Utah Supreme Court
What damages can employers recover for non-compete agreement violations in Utah? TruGreen v. Mower Brothers Explained
Summary
TruGreen sued former employees and competitor Mower Brothers for breach of non-compete agreements and tortious interference after employees left to work for the competitor. The federal district court certified two questions to the Utah Supreme Court regarding the proper measure of damages for these claims.
Analysis
In TruGreen v. Mower Brothers, the Utah Supreme Court clarified the proper measure of damages when employees breach non-compete agreements and when competitors engage in tortious interference with contractual relations. The case arose from certified questions submitted by a federal district court dealing with competing lawn care companies.
Background and Facts
TruGreen and Mower Brothers operated competing lawn care businesses in Utah. When Ryan Mantz resigned from TruGreen and began working for Mower Brothers, other TruGreen employees followed. TruGreen claimed these employees had signed non-compete agreements and sued for breach of contract and tortious interference with economic relations. The federal court certified two questions regarding the appropriate measure of damages to the Utah Supreme Court.
Key Legal Issues
The Court addressed whether Utah law entitles former employers to lost profits damages or restitution/unjust enrichment damages for breaches of non-competition, non-disclosure, and employee non-solicitation provisions. The second question concerned whether Utah recognizes unjust enrichment damages for tortious interference with contractual and economic relations.
Court’s Analysis and Holding
The Court held that lost profits is the correct measure of damages for both claims. Following well-established contract law principles, the Court emphasized that damages should compensate the non-breaching party for actual injury sustained. The Court adopted the rule from sister jurisdictions that “the amount that the plaintiff lost by reason of the breach, not the amount of profits made by the defendant” governs damage calculations.
However, the Court recognized that defendant’s profits may be examined when damages are difficult to ascertain, provided there is sufficient correspondence between the defendant’s gains and the plaintiff’s losses. The Court explicitly rejected unjust enrichment as an appropriate remedy, noting it applies only when no express contract exists.
Practice Implications
This decision provides crucial guidance for employment litigation in Utah. Employers must focus on proving their actual losses rather than simply pointing to competitor gains. While defendant’s profits may serve as evidence, plaintiffs must establish correspondence between those profits and their own damages to avoid speculation. The ruling reinforces that contract damages aim to make the injured party whole, not punish the breaching party.
Case Details
Case Name
TruGreen v. Mower Brothers
Citation
2008 UT 81
Court
Utah Supreme Court
Case Number
No. 20070451
Date Decided
November 25, 2008
Outcome
Certified questions answered
Holding
Lost profits, not unjust enrichment or restitution, is the correct measure of damages for breach of non-compete agreements and tortious interference with contractual relations, though defendant’s profits may be examined when they correspond to plaintiff’s losses.
Standard of Review
Legal questions on certified questions from federal court – no standard of review applied
Practice Tip
When proving damages for non-compete violations, focus on establishing the plaintiff’s actual losses with reasonable certainty rather than relying solely on defendant’s profits, but consider using defendant’s gains as evidence when they correspond to the claimed losses.
Need Appellate Counsel?
Lotus Appellate Law handles appeals before the Utah Court of Appeals, Utah Supreme Court, California Court of Appeal, and the United States Court of Appeals for the Tenth Circuit.
Related Court Opinions
About these Decision Summaries
Lotus Appellate Law publishes these summaries to keep practitioners informed — not as legal advice. Each case turns on its own facts. If a decision here is relevant to your matter, we’re happy to discuss it.