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Inc. v. Robertson

United States District Court, D. Utah

September 11, 2017

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.

          Paul M. Warner Magistrate Judge.




         This is 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 third-party defendant.

         Casey 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.


         A. The Initial Proposal

         On 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.”

         A few 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 Note.

         On 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.”

         B. The Independent Consulting Agreement

         The day 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.”

         Casey 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.

         A few 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 completed.”

         Houweling 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.

         C. Bonus Negotiations

         On 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 agreement.

         On 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.

         On 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 wrote:

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.

         Casey 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.

         On 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 ...

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