Central States Industrial Supply, Inc. v. McCullough (279 F. Supp. 2d 1005, 2003)

United States District Court for the Northern District of Iowa 2003-09-03

Citations

Full opinion text

MEMORANDUM OPINION AND ORDER REGARDING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

BENNETT, Chief Judge.

TABLE OF CONTENTS

I. INTRODUCTION.1012

A. Factual Background.1012

1. CSIS’s acquisition of CPI.1012

2. McCullough’s 1998 Employment Agreement.1013

3. The 1999 Stock Repurchase Agreement and Addendum.1014

4. McCullough’s alleged wrongdoing.1014

B. Procedural Background.1016

1. The plaintiffs’ claims and the defendant’s response.1016

2. The motions for summary judgment and to strike affidavits .1017

II. THE MOTION TO STRIKE AFFIDAVITS.1017

A. Arguments Of The Parties.1017

B. Analysis.1018

1. Anderson’s affidavit.1018

a. Rule 56(e) requirements .1018

b. Contradiction of prior testimony.1019

c. Speciñc paragraphs of the affidavit.1020

2. hanger’s affidavit.1024

3. McCullough’s request for sanctions.1026

4. Alternative analysis .1026

III. THE MOTION FOR SUMMARY JUDGMENT.1026

A. Standards For Summary Judgment.1026

B. The Breach-Of-Contract Claims.1027

1. Enforceability of the 1998 Employment Agreement.1028

a. Arguments of the parties.1028

b. Stenger’s capacity to contract on CPI’s behalf.1029

c. Adequacy of consideration.1030

2. Was the 1998 Employment Agreement superseded?.1031

a. Arguments of the parties.1031

b. Effect of the 1999 Stock Repurchase Agreement and Addendum.... 1032

i. Rules of interpretation and construction.1032

ii. Interpretation and construction of the pertinent terms.1033

3. Did McCullough breach the 1998 Employment Agreement? .1034

a. Count I: Removal or retention of conñdential information.1035

i. Arguments of the parties .1035

ii. Analysis .1035

b. Count II: Disclosure of conñdential matters.1036

i. Arguments of the parties .1036

ii. Analysis.1036

C. The Trade Secrets Act Claim.1037

1. Arguments of the parties .1037

2. Analysis .1038

a. “Trade secrets”.1038

b. “Misappropriation”.1039

D. Breach Of Fiduciary Duty.1041

1. Arguments of the parties .1041

2. Analysis .1042

a. Fiduciary duties.1042

b. Disclosure of proprietary information.1043

c. Solicitation of employees.1043

TV. CONCLUSION.1047

Convinced that the defendant, the departing president and chief operating officer of the company, pirated confidential information before jumping ship to work for a competitor and that he also solicited other employees to join him at his new employer, the plaintiffs did not just get mad, they got an attorney. In his motion for summary judgment, however, the defendant contends that the plaintiffs really have nothing to be mad about. The court must decide whether the plaintiffs’ claims of breach of contract, breach of fiduciary duty, and violation of the Iowa Trade Secrets Act are subject to genuine issues of material fact, which a jury must decide, or fail as a matter of law.

I. INTRODUCTION

A. Factual Background

Whether or not a party is entitled to summary judgment ordinarily turns on whether or not there are genuine issues of material fact for trial. See, e.g., Quick v. Donaldson Co., 90 F.3d 1372, 1376-77 (8th Cir.1996). Nevertheless, the court will not attempt here a comprehensive review of the undisputed and disputed facts in the record. Rather, the court will present here only sufficient factual background to put in context the parties’ arguments for and against summary judgment on the plaintiffs’ claims. More attention will be given to specific factual disputes, where necessary, in the court’s legal analysis, below.

1. CSIS’s acquisition of CPI

In early 1998, plaintiff Central States Industrial Supply, Inc. (CSIS), an industrial supply company incorporated in Nebraska, acquired all of the shares of plaintiff CPI Sales, Inc. (CPI), an Iowa corporation. Prior to CSIS’s acquisition of CPI, defendant Steve McCullough was the president of CPI. The principals of CSIS, Richard Stenger and Harry S. Anderson—who each owned or controlled fifty percent of the shares of CSIS at the times pertinent to the claims in this action—desired to retain McCullough in that position after CSIS acquired CPI. Therefore, on January 5, 1998, Stenger, acting as the “Secretary/Treasurer” of CPI, entered into an Employment Agreement (the 1998 Employment Agreement) with McCullough concerning his continued employment with CPI after CSIS acquired CPI.

2. McCullough’s 1998 Employment Agreement

Somewhat more specifically, the recitals at the beginning of the Employment Agreement included the following:

WHEREAS, Employer [elsewhere identified as CPI] operates and owns an industrial supply business with its headquarters in Cedar Rapids, Iowa, and has recently changed ownership but desires to continue with Steve McCullough as an employee of CPI Sales, Inc. and Steve McCullough is desirous of continuing employment with CPI Sales, Inc. under its new ownership and is willing to be so employed;

NOW THEREFORE, in consideration of the mutual promises of the parties and other good and valuable consideration, the parties agree as follows....

Defendant’s Appendix at 51, Exhibit F (1998 Employment Agreement). The parties apparently do not dispute that, before and after the acquisition, McCullough was employed as the president of CPI and that his duties remained essentially the same after the acquisition as they were before it. However, CSIS and CPI contend, and McCullough does not appear to dispute, that McCullough’s annual salary was increased by $10,000 and that he obtained certain new bonus provisions under the terms of the 1998 Employment Agreement. The 1998 Employment Agreement provided for McCullough’s employment “commenc[ing] on the 5th day of January, 1998 and continuing] indefinitely, unless terminated for reasons hereinafter set forth.” Id. at ¶ 4. The parties agree that McCullough’s employment was “at-will.” See also id. at ¶ 7 (“Termination” clause providing that “[t]his arrangement may be terminated by Employer at any time during the term hereof upon failure of Employee to devote his full time efforts to the sale of Employer’s services and products, or upon conduct by Employee of a fraudulent, dishonest, or incompetent nature, or at will of the employer”) (emphasis added).

The key provision of the 1998 Employment Agreement, however, at least from the plaintiffs’ present perspective, was neither the recitals nor the compensation and termination provisions, but the provision concerning proprietary information. That provision states the following:

5. Proprietary Information. Employee acknowledges that the list of Employer’s customers and the manufacturing representative contracts which it has with, but no [sic] limited to, Viking, Wilden, Waukesha, Goulds and Allis Chalmers, as they now exist or as they now exist [sic] or as they CPI exist from time to time [sic] are valuable, special and unique assets of the business and that certain papers, records, information, programs and other products are also valuable, special and unique to Employer’s business. Employee agrees that during and after the term of this Agreement, he will not disclose the list of those customers or manufacturing representative contracts or any part thereof to any firm, person, association or corporation or other entity for any reason or purpose whatsoever and will not during or after the term disclose any papers, records, programs, products or any other information relative to Employer’s business. Employee agrees that in addition to not disclosing any of the above, he will not in any way use such proprietary information during the contractual arrangement or thereafter, whether such arrangement ultimately terminates prior to the contract term or thereafter, and in the event of a breach can be enjoined.

1998 Employment Agreement, ¶ 5.

Although Stenger signed the 1998 Employment Agreement on January 5, 1998, as “Secretary/Treasurer” of CPI, McCullough points out that Stenger was not actually elected to the board of directors of CPI, and CSIS’s acquisition of CPI was not complete, until January 20, 1998. See Defendant’s Appendix at 54, Exhibit G (Minutes of Special Meeting of Shareholders of CPI, Inc., on January 20, 1998). However, CSIS and CPI contend that there is no dispute that both parties continued to operate under the 1998 Employment Agreement after January 20, 1998, nor is there any dispute that McCullough has never returned the fruits of the 1998 Employment Agreement.

3. The 1999 Stock Repurchase Agreement and Addendum

On October 5, 1999, the parties also executed a Stock Repurchase Agreement. See Defendant’s Appendix at 54-59, Exhibit H (Stock Repurchase Agreement). Paragraph 4(b) of the Stock Repurchase Agreement states, “The parties hereto understand and agree that Steve McCullough may leave the Corporation at any time and is not bound by any employment agreement, and that upon doing so, he must sell and the Corporation must buy his stock under the conditions set forth above.” Id. at 55, Stock Repurchase Agreement ¶ 4(b) (emphasis added). On April 12, 2000, the parties executed an Addendum to the Stock Repurchase Agreement, correcting the number of shares of CPI issued to McCullough, but otherwise reiterating the binding effect of the October 5,1999, Stock Repurchase Agreement. See Defendant’s Appendix at 60-61 (Exhibit I). McCullough contends that the 1999 Stock Repurchase Agreement superseded the 1998 Employment Agreement. The plaintiffs disagree.

4. McCullough’s alleged wrongdoing

At some point, McCullough became chief operating officer of CSIS as well as president of CPI. However, on July 16, 2001, McCullough tendered his letter of resignation from CSIS and CPI, indicating that his employment with those companies would end on July 27, 2001. See Defendant’s Appendix at 62, Exhibit J. This lawsuit arises from McCullough’s alleged misconduct just before and subsequent to his resignation from CSIS and CPI.

CSIS and CPI contend that, prior to his resignation, McCullough and another employee of CSIS and CPI named Christiaan Nielsen had been negotiating to purchase a competing business, Fluid Technology in Des Moines, Iowa, even though the purchase of Fluid Technology was a potential corporate opportunity for CSIS and CPI. McCullough denies this allegation, because he and Nielsen had only one meeting with the owner of Fluid Technology after which he contends that they decided not to pursue any alleged “opportunity” to purchase that business. Also, CSIS and CPI contend that McCullough advised CSIS and CPI to pass up an opportunity to purchase Lincoln Supply, which was the Minnesota distributor and integrator for Waukesha, one of CSIS’s and CPI’s primary suppliers. McCullough admits this allegation, but contends that it is not relevant to any claim asserted by CSIS and CPI. CSIS and CPI contend that, prior to McCullough’s resignation, McCullough and Nielsen also had several contacts with Steve Isenberg, the owner of Custom Repair and Fabricating d/b/a Fluid Solutions (Fluid Solutions), a Minnesota business in competition with CSIS and CPI. It is undisputed that McCullough and Nielsen left their employment with CSIS and CPI to go to work for Fluid Solutions and that Fluid Solutions is now serving as the distributor and integrator for Waukesha in Minnesota, Iowa, and Nebraska.

CSIS and CPI contend, and McCullough does not deny, that two days prior to resigning from CSIS and CPI, McCullough made copies of the entire CPI database at home. Although it is the “copying” that appears to be the real issue of significance, and McCullough admits copying the information, the parties apparently dispute whether McCullough used his “home computer” or a laptop computer provided to him by CSIS and CPI and a CD “burner” to perform the copying. There is no dispute that the copied information included significant amounts of company information about histories of company pump and valve sales, contracts, prices, vendor sources, sales literature, phone contacts, equipment database, and inventory. CSIS and CPI contend that McCullough made two copies of this information and turned one copy over to his brother-in-law, Don Hull, who was also an employee of CSIS and CPI, so that Hull could use the information in his “side business” of laser alignment. Hull testified in deposition that he had no use for such information from McCullough, because he had access to it himself from CPI’s database, had he wanted it. CSIS and CPI allege that McCullough contacted Hull to ask him to fabricate a story about how Hull needed the disks for his laser business, and McCullough admits that Hull so testified, but McCullough denies the substance of the allegation, in part, because he alleges that he was not even aware of Hull’s laser business at the time that he gave the disks to Hull, so that he thought he was only giving the disks to another CPI employee. McCullough also denies CSIS’s and CPI’s allegation that he contacted Hull to try to “get their stories straight” before Hull’s deposition, although he admits that Hull testified to such a supposed conversation. McCullough also claims that he mailed the other copy of the information he had downloaded to CSIS, but CSIS and CPI deny that they ever received such a copy of the information.

CSIS and CPI contend that, prior to his departure, McCullough told Steve Anderson that if he ever left CSIS and CPI, he would take Christiaan Nielsen with him, and that he also told other employees of CPI that he could take Tim Bracht, another CPI employee, with him to Fluid Solutions. McCullough disputes that he ever made such statements or that he made any similar statements in anything but a “joking” manner. However, Nielsen resigned from CSIS and CPI the same day as McCullough and joined him at Fluid Solutions and Bracht also subsequently left CSIS and CPI to work for Fluid Solutions. CSIS and CPI also contend that McCullough solicited Don Hull to join him at Fluid Solutions or to take a job with another competitor of CSIS and CPI in order to “hurt them bastards out there,” meaning CSIS and CPI. However, Hull declined to leave CSIS and CPI. McCullough denies that he ever solicited Hull to leave CSIS or CPI. McCullough also counters that any employees besides himself who left CSIS or CPI did so on their own initiative and that, at most, he provided those employees with information about positions available at Fluid Solutions upon their request.

CSIS and CPI also contend that McCullough told Mike Langer, another employee of CPI, that McCullough would get Waukesha and Wilden, two suppliers for whom CSIS and CPI were distributors or exclusive distributors in Iowa and Nebraska, to go with him to Fluid Solutions and that Fluid Solutions is, in fact, now a distributor for Waukesha and Wilden in Iowa and Nebraska, suggesting fulfillment of McCullough’s threat or boast. However, McCullough disputes the relevance of these facts, because he contends that CSIS and CPI have not asserted any claim with respect to McCullough’s role in Fluid Solutions’s distribution of Wilden or Waukesha products. CSIS and CPI also contend that Fluid Solutions has been doing business with General Mills in Cedar Rapids, which had been a customer of CSIS and CPI, including selling to General Mills approximately $8,000 worth of valves, which constituted an order that CSIS and CPI could have filled. McCullough denies this allegation.

B. Procedural Background

1. The plaintiffs’ claims and the defendant’s response

In response to McCullough’s alleged wrongdoing, CSIS and CPI filed the present lawsuit against McCullough on March 21, 2002. Count I of CSIS’s and CPI’s Complaint is denominated “Breach of Contract —Removal or Retention of Confidential Information.” See Complaint, Count I. This Count alleges that, prior to and after his voluntary termination, McCullough breached paragraph 5 of the 1998 Employment Agreement by removing and retaining certain confidential information that constitutes CPI’s proprietary and trade secret information. Id. Count II of the Complaint, denominated “Breach of Contract — Confidential Matters,” also alleges that McCullough breached paragraph 5 of the 1998 Employment Agreement, but McCullough’s breach in this Count is alleged to be disclosure in his employment with Fluid Solutions of confidential and proprietary information of CPI to which McCullough had gained access and working knowledge during his employment with CPI. See id., Count II. Count III of the Complaint, denominated “Iowa Trade Secrets Act,” alleges that, in the course of his employment with CPI, McCullough had access to and became intimately familiar with CPI’s trade secrets, as defined by Iowa Code § 550.2(4), and that McCullough’s taking of CPI’s trade secrets and his employment with Fluid Solutions has resulted and will result in disclosure of CPI’s trade secrets constituting “misappropriation” under Iowa Code § 550.2(3). Id., Count III. Finally, Count IV of the Complaint, denominated “Breach of Fiduciary Duty,” alleges that McCullough has breached fiduciary duties owed to CPI, including but not limited to his duty of loyalty and his duty not to take for unauthorized purposes or to disclose information that his employer regarded as confidential, and that he has done so by (1) soliciting and enticing employees of CPI to leave their employment with CPI to commence employment with a direct competitor, Fluid Solutions, and (2) by improperly taking, using, retaining, and removing CPI’s trade secret information. Id., Count IV. CSIS and CPI seek damages and in-junctive relief on their various claims.

By order dated August 26, 2002, this court denied McCullough’s motion to dismiss for improper venue pursuant to Rule 12(b)(3) and his alternative motion to stay proceedings. Therefore, McCullough filed his Answer, Affirmative Defenses, and Jury Demand on September 11, 2002. In addition to denying CSIS’s and CPI’s claims, McCullough pleaded affirmative defenses of laches, release, waiver, estop-pel, and invalidity of the 1998 Employment Agreement on the ground that it was superseded by the 1999 Stock Repurchase Agreement and its Addendum. This matter thereafter proceeded to the discovery phase. Trial is currently set to begin on December 15, 2003.

2. The motions for summary judgment and to strike affidavits

On July 1, 2003, McCullough filed the present Motion for Summary Judgment (docket no. 21) on all of CSIS’s and CPI’s claims. CSIS and CPI resisted McCullough’s motion for summary judgment on July 24, 2003, and McCullough filed a reply in further support of his motion on August 7, 2003. Also on August 7, 2003, McCullough filed a Motion To Strike Affidavits Of Steven Anderson And Mike Langer (docket no. 34). Because oral arguments on McCullough’s motion for summary judgment had been scheduled for August 13, 2003, the court accelerated the deadline for the plaintiffs’ response to McCullough’s Motion To Strike Affidavits to August 12, 2003. The plaintiffs responded by faxing the court a resistance brief on August 12, 2003.

The court’s schedule required rescheduling of the oral arguments on McCullough’s motion for summary judgment, but the court eventually heard those arguments on August 20, 2003. At the oral arguments, plaintiffs CSIS and CPI were represented by Mark L. Zaiger of Shuttleworth & In-gersoll, P.L.C., in Cedar Rapids, Iowa. Defendant Steve McCullough was represented by Rebecca A. Brommel of Brown, Winick, Graves, Gross, Baskerville and Schoenebaum, P.L.C., in Des Moines, Iowa. After the oral arguments, the parties were permitted to submit responses by letter to a question posed by the court concerning record evidence in support of part of the plaintiffs’ claim of solicitation of employees. The plaintiffs submitted their letter on August 20, 2003, and McCullough submitted his response on August 21, 2003. Therefore, McCullough’s motions to strike affidavits and for summary judgment are now fully submitted.

If. THE MOTION TO STRIKE AFFIDAVITS

A. Arguments Of The Parties

In his motion to strike affidavits, McCullough seeks to strike the affidavits of Steve Anderson and Mike Langer. McCullough contends that Steve Anderson’s affidavit fails to comply with Rule 56(e) of the Federal Rules of Civil Procedure, because it is not based upon Anderson’s “personal knowledge,” but only “on information and belief’ and hearsay. McCullough also contends that a number of Anderson’s statements in his affidavit, which McCullough identifies specifically, conflict with his pri- or deposition testimony, do not fit the narrow exception for subsequent affidavits after a witness has been deposed, or are inadmissible or irrelevant to the issues at hand.

CSIS and CPI disagree. They argue that McCullough has failed to identify any real contradictions in Anderson’s affidavit; rather, they argue that his affidavit demonstrates further detail on certain points, sometimes as the result of resolving confusion in his deposition testimony or memory of events, refreshing his memory, or obtaining further information since his deposition testimony. They also disagree with McCullough’s characterization of any part of Anderson’s affidavit as lacking “personal knowledge.” They also contend that all of Anderson’s averments in his affidavit are adequately supported by other record evidence. They then respond to McCullough’s paragraph-by-paragraph challenges.

As to Mike Langer’s affidavit, McCullough contends that the plaintiffs never disclosed in response to pertinent discovery requests that Mike Langer was expected to be a witness and/or that he had any knowledge concerning any of their allegations in this matter. McCullough points out that the plaintiffs have never supplemented the pertinent discovery response to identify Langer as a witness or person with pertinent information. McCullough also contends that the deadline for discovery in this matter passed on June 1, 2003, such that he is prejudiced by belated injection of Langer’s affidavit. McCullough requests sanctions pursuant to Rule 37(a) and (b) of the Federal Rules of Civil Procedure for the plaintiffs’ failure to disclose Langer, including striking Lan-ger’s affidavit and awarding McCullough the fees and costs he incurred in bringing his motion to strike.

CSIS and CPI admit that Langer was not disclosed as a potential witness in response to McCullough’s interrogatory requesting such information. However, they contend that barring an undisclosed witness is seldom appropriate in the absence of “bad faith,” which can’t be shown here. Rather, they contend that McCullough had adequate notice of Langer’s knowledge of facts pertinent to the case, from working with him at CSIS and CPI, and because McCullough himself raised in his own deposition the issues to which Langer avers. Similarly, they contend that, in his deposition, Anderson identified Langer as a person with knowledge on pertinent matters.

More generally, McCullough contends that he is entitled to reasonable expenses and attorney fees incurred due to the filing of the affidavits of Anderson and Langer pursuant to Rule 56(g) of the Federal Rules of Civil Procedure, on the ground that the affidavits were filed in bad faith. The plaintiffs suggest that no such general sanctions should be imposed, because neither affidavit was filed in bad faith.

B. Analysis

1. Anderson’s affidavit

As mentioned above, McCullough’s challenges to portions of Anderson’s affidavit are based on failure to comply with the requirements of Rule 56(e) of the Federal Rules of Civil Procedure and/or contradiction of prior deposition testimony. The court will consider, first, the standards applicable to each kind of challenge.

a. Rule 56(e) requirements

As this court recently explained,

Rule 56(e) of the Federal Rules of Civil Procedure provides that an affidavit in support of a motion for summary judgment “shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein.” Fed. R. Civ. P. 56(e). Because affidavits proffered in support of a motion for summary judgment must be based upon personal knowledge, an affidavit based upon “information and belief’ is insufficient as a matter of law. Automatic Radio Mfg. Co. v. Hazeltine Research, 339 U.S. 827, 831, 70 S.Ct. 894, 94 L.Ed. 1312 (1950) (affidavit in support of motion for summary judgment made on information and belief does not comport with Rule 56(e)); accord Sellers v. M.C. Floor Crafters, Inc., 842 F.2d 639 (2d Cir.1988); Tavery v. United States, 32 F.3d 1423, 1426 n. 4 (10th Cir.1994). Furthermore, the court may consider only that evidence that would be admissible at trial. Samuels v. Doctors Hosp., Inc., 588 F.2d 485, 486 n. 2 (5th Cir.1979). Hearsay statements which cannot be categorized as a hearsay exception, conclusory allegations, legal arguments, and statements not based upon personal knowledge, may be stricken. See Sellers v. M.C. Floor Crafters, Inc., 842 F.2d 639, 643 (2d Cir.1988) (lack of personal knowledge); Kamen v. American Tel. & Tel. Co., 791 F.2d 1006, 1011 (2d Cir.1986) (concluso-ry allegations and legal arguments).

With respect to [the requirements of Rule 56(e),] [c]ourts have recognized that “conclusory allegations and self-serving affidavits, without support in the record, do not create a triable issue of fact.” Hall v. Bodine Elec. Co., 276 F.3d 345, 354 (7th Cir.2002) (citing Patterson v. Chicago Ass’n for Retarded Citizens, 150 F.3d 719, 724 (7th Cir. 1998)); accord Albiero v. City of Kankakee, 246 F.3d 927, 933 (7th Cir.2001); see Drake v. Minnesota Mining & Mfg. Co., 134 F.3d 878, 887 (7th Cir.1998); Murray v. City of Sapulpa, 45 F.3d 1417, 1422 (10th Cir.1995); Slowiak v. Land O’Lakes, Inc., 987 F.2d 1293, 1295 (7th Cir.1993).

Wells Dairy, Inc. v. Travelers Indemnity Co. of Illinois, 241 F.Supp.2d 945, 956-57 (N.D.Iowa 2003); see also Helm Fin. Corp. v. Iowa Northern Ry. Co., 214 F.Supp.2d 934, 952-54 (N.D.Iowa 2002) (stating similar standards).

b. Contradiction of prior testimony

This court has also considered the standards applicable to alleged contradiction of prior deposition testimony by an affidavit offered in resistance to summary judgment:

As to contradiction of prior testimony, the Eighth Circuit Court of Appeals recently reiterated the following principles:

It is well-settled that “[p]arties to a motion for summary judgment cannot create sham issues of fact in an effort to defeat summary judgment.” American Airlines, Inc. v. KLM Royal Dutch Airlines, Inc., 114 F.3d 108, 111 (8th Cir.1997). Consequently,

a party should not be allowed to create issues of credibility by contradicting his own earlier testimony. Ambiguities and even conflicts in a deponent’s testimony are generally matters for the jury to sort out, but a district court may grant summary judgment where a party’s sudden and unexplained revision of testimony creates an issue of fact where none existed before. Otherwise, any party could head off a summary judgment motion by supplanting previous depositions ad hoc with a new affidavit, and no case would ever be appropriate for summary judgment.

Wilson v. Westinghouse Elec. Corp., 838 F.2d 286, 289 (8th Cir.1988) (internal citations and quotation marks omitted).

Bass v. City of Sioux Falls, 232 F.3d 615, 619 (8th Cir.1999); accord Dotson v. Delta Consolidated Indus., Inc., 251 F.3d 780, 781 (8th Cir.2001) (“We have held many times that a party may not create a question of material fact, and thus forestall summary judgment, by submitting an affidavit contradicting his own sworn statements in a deposition. See, e.g., American Airlines, Inc. v. KLM Royal Dutch Airlines, Inc., 114 F.3d 108, 111 (8th Cir.1997), and Camfield Tires, Inc. v. Michelin Tire Corp., 719 F.2d 1361, 1364-65 (8th Cir.1988).”); Plymouth Foam Prods., Inc. v. City of Becker, 120 F.3d 153, 155 n. 3 (8th Cir. 1997) (to the extent that the affiant’s affidavit conflicts with his earlier deposition testimony, his affidavit testimony should be disregarded); RSBI Aero space, Inc. v. Affiliated FM Ins. Co., 49 F.3d 399, 402 (8th Cir.1995) (same). The Eighth Circuit Court of Appeals has explained that the rule that a party cannot create a “sham” issue of fact in an effort to defeat summary judgment by filing an affidavit directly contradicting prior deposition testimony “is a sound one,” because “if testimony under oath could be ‘abandoned many months later by the filing of an affidavit, probably no cases would be appropriate for summary judgment.’ ” Herring v. Canada Life Assur. Co., 207 F.3d 1026, 1030 (8th Cir.2000) (quoting Camfield Tires, Inc. v. Michelin Tire Corp., 719 F.2d 1361, 1366 (8th Cir.1983)).

However, the Eighth Circuit Court of Appeals has also explained that, where the affidavit testimony seems consistent with the affiant’s prior deposition testimony, or simply adds more detailed information, the court may properly consider the affidavit on summary judgment. Bass, 232 F.3d at 619. Similarly, the court has recognized “that there are ‘narrow circumstances’ in which a subsequent affidavit is appropriate, such as to explain certain aspects of the deposition testimony or where the prior testimony reflects confusion on the part of the witness.” Herring, 207 F.3d at 1030-31 (citing Camfield Tires, Inc., 719 F.2d at 1364-65). In such circumstances, “it would be for the jury to resolve the discrepancy in the deposition testimony and the affidavit.” Id. at 1031.

Helm Fin. Corp., 214 F.Supp.2d at 954-55.

c. Specific paragraphs of the affidavit

McCullough’s challenges to specific paragraphs of Anderson’s affidavit begin with paragraph 3. That paragraph states the following:

As a part of the purchase [of CPI by CSIS], Central States Industrial Supply, Inc. and CPI Sales, Inc. negotiated an Employment Agreement with Steve McCullough sending several drafts back and forth. I was directly involved in this process.

Anderson Affidavit at ¶ 3. McCullough contends that the statement that “several drafts” were exchanged is contrary to Anderson’s deposition testimony, in which Anderson responded to a question about who prepared the Employment Agreement by stating that “my guess would have been Bob Guinan [CSIS’s corporate attorney] working with us.” Defendant’s Appendix at 31, Anderson Deposition at 38. The plaintiffs contend that there is no contradiction between Anderson’s deposition testimony and his affidavit on this point, merely clarification.

Assuming, for the sake of argument, that this paragraph actually creates an issue of fact of significance to the disposition of McCullough’s motion for summary judgment, the court is not convinced that this paragraph of Anderson’s affidavit is plainly contrary to Anderson’s prior deposition testimony that he “guess[ed]” that CSIS’s corporate attorney prepared the Employment Agreement. Rather, this paragraph of Anderson’s affidavit simply adds more detailed information concerning the negotiation of the Employment Agreement. See Helm Fin. Corp., 214 F.Supp.2d at 955 (where the affidavit testimony simply adds more detailed information, the court may properly consider the affidavit on summary judgment). Moreover, the court finds that this is a situation where any ambiguities or even conflicts between Anderson’s deposition testimony and this paragraph of his affidavit should be left to the jury to sort out. Id. The court will not strike paragraph 3 of Anderson’s affidavit.

Next, McCullough challenges paragraph 4 of Anderson’s affidavit, which states, “As part of the Employment Agreement, Steve McCullough’s salary increased from $65,000 to $75,000, plus a bonus plan which was not part of his previous wage package.” Plaintiffs’ Appendix, Exhibit 1, Anderson Affidavit at ¶ 4. McCullough also contends that this portion of the affidavit is contrary to Anderson’s deposition testimony that he did not remember what McCullough’s salary was either before or after the Employment Agreement and that he did not know of anything that McCullough gave in exchange for entering into the Employment Agreement. See Defendant’s Appendix at 30-31, Anderson Deposition at 36^40. Taking the latter point first, this paragraph of Anderson’s affidavit does not address whether or not McCullough gave anything in exchange for the Employment Agreement, only what CSIS and CPI gave, so that it plainly is not contrary to Anderson’s deposition testimony that he did not know of anything that McCullough gave CSIS or CPI in order to enter into the Employment Agreement. Compare Anderson Affidavit at ¶ 4 with Anderson Deposition at 40. Nor is the court convinced that there is a true conflict between Anderson’s specification in his affidavit of McCullough’s salary before and after the parties entered into the Employment Agreement and his deposition testimony that he did not remember what McCullough’s salary was before and after CSIS acquired CPI, or even whether or not McCullough’s salary increased. It might have been wise, for purposes of enhancing his credibility, for Anderson to explain in his affidavit how it is that he now knows the dollar amounts of McCullough’s salary before and after the acquisition, but did not know those amounts, or even whether McCullough’s salary was more or less after the acquisition, at the time of his deposition. The plaintiffs attempt to explain that point now, in their brief in resistance to the motion to strike, by asserting that since his deposition, Anderson has verified certain points on which he expressed lack of memory in his deposition. The court concludes that Anderson’s deposition testimony reflects confusion—or at least lack of memory— about the matters specifically stated in this paragraph of his affidavit, so that this portion of the affidavit falls within the exceptional circumstances in which a later affidavit may be appropriate. See Helm Fin. Corp., 214 F.Supp.2d at 955. Moreover, the court finds that this paragraph of Anderson’s affidavit simply adds more detailed information concerning the negotiation of the Employment Agreement. See Helm Fin. Corp., 214 F.Supp.2d at 955 (where the affidavit testimony simply adds more detailed information, the court may properly consider the affidavit on summary judgment). Therefore, this paragraph of Anderson’s affidavit will not be stricken, either.

McCullough challenges paragraphs 5 and 7 of Anderson’s affidavit, arguing that, in those paragraphs, Anderson attempts to characterize the plaintiffs’ intent at the time of entering into the 1998 Employment Agreement and the 1999 Stock Repurchase Agreement—specifically, their intent for the Employment Agreement to remain in effect and to recognize that McCullough’s employment was “at-will.” However, McCullough contends that, in his deposition testimony, Anderson agreed that the statement in the 1999 Stock Repurchase Agreement that McCullough “is not bound by any employment agreement” was true. Thus, McCullough again argues that there is a conflict between Anderson’s prior deposition testimony and his affidavit. The plaintiffs contend that Anderson’s actual deposition testimony, that he agreed that the Stock Repurchase Agreement says what it says, is by no means contradictory to his averments in his affidavit of what the parties intended by the language used in the Stock Repurchase Agreement. Again, the court is not convinced that there is a true conflict between the statements in the two contexts or that the affidavit does more than add more detail. See Helm Fin. Corp., 214 F.Supp.2d at 955. McCullough also argues that Anderson’s statements about the plaintiffs’ intent in entering into contracts is inadmissible, where the contract language is unambiguous. The court will reserve that question until it addresses, below, whether or not the language of the 1999 Stock Repurchase Agreement — to the effect that McCullough “is not bound by any employment agreement”—is ambiguous. McCullough also argues that Anderson’s assertions in paragraph 5 and 7 are not supported by sufficient facts for the court to determine whether they are based on Anderson’s personal knowledge. The court concludes, however, that the statements are not so plainly outside of Anderson’s personal knowledge that they must be stricken; rather, a jury should decide what weight to give these statements of the plaintiffs’ intent, if indeed the parties’ intent becomes a triable issue. Finally, McCullough contends that these paragraphs contain Anderson’s attempts to characterize what McCullough knew and understood, which plainly falls outside of Anderson’s personal knowledge. The court disagrees, to the extent that the statements actually indicate what Anderson believed that McCullough understood, which goes to Anderson’s state of mind, not McCullough’s, so that the statements may be relevant to the parties’ understanding of whether or not they had an agreement and whether or not there was a meeting of the minds.

McCullough’s next challenge, which is to paragraph 8 of Anderson’s affidavit, goes to the “personal knowledge” requirement of Rule 56(e) rather than contradiction of prior testimony. McCullough argues that Anderson’s statement in this paragraph of his affidavit that McCullough and Nielsen were “actively seeking to purchase Fluid Technology” is not based on personal knowledge, where Anderson’s deposition testimony shows that his only knowledge that McCullough and Nielsen ever talked to the owner of Fluid Technology came from McCullough’s answer to an interrogatory. The plaintiffs assert, however, that Anderson does have independent, personal knowledge that McCullough and Nielsen were attempting to purchase Fluid Technology. This paragraph of the affidavit may not comply with the “personal knowledge” requirement of Rule 56(e), see Fed. R. Crv. P. 56(e); Wells Dairy, Inc., 241 F.Supp.2d at 956, but it is not the only basis for the purported issue of fact regarding McCullough’s and Nielsen’s purported attempts to purchase Fluid Technology of Des Moines, Iowa. Rather, the plaintiffs also rely on McCullough’s and Nielsen’s own deposition testimony regarding the purported attempt to purchase Fluid Technology. See Plaintiffs’ Statement of Additional Facts (docket no. 28) at ¶ 7. The extent to which Anderson’s affidavit may overstate the record regarding McCullough’s and Nielsen’s contact with the owner of Fluid Technology is a matter for a jury to consider. Therefore, the court concludes that this paragraph of the affidavit need not be stricken.

Next, McCullough asserts that the court should strike paragraph 9 of Anderson’s affidavit, which discusses McCullough’s alleged taking of a corporate opportunity of CSIS and CPI to acquire Lincoln Supply. McCullough contends that Anderson’s deposition contains no mention of Lincoln Supply, even though he was repeatedly asked for information supporting the allegations contained in the plaintiffs’ Complaint. McCullough also contends that Anderson cites no facts showing his personal knowledge of why McCullough counseled against CSIS and CPI pursuing acquisition of Lincoln Supply. To the extent that McCullough asserts a “contradiction” issue with regard to this portion of Anderson’s affidavit, the court finds none. Rather, the affidavit merely adds more detail to testimony in the deposition by adding additional allegations. See Helm Fin. Corp., 214 F.Supp.2d at 955. The court will consider below whether allegations regarding McCullough’s advice about the purchase of Lincoln Supply come within the ambit of any of the wrongdoing alleged in the plaintiffs’ Complaint. However, if the statement is pertinent, the court agrees with CSIS and CPI that Anderson has sufficient personal knowledge of what reasons McCullough gave for counseling against the acquisition of Lincoln Supply, although his speculation and conclusory opinion about why McCullough gave that advice cannot generate any genuine issue of material fact on that point. Wells Dairy, Inc., 241 F.Supp.2d at 956-57. To that extent, paragraph 9 of Anderson’s affidavit will be disregarded.

McCullough also contends that paragraphs 10 through 12 and 14 of Anderson’s affidavit are not based on Anderson’s personal knowledge, but consist of repetitions and misstatements of McCullough’s testimony. To the extent that these paragraphs do not reflect Anderson’s personal knowledge—which the court finds is the case in parts of paragraphs 10 and 14 and the entirety of paragraphs 11 and 12— they must be disregarded. See Fed. R. Civ. P. 56(e); Wells Dairy, Inc., 241 F.Supp.2d at 956-57. However, the court acknowledges the truth of CSIS’s and CPI’s observation that Anderson could not respond to McCullough’s statements without identifying what those statements were. Moreover, to the extent that Anderson opines in paragraph 10 that the information copied by McCullough had significant economic value to a competitor and would normally require cost, time, and effort to duplicate, the opinion may be sufficiently based on Anderson’s personal knowledge to be admissible, although it may also be too conclusory to carry much weight with a jury without identification of supporting facts. Similarly, Anderson’s contention in paragraph 14 that CSIS and/or CPI can and does provide certain services that McCullough had testified that they could not, may be admissible, although it is so conclusory that the court doubts that, standing alone, it could generate a genuine issue of material fact. However, the court need not decide those issues until and unless it determines that these paragraphs of Anderson’s affidavit are the sole basis asserted for any genuine issue of material fact on an issue pertinent the disposition of McCullough’s motion for summary judgment. Therefore, while the court will disregard paragraphs 11 and 12 in their entirety, the court will reserve until its legal analysis—and then only if necessary—consideration of whether paragraphs 10 and 14 must also be disregarded in their entirety.

As his penultimate challenge in his motion to strike Anderson’s affidavit, McCullough contends that paragraph 17 of Anderson’s affidavit contradicts his deposition testimony, because it identifies alleged solicitations by McCullough of customers of CSIS and CPI that Anderson failed to mention in his deposition. However, as McCullough himself recognizes, Anderson’s deposition testimony was that he could not recollect “at this time”— meaning, at the time of the deposition— any other incidents of violation of the non-compete provisions of McCullough’s 1998 Employment Agreement other than the ones already mentioned in his deposition. See Anderson Deposition at 89-90. Thus, there is no “contradiction” of prior deposition testimony; there is, at worst, belated disclosure of additional incidents not mentioned in the deposition at all. See Helm Fin. Corp., 214 F.Supp.2d at 954-55. Again, the court will consider below the extent to which solicitation of customers of CSIS and CPI falls within the ambit of the claims asserted in the plaintiffs’ Complaint.

Finally, as to Anderson’s affidavit, McCullough contends that paragraphs 18 and 21 through 22 must be stricken, because they state only that Anderson has “direct knowledge” of certain situations, not “personal knowledge” of them, as required by Rule 56(e). Moreover, McCullough contends that these paragraphs identify no facts showing that Anderson has any personal knowledge of the allegations he makes. The court agrees that these paragraphs of Anderson’s affidavit provide no factual basis to conclude that they are based on any “personal knowledge” of Anderson, and as such, are insufficient to generate any genuine issues of material fact, if indeed they are pertinent to any issue that the court finds potentially dispositive of McCullough’s motion for summary judgment. See Fed. R. Civ. P. 56(e); Wells Dairy, Inc., 241 F.Supp.2d at 956-57.

Thus, McCullough’s motion to strike Anderson’s affidavit is granted in part and denied in part, as explained more specifically above. To the extent that the court has reserved ruling on portions of the motion to strike Anderson’s affidavit, the motion will be mooted by the court’s analysis of McCullough’s motion for summary judgment.

2. Langer’s affidavit

McCullough’s challenge to Langer’s affidavit is different in kind from his challenge to Anderson’s affidavit. McCullough argues that Langer’s affidavit should be stricken and sanctions imposed upon the plaintiffs pursuant to Rule 37(a) and (b) of the Federal Rules of Civil Procedure, because Langer was not disclosed as a potential witness in this matter. As explained more fully above, the plaintiffs assert that any failure to disclose was not in bad faith and that, in any event, McCullough was fully aware of Langer and his knowledge of facts pertinent to this case.

As an initial matter, the court does not agree with McCullough that the pertinent provisions of Rule 37 in this context are paragraphs (a) and (b), at least not in the first instance. This is not a case in which McCullough has brought a motion to compel, the court has granted the motion, and the plaintiffs have failed to comply, which is the situation addressed in paragraphs (a) and (b) of Rule 37. See generally Cooperative Fin. Ass’n, Inc. v. Garst, 917 F.Supp. 1356, 1373-74 (N.D.Iowa 1996). Rather, the present context—failure to disclose a witness in response to a pertinent discovery request—is addressed in Rule 37(c)(1), which provides as follows:

(c) Failure to Disclose; False or Misleading Disclosure; Refusal to Admit.

(1) A party that without substantial justification fails to disclose information required by Rule 26(a) [methods of discovery, including 26(a)(5), authorizing discovery by interrogatories, etc.] or 26(e)(1) [duty to supplement responses], is not, unless such failure is harmless, permitted to use as evidence at a trial, at a hearing, or on a motion any witness or information not so disclosed. In addition to or in lieu of this sanction, the court, on motion and after affording an opportunity to be heard, may impose other appropriate sanctions. In addition to requiring payment of reasonable expenses, including attorney’s fees, caused by the failure, these sanctions may include any of the actions authorized under Rule 37(b)(2)(A), (B), and (C) and may include informing the jury of the failure to make the disclosure.

Fed. R. Civ. P. 37(c)(1). This court “has wide latitude in imposing sanctions for failure to make discovery.” Garst, 917 F.Supp. at 1374 (citing Aziz v. Wright, 34 F.3d 587, 589 (8th Cir.1994), cert. denied, 513 U.S. 1090, 115 S.Ct. 752, 130 L.Ed.2d 652 (1995)). “Furthermore, when the facts show willfulness and bad faith in the failure to permit discovery, the selection of a proper sanction is entrusted to the sound discretion of the district court.” Id. (citing Avionic Co. v. General Dynamics Corp., 957 F.2d 555, 558 (8th Cir.1992), in turn citing National Hockey League v. Metropolitan Hockey Club, Inc., 427 U.S. 639, 643, 96 S.Ct. 2778, 49 L.Ed.2d 747 (1976) (per curiam)).

The court agrees that Langer should have been disclosed in response to an interrogatory request for the identity of any witnesses or persons with knowledge of facts supporting the plaintiffs’ claims and that the plaintiffs were under a duty to supplement their discovery responses when they became aware that Langer would either be a witness or had pertinent information. See Fed. R. Crv. P. 26(a)(5) & (e)(1). The court could, therefore, strike Langer’s affidavit, unless the failure to disclose is harmless. See Fed. R. Civ. P. 37(c)(1) (if a witness has not been properly disclosed, “unless such failure is harmless,” the party that failed to disclose the witness “is not ... permitted to use as evidence at a trial, at a hearing, or on a motion.... ”). Because the plaintiffs rely, to some extent, on Langer’s affidavit in their attempts to generate genuine issues of material fact that preclude summary judgment, the court cannot find that the failure to disclose Langer was “harmless,” unless the court determines below that, contrary to the plaintiffs’ assertions in offering Langer’s affidavit, Langer’s affidavit simply does not generate any necessary genuine issue of material fact, or that McCullough otherwise had adequate knowledge of Lan-ger’s evidence. However, “in lieu of this sanction” of striking Langer’s affidavit, the court concludes that the “appropriate sanctions” here are the following: If the court finds that Langer’s affidavit generates a genuine issue of material fact on an issue pertinent to McCullough’s motion for summary judgment, the court will direct the plaintiffs to make Langer available for deposition prior to trial, at the plaintiffs’ expense, including the defendant’s reasonable attorney’s fees for taking the deposition. See Fed. R. Civ. P. 37(c)(1).

3. McCullough’s request for sanctions

More generally, McCullough prays that the court sanction the plaintiffs by imposing upon them the costs and attorney’s fees incurred in bringing his motion to strike affidavits, because he contends that the affidavits were presented in “bad faith.” Because the court has declined to strike most of the challenged portions of Anderson’s affidavit, the court cannot find that the plaintiffs acted in “bad faith” in offering his affidavit, so that no sanctions are appropriate as to his affidavit. The court also concludes that the sanctions stated above concerning Langer’s affidavit are sufficient: If the failure to disclose Langer as a witness is not “harmless,” because it does generate a genuine issue of material fact on a pertinent issue, then the plaintiffs will be required to make Langer available for deposition at the plaintiffs’ expense.

4. Alternative analysis

Even if the court’s analysis of portions of McCullough’s motion to strike is flawed—for example, with regard to certain paragraphs of Anderson’s and Langer’s affidavits—the court’s disposition of McCullough’s motion for summary judgment will necessarily moot his motion to strike. This is so, because either (1) the court’s analysis of the motion for summary judgment will necessarily determine whether any portions of Anderson’s or Langer’s affidavits generate genuine issues of material fact on issues pertinent to the summary judgment motion, based on the requirements of Rule 56(e), or (2) the summary judgment motion will be resolved without consideration of challenged portions of Anderson’s or Langer’s affidavits, such that portions of the motion to strike will be mooted sub silentio. Therefore, in the alternative, the court will deny McCullough’s motion to strike in its entirety as mooted by the court’s disposition of his motion for summary judgment.

The preliminary issue of whether or not Anderson’s and Langer’s affidavits should be stricken now being resolved or reserved, the court turns to disposition of McCullough’s motion for summary judgment.

III. THE MOTION FOR SUMMARY JUDGMENT

A. Standards For Summary Judgment

As this court has explained on a number of occasions, applying the standards of Rule 56 of the Federal Rules of Civil Procedure providing for summary judgment, the trial judge’s function at the summary judgment stage of the proceedings is not to weigh the evidence and determine the truth of the matter, but to determine whether there are genuine issues for trial. Quick v. Donaldson Co., 90 F.3d 1372, 1376-77 (8th Cir.1996); Johnson v. Enron Corp., 906 F.2d 1234, 1237 (8th Cir.1990). In reviewing the record, the court must view all the facts in the light most favorable to the nonmoving party and give that party the benefit of all reasonable inferences that can be drawn from the facts. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Quick, 90 F.3d at 1377 (same).

Procedurally, the moving party bears “the initial responsibility of informing the district court of the basis for its motion and identifying those portions of the record which show lack of a genuine issue.” Hartnagel v. Norman, 953 F.2d 394, 395 (8th Cir.1992) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)); see also Rose-Maston v. NME Hosps., Inc., 133 F.3d 1104, 1107 (8th Cir.1998); Reed v. Woodruff County, Ark., 7 F.3d 808, 810 (8th Cir. 1993). When a moving party has carried its burden under Rule 56(c), the party opposing summary judgment is required under Rule 56(e) to go beyond the pleadings, and by affidavits, or by the “depositions, answers to interrogatories, and admissions on file,” designate “specific facts showing that there is a genuine issue for trial.” Fed. R. Civ. P. 56(e); Celotex, 477 U.S. at 324, 106 S.Ct. 2548; Rabushka ex. rel. United States v. Crane Co., 122 F.3d 559, 562 (8th Cir.1997), cert. denied, 523 U.S. 1040, 118 S.Ct. 1336, 140 L.Ed.2d 498 (1998); McLaughlin v. Esselte Pendaflex Corp., 50 F.3d 507, 511 (8th Cir.1995); Beyerbach v. Sears, 49 F.3d 1324, 1325 (8th Cir.1995). An issue of material fact is “genuine” if it has a real basis in the record. Hartnagel, 953 F.2d at 394 (citing Matsushita Elec. Indus. Co., 475 U.S. at 586-87, 106 S.Ct. 1348). “Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment,” i.e., are “material.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Beyerbach, 49 F.3d at 1326; Hartnagel, 953 F.2d at 394.

If a party fails to make a sufficient showing of an essential element of a claim with respect to which that party has the burden of proof, then the opposing party is “entitled to judgment as a matter of law.” Celotex Corp., 477 U.S. at 323, 106 S.Ct. 2548; In re Temporomandibular Joint (TMJ) Implants Prod. Liab. Litig., 113 F.3d 1484, 1492 (8th Cir.1997). Ultimately, the necessary proof that the nonmoving party must produce is not precisely measurable, but the evidence must be “such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Allison v. Flexway Trucking, Inc., 28 F.3d 64, 66 (8th Cir.1994).

The court will apply these standards to McCullough’s motion for summary judgment, considering each of the plaintiffs’ claims in .turn.

B. The Breach-Of-Contract Claims

To prove a breach-of-contract claim under Iowa law, the plaintiffs must prove: (1) the existence of a contract between themselves and the defendant; (2) the terms and conditions of the contract; (3) that the plaintiffs performed all the terms and conditions required under the contract; (4) that the defendant breached the contract in some particular way; and (5) that the plaintiffs have suffered damages as a result of the breach. See, e.g., Molo Oil Co. v. River City Ford Truck Sales, Inc., 578 N.W.2d 222, 224 (Iowa 1998). The first element, existence of a contract, in turn, requires, among other things, proof that the parties had the capacity to contract and that there was consideration for the contract. See Magnusson Agency v. Public Entity Nat’l Company-Midwest, 560 N.W.2d 20, 25 (Iowa 1997) (listing “capacity to contract,” “existence of a contract,” and “consideration” as separate elements of a breach-of-contract claim, but describing both “capacity to contract” and “consideration” as “essential elements” of a binding contract).

CSIS and CPI contend that McCullough breached paragraph 5 of the 1998 Employment Agreement by removing and retaining certain confidential information (Count I) and by disclosing in his employment with Fluid Solutions confidential and proprietary information of CPI to which he had gained access and working knowledge during his employment with CPI (Count II). McCullough’s first two challenges to both breach-of-contract claims are the same: (1) the 1998 Employment Agreement is not enforceable, because (a) Sten-ger did not have authority to enter into it, and (b) there was no consideration for the Agreement, and (2) even if the 1998 Employment Agreement was enforceable, that Agreement was superseded by the 1999 Stock Repurchase Agreement. If the 1998 Employment Agreement was enforceable and was not superseded, McCullough also contends that he did not, as a matter of law, breach the Agreement in either of the ways that CSIS and CPI allege that he did. CSIS and CPI contend that, at a minimum, there are genuine issues of material fact on each of McCullough’s contentions.

1. Enforceability of the 1998 Employment Agreement

a. Arguments of the parties

McCullough argues that capacity to contract is one of the elements of a valid and enforceable contract, and as noted above, the court agrees. However, McCullough argues that, as a matter of law, the person who signed the 1998 Employment Agreement on behalf of CPI, Richard Stenger, did not have such capacity, because he was not the “Secretary/Treasurer” of CPI as he purported to be on January 5, 1998, when the contract was executed; indeed, McCullough argues that Stenger did not become the Secretary/Treasurer of CPI until his election to the board of directors for CPI on January 20, 1998. McCullough argues that Harry Anderson, the other shareholder in CSIS besides Stenger at the time that CSIS acquired CPI, admitted in his deposition that Stenger executed the 1998 Employment Agreement prior to the time that Stenger actually became CPI’s Secretary/Treasurer. McCullough also argues that consideration, another essential element of a binding contract, is lacking here, because he occupied the same position as president of CPI, with the same duties, before and after the execution of the 1998 Employment Agreement. In other words, he contends that he did not receive anything, either a return promise or any other benefit, in exchange for his execution of the 1998 Employment Agreement.

CSIS and CPI disagree. First, as to capacity to contract, they argue that only CPI had the power to avoid the contract on the basis that Stenger lacked capacity to contract on CPI’s behalf. However, they argue that CPI has never questioned Stenger’s actions in signing the 1998 Employment Agreement on CPI’s behalf, and, indeed, that CPI has ratified Stenger’s actions by adhering to the Agreement. CPI also argues, in a footnote, that McCullough cannot challenge the Agreement based on Stenger’s supposed lack of capacity, because McCullough has accepted the benefits of the Agreement and has not offered to restore what he received pursuant to it. CSIS and CPI contend that McCullough’s arguments about supposed lack of consideration for the 1998 Employment Agreement are also without merit. First, they contend that adequate consideration is presumed under Iowa law, because Iowa Code § 537A.2 provides that “[a]ll contracts in writing, signed by the party to be bound or by the party’s authorized agent or attorney, shall import a consideration.” Furthermore, they contend that McCullough cannot rebut this presumption of adequate consideration, because continued employment alone provides sufficient consideration to support a written contract concerning employment terms. Here, they contend, McCullough received continued employment in exchange for signing the 1998 Employment Agreement. They also contend that there is further consideration, because McCullough also received explicit consideration for signing the 1998 Employment Agreement in the form of a $10,000 raise and a bonus schedule.

In reply, McCullough argues that, because Stenger did not have capacity to act on CPI’s behalf, the contract is void and not capable of ratification. As to consideration, McCullough argues in his reply that there is no consideration in continued employment if he only made a promise to do that which he was already obligated to do.

b. Stenger’s capacity to contract on CPI’s behalf

The court finds that there is no genuine issue of material fact that Stenger was not the Secretary/Treasurer of CPI on January 5, 1998, at the time that he purported to act in that capacity by entering into the 1998 Employment Agreement with McC