United States District Court, D. Utah
HOUWELING'S NURSERIES OXNARD, INC., a California corporation; HOUWELING UTAH PROPERTY, INC., a Utah corporation; HNL HOLDINGS LTD., a Canadian controlled private corporation; HOUWELING UTAH HOLDINGS, INC., a Utah corporation; and HNL UTAH HOLDING LTD.; a Canadian controlled private corporation, Plaintiffs and Counterclaim Defendants,
GEORGE ROBERTSON, an individual, Defendant and Counterclaimant. GEORGE ROBERTSON, an individual, Third-Party Plaintiff,
CASEY HOUWELING, an individual, Third-Party Defendant.
M. WARNER MAGISTRATE JUDGE.
MEMORANDUM DECISION AND ORDER GRANTING
PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT
N. PARRISH UNITED STATES DISTRICT JUDGE.
a contract case. Houweling's Nurseries Oxnard, Inc.;
Houweling Utah Property, Inc.; HNL Holdings Ltd.; Houweling
Utah Holdings, Inc.; and HNL Utah Holdings Ltd.
(collectively, “Houweling”) filed the instant
lawsuit seeking a declaration that Houweling does not owe
George Robertson additional compensation for his work
developing a tomato greenhouse in Mona, Utah. In response,
Robertson filed counterclaims against Houweling for (1)
breach of written contract, (2) breach of oral contract, (3)
breach of the implied covenant of good faith and fair
dealing, and (4) declaratory and injunctive relief. Robertson
also named Casey Houweling, the President of Houweling, as a
Houweling and Houweling have moved for summary judgment on
all claims, asserting that Houweling never entered into a
contract to pay Robertson additional compensation (ECF No.
83). Houweling also seeks a declaration that it is the owner
of the greenhouse project in Mona, Utah, and that Robertson
has no right to further compensation from Houweling. Having
considered the Motion, the related pleadings, and the record,
the Court GRANTS Plaintiffs' Motion for Summary Judgment.
The Initial Proposal
December 8, 2011, George Robertson, through email, proposed a
deal with Houweling to develop a tomato greenhouse in Utah.
Robertson proposed that Houweling contract with
Robertson's entity “Yuum A” to create
“Utah Hot House”-a tomato greenhouse in Utah.
Casey Houweling, the President of Houweling, informed
Robertson that Houweling was “interested” but
that it had also been “approached by [another] party
that want[ed] to do a similar deal” and thus Houweling
would need to “go forward cautiously.”
months later, on April 1, 2012, Robertson again approached
Houweling about the tomato-greenhouse opportunity. This time,
Robertson submitted a “Partnership Proposal” for
“Houweling's Utah Hot House” with Robertson
again proposing to use Yuum A to partner with Houweling.
Houweling did not accept the proposal. As part of the
proposal, Robertson also sent Houweling a draft Note Purchase
Agreement and Convertible Note on April 3, 2012. Houweling
never executed the Note Purchase Agreement or Convertible
April 4, 2012, Robertson sent Houweling a one-page
“basic approach” for the “Utah Hot House
Development Proposal.” Robertson proposed that
Houweling and Yuum A would develop, construct, and operate
Utah Hot House, which would be owned 91% by Houweling and 9%
by Yuum A, LCC. Under the proposal, Houweling would pay
Robertson a $20, 000 fee for his “prior work in
delivering the opportunity to Houweling's.”
The Independent Consulting Agreement
after sending the one-page basic approach, Robertson sent
Casey Houweling and Peter Cummings, Houweling's then CFO,
an email stating, “[Casey Houweling] and I spoke. We
agreed on the arrangement. I want to make sure that we are on
the same page. Here's my understanding.” The email
contained nine tasks or duties that Robertson would perform
in pursuit of the tomato-greenhouse opportunity. After
listing the tasks and duties, Robertson wrote,
“That's it in a nutshell. We agreed on the $20, 000
payment now and beginning in May $15, 000 as a monthly fee,
provided the project receives the go-ahead after the initial
meetings in Utah.”
Houweling responded with an email that read, “Peter
[Cummings]. This is what we discussed. Please execute.”
Houweling paid Robertson $20, 000, a “bonus for
[Robertson's] prior work in delivering the opportunity to
Houweling's.” And Houweling began to pay Robertson
a $15, 000 monthly fee on May 1, 2012.
weeks later, on April 23, 2012, Robertson emailed Casey
Houweling and Cummings a draft Mutual Non-Disclosure
Agreement and a draft Consulting Agreement. Houweling
executed the Mutual Non-Disclosure Agreement on April 25,
2012. The Mutual NonDisclosure Agreement provided that
“[t]he Parties have previously executed a Consulting
Agreement, which is made a part of this agreement by
reference.” Houweling, however, never executed the
Consulting Agreement. Instead, Cummings, after executing the
Non-Disclosure Agreement, explained to Robertson that
Houweling had held off on signing the Consulting Agreement
because Casey Houweling wanted to further discuss the bonus
terms with Robertson: “So [we'll] defer signing
[the Consulting Agreement] until bonus terms are
continued to pay Robertson $15, 000 per month for the months
of June, July, August, and September 2012. Houweling reduced
Robertson's compensation to $6, 000 per month from
October 2012 through March 2013 and then raised it to $10,
000 per month from April 2013 through September 2013.
Starting in October 2013, Houweling paid Robertson $15, 000
per month until he was terminated in July 2014.
January 29, 2014, Robertson sent a letter to Casey Houweling
and Cummings by email in which he discussed an
“additional compensation bonus program.” The deal
summary included two proposals: (1) Plan A, which proposed an
annual dividend equal to 8% of income before taxes and an
issuance of shares in a special class of stock in Houweling;
or (2) Plan B, which proposed that Houweling pay Robertson
10% of income before taxes as profit sharing. Houweling did
not accept either proposal. On February 1, 2014, Robertson
sent Houweling a draft Description of Preferred Stock
agreement. Neither Houweling nor Robertson ever executed the
February 17, 2014, Robertson sent an email to Casey Houweling
“[r]egarding our deal and background.” In the
email, Robertson states, “I know we still have a ways
to go, but it is time to make sure we are on the same page in
Utah. . . . Lets [sic] discuss and reach an agreement before
I leave [for Utah].” The following day, Robertson sent
a draft proposal titled “Development Agreement”
to Casey Houweling and Cummings. In paragraph 5.3 of the
Development Agreement, Robertson proposed a term titled
“Bonus Compensation.” Houweling never accepted
the Development Agreement.
February 21, 2014, Casey Houweling sent Robertson a letter
concerning the history of their relationship and a proposal
for additional compensation. In the letter, Casey Houweling
5. During our discussions, at no time did I commit to paying
you anything beyond the monthly fees, but I did, “leave
the door open” to discuss equity participation if the
project advanced to completion. . . .
9. During September and October 2013, we had casual
conversations concerning your compensation with Houwelings
and I asked you to provide . . . me with a proposal, which
you did on October 28, 2013. We subsequently met with you at
our Delta facility and indicated the following:
a. Any additional compensation beyond our monthly retainer
would be paid via a percentage of operating earnings with
terms to be agreed.
b. Any direct equity ownership would be on the basis of
actual purchase of equity.
c. There was a possibility of employment during the project
construction phase, and employment in a managerial capacity
once the project went live.
Houweling proposed two options: (1) additional compensation
of $734, 000, assuming that the greenhouse project was
completed by October 2014 and Robertson stayed until
completion; or (2) participation on an equity basis.
Robertson rejected both proposals.
February 21, 2014, Robertson emailed a counteroffer to
Houweling. In the email, Robertson wrote, “When you say
you never agreed to anything, I agree. It's a matter of
settling ownership between us without involving third parties
to make a valuation.” Robertson proposed that he would
continue to develop the project on a “cash out”
program based on receipt of the following amounts: (1) $75,
000 on March 15, 2014; (2) $25, 000 per month starting March
1, 2014, through project commission (first planting); and (3)
3% of total project capital investment as a developer fee
paid in two equal payments on January 15, 2015 and January
16, 2016. Houweling rejected the counteroffer with an email
from Cummings to Robertson stating that Houweling was
“prepared to send [Robertson] a formal offer.”
Cummings also outlined five “issues” that still
existed with respect to reaching a final agreement.
March 3, 2014, Robertson responded to Cumming's email
stating that his response was “very close to
[Houweling's] proposal.” Robertson proposed that
Houweling pay him a development fee of $1.395 million. The
amount owed to Robertson under his proposal would be reduced
by past and future “retainer” payments such that
Houweling would pay off the balance by executing four