ADVANCED RECOVERY SYSTEMS, a Utah limited liability company, Plaintiff Counterclaim Defendant,
AMERICAN AGENCIES, a Pennsylvania limited liability company, Defendant Counterclaimant Third-Party Plaintiff -Appellee, NRA GROUP, a Pennsylvania limited liability company, a/k/a National Recovery Agency; STEVEN C. KUSIC, CEO/managing member of American Agencies, LLC and/or NRA Group, LLC, and individually, Defendants, BRENT SLOAN, Third-Party Defendant -Appellant, KINUM, INC.; SCOTT MITCHELL; BLAKE REYNOLDS, Third-Party Defendants, and SAJAX SOFTWARE, Third-Party Defendant Counterclaimant.
from the United States District Court for the District of
Utah (D.C. No. 2:13-CV-00283-DAK-BCW)
Richard D. Salgado, Dentons U.S. LLP, Dallas, Texas (Kelley
C. Cox, Dentons US, Dallas, Texas, and Wade P. K. Carr,
Dentons US, Kansas City, Missouri, with him on the briefs),
for Third-Party Defendant-Appellant.
Michael K. Erickson (Carol A. Funk, with him on the brief),
Ray Quinney & Nebeker P.C., Salt Lake City, Utah, for
BACHARACH, BALDOCK, and PHILLIPS, Circuit Judges.
BACHARACH, CIRCUIT JUDGE.
appeal grew out of Mr. Brent Sloan's participation in two
transactions. The first transaction entailed a merger between
Advanced Recovery Systems, LLC and Kinum, Inc.; the second
transaction consisted of a sale of software from Kinum to
Sajax Software, LLC.
Agencies, LLC alleged harm from these transactions and sued
Mr. Sloan for damages and restitution. After the close
of evidence, Mr. Sloan filed a motion for judgment as a
matter of law. Following the denial of this motion, a jury
found Mr. Sloan liable on American Agencies' claims of
tortious interference with business relations, conspiracy to
interfere with business relations, tortious interference with
contract, copyright infringement, unjust enrichment, and
misappropriation of trade secrets. Mr. Sloan unsuccessfully
renewed his motion for judgment as a matter of law. After the
district court denied this motion, Mr. Sloan appealed. We
affirm in part and reverse in part based on four conclusions:
1. On the claims of tortious interference with business
relations and conspiracy to interfere with business
relations, Mr. Sloan contends that (1) one of American
Agencies' theories of improper means is preempted by a
Utah statute and (2) American Agencies did not present
sufficient evidence of improper means. We disagree because
Mr. Sloan did not preserve his preemption argument and the
jury could have reasonably found improper means based on
deceit. We thus conclude that the district court properly
denied Mr. Sloan's motion for judgment as a matter of law
on these claims.
2. On the claim of tortious interference with contract, Mr.
Sloan argues that the jury instructions erroneously and
prejudicially excluded improper means as an element. We agree
with Mr. Sloan and reverse the judgment on this
3. On the claim of copyright infringement, Mr. Sloan contends
that the jury could not have reasonably found commercial use
or regarded the pertinent documents as original. We disagree,
concluding that (1) Mr. Sloan did not preserve his
commercial-use argument and (2) American Agencies'
evidence on originality was sufficient.
4. On the claim of unjust enrichment, Mr. Sloan contends that
the jury could not have reasonably inferred the value of a
benefit to Mr. Sloan. We agree, so we reverse the denial of Mr.
Sloan's motion for judgment as a matter of law on this
Advanced Recovery Systems enters into a licensing
agreement with American Agencies.
Agencies is a debt-collection agency that entered into a
licensing agreement with Advanced Recovery Systems. Under the
licensing agreement, American Agencies enjoyed
• the exclusive right to use certain debt-collection
software developed by Advanced Recovery Systems and
• the right of first refusal with respect to any future
sale of Advanced Recovery Systems.
debt-collection software contained American Agencies'
customer data, including a client list, client history, fee
structure, and rate of success.
Advanced Recovery Systems merges into Kinum, and Kinum sells
the software to Sajax.
American Agencies' knowledge, Advanced Recovery Systems
merged into Kinum. See p. 3 n.1, above. Mr. Sloan
helped to facilitate the merger and became Kinum's chief
executive officer after the merger. As the chief executive
officer, Mr. Sloan oversaw Kinum's sale of the
debt-collection software to Sajax. With the software came
American Agencies' customer data.
Individual Claims and Mr. Sloan's
Liability for tortious interference with business relations
and conspiracy to interfere with business relations: The
evidence adequately supported the jury's
findings of liability.
claims of tortious interference with business relations and
conspiracy to commit this tort, American Agencies had to
prove improper means. Overstock.com, Inc. v.
SmartBargains, Inc., 192 P.3d 858, 864 (Utah 2008);
see also Puttuck v. Gendron, 199 P.3d 971, 978 (Utah
App. 2008) (stating that a claim of civil conspiracy under
Utah law requires an underlying tort). American Agencies
alleged that Mr. Sloan had used improper means in two ways:
1. using deceit to conceal transfers of the debt-collection
software and American Agencies' customer data
2. initiating unfounded litigation against American
Sloan responds to these allegations by arguing that
• the theory of improper means through deceit is
preempted by a Utah statute and
• the evidence did not indicate that the litigation had