Heartwood Home v. Huber , 2020 UT App 13 ( 2020 )

2020 UT App 13THE UTAH COURT OF APPEALS
HEARTWOOD HOME HEALTH & HOSPICE LLC,
Appellant,
v.
RITA HUBER AND GLENNA MOLYNEUX,
Appellees.
Opinion
No. 20170221-CA
Filed January 24, 2020
Third District Court, Salt Lake Department
The Honorable John Paul Kennedy
No. 120907379
Gary R. Guelker and Janet I. Jenson, Attorneys
for Appellant
Robert H. Wilde and Michael S. Wilde, Attorneys
for Appellees
JUDGE GREGORY K. ORME authored this Opinion, in which
JUDGES DAVID N. MORTENSEN and DIANA HAGEN concurred.
ORME, Judge:
¶1 Heartwood Home Health & Hospice LLC (Heartwood)
appeals the district court’s grant of summary judgment in favor
of Rita Huber and Glenna Molyneux (collectively, Defendants),
and the court’s imposition of sanctions against it pursuant to
rule 11 of the Utah Rules of Civil Procedure. We affirm the
district court’s grant of summary judgment but reverse its
imposition of sanctions.
Heartwood Home v. Huber
BACKGROUND 1
¶2 Heartwood “is a licensed home health care agency and
hospice that offers care to elderly and homebound patients.”
Defendants are Heartwood’s former employees. Huber held the
position of nurse care manager and “was responsible for
coordinating her patients’ care with Heartwood’s physicians,
social workers and home health aides.” Molyneux was
employed as a home health aide at Heartwood. She provided
personal, at­home care to patients, which included bathing, meal
preparation, and minor housekeeping.
¶3 As a condition of their employment by Heartwood,
Defendants signed a “Confidentiality/Non­Disclosure
Agreement” (the Confidentiality Agreement), which included
this provision:
Knowledge of employees and patients is
specifically the privilege of your employment here.
If your employment should end with [Heartwood],
you are prohibited to contact any employee,
patient, or other professional relationship that you
have that was a result of being an employee of
[Heartwood].[2]
1. “In reviewing a district court’s grant of summary judgment,
we view the facts and all reasonable inferences drawn therefrom
in the light most favorable to the nonmoving party and recite the
facts accordingly.” Ockey v. Club Jam, 2014 UT App 126, ¶ 2 n.2,
328 P.3d 880 (quotation simplified).
2. Heartwood has not directed us to, nor have we succeeded in
locating, the Confidentiality Agreement in the record. The only
portion of the agreement that we have the benefit of examining
is that which we have quoted above.
20170221-CA 2 2020 UT App 13Heartwood Home v. Huber
¶4 In August 2012, Huber left Heartwood for a position with
one of its competitors, Good Shepherd Home Care & Hospice,
Inc. (Good Shepherd). In the weeks following her departure,
Huber met with Molyneux and Heartwood’s director of nursing
(Director) for lunch. In October 2012, Director accepted a
position at Good Shepherd, and Molyneux followed suit
approximately one week later.
¶5 In the four days following Molyneux’s departure, four of
her Heartwood patients transferred to Good Shepherd. Believing
that Good Shepherd was poaching its patients, 3 Heartwood sent
3. In its opening brief, Heartwood describes three instances that
led it to believe that Director and Molyneux were soliciting its
patients on Good Shepherd’s behalf. These instances occurred
either in the week between Director’s and Molyneux’s
resignations or just after Molyneux resigned. First, one of
Heartwood’s nursing aides reported encountering Director and
Molyneux at a patient’s home wearing Good Shepherd
uniforms. Allegedly, the two quickly departed, but left a Good
Shepherd business card and refrigerator magnet behind with the
patient. Second, Heartwood’s chaplain reported that a patient
had informed him that Director and Molyneux had attempted to
persuade her to transfer to Good Shepherd. Third, the chaplain
claimed to have witnessed a Good Shepherd van leaving the
home of another Heartwood patient. All three of these patients
who were allegedly solicited by Director and Molyneux
remained with Heartwood.
Heartwood presented this information to the district court for
the first time in its attorney’s affidavit attached to its opposition
to Defendants’ motion for sanctions, which Heartwood filed one
week after the court granted summary judgment to Defendants.
The information was not before the court for consideration on
Defendants’ motion for summary judgment. Furthermore,
record “evidence” of these instances is limited to the attorney’s
affidavit, which constitutes inadmissible hearsay. See Utah R.
Civ. P. 56(c)(4) (“An affidavit or declaration used to support or
(continued…)
20170221-CA 3 2020 UT App 13Heartwood Home v. Huber
a cease and desist letter to Good Shepherd, requesting that it
advise Defendants and Director to stop contacting Heartwood’s
patients and staff. The following day, another of Molyneux’s
former patients transferred to Good Shepherd. On the heels of
that fifth transfer, Heartwood initiated suit against Defendants,
Director, and Good Shepherd. 4 After Heartwood filed its
complaint, the flow—or perhaps trickle—of patients from
Heartwood to Good Shepherd ceased, with the exception of one
other patient of Molyneux’s who transferred to Good Shepherd
approximately one week later.
¶6 In relevant part, 5 Heartwood’s complaint alleged that
Huber convinced Director and Molyneux to leave Heartwood’s
(…continued)
oppose a motion [for summary judgment] must be made on
personal knowledge, must set out facts that would be admissible
in evidence, and must show that the affiant or declarant is
competent to testify on the matters stated.”). Heartwood had not
submitted affidavits from the nursing aide or chaplain, and the
record shows that Heartwood made the conscious decision not
to depose or seek affidavits from any of the patients that either
transferred to Good Shepherd or chose to remain with
Heartwood.
4. Director and Good Shepherd are not parties to this appeal.
Neither joined Defendants’ motion for summary judgment or
motion for sanctions, which are the subjects of this appeal.
Additionally, Director has since passed away, and the district
court entered default judgment against Good Shepherd in the
amount of $130,000 following its failure to appear. Accordingly,
except where necessary to better understand Heartwood’s claims
against Defendants, we have omitted discussion of Heartwood’s
claims and allegations against Director and Good Shepherd.
5. Heartwood narrowed its allegations against Defendants at the
summary judgment stage of the proceedings.
20170221-CA 4 2020 UT App 13Heartwood Home v. Huber
employ in favor of Good Shepherd and that Molyneux in
turn solicited Heartwood’s patients on Good Shepherd’s
behalf. Based on these assertions, Heartwood sued
Defendants for (1) breach of the Confidentiality Agreement, (2)
breach of the duty of loyalty, (3) breach of the duty of
confidentiality, and (4) intentional interference with contractual
relations.
¶7 Near the end of discovery, Defendants sought to depose
Heartwood’s corporate representative pursuant to rule 30(b)(6)
of the Utah Rules of Civil Procedure. 6 Heartwood designated its
owner, Lee Vasic, to testify on its behalf. At the 30(b)(6)
deposition, when asked how he had prepared, Vasic replied that
he re-read the complaint and generally discussed what a
deposition was with Heartwood’s attorney. Although he
acknowledged receiving the list of topics Defendants intended to
discuss during the deposition, he did not review Defendants’
depositions nor did he discuss the deposition topics with any
current or former Heartwood employee in preparation for the
deposition.
¶8 In view of Vasic’s deposition testimony, Defendants
served Heartwood with a motion for sanctions pursuant to rule
11 of the Utah Rules of Civil Procedure, contending that
Heartwood’s complaint lacked factual support. Heartwood
declined to withdraw its complaint, and after the 21­day safe
harbor period had passed, see Utah R. Civ. P. 11(c)(1)(A),
Defendants filed a motion for sanctions with the district court in
6. The rule permits a party to depose “a corporation, a
partnership, an association, or a governmental agency” by
allowing the organization to designate one or more
representatives to “testify as to matters known or reasonably
available to the organization.” Utah R. Civ. P. 30(b)(6). See infra
¶¶ 16–20.
20170221-CA 5 2020 UT App 13Heartwood Home v. Huber
conjunction with a motion for summary judgment. 7 The district
court stayed further briefing on Defendants’ motion for
sanctions until after its resolution of their summary judgment
motion.
¶9 Following a hearing, the district court granted
Defendants’ motion for summary judgment. Among other
things, the court essentially held Heartwood to Vasic’s rule
30(b)(6) testimony and concluded that it had “not produce[d]
evidence establishing all of the elements of any of its claims
[against Defendants] and has accordingly not met its burden on
summary judgment.”
¶10 The parties subsequently resumed briefing on
Defendants’ motion for sanctions. The district court likewise
granted that motion and ordered Heartwood to pay “Defendants
for their reasonable attorney fees in defending the claims after it
became clear that the claims lacked evidentiary support and
legal basis.” The court later determined that amount to be
$10,528.50, which reimbursed Defendants “for their reasonable
attorney fees in bringing the motion for summary judgment and
motion for sanctions.” Heartwood appeals the court’s grant of
both motions. 8
7. The motion for summary judgment was brought after the
parties had completed nearly a year’s worth of discovery.
Heartwood did not move the district court, pursuant to rule 56(f)
of the 2014 version of the Utah Rules of Civil Procedure, to stay
its decision on Defendants’ summary judgment motion in order
for Heartwood to conduct additional discovery. See Utah R. Civ.
P. 56(f) (2014). See also id. R. 56(d) (2019).
8. This is Heartwood’s second appeal on the sanctions issue. See
Heartwood Home Health & Hospice LLC v. Huber, 2016 UT App 183,
382 P.3d 1074. We dismissed Heartwood’s first appeal on the
ground that a final judgment had not yet been issued in the case,
(continued…)
20170221-CA 6 2020 UT App 13Heartwood Home v. Huber
ISSUES AND STANDARDS OF REVIEW
¶11 Heartwood challenges the district court’s grant of
summary judgment in Defendants’ favor. We “review[] a trial
court’s legal conclusions and ultimate grant or denial of
summary judgment for correctness, . . . view[ing] the facts and
all reasonable inferences drawn therefrom in the light most
favorable to the nonmoving party.” Orvis v. Johnson, 2008 UT 2,
¶ 6, 177 P.3d 600 (quotation simplified).
¶12 Heartwood also challenges the district court’s imposition
of rule 11 sanctions against it. We apply a “three-part approach”
in reviewing a district court’s decision to impose sanctions.
Archuleta v. Galetka, 2008 UT 76, ¶ 6, 197 P.3d 650. The court’s
“[f]indings of fact are reviewed under a clear error standard,” its
“conclusions of law are reviewed for correctness,” and its
“determination regarding the type and amount of sanctions to be
imposed is reviewed for abuse of discretion.” Id.ANALYSIS
I. Summary Judgment
¶13 Summary judgment is appropriate when (1) “there is no
genuine dispute as to any material fact” and (2) “the moving
party is entitled to judgment as a matter of law.” Utah R. Civ. P.
56(a). We now turn to consider each of these requirements.
A. Dispute as to Any Material Fact
¶14 In reviewing a district court’s grant of summary
judgment, we first determine whether a dispute as to any
(…continued)
rendering the appeal premature and thereby depriving us of
appellate jurisdiction. See id. ¶ 13.
20170221-CA 7 2020 UT App 13Heartwood Home v. Huber
material fact exists by asking “whether reasonable jurors,
properly instructed, would be able to come to only one
conclusion, or if they might come to different conclusions,
thereby making summary judgment inappropriate.” Clegg v.
Wasatch County, 2010 UT 5, ¶ 15, 227 P.3d 1243. A genuine
dispute as to material facts may exist even when the parties
agree on the objective facts, but disagree as to the reasonable
inferences that can be drawn from them regarding “the
understanding, intention, and consequences of those facts.” USA
Power, LLC v. PacifiCorp, 2010 UT 31, ¶¶ 32–33, 235 P.3d 749(quotation simplified). But if there can “be no reasonable
difference of opinion on a question of fact in light of the
available evidence, the decision is one of law for the trial judge
or for an appellate court.” Heslop v. Bear River Mutual Ins. Co.,
2017 UT 5, ¶ 20, 390 P.3d 314 (quotation simplified).
¶15 Heartwood asserts that the objective facts of this case and
the reasonable inferences drawn therefrom precluded summary
judgment because they “created a genuine issue of fact as to
whether [Defendants] had contacted Heartwood’s patients and
employees in an effort to have them switch their medical care or
employment over to [Defendants’] new employer, Good
Shepherd.” Although Heartwood points to circumstantial
evidence that it argues supports this assertion, it is not entitled to
rely on much of that evidence in light of the concessions Vasic
made during his rule 30(b)(6) deposition.
¶16 Rule 30(b)(6) of the Utah Rules of Civil Procedure
prescribes a method for deposing organizations. Its federal
counterpart—upon which the Utah rule is based—was designed,
among other things, to avoid the “wasteful charade in which the
deposing party attempt[s] to guess the appropriate person to
provide the information sought and the entity remain[s] silent as
to the identity of persons who could actually provide useful
testimony,” and “to curb ‘bandying’ by which corporate
employees each disclaim knowledge of facts known to [the]
20170221-CA 8 2020 UT App 13Heartwood Home v. Huber
organization.” 7 James Wm. Moore et al., Moore’s Federal Practice
§ 30.25[1] & n.2 (3d ed. 2018). 9
¶17 Rule 30(b)(6) depositions are noticed to the organization
rather than to any particular individual. See Utah R. Civ. P.
30(b)(6). Unlike ordinary depositions, a rule 30(b)(6) deposition
notice must “describe with reasonable particularity the matters
on which questioning is requested.” Id. The purpose of this
requirement “is to enable the responding organization to
identify the person who is best situated to answer questions
about the matter.” 8A Charles Alan Wright et al., Federal Practice
& Procedure § 2103 (3d ed. 2019). The organization is then obliged
to produce one or more representatives who are prepared to
testify on its behalf concerning the matters described in the
notice that are “known or reasonably available to the
organization.” Utah R. Civ. P. 30(b)(6). See also 8A Wright et al.,
Federal Practice & Procedure § 2103 (“[U]nlike all other
depositions, there is an implicit obligation to prepare the [rule
30(b)(6)] witness.”). This “duty extends not only to facts, but also
to [the organization’s] subjective beliefs and opinions.” 7 Moore,
Moore’s Federal Practice § 30.25[3]. “Thus, the rule requires a good
faith effort to find out the relevant facts, which may [include]
collecting information, reviewing documents, and interviewing
employees with personal knowledge.” Id. The rule does not
require the representatives to have personal knowledge
regarding the subject matter of the deposition. Id.
¶18 Due to the organization’s affirmative duty to adequately
prepare its representative to address the topics within the scope
of the deposition notice, the organization is generally bound by
its representative’s testimony at the summary judgment stage of
9. “Interpretations of the Federal Rules of Civil Procedure are
persuasive where, as here, the Utah Rules of Civil Procedure are
substantially similar to the federal rules.” Supernova Media, Inc. v.
Pia Anderson Dorius Reynard & Moss, LLC, 2013 UT 7, ¶ 40 n.8,
297 P.3d 599 (quotation simplified).
20170221-CA 9 2020 UT App 13Heartwood Home v. Huber
litigation. Id. The organization therefore may not, without good
reason, present facts that fall within the scope of the deposition
notice that contradict those articulated by the rule 30(b)(6)
representative, or facts that the representative professed not to
know, to defeat a motion for summary judgment. 10 Id. Cf. id.(“[P]roducing an unprepared witness is tantamount to a failure
to appear, also warranting sanctions pursuant to Rule 37(d).”);
Utah R. Civ. P. 37(d) (stating that if the rule 30(b)(6)
representative “fails to appear before the officer taking the
deposition after service of the notice, any other party may file a
motion for sanctions under” rule 37(b), which authorizes the
sanctioning court, among other things, to prohibit the party from
introducing certain evidence); Burns v. Board of County Comm’rs,
330 F.3d 1275, 1282 (10th Cir. 2003) (“[Rule 30(e) of the Federal
Rules of Civil Procedure] cannot be interpreted to allow one to
alter what was said under oath. If that were the case, one could
merely answer the questions with no thought at all then return
home and plan artful responses. . . . A deposition is not a take
home examination.”) (quotation simplified); Anderton v. Boren,
2017 UT App 232, ¶ 20, 414 P.3d 508 (“The general rule in Utah is
that an affiant may not raise an issue of fact by his own
affidavit,” filed in opposition to a motion for summary
judgment, “which contradicts his deposition, unless he can
provide an explanation of the discrepancy.”) (quotation
simplified).
¶19 Although the duty to produce and prepare a witness
may prove burdensome to a corporation, it “is merely the
result of the concomitant obligation from the privilege of being
able to use the corporate form in order to conduct business.”
10. The representative may modify the rule 30(b)(6) deposition
testimony within the 28­day period permitted by rule 30(e) of
the Utah Rules of Civil Procedure, if the modification is
accompanied by a reasonable explanation for the material
discrepancy. See Utah R. Civ. P. 30(e); Gaw v. Department of
Transp., 798 P.2d 1130, 1139–41 (Utah Ct. App. 1990).
20170221-CA 10 2020 UT App 13Heartwood Home v. Huber
United States v. Taylor, 166 F.R.D. 356, 362 (M.D.N.C. 1996).
Moreover, “[t]his interpretation is necessary in order to make the
[rule 30(b)(6)] deposition a meaningful one and to prevent the
‘sandbagging’ of an opponent by conducting a half­hearted
inquiry before the deposition but a thorough and vigorous one
before the trial.” Id.¶20 The binding nature of the representative’s deposition,
however, is limited to the summary judgment stage and,
even then, the evidentiary limitation does not extend to
the representative’s legal conclusions; to answers to
questions that do not fall within the noticed scope of the
deposition; or to facts that supplement, correct, or explain the
representative’s testimony. See Gaw v. Department of Transp., 798
P.2d 1130, 1139–41 (Utah Ct. App. 1990); 7 Moore, Moore’s Federal
Practice § 30.25[3].
¶21 In opposition to Defendants’ motion for summary
judgment, Heartwood stated that although it did not have direct
evidence to support its allegation that Molyneux 11 recruited
Heartwood’s patients before she left its employ, 12 there was
11. Although Vasic also made statements that contradicted some
of Heartwood’s allegations against Huber, we do not discuss
them in this section because they are not relevant in evaluating
the district court’s grant of summary judgment in Huber’s favor.
As discussed in more detail in section IB, Heartwood’s factual
allegations are relevant only to its claims for breach of contract
and breach of the duty of loyalty. Because Heartwood did not
supply the Confidentiality Agreement in the record on appeal,
we are precluded from addressing Heartwood’s
breach­of­contract claims against Defendants. See infra ¶ 26. And
Heartwood abandoned its breach­of­the­duty­of­loyalty claim
against Huber. See infra ¶ 27 n.14.
12. The timing of Molyneux’s alleged solicitation of Heartwood’s
patients is relevant because Heartwood could prevail on its
(continued…)
20170221-CA 11 2020 UT App 13Heartwood Home v. Huber
circumstantial evidence “which, when viewed in the light most
favorable to Heartwood, creates a strong inference” in support of
that assertion. Heartwood pointed to the undisputed fact that six
of its patients, all of whom had been assigned to Molyneux,
began transferring to Good Shepherd during her final week at
Heartwood. During the rule 30(b)(6) deposition, Vasic stated that
when he asked the patients for the reason they were transferring,
they answered, “Because we hear [Molyneux is] leaving.”
Heartwood argues that “[i]t is unclear how these individuals
would have even known that Ms. Molyneux was leaving unless
she informed them of the fact.” Additionally, Heartwood points
to documentation in which four of the six patients who moved to
Good Shepherd listed Molyneux as their referral source.
¶22 But Vasic’s rule 30(b)(6) testimony concerning Molyneux
undermines Heartwood’s argument that it is entitled to a
reasonable inference of allegedly improper solicitation.
Although Heartwood asserts that it is otherwise “unclear” how
its patients would have known Molyneux was leaving, Vasic’s
testimony provided the answer to that very question: Vasic
himself requested that Molyneux inform her patients of her
imminent departure from Heartwood and introduce them to her
replacement. He also acknowledged knowing that her patients
would probably ask her where she was going.
(…continued)
claim against her for breach of the Confidentiality Agreement
only if she contacted its patients after she left its employ. And
Heartwood’s claim that Molyneux breached her duty of loyalty
to Heartwood would be viable only if she recruited its patients
before she left Heartwood. See infra ¶ 27 & n.14. But, as
mentioned in note 11 above, because we cannot meaningfully
review Heartwood’s breach­of-contract claim and are therefore
left with its claim for breach of the duty of loyalty, we focus our
analysis in this section on Heartwood’s allegation that Molyneux
recruited its patients before leaving Heartwood.
20170221-CA 12 2020 UT App 13Heartwood Home v. Huber
¶23 Heartwood may have possibly been entitled to an
inference of improper solicitation had some of the patients who
transferred to Good Shepherd not been Molyneux’s former
patients. If Heartwood could link the departure of such patients
to Molyneux—for instance, if they had named Molyneux as their
referral source for transferring to Good Shepherd even though
they had not been her patients—then Vasic’s request that she
inform her patients of her impending departure would not have
precluded an assumption that she breached her duty of loyalty.
But in reality, all six of the patients who transferred had been
Molyneux’s patients, and Heartwood has presented insufficient
evidence to create the reasonable inference that those patients’
naming of Molyneux as a referral source was the result of
something other than their being informed that Molyneux had
resigned from Heartwood in favor of Good Shepherd at the time
she introduced her replacement at Heartwood’s direction.
¶24 Thus, due to the evidentiary limitations at the summary
judgment stage resulting from Vasic’s 30(b)(6) testimony,
Heartwood presented insufficient evidence to create a
“reasonable difference of opinion on a question of fact,” leaving
“the decision [as] one of law for the trial judge,” in the first
instance, and for this court on appeal. See Heslop v. Bear River
Mutual Ins. Co., 2017 UT 5, ¶ 20, 390 P.3d 314 (quotation
simplified). Accordingly, we next proceed to determine whether
Defendants were “entitled to judgment as a matter of law” given
the facts of record. Utah R. Civ. P. 56(a).
B. Entitlement to Judgment as a Matter of Law
¶25 A moving party is entitled to judgment as a matter of law
when the nonmoving party fails to “set forth facts sufficient to
establish the existence of an element essential to that party’s
case.” Anderson Dev. Co. v. Tobias, 2005 UT 36, ¶ 23, 116 P.3d 323(quotation simplified). Heartwood brought four claims against
Defendants: (1) breach of the Confidentiality Agreement,
(2) breach of the duty of loyalty, (3) breach of the duty of
confidentiality, and (4) intentional interference with contractual
20170221-CA 13 2020 UT App 13Heartwood Home v. Huber
relations. Because Heartwood has not presented facts sufficient
to satisfy each essential element of any of those claims,
Defendants were entitled to judgment as a matter of law, and the
district court properly granted summary judgment in their favor.
1. Confidentiality Agreement
¶26 Heartwood claims Defendants breached the
Confidentiality Agreement, which provided, in relevant part, “If
your employment should end with [Heartwood], you are
prohibited to contact any employee, patient, or other
professional relationship that you have that was a result of being
an employee of [Heartwood].” In granting summary judgment
on Heartwood’s breach-of-contract claim, the district court relied
on language within the Confidentiality Agreement that it
“construed . . . against [Heartwood] who drafted [it].” See
Edwards & Daniels Architects, Inc. v. Farmers’ Props., Inc., 865 P.2d
1382, 1386 (Utah Ct. App. 1993). But Heartwood has not
included the Confidentiality Agreement—the very contract it
asserts Defendants breached—in the record on appeal. 13 The
only portion of the agreement that we have the opportunity of
examining is that quoted above. Due to this omission, we cannot
meaningfully review the district court’s interpretation of the
agreement, especially because it relied on some provisions that
appear nowhere in the record, and we therefore presume that
the district court correctly construed the Confidentiality
Agreement and granted summary judgment in Defendants’
13. Instead, an employee handbook that also included the
above­quoted language appears in the record in its entirety. But
that document expressly states “that it does not create a contract
of employment” and that Heartwood “retains the right to
change these policies and benefits, as it deems advisable.” The
fact that the employee handbook apparently incorporated a few
sentences that are identical to those included in the
Confidentiality Agreement does not excuse Heartwood from the
requirement to provide a full record.
20170221-CA 14 2020 UT App 13Heartwood Home v. Huber
favor on that claim. See State v. Pritchett, 2003 UT 24, ¶ 13, 69
P.3d 1278 (“When crucial matters are not included in the record,
the missing portions are presumed to support the action of the
trial court.”) (quotation simplified); G.G.A., Inc. v. Leventis, 773
P.2d 841, 845 (Utah Ct. App. 1989) (“In interpreting a contract,
we determine what the parties intended by examining the entire
contract and all of its parts in relation to each other, giving an
objective and reasonable construction to the contract as a whole.”)
(emphasis added).
2. Duty of Loyalty
¶27 In pressing its claim for breach of the duty of loyalty
against Molyneux, 14 Heartwood asserts, relying on Prince, Yeates
& Geldzahler v. Young, 2004 UT 26, 94 P.3d 179, that “Molyneux
was still employed by Heartwood when she referred a number
of Heartwood’s patients to Good Shepherd.” Although our
Supreme Court did hold in Prince Yeates that “an agent is subject
to a duty not to compete with the principal concerning the
subject matter of his agency,” id. ¶ 20 (quotation simplified), it
did not extend the duty to the circumstance where an employee
accepted new employment elsewhere and was followed by his
or her clients, id. ¶ 24. On the contrary, the Court specifically
stated that employees who are unhappy at their places of
employment are “free, as . . . at­will employee[s], to leave at any
time and presumably take those clients who wished to follow”
them. Id. Instead, what the Court held to be a violation of that
duty was when the defendant “represented clients in the firm’s
name without disclosing the representation to the firm,
expended firm resources and filed pleadings in the firm’s name
14. Heartwood abandoned this claim against Huber because,
according to Heartwood, “[d]iscovery revealed that Ms. Huber
solicited Heartwood’s employees after she left the company.”
And Heartwood correctly recognizes that Huber, as a former
employee, no longer owed it a duty of loyalty.
20170221-CA 15 2020 UT App 13Heartwood Home v. Huber
in connection with these matters, and retained all fees derived
from these cases for himself.” Id. ¶¶ 19, 24.
¶28 And as previously discussed, Heartwood has not
presented sufficient facts to show that the six patients who
followed Molyneux to Good Shepherd did so as a result of
anything other than discovering that Molyneux was leaving
Heartwood in favor of Good Shepherd when Molyneux visited
them to introduce her replacement, per Heartwood’s request.
Insofar as Heartwood argues that Molyneux breached the duty
of loyalty by notifying her clients of where she had found new
employment while introducing her replacement at Heartwood’s
direction, Heartwood cites no authority to suggest that such
action is sufficient to constitute a breach of the duty of loyalty.
See Utah R. App. P. 24(a)(8); infra ¶ 30.
3. Duty of Confidentiality
¶29 “A former employee may not use confidential
information obtained during the course of his or her
employment to compete after termination with his or her former
employer.” Envirotech Corp. v. Callahan, 872 P.2d 487, 496 (Utah
Ct. App. 1994). In asserting its claims for breach of the duty of
confidentiality against Defendants, Heartwood alleges that they
“used confidential information they obtained during their
employment with Heartwood (the identity of Heartwood’s
patients and employees) to compete with Heartwood.” But
Heartwood does not meet its burden of persuasion on this claim.
¶30 Rule 24 of the Utah Rules of Appellate Procedure requires
a party to “explain, with reasoned analysis supported by
citations to legal authority and the record, why the party should
prevail on appeal.” Utah R. App. P. 24(a)(8). Accord Bank of Am.
v. Adamson, 2017 UT 2, ¶ 13, 391 P.3d 196 (“A party must cite the
legal authority on which its argument is based and then provide
reasoned analysis of how that authority should apply in the
particular case, including citations to the record where
appropriate.”). See also Allen v. Friel, 2008 UT 56, ¶ 9, 194 P.3d
20170221-CA 16 2020 UT App 13Heartwood Home v. Huber
903 (“An appellate court is not a depository in which a party
may dump the burden of argument and research.”) (quotation
simplified). “An appellant that fails to devote adequate attention
to an issue is almost certainly going to fail to meet its burden of
persuasion.” Adamson, 2017 UT 2, ¶ 13.
¶31 Here, Heartwood has not argued how the identity of its
employees and patients constitutes confidential information 15
and has therefore not met its burden of persuasion on appeal.
15. Although Heartwood initially accused Molyneux in its
complaint of making copies of confidential patient records prior
to leaving, it appears to have abandoned this allegation by the
summary judgment stage and does not reassert it on appeal. It
follows that Heartwood’s claim that Molyneux misused
confidential information is limited to her alleged contact with
patients with whom she had already developed a direct personal
relationship. We therefore decline to conclude, without the
benefit of the Confidentiality Agreement in the record before us
and in the absence of meaningful argument, that Molyneux
misappropriated confidential information by allegedly
contacting her own patients after leaving Heartwood, especially
in view of several appellate decisions determining that patient
lists do not amount to confidential information under certain
circumstances. See, e.g., Vito v. Inman, 649 S.E.2d 753, 757 (Ga. Ct.
App. 2007) (holding that defendant was entitled to summary
judgment because plaintiff, a podiatrist, failed to produce
evidence that he derived some economic value from the secrecy
of his patient list, especially in view of his deposition testimony
recognizing that “other podiatrists would not seek to use the list
to take his patients from him”); Dworkin v. Blumenthal, 551 A.2d
947, 950–51 (Md. Ct. Spec. App. 1989) (concluding that a list of
dental patients did not amount to a trade secret because “there
[was] no evidence in the record to indicate that an extraordinary
amount of effort or money was expended by appellant to
generate the patient list,” “appellant took no measures to guard
(continued…)
20170221-CA 17 2020 UT App 13Heartwood Home v. Huber
4. Intentional Interference with Contractual Relations
¶32 Finally, Heartwood claims Defendants intentionally
interfered with its contractual relations when they allegedly
recruited its staff and patients on Good Shepherd’s behalf. Our
Supreme Court has “been careful to limit the scope of actionable
conduct within the tortious interference context to those
situations where a defendant employs a means that is
independently tortious or wrongful.” C.R. England v. Swift Transp.
Co., 2019 UT 8, ¶ 45, 437 P.3d 343 (emphasis added). In other
words, “a person could be held liable for the tort of intentional
interference with contract only if the person interfered in a way
in which the person was not legally entitled to have interfered,”
id. ¶ 17, “such as violations of statutes, regulations, or
recognized common-law rules—or the violation of an
established standard of a trade or profession,” id. ¶ 48.
¶33 Heartwood asserts that Defendants’ breach of the duty of
confidentiality constituted the requisite “independently
tortious” conduct. Because we have determined that Heartwood
has not met its burden of persuasion as concerns its claims for
breach of the duty of confidentiality against Defendants, it
follows that Heartwood has likewise failed to satisfy each of the
elements of its intentional-interference-with-contract tort.
¶34 For the foregoing reasons, we affirm the district court’s
grant of summary judgment in favor of Defendants.
II. Rule 11 Sanctions
¶35 Having determined that the district court properly
granted summary judgment in favor of Defendants, we next turn
to Heartwood’s claim that the court erred in sanctioning it
(…continued)
the secrecy of the patient list,” and because the departing dentist
had a “responsibility . . . to [his] current patients”).
20170221-CA 18 2020 UT App 13Heartwood Home v. Huber
pursuant to rule 11 of the Utah Rules of Civil Procedure.
“Whether specific conduct amounts to a violation of Rule 11 is a
question of law.” Bailey–Allen Co. v. Kurzet, 945 P.2d 180, 193
(Utah Ct. App. 1997) (quotation simplified).
¶36 “Rule 11 places an affirmative duty on attorneys and
litigants to make a reasonable investigation (under the
circumstances) of the facts and the law before signing and
submitting any pleading, motion, or other paper.” Morse v.
Packer, 2000 UT 86, ¶ 28, 15 P.3d 1021 (quotation simplified).
Here, the court determined that Heartwood violated rule
11(b)(3) of the Utah Rules of Civil Procedure, which requires
“the allegations and other factual contentions” in “a pleading,
written motion, or other paper to the court,” to “have
evidentiary support, or, if specifically so identified, are likely to
have evidentiary support after a reasonable opportunity for
further investigation or discovery.” Specifically, in light of
Vasic’s deposition, the court concluded “that Heartwood
violated Rule 11 by failing to withdraw its claims against these
Defendants after being served under the safe harbor provision
and by continuing to advocate for a position that clearly lacked
evidentiary support.” And as a result of the perceived violation,
the court ordered Heartwood to compensate Defendants “for
their reasonable attorney fees incurred litigating their motion for
summary judgment and motion for sanctions.” See Utah R. Civ.
P. 11(c) (allowing courts to sanction attorneys or parties for
violations of rule 11); id. R. 11(c)(2) (permitting courts to impose
reasonable attorney fees as a sanction).
¶37 Rule 11(b)(3) “sets a relatively low standard requiring
some factual basis after a reasonable inquiry,” permitting
sanctions against plaintiffs only “for bringing a claim merely
founded on innuendo and suspicion.” Robinson v. Morrow, 2004
UT App 285, ¶ 24 n.3, 99 P.3d 341 (quotation simplified). The
standard imposed by rule 11 is lower than that applied at the
summary judgment stage of litigation. Thus, although we
affirmed the district court’s grant of summary judgment in favor
of Defendants, that fact alone is insufficient to warrant the
20170221-CA 19 2020 UT App 13Heartwood Home v. Huber
imposition of sanctions against Heartwood. 16 See Morse, 2000 UT
86, ¶ 28 (“The fact that a complaint is dismissed for legal
insufficiency or does not produce a triable issue does not
necessarily mean that a sanction is appropriate.”) (quotation
simplified). See also Teamsters Local Union No. 430 v. Cement
Express, Inc., 841 F.2d 66, 68 (3d Cir. 1988) (“Litigants misuse
[rule 11] when sanctions are sought against a party or counsel
whose only sin was being on the unsuccessful side of a ruling or
judgment. Substantially more is required.”) (quotation
simplified).
¶38 To support its contention that Huber recruited Molyneux
and Director on Good Shepherd’s behalf, Heartwood offered
Huber’s deposition testimony in which she acknowledged
meeting Molyneux and Director for lunch and sometimes
discussing employment opportunities at Good Shepherd with
them. 17 And in support of its contention that Molyneux recruited
16. Heartwood argues that the district court erred in concluding
that Heartwood violated rule 11 by “failing to withdraw its
claims against . . . Defendants after being served under the safe
harbor provision and by continuing to advocate for a position
that clearly lacked evidentiary support,” thereby imposing upon
Heartwood “an ongoing obligation under Rule 11 to review the
sufficiency of its previously filed complaint.” Heartwood argues
that “Rule 11’s emphasis on the need for an attorney to perform
a reasonable inquiry before presenting a pleading to the court
suggests that the rule authorizes sanctions only for unreasonable
filings, not for the failure to amend or withdraw a previously
filed document.” Because the district court’s decision warrants
reversal even under an ongoing­obligation interpretation of rule
11, we do not reach this particular issue.
17. But Huber also stated that it was Director and Molyneux who
initiated the discussions regarding possible job openings at
Good Shepherd.
20170221-CA 20 2020 UT App 13Heartwood Home v. Huber
Heartwood’s patients on Good Shepherd’s behalf, Heartwood
pointed to the following undisputed facts:
• On October 14, 2012, Molyneux tendered her two weeks’
notice to Vasic.
• Later that same day, Molyneux submitted an application
for employment to Good Shepherd and interviewed with
Good Shepherd’s director of nursing.
• Either on October 18 or 19, Good Shepherd extended an
offer of employment to Molyneux, which she immediately
accepted.
• On October 19, two of Molyneux’s patients transferred
services to Good Shepherd. Two more transferred on
October 22, and one more on October 23. And
approximately two weeks later, a sixth Molyneux patient
transferred to Good Shepherd.
• On October 22, Molyneux began working as a home
health aide for Good Shepherd.
• On October 23, Molyneux visited another of Heartwood’s
patients, Z.H., to inform her that she was no longer
employed by Heartwood. Molyneux stated that she
visited Z.H. because she had previously been scheduled
to do so and she did not want to disappoint Z.H., who
was expecting her. She possibly wore Good Shepherd
scrubs to that visit. Z.H. remained with Heartwood.
• Four of the six patients that transferred from Heartwood
to Good Shepherd listed Molyneux as their referral
source.
¶39 It is not readily apparent on the record before us whether
Heartwood would have prevailed on the summary judgment
motion had it been entitled to any reasonable inference it lost as
a result of Vasic’s 30(b)(6) deposition. And we cannot say how
20170221-CA 21 2020 UT App 13Heartwood Home v. Huber
we would have ruled had Heartwood included the
Confidentiality Agreement in the record and carried its burden
of persuasion on the confidentiality issue. But it is clear that
Heartwood’s claims against Defendants did not sink to the level
of being “merely founded on innuendo and suspicion.” 18
Robinson, 2004 UT App 285, ¶ 24 n.3 (quotation simplified). In
this case, while not prevailing on summary judgment, the record
reflects sufficient facts such that we can conclude it was not
wholly unreasonable to oppose summary judgment—even in the
face of a significant uphill battle. Thus, the specific conduct here
did not warrant rule 11 sanctions. As anemic as Heartwood’s
claims had become, those claims had not become plainly
frivolous or completely lacking in evidentiary support.
¶40 Accordingly, we vacate the district court’s imposition of
sanctions against Heartwood. 19
CONCLUSION
¶41 We affirm the district court’s grant of summary judgment
in favor of Defendants. In light of its designated representative’s
contradictory rule 30(b)(6) deposition testimony, Heartwood
was not entitled to the reasonable inference it claimed should
defeat summary judgment. We do not reach the merits of its
breach-of-contract claim because Heartwood did not include the
contract in question in the record and it did not carry its burden
of persuasion on its claims for breach of the duties of
18. Furthermore, to its credit, Heartwood narrowed its claims
against Defendants after determining, following discovery, that
it could not factually support certain allegations it had made in
its complaint.
19. We likewise deny Defendants’ request for attorney fees
incurred on appeal, premised on the theory that they were
awarded fees below.
20170221-CA 22 2020 UT App 13Heartwood Home v. Huber
confidentiality and loyalty, which likewise preempted its claim
for interference with contractual relations. But in light of the
totality of the evidence Heartwood offered to oppose summary
judgment, rule 11 sanctions were not appropriate and we reverse
the district court’s award of attorney fees to Defendants.
20170221-CA 23 2020 UT App 13