Utah: Attorney Breached Fiduciary Duties of Confidentiality and Loyalty

Link for opinion: http://www.utcourts.gov/opinions/supopin/USAPower051410.pdf


In USA Power, LLC v. PacifiCORP, 235 P.3d 749 (Utah 2010), the Utah Supreme Court reviewed a district court’s grant of summary judgment on three claims: misappropriation of trade secrets, breach of a confidentiality and nondisclosure agreement, and breach of an attorney's fiduciary duties of confidentiality and loyalty. The focus of this summary will be on the attorney’s breach of the fiduciary duties of confidentiality and loyalty.

The attorney was retained by USA Power in 2001 and later by PacifiCORP in 2003. USA Power argued that the attorney simultaneously represented them and defendant PacifiCORP, and disclosed confidential information to benefit PacifiCORP.

The Utah Supreme Court ruled that the district court erred when it granted summary judgment to an attorney and her law firm on USA Power’s breach of the fiduciary duty of confidentiality claim, and the lower court’s summary judgment was reversed and remanded because the district court “should have looked to whether USA Power presented evidence, either direct or circumstantial, that created a material issue” as to the attorney’s disclosure of confidential information.

The presentation of circumstantial evidence may create a real issue of material fact barring summary judgment. See Regan-Touhy v. Walgreen Co.,526 F.3d 641, 651 (10th Cir. 2008). The Utah Supreme Court held that genuine issues of material fact may be created by inferences drawn from circumstantial evidence because producing direct evidence that an attorney disclosed confidential information may be difficult for a plaintiff. Therefore, simultaneous adverse representation provides for an adequate inference of disclosure to create a genuine issue of material fact.

The Utah Supreme Court also ruled that the district court erred in granting summary judgment on the issue of the fiduciary duty of loyalty on the basis that a genuine issue of material fact caused harm to USA Power. Specifically, the attorney’s dual representation caused PacifiCORP to withdraw its interest in purchasing a power plant.

The court also concluded that PacifiCORP, a utility company, misappropriated trade secrets and breached a contract with USA Power, a power plant developer.

This case teaches the importance of the lawyer’s fiduciary duty. The elements of a claim against an attorney for breach of a fiduciary duty are " ‘(1) an attorney-client relationship; (2) breach of the attorney's fiduciary duty to the client; (3) causation, both actual and proximate; and (4) damages suffered by the client.'" Christensen & Jensen, P.C. v. Barrett & Daines, 2008 UT 64, ¶ 23, 194 P.3d 931 (quoting Kilpatrick v. Wiley, Rein & Fielding, 909 P.2d 1283, 1290 (Utah Ct.App.1996)).