Killough v. Monkress

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ALABAMA

NORTHEASTERN DIVISION

DOUG KILLOUGH and )

TECHNICAL CONSULTING )

SOLUTIONS, INC., )

)

Plaintiffs, )

Civil Action Number

)

vs. ) 5:17-cv-00247-AKK

)

PHIL MONKRESS and ALL

)

POINTS LOGISTICS, LLC,

)

)

Defendants.

MEMORANDUM OPINION

This action arises from an employment agreement between Doug Killough,

the owner of Technical Consulting Solutions, Inc. (“TCS”), and All Points Logistics,

LLC (“APL”), a company owned by Phil Monkress. Killough and TCS assert claims

against Monkress and APL for allegedly failing to pay Killough all the profits he

was owed on contracts he generated for APL and for breaching an agreement to

transfer those contracts to TCS. Doc. 41. For its part, APL asserts counterclaims

for alleged misappropriation of its trade secrets and interference with its business

relations by, among other things, usurping its customers and purloining APL’s

confidential and proprietary documents. Doc. 54 at 30-63. The court has the parties’

cross-motions for summary judgment for consideration—Killough and TCS’s

motion on all of APL and Monkress’s counterclaims, doc. 80, and APL and

Monkress’s motion on all of Killough and TCS’s claims, doc. 82. For the reasons

explained below, each motion is due to be granted in part.

I.

Under Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment

is proper “if the movant shows that there is no genuine dispute as to any material

fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56.

“Rule 56[] mandates the entry of summary judgment, after adequate time for

discovery and upon motion, against a party who fails to make a showing sufficient

to establish the existence of an element essential to that party’s case, and on which

that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S.

317, 322 (1986) (alteration in original). The moving party bears the initial burden

of proving the absence of a genuine issue of material fact. Id. at 323. The burden

then shifts to the nonmoving party, who is required to “go beyond the pleadings” to

establish that there is a “genuine issue for trial.” Id. at 324 (citation and internal

quotation marks omitted). A dispute about a material fact is genuine “if the evidence

is such that a reasonable jury could return a verdict for the nonmoving party.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

On summary judgment motions, the court must construe the evidence and all

reasonable inferences arising from it in the light most favorable to the non-moving

party. Adickes v. S. H. Kress & Co., 398 U.S. 144, 157 (1970). See also Anderson,

477 U.S. at 255. Any factual disputes will be resolved in the non-moving party’s

favor when sufficient competent evidence supports the non-moving party’s version

of the disputed facts. See Pace v. Capobianco, 283 F.3d 1275, 1276, 1278 (11th Cir.

2002) (a court is not required to resolve disputes in the non-moving party’s favor

when that party’s version of events is supported by insufficient evidence). However,

“mere conclusions and unsupported factual allegations are legally insufficient to

defeat a summary judgment motion.” Ellis v. England, 432 F.3d 1321, 1326 (11th

Cir. 2005) (per curiam) (citing Bald Mountain Park, Ltd. v. Oliver, 863 F.2d 1560,

1563 (11th Cir. 1989)). Moreover, “[a] mere ‘scintilla’ of evidence supporting the

opposing party’s position will not suffice; there must be enough of a showing that

the jury could reasonably find for that party.” Walker v. Darby, 911 F.2d 1573, 1577

(11th Cir. 1990) (citing Anderson, 477 U.S. at 252).

II.

Prior to joining APL, Killough worked for Booz Allen Hamilton, a

government contractor, providing engineering services to Boeing in support of

missile defense contracts Boeing held with the federal government. See docs. 85-1

at 13-14; 96-1 at 2. When Booz Allen withdrew from that market, Killough and a

fellow employee decided to start a new company, TCS, to try to continue working

on missile defense contracts. Docs. 85-1 at 13-14; 88-1 at 11; 96-1 at 2; 96-3 at 8.

As part of that process, Killough and his partner met with Monkress to discuss a

potential joint venture with APL to enable Killough to continue servicing the Boeing

contract while also helping APL build a new team providing missile defense

services. Docs. 85-1 at 15, 23; 88-1 at 13; 96-3 at 12-13.

Monkress and Killough first discussed working together under a mentor-

protégé arrangement in which APL, Monkress’s company, would serve as the

mentor for TCS. Doc. 88-1 at 12-13, 15, 17. Then, the parties changed course and

reached an agreement for Killough to work for APL as an engineer servicing missile

defense contracts for prime contractors and developing that business for APL while

also setting up his own business, TCS. See docs. 96-1 at 3; 88-1 at 16-17; see also

doc. 84-8. Though the parties dispute the specific terms of their agreement,

Monkress and Killough agree that they initially settled on an arrangement where

APL would subcontract to TCS the missile defense work that Killough generated for

APL when Killough felt that TCS could take on the work. Docs. 85-1 at 15, 17, 21;

88-1 at 16-17. APL also agreed to pay Killough a bonus of 50% of the net profits

on the contracts he generated. Docs. 85-1 at 20-21, 52; 84-12 at 9; 96-1 at 3.1

According to Killough, APL learned subsequently that it could not subcontract the

missile defense contracts to TCS, and Monkress and TCS agreed instead to transfer

1 APL and Killough negotiated an employment agreement that Monkress and Killough signed in

June 2010, see docs. 84-8; 85-1 at 24-25, but which Killough did not return. Killough contends

that the parties reached only an oral agreement as a result. Docs. 96-1 at 3; 85-1 at 24-25, 52.

or novate the contracts to TCS once TCS had the appropriate security clearance,

approvals, and business structure in place. Docs. 85-1 at 15-16, 26, 34; 96-1 at 3.2

During his five-year employment with APL, Killough worked as a program

manager and principal engineer. Doc. 84-1 at 3. In this capacity, Killough helped

APL obtain contracts with three prime contractors: Boeing, Northrop Grumman,

and Teledyne Brown. Docs. 96-1 at 3-4; see also doc. 85-1 at 30. In November

2014, he contacted all three about transferring their contracts with APL to TCS, and

each expressed a willingness to move ahead with the transfer. See docs. 84-13 at 1;

85-1 at 26-27; 97-4 at 2. Killough then told Monkress that he wanted APL to transfer

the contracts to TCS, and that the prime contractors had agreed to the transfer. Docs.

85-1 at 32-33; 88-1 at 27; 84-13 at 1. Three days later, APL discharged Killough

for alleged insubordination. Docs. 85-1 at 33; 88-1 at 27-28; 88-3 at 27-28.

Killough’s discharge caused Northrop to express concerns about APL’s

ability to successfully complete the contract. See docs. 88-1 at 29-30; 88-3 at 27-

29; 88-8 at 42. As a result, APL rehired Killough. Docs. 88-1 at 29-30; 88-3 at 28-

29. According to Killough, he agreed to return to APL after Monkress orally agreed

that APL would eventually novate the contracts at issue to TCS. See doc. 85-1 at

2 Monkress and APL dispute the novation allegations, and Monkress contends that the parties

simply agreed to eventually negotiate a subcontract agreement. Doc. 88-1 at 17-18, 27-28; 84-1

at 9; 88-3 at 28, 31.

33, 57. Despite this purported agreement, APL and Monkress insisted that Killough

sign an employment agreement that did not include any terms about novating or

subcontracting the contracts. See docs. 88-1 at 30; 88-3 at 30, 33; 84-19; 84-21; 84-

22; see also doc. 84-1 at 5. Killough refused, and APL eventually removed

Killough’s managerial responsibilities in August 2015. See docs. 88-1 at 30; 88-3

at 33, 37-38; 84-1 at 5; 81-3 at 2. After that change, Killough’s only task for APL

was to finish the Northrop project. Docs. 81-3 at 2; 88-3 at 38. And, when that

project closed, his employment at APL also ended. See doc. 88-3 at 38.

In the year before Killough’s employment at APL ended, Killough contacted

Northrop using his TCS email account and inquired about a facility security

clearance for TCS, and he asked Northrop for job descriptions for available positions

and expressed concern when he learned Northrop sent them to his APL email

account. Docs. 85-1 at 86; 85-24 at 3; 85-26 at 4. Killough also applied for TCS to

become an approved supplier for Northrop and sent a proposed statement of work,

which he designed to be broad enough to allow TCS “to be able to help out wherever

needed.” Docs. 85-24 at 12-13; 85-51 at 7; 85-106 at 39; 88-45 at 15-16, 51; 98 at

exhs. Q, S. In Killough’s last month with APL, Northrop and Killough reached an

agreement that TCS could perform for Northrop the same work Killough performed

for Northrop as an APL employee. See docs. 85-106 at 17; 85-45 at 31-32; 98 at

exh. U. Killough then submitted proposed labor rates to Northrop on behalf of TCS

that were identical to APL’s rates. Docs. 88-17 at 9, 31; 98 at exh. A, ¶ 64. Northrop

used the rates to estimate a ceiling value for the contract it ultimately awarded to

TCS. Doc. 85-45 at 52. After Killough began working for Northrop as a TCS

employee, APL did not place any other personnel with Northrop, and Northrop

elected not to extend to its contract with APL when the contract expired. Doc. 98 at

exh. A, ¶¶ 22, 27; see also doc. 85-45 at 38.

III.

Killough and TCS assert claims against APL and Monkress for breach of

contract (Count I), misrepresentation (Count II), suppression (Count III), quantum

meruit (Count V), conversion (Count VI), and unjust enrichment (Count VII). Doc.

41 at 17-25, 17-31.3 For its part, APL pleads counterclaims for violations of the

federal and state trade secrets acts (Counts I and II), conversion of confidential

documents (Count III), tortious interference with business relations (Count IV),

breach of fiduciary duty (Count V), and breach of contract (Count VI). Doc. 54 at

44-63. The court turns now to the parties’ respective contentions regarding each of

the claims and counterclaims, beginning with the plaintiffs’ breach of contract

claims.

3 The court previously dismissed the plaintiffs’ promissory fraud claim (Count IV). Doc. 50.

A.

To prove their breach of contract claims, TCS and Killough must establish:

“a valid contract binding the parties; [] the plaintiffs’ performance under the

contract; [] the defendant’s nonperformance; and [] resulting damages.” Shaffer v.

Regions Fin. Corp., 29 So. 3d 872, 880 (Ala. 2009) (quotation omitted). A valid

contract requires “‘an offer and an acceptance, consideration, and mutual assent to

terms essential to the formation of a contract.’” Id. (quotation omitted).

1.

TCS and Killough allege APL breached the contract, in part, by failing to pay

Killough the correct amount of net profits for certain contracts he generated. Under

the agreement, APL agreed to pay Killough “50% of net profits . . . .” Doc. 69 at 4.

The dispute here centers on the costs that APL can charge to each contract Killough

generated. APL contends that it correctly determined the amount of “net profits” to

pay Killough by properly utilizing generally accepted accounting principles that

define net profits as “net income after all costs are accounted for.” Docs. 83 at 11-

13; 88-3 at 18 (emphasis added). APL adds that Killough cannot show that it inflated

costs to reduce his profit share. Doc. 83 at 11-12.

For their part, Killough and TCS contend that the phrase “50% of net profits

of project” in Addendum A of the employment agreement does not include certain

“unallowable costs,” doc. 97-1 at 19-20; see also doc. 69 at 4 (emphasis added), and

they rely on their expert, Kandy Gardner, for this contention, see doc. 88-10 at 27-

28, 31. Gardner added that there is no generally recognized definition of net profits,

and that the meaning of the phrase is “something that’s left up to the parties.” Doc.

88-10 at 27. Killough adds that he understood that APL would calculate the net

profit on his contracts using only the overhead and general and administrative

expenses associated with his specific contracts. Doc. 88-6 at 33. These contentions

are sufficient to create a question of fact regarding whether APL purportedly

included “unallowable costs,” i.e., the overhead and expenses associated with other

contracts, in its calculation of Killough’s net profits for the particular contracts he

generated. As a result, summary judgment is due to be denied on the claim that APL

breached the contract by purportedly failing to pay Killough the correct amount of

net profits.

2.

TCS and Killough allege also that APL failed to pay Killough net profits in

2015. APL contends that it “changed the terms of Killough’s compensation prior to

his being rehired [in 2014] and no longer paid him [in 2015] for the net profits when

he refused to agree to [a] written agreement.” Doc. 83 at 19. But, this contention

ignores that APL did not tell Killough that he needed to sign and return a contract

until after it rehired him. See doc. 88-3 at 13, 15, 30. Moreover, Killough insists

that (1) Monkress reaffirmed the parties’ “initial verbal agreement,” which allegedly

includes the profit-sharing provision, when Killough agreed to return to APL in

2014, doc. 85-1 at 57; (2) APL paid him a commission for profits on contracts after

it rehired him, see doc. 96-2 at 2-3; and (3) an APL employee indicated that APL

would pay him profits in 2015, docs. 97-5 at 2-9; 97-6 at 2. This evidence creates a

question of fact regarding whether APL in fact agreed to continue to pay Killough

net profits for 2015.

3.

Finally, TCS and Killough allege a breach based on APL’s refusal to transfer

the contracts at issue to TCS. APL contends that the purported agreement to transfer

is unenforceable for three reasons, which the court addresses separately below.

a.

APL asserts first a lack of consideration defense. Doc. 83 at 16. “‘To

constitute consideration, a performance or a return promise must be bargained for,’

and ‘[a] performance or return promise is bargained for if it is sought by the promisor

in exchange for his promise and is given by the promisee in exchange for that

promise.’” Smith v. Wachovia Bank, N.A., 33 So. 3d 1191, 1197 (Ala. 2009)

(quoting Restatement (Second) of Contracts § 71(1) and (2)) (emphasis in original

omitted). At issue here is APL’s contention that Killough offered nothing in

exchange for the alleged promise to novate other than services he was required to

provide as APL’s employee. The record shows that the parties initially agreed that

Killough would work and develop business for APL and that, in exchange, APL

would pay Killough a salary and bonus.4 See docs. 85-1 at 17, 21, 24, 28; 91-1 at

106. And, as to the contracts at issue, the written employment agreement states in

part that, after certain conditions were met, APL “will agree to transfer the existing

work being performed by [Killough] to the new business entity [i.e., TCS] in a sub

contract agreement with [APL].” 5 Docs. 69 at 5; 84-8 at 10; 84-5 at 11; 84-6 at 11;

85-4 at 5; 85-5 at 7. Thus, contrary to APL’s contention, Killough’s agreement to

work for APL is consideration to support the initial agreement to subcontract the

work to TCS. See Wachovia Bank, 33 So. 3d at 1197.

According to Killough, APL agreed to amend the agreement to novate the

contracts to TCS when APL learned that subcontracting was not an available option.

Docs. 85-1 at 15-16, 20-21, 24, 28; 91-1 at 106. Though Monkress and APL

adamantly deny that they agreed to transfer rather than subcontract work to TCS, see

docs. 88-1 at 17-18, 27-28; 88-3 at 28, 31, Killough’s testimony creates a question

4 Kiriakos Sarris, Killough’s TCS partner, testified that when they met with Monkress initially to

discuss a joint venture, Monkress told him and Killough that APL would transfer or novate the

contracts to TCS because Boeing would not accept a subcontract agreement. Doc. 96-3 at 14-16.

Nevertheless, Killough and TCS did not dispute APL’s statement that the parties only discussed

at the initial meeting APL’s subcontracting the work at issue. See docs. 83 at 3; 97-1 at 8.

5 Killough contends that because he did not return the signed contract to APL, doc. 85-1 at 24, he

did not assent to the terms of the contract, see doc. 97-1 at 8, 18. But, Killough does not cite any

authority to support that contention, see doc. 97-1, and Alabama law is clear that “[t]he purpose of

a signature on a contract is to show mutual assent . . . .” Ex parte Rush, 730 So. 2d 1175, 1177-78

(Ala. 1999) (citations omitted). Thus, Killough’s signature on the contract is evidence of his assent

to the terms of the written contract even if he did not deliver the contract to APL.

of fact regarding whether there was mutual assent for the alleged amendment to the

agreement. And, under Alabama law, “[p]arties to a written contract may by mutual

consent without other consideration orally alter, modify or rescind the contract.”

Watson v. McGee, 348 So. 2d 461, 464 (Ala. 1977) (citing Allied Mills, Inc. v. St.

John, 152 So. 2d 133 (Ala. 1963)) (emphasis added). Thus, because consideration

supports the initial agreement and a dispute exists regarding if the parties assented

to a change in the agreement, the lack of consideration defense fails at this juncture.6

b.

APL contends also that the alleged novation change is an unenforceable

agreement to agree and one that gave Killough and TCS complete discretion to

determine when it would occur. Doc. 83 at 14-16, 18. Indeed, “‘[t]o be enforceable,

the essential terms of a contract must be sufficiently definite and certain, [] and a

contract that leaves material portions open for future agreement is nugatory and void

for indefiniteness[.]’ . . . ‘In particular, a reservation in either party of a future

unbridled right to determine the nature of the performance has often caused a

promise to be too indefinite for enforcement.’” White Sands Group, L.L.C. v. PRS

II, LLC, 998 So. 2d 1042, 1051 (Ala. 2008) (quotations, emphasis, and alterations in

6 APL and Monkress contend that substantial consideration “separate from the services to be

rendered” must support the alleged agreement to novate. Doc. 83 at 16. But, the cases they cite

are inapposite because they relate to what an employee must show “[t]o establish that an

employment agreement is one other than one terminable at will . . . .” Hoffman-LaRoche, Inc. v.

Campbell, 512 So. 2d 725, 728 (Ala. 1987); see also Hopkins v. ADT Sec. Servs., Civ. Action No.

2:12-cv-00518-AKK, 2013 WL 19009416, at *5 (N.D. Ala. May 8, 2013).

original omitted). Here, however, the purported agreement had a definite date—

when TCS had the proper business structure and security clearances in place and

was ready to take on the work. See docs. 85-1 at 15, 17; 96-1 at 3-4. And because

Monkress acknowledged that novating the contracts to TCS would leave APL with

no role in the contracts after the transfer, see doc. 88-1 at 18, APL’s contention that

the purported agreement is indefinite because it does not identify APL’s role is

unavailing.

Nor has APL shown that the alleged agreement to novate is a non-binding

illusory promise. APL correctly notes that a party’s “unlimited right to determine

the nature and extent of his performance” renders a contract “too indefinite for legal

enforcement,” Smith v. Chickamauga Cedar Co., 82 So. 2d 200, 202 (Ala. 1955),

and that Killough testified that APL agreed to novate the contracts to TCS when

Killough “felt [he] was ready to take them on [him]self,” doc. 85-1 at 15. But, the

novation or transfer of the contracts was not Killough’s performance under the

alleged agreement. Rather, the agreement required Killough to work for APL,

including by developing the missile defense business, see docs. 84-1 at 3-4; 84-12

at 1-2; 88-1 at 16-17, and APL cited nothing to suggest that Killough could decide

the nature or extent of his work, see doc. 83. Thus, on this record, APL has not

shown that Killough had complete discretion to determine the nature of his

performance and that the alleged agreement is an illusory promise, or that it is an

indefinite agreement to enter into a future contract.

c.

Finally, APL contends that the affected prime contractors did not consent to

the novation, doc. 83 at 17, which is a prerequisite before APL could transfer the

contracts to TCS, see doc. 85-1 at 29. Indeed, the contractors had not consented

before APL discharged Killough. See docs. 88-18 at 24; 88-34 at 11. But, Killough

testified that those prime contractors expressed a willingness to transfer the contracts

from APL to TCS before APL discharged Killough. See doc. 85-1 at 26-27. And

he alleges that APL discharged him because he sought the novation and, in doing so,

frustrated his attempt to obtain the contractors’ consent for the novation. See id. at

33. “[A] party to a contract cannot rely on the failure of another to perform a

condition precedent where he has frustrated or prevented the occurrence of the

condition.” Koooleraire Serv. & Installation Corp. v. Bd. of Ed. of New York, 268

N.E. 2d 782, 784 (N.Y. 1971) (citation omitted).7 Thus, because Killough’s

testimony creates a question of fact regarding whether APL may have frustrated his

7 See also Ex parte Birmingham Fire Ins. Co., 172 So. 99, 101 (Ala. 1937) (“If the appraisal should

fail, by reason of the fault of the insurer, and without fault on the part of the insured, the insured

may bring his action on the policy to recover the loss, notwithstanding the policy provides that the

loss shall be ascertained by appraisers and that no suit shall be commence ‘until after full

compliance by the insured with all the foregoing requirements . . . .’ The insurer will not be

allowed to take advantage of his own wrong in preventing the making of an award by the

appraisers.”).

ability to obtain the contractors’ consent to the novation, the purported lack of

consent defense fails at this juncture.

* * *

To summarize, Killough and TCS have shown a question of fact regarding

whether APL breached the contract by not paying Killough any net profits in 2015

and the correct amount of net profits in the prior years. The record also shows an

issue of fact regarding whether the alleged agreement to novate is indefinite and

supported by consideration, and whether APL frustrated Killough’s ability to obtain

the prime contractors’ consent to the novation. Thus, APL’s motion on the breach

of contract claim fails.

B.

In Counts II and III, Killough asserts fraudulent misrepresentation and

suppression claims against Monkress and APL based on financial statements that

purportedly overstated costs and concealed the true costs associated with the TCS-

related contracts from Killough. Doc. 41 at 9-11, 20-25. To prove

misrepresentation, Killough must show that APL and Monkress made a false

representation about a material fact, he relied on the representation, and suffered

actual damages as a result. Spooner v. State Farm Mut. Auto. Ins. Co., 709 So. 2d

1157, 1160 (Ala. 1997). Proving the suppression claim requires showing that APL

and Monkress suppressed an existing, material fact they had knowledge of and a

duty to disclose, that Killough’s lack of knowledge induced him to act, and that he

suffered actual damages as a result. Hardy v. Blue Cross & Blue Shield, 585 So. 2d

29, 32 (Ala. 1991). And, to prove actual damages for either claim, Killough must

show he suffered “damage due to fraud that is separate from damages that may result

from any subsequent contractual breach.” Dickinson v. Land Developers

Construction Co., 882 So. 2d 291, 305 (Ala. 2003) (J. Houston, concurring (citing

Deupree v. Butner, 552 So. 2d 242, 245 (Ala. 1988)) (emphasis and quotation

omitted).

APL and Monkress contend, among other things, that Killough failed to show

he suffered any damages from the alleged fraud separate from the alleged breach of

contract damages. Doc. 83 at 24-25. Indeed, Killough asserts that the alleged

misrepresentation and suppression caused him to accept less than the share of the

profits he was entitled to under the parties’ agreement. Docs. 41 at 13, 22, 25; 85-1

at 39-40, 68-69, 88. These are the same damages he claims for the alleged breach

of contract, see doc. 41 at 17-18, and his alternative contention that the alleged fraud

also injured him by causing him to “continue working for a fraudster” instead of

requesting a novation, doc. 97-1 at 32, is unavailing. Killough points to no evidence

suggesting that he could have requested the novation any earlier than he did or that

he delayed doing so because of the alleged fraud. See doc. 97-1. Consequently,

because Killough has not shown he suffered damages due to the alleged fraud that

are separate from his breach of contract damages, his fraudulent misrepresentation

and suppression claims fail as a matter of law.8

C.

In Count V, Killough asserts a quantum meruit claim against APL based in

part on his allegations that APL knowingly accepted the benefit of his services and

failed to reasonably compensate him. Doc. 41 at 28. To prevail on this claim,

Killough must show that he provided services that APL knowingly accepted, and

that he had a reasonable expectation of compensation for his services. Mantiply v.

Mantiply, 951 So. 2d 638, 656 (Ala. 2006). But, the existence of an express contract

for the services at issue generally precludes a plaintiff from recovering under a

theory of quantum meruit. See Carroll v. LFC Def. Contracting, Inc., 24 So. 3d 448,

458 (Ala. Civ. App. 2009) (citation omitted). And, here, APL contends the quantum

meruit claim arises out of the parties’ express contract, doc. 83 at 25-26, a fact

Killough does not dispute. Still, Killough contends that his claim survives based on

the parties’ dispute regarding whether their contract terminated in 2014 or in 2015.

8 Killough insists the fraud claims against Monkress should survive independently because he did

not have a contract with Monkress, and can seek unpaid profits as damages against Monkress.

Doc. 97-1 at 32-33. Killough does not cite any evidence, however, suggesting Monkress—not

APL—is responsible for the allegedly inflated costs in the quarterly profit statements. In fact,

Killough explicitly states that “APL falsely represented costs” and “APL concealed the true

overhead and G&A costs,” id. at 29-30, and that APL prepared and provided the quarterly

statements containing the allegedly inflated costs, id. at 15. As a result, because Killough did not

show that Monkress misrepresented or suppressed any fact, the fraud claims against Monkress also

fail.

See doc. 97-1 at 33-34. According to Killough, if the factfinder agrees with APL

and finds that the contract terminated in 2014 after APL rehired Killough, then

Killough may be entitled to a share of the profits for 2015 under a theory of quantum

meruit. Id. In particular, Killough contends that he had a reasonable expectation

that APL would continue to pay him 50% of the net profits on certain contracts when

he agreed to return to APL, and APL never paid him those profits. Id.; see also doc.

85-1 at 57 (testifying that the parties reaffirmed parts of their general agreement

when Killough returned to APL).

APL counters that Killough’s argument does not relate to the quantum meruit

claim as pleaded,9 and that it is improper for him to amend the claim now.10 Doc.

105 at 9. But, Killough’s argument that APL did not pay him profits in 2015 is not

a new theory of recovery or a fundamental change to his claim. Rather, Killough is

simply limiting his claim to seek damages for unpaid profits to a single year.

Because APL denies that it agreed to pay Killough net profits in 2015, see doc. 84-

1 at 6, and Killough’s testimony creates a question of fact regarding whether he

9 The complaint pleads: “Killough rendered services for over five years to APL, and [] APL

knowingly accepted the benefit of those services. . . . Killough had a reasonable expectation of

being compensated a reasonable amount of money for the services provided to APL. APL failed

to provide a reasonable amount of money to compensate Killough for the services provided.

Further, any compensation provided was unreasonable compared to the services rendered.” Doc.

41 at 28.

10 “In this circuit, a plaintiff cannot amend his complaint through argument made in his brief in

opposition to the defendant’s motion for summary judgment.” Miccosukee Tribe of Indians of Fla.

v. United States, 716 F.3d 535, 559 (11th Cir. 2013).

reasonably expected payment of those profits, see doc. 85-1 at 57, his quantum

meruit claim related to unpaid profits from 2015 survives summary judgment.

D.

In Count VI, TCS asserts a conversion claim based on allegations that APL

converted the contracts Killough generated by refusing to transfer them to TCS.

Doc. 41 at 29. For a conversion claim, “a plaintiff must show a wrongful taking, an

illegal assumption of ownership, an illegal use or misuse of another’s property, or a

wrongful detention or interference with another’s property.” Huntsville Golf Dev.,

Inc. v. Ratcliff, Inc., 646 So. 2d 1334, 1336 (Ala. 1994) (citation omitted). “The gist

of the action is the wrongful exercise of dominion over property in exclusion or

defiance of a plaintiff’s rights, where said plaintiff has general or specific title to the

property or the immediate right to possession.” Ott v. Fox, 362 So. 2d 836, 839 (Ala.

1978) (citation omitted). Although TCS concedes that it did not have title to the

contracts, TCS argues that it had an immediate right to possession and had a

contractual right to have title to the contracts. See doc. 97-1 at 34-35. But, the record

reveals that TCS could not assume ownership until the third-party prime contractors

agreed to novate or transfer the contracts from APL to TCS. See doc. 84-13 at 1-5;

85-1 at 26-27; 97-4 at 2. And, while Killough contends that the contractors had

consented, he and TCS do not point to any evidence to suggest the prime contractors

had given their final consent to the novation, see doc. 97-1, or that he tried to execute

the novation after he returned to APL in 2014 and before he left in 2015. As a result,

TCS has failed to establish that it had an immediate right to possess the contracts at

issue, and the conversion claim fails as a matter of law.

E.

Finally, Killough asserts in Count VII an unjust enrichment claim against APL

based in part on his allegations that APL retained the benefits of contracts Killough

generated without adequately compensating him. Doc. 41 at 30-21.11 “To prevail

on a claim of unjust enrichment under Alabama law, a plaintiff must show that:

(1) the defendant knowingly accepted and retained a benefit, (2) provided by

another, (3) who had a reasonable expectation of compensation.” Matador

Holdings, Inc. v. HoPo Realty Investments, L.L.C., 77 So. 3d 139, 145 (Ala. 2011)

(quotation omitted). “Retention of a benefit is unjust if (1) the donor of the benefit

acted under a mistake of fact . . . , or (2) the recipient of the benefit engaged in some

unconscionable conduct, such as fraud, coercion, or abuse of a confidential

relationship.” Id. at 146 (quotation and alteration in original omitted).

Here, APL contends that Killough’s unjust enrichment claim fails because

APL paid him a salary for his work and a share of net profits on the contracts. See

11 The plaintiffs contend in their brief that TCS and Killough assert the unjust enrichment claim

against APL. Doc. 97-1 at 36. But, the Third Amended Complaint explicitly states “Killough

alleges a claim of unjust enrichment against APL,” doc. 41 at 29, n.10, and the unjust enrichment

claim’s ad damnum clause states that only “Killough demands judgment against APL for

compensatory and punitive damages plus interest,” id. at 31.

doc. 83 at 30-32. Killough does not directly refute those contentions, but argues

instead that APL discharged him when he asked for the novation. See docs. 85-1 at

32-33; 97-1 at 36. As Killough puts it, APL’s retention of the contracts and the

profits is unjust. Doc. 97-1 at 36. But, as APL points out, see doc. 105 at 10-11, the

unjust enrichment claim Killough pleaded does not mention APL’s alleged promise

to novate the contracts, or that APL failed to novate the contracts and discharged

Killough when he asked APL to satisfy its alleged promise, see doc. 41 at 29-31.12

Killough cannot amend his claim through a summary judgment brief. See, e.g.,

Monaghan v. Worldpay US, Inc., 955 F.3d 855, 859 (11th Cir. 2020) (citing

Miccosukee Tribe of Indians of Fla., 716 F.3d at 559). Moreover, “grounds alleged

in the complaint but not relied upon in summary judgment are deemed abandoned.”

Resolution Trust Corp. v. Dunmar Corp., 43 F.3d 587, 599 (11th Cir. 1995)

(citations omitted). Thus, APL is entitled to summary judgment because Killough

has abandoned the unjust enrichment claim as pleaded.

* * *

To summarize, as to Killough and TCS’s claims, APL’s motion for summary

judgment is denied as to the breach of contract claims (Count I) and the quantum

12 The complaint pleads that “APL knowingly accepted and retained a benefit in the form of the

TCS-related contracts that Killough obtained and worked with Defendants to fulfill” and

“[d]efendants owe the [p]laintiffs the reasonable value for the contracts described above and for

the work done and expertise provided for APL . . . .” Doc. 41 at 30. Those allegations are not

sufficient to put APL on notice that the unjust enrichment claim is based on the failure to novate.

meruit claim related solely to net profits for 2015 (Count V). In all other respects,

APL’s motion is granted.

F.

For its part, APL asserts in Counts I and II of its counterclaims that Killough

and TCS violated the Defense of Trade Secrets Act (“DTSA”) and the Alabama

Trade Secrets Act (“ATSA”). Allegedly, Killough and TCS took APL’s trade

secrets (in particular, APL’s labor rates) and used them in competition with APL in

bidding for contracts with Northrop. Doc. 54 at 44-48; see also doc. 102 at 8, 16.

Damages available under the DTSA and ATSA are for the actual loss and

unjust enrichment caused by the misappropriation of trade secrets. 18 U.S.C.

§ 1836(b)(3)(B); Ala. Code § 8-27-4(a)(1). TCS and Killough argue that APL

cannot show that the misappropriation and submission of APL’s labor rates to

Northrop conferred any financial benefit to TCS and Killough or caused APL to lose

any profit. Doc. 85 at 18-19. To support that contention, TCS and Killough correctly

note that Northrop rejected the misappropriated labor rates that they submitted. See

doc. 85-105 at 2-3. Still, Northrop used those rates as a ceiling when setting the

value for the contract TCS ultimately received for Killough to perform work for

Northrop that he originally performed as an APL employee. See doc. 84-45 at 52.

In addition, Killough’s labor rate in TCS’s January 2016 contract with Northrop was

exactly 35% less than APL’s 2016 labor rate for principal engineer, which, according

to APL’s expert, is not likely a coincidence. Docs. 88-17 at 30-31; 98 at exh. G,

101-06. Northrop’s use of the allegedly misappropriated labor rates that Killough

and TCS submitted to Northrop creates questions of fact regarding whether the

alleged conduct helped TCS secure a contract with Northrop, and harmed APL or

caused Killough and TCS to be unjustly enriched. Consequently, Killough and

TCS’s motion on the DTSA and ATSA counterclaims is due to be denied.

G.

Summary judgment is due, however, on APL’s claim in Count III of its

counterclaim that Killough and TCS converted its confidential documents. Doc. 54

at 49-50. The ATSA preempts any common law conversion claim based on the

misappropriation of trade secrets. The ATSA “‘is intended to both codify and to

modify the common law of trade secrets in Alabama,’” and a plaintiff cannot “pursue

both statutory and common law theories of recovery for the defendants’ alleged

misappropriation of ‘trade secrets’ or confidential documents.” Allied Supply Co.,

Inc. v. Brown, 585 So. 2d 33, 37 (Ala. 1991) (quotation omitted). Thus, “any

common law tort claim that, whatever its name, provides a theory of recovery for

the misappropriation of a trade secret is preempted by [the] ATSA.” Arkema Inc. v.

Emerson Process Mgmt., LLLP, 413 F. Supp. 3d 1191, 1194 (S.D. Ala. 2019).13 And

13 APL contends that Acoustic Artistry, LLC v. Peavey Electronics Corp, 2:10-cv-02194-AKK,

2013 WL 12250381 (N.D. Ala. Jan. 10, 2013), compels a finding that the ATSA preempts only

common law misappropriation claims rather than other tort claims like conversion. Doc. 102 at

because APL’s conversion claim seeks recovery for the misappropriation of its

confidential documents and information, see doc. 54 at 49-50, it is preempted by the

ATSA.

APL attempts to avoid that conclusion by contending that it is challenging the

taking of its physical property, i.e., confidential documents. Doc. 102 at 18. Such a

claim still fails. The Alabama Supreme Court has found that the ATSA precludes

common law claims for the “alleged misappropriation of ‘trade secrets’ or

confidential documents.” Allied Supply Co., Inc., 585 So. 2d at 37 (emphasis added).

Moreover, the case APL cites hinged on whether “the converted property has value

independent of the value it accrues as a trade secret.” Southern Field Maintenance

& Fabrication LLC v. Killough, 2019 WL 360515, at *5 (M.D. Ala. Jan. 29, 2019)

(citing Diamond Power Int’l, Inc. v. Davidson, 540 F. Supp. 2d 1322, 1345 (N.D.

Ga. 2007)). There is no evidence before the court indicating that the confidential

18. In that case, the court allowed the plaintiff’s conversion claim to proceed past a motion for

judgment on the pleadings because the Supreme Court of Alabama had allowed conversion claims

to proceed with claims arising under the ATSA in at least two cases. 2013 WL 12250381 at *8

(citing Sevier Ins. Agency, Inc. v. Willis Corroon Corp., 711 So. 2d 995 (Ala. 1998) and Soap Co.

v. Ecolab, Inc., 646 So. 2d 1366 (Ala. 1994)). But, as Judge Steele recently noted, the defendants

in the two cases the court cited in Acoustic Artistry did not argue that the ATSA preempted the

plaintiffs’ conversion claims and, therefore, the Supreme Court did not address the issue of

preemption. See Arkema Inc., 413 F. Supp. 3d at 1195. Moreover, the court agrees with Judge

Steele that “Allied Supply did not use the quoted phrase [‘common law misappropriation cause of

action’] to restrict preemption to a single cause of action traveling under a particular name but

rather as a shorthand to describe any tort claim brought to redress the misappropriation of a trade

secret.” Id. at 1194. Thus, the court finds that the ATSA preempts any common law tort claim

for the misappropriation of trade secrets, including conversion claims. See Allied Supply, 585 So.

2d 37.

documents that form APL’s conversion claim, see doc. 54 at 49-50, have value

independent of the information contained within them, see docs. 54; 102.

Consequently, APL’s common law conversion claim is preempted by the ATSA.

H.

APL asserts in Count IV of its counterclaim that, after it discharged Killough,

he and TCS wrongfully interfered with its contractual and business relations with

Northrop. Doc. 54 at 50-55.14 Allegedly, Killough and TCS used confidential

knowledge Killough gained as an APL employee to: influence Northrop’s staffing

decisions; procure a contract for TCS to supply Northrop with personnel doing the

same work APL provided; and influence Northrop’s decision to end APL’s contract.

Doc. 54 at 50-55.15 To prevail on this claim, APL must show “(1) the existence of

14 APL argues that its wrongful interference counter claim is also based on actions Killough took

during his employment. Doc. 102 at 20-22. But, APL cannot amend its counterclaim through its

brief. Miccosukee Tribe of Indians of Fla., 716 F.3d at 559. Moreover, during Killough’s

employment at APL, he was arguably not a stranger to APL’s contractual and business relations

with Northrop Grumman.

APL’s contention that Killough interfered with its relationship with Northrop by not informing

APL that he had an opportunity to continue working on missile defense contracts for Northrop and

by pursuing that opportunity through TCS instead of for APL is unavailing. Doc. 102 at 10-11,

22. As APL recognizes, Alabama is an at-will state, and APL had no right or reasonable

expectation to Killough’s continued employment. See Hoffman-LaRoche, Inc., 512 So. 2d at 728.

15 In its counterclaim, APL also alleges that the plaintiffs interfered with its relationship with

Northrop by persuading Northrop to stop buying equipment through APL and by informing

Northrop that APL is only a “staffing company.” Doc. 54 at 35, 53. But, APL does not present

any evidence related to those allegations, and did not respond to the plaintiffs’ arguments for

summary judgment on the intentional interference claim based on equipment purchases and

Killough’s alleged “staffing company” statement. See doc. 102. Thus, APL has abandoned the

claim based on those two allegations. See Resolution Trust Corp., 43 F.3d at 599.

a protectible business relationship; (2) of which the defendant knew; (3) to which

the defendant was a stranger (4) with which the defendant intentionally interfered;

and (5) damage.” White Sands Group, L.L.C. v. PRS II, LLC, 32 So. 3d 5, 14 (Ala.

2009). APL has failed to make the necessary showing.

1.

To show the plaintiffs interfered with Northrop’s staffing decisions, APL

alleges that Killough and TCS influenced Northrop to: (1) “terminate its use of the

services of APL Network Engineer Travis Merrell and to hire [Merrell] directly” and

to deny APL an opportunity to fill the position vacated by Merrell; (2) deny APL an

opportunity to re-fill a position when Thomas Neumann, an APL employee who

worked as a network engineer for Northrop, resigned; and (3) reject qualified

candidates APL submitted to Northrop to replace Franklin Mitchell, an engineer

APL discharged based on Northrop’s complaints. Doc. 54 at 34-35, 52. But, APL

cites no evidence to support these specific allegations, see doc. 102,16 and it did not

dispute Northrop’s testimony that Killough did not make or have input into

Northrop’s decision to hire Merrell directly and that a Northrop employee probably

took over the work that Merrell had previously performed as an APL employee, see

16 APL does cite evidence showing that TCS employed Merrell and Neumann after they resigned

from APL. See doc. 98 at exhs. A, ¶¶ 23-24, M. But, the intentional interference claim is based

on Northrop’s decisions to hire Merrell directly and to allegedly refuse to allow APL to fill

Neuman’s position, doc. 54 at 34-35, 52, rather than on TCS hiring APL employees, see id. at 50-

55.

doc. 85-45 at 41, 65. Likewise, APL did not challenge Killough’s testimony that he

played no role in Northrop’s decision related to the decision against refilling

Neumann’s position. Doc. 85-1 at 62-63.17 Moreover, APL did not directly dispute

Northrop’s corporate representative’s testimony that Killough had no input into

whether Northrop hired APL candidates and that he did not remember Killough ever

saying anything negative about APL or any of the candidates APL submitted. Doc.

85-45 at 18, 37, 65-67.

APL does offer evidence, however, that Northrop did not accept any APL

candidates after Killough’s employment with APL ended and that Killough

participated in one Northrop interview with a candidate APL presented. Docs. 102

at 21; 98 at exh. A, ¶¶ 20-25; see also docs. 85-1 at 62. Indeed, Killough sat in on

Northrop’s interview with Sam Woodson, a candidate APL submitted to fill the

position vacated by Merrell. See docs. 85-1 at 62; 85-45 at 60; 98 at exh. A, ¶ 24.

But, according to Killough, he and TCS presented Woodson as a candidate for the

position before APL did so, and Northrop and Killough jointly decided that

Woodson’s technical skills did not match what the position required. See doc. 85-1

at 62. Killough added that he and Northrop also reached the same conclusion after

17 In addition, Michael Elsner, a Northrop manager in charge of the project Neumann worked on,

testified that he did not remember Killough ever asking him not to fill Neumann’s position with

an APL employee, doc. 88-8 at 43, and Northrop’s corporate representative testified that he did

not remember Northrop ever hiring Neumann through TCS, doc. 85-45 at 79.

Woodson’s interview. Id. APL offered nothing to rebut these contentions. See doc.

102 at 21-22.18 Based on Killough’s testimony relating to Woodson and APL’s

failure to present evidence that Killough and TCS influenced any of Northrop’s other

staffing decisions, APL has not shown that the plaintiffs interfered with APL’s

contract with Northrop by improperly influencing its staffing decisions.

2.

APL contends also that TCS and Killough interfered with its contractual and

business relations by procuring a contract for TCS to supply Northrop with personnel

doing the same work APL provided. In particular, APL alleges that TCS supplied

employees for positions at Northrop “that were specific to the APL/Northrop

contract” and that the plaintiffs influenced Northrop “to hire at least two TCS

employees within the [] scope of APL’s contract with Northrop . . . .” Doc. 54 at

52-53. Indeed, APL correctly notes that TCS secured a contract with Northrop to

provide the same type of work and personnel as APL provided under its contract

with Northrop. See docs. 85-45 at 14; 102 at 8-10, 21-22. But, APL did not cite any

evidence to show that it submitted candidates for a position that Northrop filled with

a TCS employee. See doc. 102. And, to the extent that APL bases its claim on

18 APL’s corporate representative, Robyn Smith, declares generally that Woodson “was qualified

to fill the position,” doc. 98 at Ex. A, ¶ 24, but she offers nothing specific regarding his

qualifications and does not address Killough’s testimony that he and Northrop previously

determined Woodson did not have the required technical skills for the position when Killough and

TCS presented Woodson as a candidate.

Killough’s decision to pursue work at Northrop through TCS rather than through

APL, Killough was an at-will employee, and APL had no expectation or right to his

continued employment. See Hoffman-LaRoche, Inc., 512 So. 2d at 728. Moreover,

APL did not dispute Northrop’s testimony that a statement defining the work or type

of personnel a subcontractor like APL will supply to Northrop does not guarantee

that Northrop will hire any candidate the subcontractor submits. See docs. 85-45 at

11-12, 76; 102. APL also did not dispute that Northrop has no obligation under any

contract with its subcontractors “to maintain any particular head count level[.]” Doc.

85-45 at 76. Based on this record, APL has not shown that the plaintiffs interfered

with APL’s contractual and business relations by procuring a contract for TCS to

provide personnel and work for Northrop.

3.

Finally, APL contends that it had a reasonable expectation that Northrop

would extend the parties’ contract, and that Killough’s and TCS’s interference

caused Northrop to allow the contract to expire. Docs. 54 at 51, 53-55; 102 at 22.

The record establishes that Northrop’s own program leadership team decided not to

extend APL’s contract because APL was no longer providing personnel to support

Northrop’s missile defense program and had not provided any such personnel “in a

while.” Doc. 85-45 at 19. While APL believes it would have continued to provide

personnel to Northrop and that Northrop would have extended its contract in the

absence of Killough and TCS’s interference, see doc. 54 at 53-54; 102 at 21-22, APL

did not specifically dispute Killough’s testimony that Woodson, the sole APL

candidate Killough interviewed in conjunction with Northrop, lacked the technical

skills for the position APL sought for him at Northrop, see docs. 85-1 at 62; 102.

And, APL has not shown that Killough and TCS influenced any other decision

regarding Northrop’s staffing for its missile defense project. See Section III(H)(1),

supra. Thus, APL has not established that the plaintiffs’ alleged interference led to

Northrop’s decision to not extend its contract with APL.

To summarize, APL has not established its prima facie case. APL has failed

to show the existence of any disputed issues regarding whether Killough and TCS

interfered with APL’s contractual and business relations with Northrop Grumman.

As a result, Killough and TCS’s motion is due to be granted on APL’s wrongful

interference claim.

I.

In Count V of its counterclaim, APL asserts a breach of fiduciary duty claim

against Killough, alleging that Killough set up a competing enterprise and attempted

to usurp APL’s business while still employed by APL. Doc. 54 at 55-58.19 To

19 APL also pleads that Killough breached his fiduciary duty by misappropriating APL’s trade

secrets and confidential documents and by asking APL’s customers to transfer their contracts to

TCS. Doc. 54 at 56-57. To the extent that APL’s claim is based on the alleged misappropriation

of APL’s confidential documents, it is precluded by the ATSA. See Section III(C), supra. Also,

the claim based on Killough’s attempt to persuade APL’s customers to transfer contracts to TCS

is barred by the two-year statute of limitations, see Tender Care Veterinary Hosp., Inc. v. First

establish the claim, APL must show “the existence of a fiduciary duty, a breach of

that duty, and damages suffered as a result of the breach.” Aliant Bank v. Four Star

Investments, Inc., 244 So. 3d 896, 908 (Ala. 2017) (citing Regions Bank v. Lowrey,

101 So. 3d 210, 219 (Ala. 2012)).20

1.

Killough contends that APL cannot assert a cognizable breach of fiduciary

duty claim based on any action he took after APL removed him from his managerial

duties. Doc. 85 at 23-29. But, Killough did not cite any Alabama law explicitly

limiting fiduciary obligation to employees who are executives, directors, or

managers, and the court is not aware of any such authority. Instead, Alabama law

recognizes that employees are agents of their employers for actions that fall within

the scope of employment, see Potts v. BE & K Const. Co., 604 So. 2d 398, 400 (Ala.

1992), and that “‘[i]t is an agent’s duty to act, in all circumstances, with due regard

for the interests of his principal and to act with the utmost good faith and loyalty,’”

Systrends, Inc. v. Group 8760, LLC, 959 So. 2d 1052, 1078 (Ala. 2006) (quoting

Tuskegee Bank, 168 So. 3d 33, 38 (Ala. 2014), and APL abandoned it by failing to respond to

Killough’s motion, see Resolution Trust Corp., 43 F.3d at 599.

20 APL contends that it also asserts a breach of the duty of loyalty claim in Count V that is separate

from its breach of fiduciary duty claim. Doc. 102 at 29-30. But, APL did not cite any Alabama

law indicating that an alleged breach of the duty of loyalty is a separate claim from a breach of

fiduciary duty claim. See doc. 102 at 30. Rather, the duty of loyalty appears to be part of the

fiduciary duty. See M5Mgmt. Servs., Inc. v. Yanac, 428 F. Supp. 3d 1282, 1293-94 (N.D. Ala.

2019) (noting that that the plaintiffs assert a breach of fiduciary duty claim and addressing the duty

of loyalty as part of that claim)

Allied Supply Co. v. Brown, 585 So. 2d 33, 37 (Ala. 1991)). In addition, under

Alabama law, an employee “while engaged in the service of his [employer], has no

right to do any act which may injure his trade, or undermine his business . . . .”

Perfection Mattress & Spring Co. v. Dupree, 113 So. 74, 78 (Ala. 1927) (citation

omitted). This authority belies Killough’s contention that fiduciary duty claims are

limited to managerial employees.

2.

Killough also contends that no breach exists because his alleged conduct

consists of seeking employment on his own behalf or preparing to compete with

APL after his employment with APL ended. Doc. 85 at 26-29. “Implicit in [an

agent’s fiduciary duty] is an obligation not to subvert the principal’s business by

luring away customers or employees of the principal, or to otherwise act in any

manner adverse to the principal’s interest.” Allied Supply Co., 585 So. 2d at 37

(citation omitted). Nevertheless, “it is not a violation of an employee’s fiduciary

duty to prepare to enter into competition with his employer without providing prior

notice,” id., and an employee “is entitled to seek other employment before he is on

the street,” Perfection Mattress & Spring Co., 113 So. at 78.

Here, the record reveals that while Killough was still an APL employee he

(1) contacted Northrop about TCS obtaining a facility security clearance and

becoming an approved supplier, doc. 85-106 at 50-51; (2) emailed a Northrop

employee from his TCS email account asking for job descriptions for openings at

Northrop, doc. 85-26 at 4; (3) sent Northrop a draft statement work using his TCS

email address, docs. 85-45 at 51; 98 at exh. S; and (4) entered into an agreement with

Northrop regarding the scope of work, which mirrored the work Killough did for

Northrop as an APL employee, see doc. 85-45 at 29. While Killough may ultimately

prove that all of those actions qualify as efforts to secure employment or to prepare

to compete with APL after his employment ended, a reasonable jury could find

instead that Killough acted to lure Northrop’s business away from APL.

3.

Finally, Killough contends that APL cannot prove damages. Doc. 85 at 28-

29. Indeed, Killough’s efforts to solicit business from Teledyne Brown and Boeing

on behalf of TCS while employed by APL proved unsuccessful, see docs. 85-106 at

16-17; 98 at exhs. AA, BB; 85-98 at 30, and APL has not shown that Killough’s

actions caused it to lose any business from these two companies, see 85-93 at 34;

85-98 at 30. Consequently, in the absence of proof of damages, the breach of

fiduciary duty claim related to Killough’s attempts to solicit business from those

companies fails.21 But, questions of fact exist regarding whether Killough’s

21 APL contends that it is entitled to recover damages based on the faithless-servant doctrine, which

“precludes an employee from receiving compensation for conduct that is disloyal to the employer

or in violation of the employee’s employment contract.” Edwards v. Allied Home Morg. Cap.

Corp., 962 So. 2d 194, 209 (Ala. 2007); see also doc. 102 at 28-29. But, APL pleaded in its

counterclaim only that it suffered a “diminished competitive advantage” due to Killough’s actions.

interactions with and solicitation of business from Northrop harmed APL. See

section III(F). Accordingly, APL may proceed with its breach of fiduciary duty

claim related to Killough’s interactions with Northrop.

J.

APL asserts in Count VI of its counterclaim that Killough breached

confidentiality provisions of his employment agreement. Doc. 51 at 58-61.

Killough challenges the claim by citing his failure to transmit the signed agreement

to APL, and his related contention that APL cannot show as a result a meeting of the

minds regarding the confidentiality provisions. Doc. 85 at 35-36. While Killough

did not return the signed contract to APL, he did sign it. See docs. 69 at 5; 84-8; 84-

5; 84-6; 85-1 at 24-25. His signature on it raises a question of fact regarding whether

he assented to the confidentiality terms of the agreement. See Ex parte Rush, 730

So. 2d at 1177-78. Consequently, Killough has not established that he is entitled to

summary judgment on the breach of contract claim.22

Doc. 54 at 57. The counterclaim gives no notice that it may seek damages based on compensation

paid to Killough during the time of his allegedly disloyal conduct.

22 Killough also contends APL cannot prove damages based on the alleged breach of the

confidentiality provisions. Doc. 85 at 36-37. But, as discussed above, a question of fact exists

regarding whether Killough’s alleged misappropriation of APL’s confidential documents injured

APL. See Section III(F), supra. Moreover, Killough does not address APL’s allegation that it has

incurred damages in seeking the return of its confidential documents. See doc. 54 at 60.

K.

Finally, Killough and TCS challenge APL’s request for lost profits damages

after November 2019. Doc. 85 at 37. Under Alabama law, a plaintiff may recover

lost profits if the plaintiff shows the lost profits are “the natural and proximate, or

direct, result of the breach complained of and [the profits] are ‘capable of

ascertainment with reasonable, or sufficient, certainty . . . .’” Super Valu Stores, Inc.

v. Peterson, 506 So. 2d 317, 327 (Ala. 1987 (quoting Morgan v. South Central Bell

Telephone Co., 466 So. 2d 107, 115-16 (Ala. 1985)). Based on APL’s testimony,

Killough and TCS contend that APL cannot show that any of their actions have

caused APL to incur lost profits since at least November 25, 2019, doc. 85 at 37, the

date by which APL asserts it had “graduated into being in [] a business size where

[it] wouldn’t be competing for some of the same work as TCS because [APL is] a

bigger company.” Doc. 85-27 at 61 (emphasis added). But, that APL and TCS

would not compete for “some of the same work” does not establish as a matter of

law that APL and TCS never competed for the same work. As a result, Killough and

TCS have not shown at this juncture that APL cannot recover for any lost profits

incurred after November 25, 2019.

* * *

To summarize, APL may proceed with its counterclaims under the DTSA and

ATSA (Count I and II), its breach of fiduciary duty claims related to Killough’s

interactions with Northrop (Count V), and its breach of contract claim (Count VI).

In all other respects, Killough and TCS’s motion for summary judgment is due to be

granted.

IV.

To close, Monkress and APL’s motion for summary judgment, doc. 80, is due

to be granted as to the fraudulent misrepresentation and suppression claims (Counts

II and III), quantum meruit claim related to net profits in 2010-2014 (Count V),

conversion claim (Count VI), and unjust enrichment claim (Count VII). The motion

is due be denied as to Killough and TCS’s breach of contract claims (Count I) and

quantum meruit claim related to net profits in 2015 (Count V).

Killough’s and TCS’s motion for summary judgment, doc. 85, is due to be

granted as to the following counterclaims: conversion (Count III); wrongful

interference with contractual and business relations (Count IV); and breach of

fiduciary duty (Count V) based on the alleged misappropriation of trade secrets,

attempt to transfer contracts from APL to TCS, and attempts to solicit business from

Teledyne Brown and Boeing. The motion is due to be denied as to APL’s

misappropriation of trade secrets under the DTSA and ATSA (Counts I and II),

breach of fiduciary duty (Count V) based on Killough’s alleged attempts to usurp

APL’s business with Northrop for TCS, and breach of contract (Count VI)

counterclaims.

The court will issue a separate order in accordance with this opinion.

DONE the 30th day of March, 2021.

ABDUL K. KALLON

UNITED STATES DISTRICT JUDGE

37