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IN THE COURT OF APPEALS OF IOWA No. 6-742 / 05-2113 Filed April 25, 2007

MIDWEST MOTORSPORTS PARTNERSHIP, Plaintiff-Appellant, vs. HARDCORE RACING ENGINES, INC., KENT A. DAVENPORT, JEFFREY A. ROSS, RODNEY G. RICHARDS, SCOTT A. OLSON AND PATRICK GRAHAM, Defendants-Appellees. ________________________________________________________________

Appeal from the Iowa District Court for Story County, Carl D. Baker, Judge.

Midwest Motorsports Partnership appeals the denial of its motion for directed verdict on multiple claims against HardCore Racing Engines, Inc. and several individual defendants. AFFIRMED.

James H. Gilliam, Ann Holden Kendell, and Laura N. Martino of Brown, Winick, Graves, Gross, Baskerville and Schoenbaum, P.L.C., Des Moines, for appellant. James A. Brewer and Angelina M. Thomas of Newbrough, Johnston, Brewer, Maddux & Howell, L.L.P., Ames, for appellees.

Heard by Mahan, P.J., and Miller and Vaitheswaran, JJ.

2 VAITHESWARAN, J. Midwest Motorsports Partnership built race car engines and sold component parts. Several former employees of Midwest formed a competitor corporation, Hardcore Racing Engines, Inc. Hardcore and the former employees. Midwest alleged that Hardcore and Kent Davenport, Jeffrey Ross, Rodney Richards, Scott Olson, and Patrick Graham (1) breached a duty of loyalty to Midwest, (2) intentionally interfered with existing contractual relationships, (3) intentionally interfered with prospective business advantage, (4) misappropriated trade secrets, and (5) engaged in civil conspiracy. The defendants Midwest responded by suing

counterclaimed for abuse of process and unpaid wages. The counterclaims are not at issue on appeal. During trial, Midwest moved for a directed verdict on all its claims. The district court denied the motion. Later, at a conference on proposed jury

instructions, the district court decided not to submit to the jury Midwest's claims for breach of a duty of loyalty, intentional interference with existing contractual relationships, and civil conspiracy. Midwest's remaining two claims of intentional interference with prospective business advantage and misappropriation of trade secrets were submitted to the jury, which returned a verdict in favor of the defendants. In a post-trial ruling, the court rejected Midwest's contention that its motion for directed verdict should have been granted. Midwest appealed. I. Breach of Duty of Loyalty Midwest contends "directed verdict was warranted against Davenport, Ross, Richards, Graham and Olson on breach of the duty of loyalty or, at a

3 minimum, the trial court erred by failing to submit plaintiff's claim of breach of the duty of loyalty to the jury." Our review of this issue is on error. Bellville v. Farm Bureau Mut. Ins. Co., 702 N.W.2d 468, 473 (Iowa 2005). Midwest acknowledges that our highest court has not explicitly recognized a separate cause of action by an employer against an employee for breach of a duty of loyalty. See Condon Auto Sales & Service, Inc. v. Crick, 604 N.W.2d 587, 599-600 (Iowa 1999). Midwest argues, however, that the types of conduct that have supported claims for breach of this duty in other jurisdictions are present in this record. Our state has not recognized this cause of action and Midwest did not provide the district court with a reasoned basis for moving in a different direction. Beyer v. Todd, 601 N.W.2d 35, 38 (Iowa 1999) (stating

requested instruction must "correctly state[ ] the law.") Midwest next argues that at least two of its former employees, Kent Davenport and Patrick Graham, had managerial positions that subjected them to a "fiduciary" duty of loyalty. Our highest court has recognized a cause of action for breach of a fiduciary duty by a corporate officer and director. See Midwest Janitorial Supply Corp. v. Greenwood, 629 N.W.2d 371, 375 (Iowa 2001). However, this cause of action was neither pled nor tried here. Even if this claim had been tried, there is no evidence that these two defendants were partners in Midwest. At best, there is evidence that Davenport was the shop manager,

although Davenport testified he primarily worked as a machinist. As for Graham, the record reflects that he had a title of "sales manager" but performed a variety of non-sales functions, including scheduling employees and undertaking special projects. At all relevant times, he was a salaried employee of Midwest. Based

4 on this record, we conclude that, even if the related claim of breach of a fiduciary duty had been pled and tried, there was not substantial evidence to submit the claim to the jury. The district court did not err in denying Midwest's motion for directed verdict on the breach of duty of loyalty claim and in refusing to submit the breach of duty of loyalty claim and the related breach of fiduciary duty claim to the jury. II. Misappropriation of Trade Secrets This claim is based on the defendants' receipt of a Midwest customer list, job tickets, and certain other Midwest property. The claim was submitted to the jury, which determined Midwest was not entitled to damages. Midwest contends it "was entitled to directed verdict on its claim of misappropriation of trade secrets." The company maintains "there was not sufficient evidence to generate a jury question on this issue

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