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Grimm v. DxNA LLC

Court of Appeals of Utah

June 14, 2018

Phillip Grimm, Appellee and Cross-Appellant,
v.
DxNA LLC, Appellant and Cross-Appellee.

          Fifth District Court, St. George Department The Honorable Pamela G. Heffernan No. 110502762

          Bryan J. Pattison and Elijah L. Milne, Attorneys for Appellant and Cross-Appellee

          Andrew W. Stavros, Attorney for Appellee and Cross-Appellant

          Judge Gregory K. Orme authored this Opinion, in which Judges Michele M. Christiansen and David N. Mortensen concurred.

          ORME, Judge

         ¶1 Appellant DxNA LLC appeals the trial court's judgment that it had an enforceable employment agreement with Appellee Phillip Grimm. DxNA also appeals the trial court's calculation of prejudgment interest. Grimm cross-appeals, arguing that the trial court erred in ruling that he did not make a written demand and in therefore declining to award him a statutory penalty or attorney fees for DxNA's failure to pay his wages. We affirm.

         BACKGROUND

         ¶2 Grimm was initially hired in 2007 to be the chief executive officer (CEO) for DxNA Nucleic Analytics (Nucleic), located in St. George, Utah.[1] His two-year employment agreement included a yearly salary of $250, 000, an equity membership of 5%, and reimbursement for business expenses. It also required that Grimm's principal place of employment be St. George, Utah, with the opportunity to work one week per month elsewhere.

         ¶3 Less than a year later, Nucleic was in need of funding and sought out Glory BioVentures LLC (Glory), an investment firm. This resulted in Nucleic being restructured as DxNA LLC (DxNA), with Glory as its majority owner. As a result of the restructuring, Grimm was required to resign and be rehired by DxNA, and for that reason, Grimm resigned with the expectation that he would sign a new employment agreement with DxNA. Following his resignation, he continued to work and receive his salary and all of the compensation and benefits provided for under the original agreement.

         Negotiations with Glory

         ¶4 Negotiations for Grimm's new employment agreement began in July 2008. Several drafts of an agreement were exchanged between Grimm and Glory, but the parties remained at an impasse over three issues: whether Grimm's principal place of employment would be in St. George or split between St. George and Salt Lake City; whether severance pay for termination without cause would be 15 weeks or 26 weeks; and whether notice for non-renewal of Grimm's employment agreement would be 90 days or 120 days.[2]

         ¶5 Glory sent Grimm a draft in February 2009 (the Final Proposal), stipulating that he would receive 15 weeks of severance pay, that his principal place of employment would be divided between St. George and Salt Lake City, [3] and that the notice of non-renewal would be 90 days. Grimm opposed two of these provisions in a June 2009 email, proposing instead that his principal place of business be in Salt Lake City, with travel as required to St. George, and that, if he was terminated without cause, his severance pay would be increased to 26 weeks.

         ¶6 A few weeks after Glory received Grimm's proposed revisions, Grimm attended a DxNA board meeting at Glory's office and met with one of its principal investors to discuss the agreement. Grimm testified that an employment agreement was signed (the Missing Agreement), resolving the disputed issues in his favor. He said that Glory retained the Missing Agreement and that he never received a copy. Glory refuted this, claiming that no agreement was signed and that the disputed issues were never resolved. But consistent with Grimm's basic version of events, there were no further discussions regarding an employment agreement after the meeting. Grimm continued to reside in Salt Lake City and commute to St. George, received a salary of $250, 000, and obtained reimbursement for travel and business expenses.

         Grimm's Termination

         ¶7 Relations between Glory and Grimm soured in 2010, when Glory became dissatisfied with Grimm's performance as CEO and threatened to fire him. However, DxNA was once again experiencing serious financial difficulties, and in July 2010, Glory divested itself of any ownership in DxNA by assigning all its rights and interests over to DxNA in exchange for a promissory note. After Glory's departure as an owner, Grimm received an email in January 2011 from DxNA's board of directors indicating that it intended to completely reorganize DxNA and would require the resignation of all employees. Shortly thereafter, Grimm was terminated by the board. As the board understood it, no employment agreement existed, and Grimm was an at-will employee who could be fired without cause.

         ¶8 Two days after his termination, Grimm emailed a member of the board (the Email) regarding the amounts that DxNA owed him for unpaid salary, accrued paid time off (PTO), business expenses, and severance pay. Because of DxNA's financial difficulties, Grimm indicated in the Email that he would be willing to work with DxNA in finding other ...


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