Allyis, Inc., App. v. Simplicity Consulting, Inc., Res.
74511-5
| Wash. Ct. App. | Feb 27, 2017Background
- Allyis sued former employee Jeremy Schroder and his new employer Simplicity alleging breach of a noncompete and confidentiality agreement and asserting tortious interference, Consumer Protection Act, injurious falsehood, and UTSA claims; Allyis later withdrew the original claims against Simplicity and amended to an unjust enrichment claim.
- Schroder had signed the noncompete/confidentiality provisions after he began employment in 2002; Allyis did not produce evidence of independent consideration for those post-hire agreements.
- Simplicity served discovery; Allyis and its counsel repeatedly failed to respond or appear at depositions, and the trial court found them in contempt for violating discovery orders.
- Simplicity moved for summary judgment; Allyis moved to voluntarily dismiss the day before the hearing; the court granted dismissal with prejudice based on discovery abuse and willful disregard of court orders.
- The trial court awarded CR 11 sanctions jointly and severally against Allyis and its attorney for filing claims without reasonable inquiry or for improper purpose, and awarded attorney fees under RCW 4.84.185 for a frivolous action; Allyis and counsel appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CR 11 sanctions were appropriate | Allyis/Davis contend reasonable inquiry was made and sanctions against the client and attorney were improper | Simplicity: claims lacked factual and legal basis; counsel failed to investigate; filings were to target Simplicity | Affirmed: court did not abuse discretion; findings supported that claims were not grounded and that inquiry was unreasonable; sanctions may be imposed on both client and counsel |
| Whether award under RCW 4.84.185 (frivolous action fees) was warranted | Allyis: claims were not frivolous and findings lack substantial evidence | Simplicity: claims were frivolous or advanced without reasonable cause, justifying costs | Affirmed: claims (original four collectively and amended unjust enrichment) were frivolous and advanced without reasonable cause; fees proper |
| Viability of unjust enrichment claim | Allyis: unjust enrichment requires only that defendant received benefit at plaintiff's expense; claim based on Schroder recruiting employees/clients | Simplicity: plaintiff must show plaintiff conferred a benefit on defendant; Allyis produced no evidence it conferred benefit or gained clients for Simplicity | Affirmed: unjust enrichment failed — Allyis did not show it conferred benefit on Simplicity or that circumstances made retention unjust |
| Viability of tortious interference (and related claims: UTSA, injurious falsehood, CPA) | Allyis: tortious interference and other claims were at least arguable; evidence existed of solicitation | Simplicity: no valid noncompete (lack of consideration) and Allyis produced no evidence of improper means, damages, or specific false statements/trade secret misuse | Affirmed: tortious interference lacked basis because noncompete likely unenforceable for lack of independent consideration; other claims unsupported by facts/evidence |
Key Cases Cited
- Biggs v. Vail, 124 Wn.2d 193 (Wash. 1994) (standards for CR 11 findings and permissible sanctions)
- Young v. Young, 164 Wn.2d 477 (Wash. 2008) (elements and measure of recovery for unjust enrichment)
- Labriola v. Pollard Group, Inc., 152 Wn.2d 828 (Wash. 2004) (post‑hire noncompete requires independent consideration)
- Bryant v. Joseph Tree, Inc., 119 Wn.2d 210 (Wash. 1992) (CR 11 requires reasonable inquiry before filing)
- Goldmark v. McKenna, 172 Wn.2d 568 (Wash. 2011) (definition of frivolous action under RCW 4.84.185)
- Goodyear Tire & Rubber Co. v. Whiteman Tire, Inc., 86 Wn. App. 732 (Wash. Ct. App. 1997) (elements of tortious interference)