COURT OF APPEALS SECOND DISTRICT OF TEXAS FORT WORTH
NO. 02-12-00512-CV
HEAT SHRINK INNOVATIONS, APPELLANTS LLC; KEVIN WOLFE; AND DEBORAH WOLFE
V.
MEDICAL EXTRUSION APPELLEE TECHNOLOGIES-TEXAS, INC., A TEXAS CORPORATION
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FROM THE 367TH DISTRICT COURT OF DENTON COUNTY TRIAL COURT NO. 2011-50408-367
MEMORANDUM OPINION 1
Appellants Heat Shrink Innovations, LLC, Kevin Wolfe, and Deborah Wolfe
appeal the trial court’s judgment against them and in favor of appellee Medical
Extrusion Technologies-Texas, Inc., a Texas corporation (METT) for
1 See Tex. R. App. P. 47.4. misappropriation of trade secrets, breach of fiduciary duty, and conspiracy. We
modify the trial court’s judgment and affirm the judgment as modified.
Background Facts
Tom Bauer operated a company called Medical Extrusion Technologies,
Inc. in California that manufactured tubing used in medical devices such as
catheters. The tubing is made of fluorinated ethylene propylene (FEP) resin that
goes through a two-step process using two machines: an extruder and an
expander. In very simple terms, the FEP is first melted and “extruded” through
the extrusion equipment to create the tubing, and then the tubing is “expanded”
using a heat process in the expansion equipment.
Bauer met Kevin Wolfe 2 in 2002 or 2003 when Wolfe sold machine parts
for extrusion equipment. Sometime in 2004 or 2005, Wolfe suggested that he
and Bauer create a tubing manufacturing company in Texas. The exact
agreement between Wolfe and Bauer is unclear, but it is undisputed that Bauer
and his wife, Rikki, formed the corporation, METT, in 2006 and purchased a
building in Lewisville to house the operation. Bauer and Rikki were the sole
officers and shareholders of METT. Wolfe worked as METT’s manager. Wolfe
did not supply any capital, but Bauer testified that Wolfe “would have a vested
interest after several years of working at the business that could only be realized
at the time we would sell the business.” Wolfe testified that he believed he was
2 For clarity and convenience, we will refer to Kevin Wolfe as “Wolfe” and his wife, Deborah Wolfe, as “Deborah.”
2 supposed to receive a 10% ownership interest after three years, another 10%
after four years, and after five years, he was to have a 30% interest in the
company.
Bauer also hired Deborah as an office manager. Neither Wolfe nor
Deborah signed a noncompete or nondisclosure agreement. METT provided an
employee handbook that stated that it was “not an employment contract and
[was] not intended to create contractual obligations of any kind.” The handbook
contained a nondisclosure section listing various types of confidential information
including customer lists, financial information, proprietary production processes,
technological prototypes, and tooling design concepts. The handbook stated,
“Employees or former employees of [METT] may be subject to legal action for
disclosing of confidential and/or proprietary information including but not limited
to the above examples.”
Wolfe and a consultant named Scott Steele created the concept for
METT’s expander machine based upon similar principles used in the expanders
in Bauer’s California company and Wolfe’s former employer, Parker TexLoc.
Wolfe testified that he designed the concept and provided instruction to Steele,
who manufactured the machine. Steele made two more expanders for METT
based off of the original design.
Wolfe was concerned that he did not have some form of a written contract
with METT, and he spoke with Bauer about his concern in 2005. Bauer
consulted with a law firm about an agreement, but he did not draft one at that
3 time. It was not until December 2010, after Bauer heard of an incident in which
Wolfe had “an outburst” in front of a new employee over dinner regarding his lack
of a written agreement, that Bauer drafted a contract and offered it to Wolfe.
Wolfe told Bauer he would not accept the contract as written. The two had no
further conversations about a written agreement.
Beginning in early 2010, while still employed at METT, Wolfe started
seeking investors to start a company to compete against METT. Wolfe’s friend
Terry Upchurch agreed to supply the initial capital for Wolfe’s company. Wolfe
contacted METT’s customer Creganna-Tactx Medical and asked if it would be
interested in changing suppliers. Creganna’s representative, Brent Anderson,
agreed and supplied a letter stating that Creganna would transfer its business to
Wolfe’s company. Anderson also agreed to invest in Wolfe’s company.
In late 2010, Wolfe hired a mechanical engineer named Robert Terzini to
design expander machines for his new company and Allen Meyer to fabricate the
machines. Without Bauer’s knowledge, Wolfe brought Terzini and Meyer to
METT’s Lewisville facility to look at METT’s expanders as examples of machines
that Wolfe wanted to build.
Wolfe incorporated Heat Shrink in February 2011. In April 2011, Wolfe
and Deborah resigned from METT. Heat Shrink’s first expander was completed
in September 2011, and the company began filling customer purchase orders in
October 2011. Heat Shrink used the same type of FEP resin that METT used.
There was a limited amount of resin product available to purchase, and when the
4 manufacturer could not fill METT’s purchase requests, Bauer blamed Heat
Shrink.
METT sued the Wolfes and Heat Shrink for misappropriation of trade
secrets, breach of fiduciary duty, violations of the Texas Theft Liability Act, unfair
competition, unjust enrichment, tortious interference with business relationships,
civil conspiracy, and conversion. 3 Bauer also sought a temporary restraining
order and temporary and permanent injunctive relief.
A jury found that Heat Shrink and Wolfe had misappropriated METT’s
trade secrets, that Wolfe had breached his fiduciary duty to METT, that Heat
Shrink had knowingly participated in Wolfe’s breach of fiduciary duty, and that
Wolfe, Deborah, and Heat Shrink had conspired to damage METT. They
awarded METT $15,000 in damages for misappropriation of trade secrets,
$600,000 in past lost profits and $94,000 for the cost of the expander machines
for breach of fiduciary duty, and $1,000 in exemplary damages. On April 10,
2012, the trial court entered a final judgment on the jury’s verdict stating that
Heat Shrink and the Wolfes were jointly and severally liable to METT for
$694,000 in damages, that Heat Shrink was solely liable for $15,000 in damages,
and that Wolfe was liable for $1,000 in exemplary damages. The judgment also
3 Bauer also sued the Wolfes for an unrelated loan of $7,400, which the Wolfes admitted they owed and from which they do not appeal. The Wolfes filed counterclaims against METT for fraud, promissory estoppel, and breach of oral contract. The trial court’s final judgment ordered that the Wolfes take nothing on their counterclaims, and the Wolfes do not appeal that part of the judgment
5 permanently enjoined Wolfe and Heat Shrink from “soliciting FEP heat shrink
tubing business from, or providing FEP heat shrink tubing to” a list of METT’s
customers.
Heat Shrink filed motions for new trial and to modify the judgment, which
sought to lift the permanent injunction. After a hearing on the motions, the trial
court granted Heat Shrink’s motion for new trial. It then amended its order,
stating, “The Court’s grant of a new trial extends solely to the damage question
6(a) of the Charge as answered by the Jury; the remainder of the Judgment
entered April 10, 2012 is unaffected.” Question 6(a) of the jury charge asked
what amount of past lost profits METT had sustained.
METT filed a motion to enter an amended final judgment, seeking a
judgment awarding it all of the other damages the jury had awarded (excluding
the past lost profits for which the trial court had granted a new trial) and the
permanent injunctive relief. It also filed a motion to sever the issue of lost profit
damages from the case. The trial court filed an order vacating its orders for new
trial and reinstating the original final judgment of April 10, 2012. Heat Shrink and
the Wolfes then filed this appeal.
Discussion
I. Complete record
Before we address the appellants’ issues, we must first address METT’s
contention that the appellants did not provide this court with a complete record
6 and therefore “all of [the a]ppellants’ issues should not be considered and should
be denied.”
During the trial, METT presented testimony from Brent Anderson, manager
of Creganna, in the form of a videotaped deposition. The court reporter asked
whether any party requested that she make a contemporaneous record of the
testimony, and Heat Shrink and METT both waived the making of the record. 4
METT did not state on the record what sections of the deposition it showed the
jury. Heat Shrink also read portions of Anderson’s testimony and stated that it
would “provide this part in writing also to the court reporter.” There is no copy of
Anderson’s testimony in the record.
In November 2013, Heat Shrink sent a letter to the court reporter asking
that a supplemental reporter’s record be made containing the “omitted” Anderson
testimony. The letter contained a copy of the deposition with 787 lines
highlighted that Heat Shrink stated were played or read to the jury. METT filed a
motion to strike the supplemental record, which we denied as moot because no
supplemental record had been filed at the time.
In December 2013, Heat Shrink filed in the trial court a document entitled
“Deposition Transcript of Brent Anderson Presented to the Jury on December 14,
2011.” It again contained, as an exhibit, excerpts from Anderson’s deposition
4 Neither Wolfe nor Deborah made a statement on the record regarding the making of the record, but neither objected that a record was not made.
7 that Heat Shrink claims were shown to the jury. METT filed a motion to strike this
supplemental record, which we granted.
METT argues that because Anderson’s testimony does not appear in the
record, we must presume that the testimony supports the judgment. See Prather
v. McNally, 757 S.W.2d 124, 125 (Tex. App.—Dallas 1988, no writ) (addressing
former rule of appellate procedure 53(d)); see also Tex. R. App. P. 34.6(c), cmt.
(stating that former rules 53(b), (d), and (e) were merged into rule 34.6(c)).
Current rule 34.6(c) applies when the appellant requests a partial reporter’s
record. See Tex. R. App. P. 34.6(c)(1) (explaining the effect of requesting a
partial record on the appellant’s issues on appeal). Heat Shrink requested and
received the complete reporter’s record in this case. Rule 34.6(c) is therefore
inapplicable. See W&F Transp. Inc. v. Wilheim, 208 S.W.3d 32, 39–40 (Tex.
App.—Houston [14th Dist.] 2006, no pet.) (“The omitted material simply did not
exist to be included in the record because the trial court had dismissed the court
reporter. This situation differs markedly from that contemplated by Rule 34.6(c),
in which one party designates and submits only certain portions of an existing
reporter’s record . . . .”).
Heat Shrink has attempted a number of ways to get the testimony into the
record after the fact. But nothing in our rules allows for the creation of a new trial
court record. See Gerdes v. Marion State Bank, 774 S.W.2d 63, 65 (Tex. App.—
San Antonio 1989, writ denied) (“[A]fter an appeal has been perfected, the trial
court may not change the record that existed at the time the judgment was
8 granted.”); see also Richards v. Comm’n for Lawyer Discipline, 35 S.W.3d 243,
251 (Tex. App.—Houston [14th Dist.] 2000, no pet.) (“To allow supplementation
at this late date would create a new trial court record.”). The parties failed to note
on the record what portions of the testimony were heard by the jury.
Parties are not required to have a contemporaneous record made every
time deposition testimony is submitted into evidence. See Tex. R. App. P.
13.1(a) (stating that a court reporter does not have to make a record of a
proceeding when excused by agreement of the parties). However, parties must
exercise diligence in ensuring that a sufficient record is before the court on
appeal. See Piotrowski v. Minns, 873 S.W.2d 368, 370 (Tex. 1993) (“At every
stage of the proceedings in the trial court, litigants must exercise some diligence
to ensure that a record of any error will be available in the event that an appeal
will be necessary.”). In this case, the parties agreed to forego a
contemporaneous record with the apparent intention of providing the court
reporter with the deposition transcript of the sections presented to the jury. Their
failure to see that the transcripts made it into the record leaves this court with a
complete yet insufficient record to review. See Michiana Easy Livin’ Country, Inc.
v. Holten, 168 S.W.3d 777, 783 (Tex. 2005) (“If . . . an evidentiary hearing took
place in open court, then a complaining party must present a record of that
hearing to establish harmful error.”).
The missing Anderson testimony does not destroy the appellants’ ability to
appeal as METT suggests. However, with an insufficient record of the evidence
9 presented at trial, we are not in a position to evaluate the appellants’ challenges
to the sufficiency of the evidence, and we must overrule those parts of the
appellants’ issues. See Travelers Indem. Co. of Rhode Island v. Starkey, 157
S.W.3d 899, 904–05 (Tex. App.—Dallas 2005, pet. denied) (overruling
appellant’s sufficiency challenges when an exhibit on which the trial court relied
was not included in the appellate record). We will review those arguments that
do not involve evidentiary evaluations.
II. Past lost profits
In their first issue, the appellants argue that the trial court erred by
awarding METT damages for past lost profits. They argue that METT failed to
disclose its damages calculation. Prior to trial, Heat Shrink filed a motion in
limine seeking to prohibit METT from bringing before the jury “[a]ny calculation of
[its] alleged damages or attorneys’ fees, because the same has not been
disclosed to Defendants as required by Tex. R. Civ. P. 194.2(d).” See Tex. R.
Civ. P. 194.2(d) (“A party may request disclosure of . . . the amount and any
method of calculating economic damages.”). Heat Shrink attached to its motion
METT’s fourth supplemental response to its request for disclosures under rule
194.2(d). METT’s response stated,
Plaintiff anticipates that its damages model will include amounts for lost profits in the past and in the future, as well as attorneys’ fees on some causes of action and exemplary damages on other causes of action. Plaintiff has lost approximately two-thirds of its business from its biggest customer, Creganna-Tactx, as well as significant work from other customers, and the value of the company is considerably less than it was before Defendants’ actions. Plaintiff
10 also seeks to recover damages for the expenses incurred by it in creating innovations to its expansion machines, which have been copied by Defendants or at the Defendants’ behest by non- parties . . . .
At the hearing on the motion in limine, Heat Shrink again argued that
METT had not disclosed its damages calculation and pointed out that “the only
thing they’ve disclosed is cost approximating in excess of $150,000 for creating
[i]nnovations to its expansion machines.” The trial court asked METT, “To the
extent that 194.2(d) requests specifically the amount, even assuming that the
method of calculating economic damages, if that’s in there, I’ll say, or the
explanation of economic damages is kind of how it reads, other than that
$150,000 figure, where is the amount?” METT’s counsel responded, “I don’t
think there’s an amount in there other than the $150,000.” METT’s counsel
noted that in Bauer’s deposition, he “talk[ed] about the gross sales being 5.5
million, but I—I don’t think that gets to the calculation of actual damages that
we’re seeking.” The trial court first granted the motion as to economic damages,
but then after a discussion on attorneys’ fees, stated that the portion of the
motion pertaining to economic damages was denied and that the parties must
approach the bench before “any testimony as to matters not set forth in the
request for disclosures or the supplemental responses to the request for
disclosure[s].”
During trial, METT tried to elicit testimony from Bauer regarding how much
profit METT had lost from former customers, and Heat Shrink objected. The trial
11 court held another hearing outside the presence of the jury regarding what
testimony on damages could be elicited. METT again pointed to the gross sales
amount of $5.5 million and to Bauer’s deposition in which he stated that his profit
margin was fifty percent. At the end of the hearing, the trial judge said,
All right. I’m not sure how clear this will be, but my intention is to allow the Plaintiff to elicit responses limited solely to the response made under 194.2(d) of the fourth supplemental response to Defendant’s request for disclosure. Also, under 193.5, allowing supplementation by methods not solely by way of disclosure, only those statements made in the deposition.
For example, there not being any calculation, any method at all regarding, I’ll say, net lost profits—maybe profits itself assumes net—that which was not provided, supplemented, or responded to, or the answer was no[t] in the deposition, and further not supplemented by way of the fourth amended request for disclosure will not be permitted.
Later during trial, Bauer testified that he had not made any calculation of lost
profits. When asked what damages METT sought against Heat Shrink and the
Wolfes, Bauer said, “It would be the diminished sales of Creganna-Tactx.”
The amount of lost profits must be shown by competent evidence with
reasonable certainty. Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84
(Tex. 1992). “What constitutes reasonably certain evidence of lost profits is a
fact intensive determination. At a minimum, opinions or estimates of lost profits
must be based on objective facts, figures, or data from which the amount of lost
profits can be ascertained.” Id. “The plaintiff bears the burden of providing
evidence supporting a single complete calculation of lost profits, which may often
12 require certain credits and expenses.” ERI Consulting Eng’rs, Inc. v. Swinnea,
318 S.W.3d 867, 878 (Tex. 2010). Further,
A party who fails to make, amend, or supplement a discovery response in a timely manner may not introduce in evidence the material or information that was not timely disclosed . . . , unless the court finds that: (1) there was good cause for the failure to timely make, amend, or supplement the discovery response; or (2) the failure to timely make, amend, or supplement the discovery response will not unfairly surprise or unfairly prejudice the other parties.
Tex. R. Civ. P. 193.6(a).
METT did not provide the appellants with a “single complete calculation of
lost profits.” It only provided evidence of lost sales, which is not the same thing.
See Holt Atherton, 835 S.W.2d at 84 (“[L]ost income is not the correct measure
of damages.”); Kellmann v. Workstation Integrations, Inc., 332 S.W.3d 679, 685
(Tex. App.—Houston [14th Dist.] 2010, no pet.) (holding that evidence of gross
revenue or gross profits, rather than net revenue, did not establish lost profits).
During trial, it pointed to two separate sections of Bauer’s deposition and
suggested that Heat Shrink was responsible for putting the two answers together
and concluding that they formed METT’s damage model. It was not the
appellants’ burden, but METT’s. See ERI Consulting, 318 S.W.3d at 878. METT
did not show why its failure to provide the calculation was not unfair surprise or
prejudice to the appellants. See Tex. R. Civ. P. 193.6(a); Miller v. Kennedy &
Minshew, Prof’l Corp., 142 S.W.3d 325, 348 (Tex. App.—Fort Worth 2003, pet.
denied) (“The burden of establishing good cause or lack of unfair prejudice or
13 surprise is on the party seeking to call the witness, and the trial court’s finding of
good cause or lack of prejudice or surprise must be supported by the record.”).
Because METT did not provide a single complete calculation of lost profits as
Heat Shrink had requested, it was prohibited from introducing evidence on lost
profits. See Tex. R. Civ. P. 193.6(a). Because any evidence of lost profits
admitted was in error, 5 the award of lost profits predicated on such evidence was
likewise in error. We therefore sustain the appellants’ first issue.
III. Standing
In their second issue, the appellants argue that METT lacked standing to
recover damages for the costs of the expansion machine because Medical
Extrusion Technologies, Inc. (the California company) paid for the machine. To
have standing, a plaintiff must be personally aggrieved, and his alleged injury
must be concrete and particularized, actual or imminent, and not hypothetical.
DaimlerChrysler Corp. v. Inman, 252 S.W.3d 299, 304–05 (Tex. 2008). Jury
question 6 asked what sum of money would fairly and reasonably compensate
METT for damages it suffered from Wolfe’s breach of his fiduciary duty to METT.
Subsection (c) asked for the amount of damages METT suffered for the “[o]riginal
cost to [METT] of the expansion machine(s) that [Heat Shrink] owns and that
were based on [METT’s] design, if any.” The appellants argue that METT was
5 METT argues that the appellants did not object to some of Bauer’s testimony on lost profits. The testimony to which METT points regards METT’s lost sales, which we have already noted is not a proper calculation of lost profits. See Kellmann, 332 S.W.3d at 685.
14 not personally aggrieved because it did not pay for the development or
manufacture of the machines.
A party may be personally aggrieved if it has a legal or equitable interest in
the controversy. See Goswami v. Metro. Sav. & Loan Ass’n, 751 S.W.2d 487,
489 (Tex. 1988) (holding that plaintiff had standing to contest sale of property in
which he had an equitable interest); $574.37 U.S. Coin & Currency v. State, No.
02-06-00434-CV, 2008 WL 623793, at *6 (Tex. App.—Fort Worth Mar. 6, 2008,
no pet.) (mem. op.) (holding that although vehicle was owned by another person,
plaintiff had equitable interest in truck to confer standing to contest forfeiture);
First Nat. Bank of El Campo, TX v. Buss, 143 S.W.3d 915, 922 (Tex. App.—
Corpus Christi 2004, pet. denied) (noting that a person in possession of a vehicle
who is the intended owner of the vehicle has an equitable possessory right in the
vehicle even if that person is not named on the vehicle’s title). The appellants do
not challenge that the machines are in METT’s possession for its exclusive use
and thus have not challenged whether METT has an equitable interest in them
such that it would confer standing. Because METT has a legal or equitable
interest in the expander machines, it has standing to pursue its claim against the
appellants. We overrule the appellants’ second issue.
IV. Trade secrets
In their third issue, the appellants argue that METT failed to prove that it
owned any trade secrets. As this issue concerns the sufficiency of the evidence
15 and because we cannot evaluate all of the evidence introduced at trial, we must
overrule this issue. See Starkey, 157 S.W.3d at 904–05.
V. Knowing participation
In their fourth issue, the appellants argue that the trial court erred by
finding that Heat Shrink was jointly and severally liable for damages from Wolfe’s
breach of fiduciary duty through its knowing participation in Wolfe’s breach. They
contend that chapter 33 of the civil practice and remedies code requires the
factfinder to determine the proportionate responsibility of all defendants for tort
claims. See Tex. Civ. Prac. & Rem. Code Ann. §§ 33.001–.003 (West 2008).
Knowing participation or aiding and abetting, while a distinct cause of
action, is not actionable unless a third party commits a tort. See W. Fork
Advisors, LLC v. SunGard Consulting Servs., LLC, 487 S.W.3d 917, 921 (Tex.
App.—Dallas Aug. 5, 2014, no. pet. h.) (“[T]he supreme court has specifically
dealt with aiding and abetting—as it has dealt with conspiracy—as a ‘dependent’
claim, which is ‘premised on’ an underlying tort. Thus, when an underlying tort
fails, there can be [no] aiding and abetting claim related to that failed tort.”) (citing
Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 582–83 (Tex.
2001)). In this case, the pleadings alleged and the jury found that Heat Shrink’s
liability for knowing participation was wholly dependent upon and wholly derived
from Wolfe’s breach of his fiduciary duty to METT. See Kastner v. Jenkens &
Gilchrist, P.C., 231 S.W.3d 571, 580 (Tex. App.—Dallas 2007, no pet.) (“When a
third party knowingly participates in the breach of a fiduciary duty, the third party
16 becomes a joint tortfeasor and is liable as such.”) (citing Kinzbach Tool Co. v.
Corbett–Wallace Corp., 138 Tex. 565, 574, 160 S.W.2d 509, 513–14 (Tex.
1942)). It is unnecessary to submit a question to the jury to apportion liability;
Heat Shrink’s liability is Wolfe’s liability. Cf. Rosell v. Ctr. W. Motor Stages, 89
S.W.3d 643, 656–57 (Tex. App.—Dallas 2002, pet. denied) (noting in the
negligent entrustment and negligent hiring context that “the owner/employer is
liable for the acts of the driver, and the degree of negligence of the
owner/employer is of no consequence”). We therefore cannot say that the trial
court erred by failing to apportion liability.
The remainder of the appellants’ fourth issue challenges the sufficiency of
the evidence, and thus, we do not address it. See Starkey, 157 S.W.3d at 904–
05. We therefore overrule the appellants’ fourth issue.
VI. Permanent injunction
In their fifth issue, the appellants argue that the trial court erred by granting
a permanent injunction. Specifically, they argue that METT had an adequate
remedy at law, that the permanent injunction is too vague, and that it is an
impermissible prior restraint on speech.
To be entitled to a permanent injunction, the party seeking the injunction
must plead and prove (1) a wrongful act, (2) imminent harm, (3) irreparable
injury, and (4) absence of an adequate remedy at law. See Indian Beach Prop.
Owners Ass’n v. Linden, 222 S.W.3d 682, 690 (Tex. App.—Houston [1st Dist.]
2007, no pet.). A remedy is “adequate,” for purposes of determining entitlement
17 to an injunction, when it is complete, practical, and efficient to the prompt
administration of justice. Matagorda Cnty. Hosp. Dist. v. City of Palacios, 47
S.W.3d 96, 103 (Tex. App.—Corpus Christi 2001, no pet.). An injunction must be
as definite, clear, and precise as possible and, when practicable, it should inform
the defendant of the acts he is restrained from doing without calling on him for
inferences or conclusions about which persons might well differ and without
leaving anything for further trial. Webb v. Glenbrook Owners Ass’n, Inc., 298
S.W.3d 374, 384 (Tex. App. —Dallas 2009, no pet.); see Tex. R. Civ. P. 683. An
injunction should be broad enough to prevent a repetition of the “evil” sought to
be corrected, but not so broad as to enjoin a defendant from lawful activities.
Webb, 298 S.W.3d at 384. A trial court abuses its discretion by granting an
injunction when it misapplies the law to established facts or when the evidence
does not reasonably support the determination or the existence of a probable
right of recovery or probable injury. See Marketshare Telecom, L.L.C. v.
Ericsson, Inc., 198 S.W.3d 908, 916 (Tex. App. —Dallas 2006, no pet.).
“As a general rule, in the absence of an enforceable agreement not to
compete, an employer is not entitled to an injunction preventing a former
employee from soliciting the employer’s clients.” Rugen v. Interactive Bus. Sys.,
Inc., 864 S.W.2d 548, 551 (Tex. App.—Dallas 1993, no writ); see also Gonzales
v. Zamora, 791 S.W.2d 258, 268 (Tex. App.—Corpus Christi 1990, no writ) (“An
employer is not entitled to an injunction preventing a former employee from
soliciting employer’s clientele as it existed on the day of employee’s termination
18 of employment, where there is no agreement not to compete.”). However, a
former employee, even without a written contract, cannot use the former
employer’s confidential information or trade secrets for his own advantage to the
detriment of his former employer. Rugen, 864 S.W.2d at 551.
The injunction in this case does not bar Wolfe and Heat Shrink from using
METT’s confidential information; it permanently enjoins Wolfe and Heat Shrink
from “soliciting FEP heat shrink tubing business from, or providing FEP heat
shrink tubing to” a list of METT’s customers. The injunction in this case therefore
enjoins a far broader range of activity than is proper or necessary to protect
METT’s interests and infringes on Wolfe’s and Heat Shrink’s right to compete.
See Miller Paper Co. v. Roberts Paper Co., 901 S.W.2d 593, 602 (Tex. App.—
Amarillo 1995, no writ) (noting as important when upholding injunction that it
allowed appellants to compete with former employer and only prohibited their use
of employer’s confidential information).
But even assuming that the injunction was proper under the circumstances
of this case, the terms of the injunction are too vague to be enforceable. The
injunction prohibits sales to a list of names, but provides no other identifying
information. Some names appear to be companies, but others are names of
individual persons. For example, the injunction enjoins sales to “Julie McCreary”
and “Richard Wolf.” The list also includes “Farm” and “Calypso” with no further
clues to their identities. That cannot be said to be “as definite, clear, and precise
as possible.” See Computek Computer & Office Supplies, Inc. v. Walton, 156
19 S.W.3d 217, 222–23 (Tex. App.—Dallas 2005, no pet.) (holding that injunction
lacked specificity when it did not list clients that Computek could not contact and
stating that the lack of specificity could not be cured “by any knowledge
Computek may have outside the permanent injunction”). The injunction is
therefore impermissibly vague. We sustain the appellants’ fifth issue.
VII. Double recovery
In their sixth issue, the appellants argue that the trial court’s final judgment
resulted in an improper double recovery for METT. A double recovery exists
when a plaintiff obtains more than one recovery for the same injury. See Stewart
Title Guar. Co. v. Sterling, 822 S.W.2d 1, 7 (Tex. 1991).
The trial court awarded METT $15,000 for misappropriation of its trade
secrets and $94,000 for the cost of the expansion machines for breach of
fiduciary duty. 6 The appellants argue that the same course of conduct forms the
basis for all of METT’s causes of action against them—that is, that Wolfe and
Heat Shrink used METT’s confidential and proprietary information to METT’s
financial detriment. However, the appellants do not explain how both causes of
action address the same financial injury. In its petition, METT identified its trade
secrets and confidential and proprietary information as including “computer
programs and raw material/labor planning requirements, customer lists, financial
information, pending projects and proposals, proprietary production processes,
6 The trial court also awarded $600,000 in lost profits for breach of fiduciary duty, which we have already held to be in error.
20 production log information, technological data, technological prototypes, internal
business payroll and employee contact information.” The award of $94,000 was
clearly for the injury resulting from using METT’s confidential or proprietary
information relating to the expander design. But the $15,000 award could have
been for any other financial loss that METT suffered from the loss of any other of
its trade secrets. We have stated that we cannot evaluate all of the evidence
introduced at trial to determine what, if any, trade secrets METT proved it owned.
We therefore overrule this issue. See Starkey, 157 S.W.3d at 904–05.
VIII. Motion to withdraw
In their seventh issue, the appellants argue that the trial court erred by
granting the Wolfes’ attorney’s motion to withdraw and by denying a continuance.
The Wolfes’ trial counsel filed a motion to withdraw on November 3, 2011.
The trial court heard the motion on December 1, 2011. At the same hearing, the
court heard METT’s motion for continuance. METT argued that it had been
unable to take the defendants’ depositions. 7 Heat Shrink opposed the motion for
continuance on a number of grounds. It argued that it did not receive proper
notice, that it violated the trial court’s standing orders, that the motion did not
meet the requirements of rule 252, and that this was METT’s second request for
a continuance. See Tex. R. Civ. P. 21, 252. The trial court granted the Wolfes’
counsel’s motion to withdraw, stating that counsel could withdraw after he filed a
7 METT’s motion for continuance does not appear in the record before us.
21 response to METT’s pending motion for summary judgment and represented the
Wolfes at their upcoming depositions. It denied METT’s motion for continuance.
On appeal, the Wolfes argue that they joined in METT’s motion for
continuance. The record shows only that the Wolfes stated that they did not
oppose the motion and that they would suffer no harm or prejudice if it were
granted. 8 To preserve a complaint for appellate review, a party must have
presented to the trial court a timely request, objection, or motion that states the
specific grounds for the desired ruling, if they are not apparent from the context
of the request, objection, or motion. Tex. R. App. P. 33.1(a); see also Tex. R.
Evid. 103(a)(1). If a party fails to do this, error is not preserved, and the
complaint is waived. Bushell v. Dean, 803 S.W.2d 711, 712 (Tex. 1991) (op. on
reh’g).
Not opposing a motion is not the same thing as joining the motion and
requesting relief. The Wolfes did not request a continuance in the trial court and
thus waived the issue. See Bushell, 803 S.W.2d at 712; Addicks v. Sickel, No.
02-03-00218-CV, 2005 WL 737419, at *3 (Tex. App.—Fort Worth Mar. 31, 2005,
no pet.) (mem. op.) (holding that appellant waived complaint that trial was set by
failing to seek a continuance or otherwise affording the trial court an opportunity
to grant relief). We overrule their seventh issue.
8 Regarding the motion to withdraw, Heat Shrink’s attorney stated at the hearing, “My understanding is that the Wolfes oppose the motion. They’re here today back in the back row (indicating). We don’t represent the Wolfes, but we do know that they oppose the motion because they sought counsel.”
22 IX. Breach of fiduciary duty
In their eighth issue, the appellants argue that METT failed to prove that
Wolfe violated a fiduciary duty to it. The appellants argue that at-will employees
owe no fiduciary duty to their employers as a matter of law and that Wolfe, as an
at-will employee, was free to make preparations to compete with METT while still
employed by it.
The issue is not whether an at-will employee may plan to compete with his
employer while still employed with it, as that is clear. See Abetter Trucking Co. v.
Arizpe, 113 S.W.3d 503, 510 (Tex. App.—Houston [1st Dist.] 2003, no pet.) (“An
at-will employee may properly plan to compete with his employer, and may take
active steps to do so while still employed.”). The issue is what constitutes
“proper” planning and whether improper planning by an employee violates a
fiduciary duty to his employer. See Johnson v. Brewer & Pritchard, P.C., 73
S.W.3d 193, 202 (Tex. 2002) (noting that there are “certain limitations on the
conduct of an employee who plans to compete with his employer”) (quoting
Augat, Inc. v. Aegis, Inc., 409 Mass. 165, 565 N.E.2d 415, 419 (1991)). The
agency relationship between employer and employee creates certain fiduciary
duties. See id. at 201; Miller Paper, 901 S.W.2d at 600 (“Upon the formation of
an employment relationship certain duties arise apart from any written contract.”).
Those duties include the employee’s obligation not to use confidential or
proprietary information acquired during the relationship in a manner adverse to
the employer, even after the employment relationship ends. See Cuidado
23 Casero Home Health of El Paso, Inc. v. Ayuda Home Health Care Servs., LLC,
404 S.W.3d 737, 753 (Tex. App.—El Paso 2013, no pet.) (“[A] breach of fiduciary
duty can be based on an employee’s use of an employer’s confidential or
proprietary information in a manner adverse to the employer.”); RenewData
Corp. v. Strickler, No. 03-05-00273-CV, 2006 WL 504998, at *12 (Tex. App.—
Austin Mar. 3, 2006, no pet.) (mem. op.) (discussing employee’s “post-
termination fiduciary duty” not to use employer’s confidential information); Miller
Paper, 901 S.W.2d at 600 (noting that employee’s duty not to use confidential
information against employer “survives termination of employment”). This duty is
imposed upon employees even when there is no contractual obligation. Fox v.
Tropical Warehouses, Inc., 121 S.W.3d 853, 858 (Tex. App.—Fort Worth 2003,
no pet.) (“Even in the absence of an enforceable nondisclosure agreement, a
former employee may not use confidential information or trade secrets the
employee learned in the course of his employment for his own advantage and to
the detriment of his employer.”).
Thus, if Wolfe used METT’s confidential and proprietary information in his
preparations for starting Heat Shrink, he went beyond the bounds of proper
planning to compete and breached his fiduciary duty to METT. See Cuidado
Casero, 404 S.W.3d at 753 (reversing summary judgment in favor of employee
on employer’s breach-of-fiduciary-duty claim based on employee’s use of
confidential or proprietary information); RenewData, 2006 WL 504998, at *12
(upholding jury’s finding that former employee breached his post-termination
24 fiduciary duty to former employer by disclosing former employer’s confidential
information); Miller Paper, 901 S.W.2d at 602 (noting that former employee was
free to compete with former employer “but not with the material developed by or
on behalf of” former employer). Whether Wolfe did violate his fiduciary duty to
METT was a fact issue for the jury to decide. Abetter Trucking Co., 113 S.W.3d
at 508 (“At a trial on the merits, whether a party has breached a fiduciary duty is
not decided as a matter of law; it is, instead, a fact issue for the jury’s
determination.”). Because we cannot evaluate the sufficiency of the evidence
supporting the jury’s finding that Wolfe breached his fiduciary duty, we overrule
the appellants’ eighth issue. See Starkey, 157 S.W.3d at 904–05.
IX. Conspiracy
In their ninth issue, the appellants argue that the trial court erred by finding
that Deborah and Heat Shrink were jointly and severally liable through
conspiracy for damages from Wolfe’s breach of fiduciary duty.
The essential elements of a civil conspiracy are “(1) two or more persons;
(2) an object to be accomplished; (3) a meeting of the minds on the object or
course of action; (4) one or more unlawful, overt acts; and (5) damages as the
proximate result.” Cotten v. Weatherford Bancshares, Inc., 187 S.W.3d 687, 701
(Tex. App.—Fort Worth 2006, pet. denied). Question No. 14 of the jury charge
asked,
Was KEVIN WOLFE part of a conspiracy that damaged [METT]?
25 To be part of a conspiracy, KEVIN WOLFE and another person or persons or entity must have had knowledge of, agreed to, and intended a common objective or course of action that resulted in the damages to [METT]. One or more persons involved in the conspiracy must have performed some act or acts to further the conspiracy.
Question Nos. 15 and 16 asked the same question about Deborah and Heat
Shrink. There was no separate question on damages resulting from the
conspiracy.
In one of their arguments under this issue, the appellants claim that METT
failed to establish a finding that it suffered damages as a result of the conspiracy.
That is, damages “are not presumed from the existence of a conspiracy.” Hart v.
Moore, 952 S.W.2d 90, 98 (Tex. App.—Amarillo 1997, pet. denied); see Belz v.
Belz, 667 S.W.2d 240, 243 (Tex. App.—Dallas 1984, writ ref’d n.r.e.) (“[T]he
mere fact that the existence of a conspiracy is proved is not, in and of itself, a
recoverable harm.”). The damages proximately resulting from the conspiracy
must be proven like any other element. See ERI Consulting, 318 S.W.3d at 881
(upholding take-nothing judgment on claim of conspiracy when the damages
awarded could not be the proximate result of a conspiracy).
In this case, the appellants were found to be jointly and severally liable for
the damages resulting from Wolfe’s breach of fiduciary duty. However, “it does
not automatically follow that whatever damages were caused by the [underlying
tort] were also attributable to the ‘conspiracy’ the jury found.” THPD, Inc. v.
Continental Imports, Inc., 260 S.W.3d 593, 605 (Tex. App.—Austin 2008, no
26 pet.). Without a finding on the amount of damages caused by the conspiracy,
METT failed to prove an essential element of its cause of action. See Belz, 667
S.W.2d at 243 (“[I]n order to recover a judgment for civil conspiracy there must
be a finding of damages resulting from that conspiracy.”). Joint and several
liability for Wolfe’s breach of fiduciary duty cannot be predicated on the
conspiracy cause of action.
However, as discussed above, the jury found in a separate question that
Heat Shrink knowingly participated in Wolfe’s breach of his fiduciary duty to
METT. Knowing participation is a separate ground supporting the imposition of
joint and several liability on Heat Shrink for the damages resulting from Wolfe’s
breach. See Kastner, 231 S.W.3d at 580 (“When a third party knowingly
participates in the breach of a fiduciary duty, the third party becomes a joint
tortfeasor and is liable as such.”). So although we sustain the appellants’ ninth
issue, it does not affect our reasoning under the appellants’ fourth issue as to
Heat Shrink.
Conclusion
Having sustained the appellants’ first issue, we reverse the award of
$600,000 in lost profit damages and modify the trial court’s award of $694,000 to
$94,000. Having sustained the appellants’ fifth issue, we dissolve the permanent
injunction and modify the trial court’s final judgment to omit the permanent
injunction. Having sustained the appellants’ ninth issue, we modify the trial
court’s judgment to omit Deborah Wolfe as liable for the $94,000 damage award.
27 Having overruled the appellants’ second, third, fourth, sixth, seventh, and eighth
issues, we affirm the trial court’s judgment as modified.
/s/ Lee Gabriel
LEE GABRIEL JUSTICE
PANEL: MCCOY, MEIER, and GABRIEL, JJ.
MEIER, J., filed a concurring and dissenting opinion.
DELIVERED: October 16, 2014