La Bella Vita v. Shuler ( 2018 )

IN THE COURT OF APPEALS OF THE STATE OF IDAHO
Docket No. 45378
LA BELLA VITA, LLC, an Idaho limited )
liability company, ) Filed: December 31, 2018
)
Plaintiff-Appellant, ) Karel A. Lehrman, Clerk
)
v. ) SUBSTITUTE OPINION
) THE COURT’S PRIOR OPINION
AMANDA SHULER and EIKOVA ) DATED OCTOBER 15, 2018,
SALON AND SPA, LLC, an Idaho limited ) IS HEREBY WITHDRAWN
liability company, )
) THIS IS AN UNPUBLISHED
Defendants-Respondents, ) OPINION AND SHALL NOT
) BE CITED AS AUTHORITY
and )
)
CASSIE MOSER, BRITNEY )
HARRINGTON, KORTNI ELLETT, )
JERA DALLEY, EMILY COFFIN, )
)
Defendants. )
)
Appeal from the District Court of the Sixth Judicial District, State of Idaho,
Bannock County. Hon. Robert C. Naftz, District Judge.
Order granting summary judgment, reversed and case remanded.
David H. Maguire, Pocatello, for appellant.
Racine, Olson, Nye, Budge & Bailey, Chtd.; Lane V. Erickson, Pocatello, for
respondents. Lane V. Erickson argued.
________________________________________________
GUTIERREZ, Judge
This is a misappropriation of trade secrets case arising out of a dispute between
competing businesses that provide spa and salon services. La Bella Vita, LLC (La Bella Vita)
appeals from the district court’s order granting a second summary judgment and amended
judgment awarding attorney fees in favor of the Respondents. For the reasons set forth below,
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the order granting Respondents’ second motion for summary judgment is reversed and the case is
remanded.
I.
FACTUAL AND PROCEDURAL BACKGROUND
La Bella Vita brought action against Amanda Shuler, a former employee, and her newly
formed business alleging Shuler took confidential client information to create and promote her
new business, Eikova Salon and Spa, LLC (Eikova). Specifically, La Bella Vita, which is solely
owned by Candy Barnard-Davidson (Davidson), filed a complaint against Shuler, Eikova, and
other former employees alleging the employees took La Bella Vita’s confidential client
information to create and promote Eikova. Through the course of the proceedings, all of the
defendants were dismissed except Shuler and Eikova (hereinafter collectively referred to as
“Respondents”). La Bella Vita also voluntarily dismissed several claims except those for breach
of a confidentiality agreement and a violation of the Idaho Trade Secrets Act, Idaho Code § 48-
801, et seq. (“ITSA”).
Respondents filed a motion for summary judgment, which was granted by the district
court. Attorney fees and costs were awarded to Respondents. La Bella Vita’s motion for
reconsideration was denied, and the case was dismissed. La Bella Vita appealed to the Idaho
Supreme Court. La Bella Vita, LLC v. Shuler, 158 Idaho 799, 353 P.3d 420 (2015). The Court
found there were three disputed issues of material fact regarding the breach of confidentiality and
trade secret claims. Id. at 808, 353 P.3d at 429. It reversed the district court’s grant of summary
judgment, vacated the award of costs and fees, and remanded the case for further proceedings.
Id. at 817, 353 P.3d at 438.
Following the remand, the Respondents produced new evidence and filed a second
motion for summary judgment. The district court heard arguments and granted the second
summary judgment motion, denied La Bella Vita’s motion for reconsideration, and also entered
an award of attorney fees and costs in favor of Respondents. La Bella Vita timely appeals.
II.
STANDARD OF REVIEW
On appeal, we exercise free review in determining whether a genuine issue of material
fact exists and whether the moving party is entitled to judgment as a matter of law. Edwards v.
Conchemco, Inc., 111 Idaho 851, 852, 727 P.2d 1279, 1280 (Ct. App. 1986). Summary
judgment is proper if the pleadings, depositions, and admissions on file, together with the
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affidavits, if any, show that there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law. Idaho Rule of Civil Procedure 56(c). The
movant has the burden of showing that no genuine issues of material fact exist. Stoddart v.
Pocatello Sch. Dist. No. 25, 149 Idaho 679, 683, 239 P.3d 784, 788 (2010). The burden may be
met by establishing the absence of evidence on an element that the nonmoving party will be
required to prove at trial. Dunnick v. Elder, 126 Idaho 308, 311, 882 P.2d 475, 478 (Ct. App.
1994). Such an absence of evidence may be established either by an affirmative showing with
the moving party’s own evidence or by a review of all the nonmoving party’s evidence and the
contention that such proof of an element is lacking. Heath v. Honker’s Mini-Mart, Inc., 134
Idaho 711, 712, 8 P.3d 1254, 1255 (Ct. App. 2000). Once such an absence of evidence has been
established, the burden then shifts to the party opposing the motion to show, via further
depositions, discovery responses or affidavits, that there is indeed a genuine issue for trial or to
offer a valid justification for the failure to do so under I.R.C.P. 56(d). Sanders v. Kuna Joint
Sch. Dist., 125 Idaho 872, 874, 876 P.2d 154, 156 (Ct. App. 1994). Disputed facts and
reasonable inferences are construed in favor of the nonmoving party. Castorena v. Gen. Elec.,
149 Idaho 609, 613, 238 P.3d 209, 213 (2010). This Court freely reviews issues of law. Cole v.
Kunzler, 115 Idaho 552, 555, 768 P.2d 815, 818 (Ct. App. 1989).
III.
ANALYSIS
A. Granting of Second Motion for Summary Judgment
La Bella Vita asks this Court to overturn the granting of Respondents’ second motion for
summary judgment and remand this case back to the district court. “The burden of establishing
the absence of a genuine issue of material fact is on the moving party,” and this Court “will
construe the record in the light most favorable to the party opposing the motion for summary
judgment, drawing all reasonable inferences in that party’s favor.” Wesco Autobody Supply, Inc.
v. Ernest, 149 Idaho 881, 890, 243 P.3d 1069, 1078 (2010). Given these standards, summary
judgment is improper “if reasonable persons could reach differing conclusions or draw
conflicting inferences from the evidence presented.” McPheters v. Maile, 138 Idaho 391, 394,
64 P.3d 317, 320 (2003). However, a “mere scintilla of evidence or only slight doubt as to the
facts is not sufficient to create a genuine issue of material fact for the purposes of summary
judgment.” Van v. Portneuf Med. Ctr., 147 Idaho 552, 556, 212 P.3d 982, 986 (2009).
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On the first appeal, the Idaho Supreme Court found there were genuine issues of material
fact regarding the breach of confidentiality and trade secret claims specifically holding:
Based upon a thorough review of the record, there are three genuine
disputes of material fact which render this case inappropriate for summary
adjudication. First, there is a dispute surrounding the “baby shower list,”
specifically whether Davidson authorized the use and release of La Bella Vita’s
official client list in generating or supplementing the invitation list for the baby
shower being thrown in Shuler’s honor. Second, there is a dispute about La Bella
Vita’s business practices and whether these practices compromised the
confidentiality of its official client list and other client-related information. Third,
there is a dispute regarding whether Shuler actually took and used any
confidential information in the creation and promotion of Eikova.
La Bella Vita, LLC, 158 Idaho at 808, 353 P.3d at 429.
On remand, Respondents filed a second motion for summary judgment. In support
thereof, Respondents filed a written brief and an affidavit of Shuler with attached exhibits.
Included in the exhibits were photos taken during the baby shower and the original baby shower
list. Respondents relied on the new evidence to support their position that the baby shower list
did not contain confidential or protected information and therefore could not be the basis for a
trade secret violation. The affidavit in support of the second motion for summary judgment
asserts that the photos establish Davidson was present at the baby shower where the baby shower
list containing client contact information was being used openly and publicly by nonemployees
to record information about the gifts being received by Shuler.
La Bella Vita’s position on appeal is that the new evidence submitted by Respondents,
including the baby shower list and photographs from the baby shower, does not change the status
of this case. La Bella Vita contends that genuine issues of material fact as set forth by the
Supreme Court still exist and that summary judgment is improper. We agree.
In order to prevail in a claim brought under the ITSA, “[a] plaintiff must show that a
trade secret actually existed.” Basic Am., Inc. v. Shatila, 133 Idaho 726, 734, 992 P.2d 175, 183
(1999); see also I.C. § 48-801. “Without a proven trade secret there can be no misappropriation,
even if the defendants’ action was wrongful.” Basic Am., 133 Idaho at 734, 992 P.2d at 183(quoting Electro-Craft Corp. v. Controlled Motion, Inc., 332 N.W.2d 890, 897 (Minn. 1983)).
ITSA defines “trade secret” as follows:
“Trade secret” means information, including a formula, pattern,
compilation, program, computer program, device, method, technique, or process,
that:
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(a) Derives independent economic value, actual or potential, from not
being generally known to, and not being readily ascertainable by proper means
by, other persons who can obtain economic value from its disclosure or use; and
(b) Is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy.
I.C. § 48-801(5). Factors that are to be considered in determining whether information qualifies
as a trade secret include:
(1) the extent to which the information is known outside [the plaintiff’s] business;
(2) the extent to which it is known by employees and others involved in the
business; (3) the extent of measures taken by him to guard the secrecy of the
information; (4) the value of the information to him and his competitors; (5) the
amount of effort or money expended by him in developing the information; and
(6) the ease or difficulty with which the information could be properly acquired or
duplicated by others.
Basic Am., 133 Idaho at 735, 992 P.2d at 184 (quoting Restatement of Torts § 757, comment b
(1939)).
La Bella Vita relies on Davidson’s affidavit, filed with the first motion for summary
judgment, in which she states she did not authorize the disclosure of confidential information and
that as part of Shuler’s duties as manager, she was trained to ensure confidential information was
not disclosed. Neither the baby shower photos nor baby shower list refute this assertion, which
was one of the genuine issues of material fact specifically identified by the Idaho Supreme Court.
There still remains a direct conflict between Shuler’s affidavit in support of the second motion
for summary judgment where she states, in part, that Davidson authorized the use of the client
information to create the baby shower list and Davidson’s affidavit filed in response to the first
motion for summary judgment where she specifically denied this. In effect, Shuler’s affidavit in
support of the second motion for summary judgment declares the same thing she stated in
support of the first motion for summary judgment, i.e., that Davidson authorized the use. The
only difference is that on the second motion, Shuler attaches the baby shower list and pictures in
an effort to dispute Davidson’s explicit denial. The baby shower list and photographs from the
baby shower fail to answer critical questions, such as whether Davidson saw the list at the
shower, whether she would have recognized it as her client list, and whether she authorized it.
Shuler contends her statement in her affidavit that she knew everyone that was included on the
Baby Shower List is undisputed. However, this contention, even if undisputed as she asserts,
does not resolve whether she retrieved the contact information for La Bella Vita without
authorization from Davidson, which was one of the genuine issues of material fact set forth by
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the Idaho Supreme Court on the first appeal. As a result, there remains a genuine issue of
material fact as to whether Davidson authorized the use and release of La Bella Vita’s official
client list in generating or supplementing the invitation list for the baby shower being thrown in
Shuler’s honor.
Second, the baby shower list does not account for at least four people who were not
included on the baby shower list but were solicited by Shuler when she left to open Eikova. The
district court does not appear to have taken into consideration the affidavits of these four
individuals, all of which state that the women had given their personal information to La Bella
Vita while clients there, that they did not give this information to anyone who left La Bella Vita
to go work for Eikova, and that they were subsequently contacted by representatives from
Eikova to follow them to their new location. One of the affidavits indicates that the client was
contacted by Eikova letting her know that an appointment she had made at La Bella Vita had
been moved to Eikova. La Bella Vita also relies on a witness’s affidavit testimony that, as an
employee of Eikova, she was given the baby shower list to input into the Eikova computer.
La Bella Vita correctly contends such evidence creates questions of fact as to whether Shuler
actually took and used any confidential information in the creation and promotion of Eikova,
which was another genuine issue of material fact specifically identified by the Idaho Supreme
Court.
While the district court correctly stated that La Bella Vita did not present any new
evidence or affidavits in the response to Respondents’ second motion for summary judgment, it
noted that La Bella Vita directed the court to Jera Dalley’s deposition and Davidson’s affidavit
that she filed in response to Respondents’ first motion for summary judgment, which was in the
record. Construing the record in the light most favorable to La Bella Vita, we conclude La Bella
Vita met its burden of setting forth sufficient evidence showing genuine issues of material fact as
set forth by the Idaho Supreme Court still exist, which render the granting of the second motion
for summary judgment improper. Consequently, the order of the district court granting
Respondents’ second motion for summary judgment is reversed and the case is remanded.
B. Attorney Fees on Appeal
Both parties requested attorney fees on appeal. This Court awarded attorney fees to
La Bella Vita pursuant to Idaho Code § 12-120(3), which allows for the recovery of attorney fees
by the prevailing party in a civil action on any commercial transaction. Respondents, in their
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petition for rehearing, assert that, based upon recent decisions of the Idaho Supreme Court, it was
improper to award attorney fees on appeal to La Bella Vita because the case was also remanded.
In Portfolio Recovery Assocs., LLC. v. MacDonald, 162 Idaho 228, 395 P.3d 1261(2017), a party appealed the district court’s decision upholding the magistrate court’s order
granting summary judgment and sought an award of attorney fees under I.C. § 12-120. Portfolio
Recovery, 162 Idaho at 236, 395 P.3d at 1269. The Idaho Supreme Court ruled in favor of the
appellant and reversed the grant of summary judgment; however, it held an award of attorney
fees was improper because the case had not been resolved, and therefore there was no prevailing
party. Id. However, it noted that if the appellant was ultimately successful on remand that an
award for attorney fees in connection with the appeal would be proper. Id.
Similar to Portfolio Recovery Associates, the Idaho Supreme Court declined to award
attorney fees on appeal in MFG Fin., Inc. v. Vigos, 163 Idaho 252, 409 P.3d 832 (2018). In
MFG Fin., the Idaho Supreme Court affirmed the district court’s reversal of the magistrate
court’s grant of summary judgment. Id. at 256-57, 409 P.3d at 836-37. While both parties
requested attorney fees on appeal, the Idaho Supreme Court declined to award attorney fees
because it concluded the case had not been resolved so there was no prevailing party. Id.
Based on these holdings, it is improper to award attorney fees at this time. While
La Bella Vita was successful in this Court’s ruling to reverse the district court’s decision to grant
summary judgment in favor of Respondents, the case has not been resolved. However, if Bella
Vita ultimately prevails on remand the district court may properly award attorney fees in
connection with this appeal.
IV.
CONCLUSION
Because genuine issues of material fact, as set forth by the Idaho Supreme Court, still
exist, the district court erred in granting Respondents’ second motion for summary judgment.
Accordingly, the order of the district court is reversed and the case is remanded. We decline to
award attorney fees to either party. Costs to La Bella Vita.
Judge HUSKEY and Judge LORELLO CONCUR.
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