Brett Bihner v. Bihner Chen Engineering, Ltd., Bihner Chen Engineering, GP, LLC and Yubo Chen

Court of Appeals of Texas·Decided September 14, 2021·No. 01-21-00086-CV·Published

Opinion

Opinion issued September 14, 2021

In The

Court of Appeals

For The

First District of Texas

issues, Brett1 argues that the trial court abused its discretion in granting the temporary injunction because (1) the record contains no evidence that he misappropriated certain documents and that those documents are protected trade secrets, and (2) the noncompete agreement is unenforceable against him.

We affirm.

Background

The History of the Bihner Chen Entities In December 2005, Brad Bihner and Yubo Chen formed a Texas limited partnership called Bihner Chen Engineering, Ltd. (“Bihner Chen”) to provide structural engineering services to clients in the greater Houston area and throughout Texas. Brad is Brett’s father.

Bihner Chen specialized in low-rise and mid-rise commercial and industrial buildings. Bihner Chen consisted of one general partner, Bihner Chen Engineering GP, LLC, and two equal limited partners, Yubo and Brad, who were licensed engineers, managers, and equal co-owners of Bihner Chen Engineering GP, LLC. At times, we refer to Bihner Chen and Bihner Chen Engineering GP, LLC together as the Bihner Chen entities.

Brad and Yubo executed ten formation documents, including a limited partnership agreement and a noncompete agreement, for Bihner Chen. They made

1 We refer to the individual parties by their first names for clarity.

four copies of all ten documents and placed them in four separate binders. Yubo, Brad, and their respective attorneys received a binder containing identical documents.

Under the noncompete agreement, Yubo paid Brad $38,800 as consideration for Brad agreeing not to compete against Yubo or Bihner Chen for as long as Brad was a partner and for five years after he was no longer a partner. 2 The noncompete agreement prohibited “use in any competition, solicitation, or marketing effort any Confidential Information, any proprietary list, or any information concerning customers of [Bihner Chen].” The noncompete agreement provided that Brad would protect Bihner Chen’s confidential information and goodwill. The noncompete agreement reflected Brad’s acknowledgment that Bihner Chen owned confidential information, which included:

pricing information, cost information . . . customer lists, customer leads, documents identifying past, present and future customers, customer profiles and preference data . . . and other confidential, proprietary and/or trade secret information concerning its operations and expansion plans.

Brad and Yubo agreed that the noncompete agreement would “inure to the benefit of and be binding [ ]on [Brad and Yubo] and their respective permitted successors and permitted assigns.” Yubo assigned all his “interest, rights, and benefits” under

2 Yubo also paid Brad $50,000 as consideration for Brad’s goodwill.

the noncompete agreement to Bihner Chen. In exchange, Bihner Chen credited Yubo’s capital account in the amount of $88,000.

Brett’s Interest in the Bihner Chen Entities About seven years later, Brad decided to retire and wanted to transfer his interest in the Bihner Chen entities to his son, Brett, who was also a licensed engineer. At that time, Brett had been a Bihner Chen employee for many years. Article 8.5 of both Bihner Chen’s limited partnership agreement and Bihner Chen Engineering, GP, LLC’s regulations granted Yubo the right of first refusal to purchase Brad’s interest in the Bihner Chen entities. Yubo waived his Article 8.5 rights and agreed to allow Brad to transfer his rights and interest to Brett. Yubo provided Brett with one of the formation document binders, and Brett did not object to any of the agreements in the binder.

In December 2012, Brett and Yubo entered into a written agreement that Brett would assume all of Brad’s rights, title, and interest in the Bihner Chen entities (“written consent”). Under the written consent, Brett agreed to be “bound by all of the governing documents, bylaws, and regulations of [the Bihner Chen entities], as is, without limitation.” Unlike his transaction with Brad, Yubo did not give Brett any money. As soon as Yubo and Brett executed the written consent, Brad retired from engineering.

Brett assumed his duties as partner and manager of Bihner Chen. Yubo gave Brett access to Bihner Chen’s confidential information, including a Christmas card list and a fee schedule. The Christmas card list included Bihner Chen’s customers and referral sources, their points of contact, and addresses. It also included handwritten notes about the type and value of gifts Bihner Chen sent to each customer or referral source. Brett kept a copy of the Christmas card list in a manila folder in his office. Yubo did not keep a copy of the Christmas card list. The fee schedule contained information about Bihner Chen’s pricing guidelines. Brett and Yubo routinely referred to the fee schedule before bidding on a particular project. Yubo kept a copy of the fee schedule in his office.

The Buy-Sell Transaction and the Alleged Misconduct In September 2020, Brett invoked the buy-sell provision of Bihner Chen’s limited partnership agreement and Bihner Chen Engineering, GP, LLC’s regulations. Under the buy-sell provision, Yubo could either sell his interest in the Bihner Chen entities to Brett for $600,000 or purchase Brett’s interest in the Bihner Chen entities for the same price. The next month, Brett and Yubo met at Bihner Chen’s office. Yubo presented a letter to Brett and elected to purchase all of Brett’s interest in the Bihner Chen entities. The letter outlined the details to finalize the buy- sell transaction and reminded Brett of his obligations and duties to the Bihner Chen entities until the transaction closed. Brett became very angry, announced his

immediate resignation from the Bihner Chen entities, and told Yubo that he planned to start a competing business.

Yubo’s counsel sent a letter to Brett reminding him of his duties and obligations to the Bihner Chen entities. The letter specifically alerted Brett that starting a competing firm would violate the noncompete agreement. It also stated that Yubo and the Bihner Chen entities would sue Brett and seek injunctive relief if he did so.

Disregarding Yubo’s letter, Brett filed a certificate of formation for Bihner Engineering, PLLC before the buy-sell transaction had finalized. The certificate listed Brett as the registered agent, provided his home address as the company’s business address, and described the company’s purpose as a “professional service” that provided “structural engineering consultation and design services.” Brett advertised Bihner Engineering, PLLC on the website for the Texas Board of Professional Engineers & Land Surveyors. He bought an internet domain for Bihner Engineering, PLLC, www.bihner.net. The internet domain Brett bought was much like the internet domain that the Bihner Chen entities held since 2005: www.bihnerchen.net. After Brett had formed Bihner Engineering, PLLC, advertised his company, and bought an internet domain for it, the buy-sell transaction closed and Brett received $600,000 from Yubo in December 2020.

Yubo later learned that the Christmas card list that Brett maintained was missing from his office. He also learned that Brett sent holiday cards to contacts on Bihner Chen’s Christmas card list. A former Bihner Chen employee sent Yubo an email informing him that Brett sent him a holiday card and announced his new company. A current Bihner Chen employee also received a holiday card from Brett and sent a picture of Brett’s card to Yubo.

Yubo discovered that Brett had solicited one of Bihner Chen’s clients. One of Bihner Chen’s clients mistakenly emailed Yubo and requested payment for services from Brett’s new company, Bihner Engineering, PLLC. The invoice displayed Brett’s name and home address. The email and invoice alarmed Yubo because he had paid this client for services days earlier.

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Brett Bihner v. Bihner Chen Engineering, Ltd., Bihner Chen Engineering, GP, LLC and Yubo Chen, (Tex. Ct. App. 2021).

Brett Bihner v. Bihner Chen Engineering, Ltd., Bihner Chen Engineering, GP, LLC and Yubo Chen (Brett Bihner v. Bihner Chen Engineering, Ltd., Bihner Chen Engineering, GP, LLC and Yubo Chen) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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