering the aforementioned terms of the Settlement Agreement, any
claim for an alleged breach of trade secret is only applicable to the Christensen Iceberg Stores for
actions after the Transition Date. And as for Defendants Kelly Christensen, Hollie Johanson, and
Dean Lehwalder, Plaintiffs have not pleaded facts that make it clear why these Defendants would
be personally liable for acts by the Christensen Iceberg Stores.
Therefore, Defendants Iceberg Opportunities, Motor City LLC, Taylorsville LLC, and
Orem LLC are the only plausible Defendants under these causes of action. Accordingly, the
Partial Motion to Dismiss is granted as to Defendants Kelly Christensen, Anchor, 4C Shake,
Four C, Shaking it Up, Caley’s Catering, Shakemakers, Shakemakers II, Hollie Johanson, and

86

Complaint at ¶124.

87

Settlement Agreement at ¶ 7

88

Id. at 1

89

Settlement Agreement at ¶9.

90

Partial Motion to Dismiss at 9.

16

Dean Lehwalder. These Defendants are dismissed without prejudice from the sixth and seventh
causes of action for misappropriation of trade secret under Utah and Federal Law.
C. Plaintiffs Eighth and Ninth Claims for False Designation of Origin and Unfair
Competition.
Plaintiffs’ eighth and ninth causes of action are for False Designation of Origin/Unfair
Competition. 91 Again, these causes of action pertain to the operations of the Christensen Iceberg
Stores after the Transition Date as Plaintiffs allege that “continuing to operate [these] previously
legitimate Iceberg licensed stores” after the transition date confuses customers and violates state
and federal law. 92
Once again, the allegations implicate the Christensen Iceberg Stores operated by Iceberg
Opportunities: Motor City LLC, Taylorsville LLC, and Orem LLC. The Complaint is entirely
unclear as to how the other named Defendants can be held liable for any post-Transition Date
activities at the Christensen Iceberg stores. Therefore, the Partial Motion to Dismiss is granted as
to Defendants Kelly Christensen, Anchor, 4C Shake, Four C, Shaking it Up, Caley’s Catering,
Shakemakers, Shakemakers II, Iceberg, Inc. and Dean Lehwalder. These Defendants are
dismissed from these causes of action without prejudice.
2. Staying—Rather Than Dismissing—the Causes of Action Subject to Arbitration is
Procedurally Appropriate
Defendants seek the dismissal of Plaintiffs’ fourth, fifth, and tenth causes of action
because Defendants argue that the Settlement Agreement establishes that these causes of action
must be arbitrated and are therefore subject to dismissal. 93 Plaintiffs do not dispute that these

91

Complaint at ¶¶129-142.

92

See Complaint at ¶130.

93

Partial Motion to Dismiss at 4-6, 9-10.

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causes of action are subject to arbitration as provided in the Settlement Agreement. 94 However,
Plaintiffs argue that dismissal of these causes of action is inappropriate under the Federal
Arbitration Act. 95 Plaintiffs are correct.
According to the FAA,
If any suit or proceeding be brought in any of the courts of the United States upon
any issue referable to arbitration under an agreement in writing for such
arbitration, the court in which such suit is pending, upon being satisfied that the
issue involved in such suit or proceeding is referable to arbitration under such an
agreement, shall on application of one of the parties stay the trial of the action
until such arbitration has been had in accordance with the terms of the agreement,
providing the applicant for the stay is not in default in proceeding with such
arbitration. 96
Defendants’ argument that dismissal or stay is d is misplaced. As explained in another
decision within this district, this course of action is “a judicially-created exception that [allows]
courts to dismiss an action, rather than stay it, where it is clear that the entire controversy will be
resolved by arbitration.” 97 The entire controversy is not at issue here, only certain causes of
action. It is inappropriate to consider dismissal of these claims as a stay is the appropriate
remedy. However, Defendants have not sought that relief here, even in the alternative. Therefore,
Defendants’ motion as to these specific causes of action is denied. A motion to stay or order into
arbitration could be filed.
Furthermore, because these causes of action are subject to arbitration, Defendants’
arguments as to which defendants could be dismissed from these causes of action will not be

94

Opposition to Partial Motion to Dismiss at 7-8.

95

Id.

96

9 U.S.C. § 3

97
Bradford v. Pilot Travel Centers, LLC, No. 2:18-CV-202 TS-DBP, 2018 WL 4082345, at *2 (D. Utah Aug. 27,
2018) (emphasis added).

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considered. As explained below, the Settlement Agreement dictates that such matters are to be
decided by an arbitrator.
3. Because the Parties Have Stipulated that Certain Claims are to be Arbitrated,
Plaintiffs’ Twelfth Cause of Action is No Longer Viable
In the Plaintiffs’ twelfth cause of action, Plaintiffs’ request an order:
[I]nterpreting and enforcing the Settlement Agreement, which order would, inter
alia, declare the powers of the arbitrator, scope of subject matter, procedures,
remedies, enforceability, and other details associated with arbitration, order
compliance and appointment of a binding arbitrator for such matters, and refer all
relevant disputed matters and signatories of the Settlement Agreement as set forth
in this Complaint to arbitration which are required to be arbitrated pursuant to the
Settlement Agreement. 98
Defendants assert that dismissal of Plaintiffs’ twelfth cause of action is appropriate
because the scope of the arbitration should be determined by an arbitrator. 99 In response,
Plaintiffs argue that they may appropriately bring this claim 100 because, pursuant to 9 U.S.C. § 4,
“[a] party aggrieved by the failure, neglect, or refusal of another to arbitrate under a written
agreement for arbitration may petition any United States district court for an order directing that
such arbitration proceed in the manner provided for in such agreement.” 101
Although Plaintiffs are correct that the FAA establishes that Plaintiffs may seek an order
directing that arbitration can proceed, relief beyond that is limited: a “[c]ourt’s role under the
[FAA] is limited to determining: (1) whether a valid agreement to arbitrate exists and, if it does,
(2) whether the agreement encompasses the dispute at issue.” 102 As Defendants point out, these

98

Complaint at ¶161.

99

Partial Motion to Dismiss at 11.

100

Opposition to Partial Motion to Dismiss at 12.

101

9 U.S.C. § 4.

102

Bradford, 2018 WL 4082345, at *1 (citing Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287, 296
(2010)).

19

matters here are undisputed: the parties have acknowledged that the fourth, fifth, and tenth
causes of action are subject to arbitration as provided for in the Settlement Agreement. 103
And in addition to this undisputed scope, the operative language of the Settlement
Agreement establishes that “only the neutral arbitrator shall review and make the substantive
determinations” pertaining to arbitration. As the Tenth Circuit has acknowledged, although
courts can “resolve ‘arbitrability’ issues such as the validity, scope, or enforcement of an
arbitration contract . . . delegation clauses within arbitration contracts can commit the
determination of such issues to an arbitrator.” 104 The aforementioned language of the Settlement
Agreement regarding “substantive determinations” delegates significant authority to the
arbitrator to determine the very issues that Plaintiffs raise in the twelfth cause of action.
The stipulation of the parties here as well as the specific, delegated authority of the
arbitrator obviates the need for Plaintiffs’ requested relief in the twelfth cause of action. As
Defendants have indicated, they will seek to stay the causes of action that the parties have now
acknowledged are to be arbitrated. 105 That procedurally appropriate course of action will be
considered when it is presented, but Plaintiffs’ cause of action in unnecessary and overbroad
given the circumstances and applicable law here. Dismissal of this cause of action with prejudice
is appropriate.
4. Dismissal of Plaintiffs’ Thirteenth Cause of Action for Civil Conspiracy Is Appropriate
Because It Does Not Include the Required Detailed Allegations of Specific Acts
The final cause of cause of action that Defendants move to dismiss is Plaintiffs’ thirteenth
cause of action for civil conspiracy. 106 In order to prove civil conspiracy in Utah, “five elements
103

Settlement Agreement at ¶4.

104

Fedor v. United Healthcare, Inc., 976 F.3d 1100, 1105 (10th Cir. 2020).

105

Defendants’ Reply at 6.

106

Complaint at ¶¶164-172.

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must be shown: ‘(1) a combination of two or more persons, (2) an object to be accomplished, (3)
a meeting of the minds on the object or course of action, (4) one or more unlawful, overt acts,
and (5) damages as a proximate result thereof.’” 107 A complaint must contain facts that show a
meeting of the minds rather than conclusory statements that “simply imply that this element is
satisfied” 108 and must allege “specific overt acts (including when, where, who, what) in which
the . . . defendants participated 109 that demonstrate the existence of an underlying tort. 110
Defendants argue that Plaintiffs’ civil conspiracy cause of action fails because Plaintiffs
“only allege in a conclusory fashion [in paragraphs 168 and 169 of the Complaint] that there was
a ‘meeting of the minds’” and because Plaintiffs “do not state what the supposed unlawful overt
acts were, which, Defendants took them, and when they were taken.” 111 Plaintiffs respond with
the argument that it is not necessary to plead a civil conspiracy claim with particularity and that
their conclusory statements of the elements of civil conspiracy are adequate, particularly since
the cause of action incorporates by reference all preceding paragraphs of the complaint. 112
Granted, because Plaintiffs’ civil conspiracy cause of action incorporates the preceding
paragraphs of the Complaint, Plaintiffs have alleged the existence of an underlying tort. The
eleventh cause of action for intentional interference with economic relations is what appears to
support the civil conspiracy cause of action, and that cause of action (which also incorporates the
paragraphs that precede it) includes allegations of overt acts that were undertaken to interfere
with Plaintiffs’ economic relations.

107

Peterson v. Delta Air Lines, Inc., 42 P.3d 1253, 1257 (Utah Ct. App 2002).

108

See Fid. Nat. Title Ins. Co. v. Worthington, 344 P.3d 156, 161 (Utah Ct. App 2015).

109

Robinson v. Robinson, 368 P.3d 105, 118, (Utah Ct. App 2016) cert. denied, 379 P.3d 1183 (Utah 2016)

110

Puttuck v. Gendron, 199 P.3d 971 (Utah Ct. App 2008).

111

Partial Motion to Dismiss at 12.

112

Complaint at ¶164.

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However, the preceding paragraphs do not include facts that affirmatively demonstrate
that a meeting of the minds between any of the Defendants. All that Plaintiffs offer is the
conclusory statement that a meeting of the minds took place. 113 The Complaint fails to include
the required allegations of specific, overt acts necessary for a claim of civil conspiracy. Under
Utah law, Plaintiffs’ thirteenth cause of action is insufficient. Defendants’ Motion to Dismiss is
therefore granted as to this specific cause of action and the cause of action is dismissed without
prejudice.
5. Plaintiffs Must Provide a More Definite Statement as to
the Eleventh Cause of Action in the Complaint
Defendants request an order that Plaintiffs provide a more definite statement as to
Plaintiffs’ eleventh cause of action for intentional interference with economic relations. 114 In
support of this request, Defendants argue that this cause of is not plausible on its face because the
facts alleged do not relate to all fourteen defendants named in the eleventh cause of action. 115
Plaintiffs respond by offering that the “Complaint is plain and unambiguous as to its allegations”
and that “each defendant named in each cause of action is clearly and unambiguously alleged to
be liable for the respective claim.” 116
Certainly, “because Rule 8 of the Federal Rules of Civil Procedure provides for notice
pleading and requires only a short and plain statement of the pleaders claim, ‘Rule 12(e) motions
are generally disfavored by the courts and are properly granted only when a party is unable to

113

Opposition to Partial Motion to Dismiss at 12; Complaint at ¶168.

114

Partial Motion to Dismiss at 10.

115

Id.

116

Opposition to Partial Motion to Dismiss at 14.

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determine the issues to which a response is required.’” 117 But Fed. R. Civ. R. 12(e) “is designed
to correct pleadings that are unintelligible not merely to correct a claimed lack of detail.” 118
Therefore, “[r]equiring a more definite statement is . . . appropriate when addressing
unintelligible or confusing pleadings.” 119
Here, the thrust of the Complaint is that the Defendants violated the terms of the
Settlement Agreement, in particular as to activities at the Christensen Iceberg Stores after the
Transfer Date. Although it follows that Plaintiffs seek to hold the Defendant entities associated
with Christensen Iceberg Stores accountable for any alleged interference with economic relations
attributable to those post-Transfer Date activities, it remains unclear as to how all fourteen
Defendants named in this cause of action are liable.
As representative examples of this confusion, Defendant Dean Lehwalder is named in
this cause of action. 120 But the only other detail provided in the Complaint about this defendant
is that Dean Lewhalder is a manager or agent of Kelly Christensen and is alleged to have assisted
with Christensen’s “scheme to confuse the public.” 121 Otherwise, the Complaint does not
identify actions that could more specifically link Lehwalder to this cause of action. Defendant
Shakemakers II is listed as a defendant under the eleventh cause of action, 122 but is not
specifically described in the “parties” section of the complaint. 123 Beyond being a signatory to

117

Swig Holding, LLC v. Sodalicious, Inc., 2015 WL 5999896 at *1 (D. Utah Oct. 14, 2015), quoting Creamer v.
Ellis Cnty. Sheriff Dep’t, 2009 WL 484491, at *1 (D. Kan. Feb. 26, 2009).
118

Id.

119

May v. Rottinghaus Co., Inc., 394 F. Supp. 3d 1334, 1338 (D. Kan. 2019).

120

Complaint at 47.

121

Id. at ¶21.

122

Id. at 47.

123

See Complaint at ¶¶6-18.

23

the Settlement Agreement, 124 it is wholly unclear as to what relationship this defendant has to the
Christensen Iceberg Stores.
This sort of confusion justifies an order requiring Plaintiffs to provide a more definite
statement so that all the named Defendants under this cause of action can provide “a responsive
pleading in the form of a denial or admission.” 125 Defendants’ request is granted, and Plaintiffs is
ordered to provide a more definite statement regarding how each of the named Defendants in the
eleventh cause of action are alleged to have intentionally interfered with Plaintiffs’ economic
relations.
6. Denial of Plaintiffs’ Proposed Amended Complaint is Appropriate Because
It Does Not Address Deficiencies Identified in this Decision.
A plaintiff’s “proposed amendment is futile if the complaint, as amended, would be
subject to dismissal.” 126 While the Proposed Amended Complaint does provide additional detail
and allegations regarding Defendants Dean Lehwalder and Hollie Johanson, 127 the Proposed
Amended Complaint still contains many of deficiencies that have been identified in this
memorandum decision which support the determination to dismiss of certain portions of the
Complaint.
For example, the first cause of action in the Proposed Amended Complaint is still brought
against all parties who signed the Settlement Agreement. 128 As detailed earlier in this
memorandum decision, all of these parties cannot be held liable for breaching the identified

124

Settlement Agreement at 27.

125

May, 394 F. Supp. 3d at 1338.

126

Lind v. Aetna Health, Inc., 466 F.3d 1195, 1199 (10th Cir.2006).

127

Proposed Amended Complaint at ¶20.

128

Id. at ¶35.

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paragraphs of the Settlement Agreement when only certain parties owe obligations under those
paragraphs. 129
And as in the original complaint, the Proposed Amended Complaint broadly names the
majority of the Defendants in Plaintiffs’ sixth and seventh cause of action for the violation of
Utah and federal trade secret law. As detailed earlier, given the terms of the Settlement
Agreement, these causes of action may only be brought against Defendants Iceberg
Opportunities, Motor City LLC, Taylorsville LLC, and Orem LLC absent specific allegations
that demonstrate how the additionally named defendants could be liable for violating federal and
state trade secret law.
Finally, the thirteenth cause of action for civil conspiracy in the Proposed Amended
Complaint is just as ambiguous as it was in the original Complaint. The Proposed Complaint
repeats the same error of offering the conclusory allegation that a meeting of the minds took
place and then failing to 130 include the required allegations of specific, overt acts necessary for a
claim of civil conspiracy.
It is evident that the parties would benefit from an Amended Complaint in this action
going forward. But the Proposed Amended complaint does not correct the deficiencies that this
memorandum decision has identified and would be futile in its present form. Plaintiffs’ motion is
therefore denied. However, because of the substantial dismissals which are ordered, the
obviously careless pleading in the Complaint, and the difficulty of progressing in this action with
this Complaint now riddled with dismissals, Plaintiffs must file an amended complaint within 28

129

See Supra 9-16.

130

Proposed Amended Complaint at ¶¶167-169.

25

days or this action will be dismissed. That Amended Complaint may simply restate the surviving
claims or it may restate the surviving claims and also attempt to remedy the failed claims.
ORDER
Based on the foregoing memorandum decision, IT IS HEREBY ORDERED as follows:
Defendants’ Partial Motion to Dismiss Certain Parties and Claims in Plaintiffs’
Complaint or, in the Alternative, a Motion for a More Definite Statement on Certain Claims 131 is
GRANTED IN PART AND DENIED IN PART as follows:
•

Defendants Partial Motion to Dismiss is GRANTED as to dismissal WITHOUT
PREJUDICE of Defendants Kelly Christensen, Anchor, Four C, Shaking it Up,
Caley’s Catering, Shakemakers, Shakemakers II, and Iceberg, Inc from Plaintiffs’
first cause of action.

•

Defendants Partial Motion to Dismiss is GRANTED as to the dismissal of the
portion of the first cause of action that claims a breach of “Provision 12” of the
Settlement Agreement. That claim is also DISMISSED WITHOUT PREJUDICE.

•

Defendants Partial Motion to Dismiss is GRANTED as to the dismissal
WITHOUT PREJUDICE of Defendants Kelly Christensen, Anchor, 4C Shake,
Four C, Shaking it Up, Caley’s Catering, Shakemakers, Shakemakers II, Hollie
Johanson, and Dean Lehwalder. from the sixth and seventh causes of action in
Plaintiffs’ Complaint.

•

Defendants Partial Motion to Dismiss is GRANTED as to the dismissal
WITHOUT PREJUDICE of Defendants Kelly Christensen, Anchor, 4C Shake,

131
Defendants’ Partial Motion to Dismiss Certain Parties and Claims in Plaintiffs’ Complaint or, in the Alternative,
a Motion for a More Definite Statement on Certain Claims, docket no 30, filed August 4, 2017.

26

Four C, Shaking it Up, Caley’s Catering, Shakemakers, Shakemakers II, Iceberg,
Inc. and Dean Lehwalder from the eighth and ninth causes of action in Plaintiffs’
Complaint.
•

Defendants Partial Motion to Dismiss is DENIED as to the fourth, fifth, and tenth
causes of action in Plaintiffs’ Complaint.

•

Defendant’s Motion for a More Definite Statement regarding Plaintiffs’ Eleventh
Cause of Action is GRANTED. Plaintiffs is ORDERED to provide a more
definite statement in accordance with the direction specified in the memorandum
decision.

•

Defendants Partial Motion to Dismiss is GRANTED as to the dismissal WITH
PREJUDICE of the twelfth cause of action in Plaintiffs’ Complaint.

Plaintiffs’ Motion for Leave to File an Amended Complaint132 is DENIED.
IT IS FURTHER ORDERED that Plaintiff must file an Amended Complaint within 28
days or this action will be dismissed.
Signed March 27, 2021
BY THE COURT

________________________________________
David Nuffer
United States District Judge

132
Memorandum in Support of Motion for Leave to File an Amended Complaint, docket no. 45, filed January 29,
2018.

27