Joshua Arey and Rogina Kimmons v. the Shipman Agency, Inc.

• Court: Court of Appeals of Texas
• Decided: May 1, 2019
• Docket: 10-18-00100-CV
• Status: Published

Opinion

IN THE TENTH COURT OF APPEALS

No. 10-18-00100-CV

JOSHUA AREY AND ROGINA KIMMONS, Appellants v.

THE SHIPMAN AGENCY, INC., Appellee

From the 85th District Court Brazos County, Texas Trial Court No. 17-002869-CV-85

MEMORANDUM OPINION

Joshua Arey and Rogina Kimmons were sued by their former employer, The

Shipman Agency, Inc., (Shipman), after Kimmons filed a claim for unemployment. Arey

and Kimmons filed a motion to dismiss the lawsuit under the Texas Citizens Participation

Act (TCPA). TEX. CIV. PRAC. & REM. CODE ANN. § 27.001, et sec. (West 2014). After a

hearing, the motion was denied. Because the trial court erred in denying the motion, the

trial court’s order is reversed and this appeal is remanded for further proceedings

consistent with this opinion. THE TCPA

The TCPA protects citizens who associate, petition, or speak on matters of public

concern from legal actions that seek to intimidate or silence them. See State ex rel. Best v.

Harper, 562 S.W.3d 1, 13 (Tex. 2018); Youngkin v. Hines, 546 S.W.3d 675, 679 (Tex. 2018); In

re Lipsky, 460 S.W.3d 579, 584 (Tex. 2015). That protection comes in the form of a special

motion to dismiss, subject to expedited review, for any suit that appears to stifle a

defendant's exercise of those rights. Youngkin, 546 S.W.3d at 679; Lipsky, 460 S.W.3d at

584. The TCPA casts a wide net and is to be construed liberally to fully effectuate its

purpose and intent. Adams v. Starside Custom Builders, LLC, 547 S.W.3d 890, 894 (Tex.

2018); ExxonMobil Pipeline Co. v. Coleman, 512 S.W.3d 895, 898 (Tex. 2017). In determining

whether a plaintiff's legal action should be dismissed, the TCPA requires the trial court

to consider the pleadings and supporting and opposing affidavits stating the facts on

which the liability or defense is based. TEX. CIV. PRAC. & REM. CODE ANN. § 27.006(a)

(West 2014); Adams v. Starside Custom Builders, LLC, 547 S.W.3d 890, 892 (Tex. 2018).

Entitlement to a TCPA motion to dismiss requires the completion of a two-, and

possibly three-, step process. See Castleman v. Internet Money Ltd., 546 S.W.3d 684, 691

(Tex. 2018). Under the first step, the burden is on the movant, typically a defendant, to

show "by a preponderance of the evidence" that a legal action by the non-movant,

typically a plaintiff, "is based on, relates to, or is in response to” the defendant's exercise

of: (1) the right of free speech; (2) the right to petition; or (3) the right of association. TEX.

CIV. PRAC. & REM. CODE ANN. § 27.005(b) (West 2014); see Lipsky, 460 S.W.3d at 586-87.

The statute defines what it means to exercise those rights, and courts must adhere to these

Arey v. The Shipman Agency, Inc. Page 2 supplied legislative definitions. Youngkin v. Hines, 546 S.W.3d 675, 680 (Tex. 2018). A

preponderance of the evidence means that the evidence presented is more likely than not

true. See Lipsky, 460 S.W.3d at 589; In the Interest of C.H., 89 S.W.3d 17, 25 (Tex. 2002).

If a defendant is able to demonstrate that a plaintiff's legal action implicates one of

these rights, the second step shifts the burden 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) (West 2014); see In re Lipsky, 460 S.W.3d at

587. Although the statute does not define "clear and specific,” "clear" means

unambiguous, sure, or free from doubt, and "specific" means explicit or relating to a

particular named thing. S&S Emergency Training Sols., Inc. v. Elliott, 564 S.W.3d 843, 2018

Tex. LEXIS 1312, at *8 (Tex. 2018) (internal quotes omitted); In re Lipsky, 460 S.W.3d at 590.

"Prima facie case" as used in the statute means a "minimum quantum of evidence

necessary to support a rational inference that the allegation of fact is true." Id. Direct

evidence of damages is not required, but the evidence must be sufficient to allow a

rational inference that some damages naturally flowed from the defendant's conduct.

S&S Emergency Training Sols., 564 S.W.3d 843 at *8.

If the plaintiff satisfies that requirement, the burden shifts back, in step three, to

the defendant to prove each essential element of any valid defenses by a preponderance

of the evidence. TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(d) (West 2014); Youngkin v.

Hines, 546 S.W.3d 675, 679-80 (Tex. 2018).

On appeal, our review of the trial court’s ruling on a TCPA motion to dismiss is

de novo. See Holcomb v. Waller Cty., 546 S.W.3d 833, 839 (Tex. App.—Houston [1st Dist.]

Arey v. The Shipman Agency, Inc. Page 3 2018, pet. denied); Tervita, LLC v. Sutterfield, 482 S.W.3d 280, 282 (Tex. App.—Dallas 2015,

pet. denied); Johnson-Todd v. Morgan, 480 S.W.3d 605, 609 (Tex. App.—Beaumont 2015,

pet. denied). See also Better Bus. Bureau of Metro. Hous., Inc. v. John Moore Servs., Inc., 441

S.W.3d 345, 353 (Tex. App.—Houston [1st Dist.] 2013, pet. denied).

Step One

As required, we first decide whether Shipman’s lawsuit was based on, related to,

or in response to Arey’s and Kimmons’s exercise of their right of free speech, right to

petition, or right of association. In conducting our de novo determination under any of

the steps, we consider the pleadings and supporting and opposing affidavits stating the

facts on which the liability or defense is based as the trial court was required to consider.

See TEX. CIV. PRAC. & REM. CODE ANN. § 27.006(a) (West 2014); Adams v. Starside Custom

Builders, LLC, 547 S.W.3d 890, 892 (Tex. 2018); Johnson-Todd, 480 S.W.3d at 609. And when

it is clear from the plaintiff's pleadings that the action is covered by the TCPA, the

defendant need show no more. Hersh v. Tatum, 526 S.W.3d 462, 467 (Tex. 2017).

Arey and Kimmons each signed employment agreements when they began

working for Shipman. Kimmons’ agreement required her “never to legally sue” Shipman

“for any reason what so ever within the Universe.” Arey’s agreement included a similar

provision wherein he agreed “that all rights to claims, lawsuits, or allegation, shall be

waived forever….” When Kimmons refused to sign a new employment agreement,

Shipman terminated Kimmons’ employment, but required Kimmons to finish all the

assigned tasks for the day. Shipman also told Kimmons that “’if [Arey] or I said or did

anything or made any disgruntled statements[,] she would come down on me,

Arey v. The Shipman Agency, Inc. Page 4 [Arey],…and anybody else.’” Shortly thereafter, Kimmons filed for unemployment

benefits with the Texas Workforce Commission.

On November 1, 2017, about a month after Kimmons filed her complaint with the

TWC, Shipman sued both Arey and Kimmons, alleging in the “Facts” portion of its

petition that Arey and Kimmons executed valid confidentiality and non-compete

agreements and that:

Defendants have made statements on social media about Shipman’s confidential information. Defendants have disclosed and continue to disclose Shipman’s confidential information…Defendants have contacted employees, contractors, sponsors, vendors, or goods and service providers of Shipman to terminate their association with Shipman.

It is clear from Shipman’s petition that her legal action is covered by the TCPA, in that it

is based on, relates to, or is in response to Arey’s and Kimmons’s exercise of the right of

free speech because Shipman alleges communications by Arey and Kimmons in

connection with a matter of public concern.1 See TEX. CIV. PRAC. & REM. CODE ANN. §

27.001(3) (The “exercise of the right of free speech” means a communication made in

connection with a matter of public concern); § 27.001(7)(E) (a “matter of public concern”

includes an issue related to: a good, product, or service in the marketplace). The first

step is met. See Hersh v. Tatum, 526 S.W.3d 462, 467 (Tex. 2017) (when it is clear from the

1Shipman contends that Arey and Kimmons did not prove retaliation. Retaliation is not a requirement the statute imposes. The statute only requires a demonstration that the action is based on, relates to, or is in response to a party's exercise of the right of free speech. TEX. CIV. PRAC. & REM. CODE ANN. § 27.003(a). Shipman’s argument, therefore, constitutes an improper effort to narrow the scope of the TCPA by reading language into the statute that is not there and will not be followed. See ExxonMobil Pipeline Co. v. Coleman, 512 S.W.3d 895, 901 (Tex. 2017). See also Youngkin v. Hines, 546 S.W.3d 675, 681 (Tex. 2018) (injecting requirement that the Act’s safeguard of certain First Amendment rights only applies to constitutionally guaranteed activities is disloyal to the Act’s text).

Arey v. The Shipman Agency, Inc. Page 5 plaintiff's pleadings that the action is covered by the TCPA, the defendant need show no

more).

Step Two

Next, we determine whether Shipman established by clear and specific evidence a

prima facie case for each essential element of the claims alleged in the petition. Clear and

specific evidence includes relevant circumstantial evidence and the rational inferences

that may be drawn therefrom. Lipsky, 460 S.W.3d at 584, 591. Shipman sued both Arey

and Kimmons for breach of contract, conversion, and theft under the Theft Liability Act.

Shipman also sued Kimmons for fraud.

Breach of Contract

A breach of contract action requires proof of four elements: (1) formation of a valid

contract; (2) performance by the plaintiff; (3) breach by the defendant; and (4) "the

plaintiff sustained damages as a result of the breach." S&S Emergency Training Sols., Inc.

v. Elliott, 564 S.W.3d 843, 2018 Tex. LEXIS 1312 at *9 (Tex. 2018). Thus, Shipman needed

to establish by clear and specific evidence a prima facie case that the nondisclosure

agreement was a valid contract, that Shipman performed by providing information

covered by the agreement, that Arey and Kimmons disclosed information covered by the

agreement, and that Shipman sustained damages as a result of the disclosure. Arey and

Kimmons each signed a “CONFIDENTIALITY/NON COMPETE and AGENCY

AGREEMENT.” Even assuming without deciding that these agreements were valid

contracts, there is no clear and specific evidence in the record that Shipman performed

under the contract, that Arey and Kimmons breached the contracts, or that Shipman was

Arey v. The Shipman Agency, Inc. Page 6 damaged as a result of the alleged breach.2 Accordingly, Shipman did not establish by

clear and specific evidence a prima facie case for each essential element of the breach of

contract claim.

Conversion

To establish a claim for conversion, a plaintiff must prove that (1) the plaintiff

owned or had possession of the property or entitlement to possession; (2) the defendant

unlawfully and without authorization assumed and exercised control over the property

to the exclusion of, or inconsistent with, the plaintiff's rights as an owner; (3) the plaintiff

demanded return of the property; (4) the defendant refused to return the property; and

the plaintiff was injured. Lawyers Title Co. v. J.G. Cooper Dev., Inc., 424 S.W.3d 713, 718

(Tex. App.—Dallas 2014, pet. denied).

Shipman asserted in an affidavit in response to the motion to dismiss that: 1)

Shipman owned, possessed, or had the right to immediate possession of a cookbook,

merchandise, a Corral purse, a pair of Corral boots, cowboy shirts, Corral girl shirts, and

belts; 2) Arey and Kimmons physically took and unlawfully appropriated the property

without Shipman's consent and deprived Shipman of its free use and enjoyment; 3) Arey

and Kimmons have withheld the property from Shipman; 4) Shipman seeks the return of

the property; and 5) alternatively, Shipman seeks damages for the lost value of the

property, at least $6,000.00. Although some of the essential elements of conversion may

2Objections to Shipman’s affidavit regarding these elements were sustained by the trial court at the hearing on the motion to dismiss. Shipman complains that the trial court erred in sustaining the objections to the affidavit, but provides no authority for its complaints.

Arey v. The Shipman Agency, Inc. Page 7 be supported by this conclusory affidavit, the affidavit is not clear and specific evidence

that Shipman demanded the return of the property or that Arey and Kimmons refused

to return the property. Accordingly, Shipman did not establish by clear and specific

evidence a prima facie case for each essential element of its conversion claim.

Theft Liability Act

According to the Theft Liability Act, a person who commits theft is liable for the

damages resulting from the theft. TEX. CIV. PRAC. & REM. CODE ANN. § 134.003(a) (West

2011). A person commits theft if the person unlawfully appropriates property with the

intent to deprive the owner of the property. TEX. PENAL CODE ANN. § 31.03(a) (West 2011).

Appropriation of property is unlawful if it is without the owner's effective consent. Id.

(b)(1). “Intent to deprive" is the person's intent at the time of the taking and can be

inferred from the words and acts of the person. McCullough v. Scarbrough, Medlin &

Assocs., 435 S.W.3d 871, 906, 907 (Tex. App.—Dallas 2014, pet. denied).

The same affidavit evidence offered to support Shipman’s claim for conversion

was offered to support its claim under the Theft Liability Act. Reviewing that evidence,

there is nothing to indicate that Arey or Kimmons intended to deprive Shipman of any

property. No words or actions evidenced Arey’s or Kimmons’s intent at the time

property was allegedly taken. Accordingly, Shipman did not establish by clear and

specific evidence a prima facie case for each essential element of its claim under the Theft

Liability Act.

Arey v. The Shipman Agency, Inc. Page 8 Fraud

Common-law fraud requires a material misrepresentation, which was false, and

which was either known to be false when made or was asserted without knowledge of

its truth, which was intended to be acted upon, which was relied upon, and which caused

injury. Zorrilla v. Aypco Constr. II, LLC, 469 S.W.3d 143, 153 (Tex. 2015).

An objection to the paragraph in Shipman’s affidavit regarding its fraud claim

against Kimmons was sustained. The only “evidence” of Shipman’s fraud claim against

Kimmons appears to be 30 pages of documents which are attached to the affidavit. These

appear to be timesheets which are filled out and signed by Kimmons. Certain times on

each of these timesheets are circled and numbers are written at the top of each page. At

the top of the first page, the written number, 6.5, is circled. Next to that number is the

notation:

total 97 Hours 20 mins, total Fraud or padded Hours

There is nothing to show who circled the times, made the notation on the first page, or

wrote the numbers on the remaining pages.

These documents do not indicate that the representations made by Kimmons in

the documents were false or that she knew they were false. Further, these documents do

not indicate Shipman was injured. Accordingly, Shipman did not establish by clear and

specific evidence a prima facie case for each essential element of its fraud claim.

Arey v. The Shipman Agency, Inc. Page 9 Conclusion

Based on this record, the TCPA applies to Shipman’s legal action. Further,

Shipman did not establish by clear and specific evidence a prima facie case for each

essential element of each of its claims as required to avoid dismissal under the Act.

Because it did not, the trial court erred in failing to grant Aery’s and Kimmons’s motion

to dismiss. Accordingly, Aery’s and Kimmons’s first and second issues are sustained.3

ATTORNEY’S FEES

Section 27.009 mandates that if an action is dismissed under the TCPA, the trial

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,"

as well as sanctions "sufficient to deter" future "similar actions." TEX. CIV. PRAC. & REM.

CODE ANN. § 27.009(a).

Because the trial court did not grant Arey’s and Kimmons’s motion to dismiss, it

has not had the opportunity to determine the amount of trial court costs, reasonable

attorney's fees, and other expenses that justice and equity require be awarded to Arey

and Kimmons or the amount of sanctions sufficient to deter Shipman from bringing

similar actions in the future. Accordingly, we sustain Arey’s and Kimmons’s fourth issue

and remand the case to the trial court to make these determinations. See Sullivan v.

Abraham, 488 S.W.3d 294, 299-300 (Tex. 2016).

3 Because Shipman did not sustain its burden, we need not review the third step in the TCPA process: whether Arey and Kimmons proved by a preponderance of the evidence a valid defense to Shipman’s claims.

Arey v. The Shipman Agency, Inc. Page 10 CONCLUSION

Having sustained each issue necessary to the disposition of the appeal, we reverse

the trial court’s “ORDER OF DISMISSAL UNDER TEXAS CITIZENS PARTICIPATION

ACT,”4 which actually denied Arey’s and Kimmons’s motion to dismiss rather than

granted it as the title of the order suggests on February 21, 2018, and remand this case to

the trial court to grant Arey’s and Kimmons’s motion to dismiss under the TCPA and to

determine the amount of court costs, reasonable attorney's fees, and other expenses that

justice and equity require be awarded to Arey and Kimmons and the amount of sanctions

sufficient to deter Shipman from bringing similar actions in the future.

TOM GRAY Chief Justice

Before Chief Justice Gray, Justice Davis, and Justice Scoggins5 Reversed and remanded Opinion delivered and filed May 1, 2019 [CV06]

4 It appears that the trial court signed a draft order prepared by Arey and Kimmons to grant the motion to dismiss but altered the disposition from “granted” to “denied” and blacked out several other paragraphs in the order.

5The Honorable Al Scoggins, Senior Justice of the Tenth Court of Appeals, sitting by assignment of the Chief Justice of the Texas Supreme Court. See TEX. GOV’T CODE ANN. §§ 74.003, 75.002, 75.003 (West 2013).

Arey v. The Shipman Agency, Inc. Page 11