Citrix Systems, Inc. v. Atm Shafiqul Khalid And Xencare Software, Inc.

IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON

ATM SHAFIQUL KHALID, an No. 79143-5-I

individual, and XENCARE consolidated with No. 79405-1-I

SOFTWARE, INC., a Washington

corporation, No. 79145-1-I

consolidated with No. 79305-5-I

Appellants,

DIVISION ONE

v.

UNPUBLISHED OPINION

CITRIX SYSTEMS, INC., a Delaware

corporation,

Respondent.

CITRIX SYSTEMS, INC.,

Appellant,

v.

ATM SHAFIQUL KHALID, and

XENCARE SOFTWARE, INC.,

Respondents.

ANDRUS, A.C.J. — Software engineer ATM Shafiqul Khalid 1 sued his former

employer, Citrix Systems, Inc., raising numerous claims, including breach of an

employment agreement relating to the ownership of intellectual property Khalid

1“ATM” does not stand for any specific name and, according to Khalid, in Bangladesh,

where Khalid was born, the letters are commonly used as part of people's names.

Citations and pin cites are based on the Westlaw online version of the cited material.

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developed during his employment. Citrix countersued Khalid for breaching the same

agreement and for trademark infringement under the Lanham Act, 15 U.S.C. §1114

et seq. based on Khalid’s use of Citrix’s “Xen” trademarks for his startup businesses.

On summary judgment, the trial court dismissed several of Khalid’s claims and

also found Khalid had infringed Citrix’s trademarks. A jury subsequently found Citrix

breached Khalid’s employment agreement and severance agreement and awarded

him over $3 million in damages. The jury found Khalid had not breached his

employment agreement and awarded Citrix no damages on its trademark

infringement claim.

In post-trial motions, the trial court awarded Khalid over $2.6 million in attorney

fees and costs. It awarded Citrix $117,816 in legal fees and costs for prevailing in

part on summary judgment on its trademark infringement counterclaim. The trial

court also concluded, based on the jury’s verdicts, that Citrix has no ownership

interest in two of Khalid’s patents and entered a declaratory judgment to that effect

in Khalid’s favor.

On appeal, Citrix and Khalid challenge a number of pretrial, trial, and post-

trial decisions. 2 We conclude that the trial court erred in denying Khalid’s request

for prejudgment interest on the jury’s $3 million damages award and erred in

awarding attorney fees to Citrix on its trademark infringement claim. We remand

with instructions to vacate the attorney fee award in favor of Citrix, to award

prejudgment interest to Khalid as set out in this opinion, and to adjust Khalid’s

2

Although Xencare Software, Inc. was identified as an appellant in the notice of appeal,

only Khalid assigned errors for our review in this appeal.

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attorney fee award to eliminate compensation for work that does not relate to a

common core of facts. In all other regards, we affirm the decisions of the trial court

and the judgment entered on the jury's verdicts.

FACTS

Khalid’s Education and Employment History

Khalid completed his undergraduate studies in computer science and

engineering in Bangladesh, his country of origin, in 1995. After publishing multiple

research papers in computer science journals and winning a national computer

programming competition from the Bangladesh Computer Council, Khalid began

graduate studies in the United States, completing a master’s degree in computer

engineering in 1998. That same year, he began working at Microsoft as a software

design engineer, in its “kernel and architecture group,” working on the nucleus of its

Windows operating system.

In 2006, Khalid left Microsoft to join Citrix, an international technology

company that provides desktop virtualization and networking services. Citrix hired

Khalid to work in “Citrix Labs,” the company’s research and development group that

functioned as a think tank responsible for the creation and development of new

products.

Khalid’s Inventions

Khalid has a lengthy history of developing patentable inventions, both for his

employers and for his own, separate, business endeavors. The litigation with Citrix

involves two such inventions.

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The ‘637 Patent for the Mini-Cloud System

On July 15, 2014, the United States Patent & Trademark Office (USPTO)

issued patent number 8,782,637 (the ‘637 Patent). This patent, entitled “Mini-

Cloud System for Enabling User Subscription to Cloud Service in Residential

Environment,” is described as a system “to enable subscription or service model

for computing infrastructure, software, and digital content.”

Khalid described the ‘637 Patent as a system comprised of multiple

components, including what Khalid called a “thin terminal” device, which is a small

piece of computer hardware, similar to a Roku or an Apple TV USB device, paired

with a software system to manage digital content subscription services. Khalid

began developing the software subscription component of this system as early as in

1996 while still a graduate student. This component involved compressing software

to allow users to download it from an online source, so the software seller could

eliminate retail in-store sales. He filed a provisional patent application for the system

to support a software subscription service in 2001. 3

In 2007, he broadened the provisional patent application to include a

framework and platform for incorporating a digital content subscription. In November

2009, Khalid filed yet another provisional patent application for a system and process

to consolidate a DSL modem and small computer into an “access gateway,” which

3 Since 1995, the USPTO has offered inventors the option of filing a “provisional” patent

application, designed as a lower-cost first patent filing. The application has a pendency lasting 12

months and an applicant must file a corresponding nonprovisional application or convert the

provisional into a nonprovisional application during the 12-month pendency period to benefit from

the earlier filing date. See USPTO, Provisional Application For Patent,

https://www.uspto.gov/patents-getting-started/patent-basics/types-patent-applications/provisional-

application-patent (last visited Nov. 5, 2020).

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could connect to services to host a remote desktop. This home gateway system was,

as Khalid described it, a method of combining and centrally managing one’s cell

phone, movie rentals, and internet services.

In January 2010, Khalid filed his next provisional patent application for “thin

devices to deliver computing power.” The thin device, described as like a Roku stick,

was the hardware needed to control his prior software system inventions.

On November 22, 2010, he filed a nonprovisional patent application

combining each of the components for which he had previously filed provisional

applications. This application is what culminated in the issuance of the ‘637 Patent.

Khalid initially formed a company he called KrisanTech in 2000 to develop

and market the subscription component of what later became his mini-cloud system.

He prepared a business plan for KrisanTech in 2006 when he began exploring how

to attract venture capital for his startup company outside of Microsoft. He later began

using the name “PCXen” as the name of the startup he intended to use to develop

and market the mini-cloud system.

The ‘219 Patent for Softlock Antivirus Software

On October 9, 2012, the United States Patent & Trademark Office (USPTO)

issued patent number 8,286,219 (the ‘219 Patent) to Khalid. This patent, entitled

“Safe and Secure Program Execution Framework,” is described as a system and

method for ensuring that any instructions executing on a computer are certified and

secure. Khalid testified that the patent covers a type of antivirus software based on

“whitelisting,” a process of certifying secure applications permitted access to a

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computer, as compared to “blacklisting,” the then-prevalent antivirus methodology of

maintaining a list of unsecure applications to be blocked.

Khalid filed a provisional patent application for this invention in 2005, prior to

working for Citrix. He allowed the application to lapse, but after working on the

software code and testing it on his own time and using his own resources, he filed a

second, nonprovisional patent application for the invention on February 16, 2008.

The 2008 application was identical to the 2005 provisional one he had filed, with the

exception of one additional improvement.

By 2008, Khalid had a functional software security product that he named

“Softlock.” Khalid founded a company he called “XenCare Software,” purchased the

expired domain name of www.xencare.com, and developed a website for the

company. In September 2008, he issued a press release announcing the release of

Softlock 2.0, described as a “lightweight and powerful protection [system] for

Windows computers.” Khalid testified that thousands of users downloaded free trial

copies of Softlock 2.0. He later assigned the ‘219 Patent to Xencare, a company he

formally incorporated in late 2011.

Khalid’s Employment Agreement with Citrix.

When Khalid began working for Citrix in 2006, it asked him to execute a

document entitled “Non-Solicitation, Non-Compete and Confidentiality and Employee

Non-Disclosure Agreement” (Employment Agreement). Section 7 of the

Employment Agreement, entitled “Disclosure and Assignment of Inventions”

(“Invention Assignment Clause”), provides:

If at any time during the term of my employment by Citrix, I . . . make,

conceive, discover or reduce to practice any invention, . . . or

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intellectual property right . . . (hereinafter called “Developments”) that

(i) relate to the business of Citrix . . .; (ii) result, directly or indirectly,

from tasks, duties and/or responsibilities assigned to me by Citrix; or

(iii) result, directly or indirectly, from the use of premises or personal

property (whether tangible or intangible) owned, leased or contracted

for by Citrix, such Developments and the benefits thereof shall be

considered work made for hire4 and shall immediately become the sole

and absolute property of Citrix and its assigns. . . .

If any of the Developments may not, by operation of law or otherwise,

be considered work made for hire by me for Citrix, or if ownership of all

right, title, and interest of the intellectual property rights therein shall

not otherwise vest exclusively in Citrix, I hereby assign to Citrix, and

upon the future creation thereof automatically assign to Citrix, without

further consideration, the ownership of all such Developments. . . .

Upon disclosure of each of such Developments to Citrix, I agree during

the term of my employment and at any time thereafter, at the request

and cost of Citrix, to sign, execute, make and do all such deeds,

documents, acts and things as Citrix may reasonably require to perfect

and protect all interests therein. (Emphasis added).

The Invention Assignment Clause required Khalid to disclose all

developments “made or conceived” prior to employment by Citrix on “Exhibit B” to

the Employment Agreement. Developments identified in Exhibit B were “excluded

from and shall not be assigned to Citrix.”

Khalid listed twelve works he claimed to have conceived before joining Citrix

in his Exhibit B. These included:

7. Safe and secure program execution framework.

8. A home communication Gate Way to combine different

consumers[] needs like cell phone, movie rental, internet

services etc.

9. A method and system to support subscription based

software service.

10. A method and system to support software distribution

replacing existing retail distribution network.

4 A “work made for hire” is a term defined in the Copyright Act of 1976, 17 U.S.C. § 101 as

“a work prepared by an employee within the scope of his or her employment.” Warren v. Fox Family

Worldwide, Inc., 328 F.3d 1136, 1140 (9th Cir. 2003).

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Khalid testified that number 7 referred to the antivirus software system he

invented and later patented in the ‘219 Patent. Number 8 was intended to cover the

invention he submitted for patent protection in his 2009 provisional application. And

the invention set out in number 9 is what Khalid described in his 2001 provisional

patent application. The work described in number 10 was described in the

KrisanTech business plan from 2006 and included in Khalid’s extended 2007

provisional patent application.

According to Khalid, both the software system covered by the ‘219 Patent and

all four components of the mini-cloud system covered by the ‘637 Patent—the thin

terminal, the access gateway, the digital content, and the subscription service—were

disclosed to Citrix before he began working for the company.

Khalid also added an additional paragraph to the Invention Assignment

Clause:

This covenant not to complete is not applicable for working for

Microsoft corp. or any company that develops the similar product

Microsoft has developed or continuation work of the items listed in

Exhibit B. (Emphasis added).

Khalid added this language to make it clear that he was allowed to continue

working on his own inventions while employed with Citrix.

Khalid signed and returned the modified Employment Agreement, with the

accompanying Exhibit B, to Abolfazl Sirjani, his supervisor at the time he began

working at Citrix, on September 11, 2006. According to Khalid, he called out to

Sirjani the inventions he listed in Exhibit B and the additional language he added to

the Invention Assignment Clause and indicated via email that he intended to continue

developing his inventions. Khalid testified he would not have accepted the offer from

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Citrix if it meant he could no longer work on his outside research projects. Sirjani

acknowledged receipt of the Exhibit B and informed Khalid that the company legal

department would contact him if they had questions about his invention disclosure.

No one from Citrix’s legal department ever raised questions or concerns to Khalid

about the inventions he disclosed in the Employment Agreement.

The work Khalid did for Citrix was unrelated to any of the inventions he

disclosed in Exhibit B. The first project he worked on was to work out bugs in

Windows Vista to allow it to operate audio remote technology. Citrix never asked

him to work on any of his personal inventions. And none of the work he did on his

own inventions interfered with his ability to perform up to Citrix’s expectations.

Khalid received above average to extraordinary performance reviews and, at

times, received discretionary bonuses based on the quality of his work.

Khalid’s Search for Investors, including Citrix

Between 2006 and 2008, Khalid continued to work on completing the coding

for his Softlock antivirus software and developing the various components to the mini-

cloud system. He retained the services of coders in Bangladesh to assist him with

this work. He transferred approximately $70,000 to a bank account in Bangladesh

to fund his startup’s work there. He built a prototype thin terminal device for the mini-

cloud System. Khalid testified he used his own resources, worked on these

independent projects on his own time, and did not allow the work to interfere with any

of his assigned duties for Citrix.

After Khalid succeeded in completing a beta release of Softlock and once he

had his mini-cloud prototype in hand, he knew he needed more capital to take the

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product to the next phase. One of the companies he approached was Citrix. In

March 2008, he asked Sirjani to lunch to discuss his inventions. Khalid showed

Sirjani his KrisanTech business plan and described his idea of distributing software

via subscriptions rather than through retail purchases. Sirjani testified these projects

were “sort of related to Citrix,” but he clearly understood Khalid had worked on them

independently, and the projects were “something that he was doing outside his work.”

Sirjani told Khalid he would speak to Martin Duursma, the Vice President of Citrix

Labs, but he also told Khalid that Citrix was unlikely to be interested in the security

software. To Khalid’s understanding, that ended the discussion.

The next interaction Khalid had with Citrix regarding his inventions occurred

in November 2009, when Khalid spoke directly with Duursma regarding his

independent startups. When Khalid described to Duursma his idea for a home

virtualization system, Duursma asked Sirjani to review Khalid’s intellectual property.

Sirjani reported to Duursma that it had potential and was something he

recommended Duursma discuss with Khalid.

Duursma invited Khalid to give him a presentation about his business ideas.

Khalid prepared a set of slides to describe his mini-cloud system to Duursma, and

carried computers from his home office to the Citrix conference room to use for this

presentation. On November 16, 2009, Khalid presented the system under the name

“XenDesk.” He described the idea as a “virtual mobile desk” that a residential user

could access in multiple ways. He proposed the idea as a possible joint venture

between him and Citrix. He made it clear he was looking for venture capital for his

startup company. At Duursma’s request, Khalid forwarded his slides to Bill

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DeForeest, Khalid’s supervisor at that time, and gave DeForeest a separate

presentation on November 23, 2009. Khalid was then asked to give his presentation

to a Citrix product team lead by Michael Harries. At this meeting, Khalid testified he

received “mixed feedback.” Harries stated Citrix was uninterested in getting into any

hardware product development. Brad Pedersen, Citrix’s chief architect, also told

Khalid that Citrix had previously looked at hardware proposals and had never been

interested in investing in the past. At the end of these meetings, Duursma told Khalid

he could continue to work on these inventions on his own time, at his own expense,

and if he could subsequently prove that they worked, Citrix might be interested at that

point.

Khalid assumed Citrix had no interest in his antivirus software, and he began

soliciting investments from other colleagues and friends. In January of 2010, Khalid

met with Quamrul Mina, a fellow engineer from Bangladesh who had been his college

mentor. Mina was the co-founder of Pragma Systems, an Austin-based technology

company that developed secure applications to connect computer terminals. Khalid

demonstrated Softlock for Mina. Mina tested the software and believed it showed a

lot of promise, as it was a new and different technology from anything else on the

market. Mina concluded the software was “very mature” and “something we could

take it to the marketplace.” Based on this meeting, Mina testified that Pragma

planned to invest $100,000 in Softlock, and would have purchased 50,000 copies of

the software to sell to its customers.

Khalid continued to pursue an investment from Citrix for his mini-cloud

system. In January 2010, Khalid prepared a video of the progress he had made to

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share with Duursma. The video lead to a follow up presentation on March 1, 2010,

to ask Citrix to invest. After the presentation, Harries indicated Citrix was not

interested in making Khalid an offer. The following month, he approached Duursma

again because he was running out of funding and was looking for an alternative

source of funding. Duursma told Khalid, via email, that he was in the process of

setting up an accelerator program the purpose of which would be to fund new

ventures. Khalid met again with Duursma in July 2010 and Duursma recommended

that Khalid set up a management team and to develop a budget and a timeframe for

going to market with his mini-cloud system in anticipation of possible participation in

the Citrix startup accelerator program.

Based on Duursma’s recommendations, in July 2010, Khalid attempted to

retain the services of Robert Kapela, an experienced software executive, to serve as

CEO for the startup company for the mini-cloud system that Khalid was now calling

PCXen. Kapela expressed interest in investing in the business, but stated that his

willingness to become involved and to invest was contingent on Khalid having clear

title to his developments.

Citrix launched its accelerator startup program at the end of 2010. The

purpose was to provide funding to outside companies, so Citrix employees could not

participate. If a Citrix employee wanted funding through the program, he or she

would have to first stop working at Citrix. Duursma suggested to Khalid that he

should apply to the program. Khalid arranged to meet with John McIntyre, the

program director, in February 2011. McIntyre told Khalid that if he applied to the

program, Citrix would be willing to invest $400,000 in his startup.

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Shortly after this meeting occurred, Duursma told Khalid that because he was

disclosing intellectual property to Citrix representatives, he should document his

personal inventions to protect his intellectual property if he did in fact choose to leave

Citrix. As Duursma requested, Khalid sent him an email in which he wrote:

I just wanted to formally disclose few items I’m working on

outside my Citrix work to pursue some funding through Citrix start-up

accelerator program that would fund new ideas up to 400k to create a

new business. I typically work at night and weekend to engage myself

in those activities that doesn’t affect my Citrix work in any way. Here

are the areas I’m working on:

1. Mobile Application delivery – The idea was to build a

solution that can help customer deploy mobile apps and manage

mobile end points. There are many approaches to target that problem.

My primary approach is to solve the issue using mobile device

simulator/emulator. . . .

2. Thin terminal, composite devices to combine few

computing functionalities in consumer H/W like Modem, PC, TV, etc. –

I started this project in 2008 as an extension of my earlier project to

enable rental based computing like sales force. I build some demo

using open source projects and explored different related areas like

some devices developed by N-computing and pano logic. This also

targets many software pieces to make those devices and services

practically achievable. I showed demo and progress to Bill/Martin/Brad

P at different times in 2009 and 2010 for possible sponsorship/funding

through Citrix.

Khalid testified that the intellectual property described in paragraph 2 of this email

related to the mini-cloud system that he had demonstrated to Duursma and

DeForeest. Duursma confirmed that he recognized this email as a disclosure by

Khalid of product ideas he wanted to have considered for the accelerator program.

Yet, Duursma never informed Khalid that these ideas could not be developed

independently or that he believed they were products being developed by Citrix.

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In June 2011, Khalid sent an email again to Pedersen making a second pitch

regarding his antivirus software. At the bottom of this email, Khalid added a

paragraph that read: “Disclosure: I have personal investment security company,

XenCare, which is not in competition to Citrix . . . XenCare has few pending patents

. . .” No one at Citrix objected to Khalid’s use of the name XenCare.

Khalid’s Termination and Severance Agreement

Citrix terminated Khalid’s employment on October 3, 2011. According to

DeForeest, Khalid was terminated for two reasons. First, the work on Microsoft-

related projects that Khalid had been hired to perform was complete. Second,

Khalid’s job performance on other projects had declined and Khalid had increasing

difficulty collaborating with other engineers or taking direction.

Citrix offered Khalid a severance package of $30,757, equivalent to eleven

weeks of base pay. To receive the severance payment, Citrix required Khalid to sign

a Severance and General Release Agreement (“Severance Agreement”), which

stated: “the Company desires to extend certain separation benefits to Employee to

assist Employee with the transition to new employment, and in return, Employee

has agreed to release the Company from any claims arising from or related to the

employment relationship.” The Severance Agreement imposed on Khalid

continuing obligations related to his employment at Citrix. For example, Khalid

was required to keep the terms of the Severance Agreement confidential, to

comply with all of the terms of the Employment Agreement, and to return all

company property to Citrix. It also contained a broad release of claims against

Citrix.

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Accompanying the Severance Agreement was a “Termination Certificate,”

requiring Khalid to certify that he had disclosed to Citrix any and all intellectual

property he had conceived or made under the Employment Agreement. Before

executing the document, Khalid sent an email to Lisa Barney, a human resources

representative at Citrix, certifying that he had previously disclosed all of his

intellectual property as a part of his request to participate in the accelerator program.

By email dated October 19, 2011, Khalid sent Barney a list of disclosures of all of the

intellectual property he developed while employed with Citrix but which he believed

remained his property. This included “XenCare Software,” which he described as an

entity he founded in 2007 or 2008, which had two pending patents. He also identified

a “HomeCloud” system, which he described as the software and product ideas he

had demonstrated to Duursma and Pedersen. Khalid told Barney that, based on his

termination, he assumed Citrix had no interest in funding any of his inventions and

would find alternative funding.

Khalid signed and returned the Severance Agreement on October 21, 2011.

At the same time, he informed Citrix that the “HomeCloud” system he had mentioned

was the same as the mini-cloud system he had demonstrated to Duursma, and that

it was derivative of what he had excluded from the Invention Assignment Clause by

way of Exhibit B to the Employment Agreement.

On October 25, 2011, Khalid received a letter from Kellan Ponikiewicz, Citrix’s

in-house intellectual property counsel. Ponikiewicz informed Khalid that Citrix

believed it owned any intellectual property he created while employed at Citrix, as

well as the xencare.com domain name and the XenCare company name. She

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sought additional information regarding the intellectual property he claimed to own in

his email to Barney. Khalid sent Ponikiewicz a detailed email explaining how he had

listed all of the patented inventions owned by XenCare in Exhibit B of his Employment

Agreement, and provided her with URL links to the patent applications for her to

review. He further explained how he had purchased the xencare.com domain and

felt that “XenCare” was not a trademark owned by Citrix. He explained how he had

purchased the Xencare domain name before joining Citrix, that he had disclosed his

use of this company name to several managers within Citrix as early as 2008. Khalid

also provided Ponikiewicz with a copy of RCW 49.44.140, Washington’s statute on

assignment of employee invention rights, and asked her to evaluate Citrix’s claim of

ownership in light of this law. On October 30, 2011, Khalid provided Ponikiewicz with

further information regarding the PCXen patent applications for the mini-cloud

system and provided additional URL links to these applications.

At some point thereafter, Khalid spoke with Ponikiewicz on the phone and she

told him he had to assign all of his inventions to Citrix. On November 13, 2011,

Ponikiewicz demanded that Khalid cease using the name XenCare and PCXen and

assign the XenCare domain name to Citrix. She also demanded that Khalid assign

his patent applications to Citrix. She informed him that Citrix would not release any

severance payment until he had done so.

On December 8, 2011, Rob Feldman, associate general counsel for litigation

and employment at Citrix, sent Khalid an email re-asserting Citrix’s right to Khalid’s

patent applications and again demanding that Khalid cease using the “Xen” family of

names, including Xencare and PCXen. He told informed Khalid that if he did not

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agree, Citrix would take legal action. He stated that Khalid’s failure to assign the

property to Citrix constituted a breach of the Severance Agreement, and Citrix would

not release his severance payment. 5

Citrix’s demands impacted Khalid’s ability to retain investment and

management services for his startup companies. Citrix’s claim of ownership to

Softlock led Mina to pull Pragma’s purchase offer. Kapela also declined involvement

in PcXen and invested elsewhere.

The Lawsuit

In 2015, Khalid filed this lawsuit against Citrix. Khalid alleged violations of

Washington’s Consumer Protection Act (CPA), breach of contract, tortious

interference, and breach of the duty of good faith and fair dealing. Khalid also sought

a declaratory judgment that the Invention Assignment Clause was unenforceable

under RCW 49.44.140 and that Citrix had no ownership rights to the ‘219 or ‘637

Patents. He also sought punitive damages under Florida law. 6

Citrix filed a counterclaim against Khalid and a third-party complaint against

Khalid’s company, XenCare Software, Inc., alleging they were infringing Citrix’s

“Xen” trademark in violation of the Lanham Act, 15 U.S.C. §1114(1). Citrix also

filed counterclaims against Khalid for breach of contract and unjust enrichment.

5 Khalid returned to work for Microsoft in December of 2011. In 2015, when his employment

at Microsoft was terminated, Microsoft requested Khalid assign his rights in the ‘219 and ‘637 patents

to Microsoft. Khalid subsequently sued Microsoft to clear its claim of ownership to this intellectual

property. That lawsuit remains pending.

6

The Employment Agreement contained a choice of law provision providing that Florida

law governed its construction and enforcement. The parties do not dispute that Florida law governs

the breach of contract (and associated covenants) claims and the award of attorney fees, while

Washington law governs violations of Washington law (the CPA claim, the wage claim, and the

violation of the Invention Assignment Statute, chapter 49.44 RCW).

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Pretrial Motions

Khalid moved for partial summary judgment claiming, among other things,

that the Invention Assignment Clause was unenforceable because it violated RCW

49.44.140. Khalid also claimed that Citrix’s actions violated the CPA because they

constituted an unfair or deceptive act under RCW 19.86.020 and an unlawful

restraint of trade under RCW 19.86.030.

Citrix filed a cross motion for summary judgment seeking the dismissal of all

of Khalid’s claims, including his request for punitive damages. Citrix also moved

for partial summary judgment on its infringement claim, seeking a ruling that Khalid

infringed its trademark in marketing his Softlock software.

The trial court granted in part Khalid’s motion for summary judgment with

regard to his CPA claim under RCW 19.86.020, finding as a matter of law that the

Employment Agreement violated RCW 49.44.140 and was unfair in violation of RCW

19.86.020. However, it concluded that the “remedy for th[e] violation is to strike

the offending language and amend the language to conform to the requirements

of the statute.” The trial court denied the remainder of Khalid’s summary judgment

motion, including ownership of the patents.

The trial court granted partial summary judgment in favor of Citrix on its

Lanham Act claim, finding that Khalid had infringed on Citrix’s trademarks. It

reserved for trial the issue of whether Citrix had any recoverable damages. The

trial court otherwise denied Citrix’s motion for summary judgment.

Citrix later renewed its summary judgment motion, arguing that Khalid’s

restraint of trade claim should be dismissed because Khalid had no evidence that

- 18 -

No. 79143-5-I/19

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

Citrix had conspired with any other entity to harm competition. The trial court

agreed and dismissed Khalid’s RCW 19.86.030 claim. It also dismissed Khalid’s

request for punitive damages.

Trial

Khalid’s and Xencare’s remaining claims and Citrix’s counterclaims

proceeded to a jury trial in July 2018. The court summarized these claims for the

jury:

• Khalid claimed Citrix breached the Employment and Severance Agreements

• Khalid claimed Citrix breached the covenant of good faith and fair dealing

relating to these two agreements.

• Khalid claimed Citrix violated the CPA.

• Khalid and Xencare claimed Citrix tortuously interfere with their respective

business expectancies.

• Citrix claimed Khalid breached both the Employment and Severance

Agreements.

• Citrix claimed Khalid was unjustly enriched.

• Citrix claimed Khalid had infringed its trademark.

Jury Verdict

On August 1, 2018, the jury found Citrix breached the Employment Agreement

and awarded Khalid $3 million in damages. The jury also found Citrix breached the

Severance Agreement and awarded Khalid $67,994 in damages. The jury rejected

the remainder of Khalid’s and Xencare’s claims. The jury also found against Citrix

on every one of its counterclaims and awarded it no damages.

Post-Trial Motions

Both Citrix and Khalid filed post-trial motions regarding the jury’s damage

award. Citrix moved for remittitur pursuant to CR 59(a)(6) and (7) and RCW

4.76.030, arguing that both jury awards improperly included a prejudgment interest

of twelve percent. Citrix contended that, under Florida law, the court, and not the

- 19 -

No. 79143-5-I/20

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

jury, must award the appropriate amount of interest. The trial court denied Citrix’s

motion for remittitur except as to Khalid’s claim for breach of the Severance

Agreement, for which it remitted damages to $30,757, the undisputed amount Citrix

agreed to pay as severance.

Khalid requested prejudgment interest on the $3 million award starting on

November 1, 2011, at a rate of twelve percent. The trial court denied Khalid’s

request, finding it could not ascertain a date of actual loss of lost profits. The trial

court awarded prejudgment interest on the $30,757 award for breach of the

Severance Agreement, from the date of that agreement, October 28, 2011, through

the date of judgment. It awarded prejudgment interest at Florida’s interest rate of

4.75 percent, rather than Washington’s interest rate of 12 percent. The trial court

also granted Khalid’s requested declaratory relief, concluding that “Citrix has no

ownership or other rights to or arising under US Patent No. 8,286,219 and

8,782,637.”

The trial court awarded attorney fees and costs to Khalid under the

Employment Agreement and RCW 49.48.030. Because the contingency case

demanded “a high level of specialized skill and experience by Khalid’s lawyers,” and

involved complex intellectual property law, employment law, and Florida contract law,

it applied a multiplier of 1.75. The trial court awarded Khalid $2,642,972.67 in

attorney fees and $170,743.19 in costs. The trial court awarded Citrix $110,608.50

in attorney fees and $7,207.49 in costs for prevailing on its Lanham Act claim.

- 20 -

No. 79143-5-I/21

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

ANALYSIS

Khalid and Citrix have raised multiple issues on appeal. Given the

complexity of the issues, we will address them as they arose chronologically in the

trial court, regardless of the party assigning error to the issue here.

1. Dismissal of Khalid’s Restraint of Trade Claim

Khalid argues the trial court erred in dismissing his restraint of trade claim

under RCW 19.86.030 on summary judgment. We disagree.

We review summary judgment de novo, engaging in the same inquiry as

the trial court. Torgerson v. One Lincoln Tower, LLC, 166 Wn.2d 510, 517, 210

P.3d 318 (2009); Lybbert v. Grant County, 141 Wn.2d 29, 34, 1 P.3d 1124 (2000).

Summary judgment is appropriate only if the pleadings, affidavits, depositions, and

admissions on file demonstrate the absence of any genuine issue of material fact,

and the moving party is entitled to judgment as a matter of law. CR 56(c); Lybbert,

141 Wn.2d at 34. Whether a particular action gives rise to a CPA violation is

reviewable as a question of law. Leingang v. Pierce County Med. Bureau, 131

Wn.2d 133, 150, 930 P.2d 288 (1997); State v. Living Essentials, LLC, 8 Wn. App.

2d 1, 14, 436 P.3d 857, 864, review denied, 193 Wn.2d 1040, 449 P.3d 658 (2019),

and cert. denied, No. 19-988, 2020 WL 5882220 (U.S. Oct. 5, 2020).

RCW 19.86.030 provides that “[e]very contract, combination, in the form of

trust or otherwise, or conspiracy in restraint of trade or commerce is hereby

declared unlawful.” Our Supreme Court has interpreted RCW 19.86.030 as

- 21 -

No. 79143-5-I/22

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

Washington’s equivalent of section 1 of the Sherman Antitrust Act, 15 U.S.C. 7

State v. Black, 100 Wn.2d 793, 799, 676 P.2d 963 (1984). Federal courts have

applied two tests to evaluate claims under section 1 of the Sherman Act, and

Washington courts have adopted those tests to evaluate claims under 19.86.030. 8

Ballo v. James S. Black Co., Inc., 39 Wn. App. 21, 26, 692 P.2d 182 (1984). The

first approach, the “rule of reason” test, “requires the factfinder to decide whether

under all the circumstances of the case, the restricted practice imposes a

reasonable restraint on competition.” Id. Under this test, the court examines “facts

peculiar to the business, the history of the restraint, and the reasons why it was

imposed to determine the effect on competition in the relevant product market.” In

re Nat'l Football League's Sunday Ticket Antitrust Litig., 933 F.3d 1136, 1150 (9th

Cir. 2019), cert. denied sub nom. Nat’l Football League v. Ninth Inning, Inc., 19-

1098, 2020 WL 6385695 (U.S. Nov. 2, 2020) (internal quotation marks omitted)

(quoting Nat'l Soc'y of Prof'l Eng'rs v. United States, 435 U.S. 679, 692, 98 S. Ct.

1355, 55 L. Ed. 2d 637 (1978)).

The second approach, the “per se” test, is premised on the principle that

certain agreements or practices are so plainly anti-competitive and so lacking in

any redeeming virtue that they are conclusively presumed illegal without further

examination under the rule of reason test. Ballo, 39 Wn. App. at 26. The practices

typically deemed unlawful per se are price fixing, group boycotts and tying

7 15 U.S.C. §1 provides: “Every contract, combination in the form of trust or otherwise, or

conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is

declared to be illegal.”

8

The legislature expressly instructed courts to be guided by federal law in interpreting

RCW 19.86.030. RCW 19.86.920.

- 22 -

No. 79143-5-I/23

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

arrangements. Id. When an agreement falls under one of these categories, “any

explanation of why the act was done or what its effect might be in a particular case

is of no consequence or materiality.” Id. The Ninth Circuit currently still applies

both tests to section 1 claims. See Fed. Trade Comm'n v. Qualcomm Inc., 969

F.3d 974, 989 (9th Cir. 2020).

Khalid did not argue below or here that the Invention Assignment Clause

violates the rule of reason test by being an unreasonable restraint on competition.

Instead, Khalid argues that because the Invention Assignment Clause violated

RCW 49.44.140, it is a per se unlawful restraint of trade. But nothing in the plain

language of RCW 49.44.140 indicates that this was the legislature’s intent. In

Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778,

786, 719 P.2d 531 (1986), our Supreme Court noted that the legislature has

repeatedly identified conduct it deems to be per se CPA violations. It concluded

that “the Legislature, not this court, is the appropriate body to . . . [declare] a

statutory violation to be a per se unfair trade practice.” 9 Id. at 787.

Citing Sheppard v. Blackstock Lumber Co., 85 Wn.2d 929, 540 P.2d 1373

(1975), Khalid argues that an unlawful invention assignment provision in an

employment contract is analogous to an unlawful non-competition agreement,

which constitutes a per se restraint of trade in violation of RCW 19.86.030. But

Sheppard does not control here. In that case, an employee of Blackstock Lumber

9 The legislature has made explicit CPA findings, for example, in the context of deeds of

trust, Lyons v. U.S. Bank Nat’l Ass’n, 181 Wn.2d 775, 786 n. 5, 336 P.3d 1142 (2014) (RCW

61.24.135 lists some per se violations of the Deed of Trust Act that automatically constitute unfair

or deceptive practices); and claims-handling regulations by insurers. St. Paul Fire & Marine Ins.

Co. v. Onvia, Inc., 165 Wn.2d 122, 129, 196 P.3d 664 (2008) (a violation of insurance regulations

in chapter 284-30 WAC establish per se violation of CPA).

- 23 -

No. 79143-5-I/24

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

established a custom woodworking business and began directly competing with

Blackstock. Id. at 930. Blackstock notified Sheppard that his business activities

violated a provision of his retirement plan. Id. The plan provided that any equity

vested in the plan would be forfeited “if the former Participant . . . engages in or

enters the employment of any person . . . engaged in any business . . . in

competition with . . . the business of [the] Company.” Id. Sheppard contended this

forfeiture provision was unenforceable as an impermissible restraint on trade. Id.

The court framed the question as whether the contractual provision was an

illegal restraint of trade under article 12, section 22 of the state constitution and

RCW 19.86.030. Id. at 931. It recognized that under the common law of contracts,

“while contracts in general restraint of trade are void and unenforceable, contracts

in partial restraint of trade may be enforced if reasonable.” Id. at 931-32. The

court adopted the approach of the Oregon Supreme Court, drawing an analogy

between forfeiture provisions in profit-sharing retirement plans to non-competition

clauses in employment agreements. Id. at 932 (citing Lavey v. Edwards, 264 Or.

331, 505 P.2d 342 (1973)). It held that the forfeiture clause in the Blackstock

retirement plan was not void or invalid per se but had to be evaluated under

Washington’s well-established three-part reasonableness test applicable to non-

competition agreements. 85 Wn.2d at 932-33. Under this test, a non-competition

covenant is reasonable if it (1) is no greater than is required for the protection of

the employer; (2) does not impose undue hardship on the employee; and (3) is not

injurious to the public. Id. at 933.

- 24 -

No. 79143-5-I/25

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

The court deemed the Blackstock provision unreasonable as written

because the clause prohibited any competitive activity anywhere, at any time, and

the company presented no evidence to explain the precise factors that went into

the company’s decision that such an unlimited non-competition prevision was

necessary to protect its business interests. Id. at 933.

Sheppard does not support Khalid’s statutory claim under RCW 19.86.030

claim for several reasons. First, the Sheppard court did not conclude that an

invention assignment agreement that violates RCW 49.44.140 is a per se violation

of RCW 19.86.030, entitling an employee to treble damages under RCW 19.86.090

or civil penalties under RCW 19.86.140. The Sheppard court remanded the case

for a trial to determine “what extent, if any, the forfeiture provision provides a

reasonable restraint and to what extent it may be enforceable.” Id. at 934.

Second, if, as Sheppard holds, a contract that unlawfully restrains trade can

be reformed judicially to remove this unlawful restraint, then once reformation

occurs, the agreement would no longer violate RCW 19.86.030. Relying on Wood

v. May, 73 Wn.2d 307, 438 P.2d 587 (1968), the Sheppard court concluded the

appropriate remedy was a remand to the trial court to determine whether it could

modify the forfeiture provision to provide for a reasonable restraint on Sheppard’s

right to compete against his former employer. 85 Wn.2d at 933. Khalid obtained

this remedy. The trial court explicitly ruled that under RCW 49.44.140, the remedy

was reformation of the Assignment Clause to make it consistent with the statute.

Khalid does not challenge on appeal the trial court’s reformation of the Invention

Assignment Clause. This conclusion is supported by federal antitrust case law

- 25 -

No. 79143-5-I/26

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

which holds that an overbroad non-competition provision in an employment

contract, later modified by the court to be enforceable, does not give rise to an

antitrust claim. See Baker's Aid, a Div. of M. Raubvogel Co., Inc. v. Hussmann

Foodservice Co., 730 F. Supp. 1209, 1211 (E.D.N.Y. 1990) (per se rule does not

apply to employee covenants not to compete).

The language of RCW 49.44.140 and corresponding case law indicate that

the exclusive remedy for an overbroad invention assignment clause is reformation

of the agreement, not a cause of action for unlawful restraint of trade. RCW

49.44.140(1) provides:

A provision in an employment agreement which provides that an

employee shall assign or offer to assign any of the employee's rights

in an invention to the employer does not apply to an invention for

which no equipment, supplies, facilities, or trade secret information

of the employer was used and which was developed entirely on the

employee's own time, unless (a) the invention relates (i) directly to

the business of the employer, or (ii) to the employer's actual or

demonstrably anticipated research or development, or (b) the

invention results from any work performed by the employee for the

employer. Any provision which purports to apply to such an invention

is to that extent against the public policy of this state and is to that

extent void and unenforceable (Emphasis added).

The trial court found Citrix’s Invention Assignment Clause did not comply with this

statutory provision, and concluded that the remedy for this violation was “to strike

the offending language and amend the language to conform to the requirements

of the statute.”

The trial court’s ruling followed the Supreme Court’s decision in Waterjet

Tech., Inc. v. Flow Int’l. Corp., 140 Wn.2d 313, 321-22, 996 P.2d 598 (2000). In

that case, an employee sought to invalidate an employment agreement based on

the employer’s violation of RCW 49.44.140(3), the provision requiring the employer

- 26 -

No. 79143-5-I/27

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

to give notice to the employees of their rights under the statute. Id. at 315. The

Supreme Court rejected the employee’s argument that the agreement was void in

its entirety. Id. at 322. It held that the overreaching portions of the agreement

should be stricken as against public policy but the remaining portions of the

agreement could still be enforced. Id. Khalid obtained the relief the legislature

provided—a reformation of the offending provision in the Employment Agreement.

The trial court did not err in dismissing Khalid’s restraint of trade claim under

RCW 19.86.030.

2. Dismissal of Khalid’s Request for Punitive Damages

Khalid next argues the trial court erred in dismissing his request for punitive

damages under Fla. Stat. Ann. § 768.72 for his claims of breach of contract and

breach of the implied covenant of good faith and fair dealing. Both parties agree

Florida law governs this issue.

A trial court’s summary judgment ruling interpreting a statute of another

state presents a question of law, reviewed by this court de novo. Osborn v. Mason

County, 157 Wn.2d 18, 22, 134 P.3d 197 (2006) (summary judgment legal rulings

reviewed de novo); Anthis v. Copland, 173 Wn.2d 752, 755, 270 P.3d 574 (2012)

(construction of statute is question of law reviewed de novo); Byrne v. Cooper, 11

Wn. App. 549, 554, 523 P.2d 1216 (1974) (substance of foreign law is issue of law

reviewed de novo). See also RCW 5.24.030 (determination of the laws of another

state is be determined by court and is subject to appellate review).

- 27 -

No. 79143-5-I/28

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

Title XLV of the Florida Statutes, entitled “Torts,” includes a provision in

chapter 768, entitled “Negligence,” allowing the recovery of punitive damages for

certain claims:

(2) A defendant may be held liable for punitive damages only if the

trier of fact, based on clear and convincing evidence, finds that the

defendant was personally guilty of intentional misconduct or gross

negligence. As used in this section, the term:

(a) “Intentional misconduct” means that the defendant had actual

knowledge of the wrongfulness of the conduct and the high

probability that injury or damage to the claimant would result and,

despite that knowledge, intentionally pursued that course of conduct,

resulting in injury or damage.

(b) “Gross negligence” means that the defendant’s conduct was so

reckless or wanting in care that it constituted a conscious disregard

or indifference to the life, safety, or rights of persons exposed to such

conduct.

Fla. Stat. Ann. § 768.72(2). This statutory provision is explicitly limited to claims

that arise in tort. Punitive damages for breach of contract are barred by Florida

law. John Brown Automation, Inc. v. Nobles, 537 So. 2d 614, 617 (Fla. Dist. Ct.

App. 1988). If a party pleads and proves a separate and independent tort, that tort

would support a claim for punitive damages. Id.

The trial court relied on John Brown to support the dismissal of Khalid’s

punitive damage claim. In John Brown, the Florida Supreme Court considered

whether punitive damages were available to a company claiming a supplier

committed negligent misrepresentation during the performance of its supply

contract. Id. at 616-17. The court vacated the punitive damage award because it

determined that the company’s misrepresentation claims were “inherent in and

extricable from the events constituting the breach of the contract.” Id. at 617-18.

- 28 -

No. 79143-5-I/29

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

And without “some conduct resulting in personal injury or property damage, there

can be no independent tort flowing from a contractual breach which would justify

a tort claim solely for economic losses.” Id. at 617 (quoting AFM Corp. v. S. Bell

Tel. & Tel. Co., 515 So. 2d 180, 181-82 (Fla. 1987)). John Brown supports the trial

court’s legal ruling.

Ghodrati v. Miami Paneling Corp., 770 So. 2d 181 (Fla. Dist. Ct. App. 2000),

also cited by Citrix, similarly supports the dismissal of Khalid’s punitive damages

request. In that case, a buyer of ceiling tiles sued the seller for breach of contract,

fraudulent inducement, deceit and negligent misrepresentation, seeking

compensatory and punitive damages. Id. at 182. The appellate court affirmed the

dismissal of the buyer’s punitive damages claim because she was not entitled to

recover damages in tort that duplicated the damages the court awarded for breach

of contract. Id. at 183. Because the buyer suffered no damages other than the

breach-of-contract damages, she could not rely on the alleged tort claims to

recover punitive damages. Id.

We agree with the trial court that John Brown and Ghodrati preclude

Khalid’s request for punitive damages based on Citrix’s breach of contract. 10

Although the trial court concluded the Invention Assignment Clause violated RCW

49.44.140, it denied Khalid’s request to deem the agreement unconscionable. It

remedied the defect in the Invention Assignment Clause by striking the offending

language and conforming it to the statute. Id. And there was no evidence that

10 Khalid alleged only two independent tort claims: wrongful termination, which he

voluntarily dismissed before trial, and a claim of tortious interference with business expectancy,

which the trial court ruled arose under Washington and not Florida law.

- 29 -

No. 79143-5-I/30

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

Citrix’s endeavors to enforce an invalid provision of the Invention Assignment

Clause caused Khalid any personal injury or property damage under Florida’s

economic loss rule. Although Khalid initially sought damages for “emotional

distress, loss of enjoyment of life, humiliation, personal indignity, embarrassment,

fear, anxiety, and/or anguish,” he voluntarily dismissed that claim in January 2018,

and the parties agreed no evidence of any personal injury damages would be

presented at trial. The only damages Khalid sought at trial were economic losses

and he recovered $3 million in compensatory damages for the breach of contract.

Thus, any loss he may have sustained has been fully compensated.

Khalid’s reliance on Adams v. Whitfield, 290 So. 2d 49 (Fla. 1974) and

Griffith v. Shamrock Vill., Inc., 94 So. 2d 854 (Fla. 1957) is misplaced. In Adams,

a petitioner prevailed on a claim of malicious prosecution. 290 So. 2d at 50-51.

The sole issue on appeal was whether there was sufficient evidence of actual

malice to support a punitive damage award. Id. The Florida Supreme Court held

that an award of punitive damages only required proof of “legal malice,” not actual

malice. Id. at 51. Legal malice, it concluded, can be inferred from gross negligence

indicating a wanton disregard for the rights of others. Id. The court noted that “this

is true whether the cause of action is for malicious prosecution, for some other tort,

or for a breach of contract.” Id. But the statement relating to contract claims is

clearly dicta as the case did not involve any allegation of a breach of contract.

In Griffith, a tenant sued his landlord for gross negligence in failing to deliver

a telephone message from his brother that the location of the brother’s wedding

had changed, resulting in the tenant—the best man—missing the wedding. Id. at

- 30 -

No. 79143-5-I/31

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

855. On appeal, the tenant contended the trial court should have allowed him to

pursue punitive damages against the landlord. Id. at 857. In concluding that the

evidence supported a punitive damage request, the court noted that the evidence

showed the landlord undertook to accept telephone calls and messages for its

tenants, thereby assuming a duty to the tenant. Id. at 857-88. But “[t]he complaint

on which this case was tried sounds in tort, not in contract.” Id. at 858. And it

further noted that while punitive damages are not recoverable for breach of

contract,

[w]here the acts constituting a breach of contract also amount to a

cause of action in tort there may be a recovery of exemplary

damages upon proper allegations and proof. In order to permit a

recovery, however, the breach must be attended by some intentional

wrong, insult, abuse or gross negligence which amounts to an

independent tort.

Id. at 858. Because the evidence of the landlord’s gross negligence was sufficient

to demonstrate “an entire want of care,” the court held that the jury should have

been allowed to determine whether a punitive damages award was warranted. Id.

at 858.

John Brown is consistent with Griffith. Even if the parties are in a contractual

relationship, if a party pleads and proves the other party engaged in tortious

conduct, punitive damages may be awarded for that tortious conduct. Unlike the

plaintiff in Griffith, Khalid had no underlying tort-based claims arising under Florida

law and he did not prove that any tortious conduct occurred. 11 Because Khalid did

11 As Citrix correctly points out, the other cases on which Khalid relies all involved

independent tort claims. See Aero Int’l Corp. v. Florida Nat’l Bank, 437 So. 2d 156 (Fla. Dist. Ct.

App. 1983) (airplane repair company sued bank for breach of fiduciary duty for failing to pay client

interest owed to client under escrow agreement); Hogan v. Provident Life & Acc. Ins. Co., 665 F.

Supp. 2d 1273, 1279, 1289 (M.D. Fla. 2009) (insured pleaded sufficient facts on claims for breach

- 31 -

No. 79143-5-I/32

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

not prove Citrix engaged in any tortious conduct under Florida law, prevailed only

on contract-based claims, and sustained neither personal injuries nor property

damage, Khalid was not entitled to recover punitive damages. The trial court did

not err in dismissing this claim.

3. Khalid’s Challenge to Jury Instruction No. 31

Khalid contends that Jury Instruction 31 incorrectly stated Florida law on his

claim of breach of the implied covenant of good faith and fair dealing. Jury

Instruction 31 read:

To establish that Citrix breached the implied covenant of good faith

and fair dealing, Khalid must show that Citrix failed to comply with

contractual responsibilities through a conscious and deliberate act,

and not by an honest mistake, bad judgment, or negligence.

Khalid argues that an instruction requiring him to prove that Citrix acted

“consciously and deliberately and not through an honest mistake, bad judgment or

negligence,” imposed a higher standard than is warranted under Florida law. We

disagree.

Appellate courts review jury instructions to determine whether they properly

informed the jury of the applicable law, whether they were misleading, and whether

they allowed each party to argue their theory of the case. Spivey v. City of

Bellevue, 187 Wn.2d 716, 738, 389 P.3d 504 (2017). We review a trial court’s

of fiduciary duty, aiding and abetting breach of fiduciary duty, fraud, and negligence, to withstand

insurers’ Fed. R. Civ. P. 12(b)(6) motion to dismiss claim for punitive damages under Fla. Stat.

Ann. §768.72); Massey-Ferguson, Inc. v. Santa Rosa Tractor Co., 415 So. 2d 865, 866-67 (Fla.

Dist. Ct. App. 1982) (dealer action against manufacturer for trespass and tortious interference with

business; evidence supported punitive damage award for unlawful and unreasonable seizure of

collateral); Gregg v. U.S. Indus., Inc., 887 F.2d 1462, 1476 (11th Cir. 1989): seller of corporation

sued buyer for fraud and tortious interference with business relationships; punitive damages award

affirmed because evidence supported jury finding of tortious interference).

- 32 -

No. 79143-5-I/33

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

decision to give a jury instruction de novo when based on a matter of law.

Hendrickson v. Moses Lake School Dist., 192 Wn.2d 269, 274, 428 P.3d 1197

(2018).

Khalid first argues the trial court erred in giving an instruction not included

in Florida’s standard jury instructions. Florida, like Washington, publishes a set of

pattern jury instructions. In re Standard Jury Instructions in Contract & Bus. Cases,

2018 Report, 260 So. 3d 87 (Fla. 2018). The trial court provided the jury with a

modified version of Standard Instruction 416.24, entitled “Breach of Implied

Covenant of Good Faith and Fair Dealing,” for each of Khalid’s implied covenant

claims. 12

Although the trial court added Jury Instruction 31 at Citrix’s request, there is

no basis for contending that supplementing Florida’s standard instructions is

erroneous. The Florida Supreme Court has indicated that trial courts may add

instructions not included in its standard set. When it adopted the latest version of

the standard contract instructions, it reminded “all interested parties that this

12 Florida’s Standard Instruction 416.24 provides:

An implied covenant of good faith and fair dealing exists in all contracts. (Claimant)

contends that (defendant) violated the implied covenant of good faith and fair dealing in

the contract in this case. To establish this claim, (claimant) must prove all of the following:

1. (Claimant) and (defendant) entered into a contract;

2. (Claimant) did all, or substantially all, of the significant things that the contract

required [him] [her] [it] to do [or that [he] [she] [it] was excused from having to do those

things];

3. All conditions required for (defendant’s) performance had occurred;

4. (Defendant’s) conduct was not consistent with (parties’) reasonable expectations

under [identify specific provision(s) of the contract]; and

5. (Claimant) was damaged by (defendant’s) conduct.

Florida Standard Jury Instructions, Contract & Business Instructions,

https://jury.flcourts.org/contract-business-cases-4/contract-business-cases-instructions (last

visited Nov. 5, 2020).

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No. 79143-5-I/34

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

authorization forecloses neither requesting additional or alternative instructions ....”

In re Standard Jury Instructions in Contract & Bus. Cases-2018 Report, 260 So.

3d at 88.

As long as Jury Instruction 31 clearly and accurately stated the applicable

law, the trial court did not err in including an instruction that is not included in

Florida’s standard contract instructions.

Khalid next contends Jury Instruction 31 is not an accurate statement of

Florida law. Florida courts recognize an implied covenant of good faith and fair

dealing in every contract. County of Brevard v. Miorelli Eng’g, Inc., 703 So. 2d

1049, 1050 (Fla. 1997); Snow v. Ruden, McClosky, Smith, Schuster & Russell,

P.A., 896 So. 2d 787, 791 (Fla. Dist. Ct. App. 2005). The rights conferred by the

implied covenant of good faith and fair dealing, however, are limited. QBE Ins.

Corp. v. Chalfonte Condo. Apt. Ass’n, Inc., 94 So. 3d 541, 548 (Fla. 2012). An

action for such a breach cannot be maintained in the absence of a breach of an

express contract provision. Hosp.l Corp. of Am. v. Florida Med. Ctr., Inc., 710 So.

2d 573, 575 (Fla. Dist. Ct. App. 1998); Snow, 896 So. 2d at 792. The “duty of good

faith performance does not exist until a plaintiff can establish a term of the contract

the other party was obligated to perform and did not.” 896 So. 2d at 792 (quoting

Avatar Dev. Corp. v. De Pani Constr., Inc., 834 So. 2d 873, 976 (Fla. Dist. Ct. App.

2002)).

Under Florida law, the implied covenant has been described as serving

merely as a “gap-filling default rule.” Publix Super Markets, Inc. v. Wilder Corp. of

Delaware, 876 So. 2d 652, 654 (Fla. Dist. Ct. App. 2004). The claim is usually

- 34 -

No. 79143-5-I/35

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

raised when a question is not resolved by the terms of the contract or when one

party has the power to make a discretionary decision without defined standards.

Publix, 876 So. 2d at 654. A claim for breach of the implied covenant of good faith

may be dismissed as redundant if based on the same allegations as those

underlying the breach of contract claim. Alvarez v. Royal Carribean Cruises, Ltd.,

905 F. Supp. 2d 1334, 1341 (S.D. Fla. 2012).

The trial court based Jury Instruction 31 on Tiara Condo. Ass’n, Inc. v. Mash

& McLennan Cos., Inc., 607 F.3d 742 (11th Cir. 2010). In that case, a

condominium homeowners association sued their insurance broker for failing to

procure adequate insurance after the condominium tower suffered extensive wind

damage in two hurricanes in 2004. Id. at 745. The Eleventh Circuit Court of

Appeals held:

Under Florida law, a party breaches [the implied covenant of good

faith and fair dealing] by “a failure or refusal to discharge contractual

responsibilities, prompted not by an honest mistake, bad judgment,

or negligence; but, rather by a conscious and deliberate act, which

unfairly frustrates the agreed common purpose and disappoints the

reasonable expectations of the other party.”

Id. at 747 (quoting Shibata v. Lim, 133 F. Supp. 2d 1311, 1319 (M.D. Fla. 2000)).

Instruction 31 is an accurate statement of Florida law as set out in Tiara and the

case on which it relied, Shibata.

Khalid contends Tiara and Shibata are based on a misunderstanding of

Florida law. He argues that under Cox v. CSX Intermodal, Inc., 732 So. 2d 1092

(Fla. Dist. Ct. App. 1999), conduct may violate an implied covenant of good faith

and fair dealing if it is found to be merely “arbitrary” or “unreasonable.” While the

- 35 -

No. 79143-5-I/36

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

“arbitrary” or “unreasonable” test may apply to certain types of implied covenant

claims, the trial court correctly determined that it is inapplicable here.

In Cox, the court was interpreting written contracts that were silent on the

methodology or standard a rail transport company was to use in exercising its

contractual discretion to assign loads for transport. 732 So. 2d at 1098. The Cox

court held that when a contract grants discretion to one party “to promote that

party’s self-interest, the duty to act in good faith . . . limits that party’s ability to act

capriciously to contravene the reasonable contractual expectations of the other

party.” Id. at 1097-98. This “discretion” concept, however, applies only where

there is an express contractual duty or obligation over which one party has sole

discretion. Meruelo v. Mark Andrew of Palm Beaches, Ltd., 12 So. 3d 247, 251

(Fla. Dist. Ct. App. 2009). See also Speedway SuperAmerica, LLC v. Tropic

Enterprises, Inc., 966 So. 2d 1, 3-5 (Fla. Dist. Ct. App. 2007) (when contract

contains no provision detailing when landlord may withhold consent to an

assignment, court will imply a covenant of good faith to limit landlord’s ability to act

capriciously); Overseas Inv. Grp. v. Wall Street Electronica, Inc., 181 So. 3d 1288,

1291 (Fla. Dist. Ct. App. 2016) (customer agreement lacked defined standards for

exercise of discretion in liquidating brokerage account; implied covenant filled that

gap).

Khalid’s implied covenant claim was not based on the contention that Citrix

had the sole contractual discretion to take some action and exercised that

discretion arbitrarily or unreasonably. In his closing argument to the jury, Khalid

maintained that Citrix violated an implied covenant of good faith and fair dealing in

- 36 -

No. 79143-5-I/37

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

the Employment and Severance Agreements by refusing, after his termination, to

acknowledge that Khalid had explicitly excluded his security software and mini-

cloud inventions from the scope of the Inventions Assignment Clause. Because

Khalid’s claim was not premised on an express contractual provision granting Citrix

the sole discretion to take some action, the “arbitrary” or “unreasonable” standard

from Cox does not apply.

The Shibata court recognized a second circumstance in which Florida

courts have implied a covenant of good faith and fair dealing – when a contract is

ambiguous about the permissibility of one party’s conduct. 133 F. Supp. 2d at

1318. Shibata and Tiara are not the only cases setting out this legal standard. A

plethora of federal courts, applying Florida law, have held that a plaintiff must prove

that the defendant’s conduct was “prompted not by an honest mistake, bad

judgment or negligence, but, rather by a conscious and deliberate act, which

unfairly frustrates the agreed common purpose and disappoints the reasonable

expectations of the other party.” Resnick v. AvMed, Inc., 693 F.3d 1317, 1329

(11th Cir. 2012); Doe v. Lynn University, 235 F. Supp. 3d 1336, 1343 (S.D. Fla.

2017); JDI Holdings, LLC v. Jet Management, Inc., 732 F. Supp. 2d 1205, 1226

(N.D. Fla. 2010); Bookworld Trade, Inc. v. Daughters of St. Paul, Inc., 532 F. Supp.

2d 1350, 1359 (M.D. Fla. 2007). See also 11 Fla. Jur. 2d Contracts § 272 (2020)

(recognizing “conscious and deliberate act” standard from Resnick and

Bookworld).

It follows logically from these cases that if a plaintiff and defendant disagree

over a defendant’s obligations under the terms of an ambiguous contract, the

- 37 -

No. 79143-5-I/38

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

defendant may be exposed to liability for a breach of a covenant of good faith and

fair dealing only if the plaintiff can prove the defendant was not merely mistaken in

its interpretation of the contract (which would nevertheless constitute a breach of

the agreement) but also deliberately refused to perform with the intent to deny the

plaintiff the benefits he would otherwise be due.

Khalid argues that these federal cases are not authoritative determinations

of state law. But federal courts applying Florida law are required to apply the law

as declared by that state’s Supreme Court, CSX Transp., Inc. v. Trism Specialized

Carriers, Inc., 182 F.3d 788, 790 (11th Cir. 1999), or in the absence of authority on

point, must follow relevant decisions of Florida’s intermediate appellate courts and

attempt to determine state law as they believe the Florida Supreme Court would.

State Farm Fire & Cas. Co. v. Steinberg, 393 F.3d 1226, 1231 (11th Cir. 2004).

And Florida appellate courts have routinely cited federal cases when discussing

state law on the implied covenant of good faith and fair dealing. See Ins. Concepts

& Designs, Inc. v. Health Plan Services, Inc., 785 So. 2d 1232, 1234 (Fla. Dist. Ct.

App. 2001); Snow, 896 So. 2d at 792.

Khalid cites no Florida appellate case rejecting the holding of Shibata, Tiara

and their progeny. We assume that where no such authority is cited, counsel has

searched and found none. State v. Young, 89 Wn.2d 613, 625, 574 P.2d 1171

(1978). The trial court did not err in relying on federal courts’ determinations of

Florida state law.

- 38 -

No. 79143-5-I/39

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

4. Citrix’s Challenge to Jury Instruction No. 35

Citrix argues the trial court erred in instructing the jury that Khalid could

recover lost profits on his breach of contract claim. The trial court gave a jury

instruction on lost profits based on Florida Standard Jury Instruction 504.3.

Instruction 35 read in relevant part:

Mr. Khalid alleges he suffered lost profits as a consequence of Citrix's

breaches of the Employment Agreement and the covenants of good

faith and fair dealing. Lost profits are a type of compensatory

damages. To be entitled to recover lost profits, Mr. Khalid must prove

both of the following:

(1) Citrix's breaches caused Mr. Khalid to lose profits; and

(2) Mr. Khalid can establish the amount of his lost profits with

reasonable certainty.

For Khalid to establish the amount of his lost profits with reasonable

certainty, he must prove that a reasonable person would be satisfied

that the amount of lost profits which he may be entitled to recover is

not simply the result of speculation or guessing. Instead, he must prove

that there is some standard by which the amount of lost profits may be

established. Mr. Khalid does not have to be able to prove that the

amount of lost profits can be calculated with mathematical precision as

long as he has shown there is a reasonable basis for determining the

amount of the loss.

Even though Mr. Khalid's business is not established or does not have

a "track record," he still may be able to establish the amount of lost

profits which they may be entitled to recover if they prove that there is

some standard by which the amount of lost profits may be established.

In its opening brief, Citrix did not contend that Jury Instruction 35 is an incorrect

statement of Florida law. Instead, it maintained that only Xencare, and not Khalid,

could have experienced lost profits because “[t]here is no evidence in this record that

. . . Khalid could lose profits from a company he hadn’t even formed at the time the

[Employment Agreement] was entered into.”

- 39 -

No. 79143-5-I/40

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

As Khalid correctly pointed out in his responsive brief, this argument is a

challenge to the sufficiency of the evidence, not to the language of the instruction

itself. And a defendant waives a challenge to the sufficiency of a plaintiff’s evidence

by presenting evidence in defense of a claim. Hector v. Martin, 51 Wn.2d 707,

709, 321 P.2d 555 (1958); NW Wholesale v. Pac Organic Fruit, LLC, 184 Wn.2d

176, 182-83, 357 P.3d 650 (2015). Citrix did not challenge the sufficiency of the

evidence as to Khalid’s claim of lost profits before it began presenting evidence in

its case in chief and thus waived the issue.

In reply, Citrix argued for the first time that the jury instruction was legally

erroneous, because under Florida law, a plaintiff is required to prove that the loss

was in the “reasonable contemplation” of the parties at the time of the contract. See

Frenz Enterprises v. Port Everglades, 746 So. 2d 498, 504 (Fla. Dist. Ct.

App.1999); see also Hardwick Props., Inc. v. Newbern, 711 So. 2d 35, 40 (Fla.

Dist. Ct. App.1998) (consequential damages “stem from losses incurred by the

non-breaching party in its dealings, often with third parties, which were a proximate

result of the breach, and which were reasonably foreseeable by the breaching

party at the time of contracting.”). It contends Khalid presented no evidence that

Citrix knew or should have known that Khalid could lose profits from a company he

had not formed at the time of the contract. But because this argument was raised

for the first time in a reply brief, it too has been waived. See Cowiche Canyon

Conservancy v. Bosley, 118 Wn.2d 801, 809, 828 P.2d 549 (1992) (“An issue

raised and argued for the first time in a reply brief is too late to warrant

consideration.”).

- 40 -

No. 79143-5-I/41

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

Moreover, Citrix did not adequately preserve its objection to Jury Instruction

35 at trial. CR 51(f) requires a party objecting to a jury instruction to “state distinctly

the matter to which he objects and the grounds of his objection.” Washburn v. City

of Fed. Way, 178 Wn.2d 732, 746, 310 P.3d 1275 (2013). “The pertinent inquiry

on review is whether the exception was sufficient to apprise the trial judge of the

nature and substance of the objection.” Walker v. State, 121 Wn.2d 214, 217, 848

P.2d 721 (1993) (quoting Crossen v. Skagit County, 100 Wn.2d 355, 358, 669 P.2d

1244 (1983)). This court will consider a claimed error only if the appellant raised

the specific issue at trial. Galvan v. Prosser Packers, Inc., 83 Wn.2d 690, 692,

521 P.2d 929 (1974) (noting that consideration of errors in instructions on appeal

“is limited to those issues specifically raised” at trial).

Here, Citrix did not adequately preserve the error as required by CR 51(f).

When the parties discussed jury instructions, Citrix’s argument as to Instruction 35

was limited to one sentence: “We except to 35, lost profits. Considered a type of

damage for breach of contract.” This exception is insufficient to inform the trial

court or counsel that Citrix considered the instruction legally deficient because it

lacked a foreseeability element. A review of the record shows that at no point other

than this did Citrix object to Instruction 35. 13

Citrix also challenges the instruction on the grounds that it instructed the jury

to determine Khalid’s, and not Xencare’s, lost profits. Citrix argues that because

Khalid assigned both patents to Xencare, only Xencare could recover lost profits.

13

In its reply brief, Citrix argues merely that “[i]t is undisputed that the parties discussed

and argued jury instructions at length.”

- 41 -

No. 79143-5-I/42

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

Again, this argument is a challenge to the sufficiency of the evidence, an issue Citrix

waived below. And Citrix did not alert the trial court that an instruction allowing the

jury to award lost profits to Khalid, rather than only to Xencare, was legally

erroneous. Indeed, Citrix itself proposed an instruction which would have

permitted the jury to award lost profits to Khalid. Citrix’s failure to raise this specific

objection below constitutes a waiver of any error. 14 We therefore reject Citrix’s

challenge to Jury Instruction 35.

5. Citrix’s Post-Trial Motion for Judgment as Matter of Law

Citrix argues the trial court erred in denying its CR 50 motion for judgment as

a matter of law on three specific grounds: (1) Khalid’s failure to perform all the

essential terms of his Employment Agreement precluded his claim against Citrix for

breach; (2) Khalid could not establish causation between Citrix’s breach and Khalid’s

damages because Microsoft had a preexisting claim to the same intellectual property;

and (3) the Severance Agreement, if enforceable against Citrix, barred Khalid from

prosecuting a breach of Employment Agreement claim. We conclude Citrix failed to

preserve the first and third arguments. And the trial court did not err in rejecting its

second argument because the evidence, taken in the light most favorable to Khalid,

supports the jury’s verdict in his favor.

CR 50 permits a court to enter judgment as a matter of law if “during a trial

by jury, a party has been fully heard with respect to an issue and there is no legally

14 Citrix cites no authority to support its argument that the sole owner of a corporate entity

cannot recover lost profits arising from the breach of a contract he signed in his individual capacity.

In reply, Citrix cites Grayson v. Nordic Const. Co, Inc., 92 Wn.2d 548, 552, 599 P.2d 1271 (1979), for

the unremarkable proposition that “[a] corporation exists as an organization distinct from the personality

of its shareholders.” But, as Khalid notes, his expert at trial presented damages reflecting amounts

that could be allocated to Khalid through his ownership interest in his company.

- 42 -

No. 79143-5-I/43

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

sufficient evidentiary basis for a reasonable jury to find or have found for that party

with respect to that issue.” CR 50(a)(1).

We conclude Citrix failed to preserve two of the three arguments it raises

here. Citrix did not seek judgment as a matter of law on the ground that Khalid

failed to perform his obligations under the Employment Agreement or on the

ground that the Severance Agreement contained a release of claims before the

case was submitted to the jury. “A motion for judgment as a matter of law may be

made at any time before submission of the case to the jury.” CR 50(a)(2)

(emphasis added). CR 50(a) “makes clear that a party must move for judgment

as a matter of law before the trial court submits the case to the jury to preserve

any opportunity to renew its motion after the case is submitted.” Hanks v. Grace,

167 Wn. App. 542, 552-53, 273 P.3d 1029 (2012). See also Millies v. LandAmerica

Transnation, 185 Wn.2d 302, 315, 372 P.3d 111 (2016) (a party is required to

move for judgment as a matter of law before the case is submitted to the jury to

preserve any opportunity to renew the motion after the verdict). CR 50(b) allows

a party to renew a request for judgment as a matter of law by filing a motion within

10 days of judgment but it does not allow a party to raise such arguments for the

first time at that stage of the proceedings.

Here, following the close of Khalid’s case in chief, Citrix orally moved for

judgment as a matter of law on only four grounds: (1) the Severance Agreement

payment was not “wages” under Washington’s wage law; (2) Microsoft’s ownership

claim to Khalid’s inventions prevented Khalid from establishing causation between

Citrix’s actions and his claimed damages; (3) Citrix did not breach the Severance

- 43 -

No. 79143-5-I/44

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

Agreement because Khalid had revoked it; and (4) Khalid failed to prove a CPA

violation. The trial court reserved ruling on the wage claim and denied the remainder

of Citrix’s motion.

After the jury rendered its verdict, Citrix renewed its motion, reiterating the four

arguments it made before it began its case in chief, and raising three new arguments:

(1) any lost profits awarded to Khalid must be disgorged and paid to Citrix for his

trademark infringement; (2) the Severance Agreement release barred Khalid’s claim

for breach of the Employment Agreement; and (3) lost profit damages are not proper

damages for breach of the Employment Agreement. The trial court denied Citrix’s

motion.

Citrix never sought judgment as a matter of law based on the argument that

Khalid had failed to perform all the essential terms of his Employment Agreement.

Nor did it argue, before the case went to the jury, that the Severance Agreement

barred Khalid from prosecuting his contract claim. While it raised the Severance

Agreement release post-verdict, this was insufficient to preserve the error under CR

50. Citrix did not preserve these claims for appeal.

Citing Morningstar v. Worthy, 454 F. App’x. 391, 398-99 (6th Cir. 2011),

Citrix argues that an “almost fleeting” reference to the issues should suffice to

preserve them for appeal. But the trial court in Morningstar entered a finding of

fact that the defendant had raised testimonial immunity as a basis for judgment as

a matter of law before the claim for malicious prosecution was submitted to the

jury. Id. at 398. The reference was, as the trial court described it, “almost fleeting,”

but it was sufficient to preserve the defense for the officer’s post-verdict CR 50(b)

- 44 -

No. 79143-5-I/45

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

motion. Id. The Sixth Circuit held that the trial court’s finding that the defense was

raised prior to the verdict was not an abuse of discretion, and “preservation for

appellate purposes is not at issue here.” Id.

Unlike Morningstar, we have no finding by the trial court that Citrix’s counsel

made any pre-verdict reference, let alone a “fleeting” one, to the argument that

Khalid could not, as a matter of law, prove Citrix breached the Employment

Agreement because Khalid breached it first. Nor did the trial court find that Citrix

argued, pre-verdict, that the release in the Severance Agreement barred Khalid’s

claim for breach of the Employment Agreement. Although Citrix sought the dismissal

of both contract-based claims, it did so on completely different grounds.

As to Citrix’s second claim regarding the causal link between Citrix’s claim

of ownership to Khalid’s patents and Khalid’s lost profits, the trial court did not err in

rejecting this argument. A motion for judgment as a matter of law admits the truth

of the evidence of the nonmoving party and all inferences that reasonably can be

drawn from that evidence. Ramey v. Knorr, 130 Wn. App. 672, 675-76, 124 P.3d

314 (2005). The trial court may grant such a motion only if there is no legally

sufficient evidentiary basis for a reasonable fact finder to find for the nonmoving

party with respect to that issue. CR 50(a)(1). We review orders denying judgment

as a matter of law de novo. Leren v. Kaiser Gypsum Co., 9 Wn. App. 2d 55, 70, 442

P.3d 273 (2019), as amended on denial of reconsideration (Aug. 8, 2019), review

denied sub nom. Leren v. Elementis Chemicals, Inc., 194 Wn.2d 1017, 455 P.3d

133 (2020).

- 45 -

No. 79143-5-I/46

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

Citrix argues that because Microsoft also claimed an ownership interest in the

‘219 and ‘637 Patents, Khalid could not prove his losses were caused by Citrix’s

assertion of ownership to the same inventions. But Citrix’s argument ignores the

applicable standard for reviewing the evidence at trial. When viewed in the light most

favorable to Khalid, there was more than sufficient evidence of causation to submit

Khalid’s contract claims to the jury.

Citrix presented evidence that when Khalid joined Microsoft in 1998, he signed

an employment agreement containing an invention assignment clause. Khalid

admitted he did not carve out, from the scope of this clause, any preexisting

inventions. After Khalid left Microsoft in 2006 to join Citrix, Khalid received an email

from an intellectual property attorney at Microsoft, asserting that Microsoft owned

Khalid’s patents and inventions. The email stated as follows:

I’m disappointed to now hear that you not only filed one, but several,

independent patent applications during your employment with

Microsoft. With respect to each of those inventions, unless you can

prove each of the exclusion criteria set forth in paragraph 4 of your

Employment Agreement, you have a legal obligation to assign your

ownership to Microsoft.

The email demanded that Khalid prove that his inventions qualified as excluded

subject matter, and informed him that if he refused to cooperate, “Microsoft is the

rightful owner of the inventions and applications.”

But we must accept as true Khalid’s testimony that he began developing the

mini-cloud system before he began working for Microsoft. No one from Microsoft

ever followed up with him about this invention, and Khalid did not believe at the

time that Microsoft actually planned to assert ownership of the invention. And

- 46 -

No. 79143-5-I/47

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

Khalid had subsequent conversations with Microsoft that led him to believe

Microsoft did not have any interest in the market sector of his developments.

Khalid’s damage claim against Citrix was based on lost profits between

November 2011 and December 2016. We again must accept as true Khalid’s

testimony that Microsoft’s 2006 email did not lead him to lose investors because by

the time he left Citrix in 2011, Microsoft had taken no action on any claim of ownership

and he felt no need to disclose the email to any prospective investors.

Although Citrix also presented evidence that when Khalid was rehired by

Microsoft in December 2011, he signed another invention assignment agreement

with that company, and that when Khalid was terminated by Microsoft in 2015,

Microsoft again claimed to own Khalid’s intellectual property. Khalid testified he

had done the vast majority of the development work on the mini-cloud invention in

2008, after leaving Microsoft. He disclosed to Citrix in the Employment Agreement

that he had offered his intellectual property to Microsoft but he later learned his

prior employer had no interest in it. And the Softlock antivirus software was not a

part of any work he had done at Microsoft. Finally, when Khalid was rehired by

Microsoft in 2011, he explicitly disclosed to Microsoft a complete list of his personal

inventions, including both the antivirus software and the mini-cloud invention. This

evidence, if accepted as true, is sufficient to undermine Citrix’s causation

argument.

Citrix next contends that Mina, who offered to purchase 50,000 copies of the

Softlock antivirus software in 2011, provided Khalid a letter in 2015 in which he stated

that Microsoft’s alleged interest in Khalid’s inventions interfered with his decision to

- 47 -

No. 79143-5-I/48

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

invest. Mina indeed acknowledged that in 2015, he undertook business discussions

with Khalid but “decided not to proceed with our investment commitment” after

learning about Microsoft’s claim of ownership to one of Khalid’s patents. But Khalid

contends Mina’s testimony related to a completely different business venture “built

around an IP portfolio, not to Xencare in 2011 which would have been built around a

product.” The record supports Khalid’s characterization of Mina’s testimony:

Q: .... Going down to the bottom paragraph, Mr. Khalid tells you why

he needs the letter, correct, Mr. Mina? He needs it because he’s

meeting with an IP . . . He’s meeting with an IP lawyer due to Microsoft

IP issue. And he says, “I have your email that we discussed around

$350,000 investment in IP that didn’t materialize because of Microsoft,”

right? That’s what he was asking you to write about. You would have

also invested $350,000, but Microsoft interfered with your decision,

correct?

A. It was meant for a different venture called IP portfolio, rather than

product; you go with IP portfolio.

Q. Understood. A different business venture. But whatever it was,

according to Mr. Khalid and the letter you wrote, you didn’t follow

through on that because of Microsoft, not because of Citrix, right?

A. We were interested in IP portfolio. . . . I don’t know if Citrix side was

involved or not.

Khalid also presented evidence that Microsoft subsequently offered to relinquish

any ownership interest in his ‘637 Patent in exchange for a licensing arrangement.

In closing, Khalid argued if Microsoft had asserted any ownership interest in 2011,

he could have negotiated a similar arrangement with Microsoft at the time. 15

The jury was instructed, pursuant to Florida Standard Instructions for

Contracts and Business Instruction 504.2(a), that in order for Khalid to recover

15 The record also suggests the jury’s damage award related to anticipated Softlock

software license sales to Mina at Pragma and Microsoft had not asserted a claim to that antivirus

software.

- 48 -

No. 79143-5-I/49

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

damages for any breach, the damages must have been those that “naturally result

from such breaches.” See Lucas Truck Serv. Co. v. Hargrove, 443 So. 2d 260, 263

(Fla. Dist. Ct. App. 1983) (“In order that a party may recover profits lost by reason of

a breach of contract, the loss must be the natural and proximate result of the breach,

whether as an ordinary consequence thereof, or as a consequence which may, under

the circumstances, be presumed to have been in the contemplation of the parties at

the time they made the contract.”).

Citrix argued to the jury that Microsoft’s assertion of ownership broke the

causal change between Citrix’s actions and Khalid’s damages:

And if Microsoft's assertion of an ownership interest here is

material to an investor, if his argument is that Citrix's assertion of

ownership is material to an investor, Citrix could not have caused

any damage here.

He's already in trouble because he knows that Microsoft is

asserting ownership. He can't pick and choose which companies

assertion of interest is material to an investor. They both are. And if

he is claiming we caused harm, and we prevented him from getting

startup money because we asserted an ownership interest, that's not

right. There is something else that happened first, and that's this at

Microsoft. And you know from Exhibit B that he full well knows it. No

matter how many times on the stand he said it, Microsoft had no

interest. Exhibit B says it all. It's right there.

The jury obviously rejected this causation argument.

Viewing the evidence in the light most favorable to Khalid, a jury could have

found that Khalid’s investors did not know about Microsoft’s 2006 assertion of

ownership, and therefore it could not have interrupted the chain of causation when

Citrix made its unlawful demands to Khalid’s patents in 2011. And it could have also

found that any investment Mina chose not to make in 2015 was related to a different

business venture he was discussing with Khalid and not related to his decision not to

- 49 -

No. 79143-5-I/50

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

purchase Softlock software licenses between 2011 and 2015. For this reason, the

trial court did not err in denying Citrix’s motion for judgment as a matter of law.

6. Khalid’s Request for Declaratory Judgment of Citrix’s Ownership Rights

Citrix next challenges the trial court’s determination that Citrix holds no

ownership interest in the ‘219 or ‘637 Patents. Because the trial court’s declaratory

judgment is based on the jury’s verdict, and that verdict is supported by the evidence,

we find no error in the entry of the declaratory judgment in favor of Khalid.

In a post-trial motion, Khalid sought declaratory relief that Citrix had no

ownership interest in the ‘219 or ‘637 Patents. Prior to trial, Citrix in turn sought

declaratory relief that it owned the patents and that Khalid did not. The trial court

concluded that “[t]he jury’s rejection of [Citrix’s] breach of contract claim and its

decision in favor of Plaintiff Khalid on his breach of contract claim requires the

conclusion that Defendant Citrix did not gain ownership of Plaintiffs’ intellectual

property through the Agreement. Defendant had no other basis for claiming

ownership of the intellectual property.” It granted Khalid his requested declaratory

relief, “declar[ing] that Citrix has no ownership or other rights to or arising under US

Patent No. 8,286,219 and 8,782,637.”

In reviewing a declaratory judgment, we review whether the trial court's

findings of fact are supported by substantial evidence and, if so, whether the

findings support the trial court's conclusions of law. Sunnyside Valley Irrig. Dist. v.

Dickie, 149 Wn.2d 873, 879–80, 73 P.3d 369 (2003). Unchallenged findings of

fact are verities on appeal. Buck Mountain Owners' Ass'n v. Prestwich, 174 Wn.

App. 702, 714, 308 P.3d 644 (2013).

- 50 -

No. 79143-5-I/51

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

Citrix first contends the trial court erred in refusing to hold a subsequent

evidentiary hearing on the ownership issue. Citrix argues it “was entitled to a full

equitable proceeding in which evidence and briefing specific to ownership could

be presented.” But it provides no authority for this proposition. Nor is there any

merit to Citrix’s argument that the trial court erred in relying on the jury verdict,

“effectively converting a bench issue into a jury issue.” Generally, a trial court may

not substitute its judgment for the jury’s and in a case in which legal claims are tried

to a jury and equitable claims are tried by a judge, the judge will follow the jury’s

factual determinations unless several different theories support the jury verdict.

Spencer v. Badgley Mullins Turner, PLLC, 6 Wn. App. 2d 762, 797, 432 P.3d 821

(2018), citing Teutscher v. Woodson, 835 F.3d 936, 944 (9th Cir. 2016) and L.A.

Police Protective League v. Gates, 995 F.2d 1469, 1473 (9th Cir. 1993).

In this case, Khalid maintained throughout trial that he owned the patents and

the intellectual property contained in the patents because he conceived of the

inventions before he began working for Citrix and he developed them on his own

time, using his own resources. He testified none of the work he did to develop the

‘219 or ‘637 Patent was related in any way to any assignments he had while at Citrix

or related to any products it had under development. He presented evidence that

when he showed his inventions to Citrix, he indicated the ideas were his own

independent work, and that he was approaching Citrix merely to entice the company

to invest in his startup company. But the company rebuffed him and indicated it had

no interest whatsoever in what he had developed. Khalid’s testimony in this regard

- 51 -

No. 79143-5-I/52

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

was corroborated by the testimony of his former supervisor, Sirjani, as well as Citrix

managerial employees, Duursma, Pedersen, and DeForeest.

Khalid’s breach of contract claim was based on one single theory: “[t]he jury

will be asked to decide whether Citrix breached its Employment Agreement with Mr.

Khalid by claiming ownership to and demanding assignment of the inventions

protected by the Employment Agreement . . . .” Jury Instruction 15 required Khalid

to prove that “Citrix failed to do something essential which the contract required it to

do or did something which the contract prohibited it from doing and that prohibition

was essential to the contract.” In closing, Khalid made his theory – and the only theory

– clear:

Citrix failed to do something essential, which the contract required it to

do or did something which the contract prohibited it from doing, and

that [the] prohibition was essential to the contract. And so, ladies and

gentlemen, what that means in the context of [the Employment

Agreement] is did Citrix do something that it was prohibited from doing.

That’s the question you have to answer to consider element four. And

what Citrix was prohibited from doing, according to Ms. Ponikiewicz,

was making a claim to intellectual property that had been disclosed on

Exhibit B. By doing that, by telling Khalid at the time that he was

terminated that it owned his intellectual property, and then threatening

to sue him, Citrix breached this contract. It failed to do something it

was prohibited from doing.

The jury found that Citrix breached the Employment Agreement. Given the

sole theory under which Khalid proceeded at trial, the trial court properly concluded

the jury’s verdict was based on its finding that Citrix had claimed ownership to

intellectual property it did not own. Under Spencer, the trial court did not abuse its

discretion in concluding that the jury verdict resolved the question of Citrix’s claimed

ownership interest in Khalid’s inventions.

- 52 -

No. 79143-5-I/53

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

Citrix next argues that the trial court failed to recognize that it “had an

ownership claim to the patents under common law theories that arise from the fact

that Khalid, was ‘hired to invent’ and intellectual property was an integral part of his

work assignment.” But the trial court found that Citrix “claimed ownership interest of

the patents at issue in this litigation on the basis of [the Employment] Agreement and

asserted no other grounds for claiming ownership.” Citrix has not assigned error to

this factual finding.

Moreover, Citrix fails to provide this court with any support for the proposition

that an employer may assert, by common law, an ownership interest in its employee’s

intellectual property when the parties’ rights are clearly governed by a written

invention agreement. Citrix claims it has “shop rights” to Kahlid’s inventions, citing to

Wellington Print Works, Inc. v. Magid, 242 F. Supp. 614, 617 (E.D. Pa. 1965). That

case involved a textile engineer who used the company’s time, resources and

personnel to develop new techniques. Unlike this case, there was no agreement,

either express or implied, between the employer and employee under which the

employee was required to assign any inventions to his employer. Id. at 617.

Because the engineer had used company resources to develop the inventions, the

federal court concluded the employer gained a “shop right” to the inventions, giving

it a non-exclusive license to practice the inventions. Id. at 617.

Citrix’s reliance on Wellington is misplaced. Under federal patent law, the

right to an invention belongs to the inventor. Bd. of Trustees of Leland Stanford

Jr. Univ. v. Roche Molecular Sys. Inc., 563 U.S. 776, 785, 131 S. Ct. 2188, 180 L.

Ed. 2d 1 (2011). An employer has no rights to an employee’s invention absent a

- 53 -

No. 79143-5-I/54

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

written agreement to the contrary. Id. Patent law recognizes that an employer

may obtain “shop rights” in an employee’s invention “where it has contributed to

the development of the invention.” Teets v. Chromalloy Gas Turbine Corp., 83

F.3d 403, 407 (Fed. Cir. 1996). But shop rights do not transfer ownership of an

invention from employee to employer. It merely grants to the employer a non-

transferrable, non-exclusive, royalty-free right permitting the employer to use an

invention developed by its employee on the job. Marley Co. v. FE Petro, Inc., 38

F. Supp. 2d 1070, 1083 (S.D. Iowa 1998). And shop rights attach only when there

is no specific contractual provision providing for the assignment of intellectual

property. U.S. v. Dubilier Condenser Corp., 289 U.S. 178, 187-88, 53 S. Ct. 554,

77 L. Ed. 2d 1114 (1933). The common law “shop right” doctrine is superseded

when parties allocate their rights to inventions by contract. Marley, 38 F. Supp. 2d

at 1083; Jamesbury Corp. v. Worcester Valve Co., 443 F.2d 205, 214 (1st Cir.

1971).

In this case, unlike Wellington, there was an express agreement, as amended

to comply with RCW 49.44.140, setting out under what circumstances Citrix would

obtain ownership to Khalid’s inventions. The existence of this invention assignment

agreement supersedes any common law claim of shop rights. The trial court did not

err in relying on the jury’s verdict to conclude that Citrix has no ownership rights to

the ‘219 or ‘637 Patents.

7. Remittitur of the $3 Million Damages Award

Citrix next argues the trial court should have either remitted the $3 million

damage award or granted it a new trial on damages. It contends the verdict is not

- 54 -

No. 79143-5-I/55

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

supported by the evidence and the jury must have erroneously added interest to

the damages award. We disagree.

The determination of the amount of damages is “primarily and peculiarly

within the province of the jury, under proper instructions, and the courts should be

and are reluctant to interfere with the conclusion of a jury when fairly made.”

Bingaman v. Grays Harbor Community Hosp., 103 Wn.2d 831, 835, 699 P.2d 1230

(1985). If a jury’s verdict is tainted by passion or prejudice or is otherwise

excessive, the trial court or the appellate court has the power to reduce the award

or to order a new trial. But there is a strong presumption in favor of a jury’s

determination of damages. Sofie v. Fibreboard Corp., 112 Wn.2d 636, 654, 771

P.2d 711 (1989). “A judge can only reduce a jury’s damages determination when

it is, in light of this strong presumption, wholly unsupported by the evidence,

obviously motivated by passion or prejudice, or shocking to the court’s

conscience.” Id. at 654-55.

We review a trial court’s order denying remittitur or the denial of a motion

for a new trial for abuse of discretion. Bunch v. King County Dep't of Youth Servs.,

155 Wn.2d 165, 176, 116 P.3d 381 (2005); State v. Boyle, 183 Wn. App. 1, 12,

335 P.3d 954 (2014). “A court abuses its discretion when its decision adopts a

view that no reasonable person would take or that is based on untenable grounds

or reasons.” Boyle, 183 Wn. App. at 12-13.

Citrix does not contend the jury’s $3 million award was the result of passion

or prejudice or is so large as to shock the conscience of the court. Instead, it claims

the record does not support this award because no witness testified that $3 million

- 55 -

No. 79143-5-I/56

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

was the proper amount of damages for its breach. While a claimant bears the burden

of proving the amount of damages, this burden does not require mathematical

certainty or precision; there need only be competent evidence in the record to support

the damage award. Fed. Signal Corp. v. Safety Factors, Inc., 125 Wn.2d 413, 443,

886 P.2d 172 (1994).

There is ample evidence in this record to support the jury’s award. Khalid

presented the testimony of two experts regarding the loss of business development

opportunities resulting from Citrix’s assertion of ownership over his intellectual

property. John Forbes, a computer scientist and venture capitalist responsible for

founding several successful startup companies, testified that Softlock, was in “an

advance[d] stage of development,” and Khalid had a commitment from Pragma to

purchase 50,000 licenses to this software. Forbes opined that Citrix’s assertion of

ownership to the intellectual property behind Softlock led Khalid to lose this

business opportunity. He projected that Khalid lost revenue of $35 million based

on Citrix’s claim to the ‘219 and ‘637 Patents.

Lorraine Barrick, a certified forensic accountant specializing in damages

estimates, testified that she valued the lost revenue from the Pragma sale of

50,000 licenses to fall between $1,485,000 and $1,905,381. Barrick further

testified that had Softlock sales continued at a rate of approximately 25,000 per

year, Khalid would have had net sales revenue of $4.24 million over a five-year

period. Barrick testified that Khalid’s combined lost business opportunities for both

the Softlock and mini-cloud inventions between November 2011 and December

- 56 -

No. 79143-5-I/57

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

2016 ranged from $11.9 million and $17.8 million. The jury’s award of $3 million

clearly falls within the range of this evidence.

Citrix argues the jury could only have reached a $3 million award by applying

12 percent prejudgment interest compounded from 2011 to 2018. It notes that

Barrick testified that Khalid’s lost Pragma sales revenue, with 12 percent interest

added in, would total $2,848,821. It suggests the jury erroneously accepted Barrick’s

damages testimony and rounded up to reach the $3 million number. But this

argument is speculative at best. Barrick testified that Khalid’s lost sales of Softlock

would likely have averaged $1,695,191 in the first year and would have reached

$4,237,000 over the first five years. The jury was free to decide that Khalid’s actual

losses were somewhere in between these two numbers. We cannot conclude that

the jury’s award included prejudgment interest.

The trial court did not abuse its discretion in denying Citrix’s motion for

remittitur or in denying its motion for a new trial.

8. Khalid’s Request for Prejudgment Interest on the $3 Million Award

Khalid argues the trial court erred in denying his request for prejudgment

interest on the $3 million jury award for breach of the Employment Agreement. We

agree.

This court reviews a trial court’s order on prejudgment interest for abuse of

discretion. Humphrey Indus., Ltd. V. Clay Street Assocs., 176 Wn.2d 662, 672,

295 P.3d 231 (2013). The court will reverse a trial court’s decision only if it is

manifestly unreasonable, exercised on untenable grounds, or exercised for

untenable reasons. Id. Untenable reasons include errors of law. Id.

- 57 -

No. 79143-5-I/58

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

The parties agree Florida law governs Khalid’s entitlement to prejudgment

interest. In Florida, prejudgment interest is an element of pecuniary damages.

Argonaut Ins. Co. v. May Plumbing Co., 474 So. 2d 212, 214 (Fla. 1985). Once a

jury has reached its verdict, the plaintiff’s damages are deemed liquidated and the

plaintiff is legally entitled to an award of prejudgment interest as long as the date

of loss can be ascertained from the evidence. Arizona Chemical Co. v. Mohawk

Indus., Inc., 197 So. 3d 99, 102-103 (Fla. Dist. Ct. App. 2016). Two prerequisites

are required for an award of prejudgment interest: out-of-pocket pecuniary loss

and a fixed date of that loss. Glover Distributing Co., Inc. v. F.T.D.K., Inc., 816 So.

2d 1207, 1213 (Fla. Dist. Ct. App. 2002). There does not have to be a special

verdict determining the actual date of loss when the loss is established by the

verdict and the pertinent date can be ascertained from the evidence. Pace Prop.

Fin. Authority v. Jones, 24 So. 3d 1271, 1272 (Fla. Dist. Ct. App. 2009).

The trial court denied prejudgment interest, finding that Khalid had not

established a precise date of loss.

Under Florida law, a party seeking an award of prejudgment interest

must conclusively establish a date of pecuniary loss before prejudgment

interest can be awarded. Under these facts, the court cannot ascertain

a date of actual loss for the lost profits of the business. Plaintiff argued

the date of loss was based on the testimony of their expert, Lorraine

Barrick, who testified regarding her methodology and calculated

projected future income using November 1, 2011 as a starting date. The

court cannot anchor a 3 million dollar loss five days after Citrix sent its

letter alerting plaintiff to its claim to the patents. Given the facts

presented, it is simply not logical that the plaintiff would have lost 3

million dollars by that date. The court cannot logically ascertain a

different date. Moreover, the plaintiff did not request the jury to ascertain

a date of loss. Given the facts presented, the court cannot ascertain a

specific date of loss; the request for prejudgment interest is denied for

the $3,000,000 award.

- 58 -

No. 79143-5-I/59

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

Khalid argues the trial court erred in concluding that his date of loss could not be

ascertained from the evidence at trial. He maintains that his date of loss was

November 1, 2011, the date on which he would have been able to market his

inventions but for Citrix’s assertion of ownership to that intellectual property. He

contends Barrick computed Khalid’s lost profits using a standard methodology of

discounting a total, multi-year profit stream to a present day value. Id. He

contends under Arizona Chemical, when there is expert witness testimony

applying this methodology, the date to which the lost profit stream is discounted is

the actual date of loss. Arizona Chemical does not support this argument.

In that case, a carpet manufacturer, Mohawk, sought damages from a resin

manufacturer, Arizona Chemical, after discovering that the resin Arizona Chemical

supplied and Mohawk applied to its carpet backing was failing. Arizona Chemical,

197 So. 2d at 102. Mohawk used the resin for four years before discovering the

defect. Id. at 101. It experienced a spike in warranty claims for several years and,

after discovering the defect, sold some of the remaining carpet at a discount and

discarded the rest. Id. at 102. The brand suffered as a result of the high level of

warranty claims and ultimately Mohawk had to discontinue it. Id. at 101. It sought

expenses incurred in fulfilling customer warranty claims and lost profits due to the

declining sales of the carpet and the ultimate demise of the brand. Id.

After a jury verdict in Mohawk’s favor, the trial court sought to award

Mohawk prejudgment interest from the date of Arizona Chemical’s breach but

could not determine that date it delivered the defective resin to Mohawk. It instead

chose to start interest from the date Mohawk applied the resin to each roll of carpet

- 59 -

No. 79143-5-I/60

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

subject of a warranty claim, discarded or sold at a lower price. Id. at 102. The

Florida appellate court held that “the beginning date for the accrual of prejudgment

interest depends on the timing of the pecuniary loss for which damages have been

awarded.” Id. at 104. It held:

In the instant case, Mohawk sued to recover for losses that occurred

after the date Arizona breached the parties’ contract and its warranty.

Often, Mohawk sustained these losses years later, when it paid

warranty claims on carpet that had been installed for some time

before the defects surfaced. In some cases, Mohawk may have

realized the losses closer to the time of breach, but still later than the

breach, when it made the decision to dispose of carpet without

receiving full price rather than risk warranty claims on it. Under these

circumstances, Mohawk was not entitled to recover prejudgment

interest from the date the defective resin was delivered or applied to

the carpet. Rather, Mohawk was entitled to recover prejudgment

interest from the date it realized each loss in dollars.

Id. at 105. Because the relevant dates for determining when prejudgment interest

began to accrue were the dates Mohawk paid out on warranty claims, sold carpet

at a discount or discarded carpet, the court remanded the case to the trial court to

determine if these dates could be ascertained from the evidence. Id. at 106. It

also stated, however, that “if the dates of Mohawk’s losses cannot be ascertained

with precision, the court should select, as to each loss, the earliest date by which

the evidence shows the loss must have been sustained.” Id.

There is no discussion in Arizona Chemical about when prejudgment

interest accrues on lost profits incurred over a multi-year period or how accrual

should be analyzed when an expert estimates a lost profit stream over several

years. Arizona Chemical does not support Khalid’s argument for prejudgment

interest commencing on November 1, 2011.

- 60 -

No. 79143-5-I/61

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

Nevertheless, Arizona Chemical does support the argument that when

damages accrue at different times, prejudgment interest should be awarded from

the date of each incremental loss. Damages can become fixed on different dates

for purposes of an award of prejudgment interest. Capitol Envt’l Servs., Inc. v.

Earth Tech, Inc., 25 So. 3d 593, 597 (Fla. Dist. Ct. App. 2009). The problem with

this argument, however, is that Khalid presented different damage theories to the

jury and the verdict does not indicate which theory the jury adopted.

Forbes estimated lost revenues of $35 million between 2011 and 2015.

Barrick calculated lost sales to Pragma of between $1.7 million and $4.2 million

between 2011 and 2016. She estimated total lost sales between November 2011

and the end of 2016 to be $15.2 million. It is possible to compute interest on these

lost sales; Barrick provided the court with interest computations associated with

the Pragma sales.

But Barrick also presented evidence as to the diminution in value of Khalid’s

ownership interest in the company he formed to market his inventions of between

$10.8 million and $16 million. The jury’s $3 million award could reflect lost profits

from the anticipated Pragma sale for some portion of the five-year period outlined

by the experts or it could reflect a diminution in value of the company Khalid

formed, or some combination of both. From this record, the trial court was correct

in concluding that it could not ascertain precisely that dates on which Khalid

sustained the losses awarded by the jury.

But the date of loss does not need to be ascertained “with precision.”

Arizona Chemical, 197 So. 3d at 106. Under Florida law, if no other date is

- 61 -

No. 79143-5-I/62

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

discernable from the record, a trial court should award prejudgment interest from

the latest possible date of loss. In Berloni S.p.A. v. Della Casa, LLC, 972 So. 2d

1007 (Fla. Dist. Ct. App. 2008), a supplier of kitchens and bathrooms sued a buyer

for nonpayment. Id. at 1009. A Florida appellate court held that when a contract

dispute relates to the amount of money owing under that contract, the date of loss

for prejudgment interest purposes is the date on which payment becomes due to

the plaintiff and if the plaintiff made no pre-suit demand for payment, that date of

loss should be the date the plaintiff filed its lawsuit. Id. at 1012. Because “the filing

of the complaint unequivocally constituted a demand for payment,” the appellate

court decided prejudgment interest should be calculated from that date. Id. See

also SEB S.A. v. Sunbeam Corp., 148 Fed. Appx. 774, 795 (11th Cir. 2005) (under

Florida law, prejudgment interest can be awarded properly from the latest possible

date of loss); Specialized Transp. of Tampa Bay, Inc. v. Nestle Waters North

America, Inc., 356 Fed. Appx. 221, 231 (11th Cir. 2009) (district court did not abuse

discretion in awarding prejudgment interest as of the latest possible date of loss).

At trial, Khalid presented evidence of damages accruing no later than the

date of Barrick’s December 2016 report. The latest date on which Khalid

presented evidence of loss was the end of December 2016 and the trial court erred

in not awarding prejudgment interest from that date.

Citing Citizens Property Ins. Corp. v. Nunez, 194 So. 3d 1064, 1071 (Fla.

Dist. Ct. App. 2016), Citrix contends that a plaintiff is not entitled to prejudgment

interest when there is no basis for determining a “fixed” date of loss. But Nunez is

distinguishable. In that case, Nunez experienced a sinkhole loss and sought

- 62 -

No. 79143-5-I/63

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

insurance coverage for the costs of making subsurface repairs to the home. Id. at

1066-67. When the parties reached an impasse on the amount it would take to

cover repairs, Nunez sued for breach of contract. The jury was asked to decide

the total cost necessary to properly stabilize the land and building and to repair the

foundation. Id. at 1067. The jury returned a verdict for Nunez and awarded

$100,000 for subsurface repair damages. Id. As to prejudgment interest, the court

held Nunez was not entitled to prejudgment interest because there was no factual

determination establishing a date of loss earlier than the date of the jury’s verdict.

Id. at 1071.

In Nunez, the appellate court noted that Nunez had not contracted for any

subsurface repairs as of the date of trial. Id. at 1069. It is clear from the facts of

that case that the date of loss was the date of the verdict because that was the

date the jury determined the amount it would take for Nunez to repair the damage

to his property at some point in the future. The holding in Nunez is consistent with

other Florida case law holding that prejudgment interest is not available when

damages are based on future anticipated losses. Checkers Drive-In Rests., Inc.

v. Tampa Checkmate Food Serv., 805 So. 2d 941, 945 (Fla. Dist. Ct. App. 2001).

Here, Khalid’s theory of damages was not based on lost future sales or

future profits but was instead based on historical lost sales during a five-year

period between the date Citrix first claimed to own his inventions in late October

2011 and the date of Barrick’s report in December 2016. The jury rendered its

verdict in 2018, some two years after this period of loss. Citrix’s reliance on Nunez

is thus misplaced.

- 63 -

No. 79143-5-I/64

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

The trial court cited to Citizens Prop. Ins. Corp. v. Alvarez, 198 So. 3d 45

(Fla. Dist. Ct. App. 2016) and Citizens Prop. Ins. Corp. v. Cabrera, 197 So. 3d 72

(Fla. Dist. Ct. App. 2016) for the proposition that the party seeking prejudgment

interest must “conclusively establish a date of pecuniary loss before prejudgment

interest can be awarded.” But both Alvarez and Cabera, like Nunez, related to

insureds’ claims against an insurer for refusing to pay the cost to repair sinkholes.

In both cases, as in Nunez, the courts concluded that there was no indication that

the jury was determining the amount of loss for a date other than the date of the

verdict. Alvarez, 198 So. 3d at 46; Cabera, 197 So. 3d at 73. The court in Alvarez

explicitly noted “[w]e do not rule out the possibility that such a claim could be

presented to a jury in a manner that might allow for prejudgment interest. It simply

was not presented in such a matter in this case.” 198 So. 3d at 46. Because the

jury verdicts in Nunez, Alvarez and Cabrera established the insurer’s future liability

for their insureds’ sinkhole claims, and was not intended to determine the amount

of money needed to reimburse these insureds for out-of-pocket losses, it makes

sense that the insureds were not entitled to prejudgment interest.

But the jury award here was not to establish Citrix’s monetary liability for

future expenses Khalid would incur to develop or market his inventions. It was

instead to compensate Khalid for losses he sustained in the past. The record

demonstrates that Khalid invested years of his life developing these two inventions.

He wrote software code, tested and validated it, prepared provisional and final

patent applications for each, hired computer software engineers in Bangladesh to

assist him in finalizing the coding, and prepared business plans to attempt to attract

- 64 -

No. 79143-5-I/65

(consolidated with 79405-1-I), and No. 79145-1-I (consolidated with 79305-5-I)

investors. He estimated he invested thousands of hours of his life to these projects.

He spent thousands of dollars on computer equipment over a period of several

years. His Softlock program was fully functional by the end of 2008 and he made

it available through his company’s website. Thousands of people downloaded trial

copies of the program for free. When he left Citrix’s employ in October 2011,

Softlock remained available in the market in beta form. The mini-cloud system

was in the early stages of prototype development and not ready to release to the

market. But Khalid had a team building the prototype and he had located a

company in California to fabricate the thin terminal.

Once Citrix asserted an ownership interest in these two inventions, Khalid

was unable to continue marketing either product. He could not attract investors in

his startup company with clouds on the title to his patents. Forbes testified that

before October 2011, Khalid had the credentials that investors would find

interesting. He had a master’s degree in computer science and had worked for at

least eight years at Microsoft. He had recruited an experienced chief executive

officer to take over the management of his startup. Forbes also testified that the

market sectors for both computer security software and cloud computing were

particularly good in 2011, with a significant amount of venture capital money

available for the type of software Khalid had developed. But when Citrix asserted

that Khalid’s patents belonged to the company, he lost his prospective CEO,

investors, and his contract with Pragma. His startup essentially collapsed. In

Forbes’s opinion, “[i]t’s extremely hard to assemble all the factors to launch a

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No. 79143-5-I/66

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startup company. For Mr. Khalid to do so given the present time would be

extremely difficult, if not impossible.”

Unlike the insureds in Nunez, Alvarez or Cabera, Khalid presented evidence

of past losses occurring between November 2011 and the date he filed his

complaint in October 2015. Because Khalid’s complaint demanded payment for

lost profits and lost value in his startup companies, and Citrix conceded below that

the date he filed his complaint was the last possible date he incurred loss, the trial

court should have awarded Khalid prejudgment interest based on the evidence

presented at trial, establishing losses through December 2016. We reverse and

remand for an award of prejudgment on the $3 million jury verdict from the date of

Barrick’s report in December 2016 to the date of judgment.

9. Prejudgment Interest Rate

Khalid next contends the trial court erred in applying Florida’s prejudgment

interest rate of 4.75 percent rather than Washington’s rate of 12 percent to the

jury’s award for breach of the Severance Agreement. We disagree.

This court reviews de novo a trial court’s decision regarding its conflict of

law analysis. Williams v. Leone & Keeble, Inc., 170 Wn. App. 696, 704, 285 P.3d

906 (2012). When resolving disputes concerning choice of law, the court must

decide (1) whether there is an actual conflict of laws and, if so, (2) whether the

parties’ agreement’s choice of law provision is effective. Shanghai Commercial

Bank Limited v. Kung Da Chang, 189 Wn.2d 474, 480, 404 P.3d 62 (2017).

Here, there is an actual conflict between Washington and Florida law.

Under RCW 4.56.110(6) and RCW 19.52.020(1), judgments in Washington bear

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interest at the rate of 12 percent. In Florida, however, interest is set quarterly by

the Chief Financial Officer by averaging the discount rate of the Federal Reserve

Bank of New York for the preceding 12 months and then adding 400 basis points

to the averaged federal discount rate. Fla. Stat. Ann. § 55.03(1). The interest rate

is set at the time the judgment is entered and is adjusted annually each January in

accordance with the interest rate in effect on that date until the judgment is paid.

Fla. Stat. Ann. § 55.03(3). The interest rate in October 2015 was 4.75 percent. 16

Given this actual conflict, the analysis turns to whether the parties’

contractual choice of law is effective. Shanghai, 189 Wn.2d at 482. In Shanghai,

the Supreme Court relied on the Restatement (Second) of Conflict of Laws §187

(1971) which provides:

(1) The law of the state chosen by the parties to govern their

contractual rights and duties will be applied if the particular issue is

one which the parties could have resolved by an explicit provision in

their agreement directed to that issue.

Here, the parties expressly provided in Khalid’s Employment Agreement

that “this Agreement will be governed by and construed and enforced in

accordance with the laws of the State of Florida.” (Emphasis added). In Shanghai,

the Supreme Court addressed whether a similar contractual choice of law clause,

designating Hong Kong law, governed whether the judgment debtor’s community

property could be reached to satisfy a judgment entered in that jurisdiction.

Shanghai, 189 Wn.2d at 480. It held that the specific inclusion of the word

16 Florida Department of Financial Services, Historical Judgment Interest Rates,

https://www.myfloridacfo.com/Division/AA/LocalGovernments/Historical.htm (last visited

November 6, 2020).

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“enforcement” in a choice of law provision fulfilled the specificity requirement of

subsection (1) of § 187 and made that choice of law effective. Id. at 484. It affirmed

the trial court’s determination that the debtor’s community property could be

reached to satisfy the foreign judgment.

In Florida, prejudgment interest is considered an element of pecuniary

damages. Argonaut, 474 So. 2d at 214. The Florida Supreme Court has held

“when a verdict liquidates damages on a plaintiff’s out-of-pocket, pecuniary losses,

plaintiff is entitled, as a matter of law, to prejudgment interest at the statutory rate

from the date of that loss.” Id. at 215. Khalid’s lawsuit sought to vindicate his

contractual rights, one element of which would be compensation for Citrix’s breach.

His lawsuit is no less an effort to “enforce” his contractual rights than was the

judgment creditor’s lawsuit in Shanghai. Under this analysis, there is no basis for

applying any state’s law other than the law of the state chosen by these contracting

parties.

Khalid argues, however, that while entitlement to prejudgment interest is a

matter of substantive law governed by Florida law, the rate to be applied is purely

procedural in nature, governed by the law of the forum state under the

Restatement (Second) Conflicts of Law §122 (1971). This provision provides:

A court usually applies its own local law rules prescribing how

litigation shall be conducted even when it applies to local law rules

of another state to resolve other issues in the case.

Washington courts follow this provision of the Restatement. Boudreaux v.

Weyerhaeuser Co., 10 Wn. App. 2d 289, 313 n. 14, 448 P.3d 121 (2019)

(Washington procedural law governed the mechanism through which company

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should have asserted immunity in a Washington court); In re Marriage of Ulm, 39

Wn. App. 342, 345, 693 P.2d 181 (1984) (Washington as forum state may apply

its own statute of limitations to actions seeking to enforce foreign judgments). But

there is no reported Washington case applying section 122 to the question of

whether the interest rate to apply to a judgment should be governed by the parties’

contractual choice of law or the law of the forum state.

The cases on which Khalid relies do not support his argument. Khalid cites

Townsend v. R.J. Reynolds Tobacco Co., 192 So. 3d 1223 (Fla. 2016) for the

proposition that the Florida statute granting a judgment creditor the right to

prejudgment interest does not grant a substantive right to any particular interest

rate. He suggests Washington law is consistent with Townsend, citing Paul v. All

Alaskan Seafoods, 106 Wn. App. 406, 24 P.3d 447 (2001). Neither Townsend nor

All Alaskan Seafoods supports Khalid’s argument.

In Townsend, the Florida Supreme Court addressed whether R.J. Reynolds

owed the plaintiff postjugment interest on a judgment at a rate of 6 percent or the

rate of 4.75 percent because of an intervening statutory amendment to Fla. Stat.

Ann. § 55.03. Townsend, 192 So. 3d at 1224. At the time the trial court entered

the judgment, Florida’s statute provided that “the interest rate established at the

time a judgment is obtained shall remain the same until the judgment is paid.” Fla.

Stat. Ann. § 55.03(3) (2010). But after R.J. Reynolds’ appeal, and a remittitur of

the judgment, an amended judgment for $25 million was entered in 2012. Id. at

1224. In the interim, the Florida legislature had amended the statute, effective July

1, 2011, so that the interest rate became subject to annual adjustment on January

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1 of each year. Id. at 1224-25. The court held that the 2010 version of Fla. Stat.

Ann. § 55.03(3) was substantive in nature rather than procedural or remedial. Id.

at 1229. As a result, Townsend’s substantive right to prejudgment interest at a

fixed rate vested in 2010 when the original judgment was entered. Id. at 1230. It

held that once the legislature granted such a substantive right, it could not remove

it through subsequent amendment without violating the Florida Constitution. Id.

Khalid relies on a quote from the case in which the Florida Supreme Court

stated that “[t]he substantive right created by the 2010 version of section 55.03(3)

is simply the right to a fixed rate of interest for the life of the judgment, not the right

to interest or to a particular rate of interest.” Id. But this statement, read in context,

does not mean that the applicable statutory interest rate is an issue of procedural,

rather than substantive, law. The Florida statute – both before and after the 2011

amendment – did not set a specific interest rate. The 2010 version of the statute

provided that “the interest rate established at the time a judgment is obtained shall

remain the same until the judgment is paid.” Id. at 1226. The court analyzed

whether this statutory provision created a vested, substantive right. Townsend

actually supports Citrix’s contention that Florida’s statute on calculating interest is

a matter of substantive, not procedural, law. See also Blitz Telecom Consulting,

LLC v. Peerless Network, Inc., 212 F. Supp. 3d 1232, 1240 (M.D. Fla. 2016)

(Florida considers both the entitlement to prejudgment interest and the applicable

rate to be matters of substantive law; parties’ choice of law in contract governs

interest rate).

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In All Alaskan Seafoods, this court addressed whether federal maritime law

preempted Washington wage statutes in a claim of willful withholding of

fishermen’s wages. All Alaskan Seafoods, 106 Wn. App. at 409. The court

concluded that Washington’s statutory double wage provision did not conflict with

federal maritime law and applied. Id. at 422. All Alaskan Seafoods also challenged

the award of prejudgment interest at the state rate of 12 percent. Id. at 427. This

court held Washington law governing prejudgment interest conflicted with maritime

law and was preempted by it. Id. But it also concluded that there was a lack of

uniformity in federal courts regarding the applicable rate, with some federal courts

applying a Treasury bill rate and others leaving it to the discretion of the district

courts to determine the most appropriate rate. Id. at 429-30. Citing Ninth Circuit

maritime precedent, the court held “[i]n the absence of a uniform rule, the rate to

be applied is a matter for the sound discretion of the trial court. Id. at 430. It

concluded the trial court had not abused its discretion in applying Washington’s

statutory rate. Id.

All Alaska Seafoods does not support Khalid’s argument that the

Washington interest rate applies to his breach of contract claim in which the parties

agreed to apply Florida law. Its holding is clearly limited to the context of federal

maritime law.

Because the parties chose Florida as the law to apply in any action to

enforce their contractual rights under the Employment Agreement, and that

provision is effective, prejudgment interest must be awarded at Florida’s interest

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rate. The trial court did not err in rejecting Khalid’s request to apply Washington’s

interest rate to prejudgment interest.

10. Citrix’s Request for Disgorgement of Khalid’s Lost Profits Award

Citrix next argues that this court should order disgorgement of Khalid’s $3

million award because these damages are attributable to his trademark

infringement. We refuse to address this argument on its merits because Citrix did

not properly preserve the issue for appeal.

At trial, Citrix argued that it was entitled to damages, including disgorgement

of profits, for Khalid’s violation of the Lanham Act. The jury was instructed as

follows:

In addition to actual damages, Citrix is entitled to any profits earned

by Khalid that are attributable to the infringement, which Citrix proves

by a preponderance of the evidence.

The jury rejected Citrix’s claim and found Khalid’s infringement caused Citrix no

damages. Citrix did not assign error to the jury’s verdict.

If a respondent seeks affirmative relief on appeal, as distinguished from

urging additional grounds for affirmance, a notice of cross review is required. State

v. Sims, 171 Wn.2d 436, 442-43, 256 P.3d 285 (2011). Citrix filed a notice of

appeal and designated five assignments of error, none of which related to its

request for disgorgement of Khalid’s profits under the Lanham Act.

Citrix contends that it is entitled to raise this issue for the first time in Khalid’s

appeal under RAP 2.4(a). RAP 2.4(a) allows this court to consider a respondent’s

request for affirmative relief when that respondent has failed to file a cross appeal

“if demanded by the necessities of the case.” Washington courts generally apply

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this provision of RAP 2.4(a) only when a petitioner’s claim cannot be considered

adequately from the issues a respondent raises in response. Sims, 171 Wn.2d at

444.

Citrix’s disgorgement argument on appeal could have been considered

separately from any assignments of error Khalid raised in his appeal. As a result,

we decline to consider the argument under RAP 2.4(a).

11. Attorney Fee Award to Khalid

Citrix next contends the trial court erred in awarding any attorney fees to

Khalid because there is no applicable attorney fee provision in the Employment

Agreement and the severance pay awarded under the Severance Agreement does

not constitute “wages” under RCW 49.48.030. We reject both arguments.

A trial court may award attorney fees only when authorized by statute,

contract, or recognized ground of equity. Panorama Vill. Condo. Owners Ass'n

Bd. of Dirs. v. Allstate Ins. Co., 144 Wn.2d 130, 143, 26 P.3d 910 (2001). Whether

a trial court is authorized to award attorney fees is a question of law reviewed de

novo. Gander v. Yeager, 167 Wn. App. 638, 646, 282 P.3d 1100 (2012). When

attorney fees are authorized, we will uphold the attorney fee award absent a

manifest abuse of discretion. Mahler v. Szucs, 135 Wn.2d 398, 435, 957 P.2d 632

(1998) (overruled on other grounds by Matsyuk v. State Farm Fire & Cas. Co., 173

Wn.2d 643, 272 P.3d 802 (2012)). A trial court abuses its discretion if its decision

is manifestly unreasonable or based on untenable grounds. Mayer v. Sto Indus.,

Inc., 156 Wn.2d 677, 684, 132 P.3d 115 (2006).

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The trial court concluded Khalid was entitled to attorney fees under section 8

of the Employment Agreement. Section 8, entitled “Notice to Future Employers and

of Future Employment,” provides that, during Khalid’s employment with Citrix and

for a period of 12 months afterwards, Khalid would “notify Citrix in writing of any

subsequent engagement, occupation or employment” and his “duties and

responsibilities with respect to any such position.” Section 8 contained an attorney

fee provision:

I agree and acknowledge that violation of this Section 8 shall entitle

Citrix to bring suit against me for specific performance and, if

appropriate, injunctive relief and damages, without Citrix being

required to show any actual damage or to post an injunction bond.

Should Citrix establish that I have violated the terms of this Section

8 by failing to provide proper notice, Citrix shall be deemed the

prevailing party in any such litigation and entitled to recover its

attorney fees and costs incurred therein.

The trial court concluded that this unilateral fee provision was made bilateral by

operation of Florida law, Fla. Stat. § 57.105(7) and RCW 4.84.330.

Although much of the case involved the Invention Assignment Clause, which

does not contain an attorney fees provision, the trial court concluded that Citrix had

asserted a cause of action for breach of contract, had alleged Khalid failed to notify

Citrix of his involvement with XenCare and PcXen as required by section 8, and

presented evidence to the jury that Khalid could not prevail on his claim of breach of

contract because he had not performed all of the essential terms of the Employment

Agreement, including those required by section 8. It reasoned:

In effect, Citrix made Khalid's compliance with paragraph 8 an element

of his breach of contract claim. Thus, to prevail on his claim for breach

of the Confidentiality Agreement, Khalid had to prove he did not

materially breach the contract to overcome this defense. See Jury

Instruction No. 15. Khalid prevailed on the cause of action and the jury

awarded him damages for Citrix’s breach of the Confidentiality

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Agreement. He is therefore contractually entitled to recover attorneys'

fees and expenses incurred in proving his cause of action for breach

of contract and defeating Citrix's claim of breach of contract.

Citrix contends neither it nor Khalid ever raised section 8 to the jury as a basis for the

breach of contract claim. The record does not support Citrix’s argument. Citrix’s

consistent position was that Khalid breached section 8 of the Employment

Agreement. In its motion for summary judgment, Citrix stated:

Eventually, Xencare assumed the role of PcXen as well. Khalid served

as the sole proprietor and was employed as the chief technology officer

of each business. . . . He did not disclose this information to Citrix

during his employment despite a requirement in the Agreement that he

do so.

Citrix asserted a breach of section 8 in its trial brief:

Khalid violated the Agreement in the following ways: Khalid’s

Agreement required Khalid to disclose in writing the terms of any

employment by a third-party while employed by Citrix. Unbeknownst

to Citrix, while employed by Citrix, Khalid was devoting substantial

amounts of time to developing his own personal businesses, Xencare

and PcXen. He did not disclose this information to Citrix during his

employment despite the Agreement’s requirement that he do so.

And Citrix proposed a jury instruction that provided, in relevant part

The Agreement contained several provisions that Khalid and Citrix

claim the other breached. . . . The Agreement also required Khalid

disclose in writing any outside business interests during his

employment with Citrix and for 12 months following the end of his

employment. That disclosure must include a description of any

subsequent engagement, occupation or employment, whether as

owner, employee, officer, director, agent, consultant, independent

contractors or the like, and the duties and responsibilities with

respect to any such position. . . . Citrix also claims Khalid breached

the Agreement by failing to disclose his outside business interests to

Citrix as required by the Agreement.

Citrix clearly raised section 8 as a basis for defeating Khalid’s claims against it and

for asserting claims against him.

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The trial court also correctly concluded that for Khalid to prevail on his claim

of breach of contract, and defeat Citrix’s counterclaim, Khalid had to prove that he

“did all, or substantially all, of the essential things which the contract required him to

do or that he was excused from doing those things.” Khalid presented evidence that

he had disclosed his outside business activities with Xencare and PcXen to Citrix.

And Khalid argued in closing argument that he had not breached section 8:

Citrix also claims, because they are trying to come up with ways to

avoid what Exhibit B means, that he had failed to disclose the fact

that he worked for another company in violation of another paragraph

of the agreement, paragraph eight, I believe.

And they made much of the fact that he hadn't disclosed the fact that

he worked for other companies but that's not true. Abolfazl Sirjani,

again, . . . says that he was aware that he was working with

KrisanTech, the name Khalid used for his business before he

switched over to XenCare at or about the time that he came to work

at Citrix. Mr. Sirjani testified that he saw Khalid's business plan for

KrisanTech at or about the time Khalid came to work at Citrix.

And you have seen all of these presentations that were made at Citrix

in which Khalid was explaining that he had his company, and he was

getting it going. So to the extent that Citrix wanted him to disclose

the fact that he was involved with another company, he did so. And

he did so repeatedly. . . . Mr. Duursma testified that he was

suggesting managerial types to assist Mr. Khalid with his

businesses. So Citrix's complaints that Khalid didn't disclose his

involvement with another employer are simply an effort by Citrix to

avoid the contract terms it wants to avoid.

Although Citrix did not explicitly refer to section 8 in its arguments to the jury, it

presented evidence from Citrix employees like Pederson that Khalid did not disclose

Xencare, or PcXen to the company. And it argued in closing that Khalid breached the

Employment Agreement by failing to use his best efforts on behalf of Citrix, engaging

in outside business activities that interfered with his job duties, using Citrix

confidential information for his own gain, and refusing to assign developments to

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Citrix. The jury disagreed, finding that Khalid did not breach the Employment

Agreement.

Because Citrix invoked section 8 repeatedly as a basis for defeating Khalid’s

claims and as a basis for its own breach of contract counterclaim, and because Citrix

then argued at trial that Khalid could not prevail on his own claim of breach of contract

because he had not performed all of the essential terms of the Employment

Agreement, the trial court did not err in concluding that Citrix put Khalid in a position

of having to prove his compliance with section 8 as an element of his breach of

contract claim or in concluding that Khalid was entitled to an award of attorney fees

pursuant to section 8.

Nor did the trial court err in concluding that the jury’s severance pay award

triggered the attorney fee provision of RCW 49.48.030. RCW 49.48.030 provides

that: “In any action in which any person is successful in recovering judgment for

wages or salary owed to him or her, reasonable attorney's fees, in an amount to

be determined by the court, shall be assessed against said employer or former

employer.” The trial court concluded that Khalid’s severance pay constitutes “wages

or salary owed to him” under this statute.

Statutory interpretation is a question of law that we review de novo. State

v. Evergreen Freedom Found., 192 Wn.2d 782, 789, 432 P.3d 805 (2019) (plurality

opinion). When engaging in statutory interpretation, we endeavor to determine

and give effect to the legislature's intent. Jametsky v. Olsen, 179 Wn.2d 756, 762,

317 P.3d 1003 (2014). In determining the legislature's intent, we must first

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examine the statute's plain language and ordinary meaning. 17 Id. Legislative

definitions included in the statute are controlling. State v. Econ. Dev. Bd., 9 Wn.

App. 2d 1, 10, 441 P.3d 1269 (2019). “Wages” are defined, for the purposes of

RCW 49.48.030, as “compensation due to an employee by reason of employment.”

RCW 49.46.010(7).

In Durand v. HMC Corp., 151 Wn. App. 818, 214 P.3d 189 (2009), this court

held that severance pay can constitute compensation due to a departing employee

under an employment agreement because the term “compensation” applies to

more than work actually performed. Id. at 831. “[I]t applies to any form of

compensation that is a byproduct of the employment relationship.” Id.

The Severance Agreement provided:

Whereas, Employee’s employment has been terminated due

to Company and Employee determining that terminating the

employment relationship is of mutual benefit.

Whereas, the Company desires to extend certain separation

benefits to Employee to assist Employee with the transition to new

employment, and in return, Employee has agreed to release the

Company from any claims arising from or related to the employment

relationship;

NOW THEREFORE, in consideration of the mutual promises

made herein, the Company and Employee . . . hereby agree as

follows:

1. Final Date of Employment. Employee’s employment with

the Company will end on October 3, 2011 (“Final Date of

Employment”). On the Final Date of Employment, Company will pay

all salary, wages, bonuses, accrued PTO (paid time off), if any, in

accordance with Company Policy, and any and all other benefits due

17 RCW 49.48.030 is a remedial statute and we will construe it liberally in favor of the employee.

McGinnity v. AutoNation, Inc., 149 Wn. App. 277, 284, 202 P.3d 1009 (2009) (citing Int'l Ass'n of

Fire Fighters, Local 46 v. City of Everett, 146 Wn.2d 29, 34, 42 P.3d 1265 (2002)). See also

Schilling v. Radio Holdings, Inc., 136 Wn.2d 152, 159, 961 P.2d 371 (1998) (this court construes

the statute liberally in order to “protect employee wages and assure payment.”)

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to Employee through the Final Date of Employment. To the extent

Employee is owed any incentive compensation payment, such

payment shall be made in accordance with the terms of such

incentive compensation plan.

2. Consideration. Providing Employee has fully complied with

the terms of this Agreement, including but not limited to Section 5

below, within fifteen (15) business days following the latter of the

Final Date of Employment or the Effective Date (as defined in Section

19 below) Company will provide:

a. Employee separation compensation in the form of a

lump sum payment equal to $30,757 (the equivalent of 11 weeks

base salary). Customary payroll taxes and income tax withholdings

will be deducted from the separation compensation lump sum

payment . . ..

Citrix’s company policy provides for a fixed amount of severance pay based on the

reason for termination, the employee’s length of service, and the employee’s salary

range. An employee receives a payment equal to a certain number of weeks of

base pay based on their salary range; they also receive an additional week of pay

per year of employment if the termination was a “mutual separation,” or an

additional two weeks of pay per year of employment if the termination was a “job

elimination.” Citrix employees are not entitled to severance pay if they are

involuntarily terminated.

This text is long and has been trimmed here. Open the source document for the complete record.