ACCEPTED 04-13-00106-CV FOURTH COURT OF APPEALS SAN ANTONIO, TEXAS 5/18/2015 12:27:22 PM KEITH HOTTLE CLERK
NO. 04-13-00106-CV
FILED IN IN THE COURT OF APPEALS 4th COURT OF APPEALS FOURTH COURT OF APPEALS DISTRICTSAN ANTONIO, TEXAS SAN ANTONIO, TEXAS 5/18/2015 12:27:22 PM KEITH E. HOTTLE Clerk
BARRY BROOKS, HESTON C. KING, STEFEN DOUGLAS BROOKS, JOHANNA BARTON, AND JESSE RODRIGUEZ BENAVIDES, Appellants v. EXCELLENCE MORTGAGE, LTD., ET AL.,
Appellees
ON APPEAL FROM THE 225TH JUDICIAL DISTRICT COURT, BEXAR COUNTY, TEXAS HONORABLE CATHY STRYKER, JUDGE OF THE 224TH DISTRICT COURT, PRESIDING CAUSE NO. 2013-CI-01173
APPELLEES’ MOTION FOR REHEARING EN BANC
SAMUEL V. HOUSTON, III WILLIAM H. FORD State Bar No. 24041135 State Bar No. 07246700 HOUSTON DUNN, PLLC GREGORY SCRIVENER 4040 Broadway, Suite 440 State Bar No. 24013480 San Antonio, Texas 78209 FORD MURRAY, PLLC (210) 775-0882 10001 Reunion Place, Suite 640 (210) 826-0075 (fax) San Antonio, Texas 78216 sam@hdappeals.com (210) 731-6400 (210) 731-6401 (fax) bill.ford@fordmurray.com greg.scrivener@fordmurray.com
ATTORNEYS FOR APPELLEES EXCELLENCE MORTGAGE, LTD., et al. TABLE OF CONTENTS Page
TABLE OF CONTENTS .................................................................................. i TABLE OF AUTHORITIES ........................................................................... ii SUMMARY OF THE ARGUMENT................................................................ 1 ARGUMENT.................................................................................................. 2 I. The Panel Incorrectly Reversed the Summary Judgment on the Appellants’ Antitrust Claims. .......................................... 2 A. Appellants’ Antitrust Claims Were Based Upon Excellence’s Decision to Sue to Enforce Confidentiality Provisions. ......................................................................... 2 B. In Abandoning Its Prior Analysis, the Panel Erred By Ignoring Appellants’ Pleadings and Excellence’s Motion for Summary Judgment. ................................................... 4 II. The Panel Erred When It Reversed the Summary Judgment on Appellants’ Tortious Interference with Prospective Business Relations Claims. ........................................................................ 8 III. Conclusion and Prayer............................................................... 11 CERTIFICATE OF COMPLIANCE .............................................................. 12 CERTIFICATE OF SERVICE....................................................................... 13 TABLE OF AUTHORITIES
Page CASES Brooks v. Excellence Mortg., Ltd., No. 04-13-00106-CV, 2015 WL 1523067 (Tex. App.—San Antonio Apr. 1, 2015, no pet. h.) ............................. 5, 6, 9 Houston Mercantile Exch. Corp. v. Dailey Petroleum Servs. Corp., No. B14-92-00818-CV, 1993 WL 322901 (Tex. App.—Houston [14th Dist.] Aug. 26, 1993, no writ) (not designated for publication) ................................................................ 5 Marlin v. Robertson, 307 S.W.3d 418 (Tex. App.—San Antonio 2009, no pet.) .......................... 4 Marsh USA Inc. v. Cook, 354 S.W.3d 764 (Tex. 2011) .................................. 4 Mendelovitz v. Adolph Coors Co., 693 F.2d 570 (5th Cir. 1982) .............. 5, 7 Morriss v. Enron Oil & Gas Co., 948 S.W.2d 858 (Tex. App.—San Antonio 1997, no writ).......................... 7 RTLC AG Prods., Inc. v. Treatment Equip. Co., 195 S.W.3d 824 (Tex. App.—Dallas 2006, no pet.).................................... 5 Shoreline Gas, Inc. v. McGaughey, No. 13-07-00364-CV, 2008 WL 1747624 (Tex. App.—Corpus Christi Apr. 17, 2008, no pet.) (mem. op.) ................ 3 United Way of San Antonio, Inc. v. Helping Hands Lifeline Found., Inc., 949 S.W.2d 707 (Tex. App.—San Antonio 1997, writ denied) ................... 6 Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711 (Tex. 2001) ................ 8, 10 Zep Mfg. Co. v. Harthcock, 824 S.W.2d 654 (Tex. App.—Dallas 1992, no writ).................................... 2
STATUTES TEX. BUS. & COM. CODE § 15.05(a) .................................................................. 4
ii TO THE HONORABLE COURT OF APPEALS: Appellees, referred to collectively as “Excellence,” respectfully present this motion for rehearing asking the Court to reconsider those portions of the panel opinion on rehearing wherein it reversed the summary judgment order disposing of appellants’ claims under the Texas Free Enterprise and Antitrust Act of 1983 and claims for tortious interference with prospective business relations.1
SUMMARY OF THE ARGUMENT The Court should seriously reconsider its decision to completely
abandon its prior analysis. Excellence does not seek rehearing simply because
the opinion on rehearing is dramatically different than the original opinion.
Rather, Excellence seeks rehearing because the panel’s analysis is not
supported by the record. In reversing the summary judgment on the antitrust
and tortious inference with prospective business relations claims, the opinion
essentially rewrites appellants’ pleading to change the factual basis of the
claims against Excellence. This is not permissible. In the end, the panel had it
right the first time. The opinion on rehearing should be withdrawn and the
original analysis should be included in a new opinion affirming the summary
judgment order in its entirety.
1 In its opinion on rehearing, the panel affirmed the summary judgment on appellants’ contract-based claims for commissions that were paid on loans that closed and funded after they resigned on October 1, 2010. Although the panel’s analysis in the opinion on rehearing is markedly different than that contained in the original opinion, this motion for rehearing does not address the contract-based claims as Excellence maintains that summary judgment was appropriately granted by the trial court on those claims.
1 ARGUMENT
I. The Panel Incorrectly Reversed the Summary Judgment on the Appellants’ Antitrust Claims.
A. Appellants’ Antitrust Claims Were Based Upon Excellence’s Decision to Sue to Enforce Confidentiality Provisions. Appellants asserted a claim under the Texas Free Enterprise and
Antitrust Act of 1983 (hereinafter “the Act”), because they were not permitted
to close loans for “pipeline customers,” i.e., customers who had pending loans
with Excellence at the time that appellants resigned. CR 269. Appellants based
their antitrust claims upon the injunctive relief that Excellence obtained when
it sued to enforce confidentiality provisions found in the Employment
Agreements and Employee Confidentiality Agreements signed by appellants.
See CR 150, 158, 269-70. Appellants asserted that Excellence “asserted in bad
faith” “a groundless claim” that permitted it to obtain a “groundless
injunction.” CR 269-70.
Appellants attempted to bring Excellence’s lawsuit within the reach of
the Act by alleging that the confidentiality provisions were effectively
covenants not to compete. CR 269-70. Presumably, this allegation was
purposeful, because a covenant not to compete could conceivably fall within
the Act’s reach, whereas a confidentiality provision that restricts the disclosure
of confidential information does not. “Noncompete covenants are different
than nondisclosure covenants.” Zep Mfg. Co. v. Harthcock, 824 S.W.2d 654,
663 (Tex. App.—Dallas 1992, no writ). The latter provision is not considered a
2 restraint on trade because it “do[es] not necessarily restrict a former
employee’s ability to compete with the former employer” or prevent a former
employee from using “the general knowledge, skill, and experience acquired in
[the] former employer.” Shoreline Gas, Inc. v. McGaughey, No. 13-07-00364-
CV, 2008 WL 1747624, at *10 (Tex. App.—Corpus Christi Apr. 17, 2008, no
pet.) (mem. op.).
In moving for summary judgment, Excellence asserted that there could
be no claim under the Act because (1) the confidentiality provisions were most
appropriately described as a nondisclosure agreement, and (2) nondisclosure
agreements are not covered by the Act. CR 128-129. Therefore, Excellence’s
enforcement of the provisions through a lawsuit could not give rise to an
antitrust claim as a matter of law.
In its original opinion, the panel analyzed the confidentiality provisions
and rejected the appellants’ allegation that the provisions constituted a
covenant not to compete. Slip op. at 21. 2 Further, based upon its review of the
provisions, as well as the record, the panel concluded that there was nothing to
support the appellants’ allegation that they would be able to solicit those
pipeline customers without using Excellence’s confidential information and
without violating their agreements with Excellence. Id. Under the provisions,
confidential information specifically included “the identity of the Company’s
2 Excellence cites to the original slip opinion because the opinion has been removed from Westlaw.
3 customers, customer personal data information, customer contact
information, customer account information and balances, and customer
investment preferences.” CR 150. According to the panel’s original opinion,
appellants did not have a viable claim:
Information containing the names and addresses of individuals with whom the loan officers came into contact during their employment at Excellence, is precisely the information Appellants each contracted with Excellence not to disclose. There is no evidence Excellence sought to prevent Appellants from working or being employed by Premier; they simply sought the protection of the confidential information outlined in Appellants’ employment agreements.
Accordingly, section 15.05 of the Texas Business and Commerce Code’s prohibition against antitrust actions does not apply.” (citing Marsh USA Inc. v. Cook, 354 S.W.3d 764, 768 (Tex. 2011)).
Slip Op. at 21.
B. In Abandoning Its Prior Analysis, the Panel Erred By Ignoring Appellants’ Pleadings and Excellence’s Motion for Summary Judgment. On rehearing, the panel essentially rewrites the appellants’ pleadings
with respect to the antitrust claims. The Act declares that “[e]very contract,
combination, or conspiracy in restraint of trade or commerce is unlawful.”
TEX. BUS. & COM. CODE § 15.05(a). To prevail on a claim under the Act, the
“plaintiff must show that the alleged contract, combination, or conspiracy is
unreasonable and has an adverse effect on competition in the relevant
market.” Marlin v. Robertson, 307 S.W.3d 418, 427 (Tex. App.—San Antonio
2009, no pet.).
4 The act underlying appellants’ claims was Excellence’s decision to sue to
enforce the confidentiality provisions. CR 269-70. Those provisions serve as
the “contract” required by the Act. Just like in other cases where a plaintiff
alleges that a particular contract affords rights that are “unreasonable” for
purposes of antitrust law, the court evaluates whether the enforcement of
those provisions results in a violation of the Act. See, e.g., Mendelovitz v.
Adolph Coors Co., 693 F.2d 570, 578 (5th Cir. 1982) (analyzing whether a
contract between beer manufacturer and distributors imposing territorial
restrictions and quality control procedures violated the Act); RTLC AG Prods.,
Inc. v. Treatment Equip. Co., 195 S.W.3d 824, 830-32 (Tex. App.—Dallas
2006, no pet.) (analyzing whether a tying arrangement violated the Act).
Appellants’ summary judgment response confirms this. E.g., CR 284 (arguing
that the confidentiality provisions were effectively covenants not to compete
that violated the Act). 3
On rehearing, the panel does not directly address the confidentiality
provisions and Excellence’s decision to enforce them through the lawsuit. See
Brooks v. Excellence Mortg., Ltd., No. 04-13-00106-CV, 2015 WL 1523067, at
*10 (Tex. App.—San Antonio Apr. 1, 2015, no pet. h.) (only noting that
3 A person who initiates a lawsuit is “generally immune from antitrust liability, under the right of petition guaranteed by the Bill of Rights and the Texas constitution.” Houston Mercantile Exch. Corp. v. Dailey Petroleum Servs. Corp., No. B14-92-00818-CV, 1993 WL 322901, at *3 (Tex. App.—Houston [14th Dist.] Aug. 26, 1993, no writ) (not designated for publication). “To base an antitrust claim upon litigation, a party must show that the lawsuit is not protected petitioning, but instead is sham litigation.” Id.
5 Excellence argued that it was seeking to enforce the confidentiality
provisions). Unlike the original opinion, there is no analysis of the
confidentiality provisions and whether customer information is protected
from disclosure. There is also no discussion regarding the distinction between
a covenant not to compete and a nondisclosure agreement, including the fact
that the latter is not a restraint on trade.
Ignoring appellants’ pleading, the panel finds a whole new basis for
appellants’ antitrust claims. Rather than directly addressing the lawsuit, the
panel relies upon conclusory allegations made by appellants in their summary
judgment affidavits that (unnamed) state or federal laws were violated when
Excellence transferred loan files to Georgetown. See Brooks, 2015 WL
1523067, at *9-10. Importantly, appellants do not identify relevant statutes or
regulations that were violated. 4 Nonetheless, based upon its reading of the
affidavits (as opposed to the live pleading), the panel construes—or perhaps
changes—appellants’ pleadings to allege some sort of “combination” or
“conspiracy” between Excellence and Georgetown Mortgage to violate
unidentified state or federal law (and not necessarily the Act itself). Id. at *10
(“. . . such transfers are prohibited under state or federal regulations,
4 The panel’s reliance upon the affidavits to establish a legal conclusion, i.e., that some state or federal law requires certain performance, is improper. See United Way of San Antonio, Inc. v. Helping Hands Lifeline Found., Inc., 949 S.W.2d 707, 713 (Tex. App.—San Antonio 1997, writ denied) (“Under Texas law, a witness may not give legal conclusions or interpret the law to the jury.”).
6 Georgetown and Excellence worked together to effect the transfers. . . .”).5 The
panel’s opinion also omits citations to the laws that were allegedly violated.
The panel cannot alter the basis for the appellants’ claims through its
own reading of affidavits. The Court has previously explained that “a plaintiff
can recover, if at all, only on the cause of action pleaded by him. His claims are
fixed by the factual circumstances alleged in the petition . . . .” Morriss v.
Enron Oil & Gas Co., 948 S.W.2d 858, 873 n.14 (Tex. App.—San Antonio 1997,
no writ) (citation omitted). The Court should revisit the panel opinion to
correct this serious error.
Not only does the panel fail to give effect to the actual pleading, but its
construction is actually inconsistent with appellants’ pleaded causation theory.
Causation is an element of a claim under the Act, and the contract,
combination, or conspiracy complained of by a plaintiff must have a causal
nexus to the injury. Mendelovitz, 693 F.2d at 578. To the extent that
appellants were denied access to Excellence’s confidential information,
including customer names, it was because Excellence sued to enforce the
confidentiality provisions and was granted injunctive relief. The transferring
of loan files between Excellence and Georgetown was not the source of the
5 This allegation is problematic given the appellants’ overall position in the appeal that Excellence “ceased to exist” in late September 2010. Excellence is unaware of any authority that would suggest that a defunct company can participate in a “conspiracy” or “combination” for purposes of a claim under the Act. Further, it is well-established that a company cannot conspire with its own employees for purposes of the Act. Red Wing Shoe Co., Inc. v. Shearer’s, Inc., 769 S.W.2d 339, 345 (Tex. App.—Houston [1st Dist.] 1989, no writ).
7 alleged injury. Therefore, the panel erred in rejecting its earlier analysis
wherein it directly addressed the source of appellants’ claims: the
confidentiality provisions, the lawsuit, and the injunction.
Given the foregoing, the Court should issue a new opinion reinstating
the analysis in the earlier panel opinion where the actual issues presented by
the pleadings and Excellence’s motion for summary judgment were addressed.
II. The Panel Erred When It Reversed the Summary Judgment on Appellants’ Tortious Interference with Prospective Business Relations Claims. Excellence’s suit to enforce the confidentiality provisions is at the center
of appellants’ claims for tortious interference with prospective business
relations. See CR 265. (“The suit induced Premier, Counter-Plaintiffs’ new
employer, to agree not to do business with the 91 prospective borrowers in
order to avoid litigation.”); see also CR 282 (“Such conduct of maliciously
filing the groundless suit . . . is independently tortious.”). Excellence moved for
summary judgment, asserting that its decision to file suit and seek injunctive
relief was not independently tortious or unlawful for purposes of appellants’
tortious interference claim. See CR 127; see also Wal-Mart Stores, Inc. v.
Sturges, 52 S.W.3d 711, 713 (Tex. 2001) (discussing elements of claim).
In its original opinion, the panel correctly noted that appellants’ claims
were based upon Excellence’s lawsuit. Slip Op. 15 (“The tortious act alleged by
Appellants is the filing of this lawsuit, an allegedly baseless and groundless
suit.”). The panel analyzed the various authorities cited by Excellence and
8 concluded that “[f]iling a lawsuit is not independently a tortious act.” Id. at 16.
Further, given that the employment agreements specifically authorized
Excellence to seek injunctive relief in connection with a suit to enforce its
rights under the confidentiality provisions, the panel correctly concluded that
summary judgment had been properly granted. Id.
On rehearing, the panel again rewrites the appellants’ pleading and
abandons its prior analysis. The panel concludes that the summary judgment
must be reversed because there is a fact question as to whether Excellence
committed an unlawful act. Brooks, 2015 WL 1523067, at *11. But the
purported unlawful act identified by the panel is not the lawsuit to enforce the
confidentiality provisions. According to the opinion on rehearing, the unlawful
act complained about by appellants is “an antitrust violation.” Id.
The panel’s analysis in the opinion on rehearing must be rejected
because it is not consistent with the pleaded allegations. Appellants brought a
tortious interference claim because Excellence filed “this groundless suit in the
name of Excellence (then defunct) to prevent and unlawfully interfere with
such business relationships.” CR 266. Completely rejecting its prior analysis
and the plain language in appellants’ pleading, the panel now reasons that
there is a fact question as to whether Excellence tortiously interfered with
prospective relationships because there is also a fact question as to whether it
committed an antitrust violation. The panel does this even though appellants’
pleadings did not base the tortious interference claim upon an antitrust
9 violation. See CR 265-66. Further, the antitrust violation described earlier in
the opinion on rehearing rested upon the alleged violation of state or federal
law regarding the transfer of files between mortgage lenders. See I.B, supra.
But this is not the cause of appellants’ alleged injury. See id.
There is no explanation as to why the panel looked outside of appellants’
pleading. The independently tortious/unlawful conduct element of a tortious
interference with prospective relations claim rests upon conduct that is
directed toward a third party that leads the third party not to do business with
the plaintiff. See Wal-Mart Stores, Inc., 52 S.W.3d at 726 (providing
examples). The allegedly unlawful transfer of loans between Excellence and
Georgetown Mortgage does not meet that definition. Presumably, this is
precisely why appellants complained about the so-called “groundless
injunction” that prevented them from pursuing those pipeline customers.
The panel had it right the first time. Based upon appellants’ pleadings,
the issue was whether the filing of the lawsuit was independently tortious or
unlawful. The panel analyzed the record and the relevant authorities in its
original opinion and correctly concluded that Excellence was entitled to
summary judgment. See Slip Op. 15-16. Accordingly, this motion for rehearing
should be granted.
10 III. Conclusion and Prayer.
Applying the law to the record, it is beyond dispute that Excellence was
entitled to summary judgment on appellants’ antitrust and tortious
interference with prospective business relations claims.
WHEREFORE, PREMISES CONSIDERED, Appellees Excellence
Mortgage Ltd.; LATD-1, LLC; Grothues Financial, Ltd.; Grothues Brothers
Management 1, LLC; and Georgetown Mortgage LLC respectfully pray that the
Court grant this motion for rehearing, withdraw the panel opinion on
rehearing and judgment dated April 1, 2015, issue a new opinion and
judgment affirming the trial court’s summary judgment order in its entirety,
and grant other further relief to which appellees may be justly and equitably
entitled.
11 Respectfully submitted,
/s/ Samuel V. Houston, III SAMUEL V. HOUSTON, III State Bar No. 24041135 HOUSTON DUNN, PLLC 4040 Broadway, Suite 440 San Antonio, Texas 78209 Telephone: (210) 775-0882 Fax: (210) 826-0075 sam@hdappeals.com
WILLIAM H. FORD State Bar No. 07246700 GREGORY SCRIVENER State Bar No. 24013480 FORD MURRAY, PLLC 10001 Reunion Place, Suite 640 San Antonio, Texas 78216 Telephone: (210) 731-6400 Fax: (210) 731-6401 bill.ford@fordmurray.com greg.scrivener@fordmurray.com ATTORNEYS FOR APPELLEES EXCELLENCE MORTGAGE LTD.; LATD-1, LLC; GROTHUES FINANCIAL, LTD.; GROTHUES BROTHERS MANAGEMENT 1, LLC; AND GEORGETOWN MORTGAGE LLC
CERTIFICATE OF COMPLIANCE
In accordance with Texas Rule of Appellate Procedure 9.4, the undersigned certifies that the foregoing brief contains 2,566 words.
/s/ Samuel V. Houston, III SAMUEL V. HOUSTON, III
12 CERTIFICATE OF SERVICE This is to certify that a true and correct copy of the foregoing document has been served in accordance with the Texas Rules of Appellate Procedure on the 18th day of May, 2015, to the following: Darby Riley Via e-mail/e-serve Riley & Riley 320 Lexington Avenue San Antonio, Texas 78215-1913 (210) 225-7236 (210) 227-7907 (fax)
/s/ Samuel V. Houston, III SAMUEL V. HOUSTON, III