Hanks et al v. Anderson

THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH
NATHAN W. HANKS and REALSOURCE
EQUITY SERVICES, LLC,
Plaintiffs/Counterclaim Defendant,
v.
MICHAEL S. ANDERSON, AKA
PARTNERS, LC, KENT ANDERSON,
MICHAEL HOWARD, and GREENFILL
WOODLAND CREEK APTS, LLC,
Defendants/Counterclaim Plaintiffs.
MEMORANDUM DECISION
AND ORDER
AND
FINDINGS OF FACT AND
CONCLUSIONS OF LAW
Case No. 2:19-cv-00999
District Judge David Barlow
A six-day bench trial was held between September 3 and 17, 2025, on the five remaining
claims in this case: (1) Plaintiff RealSource Equity Services, LLC’s trade secret misappropriation
claim against defendants Michael S. Anderson, AKA Partners, LC, Kent Anderson, Michael
Howard, and Greenfill Woodland Creek Apts, LLC; (2) Michael S. Anderson’s breach of contract
and (3) breach of the implied covenant of good faith and fair dealing claims against Nathan
Hanks; (4) Kent Anderson and Michael Howard’s compensation claim against Michael S.
Anderson; and (5) Michael S. Anderson’s indemnification claim against Nathan Hanks.
After carefully considering the evidence and arguments presented at trial, the court enters
the following findings of fact and conclusions of law. Based on these findings and conclusions,
the court will enter judgment against RealSource Equity Services, LLC on the trade secret claim,
in favor of Michael S. Anderson on the contract claims, against Michael Howard and Kent
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Anderson on the compensation claims, and against Michael S. Anderson on the indemnification
claim.
FINDINGS OF FACT
The Parties
RealSource Equity Services, LLC (“RS Equity” or “RealSource”) is one of several
RealSource-related real estate entities1 that invests primarily in multifamily housing projects.2
Michael S. Anderson (“Michael Anderson”) 3 is a real estate broker and investor who founded
the first RealSource entity to manage property investments.4 Throughout his time with
RealSource, he was its principal broker.5 Nathan Hanks began working with RealSource and
Michael Anderson in 1999,6 after which he and Michael Anderson formed RS Equity in 2002 as
equal partners, each with 50% ownership.7 Its purpose is to raise equity and buy property.8 RS
Equity originally generated asset management income from acquisitions, operations, and
dispositions.9 Nathan Hanks has controlled the entity’s daily operations since its inception, and
in 2018 he became its sole owner and manager.10
Kent Anderson started working as a real estate agent for RS Equity in 2002, and Michael
Howard joined RS Equity as a real estate agent in 2011.11 Both were independent contractors for
RealSource, not employees.12 In 2018, Michael Anderson helped form AKA Partners (“AKA”),
1 Trial Ex. 1, Membership Interest Purchase Agreement (the “Agreement”).
2 Trial Tr. 348:18–24, ECF No. 471.
3 Because a number of parties share first or last names, the court uses their full names throughout.
4 Trial Tr. 47:4–7, ECF No. 451.
5 Trial Tr. 917:21–24, ECF No. 467.
6 Trial Tr. 341:6–7, ECF No. 471.
7 Trial Tr. 474:17–23, ECF No. 471 ; Trial Tr. 818:6–13, ECF No. 467.
8 Trial Tr. 349:14—351:17, ECF No. 471.
9 Trial Ex. 1029 at 35.
10 .Trial Tr. 341:12–21, ECF No. 471; Trial Ex. 1.
11 Trial Tr. 113:23—114:16, ECF No. 451; Trial Tr. 818:6–9, ECF No. 467.
12 Trial Tr. 820:3–7, 871:18–25, ECF No. 467.
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which RS Equity accuses of wrongful competition.13 AKA first invested in “small infill projects
and fix and flip homes.”14 It then mostly invested in self-storage properties.15 Michael Howard
quit working for RS Equity in the summer of 2019 and joined AKA shortly thereafter.16 Kent
Anderson was terminated from his position at RS Equity in the fall of 2019, partly because he
had been working for AKA.17
Trade Secret Claim
RS Equity raises funds for its projects, in part, through investors, and asserts that it
maintains lists of hundreds of past investors and potential clients (the “Client List”).18 Nathan
Hanks asserts that this Client List exists on four separate platforms, including spreadsheets on
RealSource’s server and on web-based software including Constant Contact and IMS Database
(“IMS”).19 Nathan Hanks testified that RS Equity’s Client List is a collection of contact
information for past, current, and potential investors.20 Nathan Hanks testified about how the
lists are maintained: potentially “hundreds” of people have login credentials to access
RealSource’s system that housed the spreadsheets,21 “[v]ery few” people at RealSource have
access to the IMS database,22 and “anyone who would need” to send marketing materials,
newsletters, and mailers could access Constant Contact.23 RealSource does not have written
13 Trial Tr. 60:18–20, 65:16–17, ECF No. 451; Trial Ex. 15.
14 Trial Tr. 60:17–18, ECF No. 451.
15 Trial Tr. 156:17—157:8, ECF No. 451.
16 Trial Tr. 159:15–22, ECF No. 451; Trial Ex. 51.
17 Trial Ex. 15.
18 Trial Tr. 79:11–15, 119:8–24, ECF No. 451; Trial Tr. 343:11–25, 344:6–8, 446:17–25, 446:20–24, 467:19—468:7,
447:8–10, 456:12–16, ECF No. 471.
19 Trial Tr. 431:7–12, 446:17–25, 467:19—468:7, ECF No. 471.
20 Trial Tr. 344:3–8, ECF No. 471.
21 Trial Tr. 110:14–18, ECF No. 451 (RealSource’s IT Director’s testimony).
22 Trial Tr. 380:5–7, 381:5, ECF No. 471 (Nathan Hanks testifying that “around 10” individuals can access IMS).
23 Trial Tr. 381:20—382:24, ECF No. 471. See also 454:7–9, ECF No. 471 (Nathan Hanks testifying that “until
Michael Howard left, he was the only one that had access to it. After Michael Howard left, others might have had
access to it.”).
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confidentiality agreements with its independent contractors.24 RealSource has a confidentiality
section in its employee handbook, but the handbook does not apply to independent contractors.25
No actual Client List, either in its entirety or as excerpts, came into evidence.26
Michael Anderson testified that he had always had his own list of investors with whom he
had been interacting, which he kept on an Excel file on his personal computer and in journal
entries on Outlook.27 When Michael Anderson’s brother Kent Anderson joined RS Equity, Kent
Anderson maintained the list; they were “constantly exchanging that list back and forth” as they
added to and updated it.28 Kent Anderson testified that he also cultivated a list of investors,
beginning in 2003, to help him raise equity.29 Michael Howard testified he introduced Constant
Contact to RealSource and managed client campaigns for them through this platform.30 When he
left RealSource, he transferred its login information to another employee and never downloaded
any email addresses from it or accessed the database when he worked with AKA.31 Both Michael
Howard and Kent Anderson lost whatever access they had to the Client List after leaving
RealSource.32 Michael Anderson also testified he never had access to Constant Contact or IMS
and never told Nathan Hanks that he had received a Client List from Michael Howard.33
24 Trial Tr. 441:3–9, 442:3–6, ECF No. 471.
25 Trial Tr. 159:8–14, ECF No. 451; Trial Tr. 346:8–25, ECF No.471.
26 See id. RealSource’s counsel tried to introduce two downloaded excerpts of the client list from Constant Contact
and IMS as exhibits, but they failed to produce a proper witness to lay the foundation and realized too late that the
individual(s) who may have created the document were not disclosed as witnesses. Trial Tr. 358:3–368:10, ECF No.
471. The court ordered briefing on whether allowing the previously undisclosed individuals to testify would
prejudice the opposing parties. ECF No. 454, Sept. 10, 2025. After considering the briefing, the court issued an
order, denying RealSource’s request to call those witnesses. ECF No. 459, filed Sept. 11, 2025.
27 Trial Tr. 52:11–23, ECF No. 451.
28 Trial Tr. 53:6—54:2, ECF No. 451.
29 Trial Tr. 169:9–21, ECF No. 451.
30 Trial Tr. 117:22–24, 125:13–16, 160:11–19, ECF No. 451.
31 Trial Tr. 126:13–127:4, ECF No. 451.
32 Trial Tr. 180:9–14, ECF No. 451; Trial Tr. 484:10–14, ECF No. 471.
33 Trial Tr. 79:11–15, ECF No. 451 (Q: “Did you have access to RealSource’s customer lists on its web-based
servers?” A: “I did not.” Q: “Did you ever have access to Constant Contact?” A: “I did not.”); Trial Tr. 607:21–24,
ECF No. 466.
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On September 3, 2019, Michael Anderson sent an email to potential investors about an
investment opportunity with AKA.34 On that email, Michael Anderson had inadvertently
included all the recipients’ email addresses in the “to:” rather than “bcc:” line, revealing all
recipients’ email addresses to each other.35 RealSource spent a considerable amount of time at
trial asking Nathan Hanks and Kelly Randall36 which email addresses in Michael Anderson’s
email they recognized as former or current investors with RealSource when they saw the email
back in 2019.37 Together, they recognized roughly half the emails listed.38
In sum, the parties presented conflicting testimony about the source of Michael
Anderson’s email addresses, but RealSource did not produce evidence to corroborate their claim
that the email addresses listed in Michael Anderson’s email was a copy of RealSource’s Client
List or to rebut Michael Anderson’s testimony that the email addresses he used were populated
from his own investor list.
Breach of Contract Claim
Nathan Hanks and Michael Anderson each owned a 50% interest in RS Equity until
March 28, 2018, when they entered into the Membership Interest Purchase Agreement
(“Agreement”), through which Nathan Hanks agreed to purchase Michael Anderson’s interest in
RS Equity and several other RealSource entities.39 As part of the Agreement, Michael Anderson
agreed that RealSource could use his brokerage license for up to twenty-four months after
closing, and Nathan Hanks agreed that he would indemnify Michael Anderson for any claim
34 Trial Tr. 71:6–23, ECF No. 451; Trial Exs. 16, 18.
35 Trial Ex. 18; Trial Tr. 72:24—73:6–8, ECF No. 451 (Michael Anderson’s email “apologizing for not putting
everybody in the BCC line”).
36 Kelly Randall has held various leadership roles at RealSource, including CFO and COO. See Trial Tr. 194:4–7,
545:24–25, ECF No. 451.
37 Trial Tr. 394:18—431:2, ECF No. 471 (Nathan Hanks’s testimony); Trial Tr. 547:8—587:11, ECF No. 466 (Kelly
Randall’s testimony).
38 Trial Tr. 394:18—431:2, ECF No. 471; Trial Tr. 547:8—587:11, ECF No. 466; Trial Ex. 18.
39 Trial Ex. 1.
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“arising out of the use” of his brokerage license during that twenty-four-month period.40
However, the parties agreed that Nathan Hanks would not be liable for indemnification until the
aggregate amount of indemnified costs exceeded $20,000.41
Under the Agreement, Michael Anderson also agreed not to solicit any RealSource clients
with the effect or intention of diverting their business from RealSource (the “Non-Solicitation
Clause”) and to keep RealSource’s information confidential (the “Confidentiality Clause”).42 The
Agreement provides that Nathan Hanks would pay Michael Anderson a down payment and
deliver a promissory note for each RealSource operating entity that Michael Anderson owned,
including RS Equity.43 Payment under the RS Equity promissory note (the “Note”) was to be
made monthly beginning on February 15, 2018, and continue every month until paid in full.44
The term of the Note was originally set for five years. However, the Agreement stated
that if any of the RealSource Operating Entities had an insufficient cash flow to make a
particular monthly payment to Michael Anderson on the RS Equity Note, Nathan Hanks would
not be required to make the payment until sufficient funds were available (the “Deferral
Clause”).45 The Note gave Michael Anderson the right “to make the entire Principal amount of
the Note immediately due and payable” upon default (the “Acceleration Clause”).46 The right
applied only to a default that had not been cured after sixty days following written notice of
default.47 Thus, after the cure period, Michael Anderson could “exercise the option to accelerate
upon an Event of Default regardless of any prior forbearance.”48 After the Agreement was
40 Agreement ¶¶ 7.6, 9.3(c).
41 Id. ¶ 9.4(b).
42 Id. ¶¶ 7.3, 7.4.
43 Id. ¶ 2.3.
44 Id. at ¶ 2.3(c).
45 Id. at ¶¶ 2.3(b), 2.3(e).
46 Trial Ex. 1031 (the “Note”) ¶ 6.
47 Note ¶ 6.
48 Note ¶ 6.
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executed, Michael Anderson stopped working for RealSource and lost access to its servers.49
Nathan Hanks made monthly payments under the Note from February 2018 to January 2019.50
On the issue of whether Nathan Hanks was justified in withholding payments to Michael
Anderson under the terms of the contract,51 Nathan Hanks testified he believed by the end of
2018 that he had overpaid Michael Anderson for that year based on RS Equity’s profitability.52
Consequently, he made no additional payments to Michael Anderson after January 2019 and
concluded that since RS Equity’s losses in 2019 were even greater, he had a “long runway”
before profitability reached a level that required him to resume payments to Michael Anderson.53
Nathan Hanks testified that he evaluated RealSource Equity Services’ financial picture annually
to determine whether a payment should be made.54 RealSource’s 30(b)(6) deponent testified as
follows:55
Q: “So when you say it was up to Nate to make that decision [to make a payment
to Michael Anderson], what information did you provide him to assist him in
making that determination?”
A: “Those monthly or year-end financial statements.”
Q: “And you said generally it was year-end?”
A: “Yes.”
Q: “How often do you recall it being monthly?”
A: “Maybe on a quarterly basis, maybe three times a year other than year end.”
Q: “And what specifically would you present to him? Was it simply the P&L?”
A: “Yes.”
Q: “Anything else?”
A: “No.”56
49 Trial Tr. 180:9–14, ECF No. 451.
50 Trial Tr. 691:12–14, ECF No. 466.
51 Trial Tr. 1039:15—1040:3, ECF No. 473.
52 Trial Tr. 691:12–692:4, 696:16–18, ECF No. 466.
53 Trial Tr. 693:6–8, 696:16–23, 699:2–5, ECF No. 466.
54 Trial Tr. 695:10—697:22, ECF No. 466.
55 Fed. R. Civ. P. 30(b)(6) allows a party to depose an organization through an officer designated “to testify on its
behalf.” Here, Jeff Hanks is the designee for 30(b)(6) testimony on behalf of RealSource Equity and RealSource
Properties OP, LP. See Trial Ex. 1029 at 4.
56 Trial Ex. 1029 at 24:7–21.
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Additionally, the assertion that Nathan Hanks reviewed only the profit and loss yearly statements
is supported by one of his responses to a request for production.57 When asked to produce “any
and all documents used in making the calculation of the ‘Non-Default Monthly Shortall’ for each
of RS Equity and RS Commercial for each month in which Hanks has not made a monthly loan
payment from March 1, 2018 through the present,” Nathan Hanks produced RS Equity’s profit
and loss statements, but no balance sheets or bank records.58 Thus, the court finds that Nathan
Hanks determined annually whether to pay Michael Anderson based on RS Equity’s previous
year’s profit-and-loss statement.59
Both parties used the Deferral Clause in the Agreement to support their positions.
Michael Anderson contends that because its terms allow a deferral of payment only when RS
Equity has “insufficient cash flow during such calendar month,” Nathan Hanks breached the
contract by not making a monthly determination of RS Equity’s cash flow.60 Nathan Hanks
emphasizes the portion that describes how the Monthly Payment “shall not be required to be
made to Seller pursuant to the respective Note until such Deferring RS Operating Entity has
sufficient available cash (taking into account projected costs and expenses and reserves), as
reasonably determined by the manager of such Deferring RS Operating Entity” to assert he
has discretion to withhold payment based on his reasonable assessment of the totality of RS
Equity’s situation.61
57 Trial Ex. 1004 at 4–5.
58 Trial Ex. 1004 at 4–5.
59 Trial Tr. 697:9–18, ECF No. 466.
60 Agreement ¶ 2.3(e); Note ¶ 5 (emphasis added).
61 Id. (emphasis added).
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When over a year passed without a payment from Nathan Hanks, Michael Anderson
provided him with notice of his default in a letter on May 1, 2020, that stated, in relevant part, as
follows:
While we understand that you have claimed that the relevant entities have
“Insufficient Cash Flow” that allows you to defer the monthly payments, we do not
believe that this excuse can be justified based on information available to Anderson
at this time. If you continue to rely on this excuse and fail to cure the Events of
Default set forth herein by making all past due payments, we demand that you
provide all documents and information upon which you are basing your
conclusion that there has been “Insufficient Cash Flow” to make the required
payments.62
Nathan Hanks did not cure the default within sixty days.63 Michael Anderson then
invoked the Acceleration Clause in his counterclaim,64 filed on August 7, 2020, in which he
stated that the Note provides him “the right ‘to make the entire Principal amount of the Note
immediately due and payable,’ which right Anderson hereby invokes.”65 Michael Anderson’s
expert, Mr. Rondeau, testified about his calculations regarding prejudgment interest on the
balance owing on the Note following the last payment in January 2019.66
Breach of the Implied Covenant of Good Faith and Fair Dealing Claim
In 2021, RealSource, then under the control of Nathan Hanks, changed the way it handled
investments.67 Michael Anderson presented evidence that RS Equity has ceased its role as the
main acquisition entity under the RealSource umbrella and no longer generates asset
management income or acquisition income.68 On May 7, 2021, RealSource established a new
62 Trial Ex. 1028 (“Notice of Default”) (emphasis added).
63 Trial Tr. 691:12–16, ECF No. 466.
64 Trial Tr. 1046:6–9, ECF No. 473.
65 See Michael S. Anderson’s and AKA Partners, LC’s Am. Answer and Countercl. ¶ 15, ECF No. 101, filed Aug. 7,
2020; Note ¶ 6.
66 Trial Tr. 783:20—791:12, ECF No. 467.
67 Trial Ex. 1029 at 11–14.
68 Trial Ex. 1029 at 35:23–25; 43:22–24.
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entity, RealSource Properties OP, LP (“RSPOP”)69 to acquire investment properties, taking over
for RS Equity as the main operating entity for acquisitions within the RealSource umbrella of
companies.70 After this transition, RealSource stopped using RS Equity for most day-to-day
operations and shifted this work to RSPOP.71 Indeed, RS Equity now does “very little” because
all its operations have moved to other RealSource entities.72 RealSource also moved the revenue
streams that would have come to RS Equity for operations and disposition fees to RSPOP.73
When RSPOP was created, several properties were transferred into it from RS Equity.74 RSPOP
was structured to acquire fees following from those properties, including the applicable
disposition fees, instead of RS Equity.75 And, as Nathan Hanks acknowledged, “without new
acquisitions, RS Equity Services will have minimal, if any, income.”76 Ever since RSPOP was
created in 2021, RS Equity Services’ yearly real estate income has slowed to a trickle:
69 The parties often referred to this entity as the “REIT” at trial, while acknowledging it was not technically a Real
Estate Investment Trust nor its actual name.
70 Trial Tr. 711:15–17, ECF No. 466; Trial Tr. 1005:15–24, ECF No. 473; Trial Ex. 1029 at 13–14 (RealSource
Equity “was the main kind of operating entity that provided kind of the acquisition model, provided kind of all the
services to go out and review, research properties and then, you know, present an executive summary to investors,
and then go out and work with lenders and buyers to acquire these properties.” RS Equity now does “[v]ery little
[b]ecause all of its operations have moved into the OP type entity.”).
71 Trial Ex. 1029 at 13:23–14:23.
72 Trial Ex. 1029 14:8–14.
73 Trial Ex. 1029 35:4–36:7.
74 Trial Tr. 726:9–15, ECF No. 466 (Nathan Hanks’s testimony: “more than nine” properties have been transferred
into RSPOP); Trial Tr. 897:9—907:15, ECF No. 466 (Kelly Randall’s testimony about eleven properties that have
been acquired by RSPOP: Antero Apartments, the Park at Midtown, the Park at Oak Ridge Apartments, Autumn
Ridge, Alkire Glen, Steepleway Downs, Lake St. James, Belle Grove, the Mill at Georgetown, Timber Hollow
Apartments, and Morgan Ridge).
75 Trial Exs. 1025, 35, 1017; Trial Tr. 729:12–14; 737:6–24, ECF No. 466; Trial Tr. 856:8–12, ECF No. 467.
76 Trial Tr. 724:25—725:2, ECF No. 466.
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RS Equity’s Yearly Real Estate Income
(1-Acquisitions, 2-Operations, 3-Dispositions, and 4-Asset Management)
2018 	2019 	2020 	2021 	2023 	2024 	2025*
1 	$555,000.00 	$0 	$811,900.00 	$0 	$0 	$0 	$0
2 	$277,878.18 	?** 	?** 	$0 	$0 	$0 	$0
3 	$395,000.00 	$809,960.00 	$744,881.92 	$38,600.00 	$0 	$0 	$0
4 	$242,644.13 	$470,867.95 	$417,678.41 	$385,174.69 	$90,411.18 	$85,962.43 	$40,756.84
Total 	$1,470,522.31 	$1,280,827.95 	$1,974,460.33 	$423,774.69 	$90,411.18 	$85,962.43 	$40,756.84
(Data in the chart is pulled from Trial Exs. 35 & 1025.)
* January–June 	** No “Operations” category is listed for these years
Thus, the court finds that the evidence clearly shows RSPOP’s detrimental effect on RS Equity’s
real estate income.77 Nathan Hanks testified he did not set up RSPOP to stop payment on the RS
Equity note to Michael Anderson.78 Instead, he claimed RSPOP was created to combat a slowing
market and to raise money more competitively.79 Taken at face value, this assertion supports
Michael Anderson’s argument that RS Equity will never be profitable enough to trigger
repayment to him because RSPOP competes with RS Equity for investor dollars—more
effectively, according to Nathan Hanks.80 And although Nathan Hanks also testified that “our
hopes are that we can turn that machine back on again,” referring to RS Equity, it is unsupported
by the evidence.81
77 Trial Exs. 1025, 35 (RS Equity’s profit and loss statements for 2017–2021 and 2023–June 2025).
78 Trial Tr. 751:14–17, ECF No. 466.
79 Trial Tr. 725:13–15, ECF No. 466. See also Trial Tr. 751:18—752:8, ECF No. 466 (“A REIT is much more liquid”
and can “spread risk”).
80 Trial Ex. 35, 1025 (RS Equity’s profits and losses before and after RSPOP’s formation).
81 Trial Tr. 724:25–725:4; 780:16–20, ECF No. 466.
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Compensation Claims
Kent Anderson and Michael Howard claim they are entitled to unpaid compensation for
their work with RealSource.82 Neither party disputed at trial that there never was a written
agreement of any kind about their compensation arrangement.83 Instead, they had a variety of
conversations at various times with various combinations of persons.
Kent Anderson raised equity for RS Equity because he has “a great deal of experience
and desire in working with clients.”84 Kent Anderson testified that from 2002 until 2019 he chose
to be an independent contractor, rather than an employee, of RS Equity so he could receive real
estate commissions on the deals for which he helped raise equity.85 He testified that at the
beginning of his employment with RS Equity, he “sat down with all of the members,” including
Nathan Hanks and Michael Anderson, and discussed how they would allocate the income from
deals.86 Initially, the compensation arrangement allocated the first 50% to “the house,” which
was RealSource, and the remainder would be equally shared among the “pool members,”
including Kent Anderson.87 During the discussion, Kent was never told that he would no longer
receive the fees if he left RealSource.88 Kent Anderson also testified about many conversations
he had over the years with his brother Michael Anderson about compensation.89 Michael
Anderson testified that he had no written agreement with Kent Anderson about his
82 Trial Tr. 1086:2–25, ECF No. 473.
83 Trial Tr. 920:9. (Michael Anderson’s testimony: “There was nothing in writing.”), ECF No. 467.
84 Trial Tr. 818:14–22, ECF No. 467.
85 Trial Tr. 818:6–7, 820:3–13, 850:19–20; ECF No. 467.
86 Trial Tr. 820:19—821:5, ECF No. 467.
87 Trial Tr. 821:19–23, 823:10–15, ECF No. 467.
88 Trial Tr. 833:18–21, ECF No. 467.
89 Trial Tr. 853:15–20, ECF No. 467.
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compensation.90 Kent Anderson testified at length about his calculation of the damages he
believes he and Michael Howard are owed by RS Equity.91
When Michael Howard approached Michael Anderson about working for RS Equity,
Michael Anderson twice referred him to Nathan Hanks for those discussions.92 Michael Howard
was an independent contractor for RS Equity.93 Michael Howard’s work for RS Equity focused
on finding, analyzing, underwriting, and managing properties.94 Initially, RealSource paid Kent
Anderson and Michael Howard acquisition, operations, and disposition fees.95 Michael Howard,
likewise, testified that Michael Anderson told him he did not have to be with RealSource to
receive the fees he had “already earned.”96 Michael Howard also testified about the
compensation he believes he is owed, although less extensively.97
In 2011, however, Nathan Hanks changed the arrangement so that pool members’
distributions were no longer equal but based, instead, on each member’s contribution to the
deal.98 Evidence at trial established that Michael Anderson never had authority to decide “who
got paid anything out of RS Equity Services for any services rendered.”99 As he testified, “I
never had that control. I never was the signer on the accounts.”100 Michael Anderson was also
asked at trial, “And did you ever have any agreement that you, as the broker, would pay [Kent
Anderson and Michael Howard] anything?” To which he replied, “As the broker, no.”101
90 Trial Tr. 920:9, ECF No. 467.
91 Trial Tr. 823:21—867:1, ECF No. 467.
92 Trial Tr. 869:18–22, 870:5–11, ECF No. 467.
93 Trial Tr. 887:1–14, ECF No. 467.
94 Trial Tr. 874:23–25, ECF No. 467.
95 Trial Tr. 821:12—835:25, 871:8–11, ECF No. 467.
96 Trial Tr. 886:6–15, ECF No. 467 (Q: “What did Michael say to you? . . . Did he ever tell you that you had to be
working for RealSource in order to obtain that money?” A: “He specifically said the opposite. You did not have to be
there, it was already earned.”).
97 Trial Tr. 872:19—873:5, ECF No. 467.
98 Trial Tr. 843:3–22, ECF No. 467.
99 Trial Tr. 918:14–21, ECF No. 467.
100 Trial Tr. 918:17–18, ECF No. 467.
101 Trial Tr. 920:20—921:8, ECF No. 467.
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Additionally, both sides referenced Kent Anderson’s termination email from Nathan
Hanks:
When we came to an agreement in February that RS would pay you significantly
more each month, we did so in reliance on your representation and promise that
you would not perform services for AKA while you were performing services for
RS. . . . When confronted about you performing services for AKA from March
through August, you initially denied your conduct for several days until eventually
confessing that you had been lying to us and working for AKA all along. To be
clear, that is a breach of our agreement and fraud on your part.102
Kent Anderson did not dispute that he was terminated from his relationship with RS
Equity in 2019 because after promising not to work for his brother’s new firm, AKA Partners, he
did so anyway, denied doing so when confronted, and then eventually recanted.103
Indemnification Claim
Neither party presented witnesses on this claim.104 The parties stipulated to the
Agreement being entered in as evidence.105
CONCLUSIONS OF LAW106
I. 	Defend Trade Secret Act Claim
To establish a claim under the Defend Trade Secret Act “(DTSA”), the owner of a trade
secret must show: “(1) the existence of a trade secret that relates to a product or service used in,
or intended for use in, interstate or foreign commerce; (2) the acquisition of the trade secret, or
the use or disclosure of the trade secret without consent; and (3) the person acquiring, using, or
disclosing the trade secret knew or had reason to know that the trade secret was acquired by
102 Trial Ex. 15, ¶ 5; Trial Tr. 356:11—358:2; 483:6—485:19, ECF No. 471.
103 Trial Ex. 15, ¶ 5.
104 Trial Tr. 955:11—956:17, ECF No. 467.
105 Trial Tr. 955:16–25, ECF No. 467.
106 Any Conclusion of Law denominated as a Finding of Fact shall be deemed a Conclusion of Law and any Finding
of Fact denominated as a Conclusion of Law shall be deemed a Finding of Fact. To reduce redundancy, the court has
not cross-listed all fact findings.
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improper means.”107 “The threshold inquiry into a claim of the misappropriation of trade secrets
is whether a trade secret even exists.”108 Thus, the court first addresses whether RealSource
established the existence of the trade secret at issue here before addressing whether it was
misappropriated.
A. 	Existence of a Trade Secret
The DTSA109 defines a trade secret as “all forms” of information that “(A) the owner
thereof has taken reasonable measures to keep such information secret; and (B) [that] derives
independent economic value, actual or potential, from not being generally known to, and not
being readily ascertainable through proper means by, another person who can obtain economic
value from the disclosure or use of the information.”110 “The plaintiff bears the burden of
proving the existence of a trade secret, and there is no presumption in its favor.”111
The court begins with this burden, noting that a “plaintiff must substantiate more than
vague and unsupported allegations as to unknown trade secrets in order to satisfy its burden.”112
RealSource claims the trade secret is a Client List or collection of contact information for
hundreds of investors who participate in RealSource’s investments in real estate.113 RealSource’s
107 Total Quality Sys., Inc. v. Universal Synaptics Corp., 679 F. Supp. 3d 1196, 1210 (D. Utah 2023) (quoting DTC
Energy Grp., Inc. v. Hirschfeld, 420 F. Supp. 3d 1163, 1175 (D. Colo. 2019)).
108 Farm Bureau Ins. Co. v. Am. Nat. Ins. Co., 505 F. Supp. 2d 1178, 1185 (D. Utah 2007).
109 18 U.S.C. §§ 1831 to 1839.
110 Id. § 1839(3).
111 Bimbo Bakeries USA, Inc. v. Sycamore, 39 F.4th 1250, 1262 (10th Cir. 2022). The analysis in cases brought under
the Uniform Trade Secrets Act is applied by the court because the elements are substantially similar to those brought
under the DTSA. Applied Predictive Techs., Inc. v. MarketDial, Inc., No. 2:19-cv-496, 2024 WL 3759894, at *6 (D.
Utah 2024) (“As a general matter, because of their substantial similarities, the federal trade secrets statute and state
uniform secrets statutes are often considered in tandem. This, in part, stems from the fact that the federal statute was
expressly modeled on the uniform trade secrets statute.”); InteliClear, LLC v. ETC Glob. Holdings, Inc., 978 F.3d
653, 657 (9th Cir. 2020) (considering claims brought under the federal trade secrets statute together with a state
uniform trade secrets act “because the elements are substantially similar”).
112 Utah Med. Prods., Inc. v. Clinical Innovations Assocs., Inc., 79 F. Supp. 2d 1290, 1312 (D. Utah 1999).
113 ECF No. 389. Earlier in this litigation, defendants argued the Client List did not qualify as a trade secret because
it was not a single compilation. But a “trade secret can exist in a combination of characteristics and components
each of which, by itself, is in the public domain, but the unified process, design and operation of which in unique
combination, affords a competitive advantage and is a protectable secret.” Meyer Grp., Ltd. v. Rayborn, 695 F. Supp.
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evidence of the list amounts to referential testimony. Nathan Hanks testified that there are
spreadsheets with client information maintained in databases, that “there was four separate ways
we kept track of all of our clients and their information,” and that RS Equity is the owner of the
“four databases.”114 Yet when Nathan Hanks was asked whether a list exists “as a standalone
thing within either Constant Contact or IMS,” he did not know and conceded he was “not able to
confirm it right now without asking the person who runs” the programs.115 He believes “there is
a list that says here are the specific RealSource investors,” but has never seen that list and is
“relying on somebody else telling [him] that it exists.”116 Two of those databases, Constant
Contact and IMS, are from third-party providers with specialized functions, such as email
distribution and financial management.117 Michael Howard testified that he ran Constant Contact
at RealSource and would “periodically” receive a list from a coworker that he would upload into
Constant Contact when RealSource “wanted to run a campaign.”118 He clarified that Constant
Contact is not an email management system, but an “email broadcast system.”119 Finally,
RealSource’s damages expert, Mr. Townsend, testified that he was provided with “RealSource’s
client list” that he used to compare names on AKA’s list of investors.120
However, RealSource failed to enter into evidence any portion of the Client List or any
client-related data.121 RealSource did not produce data from the servers described in testimony.
3d 39, 63 (D.D.C. 2023); see also IHS Glob. Ltd. v. Trade Data Monitor, LLC, No. 2:18-cv-01025, 2021 WL
2134909, at *7 (D.S.C. 2021). And courts have established six factors to determine if a compilation is a trade secret.
See Bimbo Bakeries USA, 29 F.4th at 641 (quoting Restatement of Torts § 757 cmt. b (1939)). Regardless, the court
need not decide whether the Client List qualifies as a compilation trade secret because the existence of the Client
List was not established at trial.
114 Trial Tr. 344:6–8, 446:17–25, 446:20–24, 467:19—468:7, 447:8–10, 456:12–16, ECF No. 471.
115 Trial Tr. 470:4–20, ECF No. 471.
116 Trial Tr. 470:22–471:7, ECF No. 471.
117 Trial Tr. 120:3–6, ECF No. 451; Trial Tr. 379:14–25, ECF No. 471.
118 Trial Tr. 117:22—125:16, ECF No. 451.
119 Trial Tr. 120:3–6, ECF No. 451.
120 Trial Tr. 246:2–7, ECF No. 452.
121 See Trial Tr. 446:20–24, 467:19—468:7, ECF No. 471.
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Instead, RealSource offered two exhibits that purportedly contained summaries, or excerpts, of
the Client List into evidence.122 Although these summaries, unlike the underlying client data, had
already been produced in discovery, they were not admitted into evidence because RealSource
failed to produce the proper witness to introduce them.123 RealSource then attempted to call
previously undisclosed witnesses, but the court denied the request under Federal Rules of Civil
Procedure 26(a) and 37(c)(1).124
In sum, the existence and content of the Client List or lists have not been established by
the preponderance of the evidence. While RealSource undoubtedly has contact information for
its clients and potential clients, more is required to prove the existence of a trade secret. For
whatever reason, RealSource did not produce the actual information that would comprise its
Client List. The record evidence does not show exactly what information is kept on the Client
List, how the clients’ information was obtained, when each client was added to the list, or how
many clients are on the list. Testimony about how client information was maintained at
RealSource does not suffice to prove the existence of a confidential Client List.125
Having failed to produce the Client List and data themselves, RealSource elicited
testimony from Nathan Hanks and Kelly Randall about many dozens of email addresses they
recognized as belonging to RealSource investors on an email from Michael Anderson on behalf
of AKA Partners. But Michael Anderson’s mass email sent on behalf of AKA to potential
investors that included email addresses of individuals or entities who had been RealSource
investors does not establish the existence of RealSource’s confidential Client List.
122 Trial Tr. 358:3—368:10, ECF No. 471.
123 Id.
124 Fed. R. Civ. P. 26(a), 37(c)(1).
125 Trial Tr. 117:22—125:16 (Michael Howard testifying how he ran Constant Contact at Real Source and would
“periodically” receive a list when they wanted to run a campaign” that he would upload into Constant Contact.);
Trial Tr. 446:17–25; 447:8–10, ECF No. 471. (Nathan Hanks testifying about spreadsheets with client information
maintained in databases).
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Therefore, RealSource failed to meet its burden of proving by the preponderance of the
evidence the existence of a RealSource confidential Client List it claims is a trade secret.126
Reasonable Measures to Keep Information Secret
Assuming the Client List had been produced and received into evidence, the next
question is whether RealSource proved by a preponderance of the evidence that reasonable
measures were taken to keep the information secret.
The DTSA only protects information that its owners have taken reasonable measures to
keep secret.127 “Reasonable efforts does not mean all conceivable efforts, nor are heroic
measures required. Thus, a plaintiff can meet this requirement even though a defendant manages
to point out aspects of plaintiff’s procedures that could have been stronger.”128 But
“indispensable to an effective allegation of a trade secret is proof that the matter is, more or less,
secret.”129
RealSource failed to show that reasonable measures were made to keep the Client List
secret. First, RealSource does not have written agreements with its independent contractors
requiring confidentiality.130 Kent Anderson and Michael Howard never signed confidentiality
agreements with RealSource.131 Nor was any evidence presented that they were asked to sign
126 Bimbo Bakeries USA, 39 F.4th at 1262.
127 18 U.S.C. § 1839(3)(A).
128 Graystone Funding Co., LLC v. Network Funding, LP, No. 2:19-cv-00383, 2021 WL 4460113, at *3 (D. Utah
Sept. 29, 2021) (quoting John Bean Techs. Corp. v. B GSE Grp., LLC, 480 F. Supp. 3d 1274, 1296–97 (D. Utah
2020) (internal citations omitted); see also First United Bank Ins. Sols., Inc. v. Inservices, LLC, No. civ-22-682-R,
2023 WL 1483138, at *3 (W.D. Okla. Feb. 2, 2023).
129 Hertz v. Luzenac Grp., 576 F.3d 1103, 1109 (10th Cir. 2009) (citation omitted).
130 Trial Tr. 441:3–9, 442:3–6, ECF No. 471.
131 Trial Tr. 159:8–14, ECF No. 451 (Michael Howard’s testimony he was never provided “with an employee
handbook or employee manual” or asked to sign one while at RS Equity);169:24–25, ECF No. 451 (Kent Anderson:
“I was an independent contractor [with RealSource] from December 2, 2002, until October 16th of 2019.”); Trial Tr.
871:18–25, 887:1–11, ECF No. 467 (testimony about Michael Howard being an independent contractor with
RealSource); Trial Tr. 348:9–11, ECF No. 471. (Nathan Hanks’s testimony that he is “not aware” of any independent
contractors signing the employee handbook).
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any confidentiality agreement. RealSource’s employee handbook has a confidentiality section,
but the handbook entered into evidence does not apply to independent contractors.132
Additionally, the RealSource employee handbook postdates the events at issue.133 Nathan Hanks
testified that “from 2017 forward,” a similar confidentiality provision existed in the employee
handbook, but RealSource failed to offer into evidence the confidentiality provision itself or
elaborate on how that provision was “similar” to the one promulgated later.134
Second, the only evidence about security regarded the IMS database and Constant
Contact, which are third-party software programs. Nathan Hanks testified that access to the
Client List was on a “need-to-know basis,” but no clear evidence was presented about exactly
who accessed the lists or when they were accessed.135 Additionally, it is undisputed that for a
period of years Michael Howard, an independent contractor who was not bound by any
confidentiality provision, had access to one or both of these programs. Finally, while Nathan
Hanks described the client information at issue as residing in four programs, almost nothing was
said about the two non-IMS and non-Constant Contact sources, including any security features.
For all of these reasons,136 RealSource did not establish, by a preponderance of the
evidence, that it took reasonable measures to protect the secrecy of its client information.137
Therefore, the Client List fails to satisfy this element of a trade secret.
132 Trial Tr. 346:8–25, ECF No. 471; Tr. Ex. 2 (the employee handbook states it was “revised 3/01/2020”).
133 Id.
134 Trial Tr. 347:13–22, ECF No. 471.
135 Trial Tr. 347:5–12, ECF No. 471.
136 Michael Anderson also argued that RS Equity fails on this element because the Client List has been used on
behalf of an entity other than RS Equity. Since 2020, RS Equity has “shared and continues to share information
regarding [RSPOP] to its client list to invite these clients to invest in RSPOP.” Trial Tr. 461:9–12; 461:24—462:8,
ECF No. 471. Because this element fails on other grounds, the court chooses not to address this argument.
137 Trial Tr. 379:9—384:3, ECF No. 471.
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Independent Economic Value from Secrecy
Even if the other factors were met, RealSource has not demonstrated the Client List’s
independent economic value from being kept secret.
To qualify as a trade secret under the DTSA, information must derive “independent
economic value, actual or potential, from not being generally known to, and not being readily
ascertainable through proper means by, another person who can obtain economic value from the
disclosure or use of the information.”138 “Thus, the essence of a trade secret is that it derives its
value from secrecy.”139 “This element requires proof not just of value, but of value specifically
tied to secrecy.”140 “Proof of value untethered to value derived from secrecy does not show an
alleged trade secret’s independent economic value.”141
RealSource did not make this showing because it did not present supporting evidence or
rebut contradicting evidence. RealSource offered no specific evidence about the efforts, time, or
other resources spent on developing the Client List. Evidence of the “amount of effort or money
expended in obtaining and developing the information” is a hallmark of a trade secret claim.142
Yet RealSource offered no evidence that it expended considerable time and effort over the years
to curate a list of existing and potential investors that it claimed to be invaluable for raising
equity.
Instead, RealSource argued throughout trial that AKA could not have closed on its
properties without RealSource investors, claiming that “there’s no suggestion that they had
138 18 U.S.C. § 1839(3)(B).
139 Stromback v. New Line Cinema, 384 F.3d 283, 305 (6th Cir. 2004).
140 Synopsys, Inc. v. Risk Based Sec., Inc., 70 F.4th 759, 771 (4th Cir. 2023).
141 Id. at 772 (citing Buffets, Inc. v. Klinke, 73 F.3d 965, 969 (9th Cir. 1996)).
142 Hertz. v. Luzenac Grp., 576 F.3d 1103, 1108 (10th Cir. 2009) (cleaned up).
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alternative investors available.”143 According to RealSource’s theory, an entity such as AKA
“buy[s] the apartment building for 10 million, and you can finance 70 percent of it, but you have
to raise . . . $3 million through investors. Well, none of those numbers would have been met
without the RealSource customer list.”144 This argument, however, holds no weight in the court’s
analysis because it was unsupported by the evidence.145 At most, RealSource attempted during
closing argument to connect evidence from its damages expert’s report about the specific
investors in each AKA project with the testimony about RealSource investors in Michael
Anderson’s email to calculate what percentage of AKA’s investors had invested with
RealSource.146 But RealSource failed to produce evidence that any of those investors had
actually diverted their investment dollars from RealSource. Without such evidence of actual
diversion, RealSource’s theory is based on mere speculation. Furthermore, closing argument is
not evidence and theories must be tethered to facts admitted into evidence.147
Second, RealSource failed to rebut defendants’ evidence that such lists of potential
investors are readily available to the public and that the primary value of the Client List was in
the underlying relationship with the clients, not in the secrecy of the list.148 Kent Anderson
testified that AKA purchased a list of 42,000 high-net-worth contacts for 16 cents apiece from an
online company, and that “[m]any” title companies provide free lists of such names.149 And
Michael Howard testified that he did not think it would be “a big deal” if one of his competitors
143 Trial Tr. 992:13–14, ECF No. 473.
144 Trial Tr. 992:11–22, ECF No. 473.
145 See, e.g., Fed. Deposit Ins. Corp. v. Palermo, 815 F.2d 1329, 1338 (10th Cir. 1987) (“A party is only entitled to
instructions on those theories of his or her case that are supported by competent evidence.”).
146 Trial Tr. 981:1—983:7, ECF No. 473.
147 See United States v. O’Neal, 796 Fed. App’x 513, 517 (10th Cir. 2019) (“Closing arguments are not evidence.”).
It is worth noting that there were names mentioned by Nathan Hanks and Kelly Randall that Mr. Townsend did not
identify as being RealSource investors, which highlights flaws in the data underlying its expert’s report. See Trial Tr.
1019:21—1020:11, ECF No. 473.
148 Trial Tr. 141:22–25, ECF No. 451.
149 Trial Tr. 188:18—189:20, ECF No. 451.
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had his customer list because “[t]hose names are available anywhere.”150 He explained, “It’s not
about the list. It’s about the relationship you have with the name.”151 Kent Anderson, likewise,
testified that “the important part” of his list was not the contact information but “the relationship
itself.”152 It stands to reason that individuals are more willing to invest with an acquaintance than
with a stranger. But more importantly, RealSource left this evidence unrebutted. In sum, the
absence of sufficient evidence about the list’s “independent economic value, actual or potential,
from not being generally known” and the unrebutted evidence to the contrary, RealSource did
not establish by a preponderance of the evidence that client information “derives its value from
secrecy.”153
Accordingly, the Client List does not qualify as a trade secret under these elements.
B. 	Acquisition of the Trade Secret by Improper Means
If the Client List were a trade secret, RealSource would still need to show acquisition by
improper means. “To establish the acquisition of a trade secret, a plaintiff must show that the
trade secret was ‘acquired under circumstances giving rise to a duty to maintain the secrecy of
the trade secret or limit the use of the trade secret.’”154
That acquisition must have occurred “without express or implied consent by a person
who used improper means, such as misrepresentation or a breach of a duty to maintain secrecy,
‘to acquire knowledge of the trade secret.’”155 RealSource’s claim fails on this element because
150 Trial Tr. 141:17–24, ECF No. 451.
151 Trial Tr. 141:14–25, ECF No. 451.
152 Trial Tr. 171:5–7, ECF No. 451.
153 Stromback, 384 F.3d at 305.
154 Big Squid, Inc. v. Domo, Inc., No. 2:19-cv-193, 2019 WL 3555509, at *12 (D. Utah Aug. 5, 2019) (quoting 18
U.S.C. § 1839 (5)(B)(ii)(II))).
155 Rapid Enters., LLC v. U.S. Postal Serv., No. 2:22-cv-00627, 2023 WL 5979999, at *11 (D. Utah Sept. 14, 2023)
(quoting 18 U.S.C. § 1839(5)(B)(i)).
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the record does not show that defendants acquired the alleged trade secret, let alone did so
without consent by improper means.
First, RealSource has not established by a preponderance of the evidence that defendants
acquired RealSource’s Client List. That Nathan Hanks and Kelly Randall recognized many
investors’ email addresses in Michael Anderson’s email seeking investments for AKA does not
prove that defendants obtained client contacts from RealSource’s lists. What the record does
show is that Michael Anderson did not have access to the databases containing the client
information, and Kent Anderson may have had his own list of investors dating back to 2003.156
Kent Anderson testified that his “job was just to raise equity, and so [he] started th[e] list for that
purpose” and “added to it over the years as [he would] get more referrals and introductions.157
There was no evidence that RealSource paid Kent Anderson for creating the list. On the contrary,
Kent Anderson stated that he was not “salaried for the purpose of creating data for RealSource”
or asked to create a list of accredited investors.158 He testified that he simply did so as an
independent contractor to help him raise investor funds.159 Having said that, Kent Anderson also
did not offer into the evidence the investor list he said he created. As for Michael Howard, he had
access to Constant Contact until he left RealSource, but RealSource did not establish that he used
that access to pass along client information to Michael or Kent Anderson.160
In fact, Nathan Hanks acknowledged RealSource made no efforts to try and determine
who allegedly accessed their databases at the relevant times.161 Despite RealSource’s concern
that defendants improperly obtained its confidential Client List, it failed to conduct an audit of its
156 Trial Tr. 180:2–21, ECF No. 451.
157 Trial Tr. 180:2–8, ECF No. 451.
158 Trial Tr. 181:4–9, 23–25, ECF No. 451.
159 Id.
160 Trial Tr. 453:16—455:23, ECF No. 471. (Nathan Hanks acknowledging RealSource made no efforts to try and
determine who accessed their databases at the relevant times).
161 Trial Tr. 453:16—455:23, ECF No. 471.
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systems to see if defendants actually accessed them. Nathan Hanks conceded that RealSource
could have determined who logged in and what logins occurred with Constant Contact and IMS
but RealSource did not make any such effort.162 Thus, while there was testimony that Nathan
Hanks or Kelly Randall recognized approximately half of the addresses from Michael
Anderson’s fundraising email as belonging to RealSource investors, this was insufficient to
establish that Michael Anderson’s email list was a copy of RS Equity’s confidential Client List or
even derived from it.
Second, RealSource failed to show improper means or lack of consent. The evidence does
not establish that Michael Anderson violated the Agreement’s Non-Solicitation Clause, which
states in relevant part as follows:
During the Restricted Period, Seller shall not, and shall not permit any of its
Affiliates to, directly or indirectly, solicit or entice, or attempt to solicit or entice,
any clients of or investors in any RS Entity or potential clients of or investors in
any RS Entity with the intention of diverting their business or services from
any RS Entity or for any other purposes the effect of which is to divert their
business or services from any RS Entity.163
RealSource presented no direct evidence that Michael Anderson violated this
provision.164 RealSource seemingly assumed that anyone who had ever invested with it would
necessarily invest with RealSource—and only RealSource—in future investments. But critically,
162 Trial Tr. 454:11—455:23, 484:21—485:6, ECF No. 471.
163 Agreement p 7.4(c) (emphasis added).
164 As described above, Nathan Hanks and Kelly Randall identified several dozen emails of RealSource investors on
Michael Anderson’s email to potential AKA investors. But this exercise failed to establish misappropriation.
RealSource conceded Michael Anderson never had access to Constant Contact or IMS, so the overlap of investor
emails could easily imply Michael Anderson obtained the names from somewhere other than the databases that
stored RealSource’s confidential Client List(s). RealSource tried to rebut Michael Anderson’s testimony that he
populated the email list from his own information with Nathan Hanks’s testimony that some of the names on
Michael Anderson’s email became investors with RealSource after he left in 2018. See Trial Tr. 495:1–11, ECF No.
471. Yet neither Nathan Hanks nor Kelly Randall testified where the new investors’ names came from or foreclosed
the possibility that Michael Anderson had not already become acquainted with those investors. Thus, the testimony
RealSource did present about emails matching RealSource investors did not establish misappropriation of the Client
List.
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it failed to produce evidence that any of the individuals or entities who invested with AKA would
have invested additional funds with RealSource if AKA had not approached them.
Michael Anderson, on the other hand, produced evidence that he told potential AKA
investors that they could not invest if doing so would divert investments from RealSource.
Michael Anderson communicated this requirement in a disclaimer at the end of emails to
potential investors: “Please note that you should not divert any funds that you plan to invest with
RealSource to any projects that I am discussing herein or otherwise. Due to contractual
obligations I can’t, and would not, accept such funds.”165 Furthermore, the evidence shows that
Michael Anderson required potential AKA investors to sign non-diversion letters, which state in
relevant part as follows:
The undersigned hereby represents to the Anderson Parties and the RS Parties that
any investment that the undersigned makes now or in the future with any of the
Anderson Parties will not divert any business, investment funds or other services
to/from any of the RS Parties. The undersigned covenants not to do any business
with any of the Anderson Parties in the future that would negatively impact or in
any way result in a diversion of any business, investment funds or other services
to/from any of the RS Parties.166
The Agreement’s Non-Solicitation clause did not outright prohibit Michael Anderson from
soliciting investors generally or RealSource investors specifically. Instead, it barred only
solicitation that diverted or was intended to divert money from RealSource.167 Michael Anderson
alerted potential investors of this, both through email disclaimers and non-diversion letters.
165 Trial Ex. 20.
166 Trial Ex. 1166.
167 Agreement p 7.4(c). “During the Restricted Period, Seller shall not, and shall not permit any of its Affiliates to,
directly or indirectly, solicit or entice, or attempt to solicit or entice, any clients of or investors in any RS Entity or
potential clients of or investors in any RS Entity with the intention of diverting their business or services from
any RS Entity or for any other purposes the effect of which is to divert their business or services from any RS
Entity.” (emphasis added).
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Thus, Michael Anderson’s conduct regarding RealSource clients does not violate the Agreement,
so even if RealSource could prove the other elements, it cannot show the Client List was used
“without express or implied consent.”
Nevertheless, there was limited testimony received that Michael Anderson may have felt
that his actions could have damaged RealSource. Nathan Hanks testified that he met with
Michael Anderson at his home one evening in the wake of the previously discussed AKA
Partners email that was sent to numerous individuals, many of whom also had invested with
RealSource. According to Nathan Hanks, Michael Anderson “said he felt bad about it, he felt
sorry, that they really needed to raise these funds for this project, but that I was supposed to let
him know whatever the damages were and he would pay them.”168 While this testimony is
notable, it does not, of course, establish the existence of trade secret, show that reasonable
measures were taken to protect it, establish that the Agreement itself was violated,169 or prove
that the client contact information used must have come from RealSource as opposed to mutually
known information kept by the independent contractors, Mike Howard and Kent Anderson.
Finally, as independent contractors, Kent Anderson and Michael Howard were under no
confidentiality agreements during their employment with RealSource.170 In sum, this element
fails because the record does not show that defendants acquired the Client List or used it without
consent.
168 Trial Tr. 389:8-11, ECF No. 471.
169 In closing argument, Nathan Hanks’s counsel argued that when Michael Anderson sent out his email to numerous
individuals who had invested with RS Equity and thereby exposed their email addresses to each other “that is a
breach of confidentiality.” Trial Tr. 975:20–976:1, ECF No. 473. Counsel did not explain how using the email
addresses in an inadvertently unblinded fashion amounted to a violation of the confidentiality provision of the
Purchase Agreement. Nor was evidence received about what damages would have flowed from any such breach.
170 Trial Tr. 441:3–9, 442:3–6, ECF No. 471.
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C. 	Injury Resulting from Use of the Trade Secret
Because RealSource has not established any elements of the DTSA claim, the court does
not consider damages.
In sum, the DTSA claim fails because RealSource has not met its burden to establish the
elements.
II. 	Breach of Contract Claim
Utah law applies to Michael Anderson’s contract claims.171 On his breach of contract
claim, Michael Anderson must prove (1) the existence of a contract, (2) his own performance
under the contract, (3) breach of the contract by the other party, and (4) damages.172 The parties
are in clear agreement that there is an enforceable contract between them.173 However, Nathan
Hanks disputes the remaining elements, contending that Michael Anderson did not perform as
required by the contract, that he did not breach the relevant contracts or that his nonpayment was
excusable, and that damages should not be awarded.174 Thus, the court considers each of those
elements in turn.
A. 	Performance
There is no dispute that Michael Anderson transferred his interest in RealSource entities
to Nathan Hanks.175 Although Nathan Hanks argues that Michael Anderson violated a provision
171 “A federal court exercising supplemental jurisdiction over state-law claims ‘applies the substantive law . . . of the
forum state.’” Cornelius v. Oracle Am., Inc., 2:24-cv-00850, 2025 WL 2161146, *4 n.5 (D. Utah July 30, 2025)
(quoting BancOklahoma Mortg. Corp. v. Capital Title Co., 194 F.3d 1089, 1103 (10th Cir. 1999)); see also
Agreement ¶ 10.9(a) (stating that the “Agreement shall be governed by and construed in accordance with the
internal laws of the State of Utah”).
172 Accesslex Inst. v. Philpot, 2023 UT App 21, ¶ 25, 526 P.3d 1282 (quoting Am. W. Bank Members, LC v. State,
2014 UT 49, ¶ 15, 342 P.3d 224).
173 That contract was received into evidence and contains the material provisions of the parties’ agreement. Trial Ex.
1.
174 Trial Tr. 342:5–7, ECF No. 471; Trial Tr. 691:4–6. ECF No. 466; Mot. for Partial Summ. J. Against Michael
Anderson on the RS Equity Note 2–3, ECF No. 325, filed Nov. 17, 2023.
175 Trial Tr. 685:2–13, ECF No. 466.
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of the Agreement by soliciting investors for AKA projects, the court has already found that
Michael Anderson did not violate the Agreement.176 Therefore, Michael Anderson has met this
element and his performance under the Agreement is established.
B. 	Breach
“The essence of a breach of contract claim is that one party violated the terms of a
contract while the other party complied with them.”177 Under the terms of the Agreement,
Nathan Hanks agreed to pay Michael Anderson $683,757 for his interest in RS Equity and to pay
that amount in sixty equal monthly installments of $11,396.178 The monthly payments are
predicated upon RS Equity having sufficient cash flow to pay Nathan Hanks “at least equal to
twice” the $11,396.179 If it is determined that said condition is not met, the Agreement allows
Nathan Hanks to defer payment to Michael Anderson as outlined in the Deferral Clause, which
states in relevant part as follows:
. . . in the event that if any of the RS Operating Entities cannot make a Distribution
to Buyer at least equal to twice the full Monthly Payment that Buyer must make to
Seller related to such RS Operating Entity (the “Deferring RS Operating Entity”)
as a result of insufficient cash flow during such calendar month (any such
shortfall, a “Non-Default Monthly Shortfall”), an amount equal to one-half (1/2) of
the Non-Default Monthly Shortfall in such Monthly Payment allocated to such RS
Operating Entity (only) (the “Deferred Monthly Payment”) shall not be required to
be made to Seller pursuant to the respective Note until such Deferring RS Operating
Entity has sufficient available cash (taking into account projected costs and
expenses and reserves), as reasonably determined by the manager of such
Deferring RS Operating Entity . . . .180
The alleged conflict in the Deferral Clause arises from the bolded language. Michael
Anderson contends that because the Deferral Clause allows a deferral of payment only when RS
176 See supra Section I.B.
177 Storey v. Seipel, 2:22-cv-00486, 2024 WL 4436609, at *8 (D. Utah Oct. 24, 2024).
178 Note ¶ 2.
179 Agreement ¶ 2.3(e); see also Note ¶ 5.
180 Id. (emphasis added).
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Equity has “insufficient cash flow during such calendar month,” Nathan Hanks breached the
contract by not making monthly determinations of RS Equity’s cash flow.181
For his part, Nathan Hanks invokes the language in the Deferral Clause that describes
how the Monthly Payment “shall not be required to be made to Seller pursuant to the respective
Note until such Deferring RS Operating Entity has sufficient available cash (taking into account
projected costs and expenses and reserves), as reasonably determined by the manager of such
Deferring RS Operating Entity” to assert he has discretion to withhold payment based on his
reasonable assessment of the totality of RS Equity’s situation.182
“When we interpret a contract we first look at the plain language of the contract to
determine the parties’ meaning and intent.”183 “If the language within the four corners of the
contract is unambiguous, the parties’ intentions are determined from the plain meaning of the
contractual language and the contract may be interpreted as a matter of law.”184
“A contract is facially ambiguous if its terms are capable of more than one reasonable
interpretation because of uncertain meanings of terms, missing terms, or other facial
deficiencies.”185 “A ‘reasonable interpretation’ is one ‘that cannot be ruled out, after considering
the natural meaning of the words in the contract provision in context of the contract as a whole,
as one the parties could have reasonably intended.’”186
Here, the parties’ different positions do not stem from ambiguity in the Deferral Clause
because its terms are capable of only “one reasonable interpretation.”187 The Deferral Clause
181 Agreement ¶ 2.3(e); Note ¶ 5 (emphasis added).
182 Id. (emphasis added).
183 Brady v. Park, 2019 UT 16, ¶ 53, 445 P.3d 395 (internal quotations omitted).
184 Id. (quoting Cent. Fla. Invs., Inc. v. Parkwest Assocs., 2002 UT 3, ¶ 12, 40 P.3d 599).
185 Mind & Motion Utah Invs., LLC v. Celtic Bank Corp., 2016 UT 6, ¶ 24, 367 P.3d 994 (citations omitted).
186 Meade Recovery Servs. LLC v. Davidson, 2025 UT App 97, ¶ 10, 575 P.3d 228 (quoting Brady, 2019 UT 16,
¶ 55).
187 Mind & Motion, 2016 UT 6, ¶ 24 (citations omitted).
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states that “if any of the RS Operating Entities cannot make a Distribution to Buyer at least equal
to twice the full Monthly Payment that Buyer must make to Seller related to such RS Operating
Entity (the “Deferring RS Operating Entity”) as a result of insufficient cash flow during such
calendar month,” then the Monthly Payment “shall not be required to be made to Seller
pursuant to the respective Note until such Deferring RS Operating Entity has sufficient available
cash . . . .”188 The Agreement and Note clearly create a monthly payment plan: “The Principal
Amount shall be due and payable in sixty (60) equal monthly installments of $11,396.”189 “The
first payment under each of the Notes shall be payable on February 15, 2018 to Seller or his
successors and assigns, and thereafter equal payments shall be made on the fifteenth (15 th ) day of
each calendar month . . . .”190 The Agreement conditions those monthly payments on RS Equity’s
ability to pay Nathan Hanks twice the Monthly Payment each month.
In other words, the Deferral Clause plainly required Nathan Hanks to determine whether
RS Equity had sufficient cash flow on a monthly basis.191 If he did not do so, he would have no
basis for deferring any particular monthly payment and would be in breach of the contract by
withholding the payment.192 Sufficient cash flow is defined in the Agreement “as at least equal to
188 Agreement ¶ 2.3(e) (emphasis added); see also Note ¶ 5.
189 Note ¶ 2.
190 Agreement ¶ 1.2(c).
191 Id. (“[I]f any of the RS Operating Entities cannot make a Distribution to Buyer at least equal to twice the full
Monthly Payment that Buyer must make to Seller related to such RS Operating Entity (the “Deferring RS Operating
Entity”) as a result of insufficient cash flow during such calendar month . . . .”). Nathan Hanks was asked if he
understood “that every month you’re required to make the payment unless you reasonably determine that RS Equity
Services could not make a distribution to you of $22,792?” to which he answered, “Correct.” Trial Tr. 693:16–20,
ECF No. 466.
192 Regarding Nathan Hanks’s other potential justifications for withholding payments, at trial there was testimony
that on February 10, 2019, Nathan Hanks asked Michael Anderson if he could pause payments under the Note until
RS Equity’s acquisitions picked back up, something he assured Michael Anderson would happen soon. Trial Tr.
701:19—702:22, ECF No. 466; Trial Ex. 1012. Nathan Hanks testified that he “also called and we discussed it.”
Trial Tr. 701:23–24, ECF No. 466. Then, on February 15, 2019, Nathan Hanks emailed Michael Anderson stating
that “per our discussion and the previous email” he would “hold the monthly RS Equity Service payment until some
additional acquisitions are made.” Trial Ex. 1012. Nathan Hanks testified that he was “not sure if this is a
modification or not. I mean, it is in writing, and it looks like both parties have agreed to it.” Trial Tr. 703:23–25,
ECF No. 466. The email exhibit itself does not include any response indicating agreement by Michael Anderson,
notwithstanding Nathan Hanks’s testimony that both parties had agreed to it. Trial Ex. 1012; see also Trial Tr.
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twice the full Monthly Payment that Buyer must make to Seller,” meaning that Nathan Hanks
needed to make a monthly determination of whether RS Equity could pay him at least $22,792
before he could defer the monthly payment to Michael Anderson for his interests in
RealSource.193 If he made that determination for a given month, then such payment would
become a “Deferred Monthly Payment.”194
Any particular “Deferred Monthly Payment” then would be deferred until RS Equity had
“sufficient available cash (taking into account projected costs and expenses and reserves), as
reasonably determined by the manager of such Deferring RS Operating Entity . . . .”195 In
other words, once a monthly payment had been deferred by meeting the conditions of the
preceding paragraph, that particular payment would not need to made until the manager, Nathan
Hanks, reasonably determined there was sufficient available cash to do so.
At trial, the preponderance of the evidence showed that Nathan Hanks made an annual
determination of whether to pay Michael Anderson, based on RS Equity’s previous year’s profit-
and-loss statement.196 This annual determination violates the terms of the Deferral Clause and
renders the “as a result of insufficient cash flow during such calendar month” section
703:12–19, ECF No. 466 (Michael Anderson’s attorney asked Nathan Hanks: “Well, do you understand that that’s a
legal theory that has been advanced in this case, that this email and Mike responding to it created a modification of
the agreement?” Nathan Hanks responded “If what you’re saying is that this did create a modification, then great, it
created it. I’m not – you know, it sounds like a legal situation.”). Michael Anderson was not asked and did not testify
on this issue. When Nathan Hanks was asked whether he told Michael Anderson that the Agreement gave him the
“right to pause payments,” he responded, “I was just being – you know, we had been friends and partners for 20
years at this point in time. So it was the kind way of asking. And then I followed up a few days later saying, “I’m
doing this, so . . .” Trial Tr. 702:23—703:3, ECF No. 466. Nathan Hanks did not pursue a theory of modification of
the contract’s payment terms at closing. See generally ECF No. 473; see also Trial Tr. 1041:20—1042:3, ECF No.
473. In any event, the evidence at trial does not support a modification.
193 Agreement ¶ 2.3(e).
194 Id.
195 Id. (emphasis added); see also Note ¶ 5.
196 Trial Tr. 697:9–18, ECF No. 466.
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meaningless.197 If Nathan Hanks wished to invoke the Deferral Clause to delay making a
monthly payment, he was required to make a monthly determination.198
Nathan Hanks produced no evidence to establish how this determination was made every
month since February 2019.199 Instead, the totality of evidence suggests that this was not done.
Nathan Hanks’s initial trial testimony referred only to reviewing annual profit and loss
statements. He repeatedly testified that his process was to look at the profit and loss statements
each year and determine whether he owed Michael Anderson any payments. After he made the
first year’s payments, he considered that he had overpaid Michael Anderson because RS Equity
had not made an annual profit, and he never made any additional payments. When asked whether
he determined each month if the monthly payment to Michael Anderson was deferrable, he
candidly answered, “Nope.”200 He testified that he did not think the contract required him to do
so. He reviewed RS Equity’s ability to pay on “an annual basis.”201 He reasoned that because RS
Equity had a net loss in 2018, “we’re already 200,000 in the hole, so we have to come out of that
hole before any payment would be due.”202 That might have been a sensible way to think from a
business perspective, but it was not what the Agreement specified. As noted above, if Nathan
Hanks sought to defer any particular monthly payment, he needed to make the monthly
determination set forth in the Deferral Clause. Once properly deferred, any such deferred
monthly payment would not become due until RS Equity had “sufficient available cash” as
reasonably determined by its manager. In short, Nathan Hanks confused the terms of the contract
197 Agreement ¶ 1.2(e) (emphasis added).
198 Id.
199 Trial Tr. 691:12–14, ECF No. 466. (Nathan Hanks’s last payment to Michael Anderson was in January 2019.)
200 Trial Tr. 695:13–15, ECF No. 466. See also Trial Tr. 697:21–22, ECF No. 466 (“The analysis did not become on
a monthly basis, no.”).
201 Id.
202 Trial Tr. 695:19–21, ECF No. 466.
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on when he could defer any particular monthly payment with the terms of when a properly
deferred payment ultimately would be due.
On further examination, Nathan Hanks’s counsel asked him whether he sometimes
looked at monthly bank statements when deciding whether to pay Michael Anderson.203 Nathan
replied, “For many of those months, I would look monthly at the bank statement.”204 But no
particular months were specified. Even if the statement were credited, it would be unusable for
purposes of determining which monthly payments, if any, were properly deferred. And no
documentary evidence was submitted documenting these reviews. Taken as a whole, the
evidence strongly suggests that Nathan Hanks either always or generally made annual
determinations about whether RS Equity would make any payments to Michael Anderson.205
This was insufficient for purposes of the contract’s Deferral Clause.
And, indeed, the record evidence shows that even if a monthly review had occurred, it
would not have been possible to meet the Deferral Clause’s terms for every month in the period
at issue. From February 2019 until June 2025, RS Equity had four months in which its monthly
net income apparently would not have supported deferring a monthly payment.206 Accordingly,
Nathan Hanks was in breach because the preponderance of the evidence shows that he failed to
conduct the monthly review required to meet the terms of the Deferral Clause and because there
were multiple months when, if he had done the required monthly assessment, he could not have
deferred the monthly payment.207
203 Trial Tr. 752:16–18, ECF No. 466.
204 Trial Tr. 752:23–25, ECF No. 466.
205 Trial Tr. 705:21–25, ECF No. 466 (Nathan Hanks confirming that the annual “profit and loss statements” were
the basis on which he decided whether to make payments to Michael Anderson.)
206 See Trial Ex. 1025 (RS Equity’s Profit and Loss Statements 2017–2021) (showing net income for Aug. 2019 as
$372,606.08, March 2020 as $688,112.73, May 2020 as $390,578.12, and Dec. 2021 as $1,422,672.98).
207 Trial Ex. 1025.
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C. 	Damages
Under Utah law, “breach of contract damages are limited to the ‘express terms of the
contract.’”208 And “when two agreements are executed substantially contemporaneously and are
clearly interrelated, they must be construed as a whole and harmonized if possible.”209 Here,
because the Note and the Agreement were executed together and relate to the same transaction,
the court “construe[s] them as a whole.”210
Turning to the terms of the Agreement and the Note, the court accepts Michael
Anderson’s damages calculations that are based on the premise that Nathan Hanks has been in
breach every month since February 2019.211 Although in most months RS Equity apparently did
not have sufficient monthly cash flow to trigger Michael Anderson’s monthly payment, Nathan
Hanks was still in breach for every month that he deferred Michael Anderson’s payment but
failed to do the monthly review that the Note and Agreement required. 212 Consequently, Nathan
Hanks has been in breach every month since February 2019.213
But the damages analysis does not end there. In the event of a default, the Agreement also
contains an Acceleration Clause that allows Michael Anderson to “make the entire Principal
Amount of the Note immediately due and payable.”214 This right applies only to a default that
has not been cured after sixty days following written notice.215
208 Taylor v. State Farm Fire & Cas. Co., 2024 WL 4043535, at *5 (D. Utah Sept. 4, 2024) (quoting Billings v. Union
Bankers Ins. Co., 918 P.2d 461, 466–67 (Utah 1996).
209 Tretheway v. Furstenau, 2001 UT App 400, ¶ 9, 40 P.3d 649 (citation and internal quotation marks omitted).
210 Id. (quoting Winegar v. Froerer Corp., 813 P.2d 104, 109 (Utah 1991)).
211 See Trial Ex. 1027 (RS Equity Note-Balance Due Assuming Prejudgment Interest Only on ½ Payments Due).
212 See Trial Ex. 1025 (RS Equity’s Profit and Loss Statements 2017–2021); Trial Ex. 35 (RS Equity’s Profit and
Loss Statements 2023 to June 2025).
213 Trial Tr. 691:12–14, ECF No. 466. (Nathan Hanks’s last payment to Michael Anderson was in January 2019.)
214 Agreement ¶ 1.2(e).
215 Id.
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On May 1, 2020, Michael Anderson provided such notice in a letter.216 After the sixty-
day cure period passed with no response from Nathan Hanks, he invoked the Acceleration Clause
in his counterclaim on August 7, 2020, by stating, “The Notes grant Anderson the right ‘to make
the entire Principal amount of the Note immediately due and payable,’ which right Anderson
hereby invokes.”217 The terms of the clause allow Michael Anderson to “exercise the option to
accelerate upon an Event of Default regardless of any prior forbearance.” Thus, even if his
written notice that did not invoke the right to demand immediate full payment were viewed as
forbearance, it did not preclude him from invoking the right in his counterclaim. And as
previously mentioned, the right applies only to a default that has not been cured after sixty days
following written notice.218 That is, of course, what happened here.
Therefore, Michael Anderson exercised his right “to make the entire Principal amount of
the Note immediately due and payable” when he filed his counterclaim on August 7, 2020,
specifically invoking the right.219 The sixty-day cure period ended on October 6, 2020, so the
remaining balance of the Note’s Principal became due then.220
Michael Anderson’s expert, Mr. Rondeau, testified about his calculations regarding
prejudgment interest on the balance owing on the Note following the last payment in January
2019,221 which the court has found to be the first month of Nathan Hanks’s breach.
Mr. Rondeau’s calculations spanned three schedules.222 Mr. Rondeau correctly identified the
prejudgment interest rate of 10% on all three schedules, and his calculations are generally
216 Trial Ex. 1028.
217 See Michael S. Anderson’s and AKA Partners, LC’s Amended Answer and Counterclaim, ¶ 15, ECF No. 101,
filed Aug. 7, 2020.
218 Agreement ¶ 1.2(e).
219 See Michael S. Anderson’s and AKA Partners, LC’s Amended Answer and Counterclaim, ¶ 15, ECF No. 101.
220 Note ¶ 6.
221 Trial Tr. 783:20–791:12, ECF No. 466.
222 Trial Ex. 1027.
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consistent with the theory that prejudgment interest should be calculated differently for the
installment payments that were due and owing prior to the cure period and the prejudgment
interest that should be applied to the February 15, 2019 balance of $547,005 beginning on the
date the cure period ended and the acceleration period began.223 While Mr. Rondeau’s
calculations in Schedule 2 fail in their specifics for incorrect assumptions about the installment
payment amount owed and the date the cure period ended, his methodology is otherwise
sound.224
Accordingly, the court awards prejudgment interest as follows: For the pre-cure period of
February 15, 2019 through October 6, 2020, the court applies the prejudgment interest rate of
10% to the monthly payment amount of $11,396 divided by 365 days multiplied by the number
of days from the date the payment was due on February 15, 2019 through the end of the cure
period on October 6, 2020. This results in pre-acceleration period pre-judgment interest of
$19,550.61. Added to that is prejudgment interest calculated on the unpaid balance of
$547,005.00 multiplied by the 10% prejudgment interest rate divided by 365 days, which is then
223 Trial Ex. 1027. Schedule 3, however, was simply incorrect. There, Mr. Rondeau’s calculation represented a 10%
interest rate on the balance of $547,005 owing as of the due date of the first missed payment, February 15, 2019,
multiplied by the number of days prior to judgment. This calculation is incorrect because the total unpaid balance of
$547,005 did not become due and payable until the loan accelerated on October 7, 2020 after the expiration of the
cure period.
224 In Mr. Rondeau’s Schedule 1 calculation, he applied a 10% prejudgment interest rate to one half of the original
monthly payment of $11,396 (specifically, to $5,698) divided by 365 days multiplied by the number of days from
the date the payment was due on February 15, 2019 through the anticipated termination date of the contract, or
December 31, 2023 (1,780 days) to obtain a daily interest amount. Trial Ex. 1027. From there, Mr. Rondeau testified
that the daily interest amount from February 15, 2019, the first day of missed payments, through June 30, 2020,
which he believed to be the end of the cure period, resulted in prejudgment interest owing in the amount of
$40,813.20, which he carried over to the top of Schedule 2. Id.; Trial Tr. 786:19—787:8, ECF No. 466. On cross-
examination, Mr. Rondeau was challenged about the basis for him using one half of the monthly payment in his
Schedule 1 calculation. Trial Tr. 788:11—791:7, ECF No. 466. When directed to paragraph 2 of the Promissory Note
that refers to a “Non-Default Monthly Shortfall,” Mr. Rondeau testified, “That’s why I calculated the – half of the
payment to the event.” Trial Tr. 790:6–12, ECF No. 466. Mr. Rondeau’s understanding of the Promissory Note’s
“Non-Default Monthly Shortfall” is incorrect. A “Non-Default Monthly Shortfall” does not result in half of the
monthly installment payment becoming due and owing. Default prior to the cure period, as the court found here,
results in the full installment payment becoming due and owing.
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multiplied by the number of days from the start of the acceleration period (October 7, 2020) to
the date of the judgment (November 21, 2025), or 1871 days.
Pre-cure period prejudgment interest: 	$19,550.61
Post-cure period prejudgment interest: 	+ $280,396.26
Total prejudgment interest: 	$299,946.87
Unpaid balance of note: 	+$547,005.00
Total Judgment: 	$846,951.87
The court awards prejudgment interest in the amount of $299,396.26 plus the balance of
$547,005 owing on the note for a total judgment of $846,951.87. In addition, the Note provides
that in the “Event of Default,” Nathan Hanks agreed to pay “reasonable attorneys’ fees and all
costs of suit and preparation for such suit whether incurred with or without litigation, on appeal
or otherwise.”225 The court therefore awards reasonable attorneys’ fees and costs. Michael
Anderson may file a motion seeking such fees and costs.
III. 	Breach of the Implied Covenant of Good Faith and Fair Dealing Claim
Because Michael Anderson prevails on his breach of contract claim, the court need not
address his alternative implied covenant of good faith and fair dealing claim. But given that the
claim was fully developed in briefing and at trial, the court deems it appropriate to use its
discretion to consider the alternative argument’s merits.226
Michael Anderson contends that Nathan Hanks violated the implied covenant of good
faith and fair dealing by purposely diverting RS Equity’s revenue to a different entity in which
Michael Anderson has no interest so he could avoid his payment obligation under the
Agreement.227
225 Trial Ex. 1031.
226 See United States v. Leon, 80 F.4th 1160, 1170 (10th Cir. 2023) (“We have discretion, however, to ‘consider
alternative arguments to affirm if the record is adequately developed.’”) (quoting United States v. Gaines, 918 F.3d
793, 800 (10th Cir. 2019)).
227 Trial Tr. 1046:21–1050:4.
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“An implied covenant of good faith and fair dealing inheres in every contract.”228 “Under
the covenant of good faith and fair dealing, each party impliedly promises that he will not
intentionally or purposely do anything which will destroy or injure the party’s rights to receive
the fruits of the contract.”229 “Such a duty advances the core function of the covenant, as no one
would reasonably accede to a contract that left him vulnerable to another’s opportunistic
interference with the contract’s fulfillment.”230
“The implied covenant of good faith and fair dealing performs a significant but perilous
role in the law of contracts.”231 Its import rests in “its function of inferring as a term of every
contract a duty to perform in the good faith manner that the parties surely would have agreed to
if they had foreseen and addressed the circumstance giving rise to their dispute.”232 “No such
covenant may be invoked, however, if it would create obligations ‘inconsistent with express
contractual terms.’”233 “To determine the legal duty a contractual party has under this covenant, a
court will assess whether a party’s actions are consistent with the agreed common purpose and
the justified expectations of the other party.”234
Michael Anderson succeeded at trial in “establishing a basis for a judicially imposed
covenant of good faith.”235 It is undisputed that at some point after Nathan Hanks acquired
Michael Anderson’s interests in RS Equity, he began moving revenue streams that had been
flowing to RS Equity to RSPOP, an entity in which Michael Anderson had no legal interest. At a
minimum, this included moving 10 or 11 previously acquired properties from RS Equity to the
228 Eggett v. Wasatch Energy Corp., 2004 UT 28, 94 P.3d 193, 197.
229 St. Benedict’s Dev. Co. v. St. Benedict’s Hosp., 811 P.2d 194, 199 (Utah 1991).
230 Young Living Essential Oils, LC v. Marin, 2011 UT 64, ¶ 9, 266 P.3d 814.
231 Id. ¶ 8.
232 Id.
233 Id. ¶ 10.
234 Oakwood Vill. LLC v. Albertsons, Inc., 2004 UT 101, ¶ 43, P.3d 1226 (quoting St. Benedict’s, 811 P.2d at 200)
(internal quotation marks omitted)).
235 Young Living Essential Oils, LC, 2011 UT 64, ¶ 12.
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newly created RSPOP.236 The result of these transfers is that RS Equity no longer received
property management income from these properties and would not receive the disposition
income upon their eventual sale.237 Some of the impact of these transfers is reflected in the profit
and loss statements, which show no acquisitions or dispositions after RSPOP’s creation in May
2021 and total asset management income precipitously falling after May 2021 from seven-digit
figures (from 2017 through 2020) to just over $40,000 in the first half of 2025.238 The largest
part of the impact would come from loss of the disposition income, which does not show up in
the RS Equity profit and loss statements precisely because that large revenue source was
removed from it.
But the shift in the property management income and disposition income from RS Equity
to RSPOP is not the only change that was made. After Michael Anderson sold his ownership
interest in RS Equity to Nathan Hanks, RS Equity simply ceased its role as the main acquisition
entity under the RealSource umbrella.239 In fact, after Michael Anderson sold his interest in RS
Equity, RS Equity never again acquired any new property.240 The result is that RS Equity no
longer generates new property acquisition income, asset management income, or disposition
income. 241 Indeed, RS Equity now does “very little” because virtually all its operations have
moved to other RealSource entities.242
Testimony was received about why RSPOP instead of RS Equity is now the entity that
acquires new properties. Nathan Hanks testified that he created RSPOP to combat a slowing
236 Trial Tr. 726:9–15, ECF No. 466; Trial Tr. 897:9–907:15, ECF No. 466.
237 Trial Ex. 1029 35:4–36:7.
238 Trial Ex. 35, 1025 (RS Equity’s profits and losses before and after RSPOP’s formation).
239 Trial Ex. 1029 at 35:23–25; 43:22–24.
240 Trial Ex. 35, 1025.
241 Trial Ex. 1029 at 35:23–25; 43:22–24.
242 Trial Ex. 14:8–14.
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market and to raise money more competitively.243 He opined that REITs are generally superior to
the previous model of single-property syndication used by RealSource.244 Assuming that was his
good faith view, that testimony still does not explain why the property management revenue and
disposition income from previously acquired properties were moved from RS Equity, the source
of payments to Michael Anderson, to RSPOP. In other words, even if it made sense to consider a
new acquisition vehicle going forward, there was no explanation for why income from prior RS
Equity acquisitions needed to move from the entity that acquired those properties (RS Equity) to
a new entity (RSPOP). It is obvious that moving those revenue streams from RS Equity to
RSPOP greatly increased the likelihood that RS Equity would lack sufficient funds to pay
Michael Anderson. The natural result is RS Equity likely never would have sufficient funds to
pay the debt to Michael Anderson, making that debt uncollectible and thereby depriving Michael
Anderson of the fruits of his agreement.
Nathan Hanks was aware of this. He acknowledged that “without new acquisitions, RS
Equity Services will have minimal, if any, income.”245 And while there was testimony about a
single effort made to have RS Equity acquire a new property, no evidence was provided of any
other efforts or that a single acquisition would have changed the state of affairs. Nathan Hanks
also testified, “But our hopes are that we can turn that machine back on again.”246 However, the
record does not support this claim.247 No evidence was received of any specific current efforts or
plans to turn “that machine back on.” There was no testimony or other evidence that RS Equity
was staffing up, vetting specific investment opportunities, or soliciting funds. The “turn the
243 Trial Tr. 725:13–15, ECF No. 466. See also 751:18—752:8 (“A REIT is much more liquid” and can “spread
risk”).
244 Trial Tr. 751:6–15, ECF No. 466.
245 Trial Tr. 724:25—725:2, ECF No. 466.
246 Trial Tr. 724:25—725:4; 780:16–20, ECF No. 466.
247 See, e.g., Trial Ex. 1029 at 14 (Jeff Hanks testifying that RS Equity does “[v]ery little” ever since the REIT was
formed); Trial Ex. 1025 (RS Equity’s Profit and Loss Statements 2017–2021).
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machine back on” testimony also is undermined by the testimony that RSPOP was superior and
was needed to be competitive.248 No explanation was provided for why the allegedly inferior
syndication model offered by RS Equity would all of a sudden be viable again. And, of course,
an asserted intent to “turn that machine back on” means that the machine was turned off, an
intentional and purposeful act.249
In sum, Nathan Hanks intentionally took actions that necessarily would deprive RS
Equity of the ability to make the agreed upon payments to Michael Anderson. Under his
direction, 10 or 11 properties previously acquired by RS Equity for its investor group were
moved to RSPOP, depriving RS Equity of ongoing property management fees and the eventual
disposition fees. Additionally, Nathan Hanks “turned off” RS Equity so that it did very little and
so could earn very little. The result of these actions was that RS Equity seldom had enough net
income to make the monthly payments Michael Anderson was owed. It also virtually guaranteed
that if there were any properly deferred payments, they would never come due, because there
would never be enough income to reasonably pay them. This would have been obvious to
anyone. By so doing, he “intentionally or purposely [did something] which will destroy or injure
the party’s rights to receive the fruits of the contract.”250
Therefore, the court finds in the alternative that Michael Anderson established by the
preponderance of the evidence that Nathan Hanks breached the implied covenant of good faith
and fair dealing by diverting RS Equity’s income streams to RSPOP.
248 Trial Tr. 751:6–15, ECF No. 466.
249 Trial Tr. 725:5–7, ECF No. 466 (exchange between Michael Anderson and Nathan Hanks about his statement he
hopes “to turn that machine back on” Q: “When did you turn it off?” A: “It’s never—I mean, we slowed it down
since—but now we’re in the process of selling the REIT.”). See also Trial Tr. 726:2–8, ECF No. 466 (discussing the
lack of acquisitions by RS Equity since the formation of RSPOP).
250 St. Benedict’s Dev. Co., 811 P.2d at 199.
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IV. 	Compensation Claims
In Utah, individuals with real estate licenses must be affiliated with a principal broker.251
Throughout their time with RealSource, Kent Anderson’s and Michael Howard’s real estate
licenses were associated with Michael Anderson, who was the principal broker of RealSource
from its formation until the end of 2020.252 Under the Licensing Act, “[a] sales agent or associate
broker . . . may not sue . . . for the recovery of . . . compensation or services as a sales agent or
associate broker unless the action is against the principal broker . . . .”253 Thus, as the court
previously held, Kent Anderson and Michael Howard’s compensation claims must be asserted
against Michael Anderson, not RealSource.254
At trial, Kent Anderson and Michael Howard contended that they had an oral agreement
with Michael Anderson and with RS Equity about the compensation amounts they would receive
for their independent contractor work.255 They argue that they were promised that they would be
paid a fixed percentage of all acquisition, management, and disposition fees on any property they
helped RS Equity acquire. Importantly, they contend that their agreements contained a provision
that they would be paid these fees indefinitely into the future even if they quit or were fired.
As noted earlier, under Utah law, “[t]he elements of a prima facie case for breach of
contract are (1) a contract, (2) performance by the party seeking recovery, (3) breach of the
contract by the other party, and (4) damages.”256 “‘An enforceable contract . . . consists of the
terms of a bargained-for exchange between the parties. And the terms of the bargain are defined
251 Utah Code § 61-2f-302.
252 Trial Tr. 819:3–24, 871:21—872:3, 914:23—915:25, ECF No. 467.
253 Utah Code § 61-2f-409(2).
254 Trial Tr. 1069:15–23, ECF No. 473.
255 The parties submitted trial briefs in lieu of opening arguments. See Defendants Kent Anderson, Michael Howard,
AKA partners, LC and Greenfill Woodland Creek Apartments, LLC’s Trial Brief, ECF No. 438, filed Aug. 25, 2025
(discussing the “agreement with RealSource and Mike”). See also Trial Tr. 1069:14–15; 1071:11–14, 19–20;
1073:2–3, ECF No. 473 (This is a “breach of contract claim”).
256 Am. W. Bank Members, LC, 2014 UT 49, ¶ 15 (cleaned up).
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by the meeting of the minds of the parties—through an offer and acceptance upon
consideration.’”257 “A binding contract exists where it can be shown that the parties had a
meeting of the minds as to the integral features of the agreement and that the terms are
sufficiently definite as to be capable of being enforced.”258 “For an offer to be one that would
create a valid and binding contract, its terms must be definite and unambiguous.”259 “An
acceptance must unconditionally assent to all material terms presented in the offer, including
price and method of performance, or it is a rejection of the offer.”260 As for damages, a plaintiff
must prove both the fact of damages and the amount of damages. “The level of persuasiveness
required to establish the fact of loss is generally higher than that required to establish the amount
of a loss.”261 But “there still must be evidence that rises above speculation and provides a
reasonable, even though not necessarily precise, estimate of damages.”262
A. 	There Was No Agreement with Michael Anderson.
The initial question is whether Kent Anderson and Michael Howard established that they
had an agreement with their broker, Michael Anderson, as opposed to an agreement with RS
Equity. The preponderance of the evidence suggests that they did not.
For starters, Michael Anderson unequivocally denied that he made any such
agreement.263 He testified that he never had an agreement as a broker with Kent Anderson or
257 Bear v. LifeMap Assurance Co., 2021 UT App 129, ¶ 29, 503 P.3d 507 (quoting Rossi v. Univ. of Utah, 2021 UT
43, ¶ 31, 496 P.3d 105).
258 Syme v. Symphony Grp. LLC, 2018 UT App 212, ¶ 13, 437 P.3d 576 (cleaned up).
259 Lebrecht v. Deep Blue Pools & Spas Inc., 2016 UT App 110, ¶ 13, 374 P.3d 1064 (cleaned up).
260 Id. (cleaned up).
261 Atkin, Wright & Miles v. Mountain States Tel. & Tel. Co., 709 P.2d 330, 336 (Utah 1985); Mrs. Fields
Franchising, LLC v. MFGPC, Inc., No. 2:15-cv-00094, 2021 WL 3783272, at *3 (D. Utah Aug. 26, 2021).
262 Salt Lake City Corp. v. Erm-West, Inc., No. 1:11-cv-1174, 2015 WL 4276357, at *1 (D. Utah July 14, 2015)
(quoting TruGreen Cos., LLC v. Mower Bros., Inc., 2008 UT 81, ¶ 15, 199 P.3d 929).
263 Trial Tr. 920:6—921:8, ECF No. 467.
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Michael Howard.264 Their agreement was with RS Equity, not him. Indeed, Michael Anderson
never made any payments to Kent Anderson or Michael Howard. He “never had that control.”265
This testimony went unrebutted. For their part, neither Kent Anderson nor Michael
Howard presented any evidence that their agreement was with their real estate broker, Michael
Anderson. Kent Anderson testified about what he understood the agreement with RS Equity to
be in 2002 and 2011.266 And while he also testified about conversations he claims he had with
his brother Michael Anderson about certain terms, he did not testify or provide any evidence that
his agreement was with his brother as opposed to RS Equity.267
The same is true for Michael Howard. He testified that Michael Anderson referred him to
Nathan Hanks, twice, for discussions about doing work for RS Equity.268 Michael Howard was
always an independent contractor for RS Equity.269 RS Equity, not Michael Anderson, paid
him.270
For these reasons, the court concludes that Kent Anderson and Michael Howard failed to
demonstrate, by a preponderance of the evidence, that they had a compensation agreement with
their broker, Michael Anderson. Because they did not, their claim fails.271
B. 	Kent Anderson and Michael Howard Failed to Show RS Equity Breached an
Agreement with Them and the Amount of Any Damages.
Even if Kent Anderson and Michael Howard could assert a claim against RS Equity, it
would fail. None of the parties dispute that Kent Anderson worked as an independent contractor
264 Trial Tr. 921:1–8, ECF No. 467.
265 Trial Tr. 918:17–18, ECF No. 467.
266 Trial Tr. 821:12–835:25, 843:3–22, ECF No. 467.
267 Trial Tr. 853:15–20, ECF No. 467.
268 Trial Tr. 869:18–22, 870:5–11, ECF No. 467.
269 Trial Tr. 887:1–14, ECF No. 467.
270 Trial Tr. 887:1–6, ECF No. 467.
271 “[W]e are making a claim under the statute for breach of contract.” Trial. Tr. 1071:19–20, ECF No. 473.
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for RS Equity from 2002 until 2019.272 The parties also agree that Michael Howard worked as an
independent contractor for RS Equity from 2011 until 2018.273 The parties also do not dispute
that, remarkably, there never was a written agreement about their arrangement.274 And the parties
all agree that both Kent Anderson and Michael Howard now work at AKA Partners, which Kent
Anderson’s brother Michael Anderson founded shortly after he sold his interest in RS Equity, and
which RS Equity accuses of wrongfully competing against it.275 Michael Howard began working
for AKA Partners after he stopped working for RealSource.276 Kent Anderson secretly began
working for AKA Partners while he was still working for RS Equity.277
In terms of compensation back in 2002, there was testimony about how fees would be
split among members of a “pool.”278 According to Kent Anderson, in December 2002, the
original agreement was that RS Equity would get the first 50% of any income and the pool
members would share equally in the remaining 50%.279 The income would come from
acquisition, operations, and disposition fees.280
But the deal then changed in 2011, when Nathan Hanks became president of RS
Equity.281 According to Kent Anderson, the new agreement with RS Equity was that the
compensation for pool members “was going to be allocated based on what they perceived was
the contribution of each member to the closing of the deal.”282 In other words, RS Equity would
determine what each person received based on what it felt the person earned. Kent Anderson
272 Trial Tr. 818:6, 850:19–20, ECF No. 467.
273 Trial Tr. 871:18–25; 884:19—885:1, ECF No. 467.
274 Trial Tr. 920:9, ECF No. 467.
275 Trial Tr. 60:18–20, 65:16–17, ECF No. 451; Trial Ex. 15.
276 Trial Tr. 159:15–22, ECF No. 451; Trial Ex. 15.
277 Trial Ex. 15.
278 Trial Tr. 820:19—824:21, ECF No. 467.
279 Trial Tr. 820:19—821:23, ECF No. 467.
280 Trial Tr. 820—824, ECF No. 467.
281 Trial Tr. 843:3–13, ECF No. 467.
282 Trial Tr. 843:9–11, ECF No. 467.
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thought RS Equity would assign him a certain percentage of every deal for his acquisition
efforts, and he would then receive that same percentage for management and disposition fees. In
his view, “those percentages were locked on that deal so that any time we received income for
that deal whether it was operating distributions or disposition income those percentages still
remained locked as of the date that the percentages were initially calculated at the acquisition of
the property.”283 In his trial testimony, Mr. Howard took a similar position, though he provided
much less detail, agreeing with a series of his attorney’s statements about what he believed was
going to happen:
Q. 	So did you believe you were going to get a cut of any acquisition that you
participated in?
A. 	Yes.
Q. 	All right. Did you believe that from your discussion with Mr. Hanks that you were
going to receive a cut of what you said [sic] distribution cashflows going
forward?”
A. 	I did.
Q. 	Did you, from that discussion, believe you would receive a cut of any disposition,
sale, or refinance fee?
A. 	Absolutely.284
As noted earlier, none of the foregoing was reduced to a written agreement.285
Additionally, little testimony was received about the specific percentages or amounts of each
deal RS Equity (as opposed to Kent Anderson or Michael Howard) “perceived was the
contribution of each member.”286 In other words, there was almost no direct evidence about what
RS Equity said it would pay Kent Anderson and Michael Howard for their efforts on any
particular deal. Instead, the focus primarily was on two voluminous exhibits from Kent Anderson
that he created over a period of many years from many different sources.
283 Trial Tr. 843:23–844:4, ECF No. 467.
284 Trial Tr. 872:19—873:5, ECF No. 467.
285 Trial Tr. 920:9, ECF No. 467.
286 Trial Tr. 843:9–11, ECF No. 467.
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Kent Anderson testified that he created certain documents that he felt demonstrated the
amounts of money he and Michael Howard were owed by RS Equity.287 The source materials for
these documents were varied. Some of the sources were certain company documents about past
performance and future projections.288 Another source was information about what Kent
Anderson was paid over the years.289 Yet another source was information Michael Howard
“provided” after he quit.290 Additional sources included litigation materials, like depositions.291
Finally, he included information gleaned at unidentified times from “an e-mail,” “doing
research,” “different online resources,” and “conversations [] with others.”292 From these various
sources and materials, Kent Anderson then made certain calculations about what fees might have
been received or expected, what percentages he felt he and Michael Howard were owed, and an
average percentage he calculated and imputed to certain projects where he lacked data.293 His
efforts to create some of these documents reportedly began in “mid 2003,”294 other document
collection and curation occurred “about 2011-2012 through June of 2019,”295 and the final efforts
on these documents ended on an unknown date long after this litigation began.296
287 Trial Tr. 836:3–25; 840:3–17, ECF No. 467; Trial Ex. 1120.
288 Trial Tr. 840:21—841:11, ECF No. 467 (Discussing using past income and expenses to “forecast future results
with assumptions”).
289 See, e.g., Trial Tr. 836:19–22, ECF No. 467 (“I took his worksheet that he e-mailed to me and I just simply
copied or well moved his – the worksheet into my worksheet where I kept each one of those.”); Trial Tr. 837:21–23,
ECF No. 467 (Agreeing with his attorney that he would then “summarize the document in summary tables.”).
290 Trial Tr. 847:2–7, ECF No. 467 (“He let me know what he was making on each one of these deals.”); Trial Tr.
877:11–16, ECF No. 467.
291 Trial Tr. 859:15–25, 860:1–3, ECF No. 467.
292 Trial Tr. 857:2–25, 858:1–5, ECF No. 467.
293 Trial Tr. 848:21–24, ECF No. 467 (Agreeing with his attorney that he was “able to get a percentage, an average I
should say, a percentage, of how much [he was] paid on different deals?”); Trial. Tr. 849:4–12, ECF No. 467
(Discussing that “projections [were] helpful to [him] in understanding what monies [he] could receive.”).
294 Trial Tr. 836:15–17, ECF No. 467. The court notes that while Kent Anderson agreed with his attorney’s statement
that he prepared these materials “as part of the ordinary course of [his] independent contractor work,” there was no
evidence that RS Equity asked him to prepare materials tracking fees for himself and no benefit to RS Equity for
Kent Anderson to be preparing materials documenting what he felt he was owed. See Trial Tr. 836:23–25, ECF No.
467.
295 Trial Tr. 849:21–25, 850:1–3, ECF No. 467.
296 Specifically, whenever the unidentified depositions would have been taken in this case.
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The documents Kent Anderson created, together with his testimony regarding them, are
critical to Kent Anderson and Michael Howard’s efforts to show the terms of the agreement,
breach, and damages. But the court does not find them reliable or persuasive, for a number of
reasons.
First, the documents are a hodgepodge of numerous kinds of different source material.
According to Kent Anderson’s own testimony, they represent his selections from certain
company documents, information he added about his own compensation, whatever Michael
Howard told or provided him about his compensation, data from depositions, information he saw
in online sources, things he was told by his brother and unidentified others, and information he
read in one or more emails. It was also unclear whether or what part of this information was
entered into these documents contemporaneously with its acquisition over the years. While no
objection was made to the documents being offered into evidence,297 this patchwork quilt of bits
and parts of different company records, bank account information, unknown online materials,
litigation sources, and things certain people purportedly said, is neither reliable nor persuasive.
Second, not only is the amalgamated source material unreliable and unpersuasive, it also
is further tainted by the projections, assumptions, and calculations contained in those documents.
These were never fully spelled out and explained, but both the testimony and the documents
themselves make it clear that they play an important role. While Kent Anderson testified at some
length, he never walked through the exhibits in a methodical way that persuaded the court that
either the sources or the projections, assumptions, and calculations involving those sources were
reliable.
297 Trial Tr. 838:13–19, ECF No. 467.
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Third, it is unclear what portion of the underlying materials were produced in discovery
or entered into evidence at trial, further undermining the usefulness of the materials. Because no
way was identified for the voluminous calculations and data to be checked, the court is not
persuaded of their accuracy.
Fourth, Kent Anderson provided no evidence at trial that he ever told RS Equity before he
was terminated that he was owed any specific amount of additional income. It would be
unexpected for someone who was meticulously tracking what they were owed—and whose
calculations allegedly showed they were owed money from 2014-2019—to have said little or
nothing about the supposed shortfalls until years later in litigation. At trial, no evidence on this
issue was offered by Kent Anderson.298 Whether that was a strategic decision—because such
evidence might show that there was no real meeting of the minds—or whether it was an
oversight, it was telling.
For his part, Michael Howard testified about a single experience where he clearly felt he
was paid less than he was expecting.299 However, he did not testify, or provide any other useful
evidence, of the amount he felt he was owed or evidence of what that higher expected amount
might have been.
In summary, Kent Anderson and Michael Howard’s compensation claims largely turn on
two voluminous documents that Kent Anderson created over many years, including after he was
terminated and while the litigation was pending, from numerous other documents and people,
some identified and others not. For all of the foregoing reasons, the court does not believe the
298 And his testimony on the issue was far from clear. See Trial Tr. 835:21—836:2 (“Q: Were you paid, as you went
forward from 2002, were you paid initially on three areas of income as described as you have described? [sic] A:
Yes. I was always paid from these three sources of income from the time I started and through October of 2019.”).
299 Trial Tr. 876:7—877:6, ECF No. 467.
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documents to be reliable and is not persuaded that they or the testimony related to them
reasonably establish any of the breach of contract elements.
As a final matter, the court notes that the overwhelming majority of the damages sought
by Kent Anderson and Michael Howard depend on a finding that they would be entitled to fees
even after they had left employment with RS Equity. But the evidence presented does not
establish this.
According to Kent Anderson, on unidentified dates, he had countless discussions with his
brother Michael (“too many to count”) that once the work was done and the deal closed he had
“earned the income for that property going forward.”300 Kent Anderson’s attorney suggested that
this entitlement to income would persist even if Kent left RealSource, and Kent agreed.301
Similarly, Michael Howard testified that Michael Anderson told him at some point that as far as
the three sources of income “you absolutely earn it when the deal closes and that never changes”
and “[w]hen the deal closes the money is earned, period.”302 Michael Howard also reports that
Michael Anderson stated that he did not need to be working for RealSource to continue being
paid.303
But there are many layers of problems with this testimony. First, no dates were provided
for the “too many to count” meetings where Kent Anderson’s brother Michael Anderson assured
him and Michael Howard they would get paid even if they left RS Equity.304 The dates clearly
matter, because for an offer to “create a valid and binding contract, its terms must be definite and
unambiguous.”305 If these discussions were not part of the offer and acceptance process, but
300 Trial Tr. 853:13–14, 20, ECF No. 467.
301 Trial Tr. 833:18–25, ECF No. 467.
302 Trial Tr. 885:25—886:8, ECF No. 467.
303 Trial Tr. 885:7—886:15, ECF No. 467.
304 Trial Tr. 853:13–14, 20, ECF No. 467.
305 Lebrecht, 2016 UT App 110, ¶ 13.
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instead came later, then Michael Anderson’s expressed views are not likely terms of the
agreement.
Second, no evidence was received or argument made that Michael Anderson had the
authority to bind RS Equity on the dates relevant to these claims. Since 2002, he was merely a
50% owner.306 No evidence was received that he could unilaterally bind RS Equity to continue
making payments to an independent contractor who had quit or been fired. If anything, the
testimony seemingly suggested that Nathan Hanks played that role, since the agreement changed
in 2011 when Nathan Hanks became president.307 Around that same time, when Michael Howard
talked with Michael Anderson about working with RS Equity, Michael Anderson repeatedly told
him to talk with Nathan Hanks.308 When they did speak, Nathan Hanks provided no “specifics”
other than to mention compensation in three areas.309 The lack of specificity was not troublesome
to Michael Howard because he believed “you look somebody in the eye and you shake their hand
and you have a deal and then you move forward in good faith.”310
Third, no evidence was received that RS Equity and Nathan Hanks agreed with Kent
Anderson and Michael Howard that they would continue to receive payments even if they left
RS Equity or were fired.311 Because the evidence did not even establish when Michael Anderson
allegedly made such assurances or that he had the authority to do so when he did, the failure to
provide evidence that Nathan Hanks or anyone else with the required authority did so matters.
306 Trial Tr. 818:6–13, ECF No. 467.
307 Trial Tr. 843:3–13, ECF No. 467.
308 Trial Tr. 869:18–22, 870:5–11, ECF No. 467.
309 Trial Tr. 872:11–12, ECF No. 467.
310 Trial Tr. 872:15–18, ECF No. 467.
311 This position also does not fully square with Kent Anderson and Michael Howard’s averment in their
counterclaim that they would be owed the compensation “as long as they did not voluntarily terminate their services
to the RealSource Parties.” ECF No. 168 at 8.
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Kent Anderson and Nathan Hanks could have compelled testimony from Nathan Hanks as a
witness on their compensation claims but elected not to do so.
Fourth, Kent Anderson’s “too many to count” conversations with his brother about
getting paid no matter his employment status are problematic all by themselves, even if the
conversations occurred, occurred at the right time, and Michael Anderson had authority to bind
RS Equity. If there truly were a meeting of the minds between RS Equity and Kent Anderson that
he would be paid even if he were fired or left, why would Kent Anderson need to have numerous
conversations with his brother about the issue? In other words, if that term were definite and
unambiguous and the parties’ minds had met on it, as the law requires, why would Kent
Anderson have the conversation over and over again countless times? And why was Nathan
Hanks not included in those conversations between the brothers and Michael Howard? If he was,
no evidence was provided at trial. Also, no testimony was provided about any of the details of
the conversations: the when, where, and why are all absent. No context of any kind was
provided.
Fifth, no written evidence was offered that would corroborate the alleged conversations.
That all by itself is remarkable. Instead, written evidence was received in the form of an email
from Nathan Hanks to Kent Anderson firing him and stating that “company policy has always
been that a person received compensation in 3 areas and the person has to be currently working
for RS to earn and be paid this compensation. When Joe Mackey left RS, his pool share of
acquisition fees, ongoing cash flow, and backend disposition proceeds all stopped to him.”312
While both sides discussed parts of the email and some of its implications, Kent Anderson and
312 Trial Ex. 15, ¶ 6.
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Michael Howard presented no written evidence—contemporaneous or otherwise—disputing this
statement.
Finally, there is another credibility issue to be addressed. Michael Anderson testified that
he retired from RS Equity in 2018 because of his poor health, including his “obviously failing
memory.”313 His admitted failing memory was on display at various times through the trial. He
regularly struggled to recall basic things, like the year he sold the companies he founded to
Nathan Hanks, the relatively small number of entities he had sold, or even what all the names of
those entities he had created were.314 He also struggled to remember when his brother joined
RealSource or AKA Partners.315 These admitted and demonstrated memory issues greatly
decrease the weight the court, sitting as fact finder, assigns to his testimony. As for the claimants,
Kent Anderson and Michael Howard, in addition to the obvious incentive to remember and
interpret conversations from many years earlier in ways favorable to their claims, the numerous
difficulties with their testimony that supplies the basis of their multimillion-dollar oral agreement
claims have been outlined above.
For all of these reasons, singly and together, the court concludes that Kent Anderson and
Michael Howard failed to show, by a preponderance of the evidence, that post-employment
payments were an agreed-upon term of their agreement with RS Equity.316 And as noted earlier,
they failed to show the other terms necessary to their claims, breach, and damages.
313 Trial Tr. 87:15–20, ECF No. 451.
314 Trial Tr. 48:4–7, 49:13–20, ECF No. 451.
315 Trial Tr. 61:11–14, 95:4–7, 11–13, ECF No. 451.
316 In its opening and closing arguments, RealSource also urged the court to find that Michael Anderson, Kent
Anderson, and Michael Howard had a Mary Carter or related agreement. Trial Tr. 1011–12, ECF No. 473. While the
evidence shows the Anderson brothers and Michael Howard have joined together at AKA Partners, and it was plain
from their demeanor and interactions at trial that they are close and aligned in their testimony and general litigation
strategy, no evidence was received that they had entered into any Mary Carter agreement.
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C. 	Kent Anderson Did Not Establish His Performance.
Utah law also requires a party alleging breach to demonstrate their own performance.317
Kent Anderson and Michael Howard did not argue in closing how they met this requirement. It
does not appear to be at issue for Michael Howard, but the record suggests that it is for Kent
Anderson. The previously mentioned email terminating Kent Anderson states as follows:
When we came to an agreement in February that RS would pay you significantly
more each month, we did so in reliance on your representation and promise that
you would not perform services for AKA while you were performing services for
RS. . . . When confronted about you performing services for AKA from March
through August, you initially denied your conduct for several days until eventually
confessing that you had been lying to us and working for AKA all along. To be
clear, that is a breach of our agreement and fraud on your part.318
Again, while both sides referenced parts of this email,319 Kent Anderson did not dispute that he
was terminated from his relationship with RS Equity because after promising not to work for his
brother’s new firm, AKA Partners, he did so anyway, denied doing so when confronted, and then
eventually recanted.320 He could have challenged any of these things if he thought they were
untrue but did not.
In short, Kent Anderson’s contract claim fails for the additional reason that, despite
bearing the burden, he did not address either the element of his own performance or the
unrebutted evidence suggesting that he did not fully perform.
317 See, e.g., Sanpete Water Conservancy Dist. v. Carbon Water Conservancy Dist., 226 F.3d 1170, 1177 (10th Cir.
2000) (applying Utah law) (stating that to prevail on a breach of contract claim, a plaintiff must “show the existence
of a contract, [plaintiff’s] performance and [defendant’s] nonperformance under the contract terms”).
318 Trial Ex. 15, ¶ 5.
319 Trial Tr. 356:11–358:2; 483:6–485:19, ECF No. 471.
320 Trial Ex. 15, ¶ 5.
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V. 	Indemnification Claim
The Agreement states that Nathan Hanks shall indemnify Michael Anderson for any
claim “arising out of the use by RS Brokerage of the Principal Brokerage Licenses during the
Brokerage Transition Period.”321 The Brokerage Transition Period is the twenty-four-month
period after the closing, from January 2018 to January 2020.322
Michael Howard and Kent Anderson first asserted their compensation claims against
Nathan Hanks and RealSource in 2019, which was during the Brokerage Transition Period.323 As
mentioned above, Utah law mandates that Kent Anderson and Michael Howard assert their
compensation claims against Michael Anderson, not RealSource.324 Thus, Michael Anderson’s
indemnification claim against Nathan Hanks hinges on Kent Anderson and Michael Howard’s
compensation claims.
“Generally, a cause of action for indemnity does not arise until the liability of the party
seeking indemnity results in his damage, either through payment of a sum clearly owed or
through the injured party’s obtaining an enforceable judgment.”325 Because Kent Anderson and
Michael Howard’s compensation claims fail, Michael Anderson’s indemnification claim must
likewise fail.
But even if Kent Anderson and Michael Howard’s compensation claims had been
successful, Michael Anderson did not establish that any of those claims arose out of the use of
his Principal Broker Licenses from January 2018 to January 2020. Because no effort was made
321 Agreement ¶ 9.3(c).
322 Id. ¶ 7.6.
323 Trial Tr. 1053:24—1054:3, ECF No. 473.
324 Utah Code § 61-2f-409(2).
325 Salt Lake City Corp. v. Kasler Corp., 855 F. Supp. 1560, 1573 (D. Utah 1994).
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to connect Kent Anderson and Michael Howard’s claims to any use of Michael Anderson’s
license during the relevant time period, this claim for indemnification necessarily fails.
ORDER
Based on its findings of fact and conclusions of law, the court finds in favor of Michael
Anderson on his contract claims and against all other parties on the remaining claims. The court
awards damages in the amount of $846,951.87 plus attorney fees and costs and will enter judgment.
Signed November 21, 2025.
BY THE COURT
________________________________________
David Barlow
United States District Judge
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