Opinion
Case No. 2:03-CV-01101TC.
October 15, 2004
ORDER
This dispute centers on two agreements signed by Defendant Robert Binkley in connection with his employment as an oil and gas well drilling consultant for Plaintiff GSM, Inc. ("GSM"). The case is now before the court on motions for summary judgment filed by Mr. Binkley and Westport Resources, Inc. and Westport Oil and Gas Company, L.L.P. (collectively "Westport"). Mr. Binkley claims he is entitled to summary judgment because he did not breach either of the two agreements. Westport argues for summary judgment claiming that it did not induce any breach by Mr. Binkley. For the reasons set forth below, both Mr. Binkley's and Westport's motions are GRANTED.
Background
GSM is an oil and gas consulting firm that places GSM-employed consultants with GSM's customers — companies in the oil and gas industry, such as oil and gas producers. While its consultants work for GSM, their work is at the site of, and directed by, GSM's customers.
In 2001, GSM had already approved Mr. Binkley as a contractor when it offered him a consulting job at a well-drilling site operated by El Paso Production Company ("El Paso") in Vernal, Utah. Mr. Binkley accepted this offer and began working near Vernal (the "El Paso Job") on August 21, 2001. On September 6, 2003, in connection with his acceptance of the El Paso Job, Mr. Binkley signed two agreements, a Master Service Contract ("Service Contract") and a Non-Compete Agreement (collectively, the Service Contract and Non-Compete Agreement are referred to as the "Agreements"). On September 20, 2002, Mr. Binkley's El Paso Job ended.
Westport purchased several of El Paso's oil and gas properties in the Vernal area. Although the purchase was not completed until December 17, 2002, Westport and El Paso made the purchase effective as of June 1, 2002. Soon after his El Paso Job ended on September 20, 2002, Mr. Binkley contacted Westport to inquire about the possibility of working for Westport at the Vernal site (the "Westport Job").
In December 2002, GSM contacted Mr. Binkley about the possibility of Mr. Binkley working for GSM on another project near Ozona, Texas (the "Ozona Job"). Mr. Binkley traveled to Amarillo, Texas, to meet with GSM's President and CEO, and also to Ozona, Texas to meet with the owners of the Ozona project. The parties dispute whether Mr. Binkley agreed to take the Ozona Job, but it is undisputed that he did not perform the Ozona Job.
Mr. Binkley's discussions with Westport about his possible employment on the Westport Job continued through Defendant Dan Lindsey, who was Westport's drilling manager. Mr. Binkley ultimately began working as a consultant for a company called Majestic International ("Majestic") (a non-party) at Westport's site in Vernal. Mr. Binkley informed GSM that he was taking the Westport Job on January 31, 2003. Mr. Binkley's employment by Majestic for Westport was the same arrangement as his employment by GSM for El Paso — he was employed and paid by Majestic but his work was directed by, and at the location of, Westport.
On March 12, 2003, GSM sued Mr. Binkley in the Northern District of Texas for breaching the Agreements and for tortious interference. GSM later added Mr. Lindsey and Westport as defendants under another tortious interference claim. While the case was pending in Texas, Mr. Binkley and Westport filed for summary judgment on October 30, 2003, and October 31, 2003, respectively. Mr. Binkley contends he did not violate the Agreements, and Westport denies inducing any violation. The Texas court transferred the case here on December 11, 2003, because Mr. Lindsey lacked the contacts necessary to support personal jurisdiction in Texas. See GSM Consulting, Inc. v. Binkley, 2:03CV067J, slip op. at 8-9 (N.D. Tex. Dec. 11, 2003).
Analysis
I. Summary Judgment Standard.
Under Federal Rule of Civil Procedure 56, a court may enter summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.'" Fed.R.Civ.P. 56(c); see Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998).
II. Mr. Binkley's Motion for Summary Judgment.
A. Choice of Law.
The Agreements do not have a choice-of-law provision, and GSM and Mr. Binkley dispute whether Utah or Texas law applies. (Although the broadest view of the choice-of-law options also includes Colorado, that state has minimal contacts with the dispute, and neither party advocates applying that state's law.) Accordingly, the options are Utah and Texas, and there is no clear choice. But, as discussed below, the court need not reach the issue.
The only connection that Colorado has to the present dispute is Mr. Binkley is a resident of that state.
B. Breach of Contract.
1. The Ozona Job.
GSM argues that Mr. Binkley breached the Service Contract when he made an oral promise to take the Ozona Job by informing Mr. Robert Grace and Mr. Max Mefford of GSM that if Mr. Binkley interviewed for that job and those in charge found him acceptable, then he would accept it. Mr. Binkley responds that: (1) he did not accept the Ozona Job; (2) GSM released him from any obligations regarding the Ozona Job; (3) the Service Contract was non-exclusive; and (4) the statute of frauds voids any oral agreement regarding the Ozona Job.
The Service Contract states:
This Agreement does not obligate GSM to order work from the Contractor [Mr. Binkley], nor does it obligate Contractor to accept orders for work from GSM, but it, together with any applicable work order or similar document shall control and govern all work accepted by Contractor.
(GSM's Third Am. Comp., Ex. A at 1.) For the Ozona Job, there is no need to apply either Utah or Texas law because clearly, as shown by the above provision, the parties agreed that oral agreements to accept work would not be acceptable. They agreed that "work order[s] or similar document[s]" would be necessary to set forth the terms of Mr. Binkley's employment on specific jobs. But the parties did not enter into any such written documents for the Ozona Job.
GSM takes the position that the express language in the Service Contract does not control because the parties did not have a work order for the El Paso Job when Mr. Binkley worked through GSM for El Paso in Vernal, Utah. GSM argues that Mr. Binkley accepted the El Paso Job by coming to work at the Vernal jobsite. Therefore, according to GSM, this course-of-conduct rationale should be applied to the Ozona Job, and the court should find that Mr. Binkley agreed, when he appeared at the Ozona Job, to perform that job.
But GSM presents no persuasive authority for this position. It is significant that GSM drafted the Service Contract and insisted that Mr. Binkley sign it. And the Service Contract makes clear (1) that Mr. Binkley was not obligated to accept jobs offered by GSM, and (2) that the Service Contract "together with any applicable work order or similar document shall control and govern all work accepted by" Mr. Binkley.
Perhaps most fatal to GSM's argument on this point, however, is the testimony of Mr. Robert Grace, GSM's Chief Executive Officer, about GSM's business practices. Mr. Grace testified that in the absence of a written contract, a contractor (such as Mr. Binkley) does not have a contract with GSM until the contractor starts work and is placed on the payroll. (GSM's Revised Appendix to its Supplemental Response to Westport's Motion for Summary Judgment, Grace Depo. at 43 and 73-75 (hereinafter "GSM's Rev. Appx.").) Here, it is undisputed that Mr. Binkley never worked on the Ozona Job and was never placed on the payroll. In fact, after interviewing for the Ozona Job, Mr. Binkley never again traveled to the jobsite at Ozona, Texas.
Because the evidence demonstrates that Mr. Binkley did not accept the Ozona Job in the manner required by the Service Contract, or even in a manner consistent with GSM's past business practices, Mr. Binkley did not violate the Service Contract with his actions regarding the Ozona Job. Therefore, there is no need to consider Mr. Binkley's arguments that he was released from the Ozona Job, or that the Service Contract violates the statute of frauds.
2. The Westport Job.
GSM argues that Mr. Binkley breached the Non-Compete Agreement by working on the Westport Job (either directly or as an employee of Majestic) because he had previously worked for GSM at that Vernal, Utah, jobsite when it was owned by El Paso. Mr. Binkley contends that the Non-Compete Agreement is unenforceable, and that in any event, he did not violate it because working on the Westport Job for Majestic was not prohibited by the Non-Compete Agreement.
The central issue is whether Mr. Binkley violated the Non-Compete Agreement. The second paragraph of that agreement reads:
In the event of the termination of the work assignment, on a voluntary basis or on an involuntary basis with cause, Contractor agrees that Contractor will not for a period of three years from the effective date of termination engage in a business activity similar to that of GSM with (a) any Companies or Clients assigned by GSM, any subsidiary and/or related parties thereof, or (b) accept any assignment as Employee or Independent Contractor with any Company, Client or subsidiary and/or related parties thereof.
It is undisputed that paragraphs one and three of the Non-Compete Agreement do not apply here.
(Third. Am. Comp., Ex. B at 1 (emphasis added).) Initially, it is undisputed that GSM did not assign Mr. Binkley to work for Westport and Westport is not a subsidiary of El Paso. Therefore, the only way in which Mr. Binkley violated the Non-Compete Agreement is if Westport is considered a "related" company.
Here, there is no indication that Westport and El Paso are "related." GSM has put forth no evidence that Westport is the parent, subsidiary, or sister corporation of El Paso or a client of GSM. In fact, GSM has put forth no evidence that Westport and El Paso are even in the same corporate family, or share stock ownership, directors, or officers.
Rather, the undisputed evidence shows that Westport merely purchased some of El Paso's oil and gas assets near Vernal, Utah. To include Westport in the Non-Compete Agreement merely because it bought certain property essentially removes the only substantive restriction (other than time) from the Non-Compete Agreement. If GSM wished to prevent the type of situation that occurred here, it could have easily done so by prohibiting its contractor from taking similar work from another company at the particular jobsite in question.
Accordingly, Mr. Binkley did not violate the Non-Compete Agreement because neither Westport nor Majestic are "related parties" of El Paso or clients of GSM. Therefore, there is no need to consider whether the Non-Compete agreement is unenforceable.
3. Tortious Interference Claim.
GSM also argues that Mr. Binkley intentionally interfered with GSM's prospective business relationship, presumably GSM's relationship with Westport. Mr. Binkley contends that GSM cannot establish as a matter of law that Mr. Binkley's conduct was tortious.
Under Utah law, GSM must prove the following elements to establish prospective tortious interference: "(1) that the defendant intentionally interfered with the plaintiff's existing or potential economic relations, (2) for an improper purpose or by improper means, (3) causing injury to the plaintiff." St. Benedict's Development Co. v. St. Benedict's Hosp., 811 P.2d 194, 200 (Utah 1991) (citingLeigh Furniture and Carpet Co. v. Isom, 657 P.2d 293, 304 (Utah 1982)).
To establish improper purpose, GSM must show that Mr. Lindsey's "predominant purpose was to injure the plaintiff." Leigh Furniture, 657 P.2d at 307. However, "[a]n immediate intent to injure a competitor may be motivated and outweighed by a legitimate long-range interest in furthering one's own economic condition." St. Benedict's, 811 P.2d at 201.
To establish improper means, GSM must show that Mr. Lindsey acted contrary to law, such as by "`violence, threats or other intimidation, deceit or misrepresentation, bribery, unfounded litigation, defamation, or disparaging falsehood,'" or that he violated "`an established standard of a trade or profession.'"Id. at 201 (quoting Leigh Furniture, 657 P.2d at 308).
Under Texas law, the test is similar: "(1) there was a reasonable probability that [the plaintiff] would have entered into a business relationship; (2) the defendant acted maliciously by intentionally preventing the relationship from occurring with the purpose of harming the plaintiff; (3) the defendant was not privileged or justified in his actions; and (4) actual harm or damage occurred to the plaintiff as a result." Robles v. Consolidated Graphics, Inc., 965 S.W.2d 552, 561 (Tex.App. 1997). "[T]o establish liability for interference with a prospective contractual or business relation the plaintiff must prove that it was harmed by the defendant's conduct that was either independently tortious or unlawful." Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 713 (Tex. 2001).
First, GSM cannot establish that Mr. Binkley intentionally interfered with GSM's prospective business relationship with Westport under Utah law. Simply put, GSM cannot show Mr. Binkley acted with an improper purpose because it has offered no evidence that Mr. Binkley's "predominant purpose was to injure the plaintiff." On the contrary, GSM has not disputed that Mr. Binkley accepted the Westport Job not to harm GSM, but for his own financial and personal benefit. Likewise, GSM cannot show that Mr. Binkley acted through improper means because it has offered no evidence that Mr. Binkley used "violence, threats or other intimidation, deceit or misrepresentation, bribery, unfounded litigation, defamation, or disparaging falsehood," or other similar actions when he accepted the Westport Job.
Second, GSM cannot establish that Mr. Binkley intentionally interfered with GSM's prospective business relationship with Westport under Texas law. GSM cannot establish the malice element of the test because it has offered no evidence that Mr. Binkley committed and independent tort when he took the Westport Job. In fact, GSM has not identified the independent tort it contends Mr. Binkley committed.
Accordingly, Mr. Binkley did not intentionally interfere with GSM's prospective business relationship with Westport.
III. Westport's Motion for Summary Judgment.
Under Utah law, the same test that applied above to GSM's claim of intentional interference with a prospective business relationship also applies to its claim that Westport intentionally interfered with GSM's existing contractual relationship with Mr. Binkley. St. Benedict's, 811 P.2d at 200. GSM argues that Mr. Lindsey was Westport's agent, and both Mr. Lindsey and Westport knew of the Agreements and intentionally induced Mr. Binkley to renege on his agreement to take the Ozona Job so he could take the Westport Job.
GSM and Westport agree that Utah law applies to GSM's claims of tortious interference against Westport.
Westport argues that GSM's claim against it must fail because: (1) Mr. Lindsey did not act with the requisite intent to interfere; (2) neither Mr. Lindsey nor Westport had knowledge of the Agreements; and (3) that Mr. Lindsey was an independent contractor and not a Westport employee, thereby removing any liability for Mr. Lindsey's actions.
Under the St. Benedict's test outlined above, GSM must prove Mr. Lindsey or Westport acted with an improper purpose or improper means when dealing with Mr. Binkley and the Westport Job.
A. Improper Purpose.
As noted above with respect to Mr. Binkley's motion, to establish improper purpose, GSM must show that Mr. Lindsey's or Westport's "predominant purpose was to injure the plaintiff."Leigh Furniture, 657 P.2d at 307. However, "[a]n immediate intent to injure a competitor may be motivated and outweighed by a legitimate long-range interest in furthering one's own economic condition." St. Benedict's Development, 811 P.2d at 201.
GSM argues that Mr. Lindsey's improper purpose is demonstrated by a phone call with a GSM representative where Mr. Lindsey learned Mr. Binkley had committed to the Ozona Job. GSM contends that Mr. Lindsey thought the GSM representative was "unfriendly" and "rude" because of the "tone of [his] voice." (GSM's Rev. Appx., Lindsey Depo. at 51.) Further, GSM argues that Mr. Lindsey's statements that he would never use GSM again demonstrate his improper purpose. (Id., Patricia Binkley Depo. at 65.)
In St. Benedict's, the plaintiff alleged that the defendants committed tortious interference by soliciting the plaintiff's sublessees to become tenants of defendants' new building. St. Benedict's, 811 P.2d at 201. The Utah Supreme Court held that the plaintiff failed to prove improper purpose, however, because "[t]here is no allegation that defendants' desire to harm the development company predominated over their legitimate economic motivations." Id. Stated differently, the plaintiff did not prove that the defendants were motivated more by a desire to harm the plaintiff than they were by a desire to find tenants for their own building.
Here, similar to St. Benedict's, the evidence makes clear that Mr. Lindsey's and Westport's motive was to hire Mr. Binkley to help Westport get its drill rigs running. Mr. Lindsey's and Westport's obvious desire to hire Mr. Binkley was due to Mr. Binkley's familiarity with the area at issue stemming from his previous work for El Paso at the same location. In fact, Mr. Lindsey and Mr. Binkley had discussed the possibility of Mr. Binkley working on the Westport Job before Mr. Lindsey had the contentious phone call with the GSM representative. (GSM's Rev. Appx., Lindsey Depo. at 40-43.) In sum, GSM has not shown that any intent on the part of Mr. Lindsey or Westport to injure GSM outweighed the desire to benefit Westport.
Further undermining GSM's argument is that following the contentious phone call, described above, that GSM uses as the basis for its claim of improper purpose, Mr. Lindsey had a cordial conversation with Mr. Grace, GSM's chief executive officer, where Mr. Lindsey agreed to hire Mr. Binkley through GSM. (GSM's Rev. Appx., Lindsey Depo. at 53-56; id., Grace Depo. at 209, 216-21.) The two agreed to work out the details at a later date. (Id.) While Mr. Binkley ultimately did not work through GSM, this undercuts GSM's argument that Mr. Lindsey was motivated by a desire to harm GSM.
In sum, there is nothing to suggest Mr. Lindsey was not primarily motivated by legitimate business reasons. As the Utah Supreme Court noted in Leigh Furniture:
In the rough and tumble of the marketplace, competitors inevitably damage one another in the struggle for personal advantage. The law offers no remedy for those damages — even if intentional — because they are an inevitable byproduct of competition.Leigh Furniture, 657 P.2d at 307. GSM has not shown that its damage was caused by anything other than Mr. Lindsey's and Westport's pursuit of their own "personal advantage."
B. Improper Means.
As noted above, to establish improper means GSM must show that Mr. Lindsey acted contrary to law, such as by "`violence, threats or other intimidation, deceit or misrepresentation, bribery, unfounded litigation, defamation, or disparaging falsehood,'" or that he violated "`an established standard of a trade or profession.'" St. Benedict's, 811 P.2d at 201 (quoting Leigh Furniture, 657 P.2d at 308)).
GSM argues that Mr. Lindsey committed several actions that are improper: (1) Mr. Lindsey was "very insistent" on hiring Mr. Binkley on the Westport job because he knew Mr. Binkley had taken the Ozona Job.; (2) Mr. Lindsey told Dale Stucks, another GSM consultant, that Mr. Stucks could not work for Westport through GSM; and (3) Mr. Lindsey told Mr. Binkley's wife that Mr. Lindsey would not use GSM again.
GSM's arguments are again not persuasive. Being "very insistent," or making a statement that he would never use GSM, does not rise to the level of bribery, deceit, or disparagement on the part of Mr. Lindsey or Westport. Indeed, GSM has not even alleged that being "very insistent" or not using one consultant or another is contrary to an established practice in the oil and gas industry.
The only testimony GSM points to that might be evidence of an improper means is that Mr. Lindsey told Dale Stucks not to work through GSM. (GSM's Rev. Appx., Robert Binkley Depo. at 121-25;id., Patricia Binkley Depo. at 65.) But GSM did not submit Mr. Stuck's testimony on this point. Even assuming Mr. Lindsay told Mr. Stucks that the latter could not work through GSM (although Mr. Lindsey denies this), GSM provides no evidence that Mr. Lindsey disparaged GSM, bribed Mr. Stucks, or otherwise acted with improper means under Utah law. GSM is asking the court to infer why Mr. Lindsey told Mr. Stucks not to work through GSM. Inferences are not enough to create a material issue of fact that Mr. Lindsey or Westport acted with an improper means. Lawmaster v. Ward, 125 F.3d 1341, 1347 (10th Cir. 1997).
Because the court finds that neither Mr. Lindsey nor Westport acted with an improper purpose or with improper means, there is no need to consider Westport's remaining arguments for summary judgment, namely that neither Mr. Lindsey nor Westport knew of the Agreements and that Mr. Lindsey was not Westport's agent.
Accordingly, based on the foregoing, the court GRANTS Mr. Binkley's and Westport's motions for summary judgment. Furthermore, the court ORDERS GSM to show cause within ten days from the date of this Order why its claims against Mr. Lindsey should not be dismissed.