382 P.3d 652
Utah Ct. App.2016Background
- In April 2009 OGF (Z‑Corp and OneGreatFamily) and Archives.com agreed to cross‑market memberships; the marketing party would keep 60% of subscription profits and marketing was to be done “at [its] sole cost and expense, and under [its] own exclusive control.”
- The agreement allowed either party to request an accounting/audit of subscription revenues.
- Ancestry later purchased Archives and assumed Archives’ contractual obligations but continued to operate a separate Archives site.
- OGF observed a sharp drop in subscription revenue and alleged Ancestry removed OGF ads from the Archives site; OGF requested an accounting and sued when dissatisfied with responses.
- The district court dismissed OGF’s complaint for failure to state a claim; OGF appealed. The appeal does not challenge dismissals of conversion, tortious interference, punitive damages, or the covenant of good faith claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Ancestry breached the contract by reducing or stopping marketing for OGF | OGF: contract required Ancestry to continue marketing on OGF’s behalf; stopping advertising was a breach | Ancestry: contract gave Ancestry exclusive control over marketing; it could choose amount/type or cease marketing | Court: Affirmed dismissal — contract gave marketing party control; no obligation to continue marketing |
| Whether Ancestry breached the contract by withholding subscription fees collected on OGF’s behalf | OGF: Ancestry collected subscriptions but failed to remit OGF’s share, violating the contract | Ancestry: OGF should have completed an audit before suing; alternatively denies wrongful withholding | Court: Reversed dismissal — allegation that Ancestry failed to remit OGF’s share states a viable breach claim; audit not a precondition to suit |
Key Cases Cited
- Alvarez v. Galetka, 933 P.2d 987 (Utah 1997) (standard of review for motions to dismiss; accept plaintiff’s factual allegations and review correctness)
- South Ridge Homeowners’ Ass’n v. Brown, 226 P.3d 758 (Utah Ct. App. 2010) (contract interpretation begins with plain language)
- Young Living Essential Oils, LC v. Marin, 266 P.3d 814 (Utah 2011) (covenant of good faith cannot create obligations inconsistent with express contract terms)
- TruGreen Cos. v. Mower Bros., Inc., 199 P.3d 929 (Utah 2008) (punitive damages generally not available in contract actions)
- Citynet, LLC v. Toney, 772 S.E.2d 36 (W. Va. 2015) (discussion of unilateral contract principles)