Wesco Autobody Supply, Inc. v. Ernest
243 P.3d 1069
| Idaho | 2010Background
- Wesco Autobody Supply, Inc. bought three Idaho stores from Paint and Equipment Supply, Inc. (P&E) on Aug 1, 2005 for $2.2 million, with $996,000 allocated to goodwill.
- Ernest and Davis owned Automotive Paint Warehouse (APW) and Paint and Spray Supply, Inc. (P&S); Brady, Hugh, and Cook were Idaho Stores employees.
- On Aug 19, 2005, most Wesco Idaho employees quit and joined P&S, triggering Wesco’s lawsuit against Ernest, Davis, P&S, APW, and the departing employees.
- Pre-purchase statements alleged by Wesco suggested Ernest and Davis sought to take Wesco’s business if P&E could not reach an arrangement, with Howe testifying to such conversations.
- Wesco alleged Wesco would no longer buy APW paint for Idaho Stores and would be supplied from Wesco’s Washington warehouses, affecting competitive dynamics.
- Letters, data copying, and communications around Aug 2005 showed alleged acts of loyalty breach and attempts to recruit employees; Wesco retained data-forensics to recover deleted files.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Interference with prospective economic advantage | Wesco contends defendants knowingly interfered with employee and customer expectancies to steal business. | Ernest, Davis, P&S, and APW argue no wrongful interference and no actionable economic expectancy within the contract terms. | Genuine issue as to whether fiduciary duties by some employees support interference; no liability against Ernest, Davis, P&S, or APW on this count. |
| Interference with employee contracts and fiduciary duties | Wesco asserts employees breached at-will contracts and fiduciary duties by soliciting colleagues and using confidential information. | Employees were at-will; alleged fiduciary breaches depend on specific duties not present in the agreements. | At-will status confirmed; genuine issue as to whether Dayley, Johnston, Brady, Cook, and Hancock breached fiduciary duties; covenant of good faith not breached. |
| Interference with customer contracts | Wesco claims Defendants interfered with customer contracts by converting customers to P&S. | Evidence insufficient to show ongoing contractual duties or breach by customers. | District court proper; no evidence of efficacy of interference with customer contracts; conditional-use contracts analyzed and found non-infringing. |
| Civil conspiracy | Wesco claims an agreement among defendants to drive Wesco out of business and aid the en masse resignations. | No concrete evidence of an agreement or plan between two or more to commit wrongful acts. | No evidence of a conspiracy; upheld summary judgment on civil conspiracy. |
| Conversion claim proper consideration | Wesco raised conversion against all defendants later; issue should be addressed. | Conversion not properly before district court due to procedural timing. | Conversion issue not properly before the district court; remand for proceedings consistent with opinion. |
Key Cases Cited
- Cantwell v. City of Boise, 146 Idaho 127, 191 P.3d 205 (2008) (Idaho 2008) (implied covenant of good faith and fair dealing in employment context; standard for breach)
- Highland Enters., Inc. v. Barker, 133 Idaho 330, 986 P.2d 996 (1999) (Idaho 1999) (knowledge element for interference with economic expectancy; intent standards)
- Bybee v. Isaac, 145 Idaho 251, 178 P.3d 616 (2008) (Idaho 2008) (intent in tortious interference inferred from conduct substantially certain to interfere)
- Jenkins v. Boise Cascade Corp., 141 Idaho 233, 108 P.3d 380 (2005) (Idaho 2005) (employment-at-will doctrine and duties arising from contracts)
- Van v. Portneuf Med. Ctr., 147 Idaho 552, 212 P.3d 982 (2009) (Idaho 2009) (interpretation of at-will employment and related contracts)
- Northwest Bec-Corp v. Home Living Serv., Inc., 136 Idaho 835, 41 P.3d 263 (2002) (Idaho 2002) (hiring of a competitor’s employee does not automatically constitute trade secret misappropriation)
- Twin Falls Farm & City Distrib., Inc. v. D & B Supply Co., 96 Idaho 351, 528 P.2d 1286 (1974) (Idaho 1974) (duty of loyalty and solicitations regarding employees)