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Vicidiem, Inc. v. Christensen

United States District Court, D. Utah

October 7, 2019

VICIDIEM, INC., a Utah corporation, and CRAIG HUTCHINSON, an individual, Plaintiffs,
v.
PAUL CHRISTENSEN, an individual, and FIBERWAVE TECHNOLOGIES, LLC, a Utah limited liability company; JOHN DOES I - X, and DOE CORPORATIONS I - X, Defendants.

          MEMORANDUM DECISION AND ORDER

          Dee Benson United States District Judge.

         District Judge Dee Benson Before the court is Defendants' Motion to Dismiss. (Dkt. No. 7.) The motion has been fully briefed by the parties, and the court has considered the facts and arguments set forth in those filings. Pursuant to civil rule 7-1(f) of the United States District Court for the District of Utah Rules of Practice, the Court elects to determine the motion on the basis of the written memoranda and finds that oral argument would not be helpful or necessary. DUCivR 7-1(f).

         Facts

         In this action, Vicidiem, Inc. (“Vicidiem”) has sued its former attorney Chief Operating Officer (“Christensen”) and the new company Christensen formed after the termination of his relationship with Vicidiem (“Fiberwave”). Vicidiem is a provider of wholesale internet, television, and telephone services to apartment complexes and other multi-unit developments. (Complaint ¶ 8.) Christensen is an attorney. (Id. ¶ 11.) Plaintiff Craig Hutchinson (“Hutchinson”) is a principal and founder of Vicidiem. (Id. ¶ 10.)

         In 2012 and 2013, Christensen represented Vicidiem, Hutchinson, and another owner of Vicidiem on a part- time basis. (Id. ¶ 12.) In late 2013 or early 2014, Christensen proposed a new arrangement in which he would work full-time as the COO of Vicidiem. (Id. ¶ 14, Dkt. No. 13-1.) Christensen drafted a Service Agreement, which provided that Christensen would use his business experience to promote Vicidiem, that he would assist in securing financing for the growth of the business, and that he would “also use his legal training and experience to benefit Vicidiem.” (Id. ¶ 15, Dkt. No. 13-1[1], ¶ 1.) The Agreement provided a guaranteed minimum salary to Christensen and granted equity in Vicidiem to Christensen. (Id. ¶ 18, Dkt. No. 13-1, ¶ 3.) Christensen did not advise Hutchinson or Vicidiem to seek independent legal counsel to review the Service Agreement. (Id. ¶ 20.)

         In 2014, Christensen began to work full-time for Vicidiem as its COO. During his tenure as COO, Christensen continued to advise Plaintiffs on various legal matters, including drafting vendor contracts and employment agreements for key Vicidiem employees. (Id. ¶¶ 24, 25, 31.)

         As COO, Christensen was also given access to Vicidiem's confidential information and trade secrets, including: customer contracts (id. ¶ 25); “confidential information regarding Vicidiem's business and business strategies” including “confidential information regarding technology, software development, business strategy, pricing, terms, duration, and key C level executives for Vicidiem's customers and vendors and strategic partners” (id. ¶ 26); “confidential information about upcoming and potential projects that Vicidiem intended to monetize, including a full list of all project and contacts in the company's backlog and pipeline through 2021” (id. ¶ 27); and “programs, methods, techniques and processes” developed and utilized by Vicidiem. (Id. ¶ 28.)

         On March 29, 2019, Vicidiem terminated its relationship with Christensen. (Id. ¶ 35.) On April 2, 2019, Christensen formed Fiberwave. (Id. ¶ 37.) On April 4, 2019, three key Vicidiem employees who provided engineering services to Vicidiem abruptly resigned without notice. (Id. ¶ 36.) Christensen, either directly or through Fiberwave, employed or partnered with the Vicidiem engineers following their departure. (Id. ¶ 38.)

         Within days of forming Fiberwave, Christensen and others associated with Fiberwave contacted and met with Vicidiem customers and vendors. (Id. ¶ 39.) Those contacts included soliciting several Vicidiem customers, reaching out to Vicidiem's fiber services vendor, and contacting a developer with whom Vicidiem was engaged in negotiations and falsely stating that Fiberwave's hiring of Vicidiem's engineers rendered Vicidiem unable to perform the work it had solicited from the developer. (Id. ¶¶ 40-48.)

         Vicidiem alleges ten Causes of Action against Christensen and Fiberwave: 1) Declaratory Judgment that the contract with Christensen is void; 2 and 9) Breach of fiduciary duty against Christensen; 3) tortious interference; 4) violation of the Defend Trade Secrets Act; 5) violation of the Utah Trade Secrets Act; 6 and 7) fraudulent/ negligent non-disclosure against Christensen; 8) breach of contract against Christensen; and 10) legal malpractice against Christensen. Defendants have moved to dismiss all claims.

         Discussion

         “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Plausibility, in the context of a motion to dismiss, requires facts which allow “the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

         Under Rule 12(b)(6), the court must accept all well-pleaded allegations in the Amended Complaint as true and view those allegations in the light most favorable to the nonmoving party. Stidham v. Peace Officer Standards Training, 265 F.3d 1144, 1149 (10th Cir. 2001) (quoting Sutton v. Utah Sch. for the Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir. 1999)). The Court must limit its consideration to the four corners of the Complaint, and any documents attached thereto, and any external documents that are referenced in the Complaint and whose accuracy is not in dispute. Oxendine v. Kaplan, 241 F.3d 1272, 1275 (10th Cir. 2001); Jacobsen v. Deseret Book Co., 287 F.3d 936, 941 (10th Cir. 2002).

         Defendants have moved to dismiss Plaintiffs' Complaint in its entirety pursuant to Rule 12(b)(6). Defendants first argue that Plaintiffs have not alleged sufficient facts and law to support their claim that the Service Agreement was void and constituted fraudulent or negligent non-disclosure. Plaintiffs have alleged, among other things, that their attorney drafted his own employment agreement granting himself a substantial equity interest in Vicidiem without recommending outside counsel or independent review. The court finds sufficient alleged facts and law ...


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