Case Information
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T HE U TAH C OURT OF A PPEALS
A DVANCED F ORMING T ECHNOLOGIES , LLC, Plaintiff and Appellant, v.
P ERMACAST , LLC; G ARY C RADDOCK ; AND
P AXTON C RADDOCK , Defendants and Appellees.
Opinion No. 20130949-CA Filed January 8, 2015 Third District Court, West Jordan Department The Honorable Barry G. Lawrence No. 090404693 Michael A. Stout and Jack W. Reed, Attorneys for Appellant Peter H. Barlow, Sadé A. Turner, and S. Spencer Brown, Attorneys for Appellees
J UDGE G REGORY K. O RME authored this Opinion, in which J UDGES J AMES Z. D AVIS and K ATE A. T OOMEY concurred.
ORME, Judge:
¶1 Advanced Forming Technologies, LLC (AFTEC) appeals the trial court’s grant of summary judgment in favor of Permacast, LLC and two of its principals, Gary Craddock and Paxton Craddock (collectively, Permacast). Because Permacast failed to show that it was entitled to judgment as a matter of law, we reverse.
BACKGROUND [1]
¶2 AFTEC is a Utah company that manufactures and licenses a patented concrete wall system called StoneTree. In March 2006, Permacast secured a license to use the StoneTree system for a territory in Florida. According to the licensing agreement, [2]
Permacast would purchase the StoneTree proprietary equipment from AFTEC for an amount exceeding $260,000 and pay it $5,000 per year as a licensing fee. AFTEC did not receive any commission on the walls that Permacast built. Among other things, the agreement required Permacast to actively market the StoneTree brand by putting a link to AFTEC’s website on Permacast’s website, using the StoneTree logo on all promotional materials, and marking the StoneTree name on all equipment and finished concrete walls.
¶3 Nearly three years later, AFTEC wrote a letter to Permacast
asserting that Permacast had violated the licensing agreement by
failing to properly mark the StoneTree system components it
installed, claiming AFTEC’s intellectual property as its own,
providing sub-standard installation, marketing the StoneTree
system outside of its authorized territory, and promoting and using
a competing system. AFTEC also complained that Permacast had
not put a link on its website to AFTEC’s website. As a result,
AFTEC terminated the licensing agreement on February 19, 2009.
Two weeks later, AFTEC sued Permacast for breach of
contract and interference with economic and contractual relations.
After the original deadlines for discovery had passed, both AFTEC
1. In reviewing a trial court’s grant of summary judgment, we
recite the facts and all reasonable inferences drawn therefrom in the
light most favorable to the non-moving party—in this case, AFTEC.
See Orvis v. Johnson
,
2. When Permacast first entered into the licensing agreement with AFTEC, it operated under a different name. For the sake of clarity, we use “Permacast” throughout.
and Permacast decided they needed more time. They stipulated to—and the court approved—an open-ended discovery period that has not been modified since.
¶5 In June 2012, Permacast moved for summary judgment, arguing that AFTEC “failed to provide any evidence showing damages” on either its breach-of-contract or economic-interference claim. In its opposition memorandum, AFTEC argued that it could prove the fact of damages, even if it could not yet specify the precise amount of damages. AFTEC estimated that from 2006 to 2008, it spent approximately $1.3 million in advertising, marketing, web design, and technical support for its licensees. AFTEC claimed that about $560,000 of those costs were allocable to Permacast. AFTEC argued that because of Permacast’s breach, the money had been wasted and should be considered as damages. Gale Stott, the owner of AFTEC, admitted in a deposition that he would need an expert to prove AFTEC’s damages. AFTEC also argued that Permacast’s motion was premature because discovery was still open. Because of this, AFTEC asserted that it needed only “to show generally, as is allowed in the pleading stage, the amount of its alleged damages and then quantify those damages through further fact and expert discovery.” The trial court determined that the $560,000 in damages that
AFTEC claimed was “not sufficiently broken down into actual damages” and agreed that an expert witness would be required to establish damages. Because AFTEC had not sought a continuance under rule 56(f) of the Utah Rules of Civil Procedure to provide expert–witness testimony, the trial court granted Permacast’s motion for summary judgment. AFTEC appeals.
ISSUE AND STANDARD OF REVIEW
¶7 AFTEC appeals the trial court’s grant of summary judgment.
We review the trial court’s legal conclusions and ultimate grant or
denial of summary judgment for correctness.
See Orvis v. Johnson
,
ANALYSIS
¶8
Resolution of this appeal turns on the proper application of
rule 56 of the Utah Rules of Civil Procedure. To begin with, rule
56(b) provides that a defendant “may, at any time, move for
summary judgment.” Utah R. Civ. P. 56(b). As a result, a defendant
may move for summary judgment before discovery is closed, as
happened here. If a defendant chooses to do so, it bears the burden
of proving it is entitled to judgment as a matter of law.
See id
. R.
56(c);
Jones & Trevor Mktg., Inc. v. Lowry
,
material fact. But the thrust of Permacast’s motion was not that it
was entitled to judgment as a matter of law given those facts.
Rather, Permacast claimed that AFTEC had not provided adequate
evidence of damages and had failed to disclose any expert
witnesses. In reply, AFTEC claimed it spent $560,000 in advertising,
marketing, and support that was allocable to Permacast, but
AFTEC admitted that it had not yet identified an expert witness
able to fully calculate and explain its damages. It is undisputed
[3]
that AFTEC will eventually require an expert witness to prove
damages—especially considering that “[a]dvertising and marketing
costs considered alone . . . do not provide evidence of either the fact
or the amount of . . . damages.”
Stevens–Henager Coll. v. Eagle Gate
Coll.
,
¶11 As indicated above, having filed its motion for summary judgment before the close of discovery and before any obligation on the part of AFTEC to retain an expert had ripened, Permacast was required to prove that it was “entitled to a judgment as a matter of law.” See Utah R. Civ. P. 56(c). Permacast failed to do so. In fact, Permacast failed to even assert that it was entitled to judgment as a matter of law. Instead, it focused on the facts of record and claimed only that “AFTEC has failed to provide any evidence showing damages.” Considering that discovery has not yet closed, there is nothing unusual or inappropriate about the fact that AFTEC has not yet proved its damages. There appears to be no legal basis for requiring a plaintiff to prove its damages before presentation of its case-in-chief at trial, unless it is required to do so in the face of a well-supported motion for summary judgment 3. On appeal, AFTEC argues that the trial court should have granted a continuance under rule 56(f) because AFTEC substantively argued that it needed more time to present an expert witness even if it did not explicitly make a rule 56(f) motion. But in response to the trial court’s questions about why AFTEC had not filed a rule 56(f) motion, AFTEC affirmatively represented that it did not need a continuance under rule 56(f). Therefore, if the trial court erred in any way regarding rule 56(f), that error was invited by AFTEC, and we do not address it. See State v. Dunn , 850 P.2d 1201, 1220 (Utah 1993).
purporting to demonstrate that plaintiff suffered no damages as a matter of law. [4]
¶12
In some cases, apparently including this one, expert
testimony is required to prove an element of a claim.
See, e.g.
,
Morgan v. Intermountain Health Care, Inc.
, 2011 UT App 253,
¶¶ 14–16,
period, and this arrangement, approved by the trial court, had not been modified when Permacast brought its motion for summary judgment. Without a discovery cut-off or a deadline for designating expert witnesses, AFTEC was still free to line up an expert witness 4. Parties are required to include in their initial disclosures “a computation of any damages claimed and a copy of all discoverable documents or evidentiary material on which such computation is based, including materials about the nature and extent of injuries suffered.” Utah R. Civ. P. 26(a)(1)(C). This sharing of information is for discovery purposes, and it must be supplemented, as necessary, if “incomplete or incorrect.” See id. R. 26(d)(5).
who could testify about the lost profits or other damages resulting from Permacast’s breaches.
¶14 The trial court appears to have believed, however, that the case had dragged on for too long, noting that the hearing for summary judgment took place “nearly four years after the Complaint was filed.” While this is certainly a long time—and in a more typical case, with the usual array of pretrial deadlines in place, it would most likely be well beyond the deadline for concluding discovery and designating expert witnesses—it was inconsequential in this case given the open-ended discovery agreement of the parties that was approved by the court, albeit through a judge previously assigned to the case, and which was still in effect. If Permacast determined that the open-ended discovery
protocol was no longer satisfactory or was being abused by AFTEC, it could have requested a status conference at any time, according to the terms of the discovery order, “to set firm dates.” It did not do so. Instead, Permacast moved for summary judgment. That motion did not demonstrate its entitlement to judgment as a matter of law but argued only that AFTEC had failed to “provide any evidence showing damages.” Permacast did not argue that AFTEC would never be able to prove damages. And it did not argue—as, indeed, it could not—that the deadline for AFTEC to line up an expert witness had come and gone. As a matter of law, it is impossible at this point in the discovery process to conclude that AFTEC will never be able to provide evidence of damages. Therefore, Permacast’s motion for summary judgment should have been denied.
CONCLUSION
¶16 Because Permacast failed even to assert that it was entitled to judgment as a matter of law, much less to prove it, we conclude that Permacast did not properly make and support its motion for summary judgment. See Utah R. Civ. P. 56(e). Accordingly, AFTEC was not required to “set forth specific facts showing that there [was] a genuine issue for trial.” See id . Instead, AFTEC should have been permitted to “rest on the allegations in [its] pleadings,” see Parrish v. Layton City Corp. , 542 P.2d 1086, 1087 (Utah 1975), pending the close of discovery and the expiration of the time available to it for engaging an expert. Accordingly, we reverse the trial court’s grant of summary judgment and remand for trial or such other proceedings as may now be in order.