CWS, LLC v. Scott Montgomery

Summary

The Utah Court of Appeals affirmed summary judgment awarding Scott Montgomery deferred compensation under the CWS, LLC Operating Agreement. The court upheld damages awarded to CWS for Montgomery’s competing business but remanded for reconsideration of prejudgment interest and attorney fees. The opinion addresses contract interpretation, competing activities, preservation of appellate issues, prejudgment interest, and prevailing-party attorney fees.

Holdings

1. The Operating Agreement's plain language did not prevent Montgomery from deferring his salary and bonuses. His decision to defer payment fell within the broad managerial discretion granted by the Agreement and did not constitute an impermissible change to the terms of his compensation.
2. The trial court properly granted partial summary judgment because there was no genuine dispute regarding the amount of compensation owed after Montgomery agreed at the summary-judgment hearing to accept the amount CWS acknowledged was due.
3. The court declined to address CWS's substantial-performance argument because CWS did not preserve it in the trial court.
4. Prejudgment interest was legally appropriate on the Capitol-related damages because the damages were fixed as of particular times and measurable and calculable from stipulated figures, but the trial court used an incorrect damages base. The interest must be recalculated using the jury's actual damages award.
5. Prejudgment interest was improper on the line-item damages because Montgomery tendered payment before litigation and the delay resulted from CWS's refusal to accept the tender, not from Montgomery's withholding of the money.
6. The attorney-fee award could not stand because the trial court made only a conclusory prevailing-party determination and failed to explain the factors supporting its decision. The issue was reversed and remanded for reconsideration and new findings.

Questions Presented

1. Whether the plain language of CWS's Operating Agreement prohibited Montgomery from deferring his salary and bonus compensation without approval from members holding more than fifty percent of the membership interests.
2. Whether a genuine dispute of material fact existed regarding Montgomery's entitlement to and the amount of his unpaid deferred compensation.
3. Whether CWS preserved its argument that Montgomery could not recover deferred compensation because he failed to substantially perform under the Operating Agreement.
4. Whether CWS's Capitol-related damages were sufficiently fixed, measurable, and calculable to support prejudgment interest.
5. Whether prejudgment interest was proper on the line-item damages after Montgomery had previously tendered payment and CWS rejected the tender.
6. Whether the trial court adequately supported its determination that CWS was the prevailing party and its award of attorney fees.

Disposition

reversed_and_remanded