Sole Source v. Prologic

----ooOoo----

Sole Source Media, Inc.,
a Utah corporation,
Plaintiff and Appellee,

v.

Prologic, a Utah partnership;
and Brad Stewart,
Defendants and Appellants.

MEMORANDUM DECISION
(Not For Official Publication)

Case No. 990801-CA

F I L E D
November 30, 2000 2000 UT App 339 -----

Third District, Salt Lake Department
The Honorable William Barrett

Attorneys:
Jeffrey L. Silvestrini and Brian F. Roberts, Salt Lake City, for Appellants
Matthew C. Barneck and Brandon B. Hobbs, Salt Lake City, for Appellee

-----

Before Judges Jackson, Bench, and Billings.

BENCH, Judge:

Rule 54(b) of the Utah Rules of Civil Procedure allows a trial court to certify certain claims as final judgments for purposes of appeal if the following three requirements are met: First, there must be multiple claims for relief or multiple parties to the action. Second, the judgment appealed from must have been entered on an order that would be appealable but for the fact that other claims or parties remain in the action. Third, the trial court, in its discretion, must make a determination that "there is no just reason for delay" of the appeal. Pate v. Marathon Steel Co., 692 P.2d 765, 767 (Utah 1984)(quoting 10 C. Wright, A. Miller & M. Kane, Federal Practice and Procedure: Civ. 2d § 2656, at 47-48 (1983)). To satisfy the second requirement, the claim certified for appeal under Rule 54(b) must be separate from those claims remaining in the trial court. See Kennecott Corp. v. Utah State Tax Comm'n, 814 P.2d 1099, 1103 (Utah 1991).

In determining separateness of a claim, we "'focus[] on the degree of factual overlap between the issue certified for appeal and the issues remaining in the district court.'" Id. (quoting Indiana Harbor Belt R.R. v. American Cyanamid Co., 860 F.2d 1441, 1445 (7th Cir. 1988)). "When this factual overlap is such that separate claims appear to be based on the same operative facts or on the same operative facts with minor variations, they are held not to constitute separate claims for Rule 54(b) purposes." Kennecott, 814 P.2d at 1103.

In the present case, we conclude there is significant factual overlap. We find unpersuasive Appellants' attempt to avoid factual overlap by distinguishing between causes of action based upon the shareholders agreement and causes of action based upon the employment contract. Regardless of which document a particular cause of action is based upon, the causes of action contained in Appellants' Counterclaim and Third-Party Complaint emerge from the basic fact that Stewart was terminated and forced to sell his shares of Sole Source stock.

The dismissed causes of action, certified as final under Rule 54(b), include the following: first, declaratory judgment determining Stewart's contractual rights as an officer, director, shareholder, and employee; fourth, breach of the covenant of good faith and fair dealing in purporting to cause Stewart's termination and requiring Stewart to sell his stock; fifth, breach of fiduciary duty in terminating and forcing stock sale; sixth, seeking an accounting of Sole Source profits for the period after December 31, 1994; and eighth, breach of contract for refusing to pay Stewart compensation owed pursuant to both the employment contract and the shareholders agreement. The causes of action remaining in the trial court include the following: third, tortious interference with contractual relations and economic expectancies; sixth, seeking an accounting of Sole Source profits for the period prior to December 31, 1994; seventh, seeking punitive damages for the alleged wrongful actions of third-party defendants; and ninth, indemnification. Each cause of action now on appeal alleges that the third-party defendants wrongfully acted in terminating Stewart's employment and forcing him to sell his Sole Source shares. With the possible exception of the ninth cause of action, the causes of action remaining in the trial court also allege that the third-party defendants wrongfully acted in terminating Stewart's employment and forcing him to sell his Sole Source shares.

As stated in Kennecott, res judicata is an important factor in determining whether factual overlap exists. See id. at 1104. We conclude that judgment by this court on the causes of action certified as final would have a res judicata effect on the causes of action remaining in the trial court. If this court were to rule on either good faith and fair dealing, fourth cause of action, or fiduciary duty, fifth cause of action, there would almost certainly be a res judicata effect upon the third cause of action, which alleges tortious interference with contractual relations and economic expectancies.

Even if we were to accept Appellants' argument that causes of action based upon the employment contract do not factually overlap with causes of action based upon the shareholders agreement, we conclude that the causes of action certified as final implicate both documents. Also, the award of attorney fees and the dismissal of Appellants' Motion to Compel emerge from the underlying causes of action. Because we conclude that the underlying causes of action on appeal emerge from the same set of operative facts as the causes of action remaining in the trial court, the issues on appeal regarding attorney fees and the dismissed Motion to Compel also emerge from that same set of operative facts.

Since the issues on appeal emerge from the same set of operative facts as issues remaining in the trial court, we hold that the issues on appeal are not separate claims, and thus, are not certifiable under Rule 54(b) of the Utah Rules of Civil Procedure. We therefore dismiss this appeal for lack of jurisdiction.
 
 
 
 

______________________________
Russell W. Bench, Judge -----

WE CONCUR:
 
 
 
 

______________________________
Norman H. Jackson,
Associate Presiding Judge
 
 
 
 

______________________________
Judith M. Billings, Judge