Drug Testing Compliance Group, LLC v. DOT Compliance Service
161 Idaho 93
| Idaho | 2016Background
- DOT Compliance and DTC Group are competing Idaho LLCs that solicit newly registered commercial drivers by unsolicited telephone calls; DTC Group was not registered as a telephone solicitor with the Idaho Attorney General when it obtained customers.
- Prior litigation between the companies resulted in a July 11, 2014 settlement agreement containing a no-disparagement clause; Jeff and David Minert (owners of DOT Compliance) and Crossett (owner of DTC Group) signed the agreement.
- After the settlement, DTC Group alleged DOT Compliance (and employee Ryan Bunnell) called DTC Group’s customers, prompted cancellations, and made disparaging statements in violation of the settlement; DTC Group sued for breach of contract, breach of covenant of good faith and fair dealing, tortious interference with contracts, and related claims.
- At trial a jury found breaches and awarded damages: $20,000 each against DOT Compliance, Jeff Minert, and David Minert (with some allocation nuances) and $500 against Bunnell; the district court also awarded DTC Group attorney fees.
- On appeal defendants argued (1) DTC Group’s customer contracts were void under the Idaho Telephone Solicitation Act (ITSA) because DTC Group failed to register, defeating the tortious-interference claim; and (2) insufficient evidence that Jeff and David Minert personally disparaged DTC Group to support individual liability for breach of the covenant of good faith and fair dealing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether DTC Group’s customer contracts were void under the ITSA so tortious-interference claim fails | DTC Group argued contracts should not be void as to competitors and relied on fairness/estoppel themes | DOT Compliance argued DTC Group failed to register under ITSA, and I.C. § 48-1007(2) renders such contracts null and void ab initio | Held for defendants: contracts were void under ITSA; tortious-interference claim fails because no enforceable contract existed |
| Whether the three-day rescission right under ITSA prevents interference liability | DTC Group contended rescission right is consumer-right, not a defense to competitor interference | DOT Compliance asserted rescission or voidness defeats existence of contract and thus interference claim | Court did not reach this separately after finding contracts void under ITSA (no interference claim) |
| Whether Jeff and David Minert can be held individually liable for breach of implied covenant of good faith and fair dealing | DTC Group argued Minerts caused or directed disparaging conduct (including reports to government) and are liable as principals/parties to the settlement | Minerts argued no evidence they personally made disparaging statements after the settlement; pre-formation conduct and employees’ actions do not establish individual liability | Held for defendants on JNOV: pre-settlement conduct cannot support the covenant claim; no substantial evidence Minerts personally breached the covenant post-settlement; JNOV granted for Minerts |
| Entitlement to attorney fees (district court award and on appeal) | DTC Group sought fees as prevailing party under I.C. § 12-120(3) and the settlement agreement | Appellants sought fees where they prevailed on appeal on specific claims | Trial court fee award vacated because judgment reversed; appellate fees awarded to Jeff and David Minert under settlement agreement for the good-faith claim on appeal; DTC Group not awarded fees on appeal |
Key Cases Cited
- Bybee v. Isaac, 145 Idaho 251 (explains elements of tortious interference with contract)
- Silicon Int’l Ore, LLC v. Monsanto Co., 155 Idaho 538 (distinguishes voidable contracts from void ab initio; covenant of good faith requires a contract)
- Syringa Networks, LLC v. Idaho Dep’t of Admin., 159 Idaho 813 (contracts made in violation of statute can be void ab initio)
- Polk v. Larrabee, 135 Idaho 303 (standards for JNOV review)
- April Beguesse, Inc. v. Rammel, 156 Idaho 500 (standard for directed verdict review)
- Saint Alphonsus Diversified Care, Inc. v. MRI Assocs., LLP, 157 Idaho 106 (violation of implied covenant is a breach of contract; not a separate tort)
- Ellmaker v. Tabor, 160 Idaho 576 (manager/member of LLC not personally liable for contract breach merely by signing for the LLC)