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SolarBee, Inc. v. Walker

Supreme Court of North Dakota

June 24, 2013

SolarBee, Inc., Plaintiff and Appellee
v.
Sandra Walker and Joseph Eilers, Defendants and Appellants

Appeal from the District Court of Stark County, Southwest Judicial District, the Honorable Zane Anderson, Judge.

Michael J. Maus (argued) and Patrick D. Hope (on brief), Dickinson, for plaintiff and appellee.

Jonathan P. Sanstead (on brief) and Christina A. Sambor (argued), for defendants and appellants.

OPINION

Sandstrom, Justice.

[¶ 1] Sandra Walker and Joseph Eilers appeal after the district court found them liable for damages for breach of employment contracts and proprietary information agreements and, as an additional ground, for relief for conspiring to interfere and unlawfully interfering with SolarBee's business relationships and expectancies. We affirm the judgment, concluding breach of the employment contracts was tried by consent, the findings were sufficient, and the damages awarded were supported by the evidence.

I

[¶ 2] SolarBee, Inc., is a North Dakota corporation with primary offices in Dickinson, North Dakota. SolarBee manufactures solar-powered water circulators used to clean water in lakes, wastewater bodies, and tanks. Walker and Eilers were employees, both regional managers, of SolarBee. Walker oversaw sales and marketing in California, and Eilers' sales territory covered the Pacific Northwest, including Washington, Oregon, Idaho, Alaska, and Hawaii. Walker entered a written employment contract with SolarBee on November 1, 2003, and signed a proprietary information agreement on January 11, 2010. Eilers entered a written employment contract with SolarBee on July 16, 2007, and signed a proprietary information agreement on August 8, 2008.

[¶ 3] In 2008, Joel Bleth, founder of SolarBee and its manager during Walker's and Eilers' employment, exchanged email messages with Dana Wregglesworth of Applied Process Technology, Inc., discussing potential joint opportunities between the two companies. Walker received copies of these exchanges. Wregglesworth consulted for a number of companies, including PCI International. Walker and Eilers then engaged in email communications with various other companies, some being SolarBee's competitors. Bleth found these email messages after Walker left the company. SolarBee then sued Walker and Eilers, alleging breach of proprietary information agreements, misappropriation of trade secrets in violation of N.D.C.C. ch. 47-25.1, breach of fiduciary duty in violation of N.D.C.C. §§ 59-01-09 and 59-01-11, [1] civil conspiracy, and unlawful interference with business.

[¶ 4] The case was tried to the court in November 2011. At trial, the email exchanges were the primary evidence offered. Walker's and Eilers' employment contracts and proprietary information agreements were offered as exhibits without objection. At trial, Bleth testified about documents showing his calculated percentages of gross profit loss attributed to Walker's and Eilers' wrongdoings. Bleth contended 70 percent of SolarBee's losses were a result of their actions. The district court found that Walker and Eilers were in breach of their employment contracts and their proprietary information agreements and, as "an additional basis for liability, " that they conspired together and unlawfully interfered with SolarBee's business relationships or expectancies. The district court found SolarBee failed to prove Walker or Eilers misappropriated trade secrets. The district court found Walker liable for damages in the amount of $541, 800 and Eilers liable for damages in the amount of $80, 800.

[¶ 5] The district court had jurisdiction under N.D. Const. art. VI, § 8, and N.D.C.C. § 27-05-06. Walker timely appealed under N.D.R.App.P. 4(a). We have jurisdiction under N.D. Const. art. VI, §§ 2 and 6, and N.D.C.C. § 28-27-01.

II

A

[¶ 6] Walker and Eilers argue the district court erred in awarding damages under a cause of action that was not pled by SolarBee--breach of the employment contracts.

[¶ 7] The employment contracts between Walker and Eilers and SolarBee underlie this litigation. Nevertheless, breach of the employment contracts was not one of the five specific causes of action pled.

[¶ 8] The employment contracts with Walker and Eilers were introduced without objection. Bleth testified they violated their employment contracts.

[¶ 9] Breach of the proprietary information agreements was specifically pled. There is significant overlap between the proprietary information agreements and the employment contracts. The district court found Walker and Eilers did not devote their " entire time and best efforts into selling the company's products, " with this emphasized language coming from the employment contracts and not the proprietary information agreements.

[¶ 10] The district court also found Walker and Eilers "violated the Proprietary Information Agreement and Invention Assignment by diverting customers, engaging in conflicting activities and consulting and rendering services to persons or entities marketing products to or in competition with systems or services offered by SolarBee."

[¶ 11] The district court did not distinguish damages resulting from breach of the employment contracts and the damages resulting from the breach of the proprietary information agreements. Additionally, Walker did not sign the proprietary information agreement until 2010, while the district court faults her conduct prior to that date.

[¶ 12] "'Consent to try an unpleaded issue cannot be inferred from the lack of objection to evidence on one pleaded.'" Mann v. Zabolotny, 2000 ND 160, ¶ 12, 615 N.W.2d 526 (quoting Fleck v. Jacques Seed Co., 445 N.W.2d 649, 652 (N.D. 1989)). Here the employment contracts were reasonably relevant to issues pled.

[¶ 13] "[A]mendment by implication under N.D.R.Civ.P. 15(b) is limited to situations where the novelty of the issues sought to be raised is reasonably apparent and the intent to try these issues is clearly indicated by failure to object or otherwise." Id. at ΒΆ 13 (internal quotation omitted). In this case, the issue of breach of the employment contract was raised in SolarBee's pre-trial brief and in its opposition ...


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