Beckman v. Cybertary Franchising LLC

2018 UT App 47THE UTAH COURT OF APPEALS
PATRICIA BECKMAN,
Appellant,
v.
CYBERTARY FRANCHISING LLC, FRANCHISE FOUNDRY LLC,
AND CHRISTIAN FAULCONER,
Appellees.
Opinion
No. 20150295-CA
Filed March 22, 2018
Fourth District Court, Provo Department
The Honorable Darold J. McDade
No. 110402922
Andrew W. Stavros and Austin B. Egan, Attorneys
for Appellant
Daniel K. Brough and James C. Dunkelberger,
Attorneys for Appellees
JUDGE JILL M. POHLMAN authored this Opinion, in which JUDGES
MICHELE M. CHRISTIANSEN and DAVID N. MORTENSEN concurred.
POHLMAN, Judge:
¶1 Patricia Beckman appeals the trial court’s judgment in her
lawsuit against Cybertary Franchising LLC, Franchise Foundry
LLC, and Christian Faulconer (collectively, Defendants). We
affirm in part, reverse in part, vacate in part, and remand for
further proceedings.
BACKGROUND
¶2 In 2005 Beckman established Cybertary, a company
offering virtual administrative services to businesses. At a
business conference in 2010, Beckman met Faulconer, a principal
Beckman v. Cybertary Franchising
of Franchise Foundry. Franchise Foundry provided marketing
services for companies, and Faulconer expressed an interest in
marketing for and investing in Cybertary.
¶3 Beckman and Faulconer ultimately negotiated three
agreements. First, Beckman, Franchise Foundry, and another
entity executed an operating agreement for Cybertary. Second,
Cybertary and Franchise Foundry entered into a service
agreement under which Franchise Foundry agreed to perform
marketing and sales services in exchange for a minority share in
Cybertary. Third, Cybertary and Beckman executed an
employment agreement (the Employment Agreement) under
which Cybertary agreed to employ Beckman as its chief
executive officer for a three-year term “[s]ubject to earlier
termination as provided in” that agreement. The Employment
Agreement set a base salary for Beckman and provided for
bonuses and a monthly benefits allowance. The Employment
Agreement allowed Cybertary to terminate Beckman’s
employment for “cause” and enumerated seven events that
would constitute “cause.”
¶4 Beckman’s relationship with Cybertary soured, and
Cybertary failed to pay her according to the terms of the
Employment Agreement. Concurrently, Beckman filed for
bankruptcy on May 20, 2011. In Beckman’s view, Faulconer was
threatening to terminate her employment and was considering
buying out her shares of Cybertary through the bankruptcy
proceeding. In October 2011, Beckman’s counsel sent a letter to
Faulconer and a Cybertary manager threatening litigation and
demanding that Cybertary pay the amounts it owed Beckman.
Faulconer responded and arranged a phone call “for settlement
purposes only.”
¶5 On October 19, 2011, Beckman and Faulconer had a
ninety-minute phone call, which Beckman recorded (the October
conversation). At the beginning of the call, Faulconer stated,
“This whole conversation . . . is really just for settlement
purposes only . . . .” Beckman acknowledged this preface,
stating, “Now you said this discussion is for settlement purposes
20150295-CA 2 2018 UT App 47Beckman v. Cybertary Franchising
only,” and, “If . . . this entire discussion is aiming towards a
settlement, what is it that you propose?” She and Faulconer then
candidly discussed Beckman’s grievances but did not resolve
them.
¶6 On November 2, 2011, Beckman sued Cybertary. Beckman
alleged claims for breach of contract and unjust enrichment
based on Cybertary’s failure to pay her base salary and benefits
allowance. Because Beckman expected that all amounts owed to
her before May 2011 would be addressed in the bankruptcy
proceeding, she sought compensation only for those amounts
that came due after her bankruptcy filing.
¶7 Two weeks later, on November 14, 2011, Cybertary
formally notified Beckman that, “effective immediately,” it was
terminating her employment for cause. The notice cited three
subsections of the Employment Agreement’s termination
provision to support its determination of cause:
subsections 6(b)(ii), (iii), and (vi). 1 As evidence of cause,
Cybertary explained that it had reason to believe that Beckman
had engaged in certain conduct that discredited Cybertary or
was detrimental to its reputation or its results of operation or
1. Those provisions are as follows:
(ii) Executive’s willful breach, habitual neglect,
gross neglect, or dereliction of Executive’s duties
under this Agreement;
(iii) Executive’s material misconduct with regard to
the Company, including, but not limited to,
Executive’s failure to comply with Company’s
written rules and policies; . . .
(vi) Any conduct, whether dishonest, fraudulent,
or otherwise, that discredits the Company or is
detrimental to the reputation of the Company or
the Company’s results of operations or
business . . . .
20150295-CA 3 2018 UT App 47Beckman v. Cybertary Franchising
business, pursuant to subsection 6(b)(vi). Cybertary further
explained,
Not only does that [particular] conduct fall
squarely within Section 6(b)(vi) . . . and its
prohibition on conduct that harms Cybertary’s
reputation or operations, but [it] also constitutes
“gross neglect” or “dereliction” of your duties
pursuant to Section 6(b)(ii) . . . , as well as “material
misconduct with regard to” Cybertary pursuant to
Section 6(b)(iii) . . . .
As further evidence of cause, Cybertary believes
that you have failed to perform certain crucial
duties related to your responsibility as Cybertary’s
chief executive officer. Those failures constitute
“habitual neglect” or “dereliction” of your duties
pursuant to Section 6(b)(ii) . . . , as well as “material
misconduct” pursuant to Section 6(b)(iii).
The notice also stated that the grounds articulated as cause for
Beckman’s termination were “not intended to be a
comprehensive list” and that Cybertary “reserve[d] the right to
articulate additional grounds for terminating [Beckman’s]
employment for cause.”
¶8 Beckman subsequently amended her complaint, adding
Franchise Foundry and Faulconer as defendants. Beckman’s
amended breach of contract claim stated,
In retaliation for filing this lawsuit, Faulconer and
Franchise Foundry have attempted on behalf of
Cybertary to terminate Beckman as Chief Executive
Officer for Cybertary. Faulconer and Franchise
Foundry have interfered with Beckman’s ability to
perform her duties as Chief Executive Officer . . . .
Such retaliation and actions on behalf of Cybertary
20150295-CA 4 2018 UT App 47Beckman v. Cybertary Franchising
further constitute a material breach of the
Employment Agreement.
Beckman also added a claim for declaratory judgment, seeking
to nullify Cybertary’s termination of the Employment
Agreement. In her prayer for relief, Beckman indicated that at
trial she would prove damages believed to be “in excess of
$300,000, plus interest, attorney’s fees and costs.”
¶9 Cybertary filed counterclaims against Beckman for,
among other things, breach of contract, breach of the implied
covenant of good faith and fair dealing, and breach of fiduciary
duty. Cybertary alleged that Beckman had disparaged it, failed
to keep its affairs confidential, and failed to perform her duties
“in an effective and careful manner.” Cybertary also asserted
that it had “sustained significant damages” and, without
specifying an amount, sought “general, specific, and
consequential damages, in an amount to be proven at trial.”
¶10 In March 2013, Beckman sought leave to amend her
complaint for a second time. Beckman sought to amend her
factual allegations, expand her claim for unjust enrichment, and
add four new causes of action: breach of the operating
agreement; breach of fiduciary duty; fraudulent inducement;
and civil conspiracy. The trial court denied the motion, finding
that it “was untimely and the product of unreasonable delay,”
and that Defendants would be prejudiced if the amendment
were allowed.
¶11 Beckman and Defendants subsequently filed cross-
motions for summary judgment. The trial court denied
Beckman’s motion but granted Defendants’ motion in part.
Specifically, it granted summary judgment to Franchise Foundry
and Faulconer on Beckman’s claim for breach of the
Employment Agreement. The court explained that it was
undisputed that “neither Franchise Foundry nor Faulconer are
parties to [the] Employment Agreement” and reasoned that
Beckman could not “enforce that contract against individuals or
20150295-CA 5 2018 UT App 47Beckman v. Cybertary Franchising
entities that are not parties to the contract.” The court otherwise
denied Defendants’ motion.
¶12 In advance of trial, Defendants filed a motion in limine,
requesting that the trial court exclude the recording of the
October conversation. Defendants argued that the recording
constituted evidence of settlement negotiations and that it
therefore should be excluded at trial pursuant to rule 408 of the
Utah Rules of Evidence. The court agreed and granted
Defendants’ motion, ruling that “the statements captured therein
constitute[d] compromise negotiations.”
¶13 The case proceeded to trial. Although Cybertary had
provided a supplemental disclosure quantifying its claimed
damages as $373,500, the trial court found that the disclosure
was untimely and refused to submit the question of Cybertary’s
damages to the jury. The court subsequently granted Beckman’s
motion for a directed verdict on Cybertary’s counterclaims.
¶14 Before submitting the case to the jury, the parties
disagreed about the jury instruction defining “cause” as it
related to Cybertary’s termination of Beckman’s employment
(Instruction 12). Beckman asserted that Instruction 12 should be
worded to define “cause” as the seven events enumerated in the
Employment Agreement, and she argued that Cybertary was
required to prove at least one event “by a preponderance of the
evidence.” Defendants, on the other hand, asserted that
Instruction 12 should explain that the determination of whether
one of the events constituted “cause” “was a matter for
Cybertary’s good business judgment.” Defendants further
proposed that Instruction 12 provide that “[s]o long as Cybertary
possessed a fair and honest cause or reason, in good faith, that
met one of these [seven enumerated] definitions, cause existed to
terminate Beckman, whether or not the facts that Cybertary
believed to be true really, in fact, were true.” (Citing Uintah Basin
Med. Center v. Hardy, 2005 UT App 92, ¶ 16, 110 P.3d 168.)
¶15 The version of Instruction 12 given to the jury included
Beckman’s language about Cybertary having to prove at least
20150295-CA 6 2018 UT App 47Beckman v. Cybertary Franchising
one of the seven enumerated events by a preponderance of the
evidence, while also including Defendants’ language providing
that whether “cause” existed “was a matter for Cybertary’s good
business judgment.”
¶16 The jury found in favor of Beckman, in part. On the
special verdict form, the jury indicated that Cybertary breached
the Employment Agreement by failing to pay Beckman’s
compensation and benefits, but did not breach the agreement by
terminating her employment without cause. The jury further
found that neither Franchise Foundry nor Faulconer acted with
gross negligence or willful misconduct. Although Beckman
sought an award of $235,041.05, the jury determined that
Cybertary owed Beckman $84,913.83 in unpaid salary and
$18,150 in unpaid benefits, totaling $103,063.83 in damages.
¶17 Beckman then moved for an award of prejudgment
interest. The trial court denied the motion, concluding that
Beckman’s damages “are not the type of damages that are
susceptible to an award of prejudgment interest.”
¶18 Beckman and Cybertary also filed competing motions for
attorney fees. Both relied on the attorney fees provision
contained in the Employment Agreement. Under that provision,
the “nonprevailing party” “to any proceeding under [the
Employment Agreement]” pays its own and the other side’s
reasonable expenses, including attorney fees. The provision
defined “nonprevailing party” as “the party that the court of
competent jurisdiction awards less than one-half (1/2) of all of
the amounts in dispute.”
¶19 The court construed the attorney fees provision “as
mandating an assessment of whether each party asserting a
claim under the Employment Agreement is a ‘nonprevailing
party’ under that claim.” As to Beckman’s fees request, the court
determined that “[b]ecause Cybertary was awarded less than
one-half of the amounts it sought against Beckman, it [was] the
nonprevailing party with respect to its counterclaims, and it
[was] therefore required to pay Beckman’s attorney fees and
20150295-CA 7 2018 UT App 47Beckman v. Cybertary Franchising
costs incurred in defending against those claims.” Accordingly,
the court awarded Beckman $75,317.24 against Cybertary. As to
Cybertary’s request for fees, the court determined that Beckman
was the nonprevailing party with respect to her claims, “having
recovered less than one half of the amount she sought against
Cybertary.” Thus, the court found, Beckman was required to pay
the attorney fees and costs Cybertary incurred in defending
against her claims, which amounted to $62,181.90. The court
then subtracted the amount awarded to Cybertary from the
amount awarded to Beckman, resulting in a net award of
attorney fees and costs of $13,135.34 to Beckman.
¶20 Franchise Foundry and Faulconer also requested attorney
fees. The trial court determined that because Franchise Foundry
and Faulconer prevailed on summary judgment on Beckman’s
claim against them under the Employment Agreement, they
were entitled to $27,153.33 in attorney fees from Beckman.
Beckman appeals.
ISSUES AND STANDARDS OF REVIEW
¶21 Beckman advances five main claims of error on appeal.
First, Beckman contends that the trial court abused its discretion
by denying her motion for leave to amend her complaint. This
court “will not disturb a trial court’s denial of a motion to amend
pleadings absent an abuse of discretion.” Reller v. Argenziano,
2015 UT App 241, ¶ 14, 360 P.3d 768. Under this standard, we
will reverse the trial court if its decision “exceeds the limits of
reasonability.” Coroles v. Sabey, 2003 UT App 339, ¶ 16, 79 P.3d
974 (citation and internal quotation marks omitted).
¶22 Second, Beckman contends that the trial court incorrectly
applied rule 408 of the Utah Rules of Evidence and exceeded its
discretion in refusing to admit an audio recording of the October
conversation on the ground that the recording was evidence of
compromise negotiations. We review the trial court’s resolution
of the legal questions underlying the admissibility of evidence
for correctness and the trial court’s decision to admit or exclude
20150295-CA 8 2018 UT App 47Beckman v. Cybertary Franchising
evidence for an abuse of discretion. See State v. Griffin, 2016 UT
33, ¶ 14, 384 P.3d 186.
¶23 Third, Beckman contends that Instruction 12 incorrectly
defined “cause” with regard to the termination of her
employment under the Employment Agreement. “A trial court’s
decision regarding jury instructions presents a question of law,
which is reviewed for correctness.” Vitale v. Belmont Springs, 916
P.2d 359, 361 (Utah Ct. App. 1996).
¶24 Fourth, Beckman contends that the trial court erroneously
failed to award her prejudgment interest. “A trial court’s
decision to grant or deny prejudgment interest presents a
question of law which we review for correctness.” Cornia v.
Wilcox, 898 P.2d 1379, 1387 (Utah 1995).
¶25 Fifth, Beckman contends that the trial court erred in its
awards of attorney fees. “A challenge to an award of attorney
fees [based on a] contract or statute . . . presents a question of
law that we review for correctness.” Brodkin v. Tuhaye Golf, LLC,
2015 UT App 165, ¶ 34, 355 P.3d 224.
ANALYSIS
I. Leave to Amend
¶26 First, Beckman contends that the trial court abused its
discretion by denying her motion for leave to file a second
amended complaint to add four new claims. Beckman argues
that she should have been allowed to amend her complaint
because her motion was not untimely, her delay was justified by
her pending bankruptcy action, and Defendants would have had
adequate time to prepare to defend against the new claims.
¶27 Rule 15 of the Utah Rules of Civil Procedure allows a
party, before trial, to amend its pleading “once as a matter of
course” within twenty-one days after serving the pleading, or,
where a responsive pleading is required, the earlier of twenty-
20150295-CA 9 2018 UT App 47Beckman v. Cybertary Franchising
one days after service of that pleading or twenty-one days after
service of a motion under rule 12(b), (e), or (f). 2 Utah R. Civ. P.
15(a)(1). Additional amendments may be filed “only with the
court’s permission or the opposing party’s written consent.” Id.R. 15(a)(2). “The court should freely give permission when
justice requires.” Id.¶28 Our supreme court has recently explained that this
standard requires a district court “to decide whether the
nonmoving party has identified a ground or factor sufficient to
defeat the presumption in favor of amendment.” Stichting
Mayflower Mountain Fonds v. United Park City Mines Co., 2017 UT
42, ¶ 48. Among the factors that may weigh against a decision to
allow an amendment are untimeliness, undue delay, prejudice to
the opposing party, bad faith, and failure to cure pleading
deficiencies with other, earlier amendments; but, “[t]here is no
rigid test.” Id. ¶¶ 47–48; see also Daniels v. Gamma West
Brachytherapy, LLC, 2009 UT 66, ¶ 58, 221 P.3d 256. “Even a single
consideration or factor may be enough to justify denial of a
motion for leave to amend.” Stichting Mayflower, 2017 UT 42,
¶ 48.
¶29 In reviewing a district court’s decision to deny a motion
for leave to amend under rule 15(a), we owe the court deference
because rule 15(a) “leaves a lot of discretion in the hands of the
district judge.” Id. ¶ 52. We afford that discretion because we
recognize that district courts “are in a much better position than
appellate courts to make such case-specific determinations as
whether too much time has passed to fairly allow an
amendment, whether a party’s delay is the result of an unfair
tactic or dilatory motive, or whether some other unforeseen
factor militates for or against a particular result in that particular
case.” Kelly v. Hard Money Funding, Inc., 2004 UT App 44, ¶ 41, 87
2. Rule 15 was amended in 2016. Although the trial court applied
an earlier version of the rule, we cite the current version because
recent amendments do not affect our analysis.
20150295-CA 10 2018 UT App 47Beckman v. Cybertary Franchising
P.3d 734. Thus, “[t]he question presented is not whether we
would have granted leave to amend. It is whether we find an
abuse of discretion in the district judge’s decision to deny the
motion.” Stichting Mayflower, 2017 UT 42, ¶ 49.
¶30 Under this standard, we affirm. The trial court here based
its denial of Beckman’s motion to amend on findings of
untimeliness, unreasonable delay, and prejudice to Defendants.
Beckman challenges all three of those findings but has not
demonstrated that the trial court exceeded the bounds of its
discretion in denying her motion on those grounds.
¶31 First, with respect to timeliness, Beckman argues that her
motion, filed more than sixteen months after she filed her
original complaint, was not untimely “as a matter of law.” We
do not disagree. There is, after all, no “bright line rule” against
which to judge the timeliness of a motion to amend. See Kelly,
2004 UT App 44, ¶ 28. However, we are not persuaded that it
was unreasonable for the trial court to conclude that Beckman’s
motion was untimely under the circumstances.
¶32 Beckman filed her motion months after the discovery
deadline had passed 3 and after her lawsuit had been dormant for
3. During the hearing on her motion for leave to amend,
Beckman identified August 15, 2012, as the fact discovery
deadline and conceded that under rule 26 of the Utah Rules of
Civil Procedure, “fact discovery has long since closed.” In fact,
rather than argue that the discovery deadline had not passed (or
had only recently passed), Beckman focused on the reasons the
case had been delayed, and advocated for a “new scheduling
order” and “additional time for discovery.” On appeal,
Beckman’s argument in her opening brief is similar to the one
she made to the trial court. Although she argues that the “fact
discovery cutoff date was September 6, 2012,” she does not
argue that the litigation was not in an advanced procedural
stage; rather, she argues that “the time period at issue must
(continued…)
20150295-CA 11 2018 UT App 47Beckman v. Cybertary Franchising
some time, causing the trial court judge to observe that the case
had been “dragging on and dragging on and—and nothing
done.” Where Beckman sought to significantly expand the scope
of the lawsuit by adding four new claims (including claims for
fraud and conspiracy) more than sixteen months into litigation
that had shown little outward progress, and months after
deadlines established by rule 26 of the Utah Rules of Civil
Procedure had passed, we cannot conclude that there was no
reasonable basis for the court’s timeliness finding.
¶33 Second, and closely related to her untimeliness argument,
Beckman contends that she was justified in waiting to file her
amended complaint because of uncertainties associated by her
then-pending bankruptcy case. She argues that “moving forward
with new and plausible claims for relief would have increased
the likelihood that the trustee would have seized those claims,”
and thus she was justified in waiting until after the bankruptcy
case concluded. In evaluating a movant’s justification for delay,
district courts “focus[] on the reasons offered by the moving
party for failing to include the new facts or allegations in the
original complaint.” Carter v. Bourgoin Constr., Inc., 2015 UT App
198, ¶ 11, 357 P.3d 1 (alteration in original) (citation and internal
quotation marks omitted). “In doing so, a court should look for a
dilatory motive, a bad faith effort . . . , or unreasonable neglect.”
(…continued)
factor in the delays precipitated by [Defendants].” It is not until
her reply brief that Beckman takes the position that fact
discovery did not expire until May 8, 2013, just weeks before the
trial court heard argument on her motion. Even if Beckman’s
change of position between the filing of her opening and reply
brief was excusable due to what appears to be her reliance on the
wrong version of rule 26, Beckman has offered no justification
for her suggestion that we should review the trial court’s
decision based on facts different from those she argued before
that court. Thus, we will hold her to the representations she
made there.
20150295-CA 12 2018 UT App 47Beckman v. Cybertary Franchising
Id. (omission in original) (citation and internal quotation marks
omitted).
¶34 In this case, Beckman never demonstrated to the trial
court why she had to wait to file certain claims despite having
already filed other of her claims while the bankruptcy case was
pending. In other words, she never explained why her expressed
concern over what actions the trustee could take did not deter
her from filing the claims pleaded in her original and first
amended complaints, but did deter her from filing the additional
claims she proposed to assert in her motion for leave to amend.
Given the unanswered questions and inherent inconsistencies in
Beckman’s argument, we cannot conclude that the trial court
exceeded its broad discretion in finding that Beckman’s delay
was unreasonable under the circumstances. See Stichting
Mayflower Mountain Fonds v. United Park City Mines Co., 2017 UT
42, ¶ 52 (“The judge is charged with deciding whether the
movant had a good reason for not asserting the new claims at an
earlier stage of the proceedings . . . [a]nd the judge’s findings are
entitled to deference on appeal. We are in no position to disturb
them.”).
¶35 Third, as to prejudice, Beckman argues that had she been
permitted to amend her complaint, Defendants still would have
had “ample time to adjudicate the issues raised in [her] second
amended complaint.”
¶36 In its oral ruling, the trial court determined that
Beckman’s delay in bringing her new claims caused “problems
with Rule 26,” and Defendants “would be prejudiced if Beckman
were permitted to file her proposed Second Amended
Complaint.” The court observed that while discovery could be
extended, the purpose behind rule 26 is “to make sure things are
filed timely” and that that purpose was not served by extending
the litigation to accommodate Beckman’s proposed amendment.
¶37 While we acknowledge that the court could have
reopened discovery and extended deadlines to accommodate
Beckman’s amendment, we are again mindful that the trial court
20150295-CA 13 2018 UT App 47Beckman v. Cybertary Franchising
is better positioned than we are to assess the potential prejudice
of an amended pleading on non-moving parties. See Daniels v.
Gamma West Brachytherapy, LLC, 2009 UT 66, ¶ 60, 221 P.3d 256;
see also Stichting Mayflower, 2017 UT 42, ¶ 52 (“Under the
applicable standard of review, we owe deference to the district
court’s determination that [the moving party’s] delay and the
impact on the timely resolution of the case were sufficient to
defeat the presumption in favor of amendment.”). Given the trial
court’s “involvement in and experience with the case,” Stichting
Mayflower, 2017 UT 42, ¶ 53, it was in a better position than this
court to assess the impact on Defendants of Beckman’s proposed
amendment by which she sought to add, after the close of
discovery, four substantive claims to a case that had already
extended beyond the timelines established under rule 26. Thus,
there is a basis for the trial court’s finding, and we conclude that
the trial court did not exceed its broad discretion in denying
leave to amend.
II. The Exclusion of the October Conversation
¶38 Beckman next contends that the trial court erred in
excluding, pursuant to rule 408 of the Utah Rules of Evidence,
the audio recording of the October conversation. She argues that
the recording does not fall within the scope of rule 408 because
(1) no dispute existed at the time of the call, (2) the call
constituted a business communication, and (3) Faulconer did not
offer during the call to settle any disputed claim. Alternatively,
Beckman argues that the recording should nevertheless be
admitted because the recording contains statements relevant to
the parties’ claims and defenses and would be “otherwise
discoverable.”
¶39 Rule 408 provides that evidence of compromise offers and
negotiations “is not admissible either to prove or disprove
liability for or the validity or amount of a disputed claim.” Utah
R. Evid. 408(a). Specifically, when offered for that purpose, the
rule bars evidence of “(1) furnishing, promising, or offering—or
accepting, promising to accept, or offering to accept—a valuable
20150295-CA 14 2018 UT App 47Beckman v. Cybertary Franchising
consideration in order to compromise or attempt to compromise
the claim; and (2) conduct or a statement made in compromise
negotiations.” Id. “[F]or the exclusionary rule to attach, the party
seeking to have evidence of offers to compromise or statements
made in the course thereof excluded must show that the
discussions in question were made in compromise negotiations.”
Davidson v. Prince, 813 P.2d 1225, 1232 (Utah Ct. App. 1991)
(citation and internal quotation marks omitted). The rule is
“‘premised on the idea that encouraging settlement of civil
claims justifies excluding otherwise probative evidence from
civil lawsuits.’” State v. Mead, 2001 UT 58, ¶ 46, 27 P.3d 1115(quoting Manko v. United States, 87 F.3d 50, 54 (2d Cir. 1996)).
¶40 Rule 408 has two caveats. First, evidence subject to the
rule may nevertheless be admitted if offered “for another
purpose, such as proving a witness’s bias or prejudice, negating
a contention of undue delay, or proving an effort to obstruct a
criminal investigation or prosecution.” Utah R. Evid. 408(b)(1).
Second, “otherwise discoverable” evidence need not be excluded
“merely because it is presented in the course of compromise
negotiations.” Id. R. 408(b)(2). In other words, rule 408 “does not
immunize the information included in fact statements, but, in
order to encourage free discussion, merely makes inadmissible
the statements themselves when offered as admissions of a party
opponent.” Edward L. Kimball & Ronald N. Boyce, Utah
Evidence Law 4-130 (2d ed. 2004).
¶41 We agree with the trial court that the recording of the
October conversation is evidence of “conduct [and] statement[s]
made in compromise negotiations.” See Utah R. Evid. 408(a)(2).
Both Beckman and Faulconer engaged in the October
conversation with the understanding that the purpose of the
colloquy was to discuss a resolution of their dispute. Faulconer
suggested the parties speak after Beckman had threatened
litigation, and in his email arranging the phone call, Faulconer
twice stated that if Beckman agreed to participate, the discussion
would be “for settlement purposes only.” Faulconer further
reiterated the point at the beginning of the call, and he stated
20150295-CA 15 2018 UT App 47Beckman v. Cybertary Franchising
that he would be frank to aid in their effort to “reach a
settlement” and “to make this work.”
¶42 For her part, Beckman demonstrated her assent to
Faulconer’s condition by proceeding with the conversation,
stating that her attorney had given them the “green light” to
have the discussion. She also twice acknowledged that the stated
purpose of the call was “for settlement . . . only,” and for ninety
minutes she discussed with Faulconer the grounds of their
dispute and proposals to resolve it. The record therefore
supports the trial court’s conclusion that the ensuing “statements
captured [in the recording] constitute[d] compromise
negotiations,” and the recording is inadmissible under rule 408
“either to prove or disprove liability for or the validity or
amount of” Beckman’s claims. See id.¶43 Beckman nevertheless argues that because, at the time of
the call, Faulconer had not disputed that Beckman’s wages were
owed to her and Cybertary had not terminated her employment,
there were no disputes to compromise and the conversation was
simply a “business communication.” The record does not
support Beckman’s claim. Midway through the phone call,
Beckman expressly confirmed the parties’ dispute when she
stated: “We are here to discuss the dispute related to the
employment agreement.” She also began the conversation by
saying that she was recording it so that she could share it with
her attorney. And, although the recording evidences Faulconer’s
agreement that Beckman had earned her wages, it also shows
that the parties sharply disagreed over whether Beckman shared
responsibility for the wages not being paid; whether Beckman,
Faulconer, and Franchise Foundry could be held individually
liable for the wages; and where funds would come from to pay
the wages. Similarly, with regard to Beckman’s employment,
although she had not yet been terminated, the parties discussed
their disagreement over whether Faulconer had cause and
authority to terminate Beckman, and she sought, as a step
toward resolution of their dispute, an assurance that Faulconer
had no such intent. Thus, the recording itself amply
20150295-CA 16 2018 UT App 47Beckman v. Cybertary Franchising
demonstrates that the parties had an ongoing dispute and that
the phone call was not a business communication.
¶44 Beckman further argues that the trial court erred in
excluding the recording under rule 408 because the recording
does not constitute evidence of “furnishing, promising, or
offering—or accepting, promising to accept, or offering to
accept—valuable consideration in order to compromise or
attempt to compromise the claim” under rule 408(a)(1).
Beckman’s argument is misplaced. The court excluded the
evidence under rule 408(a)(2), as “conduct or . . . statement[s]
made in compromise negotiations.” Because the court did not
rely on subsection (a)(1) of rule 408 to find the recording
inadmissible, we need not consider whether Faulconer’s offers of
compromise constitute “valuable consideration” under that
subsection.
¶45 As for rule 408’s caveats, Beckman does not claim that she
offered the recording for a purpose other than to “prove or
disprove liability for or the validity or amount of a disputed
claim,” see Utah R. Evid. 408(b)(1), but she suggests that
unidentified statements in the recording are “otherwise
discoverable” and therefore admissible, see id. R. 408(b)(2). Rule
408(b)(2) states that courts are “not required to exclude evidence
otherwise discoverable merely because it is presented in the
course of compromise negotiations.” Id. We agree with
Defendants that rule 408(b)(2) does not apply because Beckman
seeks to admit “a recording of the actual compromise
negotiations to prove certain alleged admissions by Faulconer.”
(Emphasis omitted.) For the reasons stated above, the trial court
did not err in concluding that evidence of those negotiations is
inadmissible under rule 408(a)(2).
III. The Jury Instruction Regarding “Cause” for Termination
¶46 Beckman next contends that the trial court erred in
instructing the jury as to the definition of “cause” in connection
with her claim that Cybertary breached the Employment
Agreement when it terminated her employment without cause.
20150295-CA 17 2018 UT App 47Beckman v. Cybertary Franchising
Under the Employment Agreement, the parties agreed that
Cybertary would employ Beckman for three years subject to
earlier termination as provided in the “Termination for Cause”
provision. It stated that Beckman’s term of employment “may be
terminated by [Cybertary] immediately for ‘cause,’” and
enumerated seven “events with respect to [Beckman]” that
“shall constitute ‘[c]ause’” for immediate termination:
(i) Executive’s commission of a felony of any kind
or any other crime (whether it is a felony or not)
involving securities fraud, theft, or moral
turpitude;
(ii) Executive’s willful breach, habitual neglect,
gross neglect, or dereliction of Executive’s duties
under this Agreement;
(iii) Executive’s material misconduct with regard to
the Company, including, but not limited to,
Executive’s failure to comply with [the] Company’s
written rules and policies;
(iv) Executive’s failure to follow in good faith the
reasonable lawful direction of the Board or any
committee thereof;
(v) Any act by Executive of sexual harassment (or
Executive’s creating a hostile work environment)
or any other activity of Executive prohibited by
state, local, and/or federal law with respect to
discrimination based on age, sex, race, religion, or
national origin;
(vi) Any conduct, whether dishonest, fraudulent,
or otherwise, that discredits the Company or is
detrimental to the reputation of the Company or
the Company’s results of operations or business;
and/or
20150295-CA 18 2018 UT App 47Beckman v. Cybertary Franchising
(vii) Any breach of any of Executive’s obligations
under the Inventions, Confidentiality, and
Restrictive Covenant Agreement referred to below.
¶47 Instruction 12 identified these events 4 and specified,
“‘Cause’ has been defined in . . . the Employment Agreement
and requires Cybertary to prove, by a preponderance of the
evidence,” one of the events. Beckman’s challenge focuses on
additional language included in Instruction 12, which applies
the business judgment rule to the determination of cause:
In determining whether Cybertary breached the
Employment Agreement by inaccurately
determining that one or more of these definitions
of “cause” existed, you must remember that the
determination of whether one or more of these
definitions was satisfied was a matter for
Cybertary’s good business judgment. So long as
Cybertary possessed a fair and honest cause or
reason, in good faith, that met one of these
definitions, cause existed to terminate Beckman,
whether or not the facts that Cybertary believed to
be true really, in fact, were true.
Beckman asserts that by instructing the jury regarding
Cybertary’s good business judgment, the trial court incorrectly
“looked beyond the plain language of [the] Employment
Agreement and inserted its own definition of what constitutes
‘cause’ for termination.” Cybertary responds that the
Employment Agreement does not define “what the employer
must prove to establish cause for termination” and that the jury
was properly instructed as to Utah law in that regard. According
to Cybertary, “[e]mployers are not required to prove the facts
4. We note for the sake of accuracy that Instruction 12 actually
included event (vi) twice and omitted event (iv). Neither party
has complained about that apparent error.
20150295-CA 19 2018 UT App 47Beckman v. Cybertary Franchising
giving rise to the termination so long as the employer can
demonstrate a reasonable, good-faith belief that the facts
existed.” Cybertary’s argument and the trial court’s decision to
include the challenged language in Instruction 12 rested on their
interpretation of Uintah Basin Medical Center v. Hardy, 2005 UT
App 92, 110 P.3d 168.
¶48 The dispute in Uintah Basin centered on a two-page
employment agreement that provided that the agreement could
be terminated after ninety days’ “written notice for just cause of
termination by either party.” Id. ¶ 2 (internal quotation marks
omitted). The agreement did not define “‘just cause’ or otherwise
clarify what grounds would justify termination.” Id. This court
concluded, in the absence of evidence that the parties intended a
meaning of just cause unique to their agreement, that “the
parties intended the term to have its ordinary meaning.” Id. ¶ 17.
The court explained that the term “just cause” is “ordinarily
understood to provide employers with power to terminate an
employee for legitimate business reasons and in the interest of
improving client services as long as the justification is not a mere
pretext for a capricious, bad faith, or illegal termination.” Id.; see
also id. ¶ 16 (explaining that “termination for just cause is widely
understood to permit discharge only for ‘a fair and honest cause
or reason, regulated by good faith . . . as opposed to one that is
trivial, capricious, unrelated to business needs or goals, or
pretextual’” (omission in original) (quoting Guz v. Bechtel Nat’l,
Inc., 8 P.3d 1089, 1100 (Cal. 2000))); id. (“What constitutes good
cause for dismissal of an employee is generally a matter for an
employer’s good business judgment . . . .” (omission in original)
(citation and internal quotation marks omitted)).
¶49 With respect to “what an employer must show to prove it
terminated an employee for just cause,” the court adopted an
“objective reasonableness approach,” id. ¶¶ 21, 23, under which
employers may “justify termination with an objective good faith
reason supported by facts reasonably believed to be true by the
employer,” id. ¶ 22. Courts applying this approach should
recognize that “an employer’s [proffered] justification for
20150295-CA 20 2018 UT App 47Beckman v. Cybertary Franchising
discharging an employee should not be taken at face value but
also recognize that a judge or jury should not be called upon to
second-guess an employer’s business decisions.” Id. Thus, the
employer in Uintah Basin could establish just cause for
termination by showing that it “acted in good faith by
adequately considering the facts it reasonably believed to be true
at the time it made the decision.” 5 Id. ¶ 23.
¶50 Beckman asserts that because the Employment
Agreement “specifically defines what ‘cause’ for termination
means,” the objective reasonableness approach adopted in
Uintah Basin does not apply. She argues that the Employment
Agreement should be interpreted according to its plain
language, and that the holding of Uintah Basin with respect to
“just cause” cannot be invoked to modify the terms of her
contract in which “cause” has been expressly defined. Cybertary
disagrees, arguing that Uintah Basin “is not so readily restricted
to its facts” and that the court’s reasoning “is still pertinent.”
Cybertary contends that “[a]lthough the Employment
Agreement enumerated general grounds for cause, rather than
an undefined articulation of ‘just cause,’ the enumerated
grounds are no more instructive and offer no more practical
guidance.” Thus, Cybertary argues, “Uintah teaches that such
definitions, like ‘just cause’ generally, must be interpreted and
applied, in the first instance, by the employer.”
¶51 We agree with Beckman. “When interpreting a contract,
our task is to ascertain the parties’ intent.” Mind & Motion Utah
Invs., LLC v. Celtic Bank Corp., 2016 UT 6, ¶ 24, 367 P.3d 994; see
also Berube v. Fashion Centre, Ltd., 771 P.2d 1033, 1044 (Utah 1989)
(“[E]mployment contracts should be construed to give effect to
5. In adopting the objective reasonableness approach, the court
acknowledged but rejected an approach requiring “the employer
to prove that the conditions necessitating termination actually
existed.” Uintah Basin Med. Center v. Hardy, 2005 UT App 92,
¶¶ 21–23, 110 P.3d 168.
20150295-CA 21 2018 UT App 47Beckman v. Cybertary Franchising
the intent of the parties.”). “And the best indication of the
parties’ intent is the ordinary meaning of the contract’s terms.”
Mind & Motion, 2016 UT 6, ¶ 24. “If the language within the four
corners of the contract is unambiguous, the parties’ intentions
are determined from the plain meaning of the contractual
language, and the contract may be interpreted as a matter of
law.” WebBank v. American Gen. Annuity Service Corp., 2002 UT
88, ¶ 19, 54 P.3d 1139 (citation and internal quotation marks
omitted).
¶52 In Uintah Basin, the parties had agreed to an employment
arrangement that could be terminated for “just cause.” Uintah
Basin Med. Center v. Hardy, 2005 UT App 92, ¶¶ 2, 10, 110 P.3d
168. Because the parties did not define the term, this court
concluded that the parties intended it to have its ordinary
meaning—a meaning that included a measure of discretion. Id.
¶¶ 2, 16–17. And having determined that the term “just cause” is
“widely understood to permit discharge only for a fair and
honest cause or reason, regulated by good faith,” id. ¶ 16
(citation and internal quotation marks omitted), the court
concluded that the fact-finder should determine whether the
employer had an “objective good faith reason” for termination
rather than second-guess the employer’s business decision, see id.
¶¶ 22–23.
¶53 We cannot, however, reach the same conclusion in this
case. Cybertary and Beckman negotiated an employment
contract with seven enumerated events that constituted cause for
early termination. Thus, unlike the parties in Uintah Basin,
Cybertary and Beckman clearly evidenced their intent that
something other than the ordinary meaning of just cause would
govern Beckman’s termination. For example, while “just cause”
as defined in Uintah Basin permits termination on the basis of any
“good faith business reason[],” id. ¶ 19, the Employment
Agreement narrowed the scope of permissible bases for
termination to those specifically identified. Because the parties
did not create a contract in which termination would be
permitted on the basis of any just cause, we do not incorporate
20150295-CA 22 2018 UT App 47Beckman v. Cybertary Franchising
that term, or its accordant “objective reasonableness” standard,
into the parties’ contract.
¶54 A contrary interpretation—that Beckman could be
terminated for the mistaken, but honest belief, that one of the
seven enumerated events identified in the Employment
Agreement had occurred—is unwarranted. The contract
language “established a standard that is sufficiently definite to
allow a fact-finder to determine whether [Cybertary] had [cause]
to support the termination of [Beckman’s] employment.” 6 See
Kern v. Palmer College of Chiropractic, 757 N.W.2d 651, 660 (Iowa
2008) (rejecting the objective reasonableness approach where the
parties expressly defined the meaning of cause in their
employment contract). Having contracted for that standard, we
see no justification for Cybertary’s assertion that the fact-finder
should not be allowed to “second guess” Cybertary’s own
determination of whether cause existed to terminate Beckman’s
employment. See id.; Janoff v. Gentle Dental, PC, 986 P.2d 1278,
1280–81 (Or. Ct. App. 1999) (seeing “no reason to treat [an
employment] contract differently from every other contract,
including [a] plaintiff’s right to a judicial determination of all
factual issues related to whether” the enumerated grounds for
termination were satisfied).
¶55 Given our conclusion that the Employment Agreement
does not incorporate an objective reasonableness standard into
the termination provision, it was erroneous for the trial court to
instruct the jury that “the determination of whether one or more
of these definitions [of cause] was satisfied was a matter for
Cybertary’s good business judgment.” It was also erroneous to
instruct the jury that “[s]o long as Cybertary possessed a fair and
6. In reaching this conclusion, we reject Cybertary’s argument
that the seven enumerated events identified in the Employment
Agreement as cause for termination are so ill-defined that they
“must be interpreted and applied, in the first instance, by the
employer.”
20150295-CA 23 2018 UT App 47Beckman v. Cybertary Franchising
honest cause or reason, in good faith, that met one of these
definitions, cause existed to terminate Beckman.”
¶56 “An erroneous jury instruction is prejudicial if, taken in
context with the jury instructions as a whole, it misadvised or
misled the jury on the law.” Harris v. ShopKo Stores, Inc., 2013 UT
34, ¶ 39, 308 P.3d 449 (citations and internal quotation marks
omitted). This court will reverse for a new trial when it is
reasonably likely that the error affected the outcome and “our
confidence in the jury’s verdict is undermined.” Id. ¶ 40 (citation
and internal quotation marks omitted).
¶57 Here, we conclude that the error in Instruction 12 was
prejudicial. As explained above, Instruction 12 misadvised the
jury on the applicable law with respect to Beckman’s claim that
Cybertary breached the Employment Agreement by terminating
her employment without cause. Based on this incorrect legal
standard, the jury may well have determined that Cybertary
legally terminated Beckman’s employment based only on a good
faith belief that cause existed even if there was no actual cause
for termination. Thus, there is a reasonable likelihood that the
jury may have reached a different result had it been given jury
instructions that articulated the correct legal standard. We
therefore reverse and remand for a new trial on this claim.
IV. Prejudgment Interest
¶58 Beckman contends that the trial court erred in declining to
award her prejudgment interest. She asserts that she is entitled
to prejudgment interest because her unpaid wages and benefits
can be measured and quantified by the amounts specified in the
Employment Agreement and because her damages were fixed
and complete as of the date of her termination on November 14,
2011. Cybertary responds that Beckman’s loss was not fixed as of
a particular time, because the jury had to “exercise its judgment
and discretion to award damages” in limiting the damages
award to the wages and benefits that had accrued prior to
Beckman’s termination, in determining whether that award was
subject to an offset, and in determining whether Beckman had
20150295-CA 24 2018 UT App 47Beckman v. Cybertary Franchising
waived or deferred her right to payment. Cybertary also argues
that because any interest would accrue from the date of each
missed payment, and because Beckman was sometimes
overpaid, Beckman did not provide sufficient evidence to
support an award of prejudgment interest. Cybertary further
argues that prejudgment interest is unavailable because the
Employment Agreement was not a contract for the loan or
forbearance of money, goods, or chose in action.
¶59 “[T]he purpose of awarding prejudgment interest is to
compensate a party for the depreciating value of the amount
owed over time and, as a corollary, to deter parties from
intentionally withholding an amount that is liquidated and
owing.” Encon Utah, LLC v. Fluor Ames Kraemer, LLC, 2009 UT 7,
¶ 67, 210 P.3d 263 (citation and internal quotation marks
omitted). Under Utah law, “[p]rejudgment interest may be
recovered where the damage is complete, the amount of the loss
is fixed as of a particular time, and the loss is measurable by facts
and figures.” Id. ¶ 51 (citation and internal quotation marks
omitted). “[L]osses that cannot be calculated with mathematical
accuracy are those in which damage amounts are to be
determined by the broad discretion of the trier of fact, requiring
the fact-finder to be guided by [its] best judgment in assessing
the amount to be allowed for past as well as for future injury.”
USA Power, LLC v. PacifiCorp, 2016 UT 20, ¶ 100, 372 P.3d 629(first alteration in original) (citations and internal quotation
marks omitted). “Such losses include those stemming from
personal injury, wrongful death, defamation, false
imprisonment, malicious prosecution, and assault and battery.”
Id. In those situations, prejudgment interest is inappropriate
because “the trier of fact is left to assess damages based on a
mere description of the wrongs done or injuries inflicted.” Encon
Utah, 2009 UT 7, ¶ 53 (citation and internal quotation marks
omitted).
¶60 Here, we agree with Beckman that her damages could be
calculated with mathematical accuracy. For Beckman’s only
successful claim, she alleged that Cybertary had not paid wages
20150295-CA 25 2018 UT App 47Beckman v. Cybertary Franchising
and benefits she was due under the terms of the Employment
Agreement. The Employment Agreement established the
payment schedule and the amounts due to Beckman, and at trial
Beckman provided an exhibit breaking down the funds that
Cybertary paid. And even Cybertary conceded in the trial court
that the jury calculated its damages award by subtracting the
amount Cybertary paid Beckman over the course of her
employment from the total amount she was due. 7 Unlike “cases
where the trier of fact is left to assess damages based on a mere
description of the wrongs done or injuries inflicted,” see id.(citation and internal quotation marks omitted), the amount
owed under the Employment Agreement was “ascertainable by
calculation,” see id. ¶ 54 (citation and internal quotation marks
omitted). Accordingly, we conclude that Beckman was entitled
to prejudgment interest. See id. ¶ 65 (stating that the trial court
based its decision on measurable facts and figures because it
reviewed the terms of the fixed price contract, the percentage of
work completed, and noted that the parties agreed to a 10%
profit on that work); Campbell, Maack & Sessions v. Debry, 2001
UT App 397, ¶ 23, 38 P.3d 984 (affirming an award of
prejudgment interest where a debt existed under an agreement,
the debtor delayed in tendering the amount due, and the court
had “sufficient information to calculate the loss with
mathematical accuracy and to fix the loss as of a particular time”
(brackets, citation, and internal quotation marks omitted)).
7. In opposition to Beckman’s motion for prejudgment interest,
Cybertary observed that the jury’s verdict “plainly tracked”
Beckman’s Trial Exhibit 34, which totaled the payroll payments
Cybertary made to Beckman throughout her employment, in the
amount of $45,961.17. Section 3(a) of the Employment
Agreement identified, by month, the salary due to Beckman
from June 2010 through her termination, which totaled $130,875.
Subtracting the amount Cybertary paid Beckman from the
amount it owed totaled $84,913.83—the amount the jury
awarded for unpaid salary.
20150295-CA 26 2018 UT App 47Beckman v. Cybertary Franchising
¶61 Cybertary counters that because the jury had to determine
Beckman’s damages and because it ultimately awarded a lesser
amount than she claimed, her loss was not fixed as of a
particular time. The fact that Beckman’s damages were
ascertained at trial, however, does not mean that her damages
were “not already complete, fixed, and measurable.” See
Highlands at Jordanelle, LLC v. Wasatch County, 2015 UT App 173,
¶ 28, 355 P.3d 1047; see also AE, Inc. v. Goodyear Tire & Rubber Co.,
576 F.3d 1050, 1058 (10th Cir. 2009) (concluding that, under Utah
law, it “is clear that prejudgment interest may be appropriate
even if the amount of damages [is] ascertained at trial”).
Beckman asserted two breach of contract theories against
Cybertary: one based on Cybertary’s failure to pay wages and
benefits Beckman earned for the time period before her
termination, and another based on Cybertary’s premature
termination of the Employment Agreement. As damages for that
second theory, Beckman sought the wages and benefits she
would have earned had Cybertary not prematurely terminated
her employment. Ultimately, the jury awarded Beckman only
those wages and benefits she earned pre-termination because it
rejected her theory that Cybertary unlawfully terminated her
employment without cause. But the fact that the jury rejected
Beckman’s second theory, and its attendant claim for post-
termination wages and benefits, does not negate the fact that
Beckman’s damages for unpaid wages for the period prior to her
termination were fixed and measurable based on the amount she
was owed under the Employment Agreement. See Encon Utah,
2009 UT 7, ¶ 54 (noting that prejudgment interest is appropriate
in cases where the amount due under the contract is
“ascertainable by calculation” (citation and internal quotation
marks omitted)).
¶62 Relatedly, Cybertary argues that Beckman should be
denied prejudgment interest because the “claimed prejudgment
interest is not ‘calculable with mathematical certainty.’”
Beckman calculated interest from the date Cybertary terminated
her employment (November 14, 2011) rather than from the
earlier dates of each alleged breach. Cybertary argues that
20150295-CA 27 2018 UT App 47Beckman v. Cybertary Franchising
because Beckman did not calculate the prejudgment interest
from the date of each missed payment, the court did not have
sufficient evidence before it to correctly calculate the interest.
Cybertary’s argument misses the mark. “The mathematical
accuracy standard does not apply to the calculation of
prejudgment interest itself, but instead applies to the amount of
damages found by the trier of fact.” Iron Head Constr., Inc. v.
Gurney, 2009 UT 25, ¶ 18, 207 P.3d 1231.
¶63 Moreover, Cybertary does not contend that Beckman’s
requested prejudgment interest is not readily calculable. Rather,
Cybertary complains that Beckman failed to provide sufficient
evidence for the court to award prejudgment interest accruing
incrementally from the date of each missed payment. But
Beckman did not seek to recover that added interest. Beckman
sought only to recover interest that accrued as of the date of her
termination. Any argument that Beckman may have lacked
sufficient evidence to recover prejudgment interest that accrued
before her termination does not render her evidence insufficient
as to the post-termination interest she actually sought.
¶64 Cybertary, citing Utah Code section 15-1-1, further argues
that prejudgment interest is unavailable to Beckman because the
Employment Agreement was not a contract for “the loan or
forbearance of any money, goods, or chose in action.” Section 15-
1-1 states, “Unless parties to a lawful contract specify a different
rate of interest, the legal rate of interest for the loan or
forbearance of any money, goods, or chose in action shall be 10%
per annum.” Utah Code Ann. § 15-1-1(2) (LexisNexis 2013).
Contrary to Cybertary’s argument, this provision does not
dictate whether a party is entitled to prejudgment interest. That
determination is made based on whether a party’s damages can
be calculated with mathematical accuracy. See supra ¶ 59.
Instead, section 15-1-1 identifies the particular interest rate that
applies to those categories of contracts identified in the statute.
See USA Power, LLC v. PacifiCorp, 2016 UT 20, ¶ 109, 372 P.3d 629.
Hence, Cybertary cannot rely on section 15-1-1 to defeat
Beckman’s claim to prejudgment interest.
20150295-CA 28 2018 UT App 47Beckman v. Cybertary Franchising
¶65 We reverse the trial court’s order denying Beckman
prejudgment interest and remand for the trial court to calculate
the amount of prejudgment interest to which Beckman is
entitled.
V. Attorney Fees
¶66 Beckman challenges the trial court’s awards of attorney
fees in two respects. First, she contends that the trial court erred
by awarding attorney fees to Cybertary. Second, she contends
that the trial court erred by awarding attorney fees to Franchise
Foundry and Faulconer. Finally, all of the parties request
attorney fees on appeal. We address each category of attorney
fees in turn.
A. The Attorney Fees Awarded to Cybertary 8
¶67 “In Utah, attorney fees are awardable only if authorized
by statute or by contract.” Dixie State Bank v. Bracken, 764 P.2d
985, 988 (Utah 1988). If provided for by contract, the award of
attorney fees is allowed “only in accordance with the explicit
terms of the contract and only to the extent permitted by the
contract.” Maynard v. Wharton, 912 P.2d 446, 451 (Utah Ct. App.
1996).
¶68 The trial court awarded attorney fees based on its
interpretation of the attorney fees provision in the Employment
Agreement. That provision states,
8. Although we are remanding this matter for a new trial on
Beckman’s termination claim against Cybertary, we address this
issue because it has been fully briefed and is likely to arise again
on remand. See State v. James, 819 P.2d 781, 795 (Utah 1991); see
also Utah R. App. P. 30(a) (“If a new trial is granted, the court
may pass upon and determine all questions of law involved in
the case presented upon the appeal and necessary to the final
determination of the case.”).
20150295-CA 29 2018 UT App 47Beckman v. Cybertary Franchising
The nonprevailing party in any proceeding
hereunder shall be the party that the court of
competent jurisdiction awards less than one-half
(1/2) of all of the amounts in dispute
(“Nonprevailing Party”). The Nonprevailing Party
to any proceeding under this Agreement shall pay
its own expenses, the court fees, and any
administrative fees arising in connection therewith,
and the expenses, including without limitation,
attorneys’ fees, costs, and costs of investigation,
reasonably incurred by the other party to the
proceeding.
Under this provision, the “nonprevailing party” is responsible
for paying its own and the other party’s reasonable attorney fees
and other expenses. The “nonprevailing party” is defined as the
party who was “award[ed] less than one-half (1/2) of all of the
amounts in dispute.”
¶69 The Employment Agreement does not explain how to
calculate “all of the amounts in dispute.” The parties disagreed
over the relevant figures before the trial court, but for purposes
of this appeal, Beckman and Cybertary apparently agree on the
following pertinent facts and figures: Beckman sought an award
of $235,041.05 at trial for breach of the Employment Agreement,
and the jury awarded her $103,063.83; Cybertary disclosed
damages in the amount of $373,500 for its counterclaims, but the
trial court excluded Cybertary’s damages from trial for failure to
timely disclose them; and the court granted a directed verdict on
the counterclaims to Beckman.
¶70 The trial court construed the attorney fees provision’s
language “as mandating an assessment of whether each party
asserting a claim under the Employment Agreement is a
‘nonprevailing party’ under that claim.” Consequently, the court
in effect bifurcated its analysis. The court first assessed whether
Cybertary recovered less than half of the amounts it sought
against Beckman on its counterclaims and, second, the court
20150295-CA 30 2018 UT App 47Beckman v. Cybertary Franchising
assessed whether Beckman recovered less than half of the
amounts she sought against Cybertary on all of her claims.
Taking this approach, the court determined that Cybertary was
the nonprevailing party under its counterclaims and that
Beckman was the nonprevailing party under her claims against
Cybertary. Because both sides were “nonprevailing parties”
under this analysis, the trial court concluded that each side owed
the other for the attorney fees incurred in defending against the
respective claims. And because Beckman’s attorney fees award
exceeded that of Cybertary, the court offset those amounts and
awarded Beckman a total of $13,135.34.
¶71 On appeal, Beckman challenges the trial court’s decision
to apply the attorney fees provision by evaluating whether each
party asserting a claim under the Employment Agreement was a
“nonprevailing party” with respect to that claim. She asserts that
this approach contradicts the plain language of the Employment
Agreement. By her reading, the attorney fees provision allows
for “only one prevailing party” because the “term ‘nonprevailing
party’ is singular,” and “‘all of the amounts’” is a plural phrase
that refers to “those amounts sought in the ‘dispute,’” a singular
term. Beckman argues that the attorney fees provision “groups
‘all amounts in dispute’ together and then assigns liability to the
one party who is awarded less than one-half of those amounts.”
(Emphasis omitted.)
¶72 According to Beckman, she sought an award of
$235,041.05 at trial, and Cybertary, despite having its
supplemental disclosure of damages struck at trial, sought
damages of $373,500 on its counterclaims. By Beckman’s math, to
determine “all of the amounts in dispute,” the trial court “should
have subtracted what Beckman sought ($235,041.05) from what
Cybertary sought ($373,500) to arrive at $138,458.95.” (Emphasis
added.) Because Cybertary was awarded nothing at trial,
Beckman argues, Cybertary recovered less than half of the
amounts in dispute and therefore was the “nonprevailing party”
as defined by the attorney fees provision.
20150295-CA 31 2018 UT App 47Beckman v. Cybertary Franchising
¶73 Cybertary offers a different interpretation of the provision
and a different calculation of “all of the amounts in dispute.”
Cybertary asserts that the “only way to read [the attorney fees
provision] with any fidelity to its language, and with any
common sense, is to recognize that it assesses attorney fees for
each party asserting a claim.” This reading separates each
party’s total claimed damages and compares those amounts with
each party’s ultimate recovery. According to Cybertary, when
Beckman recovered $103,063.83 at trial, she recovered “less than
half of the total $235,041.05 she sought in damages.” On her
claims, Cybertary states that Beckman “is therefore the
nonprevailing party and required to pay Cybertary’s attorney
fees and costs associated with” those claims. Likewise, because
Cybertary “recovered less than half of its $373,500.00 claim,”
Cybertary admits it “is the nonprevailing party on its claims and
must therefore pay Beckman’s attorney fees associated with that
claim.”
¶74 To illustrate why its interpretation of the attorney fees
provision makes sense, Cybertary posits an alternative scenario
in which “all of the amounts in dispute” are determined by
adding the parties’ claimed damages together. Cybertary asserts
that this scenario would adhere to a strict reading of the
provision and result in $608,541.45 as the total of Beckman’s and
Cybertary’s claims. But even if Beckman recovered her entire
amount claimed in damages, she would be deemed the
nonprevailing party who is liable for Cybertary’s attorney fees.
As Cybertary explains, this reading would lead to “a harsh,
absurd result” because “a defendant could resist a legitimate
claim by asserting a bogus counterclaim in an astronomical
amount, and then claim that the prevailing plaintiff is not
entitled to attorney fees, even though the plaintiff recovered
100% of its claim.” In other words, Cybertary claims that adding
each side’s claimed damages together to determine “all of the
amounts in dispute” would give a defendant a perverse
incentive to plead meritless counterclaims in high amounts.
20150295-CA 32 2018 UT App 47Beckman v. Cybertary Franchising
¶75 To resolve this issue, we must look to the four corners of
the Employment Agreement to determine its meaning and the
parties’ intentions. Nolin v. S & S Constr., Inc., 2013 UT App 94,
¶ 12, 301 P.3d 1026. If the language within the four corners of the
contract is unambiguous, we may determine the parties’
intentions from the plain meaning of the contractual language as
a matter of law. Bakowski v. Mountain States Steel, Inc., 2002 UT
62, ¶ 16, 52 P.3d 1179. A “court considers extrinsic evidence of
the parties’ intent only if the language of the contract is
ambiguous.” Glenn v. Reese, 2009 UT 80, ¶ 10, 225 P.3d 185. A
contractual provision may be ambiguous if it is “unclear, it omits
terms, or the terms used to express the intention of the parties
may be understood to have two or more plausible meanings.”
Saleh v. Farmers Ins. Exch., 2006 UT 20, ¶ 15, 133 P.3d 428 (citation
and internal quotation marks omitted).
¶76 Both parties contend that the Employment Agreement is
unambiguous and must be read in support of their respective
positions. Applying the above principles, we examine this rather
unusual attorney fees clause. The Employment Agreement
requires that the “nonprevailing party” pay its own expenses
and court fees along with the fees and costs reasonably incurred
by the other party “in any proceeding” thereunder. The
agreement specifically defines the nonprevailing party as “the
party that the court of competent jurisdiction awards less than
one-half (1/2) of all of the amounts in dispute.” By defining the
nonprevailing party this way, this attorney fees provision differs
considerably from the more standard, boilerplate provisions that
entitle the prevailing party to an award of attorney fees. 9
9. Beckman cites common law principles, including the net
judgment rule and comparative victory rule, to support her
interpretation of the attorney fees provision. These common law
rules might have some relevance if the contractual provision at
issue stated that the prevailing party is liable for attorney fees.
See Olsen v. Lund, 2010 UT App 353, ¶¶ 4, 7–8, 246 P.3d 521. But
(continued…)
20150295-CA 33 2018 UT App 47Beckman v. Cybertary Franchising
¶77 Contrary to Cybertary’s argument and the conclusion
of the trial court, we see no indication in the Employment
Agreement that the parties intended to apply the attorney fees
provision in a bifurcated fashion. The provision not only refers
to the “nonprevailing party” in the singular, but it refers to that
singular nonprevailing party “in any proceeding hereunder.”
The term “proceeding” is commonly understood to mean a
“legal action,” Merriam-Webster.com, http://www.merriam-
webster.com/dictionary/proceeding (last visited Mar. 21, 2018),
suggesting that in a singular legal action under the Employment
Agreement there will be only one nonprevailing party. And that
nonprevailing party is to pay all of its own fees and costs and
those of the other party “arising in connection therewith.”
¶78 In other words, the potential obligation to pay attorney
fees and costs is expressly tied to fees incurred in connection
with the proceeding; it is neither completely untethered nor tied
to fees and costs incurred relative to a particular claim. By
expressly tethering the definition of “nonprevailing party” to a
proceeding, we cannot fairly read the term as tethered to a
party’s claims.
¶79 The agreement defines the nonprevailing party as the
party in the proceeding to whom the court “awards less than
one-half (1/2) of all of the amounts in dispute.” Beckman and
Cybertary suggest two alternative ways to determine “all of the
(…continued)
because the award of attorney fees under the Employment
Agreement depends on which party is deemed the
“nonprevailing party,” our analysis does not utilize these
common law principles. See Foote v. Clark, 962 P.2d 52, 54–55
(Utah 1998) (concluding that cases evaluating the parties’
respective successes to determine which was the prevailing
party were irrelevant where the only criterion for an award of
attorney fees under the contract was to demonstrate that the
other party was in default).
20150295-CA 34 2018 UT App 47Beckman v. Cybertary Franchising
amounts in dispute” when counterclaims are involved: by
subtracting, or offsetting, the parties’ damages (the subtraction
approach); or by adding both parties’ damages together (the
addition approach).
¶80 Under the subtraction approach, “all of the amounts in
dispute” would be calculated by offsetting the plaintiff’s and the
defendant’s claimed damages. In other words, the actual amount
in dispute would be determined by subtracting one party’s
claimed damages from the other party’s. The actual amount of
money in dispute would thus turn on the relative damages each
party claimed. If one party claimed a large amount of damages
and another claimed a smaller amount, it is possible that the
party claiming the smaller amount could recover all of the
damages it seeks and still be deemed a “nonprevailing party” if
its recovery was less than one-half of the difference. 10
¶81 Under the addition approach, “all of the amounts in
dispute” would be determined by adding the parties’ damages
together. Like the subtraction approach, the addition approach
would make the total amount in dispute hinge on how much
each party claimed in damages. And hypothetically, even if one
party recovered entirely on its claim, that party could be deemed
the nonprevailing party if the other party asserted a greater
amount of damages. 11
10. For example, if the plaintiff asserted a claim for $100,000 and
the defendant counterclaimed for $600,000, “all of the amounts
in dispute” under Beckman’s subtraction approach would be
$500,000. The plaintiff could recover the entirety of its damages
and still be deemed a “nonprevailing party” for recovering less
than half of the “all of the amounts in dispute.”
11. For example, if the plaintiff asserted a claim for $100,000 and
the defendant counterclaimed for $600,000, “all of the amounts
in dispute” under the addition approach would be $700,000.
(continued…)
20150295-CA 35 2018 UT App 47Beckman v. Cybertary Franchising
¶82 Although both approaches make the risk of paying
attorney fees dependent upon the amount of damages claimed
by the other party, and both have the potential to lead to
arbitrary results, Beckman advocates for the subtraction
approach presumably because it works in her favor in this case.
Had the trial court subtracted Beckman’s claimed damages from
Cybertary’s claimed damages, it would have determined that
$138,458.95 constituted “all of the amounts in dispute.” And
because Cybertary recovered nothing and Beckman recovered
$103,063.83, more than half of the total amount, Beckman
contends that Cybertary should be deemed the singular
nonprevailing party. Cybertary, on the other hand, contends that
neither approach should apply, reasoning that the subtraction
approach is not supported by the provision’s plain language
while the addition approach leads to harsh results.
¶83 We conclude that the meaning of the phrase “all of the
amounts in dispute” is ambiguous in this context. The parties
advocate different ways to calculate “all of the amounts in
dispute,” but the plain language does not obviously support
either alternative. The phrase generally suggests that “all of the
amounts in dispute” should be combined, but it does not include
terms necessary to determine whether the parties intended that
those amounts be subtracted, added, or otherwise calculated. We
therefore must remand this issue to the trial court to consider
extrinsic evidence to determine its meaning.
¶84 Having reached this conclusion, we return to Cybertary’s
argument that the provision must be interpreted to apply
separately to each party’s respective claims because any other
reading leads to harsh or arbitrary results. We acknowledge that
regardless of whether “all of the amounts in dispute” is
(…continued)
Again, the plaintiff could recover the entirety of its damages and
still be deemed a nonprevailing party under the Employment
Agreement.
20150295-CA 36 2018 UT App 47Beckman v. Cybertary Franchising
determined through subtraction or addition, a party could be
deemed a “nonprevailing party” under the provision despite
having been awarded the entirety of its damages claim. We also
note that regardless of whether the subtraction or addition
approach is used, there are scenarios under which the party
deemed nonprevailing under the provision is the party all would
concede is the nonprevailing party under a traditional prevailing
party clause. 12 But having discerned no support for the trial
court’s bifurcated approach in the plain language of the
Employment Agreement, we cannot “make a better contract for
the parties than they have made for themselves.” Bakowski v.
Mountain States Steel, Inc., 2002 UT 62, ¶ 19, 52 P.3d 1179. “Nor
will we avoid the contract’s plain language to achieve an
‘equitable’ result.” Id. While the trial court interpreted the
Employment Agreement to achieve what is arguably a
reasonable result, its interpretation was not supported by the
provision’s plain language. We therefore vacate the trial court’s
award of fees to Cybertary, and, as noted above, remand the
issue for the trial court to decide whether Cybertary is entitled to
a fees award after the court determines the parties’ intent
regarding this ambiguous clause through the consideration of
extrinsic evidence.
B. The Attorney Fees Awarded to Franchise Foundry and
Faulconer
¶85 Beckman contends that the trial court erred in employing
the reciprocal attorney fees statute, Utah Code section 78B-5-826,
to award attorney fees to Franchise Foundry and Faulconer. In
particular, Beckman argues that she did not assert claims against
Franchise Foundry and Faulconer for breach of the Employment
12. For example, if the plaintiff asserted a claim for $100,000 and
the defendant counterclaimed for $600,000, and the plaintiff was
awarded nothing and the defendant was awarded $600,000, it is
unlikely that anyone would challenge a determination that the
plaintiff was a nonprevailing party.
20150295-CA 37 2018 UT App 47Beckman v. Cybertary Franchising
Agreement, and thus they could not invoke the reciprocal
attorney fees statute to recover attorney fees under the
Employment Agreement. Franchise Foundry and Faulconer, in
contrast, assert that they are entitled to recover fees pursuant to
the Employment Agreement and the reciprocal attorney fees
statute because Beckman “asserted a claim for breach of the
Employment Agreement against [them].” In their view, “the
Employment Agreement formed the premise of Beckman’s
claim,” it would have allowed “Beckman to recover fees had she
prevailed,” and the reciprocal attorney fees statute therefore
“allows Franchise Foundry and Faulconer to recover attorney
fees.”
¶86 Utah’s reciprocal attorney fees statute permits courts to
“award attorney fees to the prevailing party of a contract dispute
so long as the contract provide[s] for the award of attorney fees
to at least one of the parties.” Wing v. Code, 2016 UT App 230,
¶ 12, 387 P.3d 601. The statute states:
A court may award costs and attorney fees to
either party that prevails in a civil action based
upon any promissory note, written contract, or
other writing executed after April 28, 1986, when
the provisions of the promissory note, written
contract, or other writing allow at least one party to
recover attorney fees.
Utah Code Ann. § 78B-5-826 (LexisNexis 2012). The text of the
statute “provides that a court may award costs and attorney fees
to a prevailing party in a civil action if two main conditions are
met.” Bilanzich v. Lonetti, 2007 UT 26, ¶ 14, 160 P.3d 1041. First,
“the underlying litigation must be based upon a contract in the
sense that a party to the litigation must assert the writing’s
enforceability as basis for recovery.” Hooban v. Unicity Int’l, Inc.,
2012 UT 40, ¶¶ 14–15, 285 P.3d 766 (internal quotation marks
omitted). And second, the provisions of the contract “must allow
at least one party to recover fees if that party had prevailed.” Id.(internal quotation marks omitted).
20150295-CA 38 2018 UT App 47Beckman v. Cybertary Franchising
¶87 Here, the trial court agreed with Franchise Foundry and
Faulconer that the reciprocal attorney fees statute was triggered.
The trial court reasoned that because Franchise Foundry and
Faulconer “prevailed on Beckman’s claim against them under
the Employment Agreement” when the court granted them
summary judgment on Beckman’s first claim for relief, the
reciprocal attorney fees statute applied to entitle Franchise
Foundry and Faulconer to attorney fees. We disagree. Although
Beckman asserted in her amended complaint that Franchise
Foundry and Faulconer should be held liable for damages
arising out of Cybertary’s breach of the Employment Agreement,
Beckman did not seek to enforce the Employment Agreement
against Franchise Foundry and Faulconer. Thus, the first
condition of the reciprocal attorney fees statute was not satisfied.
See id.¶88 This conclusion is driven by the nature of Beckman’s
claim. Beckman labeled her first claim for relief as one for
“Breach of Employment Agreement,” an agreement she
identified in her amended complaint as between Beckman and
Cybertary. Beckman claimed that Cybertary breached the
Employment Agreement by failing to pay her salary and
benefits, and that Franchise Foundry and Faulconer took actions
“on behalf of Cybertary” in further breach of the agreement.
Beckman also sought a declaration that because Faulconer and
Franchise Foundry “have not acted in good faith,” they would
be “liable for any damages suffered by Beckman as a result of
their actions.” And in her prayer for relief, Beckman sought a
monetary judgment against Cybertary, Franchise Foundry, and
Faulconer.
¶89 While Beckman did not clearly articulate the theory under
which she sought to recover damages from Franchise Foundry
and Faulconer, she did not assert a claim against them for breach
20150295-CA 39 2018 UT App 47Beckman v. Cybertary Franchising
of contract. 13 Beckman never alleged that Franchise Foundry and
Faulconer were parties or assignees to the Employment
Agreement, and she never alleged that they breached it. Instead,
she asserted a claim for declaratory judgment in which she
sought a declaration that “Faulconer and Franchise Foundry
have not acted in good faith and are therefore liable for any
damages suffered by Beckman as a result of their actions.” In
other words, Beckman sought to recover damages from
Franchise Foundry and Faulconer for allegedly failing to act in
good faith, but she did not seek to enforce the Employment
Agreement against them.
13. It appears that Beckman was seeking to hold Franchise
Foundry and Faulconer individually liable for Cybertary’s
breach of the Employment Agreement based on section 48-2c-
807(1) of the since-repealed Utah Revised Limited Liability
Company Act. It stated, in relevant part,
(1) A member or manager shall not be liable or
accountable in damages or otherwise to the
company or the members for any action taken or
failure to act on behalf of the company unless the
act or omission constitutes: (a) gross negligence; (b)
willful misconduct; or (c) a breach of a higher
standard of conduct that would result in greater
exposure to liability for the member or manager
that is established in the company’s articles of
organization or operating agreement.
Utah Code Ann. § 48-2c-807(1) (LexisNexis 2010) (repealed 2016).
In this regard, the jury was instructed at trial that Beckman
sought a declaratory judgment that Franchise Foundry and
Faulconer “did not act in good faith in either causing Cybertary
to not pay her compensation and/or in causing Cybertary to
terminate Beckman.” The court further instructed that to succeed
on her claim, Beckman must demonstrate that Franchise
Foundry and Faulconer “acted with ‘gross negligence’ or ‘willful
misconduct.’”
20150295-CA 40 2018 UT App 47Beckman v. Cybertary Franchising
¶90 Contrary to what Franchise Foundry and Faulconer now
argue on appeal, they previously and unequivocally shared this
view. When Defendants moved for summary judgment, they
agreed that Beckman’s “sole claim regarding the Employment
Agreement is that Cybertary—and not anyone else—breached
it,” 14 and they even asserted that Beckman “does not, and has
never, asserted that [breach of contract] claim against any other
Defendant.” (Emphasis added.) In response, Beckman did not
oppose Defendants’ motion insofar as it related to Franchise
Foundry and Faulconer and the Employment Agreement,
because she “openly admit[ted] that Franchise Foundry and
Faulconer are not parties [to] the Employment Agreement, and
[had] never claimed otherwise.”
¶91 On this record, we cannot agree with the trial court’s
conclusion that Franchise Foundry and Faulconer prevailed on a
claim based on the Employment Agreement. We therefore
reverse the trial court’s award of attorney fees to Franchise
Foundry and Faulconer.
C. Attorney Fees on Appeal
¶92 Last, all of the parties request their attorney fees incurred
on appeal. “A party seeking attorney fees for work performed on
appeal must state the request explicitly and set forth the legal
basis for such an award.” Utah R. App. P. 24(a)(9).
¶93 Typically, “when a party who received attorney fees
below prevails on appeal, the party is also entitled to fees
14. Franchise Foundry and Faulconer’s assertion was based on
Beckman’s response to their interrogatory asking her to identify
every agreement that she claimed Defendants breached and
which Defendants breached those agreements. Beckman
responded: “The parties to the Employment Agreement are
Plaintiff and Cybertary. Cybertary breached the Employment
Agreement.”
20150295-CA 41 2018 UT App 47Beckman v. Cybertary Franchising
reasonably incurred on appeal.” Favero Farms, LC v. Baugh, 2015
UT App 182, ¶ 25, 356 P.3d 188 (citation and internal quotation
marks omitted). Also, generally speaking, the standard
contractual provision for the payment of attorney fees to the
prevailing party includes attorney fees “incurred by the
prevailing party on appeal as well as at trial.” Id. (citation and
internal quotation marks omitted). But the attorney fees
provision in the Employment Agreement is unlike the standard
contract clause.
¶94 Given the unique nature of the attorney fees provision in
the Employment Agreement and the fact that the provision does
not expressly speak to attorney fees on appeal, it is unclear how
the attorney fees provision might operate with respect to
attorney fees incurred during appellate proceedings. And apart
from cursory statements that they are entitled to attorney fees
under the Employment Agreement, both Beckman and
Cybertary have failed to provide analysis explaining why they
should receive attorney fees on appeal. See Utah R. App. P.
24(a)(9). Accordingly, we deny Beckman’s and Cybertary’s
requests. 15
¶95 We also deny Franchise Foundry’s and Faulconer’s
requests. Because Franchise Foundry and Faulconer have not
prevailed on appeal, they are not entitled to attorney fees on
appeal. See Favero Farms, 2015 UT App 182, ¶ 25.
CONCLUSION
¶96 We conclude that Beckman has not shown that the trial
court exceeded its discretion in denying her motion for leave to
amend her complaint. Nor has she shown that the trial court
erred in excluding an audio recording of compromise
negotiations under rule 408 of the Utah Rules of Evidence.
15. Beckman also requests costs on appeal under rule 34 of the
Utah Rules of Appellate Procedure. We decline to award them.
20150295-CA 42 2018 UT App 47Beckman v. Cybertary Franchising
¶97 Beckman has shown harmful error, however, in the trial
court’s decision to instruct the jury on the parties’ relative
burdens of proof in connection with her claim that Cybertary
wrongfully terminated her employment. Because the parties did
not incorporate a good business judgment standard into the
Employment Agreement, the trial court erred in instructing
otherwise, and we reverse and remand for a new trial on her
wrongful termination claim.
¶98 We further conclude that the trial court erroneously
denied Beckman’s request for prejudgment interest.
Accordingly, we reverse the court’s order and instruct the court
to calculate the appropriate amount of prejudgment interest on
remand.
¶99 With regard to the attorney fees awarded to Cybertary,
we vacate that award. We conclude that the Employment
Agreement’s attorney fees provision is ambiguous and that the
trial court should reassess the issue, if necessary, after
determining the parties’ intent regarding the provision through
the consideration of extrinsic evidence and after retrial of
Beckman’s wrongful termination claim. Finally, because the
court misapplied the reciprocal attorney fees statute, we reverse
its award of attorney fees to Franchise Foundry and Faulconer.
¶100 In sum, we affirm in part, reverse in part, vacate in part,
and remand for further proceedings.
20150295-CA 43 2018 UT App 47