England Logistics v. Kelles Transport Service
2024 UT App 137
Utah Ct. App.2024Background
- Kelle’s Transport Service (Soar) hired away several management-level employees from its competitor, C.R. England, who were subject to noncompete, nondisclosure, and non-solicitation agreements.
- C.R. England sued Soar and the employees for breach of these agreements, as well as for several tort claims including intentional interference with economic relations.
- At trial, the jury found for C.R. England on the breach of contract and interference claims, but only awarded $12,000 in damages (far less than the $300,000 sought), and found against C.R. England on other tort claims.
- The district court held the noncompete agreements were enforceable and awarded C.R. England attorney fees and costs as the prevailing party.
- On appeal, Soar challenged the enforceability of the noncompete agreements, the sufficiency of evidence on the interference claim, and the award of fees and costs.
Issues
| Issue | Plaintiff’s Argument | Defendant’s Argument | Held |
|---|---|---|---|
| Enforceability of noncompete agreements | Agreements were valid and supported by consideration | Lack of valid consideration, overbroad, unreasonable | Enforceable: supported by consideration, reasonable in scope |
| Intentional interference with economic relations | Soar induced employees to breach via improper means | No evidence of illegal or improper means | Verdict reversed: No evidence of improper means |
| Attorney fees award | Entitled via agreement and as prevailing party | Not entitled due to unenforceable agreements | Fees affirmed (on enforceable agreements); remand for appeal |
| Costs award | Prevailed on key claims and issues | Small damages, lost on some claims | District court did not abuse discretion; costs affirmed |
Key Cases Cited
- System Concepts, Inc. v. Dixon, 669 P.2d 421 (Utah 1983) (establishes four-part test for enforceability of restrictive covenants)
- Allen v. Rose Park Pharmacy, 237 P.2d 823 (Utah 1951) (continued at-will employment as valid consideration for noncompete)
- C.R. England v. Swift Transp. Co., 437 P.3d 343 (Utah 2019) (defines “improper means” for intentional interference)
- R.T. Nielson Co. v. Cook, 40 P.3d 1119 (Utah 2002) (factors for determining prevailing party for awards)