S6 v. Wing Enter., Inc.

556 P.3d 100

2024 UT App 105

S6, LLC, Appellant,

v.WING ENTERPRISES, INC. and Arthur Wing, Appellees.

No. 20220977-CA

Court of Appeals of Utah.

Filed August 1, 2024

Fourth District Court, Provo Department, The Honorable Derek P. Pullan, No. 180401660

Jefferson W. Gross, S. Ian Hiatt, and J. Adam Sorenson, Salt Lake City, Attorneys for Appellant

Mark O. Morris, Cameron J. Cutler, and Benjamin J. Mills, Salt Lake City, Attorneys for Appellees

Judge Michele M. Christiansen Forster authored this Opinion, in which Judges Gregory K. Orme and Ryan D. Tenney concurred.

Opinion

CHRISTIANSEN FORSTER, Judge:

¶1 S6, LLC (S6) is a consulting firm owned and managed by Mark Stromberg. For approximately three years, S6 provided consulting services to Wing Enterprises, Inc. (Wing). When Wing terminated the relationship with S6, S6 filed suit against Wing, asserting claims for breach of oral agreement, breach of implied-in-fact contract, unjust enrichment, and promissory estoppel. Following a series of pretrial motions, the district court dismissed all but S6’s promissory estoppel claim. After a five-day trial, a jury returned a special verdict in favor of S6, which was subsequently vacated by the court.

¶2 S6 now appeals, arguing there were abundant errors that infected the judgment. Specifically, S6 takes issue with multiple rulings of the district court, including the court’s decisions to dismiss all but S6’s promissory estoppel claim, to exclude all evidence of S6’s damages, to grant Wing’s post-trial motion for judgment as a matter of law, and to award Wing costs. We affirm the district court in all respects.

BACKGROUND

¶3 In 2012, following his father’s death, Arthur Wing became the chief executive officer of Wing, a closely held corporation that manufactures and distributes ladders. In early 2014, Arthur¹ was introduced to Hero Partners (Hero)—a business networking and consulting company—through Randy Hunt, who was Hero’s vice president of business development. During the initial meeting, Hunt told Arthur about several upcoming events put on by Hero that he could attend, including a retreat in Montana the following month. Hunt also explained Hero’s "15-15-15 Model" for the cost of its consulting services, whereby Hero would charge Wing a $15,000 monthly retainer fee, would receive 15% of Wing’s stock, and would then have a 15% option on other stock in Wing.

¶4 In July 2014, Hero provided Wing with a proposed written agreement for consulting services (Hero Agreement). Per the terms of the Hero Agreement, Wing would pay Hero a $30,000 engagement fee to participate in the Montana retreat. The engagement fee would be used to cover the $15,000 monthly retainer fee for two months. Regarding equity, the Hero Agreement provided, "During the initial 90 days of this Agreement, the Parties shall arrive at a commitment wherein [Wing] shall grant to [Hero] the right to purchase an ownership interest in [Wing] …." Wing did not sign the Hero Agreement. It did, however, pay Hero the engagement fee.

¶5 The following week, Wing’s executives attended the retreat in Montana. While at the retreat, they were introduced to Stromberg, whom Hero had hired to provide consulting services on Hero’s behalf. Stromberg presented Wing with a "thorough overview" of his "strategic planning process" although he did not have "any financial information of Wing" at the time of that meeting. At the end of the retreat, Arthur remarked that Hero "should be charging … north of $40,000 a month" for its consulting services.

¶6 After the retreat, the parties continued discussions regarding the terms of the Hero Agreement. Wing’s counsel proposed several changes, which Hunt accepted on Hero’s behalf, and the document was returned to Wing to execute.² Wing never signed the amended Hero Agreement. Stromberg, however, was under the impression that the agreement had been executed, and in August 2014, Stromberg attended a "strategic planning kickoff" meeting with Wing’s executives and began working on a strategic plan for Wing. Wing also began paying Hero the monthly $15,000 consulting retainer.

¶7 Stromberg continued to provide consulting services to Wing through Hero until March 2015. In April 2015, Stromberg and Hero mutually agreed to allow Stromberg to separate from Hero, and Hero assigned its consulting agreement with Wing to S6—Stromberg’s company. Thereafter, Stromberg met with Wing and informed the company that he would no longer be working with Hero but that he could continue providing consulting services through S6 just as he had done through Hero. Wing agreed and began making payments directly to S6. For approximately the next three years, Wing paid S6 its $15,000 monthly retainer, and Stromberg provided consulting services to Wing through S6.

¶8 Following the transition from Hero to S6, Stromberg knew that "there was no enforceable agreement at the time for an equity interest." But Stromberg "anticipated" that a deal would be "put in writing," and he "frequently" met with Wing to propose different equity options. In July 2015, S6 proposed—based on the terms of the unsigned Hero Agreement—a 15% carried interest. Wing rejected this 15% proposal outright. The parties then continued to discuss other percentages, including 8% and 10%. Ultimately, the parties did not agree on any specific percentage.

¶9 In February 2016, Stromberg prepared a carried interest term sheet, which he sent to Wing. Wing did not respond to the term sheet, other than to acknowledge that it had been received. Despite having no written eq- uity deal, Stromberg continued to work for Wing "based on trust" that an equity deal would get done.

¶10 In August 2016, Stromberg met with Arthur and other Wing executives to discuss Stromberg’s latest equity proposal. Stromberg gave a lengthy presentation detailing "the [equity] mechanics and the numbers, at least that [he] was proposing." Stromberg proposed a number of predetermined "gates" or "hurdles" that would have to be met in order for S6 to receive any equity in Wing. Although the Wing executives asked him multiple questions, Stromberg perceived "no push back" or "rejection" by Wing of the gates that Stromberg had proposed, which led Stromberg to conclude that "there was an agreement reached that [the proposal] looked reasonable." According to Stromberg, by the end of the meeting S6 and Wing had "agreed to a four percent equity" interest. Arthur instructed a Wing executive to set up a meeting with Wing’s counsel to "have him begin drafting an agreement."

¶11 Stromberg met with Wing’s counsel in January 2017. During this meeting, Stromberg gave "basically" the same presentation that he had given in August 2016. Stromberg testified that Wing’s counsel expressed no concerns with any of the proposed gates and told Stromberg that he thought the proposal "looked reasonable." At the end of the meeting, Stromberg told Wing’s counsel that "although [the parties] had agreed to the equity percent, four percent, … [Stromberg was] willing to work with [counsel] on reasonable hurdles." The next day, Stromberg sent Wing’s counsel a follow-up email that stated, " Attached is the worksheet we took a look at yesterday. Anything in blue is variable so you can play with different scenarios." Among the "variables" were some of the gates that Stromberg had proposed.

¶12 Over the course of the following year, Stromberg was assured that an equity deal would get done. But in February 2018, Wing informed S6 that it was terminating the relationship and that S6 would not receive any equity in Wing. Wing agreed to pay S6 its monthly consulting fee through June to allow S6 to complete its outstanding projects.

¶13 In October 2018, S6 filed suit against both Wing and Arthur, asserting claims for breach of oral agreement, breach of implied-in-fact contract, unjust enrichment, and promissory estoppel. Arthur moved for summary judgment on all claims against him individually. After briefing and argument, the district court granted Arthur’s motion, dismissing him from the case.

¶14 In September 2019, Wing moved for summary judgment on all claims against it. Regarding S6’s equitable claims, Wing argued that (1) S6 could not establish an implied-in-fact contract because "S6 testified it had subjective and actual knowledge that no agreement on terms was reached" and "S6 [could] point to no conduct on the part of Wing that indicates it ever agreed to an equity interest"; (2) S6’s unjust enrichment claim failed "for lack of damages" because "S6 [had] adduced no evidence to establish the value of any benefit it purportedly conferred on Wing"; and (3) promissory estoppel was not available to S6 because "consideration [was] exchanged," i.e., S6 received $15,000 per month from Wing in exchange for providing consulting services.

¶15 In December 2019, the distinct court entered a summary judgment order narrowing S6’s breach of contract and implied-in-fact contract claims to a single factual scenario: that "the parties negotiated about how much equity S6 would get and the gates S6 must meet to obtain that equity" and "those negotiations culminated in an agreement on August 22, 2016 that [Wing] would grant S6 a 4% equity interest without any other conditions attaching to that grant." The court also dismissed S6’s unjust enrichment claim, concluding that "S6 [had] not produced evidence of the amount of damages." However, the court denied summary judgment on S6’s promissory estoppel claim, reasoning that "[a] partial payment of consideration does not bar relief under a theory of promissory estoppel."

¶16 Approximately one month later, Wing moved to exclude S6’s valuation and damages expert (Expert), who had offered two opinions. First, Expert had opined that Wing’s fair market value had increased from $16 million in July 2014 to $70 million in Decem- ber 2018. Second, Expert had opined that S6 suffered economic damages of $1.2 million over the course of its engagement with Wing by reducing its...