Trace Min. v. Eagle Security

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Trace Min. v. Eagle Security, Case No. 20000561-CA, Filed May 17, 2001 IN THE UTAH COURT OF APPEALS


Trace Minerals International, a Utah corporation,
Plaintiff and Appellant,


Eagle Security Corporation, a Utah corporation;
its successor-in-interest, Alert One, a Utah corporation;
Grant Ashby; Jane Does, individuals; and Action Alarm, Inc.
dba ACM U.L. Monitoring Station, an Arizona corporation,
Defendants and Appellees.

(Not For Official Publication)

Case No. 20000561-CA

May 17, 2001 2001 UT App 160 -----

Second District, Ogden Department
The Honorable Roger S. Dutson
The Honorable Michael D. Lyon

Robert C. Keller, Salt Lake City, for Appellant
Henry E. Heath and Jennifer Polley-Abramson, Salt Lake City, for Appellees


Before Judges Jackson, Bench, and Thorne.

BENCH, Judge:

"A joint venture is an agreement between two or more persons . . . for the purpose of making a profit." Bassett v. Baker, 530 P.2d 1, 2 (Utah 1974). The agreement may be created formally or by the parties' conduct. See Rogers v. M.O. Bitner Co., 738 P.2d 1029, 1032 (Utah 1987). Although the required elements for a joint venture are not precisely defined, the following elements are essential: The parties must combine their property, money, effects, skill, labor[,] and knowledge. As a general rule, there must be a community of interest in the performance of the common purpose, a joint proprietary interest in the subject matter, a mutual right to control, a right to share in the profits, and unless there is an agreement to the contrary, a duty to share in any losses which may be sustained. Bassett, 530 P.2d at 2.

A written Alarm Installer's Agreement (Agreement) governs the relationship between Eagle Security (Eagle) and Action Alarm. Under the Agreement, Action Alarm was a subcontractor whose business was separate from Eagle's business. Specifically, Action Alarm's "sole and only obligation" was to monitor signals received from alarm equipment installed by Eagle. Moreover, Action Alarm explicitly disclaimed any ownership of or responsibility for the condition, functioning, repair, or maintenance of the alarm equipment. Thus, the formal agreement between Action Alarm and Eagle did not create a joint venture.

Furthermore, the parties' conduct under the Agreement fails to satisfy at least two essential elements of a joint venture. First, the parties did not share profits. See id. (sharing of profits required for a joint venture). "A common definition for profits is the excess of returns over expenditures in a transaction or series of transactions." Penelko, Inc. v. John Price Assoc., 642 P.2d 1229, 1234 (Utah 1982) (internal quotation and citation omitted). Action Alarm billed Eagle $6.00 per month per subscriber without regard to the revenue or expenses of either party. Absent any connection to revenue and expenses, the fee charged by Action Alarm was not a profit share.

Second, the required element of mutual control is not met in this case. See Bassett, 530 P.2d at 2 (requiring mutual control for a joint venture). Neither party had any voice in the other party's business operations. See Farmers Ins. Exch. v. Parker, 936 P.2d 1088, 1091 (Utah Ct. App. 1997) (stating that leader of a recreational rock climbing excursion did not have the right to "control any of the actions of the other climbers"). Eagle argues that the Agreement provided for mutual control by giving Action Alarm the authority to both refuse monitoring if a test signal failed and to suspend monitoring if the alarm equipment became disabled or substantially damaged. Rather than establishing mutual control, these provisions protect Action Alarm's independence in deciding whether to provide monitoring services should circumstances beyond its control occur. Eagle was similarly independent. Action Alarm had no control over Eagle's installation business or Eagle's discretion to go elsewhere for monitoring services.

Finally, we find Hunter v. BPS Guard Servs., Inc., 654 N.E.2d 405 (Ohio Ct. App. 1995), inapposite. In Hunter, the subscriber, installer, and the monitoring company all signed a single service agreement, the subscriber received one bill from the monitoring company for services provided by both the monitoring company and the installer, and the monitoring company kept books with client and billing information for both the monitoring company and the installer. See id. at 419. In the present case, none of these facts exist.

Accordingly, we affirm the trial court's ruling.

Russell W. Bench, Judge -----


Norman H. Jackson,
Associate Presiding Judge

William A. Thorne, Jr., Judge