                 This opinion is subject to revision before final
                        publication in the Pacific Reporter

                                 2017 UT 72


                                    IN THE

       SUPREME COURT OF THE STATE OF UTAH

                       JAMES ROBERT RAWCLIFFE,
                              Appellant,
                                       v.
                       ROBERT ANCIAUX, ET AL., 1
                              Appellees.

                              No. 20150852
                         Filed October 11, 2017

                            On Direct Appeal

                      Third District, Salt Lake
                  The Honorable Heather Brereton
                          No. 140905252

                                 Attorneys:
   Eric L. Zagar, Robin Winchester, Kristen L. Ross, Radnor, PA,
           J. Ryan Mitchell, Steven J. Joffee, Salt Lake City,
                             for appellant
       Erik A. Christiansen, Alan S. Mouritsen, Salt Lake City,
       Douglas A. Rappaport, Lucy C. Malcolm, James Tysse,
                    New York, NY, for appellees


 JUSTICE DURHAM authored the opinion of the Court in which CHIEF
  JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE LEE, JUSTICE HIMONAS,
               and PRESIDING JUDGE ORME joined.
Having recused himself, JUSTICE PEARCE does not participate herein;
     COURT OF APPEALS PRESIDING JUDGE GREGORY ORME sat.



   1Other appellees are Jerry G. McClain, Ronald S. Poelman, James
H. Bramble, Jim Brown, Gilbert Fuller, Kevin G. Guest, Daniel A.
Macuga, David A. Wentz, Deborah Woo, and Nominal Defendant
USANA Health Sciences, Inc.
                       RAWCLIFFE v. ANCIAUX
                        Opinion of the Court

   JUSTICE DURHAM, opinion of the Court:
                         INTRODUCTION
    ¶1 James Rawcliffe, a shareholder of USANA Health Sciences,
Inc., brought this action against USANA’s board of directors and
several of its officers for authorizing and receiving spring-loaded,
stock-settled stock appreciation rights (SSARs). Mr. Rawcliffe
concedes that USANA’s Compensation Committee strictly complied
with the company’s compensation plan in authorizing the SSARs.
Based on this and the absence of an allegation that the Compensation
Committee intended to circumvent the plan, the district court
dismissed all of Mr. Rawcliffe’s claims under Utah Rule of Civil
Procedure 12(b)(6) without prejudice. We affirm.
                           BACKGROUND
   ¶2 In 2006, USANA’s board of directors approved, and its
shareholders ratified, the USANA Health Sciences, Inc. 2006 Equity
Incentive Award Plan (Plan). Pursuant to the Plan, the board of
directors established the Compensation Committee, consisting of
three members of the board of directors. The Plan gave the
Compensation Committee the “exclusive power, authority, and
discretion” to award SSARs to directors, officers, and other
employees, as an incentive to continue working diligently for the
company.
    ¶3 SSARs, as defined by the Plan, are a specific type of incentive
award that differs somewhat from stock options. On the day that the
Compensation Committee awards SSARs, called the “grant date,”
the “exercise price” for the SSARs is set. The exercise price of each
SSAR is equal to the average trading price of USANA’s stock on the
grant date. 2 After the vesting period runs, the awardee can exercise
the SSARs and receive stock as compensation. The day on which the
awardee exercises the SSARs is called the “exercise date.” When the
awardee exercises her SSARs, she is given stock in an amount
reflecting the difference between the market price of USANA’s stock


   2 The exercise price must be set by the Compensation Committee
at not less than “100% of the Fair Market Value on the date of grant.”
The Plan defines Fair Market Value as “the mean between the
highest and lowest selling price of a share of Common Stock on the
principal exchange on which shares of Common Stock are then
trading, if any, on such date, or if shares were not traded on such
date, then on the closest preceding date on which a trade occurred.”


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                         Opinion of the Court

on the exercise date, and the exercise price. 3 The recipient does not
need to pay an exercise price.
   ¶4 The lower the exercise price and the higher the value of the
company’s stock on the exercise date, the more the SSARs are worth.
When the market price is lower on the exercise date than on the
grant date, the SSARs are “out of the money” and return no value to
the holder; if the SSARs are exercised when the market price is
higher than the exercise price, they are “in the money,” and the
holder then receives the difference in price in the form of USANA
stock.
   ¶5 While the Plan allows SSARs to be granted as incentive
awards, it does not explicitly mention spring-loaded SSARs. Spring-
loading involves granting equity awards just prior to the release of
non-public information reasonably expected to drive up the market
price of the company’s stock. Spring-loading increases the value of
SSARs because the exercise price is set on a day when the good news
has not yet been released, making the exercise price lower than if it
were to be set after the good news was released. It makes the SSARs
more likely to be “in the money” once they vest and also increases


   3  The terminology under the Plan is somewhat confusing. We
provide the following information and a hypothetical to explain how
this works. In this case, the SSARs were granted, and the exercise
price was set, on February 3, 2014, (the grant date) with an exercise
price of $57.62 (the market value of USANA’s stock on February 3rd).
The SSARs each had specific vesting periods, during which they
could not be exercised. The earliest any of the SSARs could be
exercised was 23 months after the grant date. Thus, as a hypothetical,
if a director exercised her SSARs on February 3, 2017, (three years
after the grant date) and the fair market value of USANA’s stock was
$100 per share on the date she exercised them (called the exercise
date), the director would be granted $42.38 worth of USANA stock
per SSAR that she was granted. This is tied to the following
calculation: $100 (the fair market value of USANA stock on the
exercise date) – $57.62 (the exercise price) = $42.38. So, if a director
were granted 12,000 SSARs in this hypothetical, the director would
get $508,560 worth of USANA stock.
      If the SSARs were granted on February 5, 2014, the day after the
good news was announced, the exercise price would have been
$68.46. Under the same hypothetical, each SSAR would be worth
only $31.54 on February 3, 2017, for a total value of $378,480.


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                        RAWCLIFFE v. ANCIAUX
                         Opinion of the Court

the difference between the exercise price and the market price on the
exercise date.
    ¶6 The Plan states only that the exercise price must be at least 100
percent of the “Fair Market Value” 4 of the common stock on the date
of the grant, with no mention of spring-loading. In this case, the
Committee awarded SSARs on February 3, 2014, to four members of
the board of directors (including the three directors serving on the
Compensation Committee) and several corporate officers. These
awards were made just one day before USANA announced its net
sales and earnings per share figures from 2013, which greatly
exceeded expectations. On February 6, 2014, each of the defendants
filed a Form 4 with the Securities and Exchange Commission
disclosing the SSARs awards. The SSARs’ exercise price the day they
were granted was $57.62. On February 5, 2014, after the
announcement, the company’s stock price rose to $68.46 per share, a
gain of $10.84 per share or 18.8 percent in two days. While the value
of USANA’s stock rose 18.8 percent just two days after the exercise
price was set, the SSARs did not vest, and could not be exercised,
until 23 to 42 months later. Thus, the directors and officers could not
realize that 18.8 percent increase until their SSARs had vested, and
only if USANA’s stock either maintained its $68.46 value or it
increased in value during that vesting period.
    ¶7 Mr. Rawcliffe acknowledges that the issuance of the spring-
loaded SSARs complied with the terms of the Plan. He argues only
that it violated the underlying “spirit” of the Plan. Accordingly, he
alleges that the Compensation Committee members breached their
fiduciary duties and wasted corporate assets. He also alleges that
one director, who was not a member of the Compensation
Committee, and several officers breached their fiduciary duties and
were unjustly enriched by passively receiving the spring-loaded
SSARs.
                       STANDARD OF REVIEW
   ¶8 A motion to dismiss presents a question of law that is
reviewed de novo, giving “no deference” to the district court’s
analysis. See State v. Ririe, 2015 UT 37, ¶ 5, 345 P.3d 1261.




   4See supra note 2 (giving the Plan’s definition of “Fair Market
Value”).


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                          Opinion of the Court

                                ANALYSIS
   ¶9 We first clarify the fiduciary duties imposed on corporate
directors and officers under the Utah Revised Business Corporation
Act. Next, we address Mr. Rawcliffe’s substantive claims in this case.
             I. DUTIES OWED BY CORPORATE OFFICERS
                        AND DIRECTORS
    ¶10 The question of whether spring-loading SSARs constitutes a
breach of fiduciary duty is an issue of first impression in Utah.
Corporate fiduciary duties were originally creatures of common law.
Now, Utah corporations are governed by the Utah Revised Business
Corporation Act (URBCA). UTAH CODE §§ 16-10a-101 to -1804. Utah
Code section 16-10a-840(4) 5 codifies when a corporate director or
officer can be held liable and states that:
          (4) A director or officer is not liable to the
       corporation [or] its shareholders . . . for any action
       taken, or any failure to take any action, as an officer or
       director, as the case may be, unless:
               (a) the director or officer has breached or failed
       to perform the duties of the office in compliance with
       this section; and
               (b) the breach or failure to perform constitutes
       gross negligence, willful misconduct, or intentional
       infliction of harm on the corporation or the
       shareholders.
(Emphases added).
    ¶11 As the emphasized portions show, this statute requires that
a cause of action brought by a corporation or shareholder 6 against a
director or officer, for the official acts of the director or officer, must
be for a breach of Utah Code section 16-10-840(4). See Bagley v.
Bagley, 2016 UT 48, ¶ 10, 387 P.3d 1000 (holding that we interpret
statutes to determine the intent of the legislature by looking first to


   5 This section was amended effective May 9, 2017. See H.B. 41,
62nd Legis. § 1 (2017). However, the provisions at issue here remain
substantially unchanged. For this reason, we cite the current version
of the statute.
   6 The statute also lists “any conservator or receiver, or any
assignee or successor-in-interest thereof . . . .” UTAH CODE § 16-10a-
840(4).

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                       RAWCLIFFE v. ANCIAUX
                        Opinion of the Court

the plain language); see also UTAH CODE § 16-10a-842(1) (providing
for director liability if a director “votes for or assents to a
distribution” that violates the URBCA “or the articles of
incorporation,” but only if “the director’s duties were not performed
in compliance with Section 16-10a-840”). Otherwise, if it is not a
breach of subsection (4), the “director or officer is not liable to the
corporation [or] its shareholders,” absent some other statutory
authorization. UTAH CODE § 16-10a-840(4) (emphasis added).
    ¶12 Subsection (4) mandates that a corporation or shareholder
prove two things before a director or officer can be held liable:
(1) that the director or officer breached a duty enumerated in Utah
Code section 16-10a-840(1); and (2) that the director or officer
breached the duty with a mental state listed in Utah Code section 16-
10a-840(4)(b). According to the plain language in subsection (4), both
a breach of a standard of conduct in subsection (1) and a mental state
listed in subsection (4)(b) are required to hold a director or officer
liable. We will first discuss the standards of conduct that corporate
directors and officers owe under the URBCA and then the mental
states required to establish liability.
   A. Standards of Conduct Under Utah Code Section 16-10a-840(4)(a)
    ¶13 Under Utah Code section 16-10a-840(4)(a), to determine
whether a corporate director or officer is liable to the corporation or
its shareholders the first step of the analysis is to determine whether
the “director or officer has breached or failed to perform the duties
of the office in compliance with this section.” The only duties
identified in section 16-10a-840 are located in subsection (1). Utah
Code section 16-10a-840(1) provides that:
          (1) Each director shall discharge the director’s
              duties as a director, including duties as a
              member of a committee, and each officer with
              discretionary authority shall discharge the
              officer’s duties under that authority:
             (a) in good faith;
             (b) with the care an ordinarily prudent person in
                 a like position would exercise under similar
                 circumstances; and
             (c) in a manner the director or officer reasonably
                believes to be in the best interests of the
                corporation.
   ¶14 A claim against a corporate officer or director must establish
a breach of one of these duties or otherwise establish a breach of this

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                         Opinion of the Court

subsection. Cf. McLaughlin v. Schenk, 2009 UT 64, ¶ 16, 220 P.3d 146
(“Under the [URBCA], directors and officers are required to carry
out their corporate duties in good faith, with prudent care, and in the
best interest of the corporation.” (citing UTAH CODE § 16-10a-840
(2005))). Section 16-10a-840(1) codified the common law duties
identified in our precedent, but the statute does not provide
definitions of the enumerated duties beyond what is written in
subsection (1). 7 “When the legislature ‘borrows terms of art in which
are accumulated the legal tradition and meaning of centuries of
practice, it presumably knows and adopts the cluster of ideas that
were attached to each borrowed word in the body of learning from
which it was taken.’” Maxfield v. Herbert, 2012 UT 44, ¶ 31, 284 P.3d
647 (citation omitted). Thus, the common law assists in defining the
scope of the duty, as long as the duty itself is identified by the plain
language of the statute and our common law does not conflict with
any statutory guidance on the scope of that duty. 8



   7 The legislature appears to have codified the common law duties
of good faith, care, and loyalty. Subsection (1)(a) corresponds to the
common law duty of good faith. Subsection (1)(b) appears to codify
the duty of care. Compare UTAH CODE § 16-10a-840(1)(b) (Directors
must act “with the care an ordinarily prudent person in a like
position would exercise under similar circumstances . . . .”), with
Warren v. Robison, 57 P. 287, 291 (Utah 1899) (“[D]irectors . . . must
exercise ordinary care, skill, and diligence. . . . [I]t is necessary for
them to give the business under their care such attention as an
ordinarily discreet business man would give to his own concerns
under similar circumstances . . . .”). Subsection (1)(c) appears to
codify the duty of loyalty. Compare UTAH CODE § 16-10a-840(1)(c)
(Directors have the duty to act “in a manner the director . . .
reasonably believes to be in the best interests of the corporation.”),
with Nicholson v. Evans, 642 P.2d 727, 730 (Utah 1982) (the duty of
loyalty requires directors “to use their ingenuity, influence, and
energy, and to employ all the resources of the corporation, to
preserve and enhance the property and earning power of the
corporation, even if the interests of the corporation are in conflict
with their own personal interests”).
   8  The mandatory language of Utah Code section 16-10a-840(4),
stating that a director or officer “is not liable” unless she violates
subsection (4), is very broad. While this subsection, and its
incorporation of subsection (1), appears to codify the common law
                                                       (continued . . .)
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                        RAWCLIFFE v. ANCIAUX
                         Opinion of the Court

    ¶15 Mr. Rawcliffe’s arguments only fall under the duty of good
faith, identified in subsection (1)(a), and the duty to act in a manner
that the director or officer reasonably believes to be in the best
interests of the corporation, identified in subsection (1)(c). We now
discuss the scope of these two duties, but do not address the scope of
the duty identified in subsection (1)(b), because Mr. Rawcliffe does
not argue a breach of that duty.
    ¶16 Mr. Rawcliffe cites Glen Allen Mining Co. v. Park Galena
Mining Co., for the scope of the first listed duty—the duty of good
faith—arguing that it requires all the acts of the directors and officers
to “be for the benefit of the corporation and not for their own
benefit. . . . They are not permitted to profit as individuals by virtue
of their position.” 296 P. 231, 240 (Utah 1931). However, this
statement conflicts with other portions of the URBCA leading us to
reject it as an accurate statement of “good faith” under Utah Code
section 16-10a-840(1)(a). For instance, the URBCA authorizes the
board of directors to set their own compensation, UTAH CODE § 16-
10a-811, and to “determine the terms upon which” shares, stock
options, or other securities “are issued, their form and content, and
the consideration for which the shares are to be issued,” id. § 16-10a-
624(1). This leads us to believe that the duty of good faith under the
URCBA does not prohibit directors from personally benefitting from
their position, subject to some restrictions. See C & Y Corp. v. Gen.
Biometrics, Inc., 896 P.2d 47, 54 (Utah Ct. App. 1995) (“[S]o long as
corporate officers [or directors] act fairly and in good faith, they are
not precluded from dealing or contracting with the corporation
merely because they are its officers [or directors].” (second and third
alterations in original) (quoting Runswick v. Floor, 208 P.2d 948, 951
(Utah 1949))); Branch v. W. Factors, Inc., 502 P.2d 570, 571 (Utah 1972)
(stating that directors are not precluded from dealing with the
corporation unless “there is an entire absence of . . . good faith” or
there is “fraud and collusion” (citation omitted)).



(continued . . .)
duties held by corporate officers and directors, such duties are now
creatures of statute and may be modified as the legislature sees fit.
Thus, the common law of corporate fiduciary duties applies only
insofar as it does not conflict with the statute. Whether the common
law fiduciary duties exist independent of the statute remains an
open question, as the parties concede that the statute applies to
Mr. Rawcliffe’s fiduciary duty claims in this case.


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                         Opinion of the Court

    ¶17 To breach the duty of good faith, the director or officer must
typically act in bad faith. See Hansen v. Granite Holding Co., 218 P.2d
274, 280 (Utah 1950) (the defendants agreed with the formulation of
the good faith standard, arguing only that “no bad faith has been
shown”); Chapman v. Troy Laundry Co., 47 P.2d 1054, 1064 (Utah 1935)
(stating that when a director breaches the duty of good faith, “they
are guilty of bad faith”). Bad faith involves some form of
“[d]ishonesty of belief, purpose, or motive.” 9 Bad Faith, BLACK’S LAW
DICTIONARY (10th ed. 2014); see also In re Walt Disney Co. Derivative
Litig., 906 A.2d 27, 64–67 (Del. 2006). Thus, this duty is breached
when a director or officer intentionally harms the corporation,
intentionally benefits herself to the detriment of the corporation,
displays an intentional dereliction of duty or a conscious disregard
for her responsibilities, or takes some similar action. 10 See Glen Allen
Mining Co., 296 P. at 241 (holding that directors act in bad faith when
they take any action “looking to the impairment of corporate rights,


   9 There may be other ways to violate the duty of good faith that
do not necessarily require intentional or willful misconduct. The
statutory scheme indicates that gross negligence could also apply to
a violation of the duty of good faith as Utah Code section 16-10a-
840(4)(b) does not limit the application of “gross negligence” to any
one duty under Utah Code section 16-10a-840(1). See MODEL BUS.
CORP. ACT § 8.31 cmt. at 8-241 (AM. BAR ASS’N 2013 Revision) (stating
that “decision-making outside the bounds of reasonable judgment” –
that could include such things as “an abuse of discretion,”
“constructive fraud,” or “reckless indifference” – “can give rise to an
inference of bad faith”). However, the determination of this question
is not necessary to this case. We merely note that intentionally or
willfully taking an action that the director knows is not in the best
interests of the corporation is evidence of bad faith and is a violation
of the duty of good faith. See Carsanaro v. Bloodhound Techs., Inc., 65
A.3d 618, 638 (Del. Ch. 2013) (“The occasions for the determination
of honesty, good faith and loyal conduct are many and varied, and
no hard and fast rule can be formulated.” (citation omitted)).
   10 In McLaughlin, this court held that, under the URBCA, directors
of closely held corporations owe the heightened fiduciary duty of the
utmost good faith. 2009 UT 64, ¶ 42. While this varies somewhat
from the traditional duty of good faith, we held that such a
heightened duty exists in closely held corporations through our
interpretation of the statute itself. Id. ¶ 20 (interpreting the statute
“in a way that achieves the intent and goal of the Act as a whole”).


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                         RAWCLIFFE v. ANCIAUX
                          Opinion of the Court

the sacrifice of corporate interests, the retardation of the objects of
the corporation, and more especially the destruction of the
corporation itself”); In re Walt Disney, 906 A.2d at 67 (Bad faith
includes “the intent to violate applicable positive law, or . . .
intentionally fail[ing] to act in the face of a known duty to act,
demonstrating a conscious disregard for [a director’s] duties.”
(citation omitted)).
    ¶18 The third duty, codified under subsection (1)(c), requires
that a director act in a manner which she “reasonably believes to be
in the best interests of the corporation.” UTAH CODE § 16-10a-
840(1)(c). This duty significantly overlaps with the duty of good faith
codified in subsection (1)(a). Some jurisdictions have even classified
the duty of good faith as a subset of the duty of loyalty. See, e.g.,
Stone ex rel. AmSouth Bancorporation v. Ritter, 911 A.2d 362, 370 (Del.
2006) (stating that, “good faith ‘is a subsidiary element[,]’ i.e., a
condition, ‘of the fundamental duty of loyalty.’” (alteration in
original) (citation omitted)). However, the statutory scheme compels
us to recognize differences between each of the three duties listed in
Utah Code section 16-10a-840(1). For instance, the URBCA allows
corporations to indemnify their directors for a breach of the statutory
duty of care identified in Utah Code section 16-10a-840(1)(b), but
does not allow them to indemnify their directors for a breach of the
duty of good faith identified in section 16-10a-840(1)(a), or a breach
of the duty of loyalty identified in section 16-10a-840(1)(c). See UTAH
CODE § 16-10a-902(1) (“[A] corporation may indemnify . . . a
director[] against liability incurred . . . if: (a) his conduct was in good
faith; and (b) he reasonably believed that his conduct was in, or not
opposed to, the corporation’s best interests . . . .”).
    ¶19 One difference between subsections (1)(a) and (1)(c) is the
mental state required under the plain language of the statute. When
a director breaches the duty of good faith in (1)(a), she typically does
so through intentional or willful misconduct. When a director
breaches (1)(c) however, she must be acting on an unreasonable
belief that her actions would be in the best interest of the company.11



   11 The Delaware Supreme Court made it clear that one of the
primary distinctions between the duty of good faith and the duty of
care is the mental state required, but acknowledged that there is a
large amount of overlap between those two duties as well. In re Walt
Disney, 906 A.2d at 65 (“The conduct that is the subject of due care
may overlap with the conduct that comes within the rubric of good
                                                     (continued . . .)
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                         Opinion of the Court

Thus, to adequately discharge her statutory duty of loyalty, the
director must subjectively believe her actions are in the best interest
of the corporation, and her subjective belief must be objectively
reasonable—the reasonable person in those circumstances would
likewise believe that the action would be in the best interests of the
corporation. See MODEL BUS. CORP. ACT § 8.30 cmt. at 8-196 (AM. BAR
ASS’N 2013 Revision) (“The phrase ‘reasonably believes’ is both
subjective and objective in character. Its first level of analysis is
geared to what the particular director, acting in good faith, actually
believes . . . . The second level of analysis is focused specifically on
‘reasonably.’”). 12 Therefore, to breach (1)(c), the director must take
some action that she either knows is not in the best interests of the
corporation, or unreasonably or negligently believes is in the best
interests of the corporation. Most importantly for this case, if the best
interests of the corporation are served by the director’s actions then
there is no claim under subsection (1)(c).




(continued . . .)
faith in a psychological sense, but from a legal standpoint those
duties are and must remain quite distinct.”(footnote omitted)). While
explaining this overlap and the distinctions between these duties the
court stated that, in some cases, “two states of mind coexist in the
same person: subjective bad intent (which would lead to a finding of
bad faith) and gross negligence (which would lead to a finding of a
breach of the duty of care).” Id. at 65 n.104. Thus, there are instances
in which a director may breach the duty of care and the duty of good
faith through the same conduct. Intentional or willful misconduct
requires us to look into the subjective mental state of the director,
whereas the URBCA’s codification of the duty of care is measured
from an objective standard. See UTAH CODE § 16-10a-840(1)(b)
(director must discharge duties “with the care an ordinarily prudent
person in a like position would exercise under similar
circumstances”).
   12 The URBCA is largely based on the 1984 version of the Model
Business Corporation Act. UTAH BUS. CORP. ACT REVISION
COMMITTEE, OFFICIAL COMMENTARY TO UTAH REVISED BUS. CORP. ACT
1 (1992). While these comments are based on the 2013 version of the
model act, they discuss the “standards of conduct” that have existed
since the “1969 Model Act,” and are thus informative of the proper
interpretation of the standards of conduct under the URBCA. MODEL
BUS. CORP. ACT § 8.30 cmt. at 8-193 (AM. BAR. ASS’N 2013 Revision).

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                        RAWCLIFFE v. ANCIAUX
                         Opinion of the Court

     B. Standards of Liability Under Utah Code Section 16-10a-840(4)(b)
    ¶20 While Utah Code section 16-10a-840(1) establishes the
standards of conduct for officers and directors, Utah Code section
16-10a-840(4)(b) establishes the standards of liability. After
establishing that a director or officer has breached a duty under
subsection (1), the corporation or shareholder must prove that the
duty was breached with any of the mental states noted in subsection
(4)(b), that codifies, to some extent, the business judgment rule.
Mr. Rawcliffe cites a string of Delaware cases for the proposition that
the business judgment rule does not apply to “directoral self-
compensation decisions.” See, e.g., Telxon Corp. v. Meyerson, 802 A.2d
257, 265 (Del. 2002). While this may be persuasive authority, and we
can see the policy reasons for such a rule, we are bound by the plain
language of the URBCA, which does not provide for any exceptions
to the application of subsection (4)(b). As noted above, the language
of the statute clearly spells out the elements that a corporation or
shareholder must establish to hold directors or officers liable for
their official acts.
    ¶21 Subsection (4)(b) provides that a director or officer can be
liable for a breach of duty only if “the breach or failure to perform [a
duty] constitutes gross negligence, willful misconduct, or intentional
infliction of harm on the corporation or the shareholders.” UTAH
CODE § 16-10a-840(4)(b). A director may breach one of the standards
of conduct identified in subsection (1), but can be held liable only if
her conduct falls under one of the mental states in subsection (4)(b).
Thus, a director may act negligently in violating her duty to act in
the best interests of the corporation, but unless her negligence rises
to the level of gross negligence, she “is not liable to the corporation
[or] its shareholders” for breaching a standard of conduct. Id. § 16-
10a-840(4).
    ¶22 The mental states in subsection (4)(b) range from “utter
indifference . . . at best [to] a concerted effort to destroy the business
at worst.” Wachocki v. Luna, 2014 UT App 139, ¶ 10, 330 P.3d 717
(footnote omitted). Gross negligence is the minimum standard
required to hold a director liable under the URBCA. “[G]ross
negligence is ‘the failure to observe even slight care; it is carelessness
or recklessness to a degree that shows utter indifference to the
consequences that may result.’” Penunuri v. Sundance Partners, Ltd.,




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                         Opinion of the Court

2017 UT 54, ¶ 35, --- P.3d --- (quoting Blaisdell v. Dentrix Dental Sys.,
Inc., 2012 UT 37, ¶ 14, 284 P.3d 616). 13
    ¶23 While this court has never expressly defined “willful
misconduct” in the context of corporate duties, we have defined it in
other situations. In the judicial discipline context, we determined
that a “wrongful purpose element should be necessary” to find
willful misconduct. In re Worthen, 926 P.2d 853, 869 (Utah 1996). In
the tort context, we held that willful misconduct, under the
Limitation of Landowner Liability Act, “incorporates the elements of
knowledge of the dangerous condition and of the fact that serious
injury is a probable result, and inaction in the face of such
knowledge . . . .” Golding v. Ashley Cent. Irrigation Co., 793 P.2d 897,
901 (Utah 1990); see also Atkin Wright & Miles v. Mountain States Tel. &
Tel. Co., 709 P.2d 330, 335 (Utah 1985) (“Willful misconduct goes
beyond gross negligence in that a defendant must be aware that his
conduct will probably result in injury.”). Thus, the director or officer
must take an action or fail to act when she knows that the action or
failure to act will likely result in harm to the corporation.
     ¶24 The final mental state under subsection (4)(b) is the
“intentional infliction of harm on the corporation or the
shareholders.” UTAH CODE § 16-10a-840(4)(b). Under this mental
state, not only does the director or officer know that the corporation
is likely to be harmed by a certain action, but also that the director or
officer’s actions are taken with the intent to harm the corporation or
its shareholders.
        II. MR. RAWCLIFFE HAS FAILED TO STATE A CLAIM
   ¶25 Having determined the proper analysis under Utah Code
section 16-10a-840, we now turn to Mr. Rawcliffe’s complaint to


   13 In Penunuri, we discussed, without determining, the mental
state required for gross negligence. 2017 UT 54, ¶ 38 n.59. We
recognized that some authorities, including some of our own
precedent, “imply that a plaintiff must prove that a defendant acted
with a certain mental state with respect to the risk created. But we
have also suggested that gross negligence can be shown even
without a ‘knowing’ state of mind.” Id. (citations omitted). We do not
conclusively address this issue here as it is not necessary to the
outcome of this case. Under either standard, we determine that
Mr. Rawcliffe has failed to state a claim for relief because he has
failed to adequately allege that the Compensation Committee
actually harmed the corporation or violated the purposes of the Plan.

                                   13
                        RAWCLIFFE v. ANCIAUX
                         Opinion of the Court

determine if he has adequately pled causes of action under this
section. Mr. Rawcliffe brought claims against the members of the
Compensation Committee for breach of fiduciary duty and waste of
corporate assets in authorizing the spring-loaded SSARs, and claims
against one other director and several officers for breach of fiduciary
duty and unjust enrichment for receiving the spring-loaded SSARs.
We first discuss the pleading standard that Mr. Rawcliffe must meet,
then review his claims against the members of the Compensation
Committee. Finally, we turn to his claims against the other director
and corporate officers.
         A. We Apply Utah Rule of Civil Procedure 9(c) to This Case
    ¶26 The district court held that Utah Rule of Civil Procedure
9(c), 14 requiring a plaintiff to plead fraud with specificity, applied to
Mr. Rawcliffe’s breach of fiduciary duties claims because “spring-
loading sound[s] in fraud.” It relied on State v. Apotex Corp. for its
statement that rule 9(c) “is not limited to allegations of common law
fraud,” but instead “reach[es] all circumstances where the pleader
alleges the kind of misrepresentations, omissions, or other
deceptions covered by the term ‘fraud’ in its broadest dimension.” 2012
UT 36, ¶ 22, 282 P.3d 66 (citation omitted). Mr. Rawcliffe does not
challenge this holding on appeal, so we review his complaint to
determine if it “state[s] with particularity the circumstances
constituting” breach of fiduciary duty.15 UTAH R. CIV. P. 9(c).
However, “intent, knowledge, and other conditions of a person’s
mind may be alleged generally.” Id. Thus, he must allege facts
surrounding the actions the Compensation Committee took with
particularity, but their intent can be pled generally. While intent


   14 The district court actually applied the old Utah Rule of Civil
Procedure 9(b), which stated that, “In all averments of fraud or
mistake, the circumstances constituting fraud or mistake shall be
stated with particularity. Malice, intent, knowledge, and other
condition of mind of a person may be averred generally.” UTAH R.
CIV. P. 9(b) (2015). However, because there is no substantive
difference concerning fraud between the old rule 9(b) and the new
rule 9(c), we cite the new rule.
   15We do not hold that the heightened pleading standard in Utah
Rule of Civil Procedure 9 applies to breach of fiduciary duty claims.
We merely apply that standard because Mr. Rawcliffe waived any
argument that his complaint should be subject to the general
pleading standard in Utah Rule of Civil Procedure 8.

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                         Opinion of the Court

need only be pled generally, we still “need not accept [as true]
extrinsic facts not pleaded nor need we accept legal conclusions in
contradiction of the pleaded facts.” Am. W. Bank Members, L.C. v.
State, 2014 UT 49, ¶ 7, 342 P.3d 224 (citation omitted).
        B. Mr. Rawcliffe’s Claims Against the Compensation Committee
    ¶27 At oral argument, Mr. Rawcliffe cited two allegations in his
complaint that he argues most strongly show a breach of fiduciary
duty by the members of the Compensation Committee and meet the
heightened pleading standard. First, the complaint alleges that “the
members of the Board’s Compensation Committee . . . knowingly
and deliberately violated USANA’s stockholder-approved equity
plan.” The allegation that the Compensation Committee violated the
Plan is a conclusory statement that we do not assume is true, absent
additional allegations supporting it. See Am. W. Bank Members, 2014
UT 49, ¶ 7. Second, the complaint alleges that “the Compensation
Committee deliberately granted the SSARs . . . [to] ensure that the
SSARs carried an artificially low exercise price,” and that the
committee thereby “improperly violated the Plan by granting
awards which they knew would be ‘in the money’ once the positive
news . . . was disclosed the following day.” At best, these two
allegations combine to allege that the Compensation Committee
knowingly and deliberately approved spring-loaded SSARs.
    ¶28 However, Mr. Rawcliffe conceded on appeal that the
Compensation Committee complied with the “strict letter” of the
Plan when it authorized the spring-loaded SSARs. He argues only
that the Compensation Committee violated “the spirit and intent” of
the Plan when they “us[ed] non-public, inside information to
manipulate ‘fair market value’ to benefit themselves.” We agree with
Mr. Rawcliffe that if, and we emphasize if, the directors intended to
circumvent the purposes of the Plan to benefit themselves to the
detriment of the corporation or its shareholders, even if they
complied with the “letter” of the Plan, he has adequately pled a
breach of the duty of good faith. However, we do not agree with
Mr. Rawcliffe’s analysis of what purposes the Plan intended to
fulfill, and hold that spring-loading does not, per se, violate those
purposes. 16


   16 The Plan was attached to Mr. Rawcliffe’s Verified Stockholder
Derivative Complaint as Exhibit A. Because it was attached, and was
therefore a part of the pleading, we may review it on a motion to
dismiss without converting the motion into a motion for summary
                                                     (continued . . .)
                                   15
                        RAWCLIFFE v. ANCIAUX
                         Opinion of the Court

    ¶29 The Plan is a document that governs the procedures the
Compensation Committee must follow when it authorizes equity
incentive awards. We interpret the governing documents of a
corporation the same way we interpret a contract. Dansie v. City of
Herriman, 2006 UT 23, ¶ 6, 134 P.3d 1139 (interpreting articles of
incorporation “using the same approach that we apply to the
interpretation of contracts generally”). Our purpose in interpreting a
contract is to “ascertain the intentions of the parties to the contract.”
WebBank v. Am. Gen. Annuity Serv. Corp., 2002 UT 88, ¶ 17, 54 P.3d
1139. “In interpreting a contract, [w]e look to the writing itself to
ascertain the parties’ intentions, and we consider each contract
provision . . . in relation to all of the others, with a view toward
giving effect to all and ignoring none.” Id. ¶ 18 (alterations in
original) (internal quotations marks omitted). While interpreting
such a document, we look first to “the plain language of its text.”
Dansie, 2006 UT 23, ¶ 6.
    ¶30 The plain language of the Plan clearly denotes its purposes.
First, the Plan defines fair market value as the “mean between the
highest and lowest selling price of a share of Common Stock on the
principal exchange on which shares of Common Stock are then
trading” on the date on which the equity incentive award is
announced. If the board of directors and shareholders who approved
the Plan intended “fair market value” to mean something different
(such as the actual value of the shares based on all non-public
information rather than its market value based on its current price
on the stock market) they would have stated as much. We cannot
read into the Plan a “spirit and intent” that runs counter to what is
actually written.
   ¶31 Additionally, the Plan specifically lays out its purposes.
Article I of the Plan provides that its four purposes are to:
       (1) Closely associate the interests of management . . .
           with the shareholders of the Company by
           reinforcing the relationship between participants’
           rewards and shareholder gains;
       (2) Provide management and employees with an
           equity ownership in the Company commensurate



(continued . . .)
judgment. See Oakwood Vill. LLC v. Albertsons, Inc., 2004 UT 101,
¶¶ 12–13, 104 P.3d 1226.


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                        Opinion of the Court

          with Company performance, as reflected in
          increased shareholder value;
      (3) Maintain competitive compensation levels; and
      (4) Provide an incentive to management and
          employees to remain in continuing employment
          with the Company and to put forth maximum
          efforts for the success of its business.
    ¶32 Article I ends by stating that the Plan is “intended to
provide flexibility to the Company in its ability to motivate, attract,
and retain the services of members of the Board . . . upon whose
judgment, interest, and special effort the successful conduct of the
Company’s operation is largely dependent.” The Plan also gives the
Compensation Committee the “exclusive power, authority and
discretion to” determine the “number of shares of Stock” that should
be issued as an incentive, and the “terms and conditions of any
Award . . . including, but not limited to, the exercise price.” It is
difficult to imagine that such a broadly-worded document intends to
completely prohibit spring-loading when it grants the Compensation
Committee such large discretion in determining the amount of
SSARs that can be awarded. If the Compensation Committee
believed that spring-loading would violate the Plan or a standard of
conduct under the URBCA, they could have simply awarded
themselves and the other defendants a larger number of SSARs to
make up the difference in profit from not spring-loading their
awards. The “spirit” of the Plan is detailed quite well by the Plan
itself, and we cannot say that spring-loading per se violates any of
these purposes.
    ¶33 As spring-loading is not a per se violation of the Plan, the
proper question is whether the directors and officers determined, in
good faith, that the amount of spring-loaded SSARs and their
attendant value met the purposes laid out in Article I. Thus,
Mr. Rawcliffe would have to plead facts sufficient to show: 1) that
the value of the awards were determined in bad faith or that the
value of the awards did not serve the best interests of the
corporation, see supra ¶¶ 13–19; UTAH CODE § 16-10a-840(1), (4)(a);
and 2) that the Compensation Committee approved the awards with
the intent to harm the corporation or that they were utterly
indifferent to the fact that the awards would harm the corporation,
see supra ¶¶ 20–24; UTAH CODE § 16-10a-840(4)(b).
   ¶34 In determining whether the corporation was actually
harmed, or that the Compensation Committee intended to harm the
corporation, we must look again to the purposes of the Plan. If the

                                  17
                       RAWCLIFFE v. ANCIAUX
                        Opinion of the Court

value of the spring-loaded SSARs, or the value of any equity
incentive award, meets the purposes laid out in the Plan, then
USANA and its shareholders have not been harmed. Indeed, if the
purposes of the Plan have been met, then the spring-loaded SSARs
have benefited USANA and its shareholders by incentivizing its
officers. The shareholder-approved Plan details what the corporation
and its shareholders believe is in their best interests. We are bound
by the plainly stated purposes of the Plan in determining what is in
the corporation’s best interests. If the Compensation Committee
takes an action that is in the corporation’s best interests, then the
corporation has not been harmed.
    ¶35 Mr. Rawcliffe alleges that the awards were “intended to and
did line the pockets of the [defendants] at the expense of USANA
and its shareholders.” But this does not show that the purposes of
the Plan were violated. Every compensation decision enriches the
recipient at the expense of the company. One of the primary
purposes of the Plan is to incentivize directors and officers to stay
with the corporation by enriching them. The SSARs clearly met this
purpose by 1) increasing the compensation of the directors and
officers and 2) maintaining a 23-to-42 month vesting period, thereby
incentivizing the directors and officers to stay with the company (so
that they could actually exercise the SSARs) and continue to work
hard to increase the company’s stock price (to make sure the SSARs
were “in the money” and to maximize their value).
   ¶36 Mr. Rawcliffe did not allege that the defendants were over-
compensated, just that they received spring-loaded SSARs.
Essentially, Mr. Rawcliffe argues that spring-loaded equity incentive
awards are a per se violation of the Plan’s purposes. 17 We do not


   17 Mr. Rawcliffe acknowledged in his brief that he did “not allege
that the Directors and Officers were not entitled to receive
compensation for their roles at USANA, nor does he allege that the
Directors and Officers were not entitle to receive SSARs at all. To the
contrary, the Complaint acknowledges that the Plan expressly
permits the Compensation Committee to grant properly priced
SSARs and other types of equity awards . . . . What Rawcliffe alleges,
however, is that the Directors and Officers were not entitled to
receive spring-loaded SSARs.” His only argument that the SSARs
were not properly priced is that they were spring-loaded. Thus, he
argues that spring-loading is a per se violation of the Plan’s
purposes.


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                         Opinion of the Court

agree. To meet rule 9(c)’s standard of pleading, Mr. Rawcliffe needed
to plead something more to show how these particular awards
violated the purposes of the Plan, thereby harming the company.
   ¶37 We can imagine instances in which spring-loading would be
a breach of one of the standards of conduct listed in Utah Code
section 16-10a-840(a) and would also be done with a mental state in
section 16-10a-840(4)(b) that is required to hold the director liable. As
an example, to survive a motion to dismiss, the complaint would
have to allege that the Compensation Committee acted in bad faith
by awarding spring-loaded SSARs that were not tied to “shareholder
gains” or “increased shareholder value,” or that they somehow
violated other purposes laid out in Article I or inferred from the text
of the Plan. The complaint would also have to allege that the
Compensation       Committee        intentionally    over-compensated
themselves, or that they were utterly indifferent to the fact that they
were over-compensating themselves and the other defendants. See
generally UTAH CODE § 16-10a-840(4)(b).
   ¶38 However, Mr. Rawcliffe has failed to allege any facts
showing that the Compensation Committee did not meet the
purposes of the Plan in awarding the spring-loaded SSARs.
Additionally, he has not alleged any facts sufficient to show that the
Compensation Committee was utterly indifferent or intentionally
violated the purposes of the Plan. He simply alleges that the
Compensation Committee “knowingly spring-loaded” the SSARs.
But incentivizing the directors and officers by awarding them with
bonuses is one of the primary purposes of the Plan, so we cannot see
how it harmed the corporation absent something more. We affirm
the district court’s dismissal of Mr. Rawcliffe’s breach of fiduciary
duty claim against the members of the Compensation Committee.
     ¶39 Mr. Rawcliffe’s claim for corporate waste against the
Compensation Committee members is likewise unavailing. While we
have mentioned the claim of corporate waste before, we have never
actually defined its scope or applied it in a case. See, e.g., Reedeker v.
Salisbury, 952 P.2d 577, 587 n.11 (Utah Ct. App. 1998) (stating that the
parties argued over whether a claim for corporate waste exists in
Utah, but the court “need not decide this issue”); Equitable Life & Cas.
Ins. Co. v. Inland Printing Co., 484 P.2d 162, 163 (Utah 1971) (saying
that “[d]irectors or officers may be liable to the corporation or
stockholders for mismanagement of the business of the corporation
or waste of its assets” without defining or applying any standard);
Arndt v. First Interstate Bank of Utah, N.A., 1999 UT 91, ¶ 18, 991 P.2d
584 (mentioning corporate waste without applying it or addressing
its scope).

                                   19
                        RAWCLIFFE v. ANCIAUX
                         Opinion of the Court

    ¶40 On appeal, Mr. Rawcliffe does not argue what the standard
should be for a claim of corporate waste. He merely spends a single
paragraph making the bald assertion that spring-loaded SSARs are a
waste of corporate assets because a Delaware court has said as much.
He neither recites the standard for corporate waste in Delaware, nor
argues why we should adopt such a standard. “[W]e are not a
depository in which the appealing party may dump the burden of
argument and research.” Bank of Am. v. Adamson, 2017 UT 2, ¶ 11, 391
P.3d 196 (citation omitted). This is especially true when the appellant
seeks to impose liability under a theory that has not been applied
before in this jurisdiction. We hold that Mr. Rawcliffe has failed “to
carry [his] burden of persuasion on appeal,” and we affirm the
district court. Id. ¶ 12 (citation omitted).
      C. Mr. Rawcliffe’s Claims Against the Other Director and Officers
    ¶41 Finally, we dismiss Mr. Rawcliffe’s claims against the other
defendants who passively received the spring-loaded SSARs.
Mr. Rawcliffe brought claims against one director and several
officers for breach of fiduciary duty and unjust enrichment. As we
have already dismissed his claim for breach of fiduciary duty against
the members of the Compensation Committee, who actively
approved the SSARs, we cannot see how a director or officer who
passively received the SSARs breached a fiduciary duty or violated
the “spirit” of the Plan.
    ¶42 Additionally, we hold that Mr. Rawcliffe has failed to state a
claim for unjust enrichment. We cannot see how it is inequitable for
the director and officers to retain the benefit of the spring-loaded
SSARs. See Desert Miriah, Inc. v. B & L Auto, Inc., 2000 UT 83, ¶ 13, 12
P.3d 580 (Unjust enrichment requires that “the acceptance or
retention by the conferee of the benefit [must be] under such
circumstances as to make it inequitable for the conferee to retain the
benefit without payment of its value.” (citation omitted)). According
to the facts pled in the complaint, the Compensation Committee
approved the spring-loaded SSARs in strict compliance with the
“letter” of the Plan, and the spring-loaded SSARs did not violate any
of the purposes of the Plan. Unless he were to allege that the director
and officers were over-compensated, or that the awards somehow
violated the Plan, it is not unjust for the director and officers to keep




                                   20
                         Cite as: 2017 UT 72
                         Opinion of the Court

their awards. 18 We affirm the district court’s dismissal of the
remaining defendants in the action.
                             CONCLUSION
    ¶43 The Utah Revised Business Corporation Act establishes
when a corporate director or officer may be held liable to the
corporation or its shareholders for her official acts. Mr. Rawcliffe has
failed to allege sufficient facts to establish any breach of such a duty.
We cannot say that spring-loading SSARs constitutes a per se
violation of USANA’s 2006 Equity Incentive Plan, and Mr. Rawcliffe
has failed to allege any facts supporting the inference that the
defendants intended to harm, or actually harmed the corporation.
We affirm the district court’s dismissal of this case without
prejudice.




   18   We also note that this claim may be barred by Utah Code
section 16-10a-840(4), because that section limits director and officer
liability. However, neither party made this argument, so we do not
address this question.


                                   21
