Grimm v. DxNA , 427 P.3d 571 ( 2018 )

2018 UT App 115THE UTAH COURT OF APPEALS
PHILLIP GRIMM,
Appellee and Cross-Appellant,
v.
DXNA LLC,
Appellant and Cross-Appellee.
Opinion
No. 20160455-CA
Filed June 14, 2018
Fifth District Court, St. George Department
The Honorable Pamela G. Heffernan
No. 110502762
Bryan J. Pattison and Elijah L. Milne, Attorneys for
Appellant and Cross-Appellee
Andrew W. Stavros, Attorney for Appellee
and Cross-Appellant
JUDGE GREGORY K. ORME authored this Opinion, in which
JUDGES MICHELE M. CHRISTIANSEN and DAVID N. MORTENSEN
concurred.
ORME, Judge:
¶1 Appellant DxNA LLC appeals the trial court’s judgment
that it had an enforceable employment agreement with Appellee
Phillip Grimm. DxNA also appeals the trial court’s calculation of
prejudgment interest. Grimm cross-appeals, arguing that the
trial court erred in ruling that he did not make a written demand
and in therefore declining to award him a statutory penalty or
attorney fees for DxNA’s failure to pay his wages. We affirm.
Grimm v. DxNA
BACKGROUND
¶2 Grimm was initially hired in 2007 to be the chief executive
officer (CEO) for DxNA Nucleic Analytics (Nucleic), located in
St. George, Utah. 1 His two-year employment agreement
included a yearly salary of $250,000, an equity membership of
5%, and reimbursement for business expenses. It also required
that Grimm’s principal place of employment be St. George, Utah,
with the opportunity to work one week per month elsewhere.
¶3 Less than a year later, Nucleic was in need of funding and
sought out Glory BioVentures LLC (Glory), an investment firm.
This resulted in Nucleic being restructured as DxNA LLC
(DxNA), with Glory as its majority owner. As a result of the
restructuring, Grimm was required to resign and be rehired by
DxNA, and for that reason, Grimm resigned with the
expectation that he would sign a new employment agreement
with DxNA. Following his resignation, he continued to work
and receive his salary and all of the compensation and benefits
provided for under the original agreement.
Negotiations with Glory
¶4 Negotiations for Grimm’s new employment agreement
began in July 2008. Several drafts of an agreement were
exchanged between Grimm and Glory, but the parties remained
at an impasse over three issues: whether Grimm’s principal
place of employment would be in St. George or split between St.
George and Salt Lake City; whether severance pay for
termination without cause would be 15 weeks or 26 weeks; and
1. “On appeal from a bench trial, we view the evidence in a light
most favorable to the trial court’s findings, and therefore recite
the facts consistent with that standard.” Lake Philgas Service v.
Valley Bank & Trust Co., 845 P.2d 951, 953 n.1 (Utah Ct. App.
1993).
20160455-CA 2 2018 UT App 115Grimm v. DxNA
whether notice for non-renewal of Grimm’s employment
agreement would be 90 days or 120 days. 2
¶5 Glory sent Grimm a draft in February 2009 (the Final
Proposal), stipulating that he would receive 15 weeks of
severance pay, that his principal place of employment would be
divided between St. George and Salt Lake City, 3 and that the
notice of non-renewal would be 90 days. Grimm opposed two of
these provisions in a June 2009 email, proposing instead that his
principal place of business be in Salt Lake City, with travel as
required to St. George, and that, if he was terminated without
cause, his severance pay would be increased to 26 weeks.
¶6 A few weeks after Glory received Grimm’s proposed
revisions, Grimm attended a DxNA board meeting at Glory’s
office and met with one of its principal investors to discuss the
agreement. Grimm testified that an employment agreement was
signed (the Missing Agreement), resolving the disputed issues in
his favor. He said that Glory retained the Missing Agreement
and that he never received a copy. Glory refuted this, claiming
that no agreement was signed and that the disputed issues were
never resolved. But consistent with Grimm’s basic version of
events, there were no further discussions regarding an
employment agreement after the meeting. Grimm continued to
reside in Salt Lake City and commute to St. George, received a
2. The parties agreed that Grimm would receive a salary of
$250,000 per year, 20 paid vacation days per year, and a 1%
membership interest in DxNA on each of the first, second, and
third anniversaries of the date of the agreement.
3. The Final Proposal stated that Grimm’s principal place of
employment would be allocated between “St. George, Utah and
St. George, Utah.” But an email between Glory and Grimm
clarified that the provision was intended to read “Salt Lake City
and Saint George.”
20160455-CA 3 2018 UT App 115Grimm v. DxNA
salary of $250,000, and obtained reimbursement for travel and
business expenses.
Grimm’s Termination
¶7 Relations between Glory and Grimm soured in 2010,
when Glory became dissatisfied with Grimm’s performance as
CEO and threatened to fire him. However, DxNA was once
again experiencing serious financial difficulties, and in July 2010,
Glory divested itself of any ownership in DxNA by assigning all
its rights and interests over to DxNA in exchange for a
promissory note. After Glory’s departure as an owner, Grimm
received an email in January 2011 from DxNA’s board of
directors indicating that it intended to completely reorganize
DxNA and would require the resignation of all employees.
Shortly thereafter, Grimm was terminated by the board. As the
board understood it, no employment agreement existed, and
Grimm was an at-will employee who could be fired without
cause.
¶8 Two days after his termination, Grimm emailed a member
of the board (the Email) regarding the amounts that DxNA owed
him for unpaid salary, accrued paid time off (PTO), business
expenses, and severance pay. Because of DxNA’s financial
difficulties, Grimm indicated in the Email that he would be
willing to work with DxNA in finding other means to pay him
what he was owed. DxNA did not pay Grimm anything, and he
eventually filed suit.
Trial Court’s Findings and Judgment
¶9 Grimm’s complaint contended that DxNA breached the
Missing Agreement and that he was entitled to his unpaid
salary, unreimbursed business expenses, accrued PTO, and 26
weeks of severance pay. He also sought a statutory penalty, as
provided by Utah Code section 34-28-5, for DxNA’s failure to
pay his wages within 24 hours of receiving the Email, and
attorney fees under Utah Code section 34-27-1.
20160455-CA 4 2018 UT App 115Grimm v. DxNA
¶10 A four-day bench trial ensued, with the central issue
being whether there was an enforceable agreement between
Grimm and DxNA. Concluding that there was an enforceable
agreement, the trial court reasoned that Glory and Grimm “were
on the cusp of finalizing their agreement as evidenced
by . . . emails in early June, 2009” and that “[i]t simply makes no
sense that the issue would have fallen off the edge of a cliff and
disappeared.” Therefore, largely crediting Grimm’s testimony,
the court determined that the course of negotiations, coupled
with Grimm’s continued employment thereafter, were evidence
that an agreement had been reached and that the Final Proposal
was “the best representation of the final agreement between the
parties” in the absence of a copy of the agreement.
¶11 On the three issues in dispute, the court determined that
there was mutual assent among the parties that the principal
place of employment for Grimm was to be split between
St. George and Salt Lake City, that Grimm would receive 15
weeks of severance pay if fired without cause, and that there
would be 90 days advance notice for non-renewal of Grimm’s
employment agreement. As to damages, the court concluded
that Grimm was entitled to full reimbursement of his business
expenses, his unpaid salary, 12 days of PTO, a 2% membership
interest in DxNA, and 15 weeks of severance pay. Grimm was
awarded prejudgment interest at a rate of 10%. See Utah Code
Ann. § 15-1-1(2) (LexisNexis 2013) (providing that a rate of 10%
per annum applies to loans or the “forbearance of any money,
goods, or chose in action”). But the court concluded that Grimm
was not entitled to the statutory penalty or attorney fees for
DxNA’s failure to pay his wages within 24 hours of the Email
because Grimm did not demand immediate payment. DxNA
appeals and Grimm cross-appeals.
ISSUES AND STANDARDS OF REVIEW
¶12 DxNA advances a number of arguments in support of its
contention that there was a lack of mutual assent to the material
terms of the Final Proposal. “Whether the parties had a meeting
20160455-CA 5 2018 UT App 115Grimm v. DxNA
of the minds sufficient to create a binding contract is . . . an issue
of fact.” LD III, LLC v. BBRD, LC, 2009 UT App 301, ¶ 13, 221
P.3d 867 (omission in original) (citation and internal quotation
marks omitted). We review findings of fact for clear error,
“reversing only where the finding is against the clear weight of
the evidence, or if we otherwise reach a firm conviction that a
mistake has been made.” Id. (citation and internal quotation
marks omitted).
¶13 DxNA also contends that the trial court erred in granting
Grimm prejudgment interest at the rate of 10% per annum. The
issue of whether a party is entitled to prejudgment interest is a
question of law that we review for correctness. USA Power, LLC
v. PacifiCorp, 2016 UT 20, ¶ 32, 372 P.3d 629.
¶14 On cross-appeal, Grimm contends that the trial court
erred in its interpretation of a “demand” under Utah Code
sections 34-28-5(1)(b) and 34-27-1. “We review questions of
statutory interpretation for correctness, affording no deference to
the district court’s legal conclusions.” Marion Energy, Inc. v. KFJ
Ranch P’ship, 2011 UT 50, ¶ 12, 267 P.3d 863 (citation and internal
quotation marks omitted).
ANALYSIS
I. Enforceable Contract
¶15 DxNA contends there was no enforceable employment
agreement with Grimm. 4 Quoting Nunley v. Westates Casing
Services, Inc., 1999 UT 100, 989 P.2d 1077, DxNA asserts that
4. While Grimm argued before the trial court that DxNA
breached the Missing Agreement, he does not reassert this
argument on appeal. He instead argues that there is sufficient
evidence to support the trial court’s finding that the Final
Proposal, not the Missing Agreement, was the agreement to
which both parties had assented.
20160455-CA 6 2018 UT App 115Grimm v. DxNA
“[w]hether a contract has been formed is ultimately a conclusion
of law,” id. ¶ 17. But whether the parties intended an agreement
to be binding is a question of fact, Brasher v. Christensen, 2016 UT
App 100, ¶ 21, 374 P.3d 40. And “[a] finding of fact may be
deemed clearly erroneous only if the finding is without factual
support in the record[.]” Jouflas v. Fox Television Stations, Inc., 927
P.2d 170, 174 (Utah 1996) (citation and internal quotation marks
omitted). It has long been the rule in Utah that to successfully
challenge a factual finding, a party “must marshal all relevant
evidence presented at trial which tends to support the findings
and demonstrate why the findings are clearly erroneous.” West
Valley City v. Majestic Inv. Co., 818 P.2d 1311, 1313 (Utah Ct. App.
1991) (emphasis omitted). Although the Utah Supreme Court
clarified that the failure to marshal all the evidence in support of
the court’s findings is not a “technical deficiency” in the
appellant’s argument, it nevertheless “reaffirm[ed] the
traditional principle of marshaling as a natural extension of an
appellant’s burden of persuasion.” State v. Nielsen, 2014 UT 10,
¶ 41, 326 P.3d 645. So crucial is the task of marshaling, the Court
warned, that appellants who fail to do it when assigning error to
the trial court’s findings of fact “will almost certainly fail to
carry” their burden. Id. ¶ 42.
¶16 Here, DxNA fails to marshal the evidence supporting the
trial court’s findings on the intent issue and thus fails to
demonstrate error with the finding that both parties mutually
assented to the Final Proposal. This finding was based on
evidence that “the parties[’] conduct and all surrounding
circumstances” indicated a clear intent to enter into an
enforceable agreement. Because no signed agreement could be
produced by either party, the court concluded the agreement
was most likely “mislaid, misfiled, or otherwise missing in
action by mistake.” The court therefore determined that the best
evidence of the terms of that agreement was the Final Proposal.
¶17 DxNA does not discuss the evidence supporting these
findings but instead focuses on the evidence most favorable to
its position. Because DxNA has not adequately marshaled the
20160455-CA 7 2018 UT App 115Grimm v. DxNA
evidence and has otherwise failed to carry its burden in
demonstrating clear error, we presume that the evidence
supports the trial court’s finding of mutual assent to the terms
offered in the Final Proposal. Accordingly, DxNA’s challenge
fails.
II. Prejudgment Interest
¶18 DxNA contends that the trial court erred in granting
Grimm prejudgment interest of 10% per annum. When the issue
of prejudgment interest was before the trial court, DxNA raised
no objection. Generally, an unpreserved issue raised for the first
time on appeal is unreviewable, and “an appellate court will not
typically reach that issue absent a valid exception to
preservation.” State v. Johnson, 2017 UT 76, ¶ 15, 416 P.3d 443.
DxNA failed to preserve this issue for appeal, but it argues that
the exceptional circumstances doctrine applies. We reserve this
doctrine for “the most unusual circumstances where our failure
to consider an issue that was not properly preserved for appeal
would . . . result[] in manifest injustice.” Id. ¶ 29 (citation and
internal quotation marks omitted). One such circumstance is
when a rare procedural anomaly has occurred, for instance,
“where a change in law or the settled interpretation of law colors
the failure to have raised an issue at trial.” Id. ¶ 33 (brackets,
citation, and internal quotation marks omitted).
¶19 DxNA argues that this is such a circumstance. After the
trial court entered its original judgment on April 29, 2016, the
Utah Supreme Court issued USA Power, LLC v. PacifiCorp, 2016
UT 20, 372 P.3d 629, substantially narrowing the availability of
prejudgment interest under Utah Code section 15-1-1. Id. ¶ 109
(holding that prejudgment interest as described in section 15-1-1
refers “only to contracts for the loan or forbearance of any
money, goods, or chose in action”) (internal quotation marks
omitted). DxNA therefore asserts that it did not have “occasion
to further consider the issue,” or to “evaluate the USA Power
opinion and its potential application to this case in time to put
[it] before the trial court in a meaningful way.”
20160455-CA 8 2018 UT App 115Grimm v. DxNA
¶20 But USA Power was issued on May 16, 2016, and as of that
date, the trial court had suspended its judgment to recalculate
the damages DxNA owed to Grimm. An amended judgment
was then entered on June 8, 2016. Because of the delay in the
entry of final judgment, DxNA not only had several weeks
between May 16 and June 8 when it could have called USA
Power to the court’s attention, but it also had 28 days from the
entry of the amended judgment in which to file a motion to
amend the judgment on the basis that the judgment was
“contrary to law or based on an error in law.” Utah R. Civ. P.
59(a)(7), (e). DxNA therefore had sufficient time to bring the
change in the law to the trial court’s attention and thus had an
opportunity to preserve the issue for appeal.
¶21 For that reason, DxNA does not satisfy the requirements
for a rare procedural anomaly under our exceptional
circumstances doctrine. Our preservation rule therefore prevents
us from considering the prejudgment interest issue.
III. A Written Demand
¶22 On cross-appeal, Grimm argues that the trial court erred
in not awarding him a statutory penalty or attorney fees for
DxNA’s failure to pay his wages. 5 The Utah Payment of Wages
5. Grimm raises a second issue on cross-appeal, contending that
the trial court erred in failing to award damages for accrued PTO
in 2008 and 2009. He argues that because the Final Proposal was
backdated to 2008, he should have been awarded accrued PTO
for 2008 and 2009. We review the interpretation of a contract for
correctness with no deference to the trial court. Encon Utah, LLC
v. Fluor Ames Kraemer, LLC, 2009 UT 7, ¶ 11, 210 P.3d 263. Section
2.2 of the Final Proposal provides that Grimm was entitled to “20
days of paid vacation each year during the Employment Term,
which will accrue in conformity with the Employer’s normal
vacation pay practices.” Accrual of PTO is determined by what
the “normal vacation pay practices” of DxNA were during 2008
(continued…)
20160455-CA 9 2018 UT App 115Grimm v. DxNA
Act (the UPWA), see Utah Code Ann. §§ 34-28-1 to -19
(LexisNexis 2015), requires that an employer pay wages owed to
an employee within 24 hours of termination, 6 id. § 34-28-5(1)(a).
If an employer fails to pay wages within 24 hours of a “written
demand” from an employee, 7 the employee can recover a
statutory penalty that consists of accrued wages from the date
the demand was made until the employer has paid those wages,
not to exceed 60 days. Id. § 34-28-5(1)(c)(i). Moreover, Utah Code
section 34-27-1 provides that attorney fees can be awarded if the
“demand” for wages was made “at least 15 days before suit was
brought.” Id. § 34-27-1.
¶23 In this case, the trial court concluded that the Email did
not constitute a “demand” under the UPWA or section 34-27-1
because Grimm did not “demand to be paid wages within 24
hours” and instead suggested “an alternative arrangement of
payments over time with interest.” In other words, the Email
was an invitation for discussion and negotiation―not an actual
demand.
(…continued)
and 2009. But Grimm offers no analysis on the interpretation of
“normal vacation pay practices” or any citations to the record
that might assist us in interpreting this part of section 2.2. We are
not persuaded that the trial court erred merely because the
agreement was backdated, and we therefore decline to disturb
its decision in this regard.
6. In 2015, Utah Code section 34-28-5 was amended, resulting in
a renumbering of this provision within the statute. For
convenience, we refer to the updated numbering of this section
rather than the numbering at the time of trial.
7. Grimm’s assumption that an email constitutes a “written”
demand is not disputed in this case.
20160455-CA 10 2018 UT App 115Grimm v. DxNA
¶24 Grimm contends the trial court misconstrued the meaning
of “demand.” The UPWA and section 34-27-1 provide no
definition of “demand,” so we are faced with a question of
statutory interpretation. Because the UPWA and section 34-27-1
are within the same title of the Utah Labor Code and both refer
to written demands for wages, we interpret “demand” to mean
the same under both sections 34-27-1 and 34-28-5.
¶25 When interpreting a statute, “our primary goal is to
evince the true intent and purpose of the Legislature.” State v.
Martinez, 2002 UT 80, ¶ 8, 52 P.3d 1276 (citation and internal
quotation marks omitted). Our “first step of statutory
interpretation is to evaluate the best evidence of legislative
intent: the plain language of the statute itself.” In re Z.C., 2007
UT 54, ¶ 6, 165 P.3d 1206 (citation and internal quotation marks
omitted). We therefore assume the language used by the
Legislature was intended to be “construed in accordance with
the ordinary meaning such words would have to a reasonable
person familiar with the usage and context of the language in
question.” Olsen v. Eagle Mountain City, 2011 UT 10, ¶ 9, 248 P.3d
465. Our starting point for resolving the ordinary meaning of
most words is the dictionary. Rent-A-Center West, Inc. v. Utah
State Tax Comm’n, 2016 UT 1, ¶ 15, 367 P.3d 989.
¶26 A “demand” is the “assertion of a legal or procedural
right.” Demand, Black’s Law Dictionary 495 (9th ed. 2009). Both
parties refer to this definition, although Grimm contends that the
ordinary meaning of “demand” under the statutory provisions is
merely “an act of asking for something.” But a “demand” is not a
mere request; it is an insistent or forceful request. See Demand,
New Oxford American Dictionary 460 (3d ed. 2010) (“an
insistent and peremptory request, made as if by right”). Given
that the UPWA provides that unpaid wages are due
immediately upon termination and that the employer must
therefore pay those wages within 24 hours, the Legislature
cannot have intended a “written demand” to be satisfied when
an employee asks for his wages to be paid at the convenience of
the employer or when negotiation might eventually require. This
20160455-CA 11 2018 UT App 115Grimm v. DxNA
would be contrary to the understanding of the term “demand”
and to the 24-hour time requirement of the UPWA. To satisfy the
statutory requirements, it must therefore be apparent from the
writing that the employee is insisting that the employer pay all
wages owed immediately.
¶27 In this case, there was no such demand because the Email
does not insist that DxNA pay Grimm’s wages immediately.
First, the Email does not specifically address wages—a
significant omission. The UPWA and section 34-27-1 are limited
to “wages,” defined by the UPWA as “amounts due the
employee for labor or services, whether the amount is fixed or
ascertained on a time, task, piece, commission basis or other
method of calculating such amount.” Utah Code Ann.
§ 34-28-2(1)(i) (LexisNexis Supp. 2017). In contrast, the focus of
the Email is on various amounts that DxNA owed Grimm, with
almost no discussion of wages other than the attachment of a file
containing Grimm’s reconciliation of his unpaid salary.
¶28 Second, Grimm did not insist that DxNA remit his unpaid
salary immediately. Instead, the Email proposes settling the
amounts that DxNA owed Grimm on terms to be mutually
agreed upon and in such a way as to not jeopardize DxNA
financially. 8 Specifically, Grimm offered to “find an acceptable
means of getting this balance paid,” even suggesting that the
amounts be treated as loans with an interest rate of 12%. It
therefore would not have been clear to DxNA from the Email
that Grimm was making a demand for the immediate payment
of his wages. Furthermore, there was no suggestion of urgency
in the Email; no demand that DxNA pay right away, as the
UPWA contemplates. Instead, Grimm advised that it would be a
week before he could go over the amounts owed with DxNA
and “make any adjustments needed.” In contrast, a written
8. This concern by a terminated employee for his former
employer’s financial stability may seem peculiar at first blush,
but Grimm was, after all, also an owner of DxNA.
20160455-CA 12 2018 UT App 115Grimm v. DxNA
demand under section 34-28-5(c) must reflect that the employer
has to pay immediately. Because Grimm did not demand that he
be paid immediately for purposes of the UPWA and section
34-27-1, we conclude that he is not entitled to a statutory penalty
or attorney fees for DxNA’s failure to pay his wages within 24
hours of the Email.
CONCLUSION
¶29 We conclude that there was no error in the trial court’s
determination that there was an enforceable employment
agreement between Grimm and DxNA. DxNA failed to preserve
the issue of prejudgment interest. And the Email from Grimm
did not constitute a written demand for purposes of the
applicable statutes. We accordingly affirm.
20160455-CA 13 2018 UT App 115