United States District Court, D. Colorado
BRIAN F. WALSHE, Plaintiff,
ROBERT ZABORS, and ENOVATION PARTNERS, LLC, Defendants.
Michael E. Hegarty United States Magistrate Judge
Court held a trial to the bench in this matter on January
17-19, 2017, and took the matters under advisement. A
transcript of the proceeding was prepared and filed on
February 13, 2017. ECF Nos. 96-98.
Enovation Partners LLC (“Enovation”) was founded
in July 2013 with three members: Defendant Robert Zabors
(“Zabors”), Jeffrey Clark, and GTI International
(“GTI”), a non-voting corporate
member. Essentially, Enovation provides consulting
services to utility companies to devise and develop
strategies for energy generation.
relevant times, Enovation was governed by the July 1, 2013
Operating Agreement and the December 30, 2013 Amended
Operating Agreement, which identify the members of the LLC
and dictate how profits and losses are shared and distributed
among the members. Plaintiff Brian Walshe
(“Walshe”) was never a member of Enovation.
and Walshe met in early 2013 when Walshe worked as a
subcontractor on Zabors' project during Zabors'
previous employment. Zabors discussed with Walshe his idea to
form Enovation; these discussions continued for several
months. Then, on September 11, 2013, Zabors emailed to Walshe
a “draft” employment offer letter with a message,
“basic document for discussion.” The letter
included a proposed “base salary draw, ”
“additional compensation potential, ” and
“equity.” Id. Walshe never signed the
letter but joined Enovation as an employee on October 1,
has been the owner of a company called Altera Energy d/b/a
ION Consulting (“ION”) since its inception in
2010. ION was neither merged with Enovation nor was rendered
“inactive” (as that term is defined by the
Colorado Secretary of State) during Walshe's employment
with Enovation; however, Plaintiff transferred his clients
and work from ION to Enovation.
April 18, 2016, the Court issued an order granting in part
and denying in part the parties' motions for summary
judgment, which narrowed the issues of this case as follows.
Walshe alleges the Defendants breached an implied contract by
failing to reimburse him for business-related expenses he
incurred while employed at Enovation; the Defendants are
promissorily estopped from treating him as an
“employee” rather than a “partner” of
Enovation entitled to compensation over and above his salary
and benefits; and, Defendants were unjustly enriched by
receiving the benefits (revenues) from his
“large” client, who Walshe transferred to
Enovation, and by engaging in bad faith in delaying the
consummation of an equity agreement for more than a year
while Walshe generated revenues for Enovation.
counter by claiming that Walshe used or disclosed without
Enovation's permission certain confidential information
belonging to Enovation; breached a fiduciary duty by keeping
ION as an active company during his employment with
Enovation; and wrongfully retained information and documents
belonging to Enovation.
issues presented for the Court's determination at trial
1. Whether Plaintiff proved by a preponderance of the
evidence that Defendants breached an agreement to pay
Plaintiff's business-related expenses;
2. Whether Plaintiff proved by a preponderance of the
evidence he reasonably relied on Zabors' promise of
compensation over and above his salary and benefits to his
3. Whether Plaintiff proved by a preponderance of the
evidence that Zabors' conduct constitutes “bad
faith” for purposes of his unjust enrichment claim;
4. Whether Defendants proved by a preponderance of the
evidence that Plaintiff used or disclosed without permission
Exhibits H, I, and/or J, which may be determined “trade
5. Whether Defendants proved by a preponderance of the
evidence that Plaintiff acted solely for the benefit of
Enovation by keeping ION as an active company during his
employment with Enovation and by performing no billable work
but receiving pay during the period July - September 2014;
6. Whether Defendants proved by a preponderance of the
evidence that electronic files, including Exhibits H-K,
belong to Enovation and whether Plaintiff wrongfully retained
Court will address each claim and counterclaim in turn.
Breach of Contract for Business-Related Expenses against
contract is formed when an offer is made and accepted, and
the agreement is supported by consideration. Marquardt v.
Perry, 200 P.3d 1126, 1129 (Colo.App. 2008). Acceptance
of an offer is generally defined as words or conduct that,
when objectively viewed, manifest an intent to accept an
offer. Id. A person who, with knowledge of an
offer's terms, voluntarily takes the benefits of the
offered services without objection is deemed to have accepted
the offer and formed a contract. Restatement (Second),
Contracts § 69.
recognizes the existence of a contract implied from the
conduct of the parties. I.M.A., Inc. v. Rocky Mountain
Airways, Inc., 713 P.2d 882, 888 (Colo. 1986) (en banc);
Fair v. Red Lion Inn, 920 P.2d 820, 825 (Colo.App.
1995). There must be a meeting of the minds as to the
essential terms before any agreement will be implied. See
A.R.A. Mfg. Co. v. Cohen, 654 P.2d 857, 859 (Colo.App.
1982); see also Dunning v. Thomas, 14 P. 49, 51
(Colo. 1887) (“An agreement is a meeting or accord of
two or more minds as to a particular thing.”).
evidence at trial was undisputed that Zabors, Walshe, and
other Enovation directors were expected, as part of their
duties and responsibilities, to travel to meet with each
other and with current and prospective clients. In fact, a
common provision in the employment offer letters from
Enovation to prospective directors provides, “All
expenses directly attributable to client engagements and
corporate initiatives as well as a pro rata share of approved
business development expenses will be reimbursed on a monthly
basis per company policy and upon completion of the
appropriate expense request form.” See Exs. 2,
5. Enovation created the form by which directors might seek
reimbursement for travel expenses, such as airfare, hotel
fees, transportation, and meals. Ex. 59.
trial, Walshe proffered copies of time and expense reports he
had submitted to Enovation in November 2014 totaling $10,
869.40, and argued these expenses were generated during July,
August, and September 2014 for business development on behalf
of Enovation, but never reimbursed. Tr. 252: 18-20; 380:
9-15. The Court finds these expenses were incurred by Walshe
during the relevant time and in furtherance of his duties as
an Enovation “director” and for business
development. Defendants offered no persuasive evidence
contradicting this finding.
the Court finds Walshe proved by a preponderance of the
evidence that Defendants breached an agreement to reimburse
his Enovation-related expenses totaling $10, 869.40.
See Ex. 43. The Court will enter partial judgment in
favor of Walshe on this claim.
Promissory Estoppel against Defendants
has adopted the promissory estoppel doctrine as articulated
in the Restatement (Second) of Contracts § 90(1):
A promise which the promisor should reasonably expect to
induce action or forbearance on the part of the promisee or a
third person and which does induce such action or forbearance
is binding if injustice can be avoided only by enforcement of
the promise. The remedy granted for breach may be limited as
Nelson v. Elway, 908 P.2d 102, 110 (Colo. 1995) (en
banc); Kiely v. St. Germain, 670 P.2d 764, 767
(Colo. 1983) (en banc). The doctrine “encourages fair
dealing in business relationships and discourages conduct
which unreasonably causes foreseeable economic loss because
of action or inaction induced by a specific promise.”
Kiely, 670 P.2d at 767. “It provides relief to
those harmed because they relied on another's promises,
even without an enforceable contract.” G&A
Land, LLC v. City of Brighton, 233 P.3d 701,
703 (Colo.App. 2010) (citing Vigoda v. Denver Urban
Renewal Auth., 646 P.2d 900, 905 (Colo. 1982)
remedial order in cases involving claims based on promissory
estoppel must be fashioned carefully to achieve fairness to
all parties in the circumstances of the particular
case.” Kiely, 670 P.2d at 767. “When
injustice to a promisee who reasonably and justifiably relies
on a promise can be prevented only by recognizing a right of
recovery from the promisor, neither the lack of a written
contract nor the absence of fraudulent conduct can defeat the
claim for recompense.” Id.; see also
Continental Air Lines, Inc. v. Keenan, 731 P.2d 708, 712
(Colo. 1987) (en banc) (if a plaintiff fails to prove a
breach of contract claim, he or she may nevertheless be able
to recover on a promissory estoppel claim).
elements of a promissory estoppel claim are: (1) the promisor
made a promise to the promisee; (2) the promisor should
reasonably have expected that the promise would induce action
or forbearance by the promise; (3) the promisee in fact
reasonably relied on the promise to the promisee's
detriment; and (4) the promise must be enforced to prevent
injustice. Marquardt, 200 P.3d at 1129 (citing
Nelson, 908 P.2d at 110). Whether the elements of
promissory estoppel have been proved generally presents a
question of fact. See Alexander v. McClellan, 56
P.3d 102, 106 (Colo.App. 2002).
Promisor Made a Promise to the Promisee
promise is “a manifestation of intention to act or
refrain from acting in a specified way, so made as to justify
a promisee in understanding that a commitment has been
made.” Restatement (Second) of Contracts § 2(1).
“A promise may be stated in words ... or may be
inferred wholly or partly from conduct.” Id.
§ 4. But it must be “clear and unambiguous.”
Hansen v. GAB Bus. Servs., Inc., 876 P.2d 112, 114
(Colo.App. 1994). It must also be sufficiently definite to
allow a court to understand the nature of the obligation.
George v. Ute Water Conservancy Dist., 950 P.2d
1195, 1199 (Colo.App. 1997) (citing Soderlun v. Pub.
Serv. Co., 944 P.2d 616, 620 (Colo.App. 1997)).
evidence at trial demonstrated Zabors promised Walshe
“something more” than his salary and benefits
(i.e., compensation in the form of a distribution) in return
for Walshe bringing his client, Quanta, to
Enovation. See Exs. 5, 12, 21, 26. Walshe
testified that during a meeting with Zabors in early 2013
(before he began employment with Enovation), Zabors expressed
his interest in Quanta by asking Walshe “how big was
it, how much revenue I got from there, how long, a lot of
details about it, which made it clear to me that was one of
the -- and I knew, that was one of the things I was bringing
to the table was my 12-year relationship with-- with Quanta,
which is one of the-- the bigger-- and may be the largest
specialty electrical contractor in the United States.”
Tr. 33: 15-25, 34: 1-15. Zabors testified, in the context of
offering employment to Walshe, that “Quanta would be a
nice thing to move forward with.” Tr. 521: 2-13.
testified that he and Zabors had a face-to-face discussion in
September 2013, before he started with Enovation, at which
Walshe informed Zabors that, based on family medical
expenses, “the salary draw [at Enovation] would not be
nearly enough for me to pay my expenses, and I would need
some kind of profit distribution on a quarterly, and I think
we said or semi-annual basis.” Tr. 42: 4-14. Walshe
explained that he was drawing approximately $30, 000/month
salary at ION, so the $13, 000/month salary draw at Enovation
was insufficient. Id. 42: 15-18. Walshe stated that
Zabors promised the formation of a final compensation
structure by the end of 2013 (id. 48: 17-24) and the
first distribution of such compensation no later than April
2014 “because a lot of us are probably going to be
using this distribution to pay our 2013 salary -- income
taxes.” Id. 51: 10-19.
October 1, 2013, Walshe transferred all work, including that
concerning his client, Quanta, to Enovation, and his own
company, ION, remained dormant (in a practical sense) during
his employment at Enovation. Tr. 29: 2-22; 54: 1-6.
proposed employment agreement Zabors presented to Walshe
included a provision for “additional compensation
potential, ” which referred to a “bonus.”
Ex. 5. Although it is undisputed that Walshe never signed the
agreement, Zabors and Walshe proceeded with the intent that
Walshe was “eligible for bonus compensation.”
See Exs. 20, 21; see also Ex. 29 (Zabors
calculated a potential bonus for Walshe based on $300, 000 in
revenue minus salary and expenses totaling $60, 000, which he
“expect[ed] to be paid by end of July”); Ex. 31
(Zabors responded to Walshe's request to discuss
compensation structure by calculating Walshe's numbers
($329, 000 in revenue minus $131, 000 salary/benefits, $26,
000 ADP/taxes, and $5, 000 business development expenses) to
come up with $165, 000 minus “overhead”). This
evidence demonstrates Zabors' intention that Walshe
receive “something more” than salary and benefits
for bringing Quanta revenue to Enovation.
in the email to Zabors discussing what constitutes a
“director/partner” at Enovation, Walshe stated
that, “The delineation for becoming a Director is
almost entirely on a demonstrated ability to sell more work.
... A threshold of originating $1 million of work per year
seems like a reasonable standard to make director.” Ex.
8 at 2. On its face, Walshe's statement may appear to be
a concession that, to receive any compensation more than
salary and benefits, a director/partner must generate more
than $1 million in sales each year. However, in the “$1
million/year” context, Walshe expressed his view that
directors should be the only employees receiving equity in
the company; separately, Walshe discussed his views on
bonuses. Id. Thus, the Court finds Walshe, by making
these statements, did not concede that a director must
generate $1 million in business before receiving some sort of
bonus or ...