Conus Communications Company Limited Partnership, Appellant, vs. Charles Hubbell, Respondent.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (1998).

IN COURT OF APPEALS

Conus Communications Company Limited Partnership,
Appellant,
 
vs.
 
Charles Hubbell,
Respondent.

Affirmed

Hennepin County District Court

File No. 9816897

Thomas L. Hamlin, Rita Coyle DeMeules, Diane L. Simerson, Robins, Kaplan, Miller & Ciresi L.L.P, 2800 LaSalle Plaza, 800 LaSalle Avenue South, Minneapolis, MN 55402 (for appellant)

James V. Roth, Madhulika Jain, Messerli & Kramer P.A., 1800 Fifth Street Towers, 150 South Fifth Street, Minneapolis, MN 55402 (for respondent)

            Considered and decided by Crippen, Presiding Judge, Amundson, Judge, and Anderson, Judge.

CRIPPEN, Judge

            Appellant Conus Communications, whose former employee recovered profits from a transaction first begun when he worked for appellant, claims on appeal that the district court erred in its summary judgment that respondent employee was not unjustly enriched.  Finding as a matter of law that appellant's equities do not reach the standard set for unjust enrichment, we affirm.

Appellant is engaged, among other things, in the business of providing satellite services to corporate clients to enable video and audio teleconferences.  Respondent was employed by appellant for 14 years and, at the time of his departure, had responsibilities for marketing and client development, project management, and supervision of account managers.  Appellant terminated respondent in September 1998, and within days after his departure, respondent solidified a deal with Conoco Oil Corporation to personally arrange for a teleconference that eventually occurred in October.  Respondent's services for the Conoco teleconference included contacting vendors to provide the personnel and equipment at multiple national and international sites, and he netted a fee of $29,108.80 on the transaction. 

There is undisputed testimony that respondent spent approximately two hours making arrangements for the teleconference while employed by appellant.  Respondent acknowledges that Conoco had been a client of appellant for three or four similar projects in recent years, that respondent had managed some of those projects, and that Conoco had first contacted respondent about the October teleconference when respondent was appellant's employee. 

Respondent furnished an affidavit stating that immediately after he was fired, he placed a call to Conoco to notify them he would no longer be managing the teleconference project for appellant.  Conoco wanted respondent to complete the deal, and respondent agreed to investigate the possibility of arranging the teleconference on his own.  There is no evidence that respondent solicited Conoco's business.  After securing the cooperation of the vendors and arranging for a cooperative booking arrangement with a local production house, respondent, as an independent producer, agreed to continue to make arrangements for the Conoco teleconference.

Respondent's duties following termination of his Conus Communications job included making additional contacts with vendors to ensure appropriate services were provided at all sites, arranging additional sites and dropping locations as requested by Conoco, and confirming time on the satellite transponder that was owned by appellant.  The undisputed evidence in the record is that respondent spent about two hours working on arrangements for the teleconference following his termination, roughly the same amount of time he spent before being fired.

            On appeal from a summary judgment, the appellate court asks whether there are any genuine issues of material fact and whether the trial court erred in its application of the law.  State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).  A "reviewing court must view the evidence in the light most favorable to the party against whom judgment was granted."  Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993) (citation omitted).  A genuine issue for trial must be established by substantial evidence, and a party that resists summary judgment "must do more than rest on mere averments."  DLH Inc. v. Russ, 566 N.W.2d 60, 70-71. 

[T]here is no genuine issue of material fact for trial when the nonmoving party presents evidence which merely creates a metaphysical doubt as to a factual issue and which is not sufficiently probative with respect to an essential element of the nonmoving party's case to permit reasonable persons to draw different conclusions.

Id. 

An action for unjust enrichment does not lie simply because one party benefits from the efforts of others; instead, "it must be shown that a party was unjustly enriched in the sense that the term ‘unjustly' could mean illegally or unlawfully."  First Nat'l Bank of St. Paul v. Ramier, 311 N.W.2d 502, 504 (Minn. 1981) (citation omitted).  The concept of illegality has been extended to include that which is morally wrong, see Klass v. Twin City Fed. Sav. and Loan Ass'n, 291 Minn. 68, 71, 190 N.W.2d 493, 495 (1971); Anderson v. DeLisle, 352 N.W.2d 794, 796 (Minn. App. 1984), or "circumstances that would make it unjust to permit its retention."  Southtown Plumbing, Inc. v. Har-Ned Lumber Co., Inc., 493 N.W.2d 137, 140 (Minn. App. 1992) (citations omitted). 

The trial court concluded there were no such circumstances in this case, and the record confirms this judgment.  It is important, initially, that there is no evidence of contractual obligations of respondent pertinent to his work for Conoco.  There was no use of private or confidential information or evidence of wrongdoing in soliciting clients.  There was no evidence of the use of any significant time of appellant's employees in making preliminary arrangements for the teleconference, other than the time spent by respondent. And there is no evidence that the deal was "substantially completed" at the time respondent's termination occurred such that the benefit must inure to a party other than the one who concluded the contract with Conoco.

Appellant also showed no occurrence of any contractual relationship with Conoco at the time of respondent's termination.  In fact, the record demonstrates that Conoco elected to work with respondent rather than continue its previous relationship with appellant, an indication of the importance to Conoco of respondent's role in the business relationship.  These are not circumstances suggesting illegality or immorality of respondent's profiting from the transaction such that the doctrine of unjust enrichment might be applied.[1]

The case cited by appellant in support of its argument, In re L-Tryptophan Cases v. Showa Denko, K.K., 518 N.W.2d 616 (Minn. App. 1994), is distinguishable from the facts of this case.  In In re L-Trytophan Cases, the court recognized the equities under a theory of unjust enrichment where attorneys left a law firm, taking to their new firm many plaintiffs in a class-action suit, after the firm that initiated the suit invested nearly $3.5 million in pre-litigation expenses in the matter.  Id. at 621.  The court concluded that a departing member could not justly deprive the firm of fees it reasonably expected to recover in light of the considerable investment of firm resources, the reliance on work product developed with the use of firm resources, the substantial completion of work prior to the attorneys' departure, and the unique inability of a law firm to protect its rights to work product with a non-compete agreement.  Similar considerations are not present in this case.[2]

Appellants also repeat on appeal the assertion that they were entitled to relief on a breach of fiduciary duty related to their earlier claims of tortious interference of prospective business advantage and misappropriation of trade secrets.  The essence of these claims depends on a showing of the use of confidential information. 

A claim of misappropriation of confidential information depends on a showing of intent, a showing that has not occurred here.  See Cherne Indus., Inc. v. Grounds & Assocs., Inc., 278 N.W.2d 81, 90 (Minn. 1979) (setting forth requirements for determining whether information is confidential or a trade secret).  Appellants gave no notice before firing respondent that any information used by respondent before or after he worked for them was confidential and made no agreement with him in that respect.  See Jostens, Inc. v. National Computer Sys., Inc., 318 N.W.2d 691, 702 (Minn. 1982) (noting employee entitled to fair notice on what information the employer seeks to protect).  Appellants did not have policies or practices in effect to establish an intent to safeguard confidential information.  In addition to failing to require respondent to sign either a confidentiality or a non-compete agreement, appellant failed to take adequate security measures in restricting access to its building and protecting information internally that it wished to keep confidential.  These are not circumstances that permit appellant to insist that its intent to maintain confidentiality can be determined as a matter of intuition.

 Respondent correctly distinguishes the foreign cases cited by appellant that do not require a showing of confidentiality to establish a claim for breach of fiduciary duty.  These cases involved former corporate officers who owe a different level of duty to a corporation than does an employee such as respondent.  And we find no Minnesota authority for recovery for breach of fiduciary duty in the absence of confidential information.

Because there are no genuine issues of fact sufficient to permit proof of a meritorious claim for unjust enrichment, the trial court did not err in its summary judgment.

Affirmed.

[1] Appellants separately assert on appeal their right to recover their pre-termination costs for the teleconference in quantum meruit.  Quantum meruit is a measure of remedy and does not arise absent a showing of unjust enrichment.  See Stemmer v. Estate of Sarazin, 362 N.W.2d 406, 408 (Minn. App. 1985).

[2] Appellant argues that respondent's successes were also shaped by previous development of Conus services, including start-up expenses, marketing, client development, and infrastructure costs.  None of these investment costs was directly associated with the Conoco job.