Guidance Residential, Llc, Appellant/cross-resp v. Anwer Mangrio, Respondents/cross-app
75507-2
Wash. Ct. App. UDec 18, 2017Background
- Guidance Residential (Guidance) provides Sharia‑compliant mortgages; several employees (including Mangrio and Hussain) left in 2011 to work for competitor UIF/University Bank.
- While employed, the employees compiled customer/prospect data in Guidance’s Loan Operating System and generated "Books of Business" (spreadsheets containing names, contact info, credit scores, income, loan status, etc.). Guidance required confidentiality and trained employees on privacy policies.
- Before departing, the employees downloaded and emailed Books of Business to personal accounts; at UIF they used those lists to solicit Guidance customers and closed numerous loans.
- Guidance sued for trade secret misappropriation under the Uniform Trade Secrets Act (UTSA) and for breach of contract/noncompete (the latter dismissed on summary judgment as unenforceable). A jury found willful and malicious misappropriation and awarded $848,000 in lost‑profits damages; it declined to award unjust enrichment.
- The trial court awarded Guidance attorney fees under the UTSA, denied Guidance’s motion for exemplary damages, granted posttrial sealing/redaction of consumer identifiers in exhibits, and awarded attorney fees to Mangrio for prevailing on the contract claims (using the lodestar method and Guidance’s hourly rates).
Issues
| Issue | Plaintiff's Argument (Guidance) | Defendant's Argument (Mangrio) | Held |
|---|---|---|---|
| Were the Books of Business trade secrets and misappropriated; were damages proven? | Books of Business are compilations of non‑public, valuable customer data (prequalification status, credit scores, etc.), protected by confidentiality policies; misappropriation caused lost profits measured by lost transactions × profit per transaction. | Personal contact lists were employee property; much Book information is publicly ascertainable (deeds, third‑party data); damages speculative and not proved by reasonable method. | Affirmed: Books of Business are trade secrets; former employees misappropriated them; substantial evidence supported lost‑profit damages and the $848,000 award. |
| Was posttrial sealing/redaction of exhibits proper? | Sealing/redaction necessary to protect consumer privacy and public trust in financial data security; UTSA authorizes sealing of trade secrets. | Guidance waived confidentiality by displaying exhibits at trial; no showing of serious and imminent threat to important interest. | Affirmed: Court complied with Ishikawa/Hundtofte factors; sealing/redaction of identifiable consumer data was justified and not an abuse of discretion. |
| Was denial of exemplary (punitive) damages proper after jury found willful and malicious conduct? | Willful and malicious finding supports exemplary damages; record shows calculated, deliberate misappropriation warranting reconsideration of punitive award. | (Argued implicitly that exemplary damages were not warranted.) | Vacated and remanded: Trial court’s denial was insufficiently explained (focused on Guidance’s overall litigation success rather than the UTSA misconduct); remand for reconsideration of exemplary damages. |
| Were contract attorney fees awarded to Mangrio correctly calculated? | The trial court properly awarded fees to prevailing party. | Contract governing noncompetes (Virginia law) limits recovery to fees actually incurred; court used lodestar with Guidance’s rates rather than defendants’ actual fees. | Reversed and remanded: Fee award must be recomputed consistent with the contract language (fees actually incurred) and governing law. |
Key Cases Cited
- Nowogroski v. Rucker, 137 Wn.2d 427 (Wash. 1999) (customer lists and compilations can be trade secrets and remain employer property even if copied by employees)
- J.L. Cooper & Co. v. Anchor Sec. Co., 9 Wn.2d 45 (Wash. 1941) (employer entitled to relief when former employees use confidential customer lists compiled during employment)
- Boeing Co. v. Sierracin Corp., 108 Wn.2d 38 (Wash. 1987) (standards for awarding exemplary damages and assessing willful misappropriation)
- Eagle Group, Inc. v. Pullen, 114 Wn. App. 409 (Wash. Ct. App. 2002) (lost‑profit damages under UTSA may be recovered if proven with reasonable certainty)
- Hundtofte v. Encarnacion, 181 Wn.2d 1 (Wash. 2014) (Ishikawa five‑step framework for sealing court records and standard of review)
- Woo v. Fireman's Fund Ins. Co., 137 Wn. App. 480 (Wash. Ct. App. 2007) (waiver/untimeliness issues when seeking to seal exhibits displayed at trial)
- Crest, Inc. v. Costco Wholesale Corp., 128 Wn. App. 760 (Wash. Ct. App. 2005) (courts look to contract terms to determine fee awards; lodestar used only when contract silent)
- Safrin v. Travaini Pumps USA Inc., 269 Va. 412 (Va. 2005) (under Virginia law, contract language providing for fees "incurred" limits recovery to fees actually incurred)