Neurodiagnostic Tex, L.L.C. v. Robert "Josh" Pierce and Synergy IOM, LLC

Opinion

ACCEPTED 12-14-00254-CV TWELFTH COURT OF APPEALS TYLER, TEXAS 3/9/2015 9:13:09 AM CATHY LUSK CLERK

NO. 12-14-00254-CV TO THE COURT OF APPEALS FOR THE TWELFTH DISTRICT OF TEXAS FILED IN AT TYLER, TEXAS 12th COURT OF APPEALS TYLER, TEXAS 3/9/2015 9:13:09 AM ___________________________________ CATHY S. LUSK Clerk NEURODIAGNOSTIC TEX, L.L.C. Appellants,

v.

ROBERT “JOSH” PIERCE and SYNERGY IOM, L.L.C. Appellees. ___________________________________

APPELLEE SYNERGY IOM, LLC’S OPENING BRIEF

___________________________________

Appeal from the 7th District Court, Smith County, Texas, Honorable Kerry L. Russell, Presiding ____________________________

WHITAKER CHALK SWINDLE & SCHWARTZ PLLC 301 Commerce Street, Suite 3500 Fort Worth, Texas 76102-4186 Phone: (817) 878-0500 Fax: (817) 878-0501

WILLIAM BRENT SHELLHORSE Texas Bar No. 24008022 HUNTER T. MCLEAN Texas Bar No. 00788026 PATRICK H. ROSE, IV Texas Bar No. 24079244 WHITAKER CHALK SWINDLE & SCHWARTZ PLLC 301 Commerce Street, Suite 3500 Fort Worth, Texas 76102-4186 (817) 878-0500 (817) 878-0501 (Facsimile) IDENTITY OF COUNSEL AND PARTIES

Appellant has accurately set forth the identity of the parties, with the exception of

Synergy’s counsel:

Synergy’s Trial Counsel: Hunter T. McLean Patrick H. Rose, IV William Brent Shellhorse WHITAKER CHALK SWINDLE & SCHWARTZ PLLC 301 Commerce Street, Suite 3500 Fort Worth, TX 76102

Synergy’s Appellate Counsel: William Brent Shellhorse Hunter T. McLean Patrick H. Rose, IV WHITAKER CHALK SWINDLE & SCHWARTZ PLLC 301 Commerce Street, Suite 3500 Fort Worth, TX 76102

ii TABLE OF CONTENTS

IDENTITY OF COUNSEL AND PARTIES ...................................................................... ii

TABLE OF CONTENTS ...................................................................................................iii

INDEX OF AUTHORITIES .............................................................................................. vi

STATEMENT REGARDING ORAL ARGUMENT ......................................................... 1

I. STATEMENT OF FACTS ............................................................................................ 2

II. SUMMARY OF ARGUMENT ..................................................................................... 5

III. ARGUMENT & AUTHORITIES ................................................................................. 6

A. APPELLANT HAD ADEQUATE TIME FOR DISCOVERY (APPELLANT’S ISSUE #1)....... 6

1. Appellant Cannot NOW Complain of Scheduling Order ................................... 7

2. Different Issues Raised On Appeal..................................................................... 7

3. Motion and Brief Are Insufficient ...................................................................... 8

4. No Abuse of Discretion in Denying Appellant’s Continuance .......................... 9

(a). Maximum Allowable Time Under Scheduling Order ............................. 9

(b). Rule 166a(i) Does Not apply to Traditional Summary Judgment ........... 9

(c). Appellant Did NOT Need Synergy’s Revenue/Profit Information to Respond to Summary Judgment Challenges ....................................... 9

B. ADEQUATE NOTICE OF SUMMARY JUDGMENT GROUNDS (APPELLANT’S ISSUE #2C) ..................................................................... 13

1. Appellant’s Special Exceptions are Insufficient............................................... 14

2. Synergy’s Motion Sufficiently Delineated Grounds ........................................ 14

iii C. COURT PROPERLY CONSIDERED SYNERGY’S SUMMARY JUDGMENT EVIDENCE (APPELLANT ISSUE #3) .......................................................................... 15

1. Trial Court Properly Considered Second Supplement (i.e. Appellant’s Judicial Admissions) .............................................................. 15

2. Hearing Transcripts Were Properly Admitted .................................................. 19

D.SYNERGY COULD NOT INTERFERE WITH THE COVENANT BECAUSE IT IS NOT ANCILLARY TO AN OTHERWISE ENFORCEABLE AGREEMENT (APPELLANT’S ISSUE #4B)................................................................. 20

1. Training .......................................................................................................... 23

(a). No Evidence that Training or Advancement of Funds for Training Was Worthy of Protection ...................................................... 23

(b). Training and Advancement of Funds for Training Was NOT An Interest Worthy of Protection .......................................................... 24

2. Covenant Not Designed to Enforce Pierce’s Return Promise Regarding Training ............................................................................. 27

(a). No Evidence Covenant Was Designed to Enforce Pierce’s Promise Regarding Training ................................................................................ 27

(b). Covenant NOT Designed to Enforce Pierce’s Promise Regarding Training.................................................................. 28

3. Customer Information Not an Interest Worthy of Protection ........................... 29

(a). No Evidence that Customer Information Was Worth Of Protection or Reasonably Related to One......................................... 29

(b). Customer Identities NOT Worthy of Protection.................................... 34

(c). Surgeon Identities/Preferences NOT an Interest Worthy of Protection.35

(d). Appellants’ Pricing NOT an Interest Worthy of Protection .................. 36

(e). Appellant Not Relieved From Establishing Ancillary Requirements ... 38

iv E. THE COVENANT’S RESTRAINTS ARE UNREASONABLE (APPELLANT’S ISSUE #4C).40

1. No Evidence that 5 Year Covenant Was Reasonable ....................................... 40

(a). Advancement Does NOT Make 5 Years Reasonable............................ 41

(b). Long Employment Does NOT Equal Long Covenant........................... 42

2. Geographic Restraints Were Unreasonable ...................................................... 43

3. Scope of Activities from Which Pierce is Prohibited is Unreasonable ............ 46

G.TRIAL COURT NOT REQUIRED TO REFORM COVENANT (APPELLANT ISSUE #4E).. 48

H.APPELLANT DID NOT PROVE ELEMENTS OF CLAIM (APPELLANT ISSUE #4D) ....... 52

1. Damages Foreclosed by Statute ........................................................................ 52

2. No Evidence of Lost Profits (i.e. “Recoverable Damages”) ............................ 54

3. No Evidence of Interference (Appellant Issue #6) ........................................... 55

PRAYER ........................................................................................................................... 58

CERTIFICATE OF COMPLIANCE ................................................................................ 59

CERTIFICATE OF SERVICE.......................................................................................... 59

v INDEX OF AUTHORITIES

Cases Acad. of Skills & Knowledge, Inc. v. Charter Sch., USA, Inc., 260 S.W.3d 529, 534 (Tex. App.—Tyler 2008, pet. denied) .................................. 38, 39 Accord Amigo Broad., LP v. Spanish Broad. Sys., Inc., 521 F.3d 472, 493 (5th Cir. 2008) ................................................................................. 56 ACS Invs., Inc. v. McLaughlin, 943 S.W.2d 426, 431 (Tex.1997) .................................... 56 Aldous v. Bruss, 405 S.W.3d 847, 857 (Tex. App.—Houston [14th Dist.] 2013, no pet.)........................................................... 14 Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644, 649 (Tex. 2006)......................................................................................................... 22, 23, 26 Allan J. Richardson & Assocs., Inc. v. Andrews, 718 S.W.2d 833, 837 (Tex. App.—Houston [14th Dist.] 1986, no writ) .......................................................... 31 Allen v. United of Omaha Life Ins. Co., 236 S.W.3d 315, 326 (Tex. App.—Fort Worth 2007, pet. denied) .................................................................... 9 Am. Fracmaster, Ltd. v. Richardson, 71 S.W.3d 381 (Tex. App.—Tyler 2001, pet. granted, judgment vacated w.r.m.) ................................ 40 Am. Precision Vibrator Co. v. Nat'l Air Vibrator Co., 764 S.W.2d 274, 276 (Tex. App.—Houston [1st Dist.] 1988) as modified, 771 S.W.2d 562 (Tex. App.—Houston [1st Dist.] 1989, no writ)............................................................. 31 Arabesque Studios, Inc. v. Academy of Fine Arts Int’l, 529 S.W.2d 564 (Tex. App.—Dallas 1975, no writ) .......................................................................... 12, 13 Atlas Copco Tools v. Air Power Tool & Hoist, 131 S.W.3d 203, 209 (Tex. App.—Fort Worth 2004, pet. denied) ............................................................ 54, 55 Baty v. ProTech Ins. Agency, 63 S.W.3d 841, 857 (Tex. App.—Houston [14th Dist.] 2001, pet. denied) ........................................................................................ 56 Baylor Univ. v. Sonnichsen, 221 S.W.3d 632, 635 (Tex. 2007) ....................................... 14 Benchmark Bank v. Crowder, 919 S.W.2d 657, 663 (Tex. 1996)..................................... 16

vi Benson v. Gaston, 2014 Tex. App. LEXIS 2753, at *6 (Tex. App.—Tyler 2014, pet. denied)............................................................................................................................ 53 Blake v. Lewis, 886 S.W.2d 404, 409 (Tex. App.—Houston [1st Dist.] 1994, no writ) ..... 8 Browning–Ferris, Inc. v. Reyna, 865 S.W.2d 925, 927 (Tex.1993) ................................. 56 Butler v. Arrow Mirror & Glass, Inc., 51 S.W.3d 787, 792 (Tex. App.—Houston [1st Dist.] 2001, no pet.) ..................................... 18, 44, 45, 46, 52 Carpenter v. Cimarron Hydrocarbons Corp., 98 S.W.3d 682, 686 (Tex. 2002).............. 16 Carter v. MacFadyen, 93 S.W.3d 307, 311 (Tex. App.—Houston [14th Dist.] 2002, pet. denied) .......................................................................................... 6 Castano v. San Felipe Ag., Mfg., & Irrigation Co., 147 S.W.3d 444, 453 (Tex. App.—San Antonio 2004, no pet.)....................................................................... 14 Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 625-26 (Tex. 1996) .......................... 53 Cobb v. Caye Publ. Grp., Inc., 322 S.W.3d 780, 784-86 (Tex. App.—Fort Worth 2010, no pet.)................................................................... 44, 45 Coinmach Corp. v. Aspenwood Apartment Corp., 417 S.W.3d 909, 923 (Tex. 2013) reh'g denied (Feb. 14, 2014) ...................................................................... 20 Cook v. Nacogdoches Anesthesia Grp., L.L.P., 167 S.W.3d 476, 480 (Tex. App.—Tyler 2005, no pet.) .................................................................................. 17 Courtney v. Nibco, Inc., 152 S.W.3d 640, 644 (Tex. App.—Tyler 2004, no pet.) ........... 30 Custom Drapery Co. v. Hardwick, 531 S.W.2d 160, 165 (Tex. Civ. App.—Houston [1st Dist.] 1975, no writ)..................................................... 24 Dale v. Hoschar, 2014 Tex. App. LEXIS 8816, *4 (Tex. App.—Dallas 2014, no pet.)........................................................................... 43, 44 Davis v. HydPro, Inc., 839 S.W.2d 137, 140 (Tex. App.—Eastland 1992, writ denied) . 56 Daytona Grp. of Tex., Inc. v. Smith, 800 S.W.2d 285, 290 (Tex. App.—Corpus Christi 1990, writ denied) .......................................... 23, 26, 49, 50 DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 681-82 (Tex. 1990)............. 40, 48, 49, 50 Emergicare Sys. Corp. v. Bourdon, 942 S.W.2d 201, 204 (Tex. App.—Eastland 1997, no pet) .............................................................................. 49

vii Evan's World Travel, Inc. v. Adams, 978 S.W.2d 225, 230-31 (Tex. App.—Texarkana 1998, no pet.)...................................... 18, 21, 24, 44, 45, 46, 52 Flory v. Daimler Chrysler Corp., 2003 Tex. App. LEXIS 10235, at *7-*8 (Tex. App.—Tyler 2003, pet. denied) ........................................................................... 53 Flynn Bros., Inc. v. First Med. Associates, 715 S.W.2d at 785......................................... 18 Gallagher Healthcare Ins. Services v. Vogelsang, 312 S.W.3d 640, 654 (Tex. App.—Houston [1st Dist.] 2009, pet. denied) ...................................................... 40 Gambling Paraphernalia Devices v. State, No. 12-01-00161, 2002 Tex. App. LEXIS 3613, *5 (Tex. App.—Tyler 2002, no pet.)......................................................... 7 Gomez v. Zamora, 814 S.W.2d 114, 118 (Tex. App.—Corpus Christi 1991, no writ)….44 Grace v. Orkin Exterminating Co., 255 S.W.2d 279, 285 (Tex. Civ. App.—Beaumont 1953, writ ref'd n.r.e.)...................................................... 24 Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 83 n.1 (Tex. 1992).................... 54, 55 Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 568 (Tex. 2001) .............. 16 Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 905 (Tex. 2000) ..................... 16 Hospital Consultants, Inc. v. Potyka, 531 S.W.2d 657, 662 (Tex. Civ. App.—San Antonio 1975, writ ref'd n.r.e.) .................................................. 23 IAC, Ltd. v. Bell Helicopter Textron, Inc., 160 S.W .3d 191, 197 (Tex. App. — Fort Worth 2005, no pet.)....................................................................... 31 In re Cauley, 437 S.W.3d 650, 657 (Tex. App.—Tyler 2014, orig. proceeding) ....... 30, 33 John Paul Mitchell Sys. v. Randalls Food Markets, Inc., 17 S.W.3d 721, 730 (Tex. App.—Austin 2000, pet. denied) ......................................................................... 56 John R. Ray & Sons, Inc. v. Stroman, 923 S.W.2d 80, 84-85 (Tex. App.—Houston [14th Dist.] 1996, writ denied)..........20, 40, 45, 46, 47, 48, 49, 50 Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 207 (Tex. 2002) ......................... 15 Johnston v. Am. Med. Int'l, 36 S.W.3d 572, 576 (Tex. App.—Tyler 2000, pet. denied).. 53

viii Juliette Fowler Homes, Inc. v. Welch Assocs., Inc., 793 S.W.2d 660, 663, 665 (Tex. 1990), superseded on other grounds by statute as stated in Coinmach Corp. v. Aspenwood Apartment Corp., 417 S.W.3d 909, 923 (Tex. 2013) reh'g denied (Feb. 14, 2014) .......................................................... 18, 20, 53 Lazer Spot, Inc. v. Hiring Partners, Inc., 387 S.W.3d 40, 49 (Tex. App.—Texarkana 2012, pet. denied) ................................................. 18, 21, 24, 56 Malooly Brothers, Inc. v. Napier, 461 S.W.2d 119, 120 (Tex. 1970)............................... 53 Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 849 (Tex. 2009).................................................................................. 21 Marsh United States, Inc. v. Cook, 354 S.W.3d 764, 768, 773 (Tex. 2011)............... 22, 43 Marshall v. Vise, 767 S.W.2d 699, 700 (Tex. 1989)......................................................... 16 McClure v. Attebury, 20 S.W.3d 722, 729 (Tex. App.—Amarillo 1999, no pet.) .............. 6 McConathy v. McConathy, 869 S.W.2d 341, 342 (Tex. 1994) ......................................... 20 McCoy v. Rogers, 240 S.W.3d 267, 272 (Tex. App.—Houston [1st Dist.] 2007, pet. denied)............................................................................................................................ 53 Miller Paper Co. v. Roberts Paper Co., 901 S.W.2d 593, 599 (Tex. App.—Amarillo 1995, no writ)............................................................................ 21 Morgan v. City of Alvin, 175 S.W.3d 408, 420 (Tex. App.—Houston [1st Dist.] 2004, no pet.) .............................................................. 8 National Union Fire Ins. Co. v. Valdez, 863 S.W.2d 458, 461 (Tex. 1993) ..................... 39 NCH Corp. v. Share Corp., 757 F.2d 1540, 1543–1544 (5th Cir.1985) ...................... 18, 21 Numed v. McNutt, 724 S.W.2d 432, 435 (Tex. Civ. App.—Fort Worth 1987, no writ) .................................................... 31, 37, 38 Patel v. City of Everman, 179 S.W.3d 1, 17 (Tex. App.—Tyler 2004, pet. denied) ........ 43 Peat Marwick Main & Co. v. Haass, 818 S.W.2d 381, 387 (Tex. 1991)..............................................................passim, 18, 20, 43, 44, 45, 46, 47, 52 Philip H. Hunke, D.D.S. v. Wilcox, 815 S.W.2d 855, 858 (Tex. App.—Corpus Christi 1991, writ denied) ............................................................ 36 Powell Indus., Inc. v. Allen, 985 S.W.2d 455, 456 (Tex. 1998).................................. 52, 55

ix Rest. Teams Intern., Inc. v. MG Sec. Corp., 95 S.W.3d 336, 339 (Tex. App.—Dallas 2002, no pet.)................................................................................... 6 Sentinel Integrity Solutions, Inc. v. Mistras Grp., Inc., 414 S.W.3d 911, 921 (Tex. App.—Houston [1st Dist.] 2013, pet. denied) ...................................................... 49 Sharma v. Vinmar Int'l, Ltd., 231 S.W.3d 405, 424 (Tex. App.—Houston [14th Dist.] 2007, no pet.)........................................................... 34 Simon v. Tudor Ins. Co., 2014 Tex. App. LEXIS 1321, 18-19 (Tex. App.—Dallas 2014, no pet.)................................................................................... 8 Sivley v. Sivley, 972 S.W.2d 850, 861 (Tex. App.—Tyler 1998, no pet.)........................... 7 SJW Prop. Commerce, Inc. v. Sw. Pinnacle Properties, Inc., 328 S.W.3d 121, 152 (Tex. App.—Corpus Christi 2010, pet. denied)............................................................. 56 Star-Telegram, Inc. v. Walker, 834 S.W.2d 54, 57 (Tex. 1992) ................................. 34, 37 Stone v. Griffin Communications & Sec. Sys., Inc., 53 S.W.3d 687, 696, no pet.), overruled on other grounds by Am. Fracmaster, Ltd. v. Richardson, 71 S.W.3d 381 (Tex. App.—Tyler 2001, pet. granted, judgment vacated w.r.m.) .......................... 40, 41 Tex. Dep't of Pub. Safety Officers Ass'n v. Denton, 897 S.W.2d 757, 761 (Tex. 1995)..................................................................................................................... 39 Texaco, Inc. v. Pennzoil, Co., 729 S.W.2d 768, 844–45 (Tex. App.—Houston [1st Dist.] 1987, writ ref'd n.r.e.), cert. dismissed, 485 U.S. 994, 108 S.Ct. 1305, 99 L.Ed.2d 686 (1988).................................................. 56 Texas Div.-Tranter, Inc. v. Carrozza, 876 S.W.2d 312, 314 (Tex. 1994)......................... 33 Travel Masters, Inc. v. Star Tours, Inc., 827 S.W.2d S.W.2d 830, 832-833 (Tex. 1991)............................................................................................................... 18, 21 U.S. Risk Ins. Group, Inc. v. Woods, 399 S.W.3d 295, 301 (Tex. App.—Dallas 2013, no pet.)................................................................................. 47 Weatherford Oil Tool Co. v. Campbell, 161 Tex. 310, 340 S.W.2d 950, 951-52 (1960) ....................................................... 44, 47 Webb v. Hartman Newspapers, Inc., 793 S.W.2d 302, 303 (Tex. App.—Houston [14th Dist.] 1990, no writ) ........................................ 44, 45, 46, 52

x Zep Mfg. Co. v. Harthcock, 824 S.W.2d 660-61, 654, 660, 663-64 (Tex. App.—Dallas 1992, no writ) .................................................. 21, 44, 45, 46, 52, 53

Statutes TEX. BUS. & COMM. CODE §§ 15.50-15.52......................................................................... 6 TEX. BUS. & COMM. CODE § 15.05 ................................................................................... 21 TEX. BUS. & COMM. CODE ANN. § 15.50................................................................ 6, 21, 40 TEX. BUS. & COMM. CODE ANN. §§ 15.51(b), (c)..................................... 19, 21, 40, 49, 53

Rules TEX. R. APP. P. 33.1(a) ........................................................................................................ 7 TEX. R. CIV. P. 198.3 ................................................................................................... 16, 18 TEX. R. CIV. P. 90 .............................................................................................................. 14 TEX. R. CIV. P. 91 .............................................................................................................. 14

xi STATEMENT REGARDING ORAL ARGUMENT

Appellee believes that the issues have been fully briefed and does not believe

that oral argument will aid this Court. Appellee will participate in oral argument if

Appellant’s request for oral argument is granted.

1 Appellee Synergy IOM LLC (“Synergy”) believes that Appellant Neurodiagnostic

Tex. LLC’s (“Appellant”) brief fails to set forth all relevant facts; therefore, Synergy

provides the following statement of facts. Synergy requests that this Court affirm the

judgment and would respectfully show this Court as follows:

I. STATEMENT OF FACTS

Synergy and Appellant are among a number of companies providing intraoperative

neurophysiologic monitoring (“IOM”) to hospitals. (CR 231). Appellant contracts with

hospitals where other IOM companies simultaneously contract with that same hospital.

(CR 231, 962).

While a surgeon decides whether to have IOM during a surgical procedure (CR

231-34, 821), Appellant does not contract with surgeons (CR 231-34) and does not

consider surgeons to be its customers. (CR 231-34). The surgeon merely requests that the

surgical facility have IOM available. (CR 231-34).

The surgical facility (e.g., a hospital) contracts directly with the IOM provider (CR

231-32, 821, 856), and it is the hospital that schedules the IOM procedure and assigns

cases to Appellant. (CR 235-37).1 Appellant cannot provide services in a hospital unless

it contracts with that hospital. (CR 231-34). Appellant characterizes itself in this process

as a subcontractor to the hospital. (CR 266).

Appellee Josh Pierce (“Pierce”) is a former employee of Appellant and is certified

as an IOM technician. (CR 172). As an IOM technician, Pierce works in surgical

operating rooms where he simply connects monitoring equipment to patients and makes

1 Appellant does not know how it is selected to provide IOM services on a given case. (CR 235-37).

2 sure the equipment is working. (CR 172). Pierce does not interpret the IOM data

gathered by the equipment. Pierce stays in the operating room monitoring the equipment

while a neurologist remotely monitors and interprets the data throughout surgery. (CR

172). Pierce does not perform IOM outside the four walls of a surgical facility. (CR

172). And, Pierce does not use any confidential information in the performance of his

duties. In fact, an IOM technicians are board certified such that their duties are

standardized throughout the industry. (CR 183-84, 457).

While Appellant’s employee, Pierce did not negotiate with hospitals and was not

involved in meetings where negotiations occurred. (CR 173). He was not asked to solicit

customers and did not solicit customers on behalf of Appellant. (CR 173). Pierce was

never given Appellant’s marketing materials and does not recall receiving any

information from Appellant that Appellant indicated was proprietary or secret. (CR 173).

Pierce signed an employment agreement containing a covenant not to compete

(the “Covenant”). (CR173, 176-90).2 In the employment agreement, Appellant agreed to

advance Pierce the costs for certification training; however, Appellant did so in exchange

for: (i) Pierce’s promise to work for 48 months after becoming board eligible; or (ii)

repayment of $5,000.00, with interest. (CR183-186). Pierce is not prohibited from using

or disclosing this training in any manner whatsoever. (CR 179-80).

The Covenant prohibits Pierce from, among other things, engaging in any business

or activity which “directly” or “indirectly” competes with Appellant; there is also an “all

2 The employment agreement is contained in the Appendix as Exhibit A, which is filed by Synergy contemporaneously herewith.

3 customers” non-solicitation provision. (CR 181-82). Although “directly” and

“indirectly” are undefined, Appellant admits that an IOM tech working with surgeon with

whom Appellant has not previously worked is neither directly nor indirectly competitive

with Appellant. (CR 220-21).

Dr. Brent Alford (“Dr. Alford”) is a surgeon. (CR 173). For a short period of time

in 2012, Dr. Alford owned a monitoring company, and that company used Appellant as a

subcontractor to provide monitoring services. (CR 209-10). Dr. Alford’s monitoring

company paid Appellant $150 per procedure, as a subcontractor performing monitoring

services; however, this relationship ended at the conclusion of 2012. (CR 209-10).

Appellant also had historically provided IOM at one or more hospitals where Dr.

Alford was the surgeon. (CR 173, 208). Pierce occasionally served as the technician on

some of those surgeries. (CR 173).

Synergy was formed in 2012 and was owned partially by Dr. Alford. (CR 173,

208, 937). However, Dr. Alford is not employed by Synergy and does not manage

Synergy. (CR 937).

By March 2013, Synergy was routinely handling all IOM for Dr. Alford’s cases,

with only minimal overflow being handled by Appellant. (CR 211, 208, 277-79).

Appellant characterizes this minimal overflow as a “backstop” for the time or two when

Synergy did not have enough IOM personnel to handle the work or did not have

privileges at a hospital. (CR 251).

Pierce worked for Appellant for approximately eight years. (CR 172). He left in

October 2013 and went to work as an IOM technician for Synergy. (CR 173, 987).

4 Since becoming a Synergy employee, Pierce has only worked with two surgeons

and has not participated in any surgery where the surgeon was a surgeon that he had

worked with while an employee of Appellant, this includes Dr. Alford. (CR 173, 958).

Furthermore, Synergy assigned Pierce primarily to Victory Medical Center in Plano, a

hospital that he did not work at while in Appellant’s employ. (CR 934, 958, 964). Pierce

also has not solicited surgeons, hospitals, or surgery centers to do business with Synergy.

(CR 173-74).

II. SUMMARY OF ARGUMENT

Appellant’s only cause of action against Synergy is tortious interference with

Pierce’s Covenant. Appellant makes numerous dilatory challenges, including that the

trial court abused its discretion by: (i) failing to grant a continuance; (ii) failing to grant

special exceptions; and (iii) failing to strike summary judgment evidence. Appellant

waived many of these complaints and the trial court did not abuse its discretion.

As to Appellants’ merit-based challenges, Synergy cannot be liable for interfering

with an unenforceable contract. The Covenant is invalid because: (i) Appellant did not

have an interest worthy of protection; (ii) any consideration given to Pierce was not an

interest worthy of protection or reasonably related to one; and (iii) as it relates to training,

the Covenant was not designed to enforce Pierce’s return promise regarding training.

The Covenant is also unenforceable because it contains restraints (geographic,

duration, and activity) that are unreasonable. Assuming (arguendo) Appellant sought

reformation, Appellant failed to establish reasonable, alternative restraints. Reformation

was, therefore, properly denied.

5 Finally, Appellant lacks evidence supporting the elements of its causes of action.

Appellant failed to present evidence of Synergy’s interference. Appellant also has no

evidence of damages and is additionally foreclosed from obtaining damages under the

Covenant Not to Compete Act3 (the “Act”). Appellant also failed to challenge Synergy’s

damage-foreclosure ground. The trial court’s judgment should be affirmed.

III. ARGUMENT & AUTHORITIES

A. APPELLANT HAD ADEQUATE TIME FOR DISCOVERY (APPELLANT’S ISSUE #1)

Appellant contends that it had inadequate time to conduct discovery; thus, it

argues the trial court abused its discretion by failing to grant a continuance.4 (CR 1458).

The trial court did not abuse its discretion by denying Appellant’s continuance request.

Whether an adequate time for discovery has occurred is case specific and

determined by factors such as the nature of the cause of action, the nature of the evidence

necessary to controvert the no-evidence motion, and the length of time the case had been

active in the trial court. Rest. Teams Intern., Inc. v. MG Sec. Corp., 95 S.W.3d 336, 339

(Tex. App.—Dallas 2002, no pet.).

Some matters may require minimal or no discovery in order to respond to

summary judgment. McClure v. Attebury, 20 S.W.3d 722, 729 (Tex. App.—Amarillo

1999, no pet.); Rest. Teams, 95 S.W.3d at 339. Requiring parties to conduct discovery

when it will make no difference is a waste of time and expense. Carter v. MacFadyen,

93 S.W.3d 307, 311 (Tex. App.—Houston [14th Dist.] 2002, pet. denied).

3 TEX. BUS.& COMM. CODE §§15.50-15.52. 4 App. Br. p. 15.

6 1. Appellant Cannot NOW Complain of Scheduling Order

Appellant complains to this Court of the expedited nature of the scheduling order

claiming that the order resulted in a condensed and the inadequate discovery period.5

However, Appellant did not complain to the trial court of the scheduling order in any

manner whatsoever. (CR 768-72). Appellant cannot complain of the scheduling order

when it did not complain below. TEX. R. APP. P. 33.1(a); Sivley v. Sivley, 972 S.W.2d

850, 861 (Tex. App.—Tyler 1998, no pet.).

2. Different Issues Raised On Appeal

Appellant’s brief is a substantial departure from its motion for continuance. Other

than the mention of two depositions, both of which occurred, Appellant’s motion for

continuance stated only a general need for evidence of “lost profits” but failed to: (i)

identify any specific discovery requests or evidence that it lacked; or (ii) how it was

prevented from responding to the summary judgment motions by the lack of any

evidence or Synergy’s discovery responses. (CR 768-72).6

On appeal, Appellant recites a list of discovery requests to which Synergy

objected. Neither the list nor these arguments were presented to the trial court.7 The

complaint on appeal must also be the same as that presented in the trial court. Gambling

Paraphernalia Devices v. State, No. 12-01-00161, 2002 Tex. App. LEXIS 3613, *5 (Tex.

5 Appellant’s Br. p. 17. 6 Appellant mentioned Dr. Alford’s deposition might produce evidence of Synergy’s intent to interfere, but Appellant does inform the Court why this is needed - Appellant presented text messages from Dr. Alford to argue Synergy’s intent (CR 1022-23, 1064-67) and had already taken Pierce’s deposition. 7 This is in addition to the new complaint about the scheduling order.

7 App.—Tyler 2002, no pet.). Appellant has not raised the same complaint; thus, this

Court should not consider Appellant’s argument.

3. Motion and Brief Are Insufficient

As previously noted, other than the two above-mentioned depositions both of

which actually occurred, Appellant’s motion for continuance merely stated a need for

evidence of “lost profits,” without any specifics. General allegations in a motion for

continuance are insufficient; the motion or the affidavit must state specific reasons for the

request. Morgan v. City of Alvin, 175 S.W.3d 408, 420 (Tex. App.—Houston [1st Dist.]

2004, no pet.). Appellant was required, among other things, to identify for the trial court

what was material and why. Blake v. Lewis, 886 S.W.2d 404, 409 (Tex. App.—Houston

[1st Dist.] 1994, no writ). The trial court did not abuse its discretion in the face of such a

deficient motion.

On appeal Appellant is required, among other things, to provide this Court with

“substantive analysis explaining why denial of the motion[] for continuance . . . was

improper” and “address how the additional time and discovery would have allowed

[Appellant] to respond to the motions for summary judgment.” Simon v. Tudor Ins. Co.,

2014 Tex. App. LEXIS 1321, 18-19 (Tex. App.—Dallas 2014, no pet.). Appellant’s brief

does neither.8 Appellant has further waived this point on appeal by its deficient brief. Id.

8 For example, there is nothing showing that Appellant learned anything relevant in Dr. Alford’s or Dr. Craven’s depositions that could have been used in responding to the summary judgment motions, had the trial court granted a continuance. Appellant also fails to address any of the written discovery that it complains of for the first time on appeal.

8 4. No Abuse of Discretion in Denying Appellant’s Continuance

(a). Maximum Allowable Time Under Scheduling Order

Even if Appellant’s continuance complaint is considered, it is without merit. The

trial court entered a scheduling order imposing a May 12, 2014 deadline for the filing of

motions seeking summary judgment. (CR 33-35). Synergy filed its motion on Friday,

May 9, 2014. (CR 140). Appellant had all of the time allowable under the scheduling

order.

(b). Rule 166a(i) Does Not Apply to Traditional Summary Judgment

Appellant’s motion for continuance sought relief claiming an inadequate time for

discovery under Texas Civil Procedure Rule 166a(i). The “adequate time for discovery”

provision of Rule 166a(i) does not apply to traditional motions for summary judgment.

Allen v. United of Omaha Life Ins. Co., 236 S.W.3d 315, 326 (Tex. App.—Fort Worth

2007, pet. denied). Synergy raised several traditional summary judgment grounds in its

motion, including that damages were foreclosed as a result of the unreasonable

geographic restrictions. Thus, the trial court could not have abused its discretion in

considering Synergy’s traditional summary judgment grounds.

(c). Appellant Did NOT Need Synergy’s Revenue/Profit Information to Respond to Summary Judgment Challenges

With regard to Synergy’s no-evidence challenges, Appellant’s motion for

continuance stated that the depositions of Dr. Alford and Pierce’s expert (Dr. Cravens)

had been scheduled for June 10 and 13, respectively. (CR 769). These depositions

occurred; however, Appellant provides no argument and fails to direct this Court to any

9 evidence that it uncovered in either deposition that Appellant did not have when it

responded to the summary judgment motions. Thus, Appellant has not shown the trial

court abused its discretion based on the assertions raised in the motion for continuance.

The written discovery responses that Appellant currently identifies as “lacking”

are: (i) all hospitals in which Synergy has worked; (ii) contact information for every

surgeon that Pierce has worked with and hospital he has worked in; (iii) all documents

between Synergy and Dr. Alford regarding Appellant, Pierce, and hiring IOM techs; (iv)

Synergy’s ownership and corporate documents; (v) all documents regarding this case; (vi)

Synergy’s bills and receipts for IOM procedures where Pierce was the tech; and (vii)

Synergy’s profit and loss statements, account of income and expenses and its general

ledger.9

Pierce only worked with two surgeons (CR 962) and Appellant was provided with

a list of every procedure in which Pierce was involved, including identifying the date,

time, hospital and doctor. (CR 118, 133-38, 949-54). Appellant attached this list as an

exhibit to its summary judgment response. (CR 949-54). Thus, Appellant did not need a

continuance for any information relating to the procedures in which Pierce was involved.

The remaining discovery identified as lacking in Appellant’s brief is Synergy’s

revenue, profits, and other financial information (together “Synergy’s revenues/profits”).

9 Much of Appellant’s discovery is manifestly overly broad and not reasonably tailored to include only information regarding Pierce. Nor is there anything to show why the locations where Synergy operated was necessary for Appellant’s summary judgment response. If Appellant had such a valuable relationship with surgeons, as it tries to convince this Court, why would Appellant need to be provided with contact information provided by Synergy. Finally, there is nothing showing why any of the other information was necessary to respond to Pierce’s summary judgment Synergy’s ownership and corporate documents and all documents regarding this case.

10 Appellant had all of the information to identify every procedure in which Pierce was

involved and determine whether Appellant had been damaged by any of those

procedures. Appellant did nothing to bring forward evidence of any actual loss or its

own financial information to show a loss of any amount. Appellant attempts to distract

this Court from its shortcomings arguing it needed Synergy’s revenue/profits. For a

number of reasons, it was unnecessary for Appellant to have Synergy’s

revenues/profits in order to respond to the summary judgment motions.

Foremost, Appellant was absolutely barred by the Act from obtaining damages for

any alleged violation of the Covenant because it contained unreasonable restraints.10 As

a consequence, lost profits are immaterial to Appellant’s summary judgment response.

Therefore, a continuance was unnecessary to obtain Synergy’s revenues/profits.

Second, Appellant testified that it had documents showing its actual economic

damages, including lost profits. (CR 339-41, 349). It chose not to offer that evidence.

Appellant cannot create a need for a continuance by refusing to come forward with its

own documents.

Next, if Synergy’s revenues/profits were relevant to anything, it was only to the

quantum of Appellant’s alleged damages. Appellant must first, however, establish it

suffered damages before there is a need to quantify. It could not establish this

predicate fact.

Pierce’s leaving had nothing to do with any decline in Appellant’s revenues from

Dr. Alford’s group. (CR 337-38). When asked — “Do you have any evidence that Josh

10 Section III(H)(1), infra.

11 had anything to do with Dr. Alford’s decision to stop using Neurodiagnostics,” the

answer was “I don’t know.” (CR372).

Except for occasions where it was short staffed, Appellant repeatedly admitted

that it did not know whether it had lost any business following Pierce leaving. (CR

342-343, see also CR 332-33). When asked:

Q. Since Josh — since his employment with Neurodiagnostics was terminated, from that time to the present are you able to identify a single surgical procedure that Neurodiagnostics lost as a result of him working for Synergy? A. I don’t know. 11

(CR 372-73). Appellant wholly failed to bring forward any evidence that it experienced

any damages. If Appellant did not lose business, Synergy’s revenues/profits were neither

material nor necessary to respond to Pierce’s summary judgment motion. Therefore, the

trial court could not have abused its discretion in deny the request for a continuance.

Despite claiming to have its own evidence of damages, failing to establish it had

suffered an injury, and the statutory bar to the recovery of damages, Appellant argues that

Synergy’s revenues/profits are relevant under Arabesque Studios, Inc. v. Academy of Fine

Arts Int’l, 529 S.W.2d 564 (Tex. App.—Dallas 1975, no writ). Appellant’s reliance on

Arabesque is misplaced.

In Arabesque, the departing employee admittedly took thirty-two students from his

former employer and moved those students to the new employer’s business. Id. at 569.

Because the departing employee lured away the customers, the Arabesque Court held the

11 Appellant had a list of every IOM procedure (including the doctor and facility) that Pierce performed while at Synergy. (CR 118, 133-38, 949-54). Appellant had sufficient information by which to identify any lost procedures.

12 jury could infer the profits the new employer received would have, at least in part,

accrued to old employer. Id. No similar evidence exists in this case.

Here, Appellant admits that months before Pierce left its employ, Appellant was

doing little to no IOM work where Dr. Alford was the surgeon. (CR 208, 211, 277-78).

Appellant proffered no evidence that Pierce’s change in employment caused it any injury

(CR 337-38, 342, 343, 372, 373, 332-33) and whatever revenue Appellant had

historically received from procedures where Dr. Alford or his group was the surgeon had

ceased long before Pierce became a Synergy employee. (CR 337).

Unlike Arabesque, Pierce stopped working for Appellant months after Appellant

was no longer being assigned by hospitals to Dr. Alford’s and his group’s surgical cases.

In other words, Pierce was not the pied piper luring Dr. Alford or his group away.

Arabesque is inapposite and Synergy’s revenues/profits were neither material nor

necessary for Appellant to respond to Pierce’s summary judgment motion. Therefore, the

trial court did not abuse its discretion in denying Appellant’s request for a continuance.

B. ADEQUATE NOTICE OF SUMMARY JUDGMENT GROUNDS (APPELLANT’S ISSUE #2C)12

Appellant asserts Synergy’s summary judgment motion failed to delineate

between traditional summary judgment grounds and no-evidence summary judgment

grounds. Based on this assertion, Appellant argues the trial court erred by failing to grant

its special exceptions. (CR 1448).

12 Appellant’s issues 2a-2b are not directed solely to Synergy’s motion.

13 A trial court has broad discretion in ruling on special exceptions. Baylor Univ. v.

Sonnichsen, 221 S.W.3d 632, 635 (Tex. 2007). A trial court's ruling will be reversed

only if there has been an abuse of discretion. Aldous v. Bruss, 405 S.W.3d 847, 857 (Tex.

App.—Houston [14th Dist.] 2013, no pet.). The trial court did not abuse its discretion.

1. Appellant’s Special Exceptions are Insufficient

Absent from Appellant’s special exceptions and also absent from its briefing to

this Court is any specific paragraph or ground that Appellant asserts is unclear or

objectionable. (CR 812-14). Appellants’ special exceptions are nothing more than a

claim that Synergy’s entire summary judgment motion is “general and confusing.”

Special exceptions must “point out intelligibly and with particularity” the alleged

defect or omission in the pleadings. TEX. R. CIV. P. 91. When special exceptions fail to

specifically point out the defective allegations, they constitute a general demurrer and are

prohibited. TEX. R. CIV. P. 90; see also Castano v. San Felipe Ag., Mfg., & Irrigation

Co., 147 S.W.3d 444, 453 (Tex. App.—San Antonio 2004, no pet.). Because Appellant

failed to “point out intelligibly and with particularity” the complained-of defects, the trial

court did not abuse its discretion in denying the special exceptions.

2. Synergy’s Motion Sufficiently Delineated Grounds

Synergy’s motion for summary judgment clearly delineated between the summary

judgment grounds raised. In each instance where Synergy challenged a lack of evidence,

Synergy stated there is “no evidence” and underlined the words “no evidence” to

emphasize that Synergy was making a no-evidence challenge. This is shown in

Paragraphs 29, 36, 37, 43, 50, 51, 55, 56, 59, 62, 72, 76, 88, 90, 97, 104, 105, 110, and

14 111 of Synergy’s motion. (CR 149, 151-155, 158-59, 162, 164-67). In each instance,

Synergy went on to identify what it was that Appellant had to prove and further identified

what evidence Appellant lacked. This is exactly what is required of a no-evidence

challenge. Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 207 (Tex. 2002).

Synergy’s traditional summary judgment grounds, on the other hand, were

supported by evidence and textually indicated a basis other than a lack of evidence. By

way of example, Paragraphs 38-40 (“evidence conclusively establishes …” and

“Appellant admits”); Paragraph 58 (“conclusory claims disproven by the facts);

Paragraphs 63-66 (nowhere in section is there a mention of “no evidence”); Paragraphs

67-71 (same); Paragraph 87 “as a matter of law it is . . . .”). (CR 148, 153, 155-58, 161-

62, 167-68). The trial court did not abuse its discretion by denying Appellant’s special

exceptions.

C. COURT PROPERLY CONSIDERED SYNERGY’S SUMMARY JUDGMENT EVIDENCE (APPELLANT ISSUE #3)

Appellant’s third point complains that the trial court erred by refusing to strike

Synergy’s summary judgment evidence offered via supplementation and erred by

refusing to grant Appellant’s objections to hearing excerpts tendered by Synergy. These

complaints will be addressed in turn.

1. Trial Court Properly Considered Second Supplement (i.e. Appellant’s Judicial Admissions)

Appellant argues the trial court erroneously granted Synergy leave to file its

Second Motion to Supplement Summary Judgment (the “Second Supplement”). (CR

1453-54). Summary judgment evidence may be filed late, with leave of court.

15 Benchmark Bank v. Crowder, 919 S.W.2d 657, 663 (Tex. 1996). A ruling on a motion

for leave to file a late summary judgment evidence is reviewed for an abuse of discretion.

Carpenter v. Cimarron Hydrocarbons Corp., 98 S.W.3d 682, 686 (Tex. 2002). The trial

court did not abuse its discretion.

Appellant neglects to mention the “content” of the Second Supplement, which

consists entirely of:

• Appellant’s responses to requests for admissions, which Appellant served on Synergy after the May 12, 2014 deadline for summary judgment motions under the Scheduling Order (CR 763-67);13

• A request that the Court take judicial notice of Appellant’s Motion for Reconsideration, which was filed on May 20, 201414 (CR 757); and

• A brief argument explaining why these judicial admissions were relevant to Synergy’s pending summary judgment grounds (CR 756-62).

Appellant’s responses to admissions are judicial admissions, as are its pleadings.

Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 568 (Tex. 2001) (statements

in pleadings); Marshall v. Vise, 767 S.W.2d 699, 700 (Tex. 1989) (responses to requests

for admissions). A judicial admission conclusively establishes the admitted fact. TEX. R.

CIV. P. 198.3. A judicial admission “not only relieves [an] adversary from making proof

of the fact admitted but also bars the party himself from disputing it.” Horizon/CMS

Healthcare Corp. v. Auld, 34 S.W.3d 887, 905 (Tex. 2000).

13 The Second Supplement with Appellant’s admissions is contained in the Appendix as Exhibit B. 14 The Motion for Reconsideration sought reconsideration of the trial court’s decision not to hold Pierce in contempt. (CR 486-539) The reason for Synergy’s supplementation was Appellant’s admission that Pierce had not worked in all counties covered by the Covenant. (CR 487).

16 By the Second Supplement, Synergy requested leave to supplement the pending

summary judgment motion with Appellant’s judicial admissions, which were made after

Synergy filed its motion. (CR 757). Other than stating that the Second Supplement was

filed only fourteen days prior to the summary judgment submission date, Appellant did

not identify any surprise or prejudice that would result from admission of its judicial

admissions. (CR 781-84). In its briefing to this Court, Appellant conclusorily asserts that

it was prejudiced by the trial court’s consideration of the Second Supplement on only

fourteen days’ notice but fails to state how or why.15

Appellant’s judicial admissions cannot be a surprise to Appellant. Nor is allowing

judicial admissions into evidence prejudicial because it is an undisputed fact. In fact, the

admission of such evidence furthers the purpose of summary judgment — elimination of

patently unmeritorious claims and defenses. Cook v. Nacogdoches Anesthesia Grp.,

L.L.P., 167 S.W.3d 476, 480 (Tex. App.—Tyler 2005, no pet.). Therefore, the trial court

did not abuse its discretion in considering Appellant’s judicial admissions.

Appellant complains that Synergy added additional briefing by the Second

Supplement, but fails to identify what is objectionable. Synergy did not raise any new

summary grounds in its Second Supplement. (CR 756-62). Rather, Synergy showed the

Court, by reference to sections, how Appellant’s judicial admissions were relevant to the

pending summary judgment motion grounds.

• In Section III(B)(4) of Synergy’s Motion for Summary Judgment, Synergy raised and establishes that Appellant’s purported customer list is neither secret nor an interest

15 Appellant’s Br. pp. 28-29.

17 worthy of protection. Appellant admits this fact by filing of public record a list of each surgeon and each hospital that Appellant claims Pierce worked with while an employee of Appellant. This list is attached to Appellant’s Motion for Reconsideration. Such filing, even if not an admission, vitiates any right to protection; and

• In Section III(C) of Synergy’s Motion for Summary Judgment, Synergy raises and establishes that Josh Pierce’s covenant not to compete is not valid because it contains unreasonable restrictions.

Synergy then went on to state:

In APPELLANT’S RESPONSE TO SYNERGY IOM’S REQUEST FOR ADMISSIONS, Appellant judicially admits that Pierce never worked for Appellant in Ellis County, Hood County, Johnson County, Kaufman County, and Parker County.16 This is five (5) of the eleven (11) counties covered by the covenant. In other words, almost ½ of the counties enumerated in the covenant are counties in which Pierce never worked for Appellant.

These admissions conclusively establish17 that Pierce’s covenant contains unreasonable restrictions. Haass, 818 S.W.2d at 387; Evan's World Travel, 978 S.W.2d at 232-33; Butler, 51 S.W.3d at 792.

As a consequence, the covenant is not valid and enforceable and cannot be the basis of a tortious interference claim. Juliette Fowler Homes, 793 S.W.2d at 665; Travel Masters, 827 S.W.2d at 833; NCH Corp., 757 F.2d at 1543–1544; Lazer Spot, 387 S.W.3d at 49; Flynn Bros., Inc. v. First Med. Associates, 715 S.W.2d at 785. Therefore, Synergy is entitled to judgment on the tortious interference claim asserted by Appellant.

. . . .

In Section III(E) of Synergy’s Motion for Summary Judgment, Synergy raises Neurodiagnostic’s lack of damages as a summary judgment ground.

16 See Responses 7-11. 17 TEX. R. CIV. P. 198.3.

18 APPELLANT’S RESPONSE TO SYNERGY IOM’S REQUEST FOR ADMISSIONS conclusively establishes that Pierce’s covenant contains unreasonable restrictions.

Assuming (arguendo) the other predicates as to formation of a valid non-compete and competent evidence of reasonableness, Appellant’s best case scenario is that the Court reform the limitations contained in the covenant. See TEX. BUS. COMM. CODE §15.51(c).

. . . .

Appellant is, therefore, precluded from obtaining the very damages it now seeks from Synergy. Because Appellant is foreclosed, as a matter of law, from obtaining damages, the tortious interference claim fails as a matter of law.

(CR 759-61).

Because the Second Supplement only sought leave for the trial court to consider

Appellant’s judicial admissions and informed the trial court why such supplementation

was appropriate, the trial court did not abuse its discretion by granting leave and

considering Appellant’s admissions.

2. Hearing Transcripts Were Properly Admitted

Synergy tendered excerpts from the temporary injunction hearing and the

contempt hearing (Appendix Tabs 5 and 6 respectively). (CR 201-13, 215-23). Appellant

contends these excerpts were unauthenticated.18 Appellant further claims that it is

unclear who was speaking on the cited pages; thus, consideration of such testimony was

improper.19

18 Appellant’s Br. pp. 31-32. 19 Appellant’s Br. p. 31.

19 Equally available transcripts, such as these, do not require authentication via a

reporter's certification or an affidavit. See McConathy v. McConathy, 869 S.W.2d 341,

342 (Tex. 1994) (stating “[a]ll parties have ready access to depositions taken in a cause,

and thus excerpts submitted with a motion for summary judgment may be easily verified

as to their accuracy. Authentication is not necessary and is not required under the present

rules.”). The same is true for these hearing excerpts. Besides, each of the excerpts

included the reporter's certification. (CR 213, 223).

As to Appellant’s complaint that it is unclear “who” is testifying on the cited

pages, Appellant need only look to its copy of the transcripts to identify the speaker. Id.

at 342. Moreover, the excerpts contained everything needed to independently determine

who was testifying. Each excerpt included, among other things, a table of contents

identifying “who” is testifying on the various pages. (CR 201-05, 215-18). The trial

court, therefore, did not abuse it discretion in overruling Appellant’s evidentiary

objections.

D. SYNERGY COULD NOT INTERFERE WITH THE COVENANT BECAUSE IT IS NOT ANCILLARY TO AN OTHERWISE ENFORCEABLE AGREEMENT (APPELLANT’S ISSUE #4B)

When, as here, a covenant not to compete is an unreasonable restraint of trade; it

cannot form the basis of an action for tortious interference. Juliette Fowler Homes, Inc.

v. Welch Assocs., Inc., 793 S.W.2d 660, 663, 665 (Tex. 1990),20 superseded on other

grounds by statute as stated in Coinmach Corp. v. Aspenwood Apartment Corp., 417 20 Although some cases predate the 1989 adoption of the Act, courts should look to pre-Act cases for guidance in applying an interpreting the Act. Haass, 818 S.W.2d at 388; John R. Ray & Sons, Inc. v. Stroman, 923 S.W.2d 80, 84-85 (Tex. App.—Houston [14th Dist.] 1996, writ denied). This decision is highlighted and contained in the Appendix as Exhibit C.

20 S.W.3d 909, 923 (Tex. 2013) reh'g denied (Feb. 14, 2014); Travel Masters, Inc. v. Star

Tours, Inc., 827 S.W.2d S.W.2d 830, 833 (Tex. 1991);21 NCH Corp. v. Share Corp., 757

F.2d 1540, 1543–1544 (5th Cir.1985); Lazer Spot, Inc. v. Hiring Partners, Inc., 387

S.W.3d 40, 49 (Tex. App.—Texarkana 2012, pet. denied).22 Here, the trial court

correctly determined that the Covenant was an unenforceable restraint of trade and

properly granted summary judgment to Synergy.

A covenant not to compete is presumed illegal. TEX. BUS. & COMM. CODE

'15.05. The Act creates a safe harbor allowing enforcement; provided, the covenant

strictly complies with the Act. Travel Masters, 827 S.W.2d 832; Miller Paper Co. v.

Roberts Paper Co., 901 S.W.2d 593, 599 (Tex. App.—Amarillo 1995, no writ); Zep Mfg.

Co. v. Harthcock, 824 S.W.2d 654, 660 (Tex. App.—Dallas 1992, no writ). Appellant

has the burden to establish compliance with the Act. TEX. BUS. & COMM. CODE ANN.

'15.51(b).

Two initial inquiries are made when assessing compliance with Act: (i) is there an

“otherwise enforceable agreement,” and (ii) is the covenant “ancillary to or part of” that

agreement at the time the otherwise enforceable agreement was made. TEX. BUS. &

COMM. CODE ANN. ' 15.50; Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289

S.W.3d 844, 849 (Tex. 2009); Evan's World Travel, Inc. v. Adams, 978 S.W.2d 225, 230-

31 (Tex. App.—Texarkana 1998, no pet.).

21 This decision is highlighted and contained in the Appendix as Exhibit D. 22 This decision is highlighted and contained in the Appendix as Exhibit E.

21 In order to be “ancillary” the:

a. consideration given by the employer in the otherwise enforceable agreement must be reasonably related to an interest worthy of protection; and

b. covenant must be designed to enforce the employee's return consideration (e.g., a promise) in the otherwise enforceable agreement.

See, e.g., Marsh USA Inc. v. Cook, 354 S.W.3d 764, 773 (Tex. 2011); Alex Sheshunoff

Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644, 649 (Tex. 2006).

Synergy challenged Appellant’s lack of evidence of confidential or proprietary

information or any other interest worthy of protection (CR 147-60) because Pierce did

not use confidential information in the performance of his duties and IOM technicians are

board certified such that their duties are standardized throughout the industry. (CR 183-

84, 457). Appellant failed to bring forward competent evidence to satisfy its burden.

As discussed in more detail below, the only “consideration” that Appellant

identified in discovery as having provided to Pierce as part of an “otherwise enforceable

agreement” are: (i) training; (ii) customer information, including surgeon preferences;

(iii) pricing; and (iv) technique. (CR 241, 263, 272, 275-77). Appellant would not

identify or describe, even generally, any technique it believed to be a protectable (CR

275-77) or what was confidential as to the delivery of its service. (CR 368-69).

Appellant only generically identified the other categories, but provided no details or

evidence. This is due to the fact that this is standardized procedure throughout the

industry.

22 1. Training

(a). No Evidence that Training or Advancement of Funds for Training Was Worthy of Protection

Synergy specifically challenged that the training Pierce received or Appellant’s

advancement of funds for that training was an interest worthy of protection by a

noncompete. (CR 291, 147-60). Without such proof, the provision of, or payment for,

training was not ancillary to the Covenant.

Appellant responded by merely claiming that it had paid the cost of Pierce’s

certification training23 (CR 822-23, 834, 835) and that such “training directly related to

the type of work that [Pierce] did for [Appellant] and now does for Synergy.” (CR 825-

26, 836). Appellant’s response would require this Court to hold that any training

whatsoever, if it is job related, is automatically worthy of protection. This is incorrect for

many reasons.

First, mere advancement of funds is not an interest worthy of protection.

Sheshunoff, 209 S.W.3d at 650 (recognizing payment of money is not a protectable

interest). Second, Appellant’s contention that all work-related training is sufficient is

incorrect. See Daytona Grp. of Tex., Inc. v. Smith, 800 S.W.2d 285, 290 (Tex. App.—

Corpus Christi 1990, writ denied) (holding publicly available training is not a protectable

interest); Hospital Consultants, Inc. v. Potyka, 531 S.W.2d 657, 662 (Tex. Civ. App.—

San Antonio 1975, writ ref'd n.r.e.) (training given to emergency room physicians was

23 It is a misstatement to say Appellant paid for training. Pierce re-paid for cost of training under the precise terms set forth in the employment agreement. (CR 183-86).

23 not a protectable interest because it belongs to the employee); Evan's World Travel, 978

S.W.2d at 231 (training given to employee was not worthy of protection).

Appellant’s response failed to connect the dots by failing to provide evidence

establishing whether Pierce’s certification training was, in fact, an interest worthy of

protection. There was nothing showing that what Pierce did or learned was different than

what is done throughout the IOM industry. Appellant came forth with nothing

identifying any curriculum, content, or information that Pierce learned in that training

that was unique to Appellant, confidential, or that would be protectable for any reason

whatsoever. Because Appellant failed to come forward with evidence that the training

provided to Pierce was worthy of protection by a noncompetition agreement, Appellant

failed to establish the agreement regarding training was ancillary to the Covenant.

(b). Training and Advancement of Funds for Training Was NOT an Interest Worthy of Protection

In comparison, the training was conclusively shown not to be an interest worthy of

protection. The mere fact “[t]hat a former employee was trained by the employer is not a

ground for enforcing a restrictive covenant not to compete, even if the training was

complex and extensive.” Custom Drapery Co. v. Hardwick, 531 S.W.2d 160, 165 (Tex.

Civ. App.—Houston [1st Dist.] 1975, no writ); see Grace v. Orkin Exterminating Co., 255

S.W.2d 279, 285 (Tex. Civ. App.—Beaumont 1953, writ ref'd n.r.e.); Lazer Spot, 387

S.W.3d at 46. While Appellant suggests that there is some distinction between the cited

cases and this case (CR 837), none exists. Just as in Custom Drapery and Grace,

24 Appellant’s promise to train is not identified in the employment agreement as “quid pro

quo” for the Covenant. (CR 176-90).

Synergy acknowledges that “specialized” training involving a company’s

proprietary information may be worthy of protection; however, the facts necessary to

warrant protection do not exist in this case. This is board certification training that is

taught, tested, and applied by all IOM technicians throughout the IOM industry.

Appellant admits there is nothing confidential or proprietary about the training that Pierce

received and it is available in the open market.

Q. And I believe you answered a question that Mr. Hampton asked. There's nothing about the training -- A. No. Q. -- that's confidential? A. No. Q. It's all in the public domain? A. Correct. Q. It just costs you time and money, right? A. Correct.

(CR 263).

Indeed, Appellant unequivocally testified that it did not care about protecting the

educational training that Pierce received.

Q. Let me see if I can ask it again. Your concern is that Mr. Pierce was trained and then worked in an environment where he gained certain specialized knowledge and expertise. A. Um-hum.

Q. You've got to say yes or no. A. Yes.

Q. Okay. And then because of that, he should be bound by the covenant not to

25 compete that he signed prior to being trained or receiving any knowledge, specialized knowledge. A. Not the education, not –

Q. You don't care about the education part. A. Correct.

(CR 244). Because the training in this case is “in the public domain” (and is admittedly

not an interest Appellant even seeks to protect) it is not an interest worthy of protection.

See, e.g., Daytona Grp., 800 S.W.2d at 290. Consequently, the training Pierce received

cannot support the Covenant.

Appellant’s advancement of monies does not transform training, which does not

warrant protection, into a protectable interest. Sheshunoff, 209 S.W.3d at 650

(recognizing payment of money is not a protectable interest). More importantly,

Appellant’s advancement of funds for training has been fully repaid, precisely as

contemplated in the employment agreement. Appellant allowed Pierce to repay the

advanced funds by working for 48 months after becoming board eligible. (CR 183-86).

Pierce became board eligible in 2006 and worked for Appellant for more than 48 months

after that time. (CR 843,24 173). Appellant was fully repaid its advancement of training

costs, precisely as it had agreed. (CR 183-86). Pierce, therefore, effectively paid for his

own training.

Appellant also argues that Pierce received and Appellant paid for continuing

education and on-the-job training (CR 823, 843, 857); however, the employment

agreement does not mention continuing education or on-the-job training. (CR 183-84).

24 Also judicially admitted Appellant’s Br. p. 51.

26 The employment agreement only refers to training to “become board eligible,” to

“become registered as an REPT,” and to “become registered as a CNIM,” there is no

mention of any continuing education or training after “eligibility” or “registration.” (CR

183-86). There are also no facts identifying or detailing what was encompassed by this

“on-the-job-training” and whether it was worthy of protection. (CR 823, 843, 857).

Therefore, regardless whether Pierce received or Appellant paid for continuing education,

this was not part of an otherwise enforceable agreement ancillary to the Covenant at the

time it was made. Because the evidence conclusively establishes that Pierce’s training

was not an interest worthy of protection and further establishes that Pierce repaid the cost

of that training as provided for in the employment agreement, the agreement regarding

training was not ancillary to the Covenant.

2. Covenant Not Designed to Enforce Pierce’s Return Promise Regarding Training

(a). No Evidence Covenant Was Designed to Enforce Pierce’s Promise Regarding Training

Appellant has no evidence showing that the Covenant was designed to enforce any

promise by Pierce related to training. (CR 149). When challenged on this precise issue,

Appellant responded:

The noncompete may have been designed, at least in part, to make Pierce live up to his agreement to repay Appellant for training expenses if he left employment with Appellant within 5 years.

(emphasis added) (CR 838).

27 Appellant provides no evidentiary citation to support its assertion of a possible

nexus and fails to even unambiguously claim such a nexus exits. Appellant instead

argues that other proprietary information existed to support the Covenant but failed to

identify that information (discussed below). Because Appellant failed to come forward

with evidence that the Covenant was designed to enforce Pierce’s consideration regarding

training, Appellant failed to establish the agreement regarding training was ancillary to

the Covenant.

(b). Covenant NOT Designed to Enforce Pierce’s Promise Regarding Training

In actuality, the evidence conclusively established the Covenant was not designed

to enforce Pierce’s consideration regarding training. Appellant agreed to provide for

Pierce’s training in exchange for either: (i) Pierce’s promise to work for a stated period

of time; or (ii) payment of $5,000, with interest. (CR 183-86).

Other than repayment under the stated terms, Pierce made no other promise in the

employment agreement related to training. By way of example, there is no prohibition on

Pierce’s use or disclosure of whatever knowledge, education, or techniques he learned

through training. (CR 179-80).25

Moreover, the repayment obligation establishes that Pierce’s five-year Covenant

was not intended as an enforcement mechanism to insure repayment. For example,

repayment is: (i) immediately due and payable “in cash upon the date of termination” of

Pierce’s employment; (ii) the unpaid debt accrues eight percent (8%) interest; (iii)

25 There can be no agreement as to the alleged ongoing training because it was never mentioned.

28 Appellant is entitled to an award of attorney’s fees and costs to collect any unpaid debt;

(iv) applied in specific order. (CR 184-85). While the terms expressly cover how the

repayment obligation is to be repaid, there is no mention of the Covenant. The Covenant

was not designed to enforce either Pierce’s promise to “work off” or repay the cost of his

training. Therefore, the agreement regarding training was not ancillary to the Covenant.

3. Customer Information Not an Interest Worthy of Protection

As noted previously, Appellant argued that proprietary information, other than

training, supported the Covenant. When asked to identify the confidential information

provided to Pierce in any detail, Appellant refused to answer most questions (CR 272-77,

246-47, 311, 368-69) and would only generically state that its customer list, surgeon

preferences, and pricing structure were proprietary. (CR 241, 263, 272, 275-77).26

Appellant never identified any allegedly confidential information with any specificity.

(a). No Evidence that Customer Information Was Worthy of Protection or Reasonably Related to One

With regard to all allegedly confidential customer information, Synergy

specifically challenged that there was no evidence that: (i) such information is

Appellant’s trade secret; (ii) such information is entitled to protection (in other words an

interest worthy of protection); (iii) such information was disclosed to Pierce by

Appellant, as opposed to by the hospital or surgeon; or (iv) that Pierce took any such

information with him, other than by way of his general knowledge and skill. (CR 151).

26 Appellant suggests that Pierce may have some of its business forms, but admitted these forms were neither confidential nor secret and were created from reference books (CR 264-65).

29 In its summary judgment response, Appellant provided nothing demonstrating that

surgeon preferences was its confidential information, that it had provided Pierce with this

information, or that the information was an interest worthy of protection. (CR 835-37).

In fact, Appellant’s summary judgment response failed to mention surgeon preferences.

Thus, Appellant failed to produce a scintilla of evidence that surgeon preferences was an

interest it was entitled to protect or one even worthy of protection.

As to pricing, Appellant’s response indicates that “methods of pricing” are

mentioned in the employment agreement (CR 835, 840) and Boldery’s affidavit states

Appellant’s pricing was confidential (CR 857); however, Appellant falls short of any

competent evidence showing that any pricing information given to Pierce was

confidential or worthy of protection by a noncompete covenant. There are no facts,

including “how” or “why” any pricing information in this case should be protected by a

covenant not to compete. (CR 857-59). Appellant’s conclusory statement and subjective

beliefs are not evidence. In re Cauley, 437 S.W.3d 650, 657 (Tex. App.—Tyler 2014,

orig. proceeding); Courtney v. Nibco, Inc., 152 S.W.3d 640, 644 (Tex. App.—Tyler

2004, no pet.). Thus, Appellant failed to produce a scintilla of evidence that its pricing

was an interest worthy of protection.

Appellant also argues that its customer list/identities are worthy of protection

because customer information has been recognized by courts as protectable. Appellant

relies on a bevy of cases where a temporary injunction issued to protect customer

lists/identities/information; however, issuance of a temporary injunction does not mean

30 the information was, in fact, a trade secret. See, e.g., IAC, Ltd. v. Bell Helicopter Textron,

Inc., 160 S.W .3d 191, 197 (Tex. App. — Fort Worth 2005, no pet.).

Appellant’s argument presupposes anything falling within the category of

customer information is worthy of protection. (CR 840). The mere fact that courts have

issued temporary injunctions to protect information falling within the category of

customer information does not relieve Appellant from establishing that its customer

information is confidential and worthy of protection in this particular case. Protection

does not automatically attach to such things as a customer list. Numed v. McNutt, 724

S.W.2d 432, 435 (Tex. Civ. App.—Fort Worth 1987, no writ); Allan J. Richardson &

Assocs., Inc. v. Andrews, 718 S.W.2d 833, 837 (Tex. App.—Houston [14th Dist.] 1986,

no writ).

To rise to a level of an interest worthy of protection, the information must be more

than merely of a kind and character encompassed by the definition. It must be

information that is not publicly available or readily ascertainable by independent

investigation. Numed, 724 S.W.2d at 435; Allan J. Richardson & Assocs., 718 S.W.2d at

837. A customer list must have a substantial element of secrecy for protection. Numed,

724 S.W.2d at 435; Am. Precision Vibrator Co. v. Nat'l Air Vibrator Co., 764 S.W.2d

274, 276 (Tex. App.—Houston [1st Dist.] 1988) as modified, 771 S.W.2d 562 (Tex.

App.—Houston [1st Dist.] 1989, no writ).

Appellant does nothing more than make conclusory statements as to status of its

customer information. There is no evidence of exactly “what” is confidential/protectable,

much less “how” or “why” any information in this case is protectable. (CR 857-59).

31 Appellant wholly failed to come forward with evidence that any of its customer

information (lists, identities, or anything else) was worthy of protection. In fact, it

refused to do so. When Appellant’s founder, sole owner, and corporate representative,

was asked about the alleged confidentiality of customer information, Ms. Boldery would

not disclose “what” exactly was confidential or “why” such information was confidential.

Q. Is there anything confidential about the identity of the hospitals or surgical facilities that I might want to contact in order to market my new business? Certainly you're not claiming that, are you? A. I believe that there is.

Q. So, you think there's something confidential about the fact that there are surgeries that occur at Harris Hospital, Cook's Hospital, Baylor All Saints, HEB, Huguley? A. Yes.

Q. Okay. What about the physicians that might perform, say a neurosurgeon? Is there anything confidential about the identity of the physicians that are neurosurgeons at certain hospitals? A. Yes.

Q. (By Mr. McLean) What? A. It's confidential.

. . . .

Q. So are you claiming that the identity of the physicians that might use IOM at USMD Fort Worth is confidential? A. No.

Q. Okay. And are you claiming that the contact information for how to contact their offices is confidential? A. No.

Q. Because that's published too. So, what is it other than physician preferences -- I'm not – I understand you've said that, like if they like hams for

32 Christmas, but what is it about identifying a list of potential physician customers that is confidential to Neurodiagnostics? A. It's confidential.

Q. What is? A. The information is confidential.

Q. So you're not even going to tell me what it is? A. (Witness shakes head.)

Q. All right. A. No.

(CR 272-77, 246-47).

Appellant’s assertion that its information falls within a recognized category of

potentially protectable information coupled with its bare conclusions that its customer

information is confidential, thus implicitly suggesting worthy of protection, is insufficient

to overcome a no-evidence challenge. Texas Div.-Tranter, Inc. v. Carrozza, 876 S.W.2d

312, 314 (Tex. 1994) (conclusory statements unsupported by facts are insufficient to raise

a fact issue to prevent the granting of summary judgment); In re Cauley, 437 S.W.3d at

657 (same).

Because Appellant failed to come forward with evidence demonstrating “what”

and “why” surgeon preferences, its customer list/identities, or other customer information

constituted an interest worthy of protection in this case, Appellant failed to raise a

genuine issue of fact. Appellant, therefore, failed to meet its burden of establishing

compliance with the “ancillary” requirements for an enforceable covenant.

33 (b). Customer Identities NOT Worthy of Protection

To the extent Appellant alleges there was some undisclosed “confidentiality”

regarding client identities or other customer information, this was conclusively disproven

by the facts. First, Appellant filed pleadings identifying the hospitals where Pierce

worked and the surgeons with whom Pierce worked. (CR 860-61, 497-98). Once filed,

the information is public record and prevents the identity of these hospitals and surgeons

from being an interest worthy of protection. See Star-Telegram, Inc. v. Walker, 834

S.W.2d 54, 57 (Tex. 1992) (filing documents destroys confidentiality/secrecy).

Second, as to the surgeons, Appellant does not have a contract with any surgeon

(CR 231-34) and Appellant does not even consider the surgeon to be its client (CR 231-

34). The identity and contact information of non-clients cannot be an interest worthy of

protection.

Finally, the identity of the surgeons and the hospitals where they practice is

publicly available and readily ascertainable.27 Appellant admits surgeon and hospital

identities are not confidential and available on the doctor’s and hospital’s websites. (CR

272-77, 246-47). It is axiomatic that the hospitals know whether they have contracted

with Appellant. Likewise, the hospital knows the surgeons to whom the hospital has

assigned Appellant as the IOM provider. (CR 235-37). If Appellant’s IOM technician is

present in surgery, the fact Appellant contracts with that hospital is also known by the

surgeon(s) and surgical staff involved in the procedure. The identity of the hospitals and 27 A defendant can be liable for misappropriation for actually taking protectable information, even though that information may be readily ascertainable through legitimate means. See, e.g., Sharma v. Vinmar Int'l, Ltd., 231 S.W.3d 405, 424 (Tex. App.—Houston [14th Dist.] 2007, no pet.). However, there is no evidence Pierce took anything.

34 surgeons is also known to the surgical patients, as well as third-party payors who pay

Appellant directly for its services (CR 266-69).

Additionally, the identity of the surgeons and hospitals was already known to Dr.

Alford and others because Appellant has subcontracted its IOM services to others. (CR

209-10). Such information was also known to Appellant’s competitors who have

contracts with the same hospitals and provide monitoring for the same surgeons. (CR

241-43, 234).

Appellant has no protectable interest in this public and readily available

information. Nor does Appellant have a right to prevent dissemination of the identity of

the hospitals with which it contracts or the identity of surgeons with whom it is assigned

to work. (CR 234,28 268-69,29 209-1030). Appellant came forward with nothing to show

an obligation on the part of any surgeon, hospital, or third party payor to maintain the

identity of these surgeons and hospitals confidential. Consequently, there is nothing

preventing Synergy, a hospital, surgeon, or anyone else that knew this information from

disclosing or using such information. These facts conclusively establish that identity of

hospitals and surgeons were not an interest worthy of protection.

(c). Surgeon Identities/Preferences NOT an Interest Worthy of Protection

Synergy also established that any information about a surgeon is not worthy of

protection. Here, it is the hospitals that assign cases to Appellant and its competitors.

(CR 235). Assuming, as Appellant suggests, the surgeon requests that a hospital assign a

28 Admitting no contracts with doctors. 29 Admitting that it does not have contracts, or many contracts, with third-party providers. 30 Admitting contract with Synergy ended in December 2012.

35 specific IOM company to handle a procedure, the surgeon is merely a referral source.31

Professional referral sources are not legitimate proprietary interests that may be protected

by a covenant not to compete. See Philip H. Hunke, D.D.S. v. Wilcox, 815 S.W.2d 855,

858 (Tex. App.—Corpus Christi 1991, writ denied) (holding the fact “flow of new

patients would be diluted whenever a [competitor] is introduced into the group of local

professionals” does not “form a legitimate proprietary interest which may be protected by

a covenant”). Therefore, the identities and other information regarding surgeons are not

interests worthy of protection.

Additionally, Dr. Alford is free to disclose to Appellant’s competitors or anyone

else for that matter, what he likes and dislikes a monitoring technician do to in surgery.

The same is true for any other surgeon. Any surgeon can freely disclose to Synergy,

Appellant, nurses, or any stranger on the street his/her preferences for monitoring and

testing during a procedure. Accordingly, a surgeon’s preferences are not an interest of

Appellant’s that is worthy of protection via a covenant.

(d). Appellants’ Pricing NOT an Interest Worthy of Protection

The final category of information that Appellant claims worthy of protection is its

pricing information; the evidence established otherwise. Appellant admitted that its

pricing has been the same for more than a decade. (CR 270-71). There is nothing secret

about Appellant’s pricing, especially after twelve (12) years.

31 Neither Pierce nor any of Appellant’s IOM technicians are assigned to any specific doctor or hospital. (CR 363). Appellant assigned its IOM technicians on an “as available” basis. Thus, Pierce was not the continual point of contact or even the primary contact between Appellant and any surgeon or hospital.

36 First, Appellant’s so-called confidential pricing is dictated to it by others. In many

instances Appellant’s pricing was set by the hospitals or a third-party payor. (CR 209).

Appellant has also been asked to reduce its rates so as to remain competitive with other

IOM providers. (CR 241-43, 238).

Second, Appellant has also publicly disclosed the amount it receives ($150) by

filing invoices with the trial court. (CR 209-10). This public disclosure prevents the

information from being an interest worthy of protection. See Star-Telegram, 834 S.W.2d

at 57.

Third, its pricing is also contained in its contracts with the hospitals (CR 234), is

contained in invoices Appellant sends out (CR 195-99), and is known to the hospitals and

third-party payors who set the prices and pay the invoices. (CR 266-67). Dr. Alford’s

former monitoring company, was also aware of Appellant’s pricing. (CR 209-10).

Appellant cannot establish that any hospital, third-party payor, Dr. Alford, or anyone else

has an obligation to maintain Appellant’s pricing confidential.

The Fort Worth Court of Appeals has addressed the protectability of information

when it is available to a much lesser degree than Appellant’s pricing information. In

Numed the court held:

Here, the facts do not justify conferring the status of trade secret on the data Numed claims requires protection. The evidence reflects much of the information Numed wishes to protect is not secret. Instead, it is contained in the contracts distributed to Numed's customers, which in turn may be discovered by anyone.

Numed, 724 S.W.2d at 435.

37 Appellant’s pricing information has been repeatedly disclosed for twelve (12)

years, without restriction, and can be readily obtained from any number of sources.

Accordingly, Appellant’s pricing information is unworthy of protection. Numed, 724

S.W.2d at 435. Because Appellant’s pricing information is not worthy of protection, it

cannot have a valid enforceable covenant not to compete based thereon.

(e). Appellant Not Relieved From Establishing Ancillary Requirements

Appellant argues that it was relieved of establishing the “specific details of [its]

confidential and proprietary information” because it had “sought and received protection

from the [trial court] regarding these details.”32 Assuming this to be correct, Appellant

was not faced with a discovery request, it was faced with a no-evidence summary

judgment.

A no-evidence motion for summary judgment must be granted if: (i) the moving

party asserts that there is no evidence of one or more specified elements of a claim or

defense on which the adverse party would have the burden of proof at trial; and (ii) the

respondent produces no summary judgment evidence raising a genuine issue of material

fact on those elements. See, e.g., Acad. of Skills & Knowledge, Inc. v. Charter Sch., USA,

Inc., 260 S.W.3d 529, 534 (Tex. App.—Tyler 2008, pet. denied).

Appellant certainly has the option of not coming forward with evidence in support

its claims, it just cannot refuse to come forward with evidence and also maintain claims

for affirmative relief. As stated by the Texas Supreme Court:

32 Appellant’s Br. pp. 45-48.

38 A plaintiff cannot use one hand to seek affirmative relief in court and with the other lower an iron curtain of silence against otherwise pertinent and proper questions which may have a bearing upon his right to maintain his action.

National Union Fire Ins. Co. v. Valdez, 863 S.W.2d 458, 461 (Tex. 1993).

Assuming Appellant has a right to protect the information:

[it] cannot eat [its] cake and have it too. The defendant also has certain rights, one of which is to defend [the] lawsuit and to develop an affirmative defense which may well destroy the plaintiff's right to maintain his action.

Tex. Dep't of Pub. Safety Officers Ass'n v. Denton, 897 S.W.2d 757, 761 (Tex. 1995).

Appellant argues it only needed to show that it had information falling into

categories of information where other courts had found those categories protectable.33

To put this in perspective, Appellant claims it does not have to identify the information it

claims was supposedly given to Pierce in support of the Covenant or why such

information was worthy of protection. The mere fact Appellant claims its information

falls within a category of information is insufficient to raise a fact issue.34

In the face of a no-evidence summary judgment, Appellant elected not to come

forward with information necessary to raise a fact issue on its claims. Because Appellant

was unwilling to provide anything more than ipse dixit statements regarding a protectable

interest, Appellant failed to meet its burden of proof under Texas Business Commerce

Code Section 15.51 and required the trial court to grant Synergy judgment. Acad. of

Skills & Knowledge, 260 S.W.3d at 534.

33 Appellant’s Br. pp. 45-48. 34 Section III(D)(3)(a), supra.

39 E. THE COVENANT’S RESTRAINTS ARE UNREASONABLE (APPELLANT ISSUE #4C)

Assuming (arguendo) some protectable interest is found to exist, the Covenant is,

nonetheless, unenforceable because it is broader than necessary to protect Appellant’s

interests. A covenant is enforceable only to the extent that it contains restraints as to

time, geographic area, and scope, which are no greater than necessary to protect good

will or other business interests of the employer. TEX. BUS. & COMM. CODE §15.50;

Gallagher Healthcare Ins. Services v. Vogelsang, 312 S.W.3d 640, 654 (Tex. App.—

Houston [1st Dist.] 2009, pet. denied); John R. Ray & Sons, Inc. v. Stroman, 923 S.W.2d

80, 85 (Tex. App.—Houston [14th Dist.] 1996, writ denied).

Restraints are unreasonable if they are broader than necessary to protect the

legitimate interests of the employer. DeSantis v. Wackenhut Corp., 793 S.W.2d 670,

681-82 (Tex. 1990); Stroman, 923 S.W.2d at 84-85. Appellant bears the burden to

establish the reasonableness of each restraint. TEX. BUS. & COMM. CODE ANN. '15.51(b).

1. No Evidence that 5 Year Covenant Was Reasonable

Synergy challenged the lack of evidence establishing that a five (5) year restraint

was a reasonable in this case. (CR 162). Appellant could not articulate any basis for a 5-

year restraint. (CR 355-59).

Appellant cites Stone v. Griffin Communications & Sec. Sys., Inc., 53 S.W.3d 687,

696, no pet.), overruled on other grounds by Am. Fracmaster, Ltd. v. Richardson, 71

S.W.3d 381 (Tex. App.—Tyler 2001, pet. granted, judgment vacated w.r.m.), for the

proposition that a 5-year restraint is per se reasonable. Appellant misreads Stone. Stone

40 recognizes that a 5-year restraint is not per se unreasonable, it does not hold that a 5-year

restraint is per se reasonable. Stone went on to hold that a 5-year restraint reasonable

because the evidence in that particular case established that it would take 5 years for the

protectable information to become outdated.35

Unlike Stone, Appellant offers no evidence that whatever information Pierce

allegedly received will not become outdated for at least five (5) years. Here, there is no

evidence that any protectable information (assuming it exists) will not be outdated at the

end of the month or that it is not already outdated. Appellant’s reliance on Stone is

misplaced.

(a). Advancement Does NOT Make 5 Years Reasonable

To justify the duration of the Covenant, Appellant returns to its advancement of

$5,000 for Pierce's training claiming this makes the 5-year restraint is reasonable.36

Because, the training is not an interest worthy of protection,37 it is self-evident that a 5-

year restraint is broader than necessary to protect that training.

Appellant’s assertion is also devoid of authority and provides no logical nexus

between the training/funds and the 5-year restraint. Appellant could have summarily

stated any duration was reasonable, just as it has done with stating 5 years is a reasonable

period. There is simply no nexus between the advance or its amount and the imposition

of a 5-year noncompete.

35 Appellant’s Br. p. 49. 36 Appellant’s Br. p. 51. 37 Section III(D)(1)-(2), supra.

41 Examination of the repayment arrangement also establishes that a 5-year covenant

is unreasonable. If Pierce did not repay the loan via the workout, he was obligated to

immediately reimburse Appellant $5,000.00, with interest. (CR 183-86). In other words,

if Pierce quit 90 days after becoming board certified he would have had to immediately

repay Appellant the entire sum. The Covenant was in no way tied to his promise to repay

the advancement of training costs. For example, if Pierce had to repay the advancement

the Covenant is not tied to his final payment. With regard to the workout period, it was

48 months, not 60 months. Moreover, the mere fact Pierce elected to “work off” the debt

in lieu of a cash repayment does not justify an additional five (5) year prohibition after

the debt has been satisfied.

(b). Long Employment Does NOT Equal Long Covenant

Finally, Appellant argues Pierce was employed for more than 5 years and received

“on the job training” and continuing education during his entire employment. (CR 823,

843, 857). Essentially, Appellant’s argument is that because Pierce remained employed

for a long time, he should be restricted for a long time. The term of the employment was

limited to just 90 days. (CR 176). Otherwise, Pierce’s employment was at-will.

Appellant offers no authority for its tit-for-tat argument and provides no evidence that 5

years is a reasonable restraint based on the duration of Pierce’s employment.

With regard to Appellant’s claim of ongoing training, neither the “on-the-job-

training” nor the continuing education is mentioned in the employment agreement. (CR

183-84). And, there are no facts identifying or detailing what this ongoing training

consisted of. (CR 823, 843, 857). Even if this training occurred at the tail end of Pierce’s

42 employment, this supposed ongoing training could have been publicly available or the

information out-of-date within a week. There is simply no evidence that whatever the

ongoing training Pierce might have received makes a 5-year restraint reasonable.

Therefore, accepting (arguendo) Appellant’s claim that ongoing training occurred, this

does not raise a fact issue whether a 5-year restraint is reasonable. Because Appellant

failed to present any evidence of that a 5-year restraint is reasonable, Synergy is entitled

to judgment that the duration of the covenant is unreasonable and, therefore,

unenforceable and incapable of supporting a tortious interference claim.38 Patel v. City of

Everman, 179 S.W.3d 1, 17 (Tex. App.—Tyler 2004, pet. denied).

2. Geographic Restraints Were Unreasonable

Separate from the 5-year restraint, the geographic restrictions are patently

unreasonable. (CR 181-82).39 A covenant not to compete is unenforceable when the

38 Section III(D), supra. 39 Appellant suggests that a no-solicitation provision in the employment agreement is enforceable and provides an alternative to the 11-county covenant. The no-solicitation provision is equally flawed. Without question, the no-solicitation provision is subject to the Act. Marsh United States, Inc. v. Cook, 354 S.W.3d 764, 768 (Tex. 2011). As a consequence, the absence of an otherwise enforceable agreement to which the no-solicitation clause is ancillary is fatal to the enforcement of the no-solicitation provision.

The no-solicitation provision applies to only current and future customers. Appellant admits surgeons are not its customers. Moreover, whatever the relationship between Dr. Alford and his group and Appellant, the evidence establishes that was a prior relationship, not a current or future one.

Additionally, the no-solicitation provision contains no time period whatsoever. (CR 182). It is an absolute bar to any contact with customers, regardless of activity. (CR 182). And, it applies to all of Appellant’s customers, not just the ones with whom Pierce worked. (CR 182). Each of these failings makes the no-solicitation provision unenforceable. Dale v. Hoschar, 2014 Tex. App. LEXIS 8816, *4 (Tex. App.—Dallas 2014, no pet.) (covenant with an indefinite duration is unenforceable as a matter of law); Haass, 818 S.W.2d at 387-88 (activities have to be ones in which promisor engaged and cannot “prohibit[] an employee from working with clients that did not exist at the time employee left or with whom employee had no contact.”).

43 restraint includes areas that the employee did not work for the former employer. Peat

Marwick Main & Co. v. Haass, 818 S.W.2d 381, 387 (Tex. 1991) (holding “the

restrictive covenant must bear some relation to the activities of the employee. It must not

restrain his activities into a territory into which his former work has not taken him . . . .”);

Cobb v. Caye Publ. Grp., Inc., 322 S.W.3d 780, 784-86 (Tex. App.—Fort Worth 2010,

no pet.) (holding reformation limited to areas where former employee actually worked);

Evan's World Travel, 978 S.W.2d at 232-33 (holding noncompete enforceable only as to

the one county that employee had worked in for former employer); Butler v. Arrow

Mirror & Glass, Inc., 51 S.W.3d 787, 792 (Tex. App.—Houston [1st Dist.] 2001, no pet.)

(reforming covenant to only counties in which the employee had conducted his duties);

Zep Mfg., 824 S.W.2d at 660-61 (holding a covenant unenforceable because it prohibited

an employee from working anywhere, regardless of whether he had serviced the area

during his employment); Webb v. Hartman Newspapers, Inc., 793 S.W.2d 302, 303 (Tex.

App.—Houston [14th Dist.] 1990, no writ) (restricting geographical area of a noncompete

covenant between a newspaper publisher and former employee to the distribution area of

the newspaper for which the employee had worked).

There is also a diversion of business provision, which applies to all “existing and future business.” In addition to a lack of an ancillary agreement, it is not limited to business with which Pierce was involved (Haass, 818 S.W.2d at 387-88) and is too indefinite to be enforced based on restrictive language of “existing or future business.” See, e.g., Weatherford Oil Tool Co. v. Campbell, 161 Tex. 310, 340 S.W.2d 950, 951-52 (1960) (geographic scope described as “any area where Weatherford Oil Tool Company, Inc., may be operating or carrying on business” undeterminable and subject to change; therefore unenforceable); Gomez v. Zamora, 814 S.W.2d 114, 118 (Tex. App.—Corpus Christi 1991, no writ) (holding restrictive language of “existing marketing area” and a "future marketing area of the employer begun during employment” to indefinite to be enforced); Hoschar, 2014 Tex. App. LEXIS 8816, at *7.

44 The Covenant restrains Pierce from engaging in activities in eleven counties;

however, Appellant did not perform any services in at least one of those counties (CR

259) and Pierce never worked for Appellant in five of those counties. (CR 764-65).

Appellant’s document shows that Pierce actually did not work in six of the eleven

counties. (CR 860). The Covenant’s geographic restraints are, therefore, unreasonable as

matter of law. Haass, 818 S.W.2d at 387; Evan's World Travel, 978 S.W.2d at 232-33;

Butler, 51 S.W.3d at 792; Zep Mfg., 824 S.W.2d at 660-61; Webb. 793 S.W.2d at 303.

Appellant makes the bare assertion that the “geographic restriction at issue here is

limited to the territory in which the employee worked while in the employment of

NeuroTex.”40 Appellant cites no evidence to support this assertion because none exists.

Appellant next asserts that the geographic restraints are reasonable because “[i]n

2005, when the Employment Agreement was entered into by the parties, Appellant had

either worked in or had prospective business in the counties included within the covenant

not to compete.” (CR 845)41 Appellant’s assertion misses the mark.

Whether Appellant had or might have intended to do business in a geographical

locale is not the test for determining the reasonableness of Pierce’s Covenant.42 Cobb,

322 S.W.3d at 784-86; Haass, 818 S.W.2d at 387; Butler, 51 S.W.3d at 792; Evan's

World Travel, 978 S.W.2d at 232-33; Stroman, 923 S.W.2d at 85; Zep Mfg., 824 S.W.2d

at 660-61; Webb. 793 S.W.2d at 303. The reasonableness of the restraints is not

measured by where Appellant performed services, but where Pierce provided services for 40 Appellant’s Br. p. 54. 41 Appellant’s Br. p. 54. 42 There is nothing establishing that Appellant’s historical or prospective service areas were known to or discussed with Pierce at the time the Covenant was signed.

45 Appellant. Haass, 818 S.W.2d at 387; Butler, 51 S.W.3d at 792; Evan's World Travel,

978 S.W.2d at 232-33; Stroman, 923 S.W.2d at 85; Zep Mfg., 824 S.W.2d at 660-61;

Webb. 793 S.W.2d at 303. Because the 11-county restraint was conclusively established

to be unreasonable, it is unenforceable and incapable of being the basis of a tortious

interference claim.43

3. Scope of Activities from Which Pierce is Prohibited is Unreasonable

The Covenant is also unenforceable because it unreasonably restrains Pierce’s

future activities. A restrictive covenant must bear some relation to the activities of the

employee at his former employer and must not restrain his activities in a field into which

his former work has not taken him. See, e.g., Haass, 818 S.W.2d at 387.

The Covenant reads: “Employee shall not, directly or indirectly, become engaged

in any business or activity …, which directly or indirectly competes with the Company’s

business owned or operated by Company or any of Company’s subsidiaries, partners,

associates, or affiliates . . . .” (emphasis added) (CR 182). On its face, the Covenant

prohibits Pierce from working as a janitor or in any other capacity for anyone that

Appellant might consider to be its competitor.

The true breadth of this restraint is not even presently determinable. According to

Appellant, Pierce might or might not be prohibited from activities depending on what

Appellant decides to do in in the future.

43 Section III(D), supra.

46 Q. But you did testify that the noncompete would restrict him as written from performing clinical testing services performed outside the operating room, correct? A. Well, it just encompass company business. There was a time when clinical testing was a big part of the business. Q. So is that a yes? A. I’m not certain. How’s that? I’m not certain, because the nature of the business changes from time to time. There could be a time in the future where clinical testing is a big part of the business.

(CR 1001).

As written, the restraint is overly broad because it is based on Appellant’s

changing business, not Pierce’s limited duties provided to Appellant. (CR 173-74). See,

e.g., Weatherford Oil, 340 S.W.2d at 951-52 (restraint described as “any area where

Weatherford Oil Tool Company, Inc., may be operating or carrying on business”

undeterminable and subject to change; therefore unenforceable). Such restrictions are

effectively industry-wide exclusions from the enumerated counties. Id; Stroman, 923

S.W.2d at 85; see Haass, 818 S.W.2d at 387; U.S. Risk Ins. Group, Inc. v. Woods, 399

S.W.3d 295, 301 (Tex. App.—Dallas 2013, no pet.).

In addition, the restraints apply to hospitals and surgeons with whom Appellant

has no contract or never had contact (CR 256-58). According to Appellant:

I believe that any competition is in violation of the contract because there’s always the potential for [NeuroTex] to obtain a physician that either is not utilizing the monitoring and might and a hospital that has a company that can’t make it, won’t make it, isn’t there yet. There always the potential, always.

(CR 256; see also 257-58).

47 However, Appellant cannot provide services to a hospital without a contract and

privileges at that hospital. (CR 233). Further, Appellant admits that performance of

IOM for a surgeon with whom Appellant has not previously worked is neither directly

nor indirectly competitive with it. (CR 220-21). Moreover, whatever the relationship

between Dr. Alford and his group and Appellant, the evidence establishes that it was not

a current relationship, but a former relationship. Despite the absence of a competitive

threat and despite Appellant’s inability to even service certain facilities, the Covenant

prohibits and Appellant seeks to forbid Pierce from providing any services in his field to

surgeons, with whom Appellant has no relationship, and to hospitals that Appellant

cannot service.

Without question, the Covenant, as written, forbids activities that are unreasonable

and greater than necessary to protect any interest that Appellant might have. DeSantis,

793 S.W.2d at 681-82; Stroman, 923 S.W.2d at 84-85. Accordingly, Synergy is entitled

to judgment that the Covenant is unenforceable and incapable of being the subject of a

tortious interference claim.44

G. TRIAL COURT NOT REQUIRED TO REFORM COVENANT (APPELLANT ISSUE #4E)

Appellant next complains that the trial court did not reform the Covenant.

Appellant did not affirmatively seek reformation. Neither Appellant’s first amended

petition nor its second amended petition requested reformation. (CR 48-58, 455-66).

44 Section III(D), supra.

48 Appellant consistently maintained throughout the litigation that the Covenant was

enforceable as written. As an alternative allegation in its summary judgment response,

Appellant raised for the first time that reformation of the geographic scope to Pierce’s

actual counties of employment was acceptable. (CR 846). This is insufficient and is a

waiver of any right to reformation. Sentinel Integrity Solutions, Inc. v. Mistras Grp., Inc.,

414 S.W.3d 911, 921 (Tex. App.—Houston [1st Dist.] 2013, pet. denied); see Emergicare

Sys. Corp. v. Bourdon, 942 S.W.2d 201, 204 (Tex. App.—Eastland 1997, no pet);

Daytona Grp., 800 S.W.2d at 290.45

Assuming a request for reformation is implied, the trial court did not err in failing

to reform the Covenant. First, reformation is only proper where the covenant is necessary

to protect a legitimate business interest. Daytona Grp., 800 S.W.2d at 290. Because the

Covenant was not necessary to protect any legitimate business interest of Appellant,46 the

Covenant could not be reformed. See id.

Second, when, as here, a covenant involves the promisor's rendition of personal

services, the burden is on Appellant to establish that the covenant meets the requirements

of the Act. TEX. BUS. & COMM. CODE ANN. § 15.51(b); see Stroman, 923 S.W.2d at 85.

Appellant also has the burden to establish what, if any, reformation of the Covenant

would be reasonable and necessary to protect its legitimate business interest(s).

DeSantis, 793 S.W.2d at 685; Stroman, 923 S.W.2d at 85. Unless such a showing is

45 There is no injunctive relief sought against Synergy. 46 Section III(D), supra.

49 made, the covenant cannot be reformed. DeSantis, 793 S.W.2d at 685; Stroman, 923

S.W.2d at 85; Daytona Grp., 800 S.W.2d at 290.

Appellant offered no alternative duration to the 5-year restraint and provided no

evidence as to the reasonableness of any alternative duration. Appellant also offered no

alternative and no evidence to establish any lesser degree of activity that reasonably

should be restrained.

Appellant’s conditional and reluctant acceptance to have the trial court enforce the

Covenant in only those counties where Pierce worked during his employment falls far

short of establishing that a county-wide restraint is reasonable. An insurmountable gap

exists between the evidence in the record and the evidence that a county-wide restraint is

reasonable. For example, the evidence establishes that: (i) Pierce’s duties were limited

to that of an IOM technician and IOM only occurs in a surgical facility (CR 172); (ii) the

hospital, not the surgeon, is Appellant’s client (CR 231-37); and (iii) Appellant cannot

work in a surgical facility without contracting with that surgical facility. (CR 231-34).

Other than a desire to eliminate any possible competition,47 Appellant offered nothing to

explain why Pierce’s former work, which only occurs within the 4 walls of a surgical

facility, justified a county-wide restraint. Appellant’s admission that Pierce could work

in Tarrant and Dallas counties under the right set of circumstances (CR 1603) further

erodes any foundation for a county-wide restraint.

47 (CR 256; see also 257-58).

50 As another example of this insurmountable gap, Appellant filed a list of hospitals

and surgeons that Pierce worked with over the tenure of his of employment (CR 860), but

nothing indicates the frequency or time period that he worked with any physician or in

any facility. In contrast, the evidence shows that Pierce worked at some hospitals only

once during his employment with Appellant. (CR 921). Appellant fails to identify

anything showing what Pierce learned or could have learned during a single procedure or

even a few procedures that would allow the trial court to determine a reasonable duration

or geographic restraint for reforming the Covenant.

As to the time periods involved, the record only allows for speculation wholly

insufficient to reform the Covenant. If the last time Pierce worked in a listed facility or

with a listed physician was 2006, there is no evidence showing the necessity of

restraining Pierce from working with that surgeon or in that facility beginning in 2013,

when he left Appellant’s employ, or for five years thereafter.48

Here, for example, Pierce had worked in USMD hospital in Fort Worth while an

employee of Appellant, but had not worked in that hospital for possibly up to five years

before leaving Appellant’s employ. (CR 962). Given the fact the record is devoid of the

time periods during which Pierce worked at the enumerated facility and surgeons (CR

860), Appellant failed to provide sufficient evidence of alternative, reasonable duration or

geographic restraints. Therefore, the trial court did not err by failing to reform the

Covenant.

48 The same could be said for the most of the years thereafter.

51 H. APPELLANT DID NOT PROVE ELEMENTS OF CLAIM (APPELLANT ISSUE #4D)

1. Damages Foreclosed By Statute

Appellant erroneously argues that damages are unnecessary and further argues that

Synergy failed to challenge Appellant’s request for injunctive relief; therefore, Appellant

asserts its claim should survive.49 Appellant did not seek injunctive relief against

Synergy. (CR 56-57, 463, 465-66).50 Appellant’s only cause of action against Synergy is

for alleged tortious interference with Pierce’s Covenant. (CR 54-55; 460-62). Damages

are a necessary element of Appellant’s tortious interference claim. See Powell Indus., Inc.

v. Allen, 985 S.W.2d 455, 456 (Tex. 1998).

Assuming (arguendo) that the Covenant was otherwise valid, Appellant judicially

admitted (CR 756-62; 167-68) that Pierce never worked for Appellant in five of the

eleven of the counties covered by Pierce’s Covenant.51 (CR 764-65). Appellant also

admitted that it had never provided services in at least one of the counties in which Pierce

was prohibiting from working. (CR 259). Therefore, even if the Covenant were

otherwise enforceable, it would have to be reformed. Haass, 818 S.W.2d at 387; Evan's

World Travel, 978 S.W.2d at 232-33; Butler, 51 S.W.3d at 792; Zep Mfg., 824 S.W.2d at

660-61; Webb, 793 S.W.2d at 303.

49 Appellant’s Br. p. 60. 50 Further, Appellant sought and received return of the injunction bond. (CR 1527-29). 51 This is not to say that a county-wide restriction is reasonable (assuming a protectable interest exists), because IOM is a hospital-based practice that occurs within a surgical center.

52 Reformation precludes damages and forecloses Appellant’s tortious interference

claim. TEX. BUS. & COMM. CODE § 15.51(c); Juliette Fowler Homes at 663; Zep Mfg.,

824 S.W.2d at 661, 663-64.52

Appellant wholly fails to address the Act’s foreclosure of damages in this case.

(CR 167-168; 760-61) and did not assign a general point of error as provided for in

Malooly Brothers, Inc. v. Napier, 461 S.W.2d 119, 120 (Tex. 1970). Even if it had, that

is not the end of Appellant’s burden. In circumstances such as these, where a trial court

has potentially granted summary judgment on multiple elements of a claim, Appellant

must present arguments and supporting authority regarding each of the elements

challenged by the motion for summary judgment. McCoy v. Rogers, 240 S.W.3d 267, 272

(Tex. App.—Houston [1st Dist.] 2007, pet. denied). Appellant fails to raise or brief the

foreclosure-of-damages ground raised by Synergy. When, as here, a summary judgment

ground would support the grant of summary judgment, a court of appeals may affirm

regardless of whether the trial court specified the grounds on which it relied. Cincinnati

Life Ins. Co. v. Cates, 927 S.W.2d 623, 625-26 (Tex. 1996); Flory v. Daimler Chrysler

Corp., 2003 Tex. App. LEXIS 10235, at *7-*8 (Tex. App.—Tyler 2003, pet. denied).

Furthermore, the granting of summary judgment must be affirmed where it may have

been based on a ground not specifically challenged by the appellant and where there is no

general assignment of error. Malooly, 461 S.W.2d at 120; Benson v. Gaston, 2014 Tex.

App. LEXIS 2753, at *6 (Tex. App.—Tyler 2014, pet. denied); Flory, 2003 Tex. App.

LEXIS 10235, at *7-*8; Johnston v. Am. Med. Int'l, 36 S.W.3d 572, 576 (Tex. App.—

52 Appellant’s challenges to the reasonableness of the restraints are dealt with in Section III(E)(2), supra.

53 Tyler 2000, pet. denied). Because Appellant did not challenge the damage-foreclosure

ground advanced by Synergy and the trial court could have granted summary judgment

on that ground, this Court must affirm summary judgment in favor of Synergy.

2. No Evidence of Lost Profits (i.e. “Recoverable Damages”)

Appellant argues that the record contains evidence of its damages because Boldery

testified that Appellant had historical, annual revenues of approximately $400,000 from

IOM procedures where Alford and his group were the attending surgeons.53 (CR 858).

In addition to not addressing Synergy’s damage-foreclosure ground, Boldery’s

affidavit statement is merely an assertion of revenues, not evidence of recoverable

damages (i.e., lost profits). Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 83 n.1

(Tex. 1992); Atlas Copco Tools v. Air Power Tool & Hoist, 131 S.W.3d 203, 209 (Tex.

App.—Fort Worth 2004, pet. denied). Evidence of lost revenue that does not include

expenses lacks probative value and constitutes no evidence. Id.54

Appellant admits it does not know how much of that alleged revenue is profit (CR

336-37) and that Appellant did not actually collect $400,000 in annual revenues from

procedures performed by Alford or his group in 2013 or 2012. (CR337). In fact,

Appellant could not state whether it had collected that much in 2011. (CR 337). In other

words, going back 3 years before Pierce left Appellant’s employ, Appellant cannot

provide evidence of its $400,000 revenue allegation.

53 Appellant’s Br. pp. 10, 59-60; see also (CR 825, 852, 858). 54 Appellant’s argument also ignores the admission that the relationship giving rise to this historical revenue ended before Pierce left Appellant’s employee. (CR 208, 211, 277-78).

54 Texas law unequivocally requires lost profits to be calculated by measuring lost

net profits, not lost gross profits. See Atlas, 131 S.W.3d at 209 (citing Holt Atherton, 835

S.W.2d at 83 n.1). Net profits are “what remains in the conduct of business after

deducting from its total receipts all of the expenses incurred in carrying on the business.”

Atlas, 131 S.W.3d at 209. Evidence of lost revenue that does not include expenses lacks

probative value and constitutes no evidence. Id. Boldery’s affidavit statement is merely

an assertion of revenues, not evidence of damages.

3. No Evidence of Interference (Appellant Issue #6)

Appellant also argues it raised fact issues precluding summary judgment on the

element of interference. With regard to interference, Appellant must establish that

Synergy intentionally interfered with Pierce’s Covenant. See Powell Indus., 985 S.W.2d

at 456 (listing of elements for tortious interference). It failed to raise a genuine issue of

fact of this element.

Appellant argues that Synergy, via Alford, knew of Pierce’s Covenant prior to

Synergy hiring Pierce. When asked to identify Synergy’s wrongful actions, Appellant

testified:

Q. Okay. What is Neurodiagnostics claiming that Synergy has done wrong as it relates to the employment agreement that is Exhibit 4? A. They maintained his employment even though Eric sent a letter informing him of the employment agreement. Q. Anything else? A. That sums it up.

(CR 252-53).

55 Appellant reasons, albeit incorrectly, this creates a fact issue of interference.

Simply hiring an employee or inducing an at-will employee to leave his/her employment

is insufficient to constitute interference. See, e.g., Lazer Spot, 387 S.W.3d at 50. Said

another way, a defendant cannot be liable for inducing a party to do what that party has a

right to do under a contract. ACS Invs., Inc. v. McLaughlin, 943 S.W.2d 426, 431

(Tex.1997); Baty v. ProTech Ins. Agency, 63 S.W.3d 841, 857 (Tex. App.—Houston [14th

Dist.] 2001, pet. denied).

A tortious interference defendant must be more than a willing participant in a

breach; the defendant must knowingly induce a contracting party to breach its obligations.

See Browning–Ferris, Inc. v. Reyna, 865 S.W.2d 925, 927 (Tex.1993); John Paul

Mitchell Sys. v. Randalls Food Markets, Inc., 17 S.W.3d 721, 730 (Tex. App.—Austin

2000, pet. denied). Merely entering into a contract with a party with knowledge of that

party's contractual obligations to someone else is not the same as inducing a breach. John

Paul Mitchell Sys., 17 S.W.3d at 731; SJW Prop. Commerce, Inc. v. Sw. Pinnacle

Properties, Inc., 328 S.W.3d 121, 152 (Tex. App.—Corpus Christi 2010, pet. denied);

Baty, 63 S.W.3d at 861; Davis v. HydPro, Inc., 839 S.W.2d 137, 140 (Tex. App.—

Eastland 1992, writ denied); Texaco, Inc. v. Pennzoil, Co., 729 S.W.2d 768, 844–45 (Tex.

App.—Houston [1st Dist.] 1987, writ ref'd n.r.e.), cert. dismissed, 485 U.S. 994, 108 S.Ct.

1305, 99 L.Ed.2d 686 (1988); Accord Amigo Broad., LP v. Spanish Broad. Sys., Inc., 521

F.3d 472, 493 (5th Cir. 2008); see also Reyna, 865 S.W.2d at 927.

Appellant has no proof that Synergy interfered with Pierce’s covenant not to

compete or any other provision of his employment contract. Appellant erroneously claims

56 that there is no dispute that Pierce breached the Covenant.55 This is incorrect. As set

forth above, the Covenant is invalid and unenforceable; therefore, it could not be

breached.

Further, Pierce primarily worked at Victory Medical Center in Plano, a hospital

that he never worked in while an employee of Appellant (CR 934, 958, 964) with

surgeons with whom he had not previously worked. (CR 173, 962).56 This is not

competitive with Appellant by its own admission. (CR 220-21). Appellant’s contention

of an undisputed breach, and therefore interference, is incorrect.

Further, the evidence showed no interference. The plain language of the Covenant

prohibits Pierce from activities in the enumerated counties, where the activities are

directly or indirectly competitive with Plaintiff. (CR 220-21). The evidence conclusively

shows that:

• Pierce has not worked with surgeon that he worked with while he was employed by Plaintiff (CR 172-73);

• Pierce has worked at Victory Medical Center, a surgical facility that he did not work at while in Appellant’s employ (CR 934, 958, 964);

• Pierce has not solicited surgeons, whether he previously worked with or not, to do business with Synergy (CR 173-74); 55 Appellant’s Br. p. 57. 56 As a Synergy employee, Pierce worked at USMD hospital on a few occasions, where Dr. Tinley was the surgeon (CR 957, 961-62). Pierce had not previously worked with Dr. Tinley (CR 497-98, 961-62). Moreover, Appellant confesses that there is no breach related to working at USMD because there was no damage. Q. Well, we know based on the Reptrax report that you produced that Josh performed IOM monitoring services for Dr. Tinley at USWD Fort Worth. Those are the ones reflected on that Reptrax report. A. um-humm, correct.

Q. Are you claiming that those are procedures that Neurodiagnostics lost? A. No. (CR 373).

57 • Pierce has not solicited hospitals or surgery centers to do business with Synergy (CR 173-74) ; and

• Pierce has not contracted or been involved in contracting with hospitals or surgery centers while an employee of Synergy (CR 173-74).

There is no interference under these facts because Appellant admits that when an

intraoperative monitoring of a surgery occurs with a surgeon that Plaintiff has not worked

with, such is neither directly or indirectly competitive with Plaintiff. (CR 220-21). For

these reasons, Appellant cannot prevail on its tortious interference claim. Consequently,

Synergy is entitled to judgment on the tortious interference claim.

PRAYER

Appellee Synergy IOM, LLC requests that this Court uphold the trial’s judgment

in all respect and that judgment in favor of Appellee be affirmed.

Respectfully submitted,

WHITAKER CHALK SWINDLE & SCHWARTZ PLLC

/s/ Brent Shellhorse William Brent Shellhorse State Bar No. 24008022 Hunter McLean State Bar No. 00788026 Patrick H. Rose, IV State Bar No. 24079244 301 Commerce Street, Ste. 3500 Fort Worth, Texas 76102 (817) 878-0523 (817) 878-0501 (Facsimile)

ATTORNEYS FOR APPELLEE SYNERGY IOM, LLC

58 CERTIFICATE OF COMPLIANCE

Relying on the word count function in the word processing software used to produce this document (MS Word), I certify that the sections covered by T.R.A.P. 9.4(i)(1) contain 14,812 words.

/s/ Brent Shellhorse Brent Shellhorse

CERTIFICATE OF SERVICE

This is to certify that on March 9, 2015, a true and correct copy of the foregoing APPELLEE SYNERGY IOM, LLC’S OPENING BRIEF with attached APPENDIX was delivered to opposing counsel, listed below, in accordance with the Texas Rules of Civil Procedure.

/s/ Brent Shellhorse Brent Shellhorse

59 APPENDIX TABLE OF CONTENTS

Employment Agreement Exhibit A

Synergy’s Second Motion to Supplement to Exhibit B Summary Judgment Evidence

Juliette Fowler Homes, Inc. v. Welch Assocs., Inc., Exhibit C 793 S.W.2d 660, 663, 665 (Tex. 1990)

Travel Masters, Inc. v. Star Tours, Inc., 827 S.W.2d S.W.2d 830, Exhibit D 832-833 (Tex. 1991)

Lazer Spot, Inc. v. Hiring Partners, Inc., 387 S.W.3d 40, 49 Exhibit E (Tex. App.—Texarkana 2012, pet. denied) EXHIBIT A EMPLOYMENT AGREEMENT This Aireentint is made to be effective the lit day of November, 2005, between vaaa.aaRtaaaaaaia ena. 11'1A a nomad; .r .1 vtavitaavialelvt AlwikisAmsaimigmusiwo ....pal*wino" sr ...wow ItarArta r—..*•••••••nrm.lri Its rrotrutirwl rilart% (if 4omp ,r *amp ran.

bushiest at 1322 Old Conk Drive, Tyler, Smith County, Taxis 7370, bezebrafter

pLey", and Robert, " ---d to se the °Com— referre - Scsitiu Pierce, hart after — vaferred ►to as the

°Employee*

Tfratill

The Company agrees to employ the Employes and the Employee hereby accepts

etiployment with the Company for a period or ninety (90) days, beginning on the date

hereof, Foltowing the initial ninety -(90) day period (the "Initial Period", Company

agrees to employ Employee for a period of thirty (30) days with such periods being

lutomatioally renewable on a monthly calendar basis (the ""Continuing Parlor), =leo.

Company or Emplare gives notice of non-renewal. Notwithstanding the foregoing,

Company 'MA retain the right to terminate this Agreement for cause at an earlier the as

set forth in tkda Agreement. Thee Agreement may be terminated by either patty by giving

fourteen (14) days written notice of an intention to not renew the employment for the

following calendsx trotith.

U. )tivasonrs Durnta employee shall work primarily in Tarrant County, Tens and surrounding counties:,

but may be assigned to plasm as the Company may from time to time direct. The rapieleit porrewrn sttelN. dug.. Ils41 ristaiparty ;thin from rf;aa tit qrae 114u% iswever, fir

vamovsaarioxecuipc - Pap 1

Page 176 it is the intention of the parties hereto that the primay duty of Employee shall be to

provide intraopentive teadog monitoring (I0lvf) services for the Company, but may

Include clinical testing marvioes parftxrned outside the °periling room.

M - -. UK&

The Employee shall devote Employee's entire time and attention to the business of

the Company while employed by Company. As a condition precedent for employment

with Company, Employee shill have no other employment without the Compiny's

expos written (tonna It Is specifically aciatowiedged by both Employee and Company

that the dune. to be pafortned by E4nployee axe of ;Koh a man that the number of hours

to be worked each, weak cannot be literally formes:2 or predicted. Employee agrees to

work that number of hours per week which will accomplhoh the results sought by both

patties herein.

IV. cOmpitssAvoN As compound= for employmesat services rendered under 'this Agreenuknt, TZnioiltirria shell be antltleril bi Twelve at the rate r3f Thirty.thnse Thrmasnel *nrt

NO/100 Dollars ($331000.00) per year, payable in bi-weekly equal installment". V 112 A Frfel, raTNAVV. to WO Pt tIlLSA 7U''!2 AV 10 T I 1.7.T4 4 ALTA: Ca 6f5 Viii 4 4Lialimri: 60.41‘1711411.1. ,....41. INV T V CF 4AMA.

The employment of the 'Employee shall continue only as long as the services

rcaikumvu 41,9 zwaimurro say se4sss,,,kuly ry IAN %.A.Juayany, ivserlAs•as v. any vvaor

provision oontained in this Agreement. The Company shall be the sole judge as to

whether the services of the Ertipkayee are satisfactory, in the event Company determines

gemoveismAGSLIMORr Pep 2

Page 177 the serviode of Employee ars neiatidactory, ringioyment may be terminated by giving

Employee a fourteen (14) day uodce of nob termination ("Notice Fedor) and by paying

Employee to the end of the Nodes Period.

11, MilthiDWIION FOR CAUSE 1

Company may terminate Employee at &try time for cause. CAllit shall be defined

to inoltutte, but is not limited to, my lots of dishonesty, theft, or involvement in any illegal

activity, whether or Ina such involvement rooks in criminal prosecution. Further, cause

Shan be defined to include tardiness, absence &en work, failure to follow the Instructions nr wined," nil retrnhanv. II? env Mho. ant at spares frit whirl' r_nrrinahv writi1 he

reasonably expected to take disciplinary actions or terminate an employee. In the event of verogii.,* NAL 11.04 mouse, the letrivniewaft 1.44761,j ww alsell 1%.* entitled 4V IMAI.I..••••P 4 Ira nerrtrurstaufinet iiteritopf hga w 40149Welir V.M.14 WOMB .411...6.0.10 forj

Employes prior to the date of teeminetion as provided for in this Agreement =putted pro *

*ea rm. A losobl a Mae* ta. • .lake MU. 12whvamtn, AS..111 ILA *4 .4 441441 uy uo. wuu ma4uummi cabal, wow. &h m 4AurodeS coon um 8111.446u tO no bather

compensation se of the date of termination, Itret ILYA Sf 0.1"1...werr.vvvvrrir "11 A aft rstWinblik Y fi.104•.# VINA.11.11L AA lull AvrnmaurfAx41

Employee acknowledges that Company is agreeing to spend financial resources to

train Employee puranant to the -Training Agreement below and flare proprietary and

confidential information with Employee so that Employee will be capable of satisfying

Employee's duties under this Agfeeriett. Pear, Company egress to provide Employee

with a fourteen (14) day Dodos of termination of Employ=at, unless Employee is

EMPLOYMINTAcRwatir —Ns 3

Page 178 terminated for CCM as dracribed earlier in ibis Agreement, in the event Employee's

employment Is tundnated as described earlier in this Agreement.

L Nen-Disclosure Agreement

Employee and Company agree that, in the course of Employee's employment with

Co thy. Employee will acquire confidential customer and patient related informsdon

that could damage C'oomporsy if this information were to corns. into the possession of

requ -- anany's cermonitors, For this. mason, and for the protection of the Company's

pedants, Employ*, will not, except as authorized in writing by Company, during or at arty thviik Oft& Aft serptratinrs fly torntrinaAnn of ?ma A errikerroast Aleattly nt iintifreettlyo is

communicate, divulge, furnish to, or convey to any other parson, firm, or omporation, any

Wa 4%& voik GNW I•14V MB A A a.P.Mlift alit:rata flftaanlal 4 rt Mom& NA arm; 444A.ILIMMIPIO 6611eNr4 IAMPRI.1.104.1. w+rJw ',Aga& A# °thew .. -r o

codicil:vial Information of Company or any of Company's subsidiaries, putters, a ORILLA.. arm nil ....a A111104Pial. 11.4a 4.• www ekta A ft4.• t aleg.14441411f11, $.44. 41.141A+41LWAIp %.nd 1.01AANIPU 1.17 lo.044trAVVVIO Mao MAW n4P+Lnn 1.4441, el* inninnen nit *11W

Information Timployes agrees not to disclose inchuies, but is not limited to, the following

a. fdendry end irAr— rurritton regard' g jay put, present or prospective cuitomer or patient of C.:oropany,

b, Any financial informs ion of any of Company's business;

c. Any list of Company's employees, whether permanent or temporary: and

d. Any results of any studies or investigations by Company or Employee conducted daring the term of this Agreement.

Further, Employee agrees that ell procedures and techniques used by Company or

other concepts created by Company for use in Company's business, whether actually used

11,1101.010/LEn AGIurzwavr- PIM 4 or not, shall bs deemed to bs works made for hire. Employee agrees to assign, and shell

assign to Company, its successors, assigns or nominees all rat, tide and interest

Employee may otherwise have in each copydghtabie WO7A1 In the etverit that Employee

tecorporatee or otherwise uses Eimployee's copyrighted, copyrightable materiel, or

tredernark ntaterial in the perlormance of Employee's duties frir Company, which

procedure or technique was not fret produced or composed by Employee in the

performance of said dude., to the extent Employee Fan the right to do 10, Employee

hereby grams, sari shall grant to Company, a roysity-free, nonexclusive and irrevocable

ilrenta to raprodualsp translate3. publish use &jut, dispose of such procedures and

techniques, and to authorize others to do so in the conduce of any of Company's byta4riabsarri.

2, Proprietary rnitrittatioe of Former Employers

-r. lareirdravoi. tArowitawnts •••••••••• .1.11M• - Rrivriltiveat • tire miagartewrineristeul •••••••• RM. V.irtwormers• vs*Artriptarti (LI

maiden:lel information from any former employer, which includes tU cottfidential as ••• .111 AVM. it".10.11ago :awe NI fr. hay #111 a • I • g ciPro.rob et* ts • *all.. la." CrIoasua. Lolkihn10414116.104A4 Va. aciy 14.11.1614V4 le41101..fri140 $.1.46b 44, liLwow+ tpra ra vAr.s.444 a► u...14 tem 'mow; AA.",As«. w as Lid fir a 1.4W

public or to the former employer's competition in the industry. Examples of such

information being customer lies, sal usfiles, personnel -Masi =1.-puter t4e0tdil,

tillirIdid and marketing data, potentisl customers or projects, the former employer's

rowel sting =rice end strategy, the former employee', scheduling and cost budgeting

techniques, end the former employees bidding techniques. Employee flirther represents

IMFLOTMEIC Aoluturorr- Page s ► MOPINOMPMS1011171111MPOISIMMINIm11411111.1=11 1 1

II I 1

that Employee's employment with Company is not in violation of any non-competition II I I

11 sgreernsed.

3. Indiesinifileadost of Company I I Employee agrees to indemnity and hold Company harmless from any dispute

arising out of any erreements or employment of Employee with any former employe/of I I I I .Employee. Employee agrees to pay all attorneys' fees and costa incurred by Coinputy iristnsr out & such dlertatt., whether or not _Ruth &wow meat Ilthinion, arbttrettm I I

or some other means of dispute resolution, Employee agrees to pay all anceneys' fees and rivet triftrrteA by nit/Torii grhino• riot arrielytlaptitht, whittlhAr rrr not mirth rthipUt" l I arise otat cat meritleas or frivolous claims, Employee agrees that ill settlement decisions .e .. .. sgrA ....L.up o to& cattkr4 4.0..,u be rude r,,, aimisanyig 401.1. dlie......kleri. i I — 4. Covenant Not to Compete

EinplOTae. aFece, flat the evens= end resuicions set ..4 14uth balm ars intended 1 I 1 only as a reasonable protection of ihe Company. For a period of five (5) years after the api ration ua .6 c. — .L nadonof Zr.u "pputunc, K.21AUee Yha S, oih t&May 1:14 i indirectly, become engaged in any businese or activity in the Texas counties surrounding

the Della / Fott Worth Wimple; which are. Collin, Dallas, Denton, Bilis, Hood, i 1 Johoson, le.eutman, Parker, Rockwell, Tarrant, and Wise comities located in the State of

Tests, which directly or indirectly competes with the Company's tnIfilleill owoed or i operated by Company or any of °armpit:1y* s subeidiarles, patters, associates, or affiliates, • I I

toolOtiszln'AGRUsater - rip s I I

. I 1

Page 181 unities approved by Company in writing before Employee's scceptance of such

employment or oppct-turtity.

Bmployee shall not have my contact with any of Comport outrun customers or

oontects or solicit potential customs if such potential customers ate or were identified

thrtyittih lead* developed divine the oouras of Employee's rendering of services and duties

under this Agreement. Tintployo ithig1 few, AMAr amine the tat:41 sit thiti Acrponiant or fir & mind rwts,

(2) years thereafter, divert or attempt to divert say existing or future businces of

awArvni -mow, addles kepi's& Sha larflA 0.14;11. A trossitrilaftt ;sr Mr • inioeiNA r. w•

two (2) years thereafter, either directly or indirectly, for himself or any third party, solicit, sorkiwn1M Wm. r. w.0 die.A1440104.611"9.111... 1.44.4106411fr LINAIWG, .011011111W 11111WWWW IAA OA employ Of toy Sumliphies$ Ow•aed or op ra wwi

by Company to terminate his/her employment for the purpose of joining, associating or 2 au.444 ' torayAvpau Wou au; U. a.m..... a...I...J.1k I. dtkitAIL woman,. INU4141 kV 'MGM wApAvolaumu it mu ‘..iwilyauy

that conducts or performs intraoperadve MOIlitOtin$ Serii041

.f the foregoing covenant is not enforceable to the fullest extent provided, it snail

remain enforceoble to the extent provided by law. My breech hereof may be remedied by

any right or remedy available to Company, including, without limitation, the right to

obtain from a court of competent jurisdiction an order of specific performance or

injunctive relief without the necessity of the posting of arty bond or other security.

5. Soliciting Employees After Termination of Eraproyvatet

IMPLOYMINT AGRI:VONT 1407

Page 182 'Won

For a period of two C2) years immediately following the termination of the

Employee'a employment with the Company, the Employee shall not, either directly or

indirectly, solicit or offer employment to any than current employee or sub-contractor of

Company, or employ any former employee of Company for a period of one (1) year from

the data of termfnitIon of employment with Company,

6 llotificssion of Futura Enipleyese

Pot I periot of -five (5) years ielle"MtAtfly fOnOVeng the tArrninstiesn of this

Agreement and Employee's employment with Company, Employee will inform each new 'NALL...NM *et/ et We PLO .7 I kri ilt;•"11 4 re MONA, AelPrtibiCt •••4441/...L.7, rho WWI 1114111eN"ii 41% 44.44.1.) VA *WI 1.0 A 41L.Ltt. A1411111111 AT dore A. fillodklinkilk Olt SF • M... er'Lert."..44

and provide the Company with a copy of this Agreement er Eon laaLijilujr60 le WAS

Employee reptant* that Employee'. experience and eapebilities are sub that the , b ...1.. 'kg not ice lavau j la warm aw. animm , 117VW451 ZKIVIAJyall WAILT1 obte.w.14 -1-2-6- st;p4F ---kry----02c. Ant

otherwise earning a living at the same general economic benefit 44 reasonsbly required by

Employee and that Employee haa, prior to the execution of this Agreemeat, reviewed this

Agreement thoroughly with Employee's legal counsel, if needed or desired.

nria-MittirlairitiaTiat2TX A3 part of this Agreement, Company and Employee agree that Company is

prepared to expend large SUMS of money and invest considerable amounts of time to train,

educate and qualify Employee to (1) either become board eligible in. preparation of the

evoked potential and intraopentive monitoring boards or to become board eligible to

aststoystzta *moot= - ear a

Page 183 provide evoked potential teatime / intreoperative monitoring (ICU) swims, (2) to

become registered u an REPT, and (3) to become registered ae a CNIM. Employee

Lc:bowled** that he has already become boarded falEIG. Employee and Company

agree that the can of the training to be provided to Bmployee is Five Thousand and

NO/100 01,000,00). otrisidoitioo of thts ooveriintiazd aareemszits contained

herein, Employee and Compeny agree to the followinfp

!Ave eAmorat of Traleing

Company will advance the cost of training to train, educate end qualify Employee

14M• 0 lit /1 rit :ALM 1 L. .1141Pii 114.161.11.1414.1111. 1.k01116 • A WWWIANIP WV Ila 1.11 all nolla lea %TAAL eifi tkiji AVM lea A ..Aala.ti a11 111 T 'WW1. yid10‘4144.1161 11.1w

intraoperartve mailtoring boards or to become board eligible to provide evoked potential h -.rt.... I ea am am Ar"ILIN a..,••••Johnos Ion t......wra mai A a. wenn+ ivituuji miememopop.av ir .tuvo.51/44 41.10 11.1A.FEW Mak V fJ.TIMPI 1,..00/ 10110 LIAQ c1541100110014 &' i 1,

and (3j to become registered as a CNN, all of which shall hereinafter be referred to as Aor

— 1— t— I IlliMalige

2. Service Period

Company will be unsble to realize the full value of the Training provided to

Employee tinder this Training Agreement unless Employee successfully completes the

Training cleecribed above and continues to provide tervices for the Company for a

ressoosble period of time, Therefore, if Employee resigns, otherwise voluntarily

terminates employment with Company, or is ditchirged for cause pursuant to Section VI

at any time dud:4 the Training period or within foluty-eight (48) months of MI time

employment following Employee's board eligibility date ("Service Period"), Employee

amvittlywithrrAorassurtrr -Psalm 14

Page 184 •

will repay Company the sum of Five Thousand tad NO/109 Dollars (35,000.00), with

introit at the rate of eight (B) percent par annum from the daze of termiration of

employment with Company, in cash upon the date of termination.

3. Effect of Employee's More to Repay Training Costs

Sliould Employee fon to make payment u described above, Compeny is entitled to

costs, attorney fees and related expenses incurred related to Company's csolleotice of the

nutitandint hemmer, together with intsreat thereon, to the extant permitted by applicable

law. Parnerate modes We Tubing Agreerunt will be applied first to the payment of mentemtaa Af r.enTrnarne iyinnh as ttifirnevis fitaa anti nniti nf nntioneinti if atm Tlia htlitrieg

of the payments will be applied to the principal amount.

-4. IPOIPaiet of T,arwelitreflor. dirlawronaverie ttatatrtarr or nooth of reap' orut

Company win absorb the cost of the Training provided under this Trail:1w A 010.111,1164f gm* 11111, T.02111..olo le. ,71,0)110 ‘4,.,bno ....44 rirji.A olvaly er,"1.0).ated by Cirr' 460P4q

or if Employee dies before the =pled= of the Service Period,

at, see rya__ 1A ablaWILMMI J.I/L111111 RAM %rum:wawa,Va zhisAyaupumun

Except as expressly provided herein, this Training Agreement does not alter any of

the redoing terms and coodidone of Ernplo`yee's etivicyyzent VA Company, either

during the period a Training or any subsequent period of employment with Company.

The existence of any claim that Employee may have against Compttly based upon any

averment with Company or upon Employee's employment with Company Mall not serve

as a defense to Company's ertforDOMMIt of this Training Agmement.

StailMOValaNTAGUICMITNT- PAD 10

Page 185 6. Mange of Employees Adams

If Ensployee's employmeot with Company is terminated for any TO114011 Won the

expiration of the Service Period, Employee agrees to promptly notify Company In malting

with all address changes for Employee.

7. Acceleradoxt of Unpaid Sabina

If Employee's onploymeit with Company is terminated and Compton elects to

wen its debts to repayment of the Tratniza costa as provided above. Company may elect

to accelerate the wiped balance of the principal and all wonted interest and declare the :lima print!, it evilne without notice or dittnantl.

S. *At VIM" Rittploystent Status This Trsining dikarsperiarit shill not hoi intimrpretwi as a preirnlitp. by rAmparly to

employ Employee for any length of time. This Training Agreement shall not be hAtikeemarael ..basworn sr • 1A1.4 elearkepaNr. AfPrrtritrammes sterns A.00,1 an "at • W•4•114/I a.* woes a. fliqwrrkirrusia

mrscELLAisovs movirsioils • 1111.01.44.11. 1)....1484416.16 • .044111 OAP 19M7IPM446 lia14104%

The parties wee that ft is in their beat interest to resolve any dispute without

Thereore, any party who La &wire unmet tl-ds Agreetuent must notify the

other party in writing of the nature of the dispute and the damages whoit the party is

seeking. Either party has a right to melte :eascrtable requests for documentation to

support the flow which are alleged by a party. If the parties cannot resolve the dispute

within thirty (30) days after the data of the written document notifying the party of a

11471,011401TAGREMIST -Peo11

Page 186 dispute is received by inch party, then the dispute shall be referred to a mutually

agreeable mediator. if the partial cannot agree to a mediator, then either party may file a

lawsuit Once the lawsuit is filed; the parties epee that the party that filed the lawsuit

shell insmallataty :aqua that the Court appoint a mediator and the parties shall attempt

to resolve the dispute through the court oppointed mediator. In such a dispute, the

prevailing party dull be entitled to reasonable attomay's fees mid courts costs of

lideation„ including appellate and collection costa. The oast for mediation shall ba

divided equally between the prides.

2. .11 nem•_Aaretinunt

This Agreement and its exhibits, if any, supersedes all other previous agreements win., moral pr, Ittft perthrtesnei of Atte* nr paynuint of eflittitiPsuiehtn ntttlinad In ihtm

Agreement, either oral or in writing, between the parties to this Agreement and contains 'hi. *mire ,ittiterrimmno ttuk ndirfirda intf all of the erwrirtainta aro{ itiewfflonst botwAAI;

the parties. A ...mks,. A MA ale.* ell411.1461464AIMMIA

No charge or. modLtication of this Agreement *hall be valid unless the ..... A 112041111G113,341.M. Al VA vs), 4:4140,4700 WM& s...svaparly. 1-444-41 ?mil =KU V4

given written notice of any amendment of any section of this Agreement.

4. Execution

1121,171.0 MINT AGIUM1Nr - pap 12

Page 187 This Agreement shall bec•oute effective u to each party when executed by such

party or its representetive, but re patty *ball be entitled to claim a bandit under this

Agreement unlees each parry ar its representative has executed this Agreement, II L Assignebility and Benefit

This ARIVICIMISIlt Shan JAVA to the benefit of and be binding upon the parties hereto

and their successors, assists, heite, and legal repreeentstives, provided, however, that this I Aunt„ beitta in thefignra of one for personel serviced may not be performed by any

person other than Employee, Imamate:wise approved by Company in writing, and the r.AnAninztitmo.2 of Pritployetk cketriet hot isiginuati by VeriplOyEse, It it wrpreautly foretold that I I the rishts arising from. the terms and provisions of this Agreement shall be-assignable by ilia rig...M.1*MP diadir t(t artu naretvft 4kg *90 MK, ini•Virwriep "APOPOPII *MN ..01 • ft1644•R ?Ye...44M til MePeK 41 ea* IA WY 101.410.10 ..004.11/MA* s ,W4 AV A.10/.g Alh AO Alio...4Pu VA ,67104,104 ‘01,144.1ky II which sumeds to the business of the Company, whether by incorporation, merger, stock WIN. Via. MAR Al a r"troil troamymparo, %rummy* 1,4 sawaa MO 1 II Or 11.1 A 1104 ^In ra f Prarevr. wou ven.r.11.111411.1l ARP 1.1. 11•1 SAS A* ilk ra 'a LARVARAM111400111. WIAAAPPAA V44.110041041PW wa sa 14404 vi 1.1.1460 114061KAM y doRN o f I Company, or otherwise. - et— — Of JFALIMMICIF ‘4111171141.1TV

All specific remedies prirrided for in this Agreement shall be cumulative and not

exclusive of each other or of any other remedies available in law or equity, I 7. Governing Law and Veins I This Agreement shall be cons ed in accordance with the lews of the State of

Texas, entirely independent of the forum in which this Agreement or any part of it may I

IMFLOYMPrr evaittacm -nip 13 I I

Page 188 Mme up for conetruction, interpretation, or eriforcamatn• Vanua for aoY judicial

proceeding under this Agreement dud be in Smith County, Texas.

8. Waiver

Any failure, forbearance or delay on the put of either the Employee or Company

to exerciee any *remedy or right under this Agreement shall not operate as a waiver. The

failure of either party to requhe performance of any of the terms, COVellikatto or provisione

of thia Aaremeat by the other party shall not constitute a waiver of any of the rights

under tail Agreement 9,. Airitretay.1 Rem end raitt

If any action at law or in equity is necessary to enforce or interpret any of the rights ante AIIIIir}arterers .r••••••••••••... stnclAr +hi •Idarravianiort the ,-- rtravallfrict • rrilartv ONION. .... shall ha •••••••••••, lawrarat/tiAri •••••••,•••leevrw• tri war .•••••••re•-••

attorneys few costs, and necessary disbursements in addition to any other relief *which

WV to, vkaeru 161101.1421.10 id _a is WOOL? hit t 1 tlatA Ye.; %MP 11•1.1110101.011

10. Readings 'fir a k..Atm, row w rr.A r kr aw r &ma 10.104,4444114, mows,' /Mk •Ii•Lett la InfrnetailF4 ~La at *Ma A...ar awaits* {.r a.ss 61W V 1141.4%"all .r.ad V 4041•Mill %It It ONIA 4hbVit41. LI% Via kiwis.

Included only to nuke it easier to locate the subject matter covered by each provision and

are not to- be used In conamting thia Agroomea rz in aacaitairlinS th6 intentions for thili

Agreement.

11. Severibtlity

In the event any one or more of the provisions olntained in tie Agreement shall be

determined by a oourt to be invalid or unenforceable in any respect, the determiner:ion

1al.° MINT AORZEMENT Pigs 14 gall not affect any odor provision, and this Agreement shell be enforced as if the invalid

provision did not exist

Bxecuted at Tylsn Smith County, Tens on the data below,

COMPANY EMPLOYER

Neurodiagnostie Tax, Ltd., a Texas Robert "Josh" Pierce &lilted partnership

RA-00,-- )2_ Cathy Boldory Robert iierce Mager of New miners, UC neitene Partner

Date 3-41S Date! 7_1 4r"I o.

IV/VOCLUIPMCLUINTWaliwy, Collitiogaosetwaspirpoist, Told% u s.Comspote Memo - auls Itiosislos

VOW 'MINT AORICEMENT- Pao Li

Page 190 EXHIBIT B Cause No. 13.357.44 ,

NEURODIAGNOSTIC TEX, LL.C. § IN THE DISTRICT COURT Plaintiff

VP o 7m JUDICIAL DISTRICT' ROBERT *JOSH* PIERCE and SYNERGY IOM, LLC

Defendants. SMITH COUNTY, TEXAS ' %el. PI , r 0JIM 4 . IL. ' ,r11: ' VC./ j jie

TO THE HONORABLE JUDGE: NOW COMES Defendant Synergy TOM LLC (ibringzge) and files this Second Motion to Supplement Sununary Judgment Evidence (the "Matige). In support hereof, Synergy would respectfully show the Court as follows: I. BACKGROUND 2. Pursuant to the Scheduling Order, the deadline to file Motions for Summary Judgment In thia lawsuit is May 12, 2014, 2. Synergy filed its Motion for Summary Judgment on May •9, 3014. 3. Attached to Synergy's Motion for Summary Judgment is an Appendix of evidence In support of Syneres Motion for Summary Judgment (the ",62aigad), Synergy previously sought leave to Supplement Exhibiti of the Appendix to substitute and include a new affidavit of Robert "Josh" Pierce to correct a procedural defect in the original affidavit. 4. Synergy makes this second request to supplement the summary judgment record based on recent filings by Plaintiff itrEURODIAGNOSTIC TEX, L.L.C. SYrnatarSzcormatertoN TO SUPP1214111`fr Pep 1 of tram

Page 756 (mDiggitsuliamitie or *malign and Plaintiffs recent service of discovery responses, both of which are relevant to the summary judgment grounds already raised by Synergy. 5. SYNERGY REQUESTS LEAVE TO SUPPLEMENT THE SUMMARY JUDGMENT EVIDENCE WITH PLAINTIFF'S RESPONSES TO SYNERGY IOM'S REQUEST FOR ADMISSIONS, WHICH ARE ATTACHED TO THIS MOTION AS EXHIBIT "8" AND REQUESTING THE COURT TO TAKE JUDICIAL NOTICE OF PLAINTIFF'S MOTION FOR RECONSIDER.ATION. 6. SYNERGY REQUESTS A JUNE 12, 2Q14 _SMOUSSION ,DATE FOR

THIS LEAVE TO SUPPLEMENT SUMMARY JUDGMENT EVIDENCE SO THAT rr BE INCLUDED WITH ITS PREVIOUSLY FILED MOTION FOR SUMMARY EVIDENCE. 7, A request for admission once admitted, deemed or otherwise, is a judicial admission, Marshall v. Vise, 767 S.W.ad 699, 700 (Tea. 1989). An admission conclusively establishes the admitted fact. TE0c. R Clv. P. 198.3, A judicial admission not only relieves (an] adversary from making proof of the fact admitted but also bars the party himself from disputing It.'" Horizon/MS Healthcare Corp, u, Auld, 34 S.W.3d 887, 905 (Tex, a000). Allowing Synergy to supplement its motion with Plaintiffs judicial admissions is not a surprise to Plaintiff. Similarly, judicial notice of Plaintiffs own pleadings cannot be a surprise to Plaintiff. Nor does the admission of such evidence prejudice Plaintiff because Plaintiff is barred from disputing judicial admissions.

SYNNIWY seam MOTION TO surnalawr Psit2of7 $0133713

Page 757 9. This Motion is not sought for the purpose of delay or prejudice. II. ARGUMENTS & EVIDENCE BEING SUPPLEMENTED A. COVENANT NOT TO COMPETE Is NOT A CotastAcr SUBJECT TO INTERFERENCE io. The elements of Plaintiff's tortious interference cause of action against Synergy require that Plaintiff prove: (1) the existence of a contract subject to interference; (2) willful and intentional interference; (3) interference that proximately caused damage; and (4) actual damage or loss. See Powell Indus., Inc. v. Allen, 985 S.W.2d 455,456 (Tex. 1998). All contracts are not subject to interference. The first element requires that the contract must be a valid contract. Juliette Fowler Homes, Inc. v. Welch Assocs., Inc., 793 S.W.2d 660, 665 (Tex.1990), superseded on other grounds by statute as stated in Coinmach Corp. v. Aspen wood Apartment Corp., 417 S.W.3d 909, 923 (Tex. 2013), retail& denied (Feb. 14, 2014); Seelbach v, Clubb, 7 S.W.3d 749, 757 (Tex. APP.—Texarkana 1999, pet. denied); Hill v. Heritage Res., Inc., 964 8.W.2d 89,123 (Tex. App...—E1 Paso 1997, pet. denied). L2. An illegal contract, such as covenant not to compete that is an unreasonable restraint of trade, is illegal and unenforceable on grounds of public policy and cannot form the basis of an action for torilous interference, Juliette Fowler HOMOS, 793 S.W.2d at 665; Travel Masters, Inc. v. Star MIPS, Inc., 827 S.W.2d 830, 833 (Tex.1.991.), superseded by statute on other grounds as stated in Alex Sheshunoff Mgrnt. Servs., L.P. v. Johnson, 209 S.W.3d 644, 653 n.5 (Texloo6); NCH Corp. v. Share Corp.. 757 F.2d 1540, 1543-1544 (5th Cir,1985); Laser Spot, Inc. v. Hiring Partners, Inc., 387 S.W.3d 40, 49 (Tex. App.—Texarkana 2012,

SYNERGY SECOND MOTION TO SUPPLEIKENT File 3 o(7 0133723

Page 758 pet. denied); Flynn Bros., Inc. v. First Med. Associates, 715 8.W.2d 782, 785 (Tex. App.—Dallas 1986, writ red n.r.e.). 13. In Section III(B)(4) of Synergy's Motion for Summary Judgment, Synergy raised and establishes that Plaintiffs purported customer list is neither secret nor an interest worthy of protection. Plaintiff admits this fact by fling of public record a list of each surgeon and each hospital that Plaintiff claims Pierce worked with while an employee of Plaintiff. This list is attached to Plaintiffs Motion for Reconsideration. Such filing, even if not an admission, vitiates any right to protection. 14, In Section III(C) of Synergy's Motion for Sumnuuy Judgment, Synergy raises and establishes that Josh Pierce's covenant not to compete is not valid because it contains unreasonable restrictions. 15. Synergy specifically asserts that the geographic restrictions are unreasonable because the restrictions sought to cover counties in which Pierce had never worked for Neurodiagnostic. Peat M'artvick Main & Co. v. Hams, 818 S.W.2d 381,387 (Tex. 1991) (holding "the restrictive covenant must bear 801110 relation to the activities of the employee. It must not restrain his activities into a territory Into which hia former work has not taken him . . . ."); Evan's World Travel, Inc. v. Adams, 978 S.W.ad 225, 232-33 (Tex. App.—Texarkana 1998, no pet) (holding that when employee worked glgx in Harrison County, Texas. The restraint from doing business anywhere in the state of Texas is clearly an unreasonable restriction); Butler v. Arrow Mirror & Glass, Inc., 53. SN.3d 787, 792 (Tex. App.—Houston [Pt Dist.] 2001, no pet.) (reforming covenant to include only counties in which the employee conducted his duties). SYNERGY sitcom MOTION TO SUPPLIIKBWE Ptst 4 of 7 *133723

Page 759 16, In PLAINTIFF'S RESPONSE TO SYNERGY rows REQuEsr FOR ADMISSIONS, Plaintiff Judicially admits that Pierce paver, worked for Plaintiff in Ellis County, Hood County, Johnson County, Kaufman County, and Parker County.i This is five (5) of the eleven (11) counties covered by the covenant. In other words, almost 1/2 of the counties enumerated in the covenant are counties in which Pierce never worked for Plaintiff. 17. These admissions conclusively establish that Pierce's covenant contains unreasonable restricdons. Haase, 818 S.W.211 at 387; Evan's World Travel, 978 N.2d at 232-33; Butler, 31 s.w.3d at 792. is. As a consequence, the covenant is not valid and enforceable and cannot be the basis of a tortious interference claim. Juliette Fowler Homes, 793 S.W.ad at 665; Travel Masters, 827 8,W21 at 8331 NCH Corp., 757 F.2d at 1543-1544; Laser Spot, 387 S.W.3d at 49; Flynn Bros., Inc. v. First Med. Associates, 715 S.W .2d at 785. Therefore, Synergy is entitled to judgment on the tortious interference claim asserted by Plaintiff. B. Unrosusonable Itegbictions Preclude Damages 19. U past of its tortious interference claim, Plaintiff must also establish that it suffered damages. See Powell Indus., 985 S.W.24 at 456 (listing of elements for tordous interference). In Section III(E) of Synergy's Motion for Summary Judgment, Synergy raises Neurodiagnostic's lack of damages as a summary judgment ground.

See Response' 7.11. I TEX. R. C1V. P. 198.3. SYNERGY SECOND MOTION TO SU117LIDIENT Pegs 6 of 7 0133723

Page 760 20. PLAINTIFF'S RESPONSE TO SYNERGY TOWS REQUEST POR ADMISSIONS conclusively establishes that Pierce's covenant contains unreasonable restrictions. 21. Assuming (arguendo) the other predicates as to formation of a valid non. compete and competent evidence of reasonableness, Plaintiffs best cue scenario Is that the Court reform the limitations contained in the covenant. See Tu. Bus. Comm. CODE /15.51(0. 22. However, reformation automatically and irrevocably precludes Plaintiff from recovering damages that might have occurred prior to the reformation, TEL

Bus. & Coil. CODE ANN. §1.5.51(C); Butler, 51 S.W.3d at 796; Perez v. Texas Disposal Systems, Inc., 53 S.W .3d 480, 482-83 (Tex, App.—San Antonio 2001)1 reversed on other grounds, 80 8.W.3d (2002); see also Haass, 818 5,W.2d at 388 (noting that Section 15.31(c) expressly provides a court may not award damages to the promisee and relief shall be limited to injunctive relief). These are the very same damages that Plaintiff must establish to prevail cults claims, 23. Plaintiff is, therefore, precluded from obtaining the very damages it now seeks from Synergy. Because Plaintiff is foreclosed, as a matter of law, from obtaining damages, the tortious interference claim fails as a matter of law. PRAYER Synergy requests that this honorable Court grant it leave to supplement its Motion for Summary Judgment, as set forth above, and also supplement the summary judgment record by allowing Synergy to file and this Court consider PlAnfrineS RESPONSES To SYNERGY Tom's RequErr FOR ADMISSIONS, which are attached to this motion as Exhibit "8" and judicial notice of the Court's file, including Plaintiff's Motion for Reconsideration. syrialor sumo MICYTION TO SUPPLEMENT Par of 7 *133723

Page 761 Respectfully submitted,

WHITAICER CHALK SWINDLE AND SCHWARTZ PLLC

By /a/ Brent Shellhorag Hunter T. McLean State Bar No. 00788026

WO= Brent Shellhorse State Bar No. 24008022 hahalihs2111fth1tak:ChadaIM Patrick H. Rose, W State Bar No, 24079244 proseewhitakerchalk.com 3500 DR Horton Tower 301 Commerce Street Fort Worth, Texas 76102 (817) 878.0500 (817) 878-0501 (Facsimile) ATTORNEYS FOR SYNERGY IOM, LW

ORTIEIUMELQUEEMICE This is to certify that on the undersigned date, a true and correct copy of the foregoing SECOND MOTION TO SUPPLEMENT MOTION FOR SUMMARY JUDGMENT WWI sent to all parties in accordance with Tani Rule of Civil Procedure 21a on May 29, 2014.

/s/ Brent Shallhorse W. Brent Shellhorse

IYNUGY SILCOND MOTION TO SUPPULICIINT Per 7 of 7 0133723

Page 762 Cause No, 13.35574 NEURODIAGNOSTIC TEX, L.L.C., IN THE DISTRICT COURT

7* JUDICIAL DISTRICT ROBERT lour PIERCE end SYNERGY IOMI, LLC, SMITH COUNTY, TEXAS Defendant.

EAM11117.2=KatilaiaMMECIOM RE0IISSEM1AINMAIM2 TO: DEPENDANT, Systaqr 1014, LLC, by Ind through its attorney of record, Petrick Rose ad Hunter McLean, Marsha Chalk Swindle & Schwexix, PLLC, 301 Cotranuce Street, Suite 3500, Port Worth, Toms 7d102.

COMES NOW Plaintiff, Nemodiegnotivie Tex, LW., Pursuant to Rule 1915 of the Taus Rules of Civil Procixtuto, and oubroiol its Rovpoose to Defttickut Synergy mu, 1.1.Cs Request for hal14141,0 CO Plaintiff in the aboreittyled and numbered cause as follows;

IZISTRIS=01111.14S12.1211123110101 Plsintiff OBJECTS to Defendant's Definitions sod Instructions o their endrety to the meat they attempt to impou szt oblivious ott Plsititiff mud& the Texas Rules of CiVil PrOCNIUM11 Plaintiff turas to thus Requests in accordance with the TeXili /Wei of Civil Procedure

IZQUAMIQUIDAWISHM BIZMUSXMUMELSKOKNOAL &bit that in connection with his employment with Netuodiegaostic, Placa was not rupoceibla for soliciting oistomers for !sisurodissaosic,

RESEMSM Denied.

BEILILIZZI1A=31112112011 Admit that in connection with hit employment with Neurodiestioedc, Pierce did not solicit customers for NetUr04641801,1e.

PKAINT-Dri UPON= TO MUST IMPS 112,QUIIST FORAMOSSION11 RUM 1 OP 5

Page 763 natiMint Denied.

ZBINDEMENLAIMIIMMIELL.3: Admit that Pierce baa not peovided Wait=Ing SWAM to any =Int customer of Neurodiagnostic note Pate's empioyasent with Nemodiagnosde terminated.

=Ea= Denied. =QUM FOR ADMISSION NCt,

Adtnit that Pierce did not provide Monitoring Services to any physician or hospital on behalf of Nourodisposdc in Collin County while empkyyed by Neurodiagetosdc. Blanaini Denied.

BECanZaZatakafinfatnail Admit that Pierce did not provide licaltoting Swim to any physician cc hospital on behalf of Nentodisipostic in MBAs County while employed by Neurodiagnostic.

Denied. Will1ala7lox=a111112Slak Admit that Pismo did not provide Monitotins Session to any physician or hospital on behalf of Neordiainottic in Demon County while employed by Neutodispoetin SPRONSEk

Denied.

ItEILIZITZCIRAIMMSIDIVELL Admit that Place dW not provide lionitonns Services to any physician or hospital on behalf of Neuttlissamen in Ellis County while employed by Neurodiainottic. =MEM Admit.

PIAThatilos Mem= TO SWIM IOU%MUM POI ADMISSIONS PAtill 2 07 5

Page 764 2211211LIZEDIALSOMMLNiaa. Adroit thet Pierce did not provide Monimuing Services to any physician or hospital on behalf of Neuediagnostic in Hood County while employed by Neurodiagnostin

FsBankairi Admit

BEXILINALENLADAMISIMECLI: Admit that Pierce did not provide Monitoring Swims to any physician at hospital on behalf of Netudiegnostic injohnion County while employed by Neurodiegnostic.

MEM= Admit.

RE.MarearMiAniaii‘Milaiik Admit that Pierce did not provide Monitoring Services to any physician or hospital on behalf of Netudispostic in Kelantan County while employed by Neurodiagnoetin

naralgit Admit otiar Pfla andaiStatiliSLII Adroit that Pie= clicl not provide Monitoring Serrieell to any physician or hospital on behalf of Neurdiartoatic in Parker County whiz employed by Neurodiagnostic.

=ilk= Admit,

BACHUMEMULAIllaiSIMLIZU21 Admit that Pierce did not provide Monitoting Services to any physician or hospital on behalf of Netudiliptostic in Rockwell County while employed by Neurodiastiortic,

11112131fiat Denied.

PLAD7rwes RIMPON511 OaleNSIGY It30$ RRQUIRST FOR ADMISSIONS PACKS 3 or 5

Page 765 nannitaggliatiOZWILLI, Admit that Pierce did not provide Monitoring Services to any physician or hoepitel on behalf of Nell:di/Vol* in Tetrint County "Me employed by Neurodispostic.

RESEMER4 Deni•d. agOVRST FOR ADMISSI0la47 NO. 14;

Admit that Pierce did not provide Monitoring Services to eny physician oz hospital on behalf of Neurdiegnostic in Wise County while employed by Neurodiagnoric.

=EOM Denied.

BACILIZI12121LAIMASTIELN.Qat Admit that since Pierce's employment with Neurcellagrinetic was teeminsted, that Neutdispootic his been ibis to pmeicis intotopetetive ersonitorlog technicians for all surgical procedures where plrysiciens or hoopirals requested that NitirOctiognootac provide such service&

Rasp *oddly submitted,

Duassurreit,L.L.F.

Z Etie Deolte-szeiter Saw BC No. 00796434 Dart S. Caton Sane Box No 24030438 iistatimatsagileks= Rob Wright Stets Ur No 24034184 intsilhanagaillnag= 3010 Broad:ono: Lane Move Mound, Tarts 75022 (972) 691-3677 (972) 91-36B8— facsimile Attarw far Nome

FLAMM'S Rill1PONIZ TO Inman /OM Itztwiert POR ADbaSSIONS PAO* 4o S

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Page 766 alanriCeint OP EOM= TWa le to certify that and =eat copy of the foe/On document bee been sent Carat Hampton, Thuspext & Anode" Met Ina Mak*4 Moot, WOO Houston Strew, Fast Work Tams 16102, end Pada Ica and amen Mama, India* Qat Senn& le Schwas. MC, 301 Commerce Stu, Suite 3500, Port Worth, Tams 76101, via emell an ads Ark of boy, 2014.

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Page 767 EXHIBIT C | | Warning As of: March 3, 2015 2:11 PM EST

Juliette Fowler Homes, Inc. v. Welch Assocs. Supreme Court of Texas June 6, 1990, Delivered No. C-7805

Reporter 793 S.W.2d 660; 1990 Tex. LEXIS 77; 33 Tex. Sup. J. 530 JULIETTE FOWLER HOMES, INC. ET AL. included noncompetition agreements with Petitioners, v. WELCH ASSOCIATES, INC. respondent. Each petitioner eventually terminated Respondent the contracts. Subsequent to the termination of the contracts, second petitioner’s president was hired Subsequent History: [**1] Rehearing Overruled by another organization to supervise the September 12, 1990. fund-raising campaign of first petitioner. Respondent brought suit against petitioners, Prior History: From Dallas County, Eleventh alleging violation of the noncompetition District. agreement, and tortious interference with a noncompetition agreement. The court found the Core Terms noncompetition agreement between second petitioner and respondent to be unenforceable, noncompetition, termination, tortious interference, because it contained no limitations concerning covenant, unenforceable, compete, fund-raising, geographical area or scope of activity. As a result, notice, damages, contractual relationship, there could be no tortious interference with the tortiously, interfered, public policy, no evidence, contract. Second petitioner, who was found to cancellation, contracts, grounds, argues, have validly ended its contract with respondent, unreasonable restraint, enforceability, injunction, did not tortiously interfere with the agreement campaign, court of appeals, monetary damages, between first petitioner and respondent, because actual damage, inducing, parties, hired, terms mere inducement of a party to terminate contractual relations did not constitute tortious Case Summary interference in Texas.

Procedural Posture Outcome Petitioners appealed from a decision of the Dallas The judgment in favor of respondents was County Court, Eleventh District (Texas), which reversed, because the noncompetition agreement held in favor of respondent in an action alleging contained no limitations as to geography or scope that one petitioner breached a noncompetition of activity, and unenforceability of a agreement with respondent and tortiously noncompetition clause was a valid defense to the interfered with another noncompetition agreement. claim of petitioner’s tortious interference.

Overview LexisNexis® Headnotes Petitioners, separate organizations involved in fund-raising, each entered into contracts which Contracts Law > Types of Contracts > Covenants 793 S.W.2d 660, *660; 1990 Tex. LEXIS 77, **1

Labor & Employment Law > ... > Conditions & contract as written. If the agreement is not Terms > Trade Secrets & Unfair Competition > enforceable in accordance with its terms because Noncompetition & Nondisclosure Agreements either the time or the area stipulated therein is unreasonable, the employer may obtain injunctive HN1 A covenant not to compete is in restraint of relief but will not be awarded a money recovery trade and unenforceable on grounds of public for anything the employee may have done prior to policy unless it is reasonable. A covenant not to a judicial declaration of the rights and obligations compete is not a reasonable restraint of trade arising from the contract. unless it meets each of three criteria: (1) the covenant not to compete must be ancillary to an Torts > ... > Commercial Interference > Contracts > otherwise valid transaction or relationship; (2) the General Overview restraint created by the covenant not to compete Torts > ... > Contracts > Intentional Interference > must not be greater than necessary to protect the Elements promisee’s legitimate interest; and (3) the promisee’s need for the protection afforded by the HN4 In Texas, the elements of a cause of action covenant not to compete must not be outweighed for tortious interference with contractual relations by either the hardship to the promisor or any are (1) there was a contract subject to interference, injury likely to the public. Whether a covenant not (2) the act of interference was willful and to compete is a reasonable restraint of trade is a intentional, (3) such intentional act was a question of law for the court. proximate cause of plaintiffs damage, and (4) actual damage or loss occurred. Contracts Law > Types of Contracts > Covenants Labor & Employment Law > ... > Conditions & Contracts Law > Procedural Matters > Statute of Terms > Trade Secrets & Unfair Competition > Frauds > General Overview Noncompetition & Nondisclosure Agreements Contracts Law > Types of Contracts > Covenants HN2 In determining whether the restraint created Labor & Employment Law > ... > Conditions & by a covenant not to compete is greater than Terms > Trade Secrets & Unfair Competition > necessary to protect the promisee’s legitimate Noncompetition & Nondisclosure Agreements interest, the court’s primary focus is whether the Real Property Law > Brokers > Brokerage covenant not to compete incorporates reasonable Agreements limitations concerning time, geographical area Real Property Law > Purchase & Sale > Contracts and scope of activity which do not impose a of Sale > Formalities greater restraint than is necessary to protect the Torts > ... > Commercial Interference > Contracts > promisee’s interest. General Overview Civil Procedure > Remedies > Injunctions > HN5 Covenants not to compete which are Permanent Injunctions unreasonable restraints of trade and unenforceable Labor & Employment Law > ... > Conditions & on grounds of public policy cannot form the basis Terms > Trade Secrets & Unfair Competition > of an action for tortious interference. Noncompetition & Nondisclosure Agreements Contracts Law > Standards of Performance > HN3 An action for damages resulting from Discharge & Termination competition occurring before a reasonable territory and period have been prescribed by a court of HN6 When a contract provides expressly that it is competent jurisdiction must stand or fall on the subject to termination upon notice, the general Page 2 of 10 793 S.W.2d 660, *660; 1990 Tex. LEXIS 77, **1

rule is that each party to the contract has the legal Torts > ... > Commercial Interference > Contracts > right to cancel the contract. General Overview

Contracts Law > Standards of Performance > HN10 Merely inducing one of the parties to Discharge & Termination exercise his right to terminate contractual relations after giving the required notice does not Torts > Business Torts > Commercial Interference > General Overview necessarily constitute tortious interference with contract under Texas law. Torts > ... > Commercial Interference > Contracts > General Overview Civil Procedure > Remedies > Damages > General Overview HN7 Until a contract is terminated, it is valid and subsisting, and third persons are not free to Civil Procedure > Remedies > Damages > Punitive tortiously interfere with it. It would be inconsistent Damages to leave contracts that are terminable upon notice Contracts Law > ... > Damages > Types of unprotected from tortious interference while Damages > Punitive Damages protecting relations that are more or less complete or definitive. Torts > Remedies > Damages > General Overview Torts > ... > Types of Damages > Punitive Civil Procedure > ... > Standards of Review > Damages > General Overview Substantial Evidence > General Overview Torts > ... > Commercial Interference > Contracts > HN11 Recovery of actual damages is a prerequisite General Overview to the receipt of exemplary damages.

HN8 In reviewing a no evidence point, the court Counsel: Bryant, Jr., Mr. Corbet F. Carrington, considers only the evidence and inferences tending Coleman, Sloman & Blumenthal, Dallas, Texas, to support the jury verdict and disregard all DeHay, Jr., Mr. J. Carlisle, and Blanchard Dallas, evidence to the contrary. If there is any evidence Texas, Cook, Mr. Kevin J., DeHay & Blanchard, of probative value to support the jury’s finding Dallas, Texas, for petitioners. that defendants tortiously interfered with a contract, the court must overrule the no evidence Zukowski, Mr. John M. Campbell, Athey, point. Zukowski & Bresenhan, Houston, Texas, for respondent. Civil Procedure > ... > Standards of Review > Substantial Evidence > General Overview Judges: Jack Hightower, Justice. HN9 No evidence points of error must and may Opinion by: HIGHTOWER only be sustained when the record discloses: (1) a complete absence of evidence of a vital fact; (2) the court is barred by rules of law or of evidence Opinion from giving weight to the only evidence offered to [*661] OPINION prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla; HIGHTOWER, Justice. and (4) the evidence established conclusively the opposite of the vital fact. This breach of contract and tortious interference with contractual relations case involves issues Contracts Law > Standards of Performance > concerning the enforceability of a covenant not to Discharge & Termination compete. The trial court rendered judgment in Page 3 of 10 793 S.W.2d 660, *661; 1990 Tex. LEXIS 77, **1

favor of Welch Associates Inc. and against Juliette agencies [**3] is Fowler. John Butler was assigned Fowler Homes, Inc. et al. The court of appeals to work directly with Fowler, and supervise affirmed the judgment of the trial court. 1 We Fowler’s fund-raising campaign. reverse the judgment of the court of appeals and Welch filed this action against Fowler, alleging render judgment that Welch Associates, Inc. take breach of the Fowler-Welch contract, and further nothing. alleging tortious interference with the [**2] Juliette Fowler Homes, Inc. (Fowler) is a noncompetition clause 3 in the contract between charitable nonprofit organization, an affiliate of Welch and Butler Companies by inducing John the Disciples of Christ Church. In 1981, Fowler Butler to accept the Director of Development entered into a fund-raising contract (Fowler-Welch position with NBA. Welch also named John contract) with Welch Associates, Inc. (Welch), Butler and Butler Companies as defendants, whereby Welch agreed to conduct a fund-raising seeking damages for breach of the noncompetition campaign for the benefit of Fowler. Welch clause of the Butler Companies-Welch contract contracted with John W. Butler Companies, Inc. and for tortious interference with Welch’s (Butler Companies), to help execute the Fowler contractual relations with Fowler. fund-raising campaign. The contract between Welch and Butler Companies (Butler [**4] The jury found that John Butler breached Companies-Welch contract) contained a covenant the noncompetition clause of Butler Companies’ not to compete which bound Butler Companies to contract with Welch and that John Butler and not ″enter into any form of contract for services″ Butler Companies tortiously interfered with with any of Welch’s clients for a period of two Welch’s contractual relationship with Fowler. years after the conclusion of the Butler Furthermore, the jury found that Fowler tortiously Companies-Welch contract. Eventually, Fowler interfered with Welch’s contractual relationship became dissatisfied with Welch’s fund-raising with Butler Companies. A judgment for damages results, and Welch and Butler Companies became was rendered in favor of Welch against Fowler, dissatisfied with one another’s performance. John Butler and Butler Companies, jointly and Pursuant to the express notice provisions, Fowler severally. In addition, John Butler was enjoined terminated its contract with Welch. Butler from certain [*662] activities for one year from Companies also terminated its contract with Welch. the date of the judgment. 4 Subsequently, John Butler, the president 2 of Butler Companies, was hired by the National [**5] BREACH OF THE BUTLER Benevolent Association (NBA), one of whose COMPANIES-WELCH NONCOMPETITION 1 The court of appeals’ opinion was originally unpublished but has been ordered published by this court. 2 As far as we can determine from the record, John Butler was the only ″employee″ of Butler Companies. 3 The terms ″covenant not to compete″ and ″noncompetition clause″ are used interchangeably in this opinion. 4 The judgment inexplicably enjoined John Butler as follows:

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that a permanent injunction be granted enjoining John W. Butler for a period of one year from the date of this Judgment [April 2, 1987] from contacting any individual or entity, who resides in the United States, the identity of whom or which was first disclosed by WAI [Welch] to John W. Butler during the term of the management contract between Welch Associates, Inc., and the John W. Butler Companies, Inc., for the purpose of soliciting funds.

Since more than one year has passed from the date of judgment, the injunction has expired by its own terms and it is not necessary for this court to address its validity. See Parr v. Stockwell, 159 Tex. 440, 322 S.W.2d 615 (1959). Furthermore, Page 4 of 10 793 S.W.2d 660, *662; 1990 Tex. LEXIS 77, **5

CLAUSE of the National Benevolent Association, St. Louis, Missouri, without the expressed The jury found that John Butler breached the written consent of Welch Associates, Inc. noncompetition clause of the Butler Companies-Welch contract by accepting the HN1 A covenant not to compete is in restraint of Director of Development position with NBA. trade and unenforceable on grounds of public Among other things, judgment for actual damages policy unless it is reasonable. DeSantis v. was rendered for Welch and against John Butler Wackenhut Corp., 793 S.W.2d 670 (Tex. 1990); based upon his breach of the noncompetition Frankiewicz v. National Comp Assoc., 633 S.W.2d clause. John Butler argues that the noncompetition 505, 507 (Tex. 1982). A covenant not to compete clause of the Butler Companies-Welch contract is is not a reasonable restraint of trade unless it unenforceable as written and that Welch may not meets each of three criteria: (1) the covenant not recover monetary damages for breach of an to compete must be ancillary to an otherwise valid unenforceable noncompetition clause. Welch does transaction or relationship; (2) the restraint created not allege that Butler Companies violated the by the covenant not to compete must not be noncompetition clause by contracting with Welch’s greater [**7] than necessary to protect the clients; rather, Welch argues that John Butler and promisee’s legitimate interest; and (3) the Butler Companies are liable for breach of contract promisee’s need for the protection afforded by the because John Butler violated the noncompetition covenant not to compete must not be outweighed clause in the Butler Companies-Welch contract by by either the hardship to the promisor or any accepting a position with NBA. Since the injury likely to the public. DeSantis v. Wackenhut noncompetition clause is unenforceable as written, Corp., S.W.2d at . Whether a covenant not to we agree that Welch may not recover monetary compete is a reasonable restraint of trade is a damages for John Butler’s breach of the Butler question of law for the court. DeSantis v. Companies-Welch contract. Wackenhut Corp., S.W.2d at ; Hershaw v. The noncompetition clause in the Butler Kroenecke, 656 S.W.2d 416, 418 (Tex. 1983). Companies-Welch contract provides: In determining the enforceability of the noncompetition clause in the Butler The [**6] employees of the John W. Companies-Welch contract, we need only consider Butler Companies, Inc., upon acceptance the second criteria: the restraint created by the of this contract, agreed that no disclosure covenant not to compete [*663] must not be of any confidential information will be greater than necessary to protect the promisee’s given to any third party at any time; and legitimate interest. HN2 Under the second criteria, further, that during the life of this contract, our primary focus is whether the covenant not to and for a period of two (2) years after compete incorporates reasonable limitations conclusion of this contract, The John W. concerning time, geographical area and scope of Butler Companies, Inc., will not enter into activity which do not impose a greater restraint any form of contract for services, directly than is necessary to protect the promisee’s interest. or indirectly, with any client of Welch DeSantis v. Wackenhut Corp., S.W.2d at . As Associates, Inc., past or present, including written, the noncompetition clause in the Butler Juliette Fowler Homes, Inc., any agencies [**8] Companies-Welch contract contains no in the court of appeals, Welch conceded that ″the injunction fashioned by the [Trial] Court is not on point with either the restrictive covenant found in the Butler [Companies-Welch] Contract or the evidence offered at trial.″

Page 5 of 10 793 S.W.2d 660, *663; 1990 Tex. LEXIS 77, **8

limitations concerning geographical area or scope carved out an area or a period that is of activity. Butler Companies and its employees 5 reasonable under the circumstances. It is are prohibited from entering into any form of one thing for the court to do this as an contract for services or employment in any incident to the granting of injunctive relief capacity or position, directly or indirectly, with which operates prospectively and an any past or present clients of Welch wherever they entirely different matter to [**10] reform may be located. This prohibition is absolute, the contract for the purpose of giving the unequivocal and unreasonable. Accordingly, we employer a cause of action for damages. hold that the noncompetition clause in the Butler In the latter situation the defendant would Companies-Welch contract as written is an be required to respond in damages for unreasonable restraint of trade and unenforceable what he had done at a time when there was on grounds of public policy. no way of determining, except possibly by an action for declaratory judgment, where John Butler argues that since the noncompetition or for how long he was legally obligated to clause of the Butler Companies-Welch [**9] refrain from competing. contract is unenforceable as written, Welch may not recover monetary damages for breach of an ***** unenforceable noncompetition clause. We agree. We hold that HN3 an action for damages An action for damages may not be predicated resulting from competition occurring upon the breach of an unenforceable before a reasonable territory and period noncompetition clause. Weatherford Oil Tool Co. have been prescribed by a court of v. Campbell, 161 Tex. 310, 340 S.W.2d 950, competent jurisdiction must stand or fall 952-953 (1960); Frankiewicz v. National Comp on the contract as written. If the agreement Assoc., 633 S.W.2d at 507-508. For purposes of an is not enforceable in accordance with its action for damages, the enforceability of the terms because either the time or the area covenant not to compete will be determined as stipulated therein is unreasonable, the written and may not be modified to render it employer may obtain injunctive relief but reasonable and enforceable. Weatherford Oil Tool will not be awarded a money recovery for Co. v. Campbell, 340 S.W.2d at 952-953; anything the employee may have done Frankiewicz v. National Comp Assoc., 633 S.W.2d prior to a judicial declaration of the rights at 507-508. As this court discussed in Weatherford and obligations arising from the contract. Oil Tool Co. v. Campbell: 340 S.W.2d at 952-953. Since the noncompetition If the agreement is not reasonably limited clause of the Butler Companies-Welch contract is as to either time or space, the parties are unenforceable as written, we hold that Welch may not definitely apprised of their respective not recover monetary damages for John Butler’s rights and duties until a court of equity has breach of the noncompetition clause by accepting

5 Since it is not necessary to the disposition of this cause, we do not address (1) whether Welch could enforce the noncompetition clause in the Butler Companies-Welch contract against John Butler simply because he is an employee of Butler Companies or (2) whether John Butler is individually liable for the breach of the Butler Companies-Welch contract. Page 6 of 10 793 S.W.2d 660, *663; 1990 Tex. LEXIS 77, **11

6 [**11] a position with NBA. defense to Welch’s tortious interference claim against Fowler. [**12] [*664] TORTIOUS INTERFERENCE WITH THE BUTLER COMPANIES-WELCH HN4 In Texas, [**13] the elements of a cause of CONTRACT action for tortious interference with contractual relations are (1) there was a contract subject to Welch obtained favorable jury findings regarding its claim that Fowler tortiously interfered with interference, (2) the act of interference was willful Welch’s contractual relationship with Butler and intentional, (3) such intentional act was a Companies. Fowler argues that a judgment cannot proximate cause of plaintiffs damage, and (4) be based upon tortious interference with the actual damage or loss occurred. Armendariz v. Butler Companies-Welch contract because the Mora, 553 S.W.2d 400, 404 (Tex. Civ. App. -- El contractual provision that was violated -- the Paso 1977, writ ref’d n.r.e.); see also Hi-Line noncompetition clause -- is unenforceable. Fowler Elec. Co. v. Dowco Elec. 7 Prod., 765 F.2d 1359, argues that the noncompetition clause in the 1362 (5th Cir. 1985). Butler Companies-Welch contract as written is an The first element requires the [**14] existence of unreasonable restraint of trade and unenforceable a valid contract. Steinmetz & Assoc., Inc. v. Crow, on grounds of public policy. Therefore, Fowler’s 700 S.W.2d 276, 277 n.1 (Tex. App. -- San actions ″inducing″ John Butler to accept the Antonio 1985, writ ref’d n.r.e.). However, even an Director of Development position with NBA unenforceable contract may serve as the basis for cannot support a judgment for tortious interference. a tortious interference claim if the contract is not This argument presents the narrow issue of void. Clements v. Withers, 437 S.W.2d 818, 821 whether the unenforceability of the noncompetition (Tex. 1969). In other words, mere unenforceability clause in the Butler Companies-Welch contract is of a contract is not a defense to an action for a defense to Welch’s action against Fowler for tortious interference with its performance. Id. tortious interference with contractual relations. Under the facts of this case, we hold that the Clements concerned an action for tortious unenforceability of the noncompetition clause is a interference with a real estate listing agreement 6 While this cause was pending before this court, the Legislature added sections 15.50 and 15.51 to the Texas Business and Commerce Code concerning covenants not to compete. TEX. BUS. & COM. CODE ANN. §§ 15.50, 15.51 (Vernon Supp. 1990). The legislature made these sections applicable ″to a covenant entered into before, on, or after the effective date of this Act.″ Act of June 16, 1989, ch. 1193, § 1, 1989 Tex. Gen. Laws 4852 (effective Aug. 28, 1989). See DeSantis v. Wackenhut Corp., S.W.2d at . We need not determine in this case whether sections 15.50 and 15.51 apply retroactively to affect litigation concerning the rights of parties to a covenant not to compete which commenced before the statute was enacted. See DeSantis v. Wackenhut Corp., S.W.2d at ; Martin v. Credit Protection Ass’n, 793 S.W.2d 667 (Tex. 1990). Under section 15.50(2), ″a covenant not to compete is enforceable to the extent that it . . . contains reasonable limitations as to time, geographical area, and scope of activity to be restrained that do not impose a greater restraint than is necessary to protect the goodwill or other business interest of the promisee.″ TEX. BUS. & COM. CODE ANN. § 15.50(2) (Vernon Supp. 1990). Under section 15.51(c), if the covenant not to compete ″does not meet the criteria specified by Subdivision (2) of Section 15.50, the court, at the request of this promisee, shall reform the covenant to the extent necessary to cause the covenant to meet the criteria specified by Subdivision (2) of Section 15.50 and enforce the covenant as reformed, except that the court may not award the promisee damages for a breach of the covenant before its reformation and the relief granted to the promisee shall be limited to injunctive relief.″ TEX. BUS. & COM. CODE ANN. § 15.51(c) (Vernon Supp. 1990). Thus, sections 15.50(2) and 15.51(c) would not require a result in this case different from the one we reach today. See DeSantis v. Wackenhut Corp., S.W.2d at ; Martin v. Credit Protection Ass’n, S.W.2d at . 7 At one time the lack of justification or excuse was viewed as an element of the plaintiffs right of recovery. Sakowitz, Inc. v. Steck, 669 S.W.2d 105, 107 (Tex. 1984). Recently, however, this court overruled Sakowitz and its progeny holding that ″the privilege of legal justification or excuse in the interference of contractual relations is an affirmative defense upon which the defendant has the burden of proof″ Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex. 1989). Page 7 of 10 793 S.W.2d 660, *664; 1990 Tex. LEXIS 77, **14

that was unenforceable between the contracting Fowler and Welch. Paragraph 14, the termination parties under the statute of frauds. Id. at 820. In provision, specified how the termination notice Clements, we expressly noted that the contract should be given and how payment should be [*665] was not void or illegal, neither was there calculated in the event of termination. 8 Welch any public policy opposing its performance. Id. at does not contest that written notice of termination 821. We now hold that HN5 covenants not to was properly given, rather it claims that compete which are unreasonable restraints of termination was wrongful because there was no trade and unenforceable on grounds of public good faith [**16] reason for termination. policy cannot form the basis of an action for tortious interference. See NCH Corp. v. Share At trial, the jury specifically found that Fowler Corp., 757 F.2d 1540, 1543-1544 (5th Cir. 1985); and Welch mutually intended and agreed that the Hi-Line Elec. Co. v. Dowco Elec. Prod., 765 F.2d fund-raising contract could be terminated for any at 1362. reason. HN6 When a contract provides expressly that it is subject to termination upon notice, the As we have noted above, [**15] the general rule is that each party to the contract has noncompetition clause in the Butler the legal right to cancel the [**17] contract. Companies-Welch contract as written is an Kingsbery v. Phillips Petroleum Co., 315 S.W.2d unreasonable restraint of trade and unenforceable 561, 576 (Tex. Civ. App. -- Austin 1958, writ ref’d on grounds of public policy. We hold, therefore, n.r.e.). In this case, the parties bargained for the that the unenforceability of the noncompetition flexibility of terminating the contract upon tender clause in the Butler Companies-Welch contract is of the requisite notice. Neither party should be a valid defense to Welch’s tortious interference denied the benefit of its bargain. We hold that claim against Fowler. Fowler properly terminated the fund-raising contract pursuant to its express terms; therefore, BREACH OF THE FOWLER-WELCH Welch’s breach of contract claim against Fowler CONTRACT must fail. Fowler argues that the court of appeals erred in affirming the trial court’s judgment ″if based upon TORTIOUS INTERFERENCE WITH THE a claim of breach of contract,″ since the FOWLER-WELCH CONTRACT fund-raising contract was properly terminated. We At trial, the jury found that John Butler and Butler address this point because the trial court’s Companies tortiously interfered with the judgment against Fowler did not specify whether contractual relationship between Fowler and it was based upon Welch’s tortious interference or Welch. John Butler and Butler Companies argue breach of contract claim against Fowler. that since Fowler properly terminated the The fund-raising contract involved in this case fund-raising contract with Welch pursuant to the was a negotiated, arm’s length agreement between contract’s express notice provisions, judgment 8 Paragraph 14, the termination provision, states:

This agreement may be cancelled by either party with the cancellation to be effective sixty days after the mailing or personal delivery of a written notice of cancellation; in the event of a cancellation, the professional fee will be prorated to the date of cancellation according to the fee payment schedule on the effective date of cancellation, based upon the rate of payment to WAI in effect for the particular month in which the termination is effective, and the remaining unpaid fees established by the schedule herein will not be due or owing by Juliette Fowler Homes, Inc., to Welch Associates, Inc.

Page 8 of 10 793 S.W.2d 660, *665; 1990 Tex. LEXIS 77, **17

could not be rendered against John Butler or with the Fowler-Welch contract. After a thorough Butler Companies for tortious interference with review of the record, we agree. the Fowler-Welch contract. Welch argues that Texas law protects against tortious interference HN8 In reviewing a no evidence point, we with valid existing contracts and prospective consider only the evidence and inferences tending business relationships, and that an existing contract to support the jury verdict and disregard all which is terminable upon notice should be given evidence to the contrary. Garza v. Alviar, 395 similar protection. S.W.2d 821, 823 (Tex. 1965). If there is any evidence of probative value to support the jury’s [**18] Texas law protects existing and prospective finding that John Butler and Butler Companies contracts from interference. Sterner v. Marathon tortiously interfered with the Fowler-Welch Oil Co., 767 S.W.2d 686, 689 [*666] (Tex. 1989); contract, we must overrule the no evidence point. C F & I Steel Corp. v. Pete Sublett & Co., 623 9 In re King’s Estate, 150 Tex. 662, 244 S.W.2d S.W.2d 709, 715 (Tex. Civ. App. -- Houston [1st 660, 661-662 (1951). Dist.], 1981, writ ref’d n.r.e.); Harshberger v. Reliable-Aire, Inc., 619 S.W.2d 478, 481 (Tex. In 1983, Fowler became increasingly [**20] Civ. App. -- Corpus Christi 1981, writ dism’d dissatisfied with the direction and results of w.o.j.). In Sterner v. Marathon Oil Co., 767 Welch’s fund-raising efforts. John Butler was also S.W.2d at 689, this court held that the dissatisfied with Welch and the operation of the terminable-at-will status of a contract was no fund-raising campaign. In mid-1983, Ed Dowell, defense to an action for tortious interference with Fowler’s Executive Director, allegedly stated that its performance. HN7 Until a contract is it would be good for Fowler if the current NBA terminated, it is valid and subsisting, and third Director of Development was no longer there and persons are not free to tortiously interfere with it. John Butler could be moved into that position. Mr. Id; see RESTATEMENT (SECOND) OF TORTS § Dowell allegedly expressed his desire that John 766 comment g (1979). It would be inconsistent to Butler assume total responsibility for the leave contracts that are terminable upon notice development of Fowler including the fund-raising unprotected from tortious interference while campaign. Mr. Dowell and John Butler had worked protecting relations that are more or less together on the fund-raising campaign almost ″complete″ or ″definitive″ (i.e., contracts with since its inception. fixed terms, terminable-at-will contracts and In September 1983, the NBA Director of prospective business relations). See Champion v. Development was terminated. Subsequently, Wright, 740 S.W.2d 848, 854 (Tex. App. -- San Fowler appointed a Search Committee to find a Antonio 1987, writ denied); Deauville [**19] successor. In December 1983, Mr. Dowell Corp. v. Federated Dept. Stores, Inc., 756 F.2d contacted John Butler concerning the Director of 1183, 1195 (5th Cir. 1985). We hold that the Development position; however, John Butler was terminable upon notice status of the Fowler-Welch not particularly interested. In January 1984, the contract is not a defense to an action for tortious members of the Search Committee decided that interference with its performance. they wanted John Butler to be the Director of John Butler and Butler Companies argue that Development. Mr. Warren Moray, the Chairman there is no evidence that they tortiously interfered of the Fowler Board, indicated that he would 9 HN9 No evidence points of error must and may only be sustained when the record discloses: (1) a complete absence of evidence of a vital fact; (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla; and (4) the evidence established conclusively the opposite of the vital fact. Calvert, ″No Evidence″ and ″Insufficient Evidence″ Points of Error, 38 TEX. L. REV. 361, 362-363 (1960). Page 9 of 10 793 S.W.2d 660, *666; 1990 Tex. LEXIS 77, **20

contact John Butler to [**21] see if he was is not entitled to an award of actual damages. interested in the position. Although he was not HN11 Recovery of actual damages is a prerequisite initially interested, John Butler decided to discuss to the receipt of exemplary damages. Doubleday the position. In February 1984, John Butler & Co., Inc. v. Rogers, 674 S.W.2d 751, 753-754 informed Welch that he was interested in the (Tex. 1984). Consequently, Welch is not entitled to Director of Development position and had decided recover exemplary damages. to pursue this employment opportunity. In April 1984, Fowler hired John Butler and terminated CONCLUSION the Fowler-Welch contract. The decision to hire We conclude, therefore, that the noncompetition John Butler as Director of Development was not agreement in the Butler Companies-Welch contract dependent upon the termination of the as written is an unreasonable restraint of trade and Fowler-Welch contract and the termination of the unenforceable on grounds of public policy Fowler-Welch contract was not dependent upon Furthermore, since the noncompetition clause of John Butler’s hiring. the Butler Companies-Welch contract is unenforceable as written, Welch may not recover Even if John Butler had induced Fowler to monetary damages for John Butler’s breach of the terminate the Fowler-Welch contract, [*667] noncompetition clause by accepting a position HN10 merely inducing one of the parties to with NBA. Since the noncompetition clause of the exercise his right to terminate contractual relations Butler Companies-Welch contract as written is an after giving the required notice does not unreasonable restraint of trade and unenforceable necessarily constitute tortious interference with [**23] on grounds of public policy, it cannot contract under Texas law. C.E. Services, Inc. v. serve as the basis for a tortious interference claim Control Data Corp., 759 F.2d 1241, 1248 (5th against Fowler. Cir.), cert denied, 474 U.S. 1037, 106 S. Ct. 604, Since Fowler terminated its contract with Welch 88 L. Ed. 2d 583 (1985); Kingsbery v. Phillips pursuant to the express notice provisions of the Petroleum Co., 315 S.W.2d at 576. Furthermore, contract, Fowler cannot be held liable for breach even if Fowler’s termination of the Fowler-Welch of the Fowler-Welch contract. Moreover, we hold contract was an ″outgrowth″ [**22] of John that there is no evidence that John Butler or Butler Butler’s hiring, this would not constitute any Companies tortiously interfered with the evidence that John Butler or Butler Companies Fowler-Welch contract. Since Welch is not entitled either induced Fowler to terminate the contract or to an award of actual damages, it is not entitled to tortiously interfered with the contract. recover exemplary damages. We hereby reverse Since we have determined that there is no evidence the judgment of the court of appeals and render that John Butler or Butler Companies tortiously judgment that Welch take nothing. interfered with the Fowler-Welch contract, Welch

Page 10 of 10 EXHIBIT D | | Warning As of: March 3, 2015 3:30 PM EST

Travel Masters, Inc. v. Star Tours, Inc. Supreme Court of Texas December 18, 1991, Delivered No. D-0962

Reporter 827 S.W.2d 830; 1991 Tex. LEXIS 158; 35 Tex. Sup. J. 254; 7 I.E.R. Cas. (BNA) 60 TRAVEL MASTERS, INC. ET AL., matter of law. The lower court affirmed the PETITIONERS v. STAR TOURS, INC., judgment against the other petitioners. On appeal, RESPONDENT the court held that the covenant not to compete was unenforceable as a matter of law because it Prior History: [**1] ON APPLICATION FOR was not ancillary to an otherwise enforceable WRIT OF ERROR TO THE COURT OF agreement. Because employment-at-will was not APPEALS FOR THE FIFTH DISTRICT OF binding upon either the employee or the employer TEXAS and was not an otherwise enforceable agreement, a covenant not to compete executed either at the Core Terms inception of or during an employment-at-will relationship could not be ancillary to an otherwise covenant, compete, Travel, enforceable agreement, enforceable agreement and was unenforceable as unenforceable, tortious interference, court of a matter of law. Further, the court held that appeals, matter of law, employment-at-will, respondent could not recover damages from illegality, ancillary petitioner father or petitioner company for the tortious interference of the covenant. The court Case Summary rendered judgment that respondent take nothing against petitioners. Procedural Posture Outcome Petitioners sought review from a decision of the Court of Appeals for the Fifth District of Texas, The court reversed the judgment of the lower which reversed the decision of the trial court and court and rendered judgment that respondent take held that a covenant not to compete was nothing against petitioners. The covenant not to enforceable as a matter of law. compete was unenforceable as a matter of law because it was not ancillary to an otherwise Overview enforceable agreement. Respondent sued petitioners, seeking injunctive relief and damages for the breach of a covenant LexisNexis® Headnotes not to compete and for tortious interference with a contractual relationship. The lower court reversed Business & Corporate Law > Distributorships & and remanded the covenant not to compete claim Franchises > Causes of Action > Covenants not to against petitioner daughter, holding that the Compete covenant not to compete was enforceable as a Contracts Law > Types of Contracts > Covenants 827 S.W.2d 830, *830; 1991 Tex. LEXIS 158, **1

Labor & Employment Law > ... > Conditions & Contracts Law > Types of Contracts > Covenants Terms > Trade Secrets & Unfair Competition > Noncompetition & Nondisclosure Agreements HN3 Covenants not to compete which are unreasonable restraints of trade and unenforceable HN1 A covenant not to compete is in restraint of on grounds of public policy cannot form the basis trade and unenforceable on grounds of public of an action for tortious interference. policy unless it is reasonable. Whether a covenant not to compete is a reasonable restraint of trade is Counsel: FOR PETITIONER Mr. Tom S. a question of law for the court. Among other McCorkle, McCorkle & Westerburg, P. C., 500 things, an enforceable covenant not to compete Katy Bldg., Dallas, TX 75202 must be ancillary to an otherwise enforceable agreement. FOR RESPONDENTS Mr. Randy Roberts, Scoggins, O’Connor & Blanscet, 14180 Dallas Business & Corporate Law > Distributorships & Parkway, Suite 800, Dallas, TX 75240. Mr. Franchises > Causes of Action > Covenants not to Compete Bradley S. Freedberg, Scoggins, O’Connor & Blanscet, 14180 Dallas Parkway, Suite 800, Dallas, Contracts Law > Types of Contracts > Covenants TX 75240. Mr. Randy Roberts, Scoggins, Labor & Employment Law > Employment O’Connor & Blanscet, 14180 Dallas Parkway, Relationships > General Overview Suite 800, Dallas, TX 75240 Labor & Employment Law > Employment Relationships > At Will Employment > General Judges: HIGHTOWER Overview Opinion by: JACK HIGHTOWER Labor & Employment Law > Employment Relationships > At Will Employment > Duration of Employment Opinion Labor & Employment Law > ... > Conditions & [*831] OPINION Terms > Trade Secrets & Unfair Competition > Noncompetition & Nondisclosure Agreements In this covenant not to compete case, Star Tours, Inc. sued Travel Masters, Inc., Donna Goldsmith HN2 An ″employment-at-will″ relationship is not and Walter Goldsmith seeking, among other things, binding upon either the employee or the employer. injunctive relief and damages from Donna Either may terminate the relationship at any time. Goldsmith for the breach of a covenant not to Thus, an employment-at-will relationship, compete and from Travel Masters and Walter although valid, is not an otherwise enforceable Goldsmith for the tortious interference with a agreement. Because employment-at-will is not contractual relationship. The trial court rendered binding upon either the employee or the employer judgment in favor of Donna Goldsmith concerning and is not an otherwise enforceable agreement, a the covenant not to compete claim and against covenant not to compete executed either at the inception of or during an employment-at-will Travel Masters and Walter Goldsmith concerning relationship cannot be ancillary to an otherwise the tortious interference with the covenant not to enforceable agreement and is unenforceable as a compete. The court of appeals reversed [**2] and matter of law. remanded the covenant not to compete claim against Donna Goldsmith, holding that the Business & Corporate Law > Distributorships & covenant not to compete was enforceable as a Franchises > Causes of Action > Covenants not to matter of law. The court affirmed the judgment Compete against Travel Masters and Walter Goldsmith. Page 2 of 5 827 S.W.2d 830, *831; 1991 Tex. LEXIS 158, **2

S.W.2d . We reverse the judgment of the court incorporated Travel Masters, a competing travel of appeals and render judgment that Star Tours agency. Donna eventually left Star Tours and take nothing against Travel Masters, Donna joined Travel Masters as its president. Star Tours Goldsmith and Walter Goldsmith. attempted to enforce the covenant not to compete against Donna and Travel Masters and ultimately Donna Goldsmith, an experienced travel agent, sought, and obtained, a temporary injunction was hired by Star Tours with the intent to restraining Donna and Travel Masters from eventually make her office manager. As a condition soliciting specified Star Tours customers. 1 of her employment, Donna executed an ″Employee Non-Competition Agreement″ which consisted [**4] Star Tours thereafter added Donna’s father, entirely of a covenant not to compete. The Walter, as a defendant and sought damages from agreement provided: him and Travel Masters for tortious interference WHEREAS, Employee, in consideration of the with a contractual relationship and from Donna agreements herein contained and the compensation for breach of the covenant not to compete. On to be paid her, expressly agrees that she will not, Donna’s motion, the trial court granted a directed for a period of twenty-four (24) months after verdict in her favor because the covenant not to termination of her employment hereunder for any compete was unenforceable. However, the tortious reason whatsoever, directly or indirectly as interference claims against Walter and Travel Employer, Employee, stockholder, principal agent Masters were submitted to a jury. The jury found Employee or in any other individual representative that Walter and Travel Masters wrongfully and capacity whatsoever, solicit, serve or cater to or maliciously induced a breach of the covenant not engage in, assist, be interested in or connected to compete and awarded Star Tours actual and with any other [**3] person, firm or corporation exemplary damages. The court of appeals reversed in the same or similar business of Employer and remanded the covenant not to compete claim soliciting, serving or catering to any of the against Donna, holding that the covenant not to customers served by her or by any other employee compete was enforceable as a matter of law. The of Employer during the term of her employment. court affirmed the judgment against Travel Masters Additionally, Employee shall not disclose to any and Walter. other persons, firms or entities in the same or I. similar business as Employer, the names, customers of Employer nor disclose any Donna argues that the covenant not to compete is information of any kind pertaining to the terms of unenforceable as a matter of law because it was any agreements between Employer and its not ancillary to an otherwise enforceable customers. agreement. We agree. Although Donna signed the ″Employee HN1 A covenant not to compete is in restraint of Non-Competition Agreement″ prohibiting [*832] trade and unenforceable on grounds of public her competition with Star Tours for two years, she policy unless it is reasonable. Martin v. Credit was an employee-at-will and was subject to Protection Ass’n, [**5] Inc., 793 S.W.2d 667, 668 termination at any time for any reason. (Tex. 1990); Desantis v. Wackenhut Corp., 793 Several years after beginning her employment S.W.2d 670, 681 (Tex. 1990). Whether a covenant with Star Tours, Donna and her parents not to compete is a reasonable restraint of trade is 1 Travel Masters and Donna appealed the temporary injunction; the court of appeals affirmed the trial court. This court dismissed the application for writ of error for want ofjurisdiction. 742 S.W.2d 837 Tex. App.--Dallas 1987, writ dism’d w.o.j.). Page 3 of 5 827 S.W.2d 830, *832; 1991 Tex. LEXIS 158, **5

a question of law for the court. Martin, 793 enforceable agreement. Id. at 669-70. See Sterner S.W.2d at 668-69. Among other things, an v. Marathon Oil Co., 767 S.W.2d 686, 689 (Tex. enforceable covenant not to compete must be 1989). Because employment-at-will is not binding ancillary to an otherwise enforceable agreement. upon either the employee or the employer and is Martin, 793 S.W.2d at 669. See Tex. Bus. & Com. not an otherwise enforceable agreement, we Code § 15.50. conclude that a covenant not to compete executed either at the inception of or during an In Martin, we examined an ″employment employment-at-will relationship cannot be agreement″ consisting entirely of a covenant not ancillary to an otherwise enforceable agreement to compete. The ″employment agreement″ was executed three years after Martin became an and is unenforceable as a matter of law. Since employee-at-will and Martin faced termination if Donna’s covenant not to compete is not ancillary he refused to execute the agreement. Martin, 793 to an otherwise enforceable agreement, we hold S.W.2d at 669. We held that the covenant not to [**7] that the covenant not to compete is an compete was not ancillary to an otherwise unreasonable restraint of trade and unenforceable enforceable agreement as a matter of law because on grounds of public policy. neither the ″employment agreement″ nor the employment-at-will relationship was an otherwise II. enforceable agreement. Id. at 669-70. In this case, Travel Masters and Walter argue that since the the ″employment agreement″ consisted entirely of covenant not to compete was unenforceable, it a covenant not to compete; it did not contain any cannot form the basis of an action for tortious terms or provisions usually associated with an interference. We agree. employment contract. Donna was required to [**6] sign the covenant not to compete as a Star Tours alleged that Walter and Travel Masters condition of employment. The only difference willfully and intentionally induced Donna to between this case and Martin is that Donna breach the covenant not to compete. HN3 executed the covenant not to compete Covenants not to compete which are unreasonable contemporaneously with the inception of her restraints of trade and unenforceable on grounds employment while the Martin covenant was of public policy cannot form the basis of an action executed three years after Martin began for tortious interference. Juliette Fowler Homes v. employment. Welch Asso., 793 S.W.2d 660, 665 (Tex. 1990). Since the covenant not to compete is an In both cases, however, the employment unreasonable restraint [**8] of trade and relationship was ″at-will″. 2 HN2 An unenforceable on grounds of public policy, we ″employment-at-will″ relationship is not binding hold that Star Tours cannot recover damages from upon either the employee or the employer. Either Walter 3 or Travel Masters for the tortious may terminate the relationship [*833] at any interference of the covenant not to compete. time. Id. at 669. Thus, an employment-at-will relationship, although valid, is not an otherwise [**9] We reverse the judgment of the court of 2 During oral argument, Star Tours asserted that Donna Goldsmith was not an employee-at-will because she was paid on a monthly basis. However, the mere fact that Donna was paid on a monthly basis by Star Tours, without any other evidence, does not prove she was other than an employee-at-will. 3 The court of appeals held that Walter waived his affirmative defense of illegality of the covenant Dot to compete by failing to specifically plead that defense. Although Walter did not plead illegality, Donna and Travel Masters did plead the affirmative defense of illegality of the covenant not to compete. ″When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be tread in all respects as if they had been raised by the pleadings.″ Gulf & Basco Co. v. Buchanan, 707 S.W.2d 655, 657 Tex. Page 4 of 5 827 S.W.2d 830, *833; 1991 Tex. LEXIS 158, **9

appeals and render judgment that Star Tours take JACK HIGHTOWER, JUSTICE nothing against Travel Masters, Donna Goldsmith and Walter Goldsmith.

App. -- Houston [1st Dist.] 1986, writ ref’d n.r.e.) (affirmative defense of ambiguity of contract); Tex. R. Civ. P. 67. The question of the illegality of the covenant not to compete was clearly before the court. Consequently, in the absence of an objection, the illegality of the covenant not to compete concerning Walter was tried by implied consent. Page 5 of 5 EXHIBIT E | | Caution As of: March 3, 2015 3:29 PM EST

Lazer Spot, Inc. v. Hiring Partners, Inc. Court of Appeals of Texas, Sixth District, Texarkana September 16, 2012, Submitted; October 18, 2012, Decided No. 06-12-00044-CV

Reporter 387 S.W.3d 40; 2012 Tex. App. LEXIS 8780 LAZER SPOT, INC., Appellant v. HIRING interfered with contracts between the employer PARTNERS, INC., Appellee and some of its employees.

Subsequent History: Rehearing overruled by Overview Lazer Spot, Inc. v. Hiring Partners, Inc., 2012 Tex. App. LEXIS 8932 (Tex. App. Texarkana, Oct. The employer and the company filed competing 30, 2012) motions for summary judgment in a suit brought Petition for review denied by Hiring v. Lazer by the employer. The employer had alleged that Spot, 2013 Tex. LEXIS 253 (Tex., Mar. 29, 2013) the company had tortiously interfered with contracts between the employer and some of its Prior History: [**1] On Appeal from the 6th employees. The trial court awarded summary Judicial District Court, Lamar County, Texas. judgment to the employer, but the appellate court Trial Court No. 79914. reversed, finding no basic for the summary judgment granted in favor of the employer. Core Terms Judgment was further rendered in favor of the company. Because the restrictive covenants were Spot, employees, tortious interference, covenant, not supported by consideration independent of the Hiring, at-will, contracts, unenforceable, simple act of hiring under an at-will agreement, noncompetition, non competition agreement, terminate, goodwill, compete, enforceable, they were not ancillary to or part of an otherwise employment contract, induce, contends, services, enforceable agreement under Tex. Bus. & Com. confidential information, summary judgment, pet, Code Ann. § 15.50 (2011). Because a claim of trial court, contractual, interfered, training, dock, tortious interference could not be premised merely summary judgment motion, attorney’s fees, matter on the hiring of an at-will employee, without of law, temporary more, summary judgment was improperly granted on the claim of tortious interference with Case Summary contractual relations; the employees were within their rights to terminate employment with the Procedural Posture employer at any time. Appellant company sought review of the decision Outcome of the 6th Judicial District Court, Lamar County (Texas), which granted summary judgment in The judgment was reversed and judgment was favor of appellee employer in the employer’s rendered in favor of the company. action alleging that the company had tortiously 387 S.W.3d 40, *40; 2012 Tex. App. LEXIS 8780, **1

LexisNexis® Headnotes HN4 The requirement of an ″otherwise enforceable agreement″ set out in Tex. Bus. & Civil Procedure > Appeals > Summary Judgment Com. Code Ann. § 15.50(a) (2011) is satisfied Review > General Overview when the covenant is part of an agreement which Civil Procedure > ... > Summary Judgment > contains mutual, nonillusory promises. An Motions for Summary Judgment > Cross Motions ″otherwise enforceable″ agreement can emanate from at-will employment so long as the HN1 When both sides move for summary consideration for any promise is not illusory. A judgment and the trial court grants one motion noncompetition agreement must be supported by and denies the other, reviewing courts consider consideration to be enforceable. Consideration for both sides’ summary-judgment evidence, a noncompetition that is reasonably related to an determine all questions presented, and render the interest worthy of protection, such as trade secrets, judgment the trial court should have rendered. confidential information or goodwill, satisfies the statutory nexus. Civil Procedure > Appeals > Standards of Review > De Novo Review Contracts Law > Formation of Contracts > Civil Procedure > Appeals > Standards of Review > Consideration > Sufficient Consideration Questions of Fact & Law Contracts Law > Standards of Performance > Labor & Employment Law > ... > Conditions & Illusory Promises Terms > Trade Secrets & Unfair Competition > Labor & Employment Law > ... > At Will Noncompetition & Nondisclosure Agreements Employment > Exceptions > Implied Contracts HN2 The Covenants Not to Compete Act governs Labor & Employment Law > ... > Conditions & the enforceability of noncompetition agreements, Terms > Trade Secrets & Unfair Competition > Tex. Bus. & Com. Code Ann. §§ 15.50-15.52 Noncompetition & Nondisclosure Agreements (2011). The enforceability of a covenant not to HN6 Where the nature of the employment requires compete is a question of law. Appellate courts the employer to furnish the employee with review the trial court’s determinations of questions confidential information, the employer impliedly of law on a de novo basis. promises to provide that information and that Labor & Employment Law > ... > Conditions & implied promise is sufficient consideration to Terms > Trade Secrets & Unfair Competition > support a covenant not to compete. Where an Noncompetition & Nondisclosure Agreements employer in an at-will employment agreement agrees to provide confidential information or HN3 See Tex. Bus. & Com. Code Ann. § 15.50(a) other consideration to an employee, a reciprocal (2011). promise by the employee not to use the confidential information in competition with the Contracts Law > Standards of Performance > employer may not be immediately enforceable Illusory Promises because the employer’s promise is illusory because Labor & Employment Law > Employment he could terminate the employee before any Relationships > At Will Employment > General confidential information is shared. But, once the Overview employer fulfills the promise to divulge the Labor & Employment Law > ... > Conditions & confidential information, the contract becomes Terms > Trade Secrets & Unfair Competition > enforceable and may support a covenant not to Noncompetition & Nondisclosure Agreements compete. Thus, a covenant not to compete is not Page 2 of 14 387 S.W.3d 40, *40; 2012 Tex. App. LEXIS 8780, **1

unenforceable solely because the employer’s Labor & Employment Law > ... > Conditions & promise is executory when made. Terms > Trade Secrets & Unfair Competition > Noncompetition & Nondisclosure Agreements Contracts Law > Formation of Contracts > Torts > ... > Contracts > Intentional Interference > Consideration > General Overview Defenses Labor & Employment Law > ... > Conditions & Terms > Trade Secrets & Unfair Competition > HN9 Those covenants not to compete which are Noncompetition & Nondisclosure Agreements unreasonable restraints of trade and unenforceable on grounds of public policy cannot form the basis HN5 Employment agreements consisting entirely of an action for tortious interference Thus, of a covenant not to compete are unenforceable unenforceability of a noncompetition covenant is because the covenant must be supported by a valid defense to a claim of tortious interference. valuable consideration. Torts > ... > Contracts > Intentional Interference > Contracts Law > Formation of Contracts > Elements Consideration > General Overview HN10 Even an unenforceable contract may serve Labor & Employment Law > ... > Conditions & as the basis for a tortious interference claim if the Terms > Trade Secrets & Unfair Competition > Noncompetition & Nondisclosure Agreements contract is not void, and mere unenforceability of a contract is not a defense to an action for tortious HN7 While goodwill is a protectable interest, interference with its performance. A tortious goodwill does not encompass guidelines that interference claim may not be grounded on a prevent the business from ceasing to exist contract that was void or illegal, or where there is (although some goodwill is generally necessary any public policy opposing its performance. for that aim). Consideration is required to support a noncompetition agreement. ″Goodwill″ is Torts > ... > Business Relationships > Intentional defined as the advantage or benefits which is Interference > Elements acquired by an establishment beyond the mere HN11 To establish liability for interference with a value of the capital stock, funds or property prospective contractual or business relation, the employed therein, in consequence of the general plaintiff must prove that it was harmed by the public patronage and encouragement which it defendant’s conduct that was either independently receives from constant and habitual customers on tortious or unlawful. account of its local position, or common celebrity, or reputation for skill, or influence, or punctuality, Civil Procedure > ... > Summary Judgment > or from other accidental circumstances or Burdens of Proof > General Overview necessities, or even from ancient partialities or Torts > ... > Contracts > Intentional Interference > prejudices. Defenses Labor & Employment Law > ... > Conditions & Torts > ... > Contracts > Intentional Interference > Terms > Trade Secrets & Unfair Competition > Elements Noncompetition & Nondisclosure Agreements HN12 A party seeking to establish tortious HN8 General skills and knowledge developed interference with a contract must prove four through course of employment are not the type of elements: (1) that a contract subject to interference interest which justifies protection under a exists; (2) that the alleged act of interference was restrictive covenant. willful and intentional; (3) that the willful and Page 3 of 14 387 S.W.3d 40, *40; 2012 Tex. App. LEXIS 8780, **1

intentional act proximately caused damage; and Civil Procedure > ... > Attorney Fees & Expenses > (4) that actual damage or loss occurred. A Basis of Recovery > Statutory Awards defendant may defeat a tortious interference claim Labor & Employment Law > ... > Conditions & on summary judgment by disproving one element Terms > Trade Secrets & Unfair Competition > of the claim as a matter of law. To establish a Noncompetition & Nondisclosure Agreements willful and intentional act of interference, there must be evidence that the defendant was more HN16 Tex. Bus. & Com. Code Ann. § 15.51(c) than a willing participant. The defendant must (2011) permits the promisor to recover costs and have knowingly induced one of the contracting reasonable attorney’s fees, in certain parties to breach its obligations under a contract. circumstances.

Labor & Employment Law > Employment Counsel: Hon. Michael V. Abcarian, Fisher & Relationships > At Will Employment > General Phillips, LLP, Dallas, TX. Overview Torts > Business Torts > Commercial Interference > Hon. Larry M. Lesh, Law Office of Larry M. General Overview Lesh, Richardson, TX. Torts > ... > Commercial Interference > Contracts > General Overview Hon. Paul M. Lanagan, Fisher & Phillips, LLP, Dallas, TX. HN13 Outside of the realm of allegedly defamatory statements made by third parties that Hon. Philip B. Smith Jr., Attorney at Law, Paris, result in termination of at-will employment (where TX. inducement is apparently tortious because it is accomplished via defamation), other actionable Judges: Before Morriss, C.J., Carter and Moseley, interference appears to hinge on violation of a JJ. Opinion by Justice Moseley. contractual provision, other than the at-will provision. Opinion by: Bailey C. Moseley

Labor & Employment Law > Employment Opinion Relationships > At Will Employment > General Overview [*43] The Judgment of the Trial Court in the referenced proceeding on appeal from Lamar Torts > Business Torts > Commercial Interference > General Overview county was this date REVERSED, and the judgment here RENDERED, in conformity with HN14 A claim of tortious interference cannot be the written Opinion of this Court of even date. premised merely on the hiring of an at-will employee, without more. A true copy of this Court’s Opinion and Judgment is enclosed. Civil Procedure > ... > Attorney Fees & Expenses > Respectfully yours, Basis of Recovery > Statutory Awards Labor & Employment Law > ... > Conditions & Opinion by Justice Moseley Terms > Trade Secrets & Unfair Competition > Noncompetition & Nondisclosure Agreements OPINION

HN15 See Tex. Bus. & Com. Code Ann. § 15.51(c) Hiring Partners, Inc. (HPI) and Lazer Spot, Inc. (2011). (Lazer Spot) filed competing motions for summary Page 4 of 14 387 S.W.3d 40, *43; 2012 Tex. App. LEXIS 8780, **1

judgment in a suit brought by HPI. HPI’s suit both the employer and employee acknowledged alleged that Lazer Spot had tortiously interfered that the employees were in an employment at-will with contracts between HPI and some of its status and wherein the [**3] employees each employees. The trial court awarded summary agreed to be bound by the ninety-day judgment to HPI. Because we find no basis for the noncompetition clause mentioned above. summary judgment granted in favor of HPI and Unbeknownst to HPI, Lazer Spot received a because Lazer Spot was entitled to summary request from Campbell’s Soup in approximately judgment as a matter of law, we reverse the July 2010 to submit a proposal to provide truck [**2] judgment of the trial court and render spotting services at its Paris facility. While Lazer judgment in favor of Lazer Spot. Spot was aware that Arnold had been providing these services up to that point, Lazer Spot was I. Background and Procedural Posture unaware that Arnold was utilizing temporary employees supplied by HPI to perform yard work HPI is in the business of recruiting workers for its (or truck spotting services). On October 7, 2010, clients for the performance of services required by Campbell’s Soup awarded the contract for those those clients. HPI requires each of its employees services to Lazer Spot.3 In mid-October, Lazer to execute written employment contracts with Spot received employment [**4] applications HPI. While the form of these contracts vary [*44] from the employees.4 On October 19, Lazer somewhat, they each specifically state that the Spot interviewed and offered employment to the employees are at-will employees. In addition, employees to work as gate clerks/dock hands at each employment contract contains a ninety-day the Campbell’s Soup plant. At the time the clause, which prohibits the employee from seeking employees were offered employment, Lazer Spot ″employment on a temporary, contract or was unaware of the employees’ written contracts permanent basis at any company where introduced for employment with HPI, contracts which by HPI for a period of ninety (90) days.″ included the noncompetition agreements.5 This case involves three at-will employees of On October 19, after the employees interviewed HPI: Mitch Templeton, Shanda McCalib, and with Lazer Spot and were offered employment by Michelle Thoms (the employees), who were each it, Dana Hill, the operations manager for HPI, hired to work as gate clerks/dock hands1 for telephoned Jerry Edwards, the vice president of Arnold Transportation Company (Arnold) at the operations for Lazer Spot. Hill advised Edwards Campbell’s Soup plant in Paris, Texas, in 2010,2 that the employees were subject to employment pursuant to Arnold’s contract with Campbell’s contracts with HPI. Although Edwards indicated Soup to supply employees for these positions. The that he then requested that Hill send him a copy of employees signed contracts with HPI wherein the contracts, Hill did not do so. According 1 Employees are periodically referred to in the record as gate clerks, dock clerks, or dock hands. As gate clerks/dock hands, the employees were responsible for checking in trucks when they arrived at the plant, checking in with truck drivers, gathering information, and entering certain data into a computer system. HPI’s job description for the gate clerks/dock hands indicates the position is akin to that of a warehouse worker. 2 The employees were hired to perform yard management services required by Arnold pursuant to a contract between Arnold and Campbell’s Soup. 3 HPI does not contend that Lazer Spot took any improper action in connection with bidding for and obtaining the services contract. 4 The applications were dated October 14 and October 19. Each application indicated that the applicant was currently employed by HPI. 5 HPI was unaware that Arnold’s contract with Campbell’s Soup was about to expire and that Lazer Spot was awarded the successor services contract. Page 5 of 14 387 S.W.3d 40, *44; 2012 Tex. App. LEXIS 8780, **5

[**5] to Hill, Edwards did not ask to see a copy Lazer Spot would pay a reasonable amount to of the contracts, even after she indicated her belief settle the lawsuit. According to Lesh, McCurtain that the employees would breach their contracts indicated that Lazer Spot would not pay any and that Lazer Spot would be assisting in that substantial amount to settle, but inquired whether breach if it hired the employees. Lazer Spot’s termination of the employees would be an acceptable alternative to HPI. HPI did not On October 23, Lazer Spot received a letter (dated find this alternative acceptable.8 October 21) from HPI’s counsel, Larry Lesh, demanding that Lazer Spot cease its interference On January 23, Lazer Spot filed a motion for with the employment contracts between HPI and summary judgment wherein it alleged [*45] that its employees. The letter neither described the it had engaged in no tortious interference with contractual obligations owed HPI by the HPI’s contracts because the post-employment employees, nor included a copy of the referenced restrictive covenants [**7] are unenforceable as a contracts. Because counsel for Lazer Spot was matter of law, and the unenforceability of those hospitalized shortly after the letter was received, covenants is a valid and absolute defense to HPI’s no immediate response was made. tortious interference claim. Lazer Spot alleged in its motion (and re-urges on appeal), that the On November 2, Lazer Spot commenced its covenants not to compete are unenforceable operations at the Campbell’s Soup plant and the because there was no legally enforceable employees began work for Lazer Spot ″around consideration promised or provided to the this time.″6 Having received no reply to its employees that would support those promises. In October 21 letter, HPI filed suit against Lazer addition, Lazer Spot alleged that HPI has no Spot on November 3, alleging that Lazer Spot protectable interest because the employees are tortiously interfered with HPI’s employment dock hands who engage in a common calling. contracts with the employees, seeking actual and Finally, Lazer Spot claimed the covenants are exemplary damages. unenforceable because they are overly broad.9

On November 18 (after having been served HPI filed a competing motion for summary [**6] with the lawsuit) Rhonda McCurtain, vice judgment, contending Lazer Spot tortiously president of human resources and general counsel interfered with the employment contracts between for Lazer Spot, called Lesh. According to HPI and its employees, entitling HPI to damages McCurtain, she unconditionally offered to and declaratory relief, citing authority it maintains terminate the employment relationships of the supports the proposition that a contract for at-will employees so that HPI could rehire them.7 employment is subject to interference. It contended McCurtain states that Lesh rejected this offer, that Lazer Spot interfered with the employment indicating that HPI did not want to rehire the contracts with full knowledge of their existence employees. Lesh claims that during the telephone and [**8] that such interference was willful and conversation with McCurtain, he inquired whether intentional, causing HPI damages in the aggregate 6 The affidavit of Hill indicates that the employees terminated their employment with HPI on October 31. 7 McCurtain also requested copies of the employment contracts. Lesh indicated that he would refer the request to HPI, but did not believe it would be a problem. 8 McCurtain received copies of the employment contracts on November 24. 9 Lazer Spot further claimed that it was unaware of the employees’ contractual obligations, and hence there could be no tortious interference. Page 6 of 14 387 S.W.3d 40, *45; 2012 Tex. App. LEXIS 8780, **8

amount of $47,684.83 as of December 31, 2011, covenants are unlawfully broad with regard to the with damages continuing to accrue thereafter for scope of activity they purport to restrain. Because so long as employees were employed by Lazer we find the noncompetition covenants are not Spot. supported by consideration, we need not address the argument regarding their scope or breadth. On March 12, the trial court entered its final summary judgment denying Lazer Spot’s motion Lazer Spot further contends (apart from any issue for summary judgment and granting HPI’s motion relating to the noncompetition agreements) that for summary judgment. The judgment awarded the trial court erred in denying its motion for HPI damages it requested in the amount of summary judgment [*46] (and in granting HPI’s $47,684.83, representing damages caused by Lazer motion) because there was no tortious interference Spot through December 31, 2011, and further with the employees’ contracts, claiming the mere declared that the liability of Lazer Spot to HPI act of hiring an at-will employee who works for ″shall continue from and after December 31, 2011 another is not tortious as a matter of law. We for so long as Mitchell Templeton, Shanda agree.10 McCalib and Michelle Thoms remain employees of Defendant Lazer Spot.″ This appeal ensued. IV. Analysis

II. Standard of Review A. The Noncompetition Agreements Are Unenforceable HN1 ″When both sides move for summary Lazer Spot initially maintains that the trial court judgment, as they did here, and the trial court erred in failing to grant its motion for summary grants one motion and denies the other, reviewing judgment—and in granting HPI’s courts consider both sides’ summary-judgment motion—because the noncompetition agreements evidence, determine all questions presented, and between HPI and its employees are unenforceable render the judgment the trial court should have as a matter of law. Because ″covenants not to rendered.″ Gilbert Tex. Constr., L.P. v. compete which are unreasonable restraints of Underwriters at Lloyd’s London, 327 S.W.3d 118, trade and unenforceable on grounds of public 124 (Tex. 2010) (citing Embrey v. Royal Ins. Co. policy cannot form the basis of an action for of Am., 22 S.W.3d 414, 415-16 (Tex. 2000)). tortious interference,″ Lazer Spot contends there III. [**9] Appellate Issues is no tortious interference. Juliette Fowler Homes, Inc. v. Welch Assocs., 793 S.W.2d 660, 665 (Tex. Lazer Spot’s primary appellate point is based on 1990). the premise that its motion for summary judgment should have been granted because the HN2 The Covenants Not to Compete Act governs noncompetition covenants were not enforceable the enforceability of noncompetition agreements. as a matter of law. In support of this contention, TEX. BUS. & COM. CODE ANN. §§ 15.50-.52 (West Lazer Spot argues that HPI did not provide 2011). The enforceability of a covenant not to consideration to the employees in exchange for compete is a question of law. Mann Frankfort their purported agreement to be bound by the Stein & Lipp Advisors, Inc. v. Fielding, 289 covenants not to compete, and the noncompetition S.W.3d 844, 848 (Tex. 2009). We review the trial 10 Lazer Spot raises additional appellate issues, including claims of justification in hiring the employees and of estoppel, the trial court’s [**10] failure to strike HPI’s first amended petition and certain summary judgment evidence, together with various complaints regarding the damage award included in the judgment. Our reversal of the trial court’s judgment in favor of HPI renders these issues moot. Page 7 of 14 387 S.W.3d 40, *46; 2012 Tex. App. LEXIS 8780, **11

[**11] court’s determinations of questions of law The covenant in question provides: on a de novo basis. Barber v. CO Indep. Sch. Dist., 901 S.W.2d 447, 450 (Tex. 1995). [*47] I [**13] agree not to seek employment on a temporary, contract or Section 15.50 provides in relevant part: permanent basis at any company where introduced by Hiring Partners, Inc. for a HN3 Notwithstanding Section 15.05 of period of ninety (90) days. I will not seek this code, and subject to any applicable to induce any client to call other temporary provision of Subsection (b), a covenant or contract agencies for their temporary, not to compete is enforceable if it is permanent or project assignments. This ancillary to or part of an otherwise means that I will not knowingly inform enforceable agreement at the time the other services of Hiring Partners, Inc. agreement is made to the extent that it clients and/or rates charged at these client contains limitations as to time, companies. Nor will I discuss my hourly geographical area, and scope of activity to rate with other individuals working for be restrained that are reasonable and do Hiring Partners, Inc. nor other temporary not impose a greater restraint than is or employment agencies. necessary to protect the goodwill or other Hiring Partners, Inc. realizes that clients business interest of the promise. may seek help from other temporary or TEX. BUS. & COM. CODE ANN. § 15.50(a). employment agencies and, that I may also be called upon by another agency to fill Lazer Spot contends the noncompetition other positions; however, I may not accept agreements are unenforceable because they are an assignment through another agency for not ″ancillary to or part of’ an otherwise a period of ninety (90) days at a firm/ enforceable agreement as required under Section company that applicant has been 15.50. HN4 The requirement of an ″otherwise introduced to by Hiring Partners, Inc. enforceable agreement″ is satisfied when the covenant is part of an agreement which contains Hiring [**14] Partners, Inc. reserves the mutual, nonillusory promises. Marsh USA, Inc. v. right to replace a candidate working on Cook, 354 S.W.3d 764, 773 (Tex. 2011). An assignment at its own discretion, without ″otherwise enforceable″ agreement ″can emanate this signed agreement being altered in any from at-will employment so long as the way and considers such to remain in effect consideration [**12] for any promise is not for a period of ninety (90) days from the illusory.″ Alex Sheshunoff Mgmt. Servs., L.P. v. date last worked by applicant. Johnson, 209 S.W.3d 644, 648 (Tex. 2006). A noncompetition agreement must be supported by All contracts specify that employment is consideration to be enforceable. Id. at 651; ″employment at will,″ meaning that either HPI or DeSantis v. Wackenhut Corp., 793 S.W.2d 670, the employee ″can terminate the employment 681 n.6 (Tex. 1990). ″Consideration for a relationship at any time, with or without cause, noncompet[ition] that is reasonably related to an with or without notice.″ interest worthy of protection, such as trade secrets, There is no recitation of consideration in the confidential information or goodwill, satisfies the contracts. The contracts identify neither statutory nexus.″ Marsh, 354 S.W.3d at 775. Here, confidential, proprietary, or trade secret Lazer Spot contends there was no consideration information to be divulged, nor any goodwill or given to enforce the noncompetition agreements. specialized training to be provided the employees Page 8 of 14 387 S.W.3d 40, *47; 2012 Tex. App. LEXIS 8780, **16

in consideration for signing the contracts. The . . was to expand rather than restrict the only implied consideration11 is illusory—the enforceability of such covenants″ and ″[t]he Act consideration of at-will employment. This is provides that ’goodwill’ is a protectable interest.″ insufficient. See, e.g., Martin v. Credit Protection Marsh, 354 S.W.3d at 775-77. Ass’n, 793 S.W.2d 667, 669 (Tex. 1990) (holding HPI relies on Hill’s testimony that the HN5 employment agreement consisting entirely noncompetition agreements [**17] were designed of covenant not to compete unenforceable because to protect HPI’s goodwill: covenant ″must be supported by valuable consideration″); Sheshunoff, 209 S.W.3d at 651.12 Q. Can you identify for the judge or the jury what was the interest that Hiring Likewise, the record fails to disclose the existence Partners was seeking to protect through of any such consideration. Hill was asked whether this 90-day clause? there is ″any confidential information [**16] that you can identify for the judge or jury that Hiring A. It’s the nature of our business. If we Partners provided to these employees as a part of don’t have some rules to follow, then we their employment with Hiring Partners?″ Her could present employees, to clients all day response was ″No.″ In addition, Hill testified that long every day and they could just hire because she could not identify any confidential or them on their own. We would be out of proprietary information given to the employees, business if we did not have guidelines to she could not [*48] identify any steps HPI took go by. to ensure that such information remained While Marsh does find that HN7 goodwill is a confidential.13 protectable interest, goodwill does not encompass HPI responds that ″[c]onsideration for a guidelines that prevent the business from ceasing noncompetition that is reasonably related to an to exist (although some goodwill is generally interest worthy of protection, such as trade secrets, necessary for that aim).14 Marsh further requires confidential information or goodwill, satisfies the consideration to support a noncompetition statutory nexus″ because ″the purpose of the Act . agreement. 11 HN6 Where the nature of the employment requires the employer to furnish the employee [**15] with confidential information, the employer impliedly promises to provide that information and that implied promise is sufficient consideration to support a covenant not to compete. Fielding, 289 S.W.3d at 852. 12 Where an employer in an at-will employment agreement agrees to provide confidential information or other consideration to an employee, a reciprocal promise by the employee not to use the confidential information in competition with the employer may not be immediately enforceable because the employer’s promise is illusory because he could terminate the employee before any confidential information is shared. But, once the employer fulfills the promise to divulge the confidential information, the contract becomes enforceable and may support a covenant not to compete. See Sheshunoff, 209 S.W.3d at 648-49. Thus, a covenant not to compete is not unenforceable under the Act solely because the employer’s promise is executory when made. Id. at 655. Here, there is no allegation or claim that employees were, at any time, provided confidential information. 13 Hill generally described the training provided to HPI employees as ″vibes in the workplace training; harassment training; safety in the workplace; back protection; hearing protection; fire safety; lock out, tag out instructions; forklift safety.″ She could not recall the specific training given to any of the employees. 14 ″Goodwill″ is defined as:

the advantage or benefits which is acquired by an establishment beyond the mere value of the capital stock, funds or property employed therein, in consequence of the general public patronage and encouragement which it receives from constant and habitual customers on account of its local position, or common celebrity, or reputation for skill, or influence, or punctuality, or from other accidental circumstances or necessities, or even from ancient partialities [**18] or Page 9 of 14 387 S.W.3d 40, *48; 2012 Tex. App. LEXIS 8780, **17

In Marsh, the employer’s managing director, covenants against [**19] employment by others Cook, was granted the option to purchase shares in controversy here were necessary to protect its of stock in the Marsh entity pursuant to an goodwill; Marsh involved a managing director incentive plan. When the option was nearing who was successful in achieving and attracting expiration, Cook exercised his right to purchase business for the company, these long-term company stock. In conjunction with the purchase, relationships being vitally important in the Cook agreed that in the circumstance he left insurance brokerage [*49] industry. Id. at 776-77. Marsh within three years, he would neither The consideration for the protection of business compete with Marsh nor solicit its employees. goodwill was reasonably related to that protection. Cook also agreed that he would maintain the In contrast with Marsh, the employees here were confidentiality of Marsh’s confidential information blue collar workers15 who signed noncompetition and trade secrets. Id. at 767. After leaving Marsh, agreements in the absence of consideration.16 Cook was sued for violating the covenant not to Because the [**21] restrictive covenants here compete. were not supported by consideration independent The Texas Supreme Court concluded that the of the simple act of hiring under an at-will noncompetition provision satisfied the agreement, they are not ″ancillary to or part of″ an requirements of the Act. Id. at 780. In doing so, it otherwise enforceable agreement under Section recognized that the award of stock options ″linked 15.50. TEX. BUS. & COM. CODE ANN. § 15.50(a). the interests of a key employee with the company’s HN9 Those ″covenants not to compete which are long-term business interests.″ Id. at 777. In unreasonable restraints of trade and unenforceable addition, ″[o]wners’ interests are furthered by on grounds of public policy cannot form the basis fostering the goodwill between the employer and of an action for tortious interference.″ Juliette its clients″ and ″stock options are reasonably Fowler Homes, 793 S.W.2d at 665. Thus, related to the protection of this business goodwill.″ unenforceability of a noncompetition covenant is Id. a valid defense to a claim of tortious interference. Id.;17 see also Travel Masters, [*50] Inc. v. Star Marsh does not support HPI’s claim that the Tours, Inc., 827 S.W.2d 830, 833 (Tex. 1991), prejudices.

Marsh, 354 S.W.3d at 777-78. 15 The employees were responsible for checking in trucks, gathering information, and entering data into a computer system. HPI’s job description for the gate clerks/dock hands says the job is akin to that of a warehouse worker. Lazer Spot thus contends that because the employees’ positions only entailed generic work skills, this basic knowledge does not implicate a protectable interest under Texas law. See Evan’s World Travel, Inc. v. Adams, 978 S.W.2d 225, 231 (Tex. App.—Texarkana 1998, no pet.) (HN8 general skills and knowledge developed through course of employment not type of interest which justifies protection under restrictive covenant). There is no evidence [**20] the employees received specialized training. When asked if HPI provided employees any training for the specific tasks they were to perform at Campbell’s Soup, Jones stated that she had no idea. 16 In addition to Marsh, HPI cites a number of cases from other jurisdictions finding disintermediation—a diversion of a company’s business by eliminating the middleman—to be an interest worthy of protection. See, e.g., Volt Servs. Grp. v. Adecco Emp’t Servs., 178 Ore. App. 121, 35 P.3d 329, 334 (Ore. App. 2001) (contacts between employer’s employees and its customers can create protectable interest when nature of contact is such that there is substantial risk employee may be able to divert all or part of customer’s business); see also Aerotek, Inc. v. Burton, 835 So.2d 197 (Ala. Civ. App. 2001) (employer had interest in protecting itself from disintermediation); Borg-Warner Protective Servs. Corp. v. Guardsmark, Inc., 946 F.Supp. 495 (E.D. Ky. 1996) (″disintermediation″ worthy of protection where considerable time, effort, and money spent in training employees). In light of Texas’ statutory restrictions governing the enforceability of noncompetition agreements, we do not find this authority persuasive. 17 In Juliette Fowler Homes, Fowler, a nonprofit organization, entered into a fund-raising contract with Welch, whereby Welch agreed Page 10 of 14 387 S.W.3d 40, *50; 2012 Tex. App. LEXIS 8780, **21

superseded by statute on other grounds as stated that the only portions of the contracts HPI alleges in Sheshunoff, 209 S.W.3d at 653 n.5. Therefore, were violated are the noncompetition covenants. to the extent HPI’s tortious interference claim is When asked what part of the agreement the premised on breach of the noncompetition employees violated, Jones pointed to the following agreements, such claim cannot stand. HPI language, ″I may not accept an assignment through contends, however, that tortious interference exists another agency for a period of 90 days, at a here, independent of any issue relating to the firm/company that applicant has been introduced noncompetition agreements. to by Hiring Partners.″ Jones further explained, ″[T]he contractual obligation is . . . that the B. The Mere Hiring of an at-Will Employee employee cannot go to a company where we have [**24] Cannot, Without More, Give Riseto a introduced them. So that is what is in violation. Tortious Interference Claim They are certainly at-will employee[s] [**25] and can go to anybody else but some place where HPI relies on Sterner v. Marathon Oil Co., 767 we’ve introduced them to, because that’s our S.W.2d 686, 689 (Tex. 1989), to claim that even business.″ Lazer Spot seeks to hold HPI to this though the employment contracts were testimony and restrict the tortious interference terminable-at-will, they are nevertheless subject issue to the noncompetition clause.18 In doing so, to a cause of action for tortious interference. See Lazer Spot prevails, because the noncompetiton also Crouch v. Trinque, 262 S.W.3d 417, 425-26 clause is unenforceable and thus will not support (Tex. App.—Eastland 2008, no pet.) (cause of a tortious interference claim. action exists ″for tortious interference with a contract of employment terminable at will″). In its second point, Lazer Spot contends that when Lazer Spot’s response to this argument is two-fold. stripped of any protection the subject The first part of Lazer Spot’s argument zeroes in noncompetition agreements might otherwise on the fact that Jones (HPI’s president) testified provide, the remaining contract is nothing more to conduct a fund-raising [**22] campaign for the benefit of Fowler. Welch contracted with Butler to help execute the Fowler fund-raising campaign. The contract between Welch and Butler contained a covenant not to compete which bound Butler not to ″enter into any form of contract for services″ with any of Welch’s clients for a period of two years after the conclusion of the Butler-Welch contract. Juliette Fowler Homes, 793 S.W.2d at 661. Thereafter, Fowler terminated its contract with Welch. Butler also terminated its contract with Welch. Butler was then hired by NBA, one of whose agencies is Fowler. Butler was assigned to work with Fowler, and to supervise its fund-raising campaign. As a result, Welch sued Fowler, alleging breach of the Welch-Fowler contract and further alleging breach of the noncompetition clause. Welch also sued Butler for breach of the noncompetition clause of the Butler-Welch contract and for tortious interference with Welch’s contractual relations with Fowler. The jury found that Butler breached the noncompetition clause of the Butler-Welch contract by accepting the position with NBA. The court found that the noncompetition clause was unenforceable and that Welch could therefore not recover for [**23] Butler’s breach of the Butler-Welch contract (the clause contained no limitations concerning geographical area or scope of activity).

The jury found that Fowler tortiously interfered with Welch’s contractual relationship with Butler. Fowler argued that the noncompetition clause in the Butler-Welch contract was an unreasonable restraint of trade and unenforceable on the grounds of public policy. Fowler therefore claimed that its actions ″inducing″ Butler to accept the position with NBA cannot support a judgment for tortious interference. The Texas Supreme Court indicated that ″this argument presents the narrow issue of whether the unenforceability of the noncompetition clause in the Butler-Welch contract is a defense to Welch’s action against Fowler for tortious interference with contractual relations.″ Id. at 664. After determining that the unenforceability of the noncompetition clause was a defense to Welch’s tortious interference claim, the court held ″that covenants not to compete which are unreasonable restraints of trade and unenforceable on grounds of public policy cannot form the basis of an action for tortious interference.″ Id. at 665. 18 HPI’s original petition alleges, ″[T]he willful and malicious acts and conduct of Lazer Spot described above constitute tortious and unlawful interference with the contracts of employment between HPI and employees of HPI.″ While the petition never mentions the noncompetition clauses, it does describe the recruiting and testing of employees and their placement with Arnold. Page 11 of 14 387 S.W.3d 40, *50; 2012 Tex. App. LEXIS 8780, **25

than the written memorialization of a common terminate its at-will contract with Sterner. Id. at law at-will employment relationship. Proceeding 691. from that premise, Lazer Spot says that the mere hiring of an at-will worker who is currently While Sterner appears to be at odds with ACS employed by another, does not constitute Investors, it has been postulated [**28] that an actionable interference. explanation for this apparent inconsistency is the fact that [*51] HPI does not concede the [**26] noncompetition agreements are Marathon’s contract with Sterner’s unenforceable; even so, they place great reliance employer specifically yielded all on Sterner and its progeny. However, the holding managerial decisions to the employer. in Sterner is limited: at-will contracts are protected Marathon induced the employer to do from tortious interference.19 Lazer Spot contends what it had a right to do (i.e., terminate at it is not tortious interference to induce a contract will). In this case, however, Marathon obligor to do what it has a right to do. In ACS breached its contract with Sterner’s Investors, Inc. v. McLaughlin, 943 S.W.2d 426, employer by making a demand that 430 (Tex. 1997), the high court recognized that violated the terms of the ″[o]rdinarily, merely inducing a contract obligor Marathon-employer agreement. to do what it has a right to do is not actionable Marathon’s acts violated its agreement interference.″ After this quote, the Texas Supreme with Sterner’s employer and thus exceeded Court signaled, ″but cf. Sterner v. Marathon Oil its right to interfere with the contract Co., 767 S.W.2d 686 (Tex. 1989).″ Id. HPI contends between Sterner and his employer. that by preceding the citation of Sterner with the ″but cf.″ signal, the high court signified that the Sean Farrell, Applying Tortious Interference quoted statement in ACS Investors was Claims to at-Will Contracts, 39 TEX. J. BUS. L. inapplicable to Sterner which, unlike ACS 527, 532 (Winter 2004) (footnotes omitted) Investors, involved tortious interference with an (citations omitted). If one accepts this distinction, employment relationship. it does not follow that ACS Investors is necessarily at odds with Sterner. In Sterner, an employee of Marathon (Sterner) prevailed in a suit against Marathon following an Additional authority cited by HPI does not support accident. Sterner, 767 S.W.2d at 688. Sterner then its position that an at-will employee cannot be took a job with a different company at a drilling induced to do what he otherwise has a right to do site. Sterner’s new employer was under contract (i.e., terminate employment at any time). For with Marathon. When a Marathon supervisor example, in Crouch, the tortious interference noticed Sterner on the job site, he instructed claim was based on allegedly defamatory Sterner’s new employer to fire Sterner. Id. The comments that led to termination of the plaintiff’s high court held that it was tortious interference for at-will employment. Summary [**29] judgment Marathon to induce Sterner’s employer to on the tortious interference claim was upheld 19 HPI suggests that Juliette Fowler Homes did not modify Sterner because it did not involve an employment contract. We disagree. Sterner held that the terminable-at-will status of a contract is no defense to an action for tortious interference with its performance. [**27] Sterner, 767 S.W.2d at 689. Fowler recognized that HN10 ″even an unenforceable contract may serve as the basis for a tortious interference claim if the contract is not void,″ and emphasized that ″mere unenforceability of a contract is not a defense to an action for tortious interference with its performance.″ Juliette Fowler Homes, Inc., 793 S.W.2d at 664. The court then created an exception to the general rule and held that a tortious interference claim may not be grounded on a contract that was ″void or illegal,″ or where there is ″any public policy opposing its performance.″ Id. at 664-65. Page 12 of 14 387 S.W.3d 40, *51; 2012 Tex. App. LEXIS 8780, **29

because the affirmative [*52] defense of at her retail location. The Mary Kay consultants justification was not pled. Crouch, 262 S.W.3d at were required to sign an agreement with Mary 426. The remaining authority20 cited by HPI in Kay to only sell directly to the [*53] consumer. support of its contention that at-will employment Graham maintained that because the consultants is subject to tortious interference likewise involved were at-will employees, it was not tortious claims based on allegedly defamatory comments interference to induce them to transact business regarding the plaintiff, which resulted in the with her. Graham did not induce the consultants to plaintiff’s termination of employment.21 In each leave their employment. ″The [**33] object of the of these cases, a third party allegedly interfered, interference was . . . not in inducing a switch in and the plaintiff was fired. In this case, however, contractual relations, but in exploiting contractual the employees quit their jobs, as they had every relations to Graham’s benefit (and Mary Kay’s right to do. There is no evidence of wrongful detriment).″ Id. at 754. Because Graham induced conduct by Lazer Spot, such as defamation or the consultants to do something they had no right breach of an obligatory contractual provision.22 to do under their contracts with Mary Kay, she tortiously interfered with those contracts. Id. Graham v. Mary Kay Inc., 25 S.W.3d 749 (Tex. App.—Houston [14th Dist.] 2000, pet. denied), HN13 Outside of the realm of allegedly highlights the distinction between inducing defamatory statements made by third parties that someone to terminate at-will employment and result in termination of at-will employment (where interfering with at-will employment contracts. In inducement is apparently tortious because it is that case, Graham appealed an injunction accomplished via defamation), other actionable preventing her from selling Mary Kay cosmetics interference appears to hinge on violation of a 20 De Mino v. Chu, No. 01-03-01127-CV, 2005 Tex. App. LEXIS 7323, 2005 WL 2123537 (Tex. App.—Houston [1st Dist.] Aug. 31, 2005, pet. denied) (mem. op.); Armijo v. Mazda Int’l, No. 14-03-00365-CV, 2004 Tex. App. LEXIS 4765, 2004 WL 1175335 (Tex. App.—Houston [14th Dist.] May 27, 2004, pet. denied) (mem. op.); Albertsons. Inc. v. Hufnagle, No. 05-01-00573-CV, 2002 Tex. App. LEXIS 6200, 2002 WL 1964236 (Tex. App.—Dallas Aug. 26, 2002, no pet.) (not designated for publication). 21 Based on this authority, Lazer Spot takes the position that there must be some [**30] independent misconduct (other than the mere loss of at-will employment) before tortious interference may be considered. The Texas Supreme Court has held that HN11 to establish liability for interference with a prospective contractual or business relation, the plaintiff must prove that it was harmed by the defendant’s conduct that was either independently tortious or unlawful. Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 713 (Tex. 2001). 22 HN12 A party seeking to establish tortious interference with a contract must prove four elements: (1) that a contract subject to interference exists; (2) that the alleged act of interference was willful and intentional; (3) that the willful and intentional act proximately caused damage; and (4) that actual damage or loss occurred. A defendant may defeat a tortious interference claim on summary judgment by disproving one element of the claim as a matter of law. Powell Indus., Inc. v. Allen, 985 S.W.2d 455 (Tex. 1998); Archives of Am., Inc. v. Archive Litig. Servs., Inc., 992 S.W.2d 665, 666-67 (Tex. App.—Texarkana 1999, pet. denied). The disputed element here is that of ″willful and intentional″ interference. To establish a willful and intentional act of [**31] interference, there must be evidence that the defendant was more than a willing participant—the defendant must have knowingly induced one of the contracting parties to breach its obligations under a contract. Funes v. Villatoro, 352 S.W.3d 200, 213 (Tex. App.—Houston [14th Dist.] 2011, pet. denied).

To support its claim of ″willful and intentional″ interference, HPI contends that despite Lazer Spot’s claimed lack of knowledge of the ninety-day clause (there is no evidence Lazer Spot knew about the ninety-day clause when it hired the employees on October 19), Lazer Spot was fully aware that employees were employed by HPI at the time it hired them because: (1) the employment applications listed HPI as the current employer, giving Lazer Spot actual notice of the status of those applicants as employees of HPI; and (2) on October 19, the date the employees were interviewed and offered employment, Hill advised Edwards that the employees were ″under contract″ with HPI and that Lazer Spot ″would be assisting them in breaching the contract if″ Lazer Spot hired them. Hill admits the telephone conversation with Edwards took place after Lazer Spot interviewed the employees and offered them employment. [**32] Further, Lazer Spot contends there is no evidence it was aware of any of the employees’ contractual obligations when it hired them, and HPI provided no evidence to prove otherwise. We agree. Even if Lazer Spot was aware of the contractual provisions between HPI and its employees, nothing in those contracts prevented Lazer Spot from hiring the employees. Page 13 of 14 387 S.W.3d 40, *53; 2012 Tex. App. LEXIS 8780, **33

contractual provision, other than the at-will Because the noncompetition covenants in this provision. See Sterner, 767 S.W.2d at 691 circumstance are unenforceable, and because there (Marathon not justified to interfere because is otherwise no tortious interference with the directive to fire Sterner exceeded terms of contracts between HPI and the employees, we Marathon-employer agreement); Graham, 25 reverse the judgment of the trial court. Further, S.W.3d at 754 (breach of direct sales clause in because Lazer Spot was entitled to summary employees’ agreements with Mary Kay). judgment as a matter of law, we render judgment in favor of Lazer Spot. Lazer Spot is not, however, Because HN14 a claim of tortious interference entitled to recover attorney’s fees and court costs.24 cannot be premised merely on the hiring of an /s/ Bailey C. Moseley at-will employee, without more, summary judgment was improperly granted on the claim of Bailey C. Moseley tortious interference with contractual relations; Justice the employees were within their rights [**34] to Date Submitted: September 26, 2012 terminate employment with HPI at any time.23 Date Decided: October 18, 2012 V. Conclusion

23 If the mere hiring of an at-will employee, without more, were sufficient to support a claim of tortious interference, the economy in the State of Texas would soon grind to a halt. 24 Lazer Spot claims that it should have been awarded attorney’s fees as a part of its summary judgment, pursuant to Section 15.51(c) of the Texas Business and Commerce Code:

HN15 If the primary purpose of the agreement to which the covenant is ancillary is to obligate the promisor to render personal services, the promisor establishes that the promise knew at the time of the execution of the agreement that the covenant did not contain limitations as to time, geographical area, and scope of activity to be restrained that were reasonable [**35] and the limitations imposed a greater restraint than necessary to protect the goodwill or other business interest of the promise, and the promise sought to enforce the covenant to a greater extent than was necessary to protect the goodwill or other business interest of the promise, the court may award the promisor the costs, including reasonable attorney’s fees, actually and reasonably incurred by the promisor in defending the action to enforce the covenant.

TEX. BUS. & COM. CODE ANN. § 15.51(c). HN16 The foregoing provision permits the ″promisor″ to recover costs and reasonable attorney’s fees, in certain circumstances. Because the express language of the statute does not apply here, Lazer Spot is not entitled to attorney’s fees under Section 15.51(c). TEX. BUS. & COM. CODE ANN. § 15.51(c); see Glattly v. Air Starter Components, Inc., 332 S.W.3d 620, 645 (Tex. App.—Houston [1st Dist.] 2010, pet. denied) (Covenants Not to Compete Act does not permit employers to recover their attorney’s fees in suits to enforce their rights under the Act). We find no authority to support the proposition that a third party, such as Lazer, Spot, is entitled to attorney’s fees pursuant to this section of the [**36] statute. Page 14 of 14