Opinion issued July 10, 2014
In The
Court of Appeals For The
First District of Texas ———————————— NO. 01-13-00721-CV ——————————— BRUCE I. SCHIMMEL, Appellant V. GARY MCGREGOR, TERI MCGREGOR, KRIS HALL, SOLEDAD PINEDA, LARRY BISHOP, CYNTHIA BISHOP, GEORGE CLARK, DEBORAH CLARK, AND CAROL SEVERANCE, Appellees
On Appeal from the 113th District Court Harris County, Texas Trial Court Case No. 2013-05146
OPINION
In this interlocutory appeal, appellees Gary McGregor, Teri McGregor, Kris
Hall, Soledad Pineda, Larry Bishop, Cynthia Bishop, George Clark, Deborah Clark, and Carol Severance (collectively, “the Buy-Out Owners”), sued Bruce
Schimmel, an attorney hired by The Sands of Kahala Beach HOA, Inc. (“SOKB”),
the homeowners’ association for the subdivision in which the Buy-Out Owners
lived, for tortious interference with prospective business relations, specifically, the
sale of their respective beachfront properties to the City of Galveston. Schimmel
moved to dismiss the Buy-Out Owners’ tortious interference claim pursuant to the
Texas Citizens Participation Act (“TCPA”). 1 The trial court denied Schimmel’s
motion to dismiss. In two issues, Schimmel contends that the trial court
erroneously (1) found that Schimmel’s complained-of actions did not involve
“matters of public concern” and did not implicate the exercise of his right to
petition, right of free speech, or right of association and thus erroneously denied
his motion to dismiss; and (2) refused to award Schimmel court costs, reasonable
attorney’s fees, and other expenses incurred in defending the action against him.
We reverse and remand for further proceedings.
Background
The Buy-Out Owners all own beachfront property in the Sands of Kahala
Beach, a small, gated subdivision located on Galveston Island. In September 2008,
Hurricane Ike made landfall in the region and caused extensive property damage to
numerous homes, including those of the Buy-Out Owners. Because their homes
1 See TEX. CIV. PRAC. & REM. CODE ANN. §§ 27.001–.011 (Vernon Supp. 2013).
2 were allegedly more than fifty percent damaged, the Buy-Out Owners sought to
sell their properties to the City of Galveston under a Federal Emergency
Management Agency (“FEMA”) program called the Hazard Mitigation Grant
Program (“HMGP”). The Texas Department of Public Safety assists in
administering this program. The Buy-Out Owners and an attorney for the City of
Galveston signed agreements in September 2009 concerning the purchase of the
respective properties.
SOKB and the remaining owners who owned property in the subdivision but
did not wish to sell their property to the City of Galveston (“the Remaining
Owners”) opposed the Buy-Out Owners’ plans to sell. Under the HMGP, the
properties that the City of Galveston purchased “were to be kept as open space in
perpetuity.” This requirement concerned the SOKB, the entity in charge of
collecting assessments and fees from the property owners within the subdivision,
and the Remaining Owners, who believed that the required public use of the
purchased land and the loss of a private roadway and utility easement would cause
the value of their properties to drop.
Due to the dispute between the Buy-Out Owners, SOKB, and the Remaining
Owners, in October 2009, the City of Galveston added a condition to the purchase
of the Buy-Out Owners’ properties: the president of SOKB’s Board of Directors
(“the Board”) needed to sign a document releasing the City from paying future
3 homeowners’ dues and other fees and assessments to SOKB once it purchased the
properties. In December 2009, SOKB hired Schimmel, an attorney, to represent its
interests and those of the Remaining Owners in the dispute with the Buy-Out
Owners. SOKB refused to sign the releases and the Board voted to amend
SOKB’s by-laws to raise the voting requirement to remove directors from the
Board, purportedly on Schimmel’s advice. The Buy-Out Owners subsequently
held a special meeting of the Board and elected new directors, including Kris Hall,
one of the appellees, as the new President. Hall then signed the releases for the
Buy-Out Owners’ properties and delivered them to the City of Galveston.
Schimmel continued to work on behalf of SOKB and the Remaining Owners
to convince the City of Galveston not to buy the Buy-Out Owners’ properties until
February 1, 2011, when he withdrew from representation. Ultimately, the time
period to participate in the HMGP expired without the City of Galveston’s having
closed on the purchases of the Buy-Out Owners’ properties.
The Buy-Out Owners, joined by SOKB, sued Schimmel on January 28,
2013, asserting claims for breach of fiduciary duty and equitable fee forfeiture.
Neither of those claims is at issue in this interlocutory appeal.
On March 28, 2013, the Buy-Out Owners and SOKB filed their first
amended petition. In addition to the breach of fiduciary duty and fee forfeiture
claims, the Buy-Out Owners asserted a claim against Schimmel for tortious
4 interference with prospective business relations.2 The Buy-Out Owners alleged
that a reasonable probability existed that they would have entered into a business
relationship with the City of Galveston, that Schimmel intentionally interfered with
the relationship, and that Schimmel’s conduct was independently tortious and
unlawful “in that Defendant Schimmel made fraudulent statements about these
Plaintiffs to third parties and persuaded others to illegally boycott these Plaintiffs.”
The Buy-Out Owners alleged that Schimmel made several
misrepresentations that interfered with the purchase of their properties by the City
of Galveston. For example, in response to an article in the Houston Chronicle
about the potential sale of the properties, Schimmel allegedly wrote to the author
of the article and stated that if the City purchased the properties the Remaining
Owners would lose their access to a nearby state highway because the private road
in the subdivision would be demolished. He also allegedly misrepresented to the
author that all of the properties were behind the vegetation line and “repairable for
less than 50% of their value,” which would preclude them from participation in the
HMGP. Schimmel also allegedly made misrepresentations to the Board
concerning how the HMGP’s definition of “substantial damage” to the properties
2 SOKB did not join the homeowners in asserting this claim against Schimmel, and SOKB is not a party to this appeal, which concerns only the Buy-Out Owners’ tortious interference claim.
5 was calculated; 3 to lot owners in the subdivision that the buyout would not include
the opportunity to buy out all of the properties in the subdivision; and to various
individuals that he “had no intention of changing any more By-Laws,” that the
SOKB had been working with the Buy-Out Owners to settle the dispute, and that
developers no longer owned lots in the subdivision, even though they did.
The Buy-Out Owners also alleged that Schimmel had “systematically
excluded members from voting [at resident meetings] in order to boycott the Buy-
out owners,” such as by quickly setting a voting eligibility date to prevent owners
who had not paid their annual assessments from voting at meetings and by
recommending the elimination of voting by proxy, which would affect the Buy-
Out Owners who used their properties as vacation homes but did not live
permanently in the subdivision. The Buy-Out Owners further alleged that
Schimmel had stated that neither SOKB nor its Board had the power to waive
assessments as required by the City of Galveston to purchase the properties, and
“[w]ithout releases, the [City] would not close on the properties and [Schimmel]
had the [Board] refuse to sign [the] release[s] which was an unreasonable restraint
3 The Buy-Out Owners alleged that Schimmel told the Board that “the definition of Substantial Damage is damages that total at least 50% of the pre-event fair value of the property,” but he allegedly knew that the fair market value of the property was based on the local appraisal district’s value for the structure, which did not include the value of the land. According to the Buy-Out Owners, “This is a significant distinction which the BOD later misrepresented to FEMA when they alleged false damage estimates.”
6 or alienation. Defendant Schimmel’s position was that the Buy-[O]ut owners
would not be allowed to sell to the [City] under any circumstances.” The Buy-Out
Owners alleged that they had suffered economic damages consisting of the
difference between the proposed buy-out values and the market values of their
properties.
On May 28, 2013, Schimmel filed a motion to dismiss under the TCPA. In
this motion, Schimmel stated that the Buy-Out Owners served him with their first
amended petition on March 28, 2013, and that this motion to dismiss addressed
only the tortious interference claim raised for the first time in that amended
petition.
Schimmel stated that he advised the Board and the Remaining Owners that
he thought the issue concerning the value of the repairs to the Buy-Out Owners’
properties, which was relevant to their eligibility to participate in the HMGP, was
“a matter between [the Buy-Out Owners] and governmental agencies” and should
not be pursued by SOKB, “but that if any lot owner wanted to pursue that issue on
his or her own, it would aid [SOKB] by distracting [the Buy-Out Owners].”
Schimmel argued that the TCPA protected these statements because they involved
his right of association and right to petition regarding a matter of public concern.
He argued that his statements to the Houston Chronicle reporter were “a
‘communication’ which is ‘an exercise of the right of free speech’ and related to an
7 exercise of the right of petition” and were made “in connection with a matter of
public concern” because the statements related to the expenditure of government
money and “interference with the community of the Subdivision and economic
concerns.” He asserted that those statements were also “reasonably likely to
encourage consideration or review of an issue by” an executive or other
governmental body or were “reasonably likely to enlist public participation in an
effort to effect consideration of an issue by” an executive or other governmental
body. With respect to his alleged statements to the Board, Schimmel argued that
those statements were “an exercise of the right of association” and thus were
entitled to protection under the TCPA.
Schimmel also argued that he was entitled to mandatory court costs,
reasonable attorney’s fees, and other expenses incurred in defending the claim
pursuant to Civil Practice and Remedies Code section 27.009(a). Schimmel
attached an affidavit setting out the amount of attorney’s fees he had incurred in
defending against the Buy-Out Owners’ claims. This affidavit set out the billing
rate, the date tasks were performed, the hours spent, and a description of the tasks
completed.
Schimmel attached numerous exhibits to his motion to dismiss. One of
these exhibits was an order of dismissal in a suit filed by the Buy-Out Owners in
the Southern District of Texas against the City of Galveston and several
8 Department of Public Safety officials involved in the administration of the HMGP.
The Buy-Out Owners had raised claims under the Fourteenth Amendment and
Section 1983,4 arguing that the City of Galveston’s failure to close on the purchase
of their properties deprived them of funds under the HMGP without due process of
law. The district court granted the defendants’ motion to dismiss pursuant to
Federal Rule of Civil Procedure 12(b)(1) and, in its order, noted that state agencies
involved with administering the HMGP have “wide discretion in administering the
program.” The court stated, “Nothing in the regulations [governing the HMGP]
dictates that qualified property owners are entitled to participate in the program or
limits the State’s discretion in determining a property owner’s qualifications for the
program or reviewing those qualifications at any time in the process.” The court
concluded that the Buy-Out Owners “have no entitlement to HMGP funds or a
property right to such funds” and ultimately dismissed their suit.
In response to Schimmel’s motion to dismiss, the Buy-Out Owners argued
that their claim fell within a statutory exemption to the TCPA because Schimmel
was engaged in the business of selling his legal services, he was paid to render
legal services by SOKB and the Remaining Owners, and his conduct at issue in the
suit occurred while he was rendering legal services. The Buy-Out Owners also
argued that Schimmel had not timely filed his motion to dismiss because the TCPA
4 See 42 U.S.C. § 1983 (2006) (providing civil cause of action for deprivation of rights).
9 required such motions to be filed not later than the sixtieth day after service of the
legal action and Schimmel filed his motion to dismiss on the sixty-first day after
the homeowners served him with their amended petition.
The Buy-Out Owners further stated,
The individual Plaintiffs[’] claims are not based on, related to, or in response to a right of Schimmel to voice free speech, have a right of association or a right to petition. It is totally about his tortious interference with Plaintiffs’ prospective business and contractual relations which caused the individual Plaintiffs money damages. Plaintiffs’ claims are based upon the independent torts of fraud, misrepresentations and illegal boycott.
They further argued, “Schimmel’s conduct is at issue here, not anyone’s free
speech, right to associate, or to file a lawsuit.” The Buy-Out Owners also
challenged the affidavits that Schimmel had submitted with his motion to dismiss
on the ground that Schimmel stated that he is “personally acquainted with the facts
stated herein, except where I state that I am testifying on information and belief, in
which case I am testifying based on information and my belief thereof.” The Buy-
Out Owners argued that these affidavits did not constitute competent evidence
because “personal acquaintance” is not “personal knowledge.” The homeowners
also challenged Schimmel’s attorney’s fees affidavit on the ground that it did not
meet the requirements for establishing reasonable and necessary attorney’s fees as
set out by the Texas Supreme Court in El Apple I, Ltd. v. Olivas.
10 The Buy-Out Owners attached their own affidavits to their response and
argued that these affidavits established a prima facie case for tortious interference
with prospective business relations.5 The affidavits were substantively identical.
The affidavits set out numerous representations allegedly made by Schimmel that,
according to the Buy-Out Owners, caused the City of Galveston to fail to purchase
their properties. As an example, Kris Hall, one of the Buy-Out Owners, averred:
But for Schimmel’s misrepresentations and conduct there is a reasonable probability that all of our buy-out contracts would have closed. . . . Schimmel’s independent misrepresentations and boycott, set out above, prevented our agreements from closing and the purchase of our property by the [City]. Schimmel’s acts, set out above, were done with a conscious desire to prevent our sales and purchases from occurring. I, as well as the other Buy-Out Owners, have suffered actual damages as a result of this interference of Schimmel. We have incurred thousands of dollars in legal fees and have lost the difference between the buy-out values that we were to be paid and the lesser amounts that our properties now are valued at. There was a reasonable probability that I, as well as the rest of the Buy-Out Owners, would have entered into a business relationship and closed our contracts with the [City].
The Buy-Out Owners did not attach affidavits from attorneys with the City of
Galveston or from personnel with the Department of Public Safety, which assisted
in administering the HMGP, nor did they attach any other evidence from persons
5 Although the Buy-Out Owners pleaded a claim for tortious interference with prospective relations, the Buy-Out Owners admit in their affidavits submitted in opposition to Schimmel’s motion to dismiss that they had signed contracts with the City of Galveston to purchase the properties for specified amounts.
11 involved with the City’s decision not to close on the purchase of the Buy-Out
Owners’ properties.
Schimmel filed a reply and asserted that he had timely filed his motion to
dismiss. He argued that although the Buy-Out Owners filed their amended petition
with the trial court on March 28, 2013, the Buy-Out Owners did not serve him with
a copy of the petition. He did not see a copy of the petition until April 1, when a
legal assistant to his attorney in the case downloaded the petition from the ProDoc
eFiling service. In the alternative, Schimmel moved the trial court to allow late
filing of the motion to dismiss, as is permitted by the TCPA. Schimmel also
argued that the Buy-Out Owners’ supporting affidavits were conclusory and not
supported by evidence that a reasonable probability existed that their buy-out
contracts with the City of Galveston would have closed but for Schimmel’s
allegedly tortious actions. He further argued that the Buy-Out Owners did not
provide “any evidence that any act of Schimmel’s caused the [Texas Department
of Public Safety] to order the City not to close the alleged contracts.”
After an oral hearing, the trial court issued an order denying Schimmel’s
motion to dismiss. The order stated:
The parties announced on the record their stipulation that the Motion relates only to the Plaintiffs’ cause of action for damages resulting from an alleged tortious interference with a prospective relationship between Plaintiffs and the City of Galveston. . . . The Court finds that the Motion was timely filed.
12 The Court finds that the docket conditions in the court prevented the scheduling of the hearing on the Motion within 30 days following the date of its filing. The Court finds that the Plaintiffs’ tortious interference claim does not affect Schimmel’s right to participate in government. The Court finds that Schimmel’s actions alleged as the basis of the tortious interference claim concerned matters disputed between individual parties, and the statements alleged as a basis of the claim were not made in connection with a matter of public concern. The Court finds that Schimmel’s actions alleged as the basis of the tortious interference claim were not a part of Schimmel’s exercise of the right of association defined in TEX. CIV. PRACT. & REM. CODE §27.001(2). The Court finds that Schimmel’s actions alleged as the basis of the tortious interference claim do not concern Schimmel’s right to petition defined in TEX. CIV. PRACT. & REM. CODE §27.001(4). The Court finds that the tortious interference claim was not brought to deter or prevent Schimmel’s exercise of his constitutional rights, for an improper purpose, for harassment, to cause unnecessary delay, or to increase litigation costs.
The trial court did not award attorney’s fees or costs to either party. This
interlocutory appeal followed.
Texas Citizens Participation Act
In his first issue, Schimmel contends that the trial court erroneously
determined that his communications that are the basis of the Buy-Out Owners’
tortious interference claim did not involve “matters of public concern” and did not
implicate his “exercise of the right to petition,” “exercise of the right of free
speech,” or “exercise of the right of association.”
13 A. Standard of Review and Applicable Law
In enacting the TCPA, the Legislature stated that the purpose of the statute
“is to encourage and safeguard the constitutional rights of persons to petition,
speak freely, associate freely, and otherwise participate in government to the
maximum extent permitted by law and, at the same time, protect the rights of a
person to file meritorious lawsuits for demonstrable injury.” TEX. CIV. PRAC. &
REM. CODE ANN. § 27.002 (Vernon Supp. 2013); KTRK Television, Inc. v.
Robinson, 409 S.W.3d 682, 688 (Tex. App.—Houston [1st Dist.] 2013, pet.
denied). The TCPA created “an avenue at the early stage of litigation for
dismissing unmeritorious suits that are based on the defendant’s exercise” of
certain constitutional rights. In re Lipsky, 411 S.W.3d 530, 539 (Tex. App.—Fort
Worth 2013, orig. proceeding). The Legislature has directed courts to construe
the statute liberally “to effectuate its purpose and intent fully.” TEX. CIV. PRAC. &
REM. CODE ANN. § 27.011(b) (Vernon Supp. 2013); Robinson, 409 S.W.3d at 688.
Under the TCPA, if a party files a legal action that is “based on, relates to, or
is in response to” the defendant’s exercise of the right of free speech, right to
petition, or right of association, the defendant may file a motion to dismiss the
action. TEX. CIV. PRAC. & REM. CODE ANN. § 27.003(a) (Vernon Supp. 2013).
The TCPA statutorily defines “exercise of the right of association,” “exercise of
the right of free speech,” and “exercise of the right to petition.” See id.
14 § 27.001(2)–(4) (Vernon Supp. 2013). The TCPA defines “exercise of the right of
association” as “a communication between individuals who join together to
collectively express, promote, pursue, or defend common interests.” Id.
§ 27.001(2). “Communication” is further defined as “the making or submitting of
a statement or document in any form or medium, including oral, visual, written,
audiovisual, or electronic.” Id. § 27.001(1). The TCPA defines “exercise of the
right of free speech” as “a communication made in connection with a matter of
public concern.” Id. § 27.001(3). “Matter of public concern” includes issues
relating to health or safety; environmental, economic, or community well-being;
the government; a public official or public figure; or a good, product, or service in
the marketplace. Id. § 27.001(7). The statutory definition of “exercise of the right
to petition” includes, among other things, “a communication in connection with an
issue under consideration or review by a legislative, executive, judicial, or other
governmental body or in another governmental or official proceeding.” Id.
§ 27.001(4)(B).
A party filing a motion to dismiss under the TCPA must file the motion “not
later than the 60th day after the date of service of the legal action.” Id.
§ 27.003(b). The trial court may extend the time to file a motion to dismiss upon
a showing of good cause. Id.
15 When deciding whether to grant a motion to dismiss a lawsuit pursuit to the
TCPA, the trial court must “consider the pleadings and supporting and opposing
affidavits stating the facts on which the liability or defense is based.” Id.
§ 27.006(a) (Vernon Supp. 2013); Robinson, 409 S.W.3d at 688. The court must
determine, after a hearing, whether the moving defendant has demonstrated by a
preponderance of the evidence that the legal action is “based on, relates to, or is in
response to the party’s exercise of the right of free speech, the right to petition, or
the right of association.” TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(b)
(Vernon Supp. 2013); Robinson, 409 S.W.3d at 688. We review de novo the trial
court’s determination whether the defendant carried this burden. Robinson, 409
S.W.3d at 688.
If the trial court determines that the defendant has met his burden, the
burden then shifts to the plaintiff to establish “by clear and specific evidence a
prima facie case for each essential element of the claim in question.” TEX. CIV.
PRAC. & REM. CODE ANN. § 27.005(c); Robinson, 409 S.W.3d at 688. The
Legislature’s use of “prima facie case” in the second step of the inquiry implies a
minimal factual burden: “[a] prima facie case represents the minimum quantity of
evidence necessary to support a rational inference that the allegation of fact is
true.” Robinson, 409 S.W.3d at 688; Rodriguez v. Printone Color Corp., 982
S.W.2d 69, 72 (Tex. App.—Houston [1st Dist.] 1998, pet. denied). The statute
16 requires that the plaintiff’s proof address and support each “essential element” of
every claim and that the proof constitute “clear and specific evidence.” Robinson,
409 S.W.3d at 688. Because the statute does not define “clear and specific,” we
apply the ordinary meaning of these terms. Id. at 689. “Clear” means
“unambiguous,” “sure,” or “free from doubt,” and “specific” means “explicit” or
“relating to a particular named thing.” Id. We review the pleadings and evidence
in the light most favorable to the plaintiffs. Newspaper Holdings, Inc. v. Crazy
Hotel Assisted Living, Ltd., 416 S.W.3d 71, 80–81 (Tex. App.—Houston [1st
Dist.] 2013, pet. denied) Accordingly, here, if we determine that Schimmel
carried his initial burden of proof, we must examine the pleadings and the
evidence presented in response to Schimmel’s motion to dismiss to determine
whether the Buy-Out Owners marshaled “clear and specific” evidence to support
each element of their tortious interference claim. See Robinson, 409 S.W.3d at
689.
B. Applicability of TCPA to the Buy-Out Owners’ Claim
1. Timeliness of Motion to Dismiss
The Buy-Out Owners argue that this Court should affirm the trial court’s
ruling denying Schimmel’s motion to dismiss on the basis that he did not timely
file the motion.
17 Section 27.003(b) provides that a party filing a motion to dismiss must file
the motion “not later than the 60th day after the date of service of the legal action.”
TEX. CIV. PRAC. & REM. CODE ANN. § 27.003(b). The statute further provides,
however, that the trial court may extend the time to file a motion to dismiss “on a
showing of good cause.” Id.; see also Newspaper Holdings, 416 S.W.3d at 79
(“The TCPA sets strict deadlines for filing, hearing, and ruling on a motion to
dismiss. Absent a showing of good cause, the defendant must move to dismiss
pursuant to the TCPA ‘not later than the 60th day after the date of service of the
legal action.’”).
Here, the Buy-Out Owners’ first amended petition, which was the first
pleading in which the Buy-Out Owners raised the tortious interference claim
against Schimmel, bears a file-stamped date of March 28, 2013. Schimmel filed
his motion to dismiss on May 28, 2013, sixty-one days later. In his initial motion
to dismiss, Schimmel stated, “On March 28, 2013, Plaintiffs served Schimmel with
their Plaintiffs’ Amended Petition, in which, for the first time, Natural Plaintiffs
added a separate cause of action against Schimmel alleging tortious interference
with prospective relations.”
In response to the motion to dismiss, the Buy-Out Ownerts argued that the
motion was untimely because Schimmel filed his motion on the sixty-first day after
he had been served with the action and he could not demonstrate that good cause
18 existed for his late filing. In reply, Schimmel asserted that his motion was not
untimely because, although he received notice that the first amended petition had
been filed on March 28, 2013, the Buy-Out Owners did not serve him with a copy
of the petition on that date. Instead, he did not receive a copy of the petition until
April 1, 2013, when his counsel’s legal assistant downloaded the amended petition
from the ProDoc eFiling service. In the alternative, Schimmel sought leave of
court to allow the late filing of his motion.
In the order ruling on the motion to dismiss, the trial court explicitly stated,
“The Court finds that the Motion was timely filed.” We conclude that, although
Schimmel filed his motion to dismiss one day late, in making a statement
concerning the timeliness of the motion, the trial court implicitly ruled that if
Schimmel technically filed the motion late he had good cause for the late filing.
We therefore decline to dismiss this suit on the ground that Schimmel did not
timely file his motion to dismiss.
2. Applicability of Services Exclusion
The Buy-Out Owners also argue that the TCPA does not apply to this case
because this case falls under the statutory exemption for commercial speech found
in section 27.010(b).
Section 27.010(b) states:
[The TCPA] does not apply to a legal action brought against a person primarily engaged in the business of selling or leasing goods or
19 services, if the statement or conduct arises out of the sale or lease of goods, services, or an insurance product, insurance services, or a commercial transaction in which the intended audience is an actual or potential buyer or customer.
TEX. CIV. PRAC. & REM. CODE ANN. § 27.010(b) (Vernon Supp. 2013). The party
asserting the exemption bears the burden of proving its applicability. See
Newspaper Holdings, 416 S.W.3d at 89; see also Pena v. Perel, 417 S.W.3d 552,
555 (Tex. App.—El Paso 2013, no pet.) (“The burden of proving the applicability
of an exemption under Section 27.010 is on the party asserting it.”).
The Buy-Out Owners argue that their tortious interference claim falls within
this exemption because (1) Schimmel was primarily engaged in the business of
selling his legal services; (2) the Buy-Out Owners’ cause of action arose from
Schimmel’s conduct consisting of representations of fact about Schimmel’s
services; (3) Schimmel’s conduct occurred in the course of delivering his legal
services; and (4) the intended audience of his conduct was a potential buyer, the
City of Galveston. We disagree that Schimmel’s conduct falls within this
exemption.
The El Paso Court of Appeals addressed a similar situation in Pena. In that
case, Pena, who had been indicted on two counts of intoxicated manslaughter and
two counts of failure to stop and render aid, hired Dolph Quijano to represent him.
Pena, 417 S.W.3d at 553. A jury ultimately convicted Pena, assessed punishment
at confinement in the Texas Department of Criminal Justice, and imposed a total of
20 $30,000 in fines. Id. at 553–54. Pena and his wife then began running
advertisements that were critical of Quijano. Id. at 554. Quijano hired Bobby
Perel to represent him, and Perel sent letters to local newspapers and to the Texas
Board of Pardons and Paroles to inform it of Pena’s conduct. Id. One of Perel’s
letters to the Board of Pardons and Paroles informed it that he believed Pena had
not taken responsibility for his underlying criminal actions and that Pena was
responsible for “vicious ads” attacking Quijano, and he requested that the Board
consider this information when making decisions about Pena’s parole. Id. Pena
filed suit against Quijano and Perel, asserting, among other things, that they had
conspired to slander and defame him by sending the letter to the Board. Id. The
trial court granted Perel’s motion to dismiss pursuant to the TCPA. Id.
On appeal, Pena argued that the trial court erred in dismissing his claims
because his claims fell within the “commercial speech” exemption to the TCPA.
Id. at 555. The El Paso Court of Appeals noted that Pena’s suit was based on the
letter that Perel had sent to the Board. Id. The court reasoned, “The letter does not
arise out of the sale or lease of goods, services, or an insurance product or a
commercial transaction. Further, the Board of Pardons and Parole is not an actual
or potential buyer or customer of any goods or services sold by Perel.” Id. The
court held that Pena failed to establish the applicability of the exemption. Id.
21 Here, Schimmel allegedly made statements that, according to the Buy-Out
Owners, induced the City of Galveston to back out of its agreements to purchase
the Buy-Out Owners’ properties. When Schimmel made the statements at issue, he
was undisputedly working as an attorney for SOKB and the Remaining Owners.
The ultimate intended audience for his statements, however, was the City of
Galveston. Schimmel did not represent the City of Galveston, nor was the City a
“potential buyer or customer” of Schimmel’s legal services. See TEX. CIV. PRAC.
& REM. CODE ANN. § 27.010(b). We therefore conclude, as the El Paso Court of
Appeals did in Pena, that the Buy-Out Owners have failed to establish the
applicability of the “commercial speech” exemption. See id.; see also Pena, 417
S.W.3d at 555; Newspaper Holdings, 416 S.W.3d at 89 (“With respect to the
newspaper, it is undisputed that NHI was in the business of reporting community
events, but the Hotel’s complained-of statements do not arise out of the lease or
sale of the goods or services that NHI sells—newspapers.”).
3. Whether the Buy-Out Owners’ Claim Falls Under the TCPA
The Buy-Out Owners complain about numerous actions and statements
allegedly made by Schimmel during the course of his representation of SOKB and
the Remaining Owners. All of these statements, whether they were made to a
journalist at the Houston Chronicle, attorneys with the City of Galveston, or
members of the Board, concerned or were related to the City’s plan to purchase the
22 Buy-Out Owners’ properties and were made to further Schimmel’s clients’ interest
in ensuring that should the purchase of the properties go forward SOKB would
receive compensation for the loss of future assessments on the purchased
The TCPA defines “exercise of the right to petition” as including “a
communication in connection with an issue under consideration or review by a
legislative, executive, judicial, or other governmental body . . . .” TEX. CIV. PRAC.
& REM. CODE ANN. § 27.001(4)(B). The statute defines “exercise of the right of
free speech” as “a communication made in connection with a matter of public
concern.” Id. § 27.001(3). And a “matter of public concern” is further defined as
“an issue related to health or safety; environmental, economic, or community well-
being; the government; a public official or public figure; or a good, product, or
service in the marketplace.” Id. § 27.001(7). None of these statutory definitions
includes a requirement that the communications be made to a particular individual
or entity, such as a governmental body, to constitute protected conduct.
SOKB and the Remaining Owners retained Schimmel to represent their
interests during the dispute concerning the buy-out of the Buy-Out Owners’
properties. All of Schimmel’s challenged statements, regardless of to whom the
statements were made, related to this dispute and were made “in connection with
an issue under consideration or review” by the City of Galveston and the Texas
23 Department of Public Safety, both of which are governmental bodies. See id.
§ 27.001(4)(B) (defining “exercise of the right to petition”). The Buy-Out
Owners’ action for tortious interference with prospective business relations is
therefore “based on, relates to, or is in response to” Schimmel’s exercise of the
right to petition on behalf of his clients. See id. § 27.003(a) (providing that
defendant may move to dismiss legal action that is based on, relates to, or is in
response to exercise of right to petition).
Moreover, the Buy-Out Owners’ claim implicates not just Schimmel’s
exercise of the right to petition on behalf of his clients but also Schimmel’s
exercise of his right to freedom of speech on behalf of his clients. See id.
§ 27.001(3) (defining “exercise of the right of free speech” as “a communication
made in connection with a matter of public concern”); id. § 27.001(7) (defining
“matter of public concern”). Contrary to the trial court’s determination, in its order
denying Schimmel’s motion to dismiss, that the dispute at issue “concerned
matters disputed between individual parties” and thus “were not made in
connection with a matter of public concern,” Schimmel’s statements all related to
and were made in connection with the purchase by the City of Galveston, a
governmental entity, of five properties in a small subdivision, the purchase of
which would allegedly damage the values of the neighboring properties and would
damage the future revenue stream of SOKB, the homeowners’ association, by
24 denying it the ability to collect future assessments on the bought-out properties. In
addition to relating to the government, the dispute at issue also relates to
“economic or community well-being,” all of which are issues included in the
statutory definition of “matter of public concern” under the TCPA. See id.
§ 27.001(7).
In arguing that their claim is not based on, does not relate to, and is not in
response to Schimmel’s exercise of constitutionally protected rights, the Buy-Out
Owners focus on the fact that their claims “are based upon the independent torts of
fraud, misrepresentations and illegal boycott,” which do not implicate
constitutional protections. That argument, however, is relevant to the second step
of the inquiry—whether the Buy-Out Owners have demonstrated a prima facie
case for relief on every essential element of their tortious interference claim. See
In re Lipsky, 411 S.W.3d at 543 (“But chapter 27 dictates that we should review
evidence concerning whether [the defendants’] statements were defamatory and
thus actionable in the second part of our review, in which [the plaintiff] has the
burden of establishing ‘by clear and specific evidence a prima facie case for each
essential element of the claim in question.’”).
The Buy-Out Owners also argue that Schimmel’s affidavits supporting his
motion to dismiss are incompetent and inadmissible because they state that he is
“personally acquainted with facts stated therein,” instead of stating that they are
25 based on personal knowledge, and that some portions state that Schimmel is
testifying based on information and belief. We first note that, in making a
determination on a motion to dismiss, the trial court is not limited to considering
only supporting and opposing affidavits, but the court “shall consider the
pleadings” as well. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.006(a). Thus,
even if Schimmel’s affidavits do not constitute competent and admissible evidence,
his motion to dismiss does not necessarily fail. Secondly, we agree with Schimmel
that there is no meaningful distinction between “personal knowledge” and
“personal acquaintance,” and to hold otherwise is to impose an unduly restrictive
reading on the personal knowledge requirement for affidavits. See WEBSTER’S
NEW COLLEGIATE DICTIONARY 8 (1956) (defining “acquaintance” as “[p]ersonal
knowledge (of a person or thing) which results from becoming acquainted”). We
therefore conclude that Schimmel’s affidavits are competent and admissible to
support his motion to dismiss.
We hold that Schimmel met his initial burden to show, by a preponderance
of the evidence, that the Buy-Out Owners’ claim is based on, relates to, or is in
response to his exercise of the right to petition and his exercise of the right of free
speech. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(b)(1)–(2).
26 4. Buy-Out Owners’ Prima Facie Case
Because we have held that Schimmel’s statements forming the basis of the
Buy-Out Owners’ tortious interference claim constitute protected conduct under
the TCPA, we must now determine whether the Buy-Out Owners met their burden
to establish, by clear and specific evidence, a prima facie case for every essential
element of their tortious interference claim. See id. § 27.005(c). To prevail on a
claim for tortious interference with prospective business relations, the plaintiffs
must establish that (1) a reasonable probability existed that the plaintiffs would
have entered into a business relationship with a third party; (2) the defendant either
acted with a conscious desire to prevent the relationship from occurring or knew
the interference was certain or substantially certain to occur as a result of the
conduct; (3) the defendant’s conduct was independently tortious or unlawful;
(4) the interference proximately caused the plaintiffs injury; and (5) the plaintiffs
suffered actual damage or loss as a result. See Coinmach Corp. v. Aspenwood
Apartment Corp., 417 S.W.3d 909, 923 (Tex. 2013); Wal-Mart Stores, Inc. v.
Sturges, 52 S.W.3d 711, 726 (Tex. 2001) (holding that plaintiff must establish that
defendant’s conduct was independently tortious or wrongful, meaning that
defendant’s conduct “would be actionable under a recognized tort”). “Conduct
that is merely ‘sharp’ or unfair is not actionable and cannot be the basis for an
27 action for tortious interference with prospective relations . . . .” Sturges, 52
S.W.3d at 726.
One of the essential elements for which the Buy-Out Owners had to
establish a prima facie case is causation, that is, whether Schimmel’s interference
proximately caused their injury, which, in this case, is the City of Galveston’s
failure to close on the purchase of their properties. See Coinmach Corp., 417
S.W.3d at 923 (listing causation as element of tortious interference with
prospective relations claim). As evidence to support their contention that they are
entitled to relief on their tortious interference claim, the Buy-Out Owners
presented to the trial court identical affidavits from each property owner as well as
copies of several e-mails between Schimmel and members of the Board. They did
not present any affidavits or other admissible evidence from any individual at the
City of Galveston, the city attorney’s office, the Texas Department of Public
Safety, which allegedly informed the City to put a hold on the transactions while
officials conducted a new “substantial damage determination” of the Buy-Out
Owners’ properties, or any other official or agency with decision-making authority
concerning the City’s purchase of the properties. Instead, the only evidence of this
element that the Buy-Out Owners produced is the statements in their identical
affidavits that “[b]ut for Schimmel’s misrepresentations and conduct there is a
reasonable probability that all of our buy-out contracts would have closed,” that
28 “Schimmel’s independent misrepresentations and boycott, set out above, prevented
our agreements from closing and the purchase of our properties by the [City],” and
that “Schimmel’s action and conduct, set out above, caused me and the other Buy-
Out Owners money losses . . . that would not have occurred, but for [Schimmel’s]
conduct.”
We agree with Schimmel that the Buy-Out Owners presented only their
conclusory statements, unsupported by any facts, that Schimmel’s actions caused
the City of Galveston to fail to close on the purchases. Evidence of Schimmel’s
conduct, by itself, is not evidence that, with respect to communications made to
other individuals and entities, that conduct caused the City not to purchase the
Buy-Out Owners’ properties. The fact that Schimmel’s alleged conduct occurred
roughly contemporaneously with the City of Galveston’s and the Department of
Public Safety’s consideration of whether to move forward with the purchases does
not establish that Schimmel’s conduct caused the governmental agencies to act as
they did.
Furthermore, in October 2009, the City of Galveston required the Buy-Out
Owners to obtain a release from future assessments, signed by SOKB, as a
condition for the purchases to close, two months before SOKB and the Remaining
Owners hired Schimmel to represent their interests. The Buy-Out Owners contend
that Schimmel tortiously interfered with their prospective contracts with the City of
29 Galveston because he urged the Board not to sign the required releases, and, as a
result of the Board’s refusal to sign the releases, the City did not proceed with the
purchases. Ultimately, however, one of the appellees, Kris Hall, signed the
releases on behalf of SOKB once he became president of the Board, but the City of
Galveston did not close on the purchases.
Additionally, in the federal suit between the Buy-Out Owners and the City
of Galveston and several Department of Public Safety employees the district court
ruled that governmental entities have “wide discretion” in administering the
HMGP and that nothing in the regulations governing the HMGP “dictates that
qualified property owners are entitled to participate in the program or limits the
State’s discretion in determining a property owner’s qualifications for the program
or reviewing those qualifications at any time in the process.” The court thus
concluded that the Buy-Out Owners had no “entitlement to HMGP funds or a
property right to such funds.” Thus, a court has already determined during the
litigation arising out of this dispute that the City of Galveston and the Department
of Public Safety acted within their discretionary authority when they declined to
close on the purchase of the Buy-Out Owners’ properties.
As the Texas Supreme Court has held, “merely inducing a contract obligor
to do what it has a right to do is not actionable interference.” ACS Investors, Inc. v.
McLaughlin, 943 S.W.2d 426, 430 (Tex. 1997); Newspaper Holdings, 416 S.W.3d
30 at 87. Even if Schimmel induced the City of Galveston and the Department of
Public Safety not to close on the purchase of the Buy-Out Owners’ properties, as
the Buy-Out Owners allege, the Buy-Out Owners would have no cause of action
against him for inducing the City or the Department to do that which they had a
right to do—not to purchase the Buy-Out Owners’ houses.
We also note that, in this regard, the Buy-Out Owners have made no
argument, with citation to authority, that SOKB and the Board were legally
required or obligated to sign the releases that the City of Galveston required to
close on the purchases, and they have produced no evidence on such a point. The
Buy-Out Owners have thus presented no evidence that Schimmel induced the
Board to take an action that it was not legally authorized to take. This is, therefore,
not a situation in which Schimmel, as a corporate agent, induced the corporation,
SOKB, to breach a contractual obligation. See, e.g., Holloway v. Skinner, 898
S.W.2d 793, 796 (Tex. 1995) (noting that “a party cannot tortiously interfere with
its own contract” and holding that even when corporate agent induces corporation
to breach contractual obligation, agent will not be held liable for tortious
interference with corporation’s contract unless plaintiff can demonstrate that agent
“acted in a fashion so contrary to the corporation’s best interests that his actions
could only have been motivated by personal interests”).
31 We conclude that the Buy-Out Owners’ supporting evidence does not
establish, by clear and specific evidence, a prima facie case on the essential
element of causation. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(c) (“The
court may not dismiss a legal action under this section if the party bringing the
legal action establishes by clear and specific evidence a prima facie case for each
essential element of the claim in question.”) (emphasis added); Coinmach Corp.,
417 S.W.3d at 923 (stating that interference as proximate cause of plaintiff’s injury
is essential element of tortious interference with prospective relations claim).
We therefore hold that because Schimmel established by a preponderance of
the evidence that the Buy-Out Owners’ tortious interference claim is based on,
relates to, or is in response to his exercise of his right to petition on behalf of his
clients and his right of free speech and because the Buy-Out Owners failed to
establish a prima facie case on every essential element of their tortious interference
claim, the trial court erroneously denied Schimmel’s motion to dismiss under the
TCPA. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(b), (c).
We sustain Schimmel’s first issue.
Award of Costs and Attorney’s Fees
In his second issue, Schimmel contends that because the trial court
erroneously denied his motion to dismiss it also erroneously failed to award him
32 mandatory costs, reasonable attorney’s fees, and expenses incurred in defending
against the claim, as required by the TCPA.
Section 27.009(a)(1) provides that if the court orders dismissal of a legal
action pursuant to the TCPA, the court “shall award to the moving party court
costs, reasonable attorney’s fees, and other expenses incurred in defending against
the legal action as justice and equity may require.” TEX. CIV. PRAC. & REM. CODE
ANN. § 27.009(a)(1) (Vernon Supp. 2013). When an appellate court determines
that the trial court erroneously denied a defendant’s motion to dismiss under the
TCPA, the appropriate disposition of the case is to reverse the trial court’s denial
of the motion and remand for the trial court to conduct further proceedings
pursuant to section 27.009(a) and to order dismissal of the suit. See Newspaper
Holdings, 416 S.W.3d at 90.
The Buy-Out Owners contend that, even if the trial court erroneously denied
Schimmel’s motion to dismiss, remand is not appropriate in this case because
Schimmel’s affidavit on attorney’s fees was “incompetent evidence of
reasonableness and necessity” under the Texas Supreme Court’s decision in El
Apple I, Ltd. v. Olivas.
Olivas involved a claim for sex discrimination and retaliation pursuant to the
Texas Commission on Human Rights Act, under which courts calculate attorney’s
fees using the lodestar method, or the number of hours worked multiplied by
33 prevailing hourly rates. See 370 S.W.3d 757, 758–59 (Tex. 2012). The court
explained that the lodestar method of calculating attorney’s fees involves two
steps: (1) the court first determines the reasonable number of hours spent by
counsel in the case and a reasonable hourly rate for such work; and (2) the court
then multiples the number of such hours by the applicable rate, which yields the
lodestar, which may then be adjusted up or down to reach a reasonable fee for the
case. Id. at 760. The court held that a party seeking attorney’s fees when the
lodestar method is used “bears the burden of documenting the hours expended on
the litigation and the value of those hours.” Id. at 761.
Unlike the attorneys in Olivas, who presented only their aggregate number
of hours spent on the case and their respective billing rates without further
indicating how they spent their time, Schimmel’s attorney’s fees affidavits stated
the date on which work was performed, the number of hours spent, the particular
tasks involved, and the applicable billing rate. See id. at 763 (“[P]roof [of
attorney’s fees] should include the basic facts underlying the lodestar, which are:
(1) the nature of the work, (2) who performed the services and their rate,
(3) approximately when the services were performed, and (4) the number of hours
worked.”); see also City of Laredo v. Montano, 414 S.W.3d 731, 736 (Tex. 2013)
(“In El Apple, we said that a lodestar calculation requires certain basic proof,
including itemizing specific tasks, the time required for those tasks, and the rate
34 charged by the person performing the work.”). We therefore do not agree with the
homeowners that Schimmel’s attorney’s fees affidavits are insufficient under
Olivas.
Finally, even if Schimmel’s attorney’s fees evidence presented with his
motion to dismiss were insufficient to establish the reasonableness and necessity of
the fee amount, because Schimmel is statutorily entitled to an award of attorney’s
fees, the appropriate disposition of this case would be to remand the attorney’s fees
issue back to the trial court for further proceedings. See Alphonso v. Deshotel, 417
S.W.3d 194, 202 (Tex. App.—El Paso 2013, no pet.) (“[G]iven that Appellees are
entitled to attorney’s fees and costs under the [TCPA] because the trial court
granted their motion to dismiss and we have upheld that ruling on appeal, the
proper disposition in this case is to reverse the award of attorney’s fees and costs
[which was not supported by an affidavit admitted into evidence] and remand that
issue back to the trial court for a new trial.”); see also Uhl v. Uhl, 524 S.W.2d 534,
538 (Tex. Civ. App.—Fort Worth 1975, no writ) (“When a [party] is clearly
entitled to attorney’s fees in some amount but where there had been no proof in the
trial court of the amount there may be severance of that issue with remand to the
trial court for a new trial on that issue.”).
We hold that because Schimmel has established his entitlement to dismissal
under the TCPA, he is entitled to “court costs, reasonable attorney’s fees, and other
35 expenses incurred in defending against the legal action as justice and equity may
require.” TEX. CIV. PRAC. & REM. CODE ANN. § 27.009(a)(1); see also Newspaper
Holdings, 416 S.W.3d at 90 (“We therefore reverse the trial court’s denial of the
defendants’ motions to dismiss, and we remand the case to the trial court for
further proceedings as required by the statute and to order dismissal of the suit.”).
We sustain Schimmel’s second issue.
Conclusion
We reverse the trial court’s order denying Schimmel’s motion to dismiss and
remand the case to the trial court for further proceedings relating to Schimmel’s
attorney’s fees, costs, and expenses and to order dismissal of the suit.
Evelyn V. Keyes Justice
Panel consists of Justices Keyes, Bland, and Brown.