Opinion issued August 23, 2018
In The
Court of Appeals For The
First District of Texas ———————————— NO. 01-17-00203-CV ——————————— TERRI PORTER-GARCIA, Appellant V. THE TRAVIS LAW FIRM, P.C., Appellee
On Appeal from the 334th District Court Harris County, Texas Trial Court Case No. 2017-04314
and ———————————— NO. 01-17-00206-CV ——————————— ALLISON E. MARTIN, Appellant V. THE TRAVIS LAW FIRM, P.C., Appellee
On Appeal from the 11th District Court Harris County, Texas Trial Court Case No. 2017-04271
OPINION
In these combined appeals, the respective trial courts denied appellants 1
Terri Porter-Garcia’s and Allison E. Martin’s motions to dismiss claims for breach
of contract, fraud, and violations of the Theft Liability Act brought by their former
employer, appellee The Travis Law Firm, P.C. (the “Law Firm”). On appeal,
Porter-Garcia and Martin contend that the trial courts erred by failing to dismiss
these claims under the Texas Citizens Participation Act (“TCPA”). We conclude
that the TCPA applies. Because the Law Firm established, for these purposes, a
prima facie case of breach of contract against Porter-Garcia and Martin, and
because Porter-Garcia and Martin did not establish by a preponderance of the
1 We combine in this opinion the reasons for our disposition of Terri Porter-Garcia v. The Travis Law Firm, P.C., No. 01-17-00203-CV and Allison E. Martin v. The Travis Law Firm, P.C., No. 01-17-00206-CV. The facts and issues are substantially similar in the appeals.
2 evidence any defense to those claims, we affirm the trial courts’ orders as to the
contract claims. We reverse the denial of Porter-Garcia’s and Martin’s motions to
dismiss, however, on the Law Firm’s claims for fraud and violations of the Theft
Liability Act. We do not address the merits of the underlying claims or who may
ultimately prevail.
Background
Porter-Garcia and Martin have been embroiled in wage disputes with the
Law Firm. Upon resigning from the Law Firm, both Porter-Garcia and Martin filed
wage claims with the TWC. The TWC concluded that the Law Firm owed
Porter-Garcia $439.32 and Martin $682.66 in unpaid wages. Soon thereafter, the
Law Firm filed the instant lawsuits, seeking judicial review of the TWC decisions
and asserting causes of action (against both women) for breach of contract, fraud,
and violations of the Theft Liability Act.
Porter-Garcia and Martin moved to dismiss, arguing below—as they do
here—that the TCPA applied in each case because the lawsuits are based on, relate
to, or are in response to the proceedings before the TWC. They further contended
that the Law Firm failed to meet its burden under the TCPA, so the statute bars the
Law Firm’s claims. Following hearings, the trial courts denied the motions to
dismiss. Porter-Garcia and Martin appealed.
3 Because the parties’ allegations form an important part of our consideration,
we describe the arguments.
The Law Firm alleged claims against both Porter-Garcia and Martin for
(1) breach of contract, (2) fraud, and (3) violations of the Theft Liability Act. The
Law Firm also sought judicial review of the TWC decisions that concluded that the
Law Firm owed Porter-Garcia and Martin unpaid wages. These claims concern the
parties’ underlying wage disputes. The Law Firm’s allegations are premised on its
positions that Porter-Garcia and Martin were ineligible for vacation days, holidays,
or sick days during their first 90 days of employment and that, after the first 90
days, they would be eligible for three days of paid sick leave. The Law Firm
contends that, in alleged oral contracts and representations, Porter-Garcia and
Martin agreed to make up any work time that they missed during the first 90-day
period and any other missed time in excess of the three days of paid sick leave for
which they later became eligible. The Law Firm further argues that, in exchange
for their agreement to make up missed work time, the Law Firm agreed to pay
them as if they had worked full days even for days, or portions of days, that they
missed.
A. The Law Firm’s breach of contract claims
In its contract claims, the Law Firm alleges that it “performed under the
contract[s]” “by paying [Porter-Garcia and Martin] for all of the days that [they]
4 worked, as well as for days that [they] did not work and w[ere] not eligible for paid
time-off.” But it contends that Porter-Garcia and Martin “breached the contract . . .
by accepting payment for days that [they] did not work and not subsequently
making up the time at a later date.”
The Law Firm emphasizes Porter-Garcia’s post-resignation collection
efforts, asserting that she “further breached the contract by seeking to be paid for
additional days of work after the conclusion of her employment because at the time
that Garcia left the Travis Law Firm, she had been absent for at least two (2) days
that she was paid for, but did not work.” According to the Law Firm, her alleged
breach caused it damages in excess of $500.00.
As to Martin, the Law Firm likewise asserts that she “further breached the
contract by seeking to be paid for additional days of work after the conclusion of
her employment.” It alleges that Martin “had been paid for at least thirteen and
one-half (13.5) days that she had not worked and she was not eligible to be paid
for.” Moreover, the Law Firm asserts that Martin stated in her resignation letter
that she would be available through September 22, 2015, but she left work on
September 8, 2015 “in direct contravention to [her] promise to make herself
available.” The Law Firm alleges that Martin’s breach of the oral contract resulted
in injury to it “in excess of $682.66.”
5 B. The Law Firm’s fraud claims
In its fraud claims, the Law Firm contends that Porter-Garcia and Martin
represented on numerous occasions “that [they were] aware that [they] had been
paid for time that [they] had not actually worked” and that they “would make up
these days in the future.” The Law Firm alleges that they knew their
representations were false. As proof, the Law Firm argues that the women
allegedly said that they would make up the time but did not. As to Porter-Garcia,
the law firm also contends that, after she resigned, she requested payment for two
additional days. And as to Martin, the Law Firm points to her failure to maintain
“documentation for absences of employees at the Travis Law Firm, including her
own.” The Law Firm contends that it relied on their representations—that without
them, the “Law Firm would not have paid” for time that they did not work. And
the Law Firm alleges that it suffered injury by paying for time not worked.
C. The Law Firm’s theft claims
The Law Firm alleges that Porter-Garcia and Martin violated the Theft
Liability Act, “appropriating” Law Firm property “with the intent to deprive” by:
receiving the benefits and wages for time that [they] had not worked, promising the Travis Law Firm that [they] would make-up time in the future, and then continually and repeatedly lying about [their] deception and false representations that led to [their] obtaining the property from Travis Law Firm without the Travis Law Firm’s effective consent.
6 The Law Firm further asserts that both women “lied to get benefits and wages from
[the] Travis Law Firm that [they] w[ere] not entitled to, and [they] continued to lie
about [their] obligations to [the] Travis Law Firm showing [their] intention all
along of depriving Travis Law Firm of its property.”
D. Porter-Garcia’s and Martin’s TCPA motions to dismiss
Porter-Garcia and Martin moved to dismiss the Law Firm’s contract, fraud,
and Theft Liability Act claims,2 arguing that the TCPA applied to bar these claims
because (1) they are based on, relate to, or are in response to their exercise of the
right to petition the TWC to resolve their wage disputes with the Law Firm, and
(2) the Law Firm could not satisfy its burden to establish by clear and specific
evidence a prima facie case for any of its claims (or, even if it had, they established
valid defenses against each of the claims).
Both Porter-Garcia and Martin attached affidavits to their motions to
dismiss. In them, they each averred that:
• When they resigned from the Law Firm, it still owed them wages for hours that they had worked.
• Because the Law Firm refused to pay them for their work, they filed wage claims with the TWC.
• The TWC determined that the Law Firm owed $439.32 to Porter-Garcia and $682.66 to Martin.
2 In its live petition, the Law Firm also seeks judicial review of the Texas Workforce Commission’s determinations. Those determinations are not a subject of the motions to dismiss or at issue in this appeal.
7 • They did not enter into oral or written contracts concerning their employment with the Law Firm.
• They believed that the Law Firm’s claims were made in retaliation for their TWC claims.
Martin also averred that, during the investigation of the TWC wage claim,
an agent of the Law Firm told her that “he would sue [her] for various claims if
[she] continued with the claim.”
E. The Law Firm’s responses to Porter-Garcia’s and Martin’s TCPA motions to dismiss
The Law Firm responded that the TCPA is inapplicable to its claims. It
asserted that it filed a “meritorious lawsuit for a demonstrable injury” that “in no
way impact[s] or discourage[s] [Porter-Garcia’s and Martin ]’s ‘constitutional
rights to petition the government.’”
The Law Firm attached affidavits from John D. Woods, an attorney at the
Law Firm, in which he averred:
• Martin began her employment with the Law Firm on September 24, 2014, and Porter-Garcia started work on July 27, 2015. The “last date on which [either] performed any work for Travis Law Firm was on September 4, 2015.”
• Woods was present during each of Porter-Garcia’s and Martin’s interviews with the Law Firm when they agreed to the Law Firm’s policy that they “would not be entitled to any paid time-off, including but not limited to, sick days, personal days, holidays, or other non-compensable time off from work until [they] worked ninety (90) days with Travis Law Firm.” Also, only “[u]pon completion of working ninety (90) days with Travis Law Firm” would they be “entitled to three (3) days of paid sick leave.”
8 • They agreed that if they did not work a full eight hours per day, the Law Firm would still pay them as if they had worked a full eight-hour day, but they were required to make up the time later.
• They breached the oral contract “by accepting payment for days that [they] did not work and not subsequently making up the time at a later date.”
• They “further breached the contract by seeking to be paid for additional days of work after the conclusion of [their] employment.”
• The Law Firm’s claims were not made in retaliation for their “participation in the Texas Workforce Commission wage claim investigation.”
The Law Firm also attached pay records.
Motion to Dismiss Under the TCPA
In both of their sole issues, Porter-Garcia and Martin contend that the trial
court erred by denying their motions to dismiss. They argue that (1) the Law
Firm’s claims are based on, relate to, or are in response to their exercise of the
right to petition; (2) the Law Firm did not establish by clear and specific evidence a
prima facie case for each of its claims; and, (3) even if it had, their defenses bar the
Law Firm’s claims. We agree that the trial court erred in failing to dismiss the Law
Firm’s claims for fraud and civil theft. We disagree, however, on breach of
contract.
A. Standard of Review and Applicable Law
This case arises under the TCPA, often called an “anti-SLAPP” statute. We
review de novo a trial court’s ruling on a motion to dismiss under the TCPA.
9 Schlumberger Ltd. v. Rutherford, 472 S.W.3d 881, 892 (Tex. App.—Houston [1st
Dist.] 2015, no pet.). We interpret the TCPA in accordance with its express
statutory language. See Jordan v. Hall, 510 S.W.3d 194, 197 (Tex. App.—Houston
[1st Dist.] 2016, no pet.). “[O]rdinary citizens should be able to rely on the plain
language of a statute to mean what it says.” Fitzgerald v. Advanced Spine Fixation
Sys., Inc., 996 S.W.2d 864, 866 (Tex. 1999).
The TCPA provides: “If a legal action is based on, relates to, or is in
response to a party’s exercise of the right of free speech, right to petition, or right
of association, that party may file a motion to dismiss the legal action.” TEX. CIV.
PRAC. & REM. CODE § 27.003(a). The statute establishes a procedure whereby
parties have an opportunity to show whether claims relate to or are in response to
the exercise of protected rights, including the right to petition. See id. § 27.003(a)–
(c). This procedure does not require parties to marshal all of their evidence at the
motion to dismiss stage. In re Lipsky, 460 S.W.3d 579, 589 (Tex. 2015) (orig.
proceeding).
A party seeking dismissal under the TCPA bears the initial burden of
“show[ing] by a preponderance of the evidence that the legal action is based on,
relates to, or is in response to the party’s exercise of: (1) the right of free speech;
(2) the right to petition; or (3) the right of association.” Id. § 27.005(b). If the
moving party meets this burden, then the burden shifts to the nonmovant to
10 establish “by clear and specific evidence a prima facie case for each essential
element of the claim in question.” Id. § 27.005(c). This standard differs from mere
notice pleading required by the Rules of Civil Procedure. See Lipsky, 460 S.W.3d
at 590–91. But the TCPA “does not impose an elevated evidentiary standard.” Id.
at 591. Instead, it requires “the minimum quantum of evidence necessary to
support a rational inference that the allegation of fact is true.” See id. at 590. Put
differently, “a plaintiff must provide enough detail to show the factual basis for its
claim.” Id. at 591.
If the nonmovant establishes his or her prima facie case, the burden shifts
back to the movant, who may obtain dismissal by establishing “by a preponderance
of the evidence each essential element of a valid defense to the nonmovant’s
claim.” TEX. CIV. PRAC. & REM. CODE § 27.005(d). In conducting our review, we
consider the pleadings and evidence in a light favorable to the nonmovant. Deuell
v. Tex. Right to Life Comm., Inc., 508 S.W.3d 679, 685 (Tex. App.—Houston [1st
Dist.] 2016, pet. denied).
B. Analysis
1. Does the TCPA apply?
Yes, both Porter-Garcia and Martin met their initial burdens of showing by a
preponderance of the evidence that the TCPA applies. As set forth above, the
TCPA applies to a legal action that is “based on, relates to, or is in response to a
11 party’s exercise of the right of free speech, right to petition, or right of
association.” TEX. CIV. PRAC. & REM. CODE § 27.003.
The TCPA broadly defines “[e]xercise of the right to petition” to include a
communication pertaining to a judicial, official, or governmental department
proceeding, such as the TWC proceeding here. See id. § 27.001(4)(A).
Specifically, the statutory definition includes (among other things) “a
communication in or pertaining to” “a judicial proceeding,” “an official
proceeding, other than a judicial proceeding, to administer the law,” or a
“proceeding before a department of the state or federal government or a
subdivision of the state or federal government,” as well as “a communication in
connection with an issue under consideration or review by a legislative, executive,
judicial, or other governmental body or in another governmental or official
proceeding.” Id. § 27.001(4)(A), (B).
“Courts must adhere to legislative definitions of terms when they are
supplied,” Youngkin v. Hines, 546 S.W.3d 675, 680 (Tex. 2018), and Porter-Garcia
and Martin have made the requisite showing, for these purposes, that their TWC
communications satisfy the TCPA’s statutory definition of “right to petition.” See
id. at 681 (TCPA applied to alleged liability stemming from dictation of Rule 11
agreement into court record); James v. Calkins, 446 S.W.3d 135, 147–48 (Tex.
App.—Houston [1st Dist.] 2014, pet. denied); Tervita, LLC v. Sutterfield, 482
12 S.W.3d 280, 283–84 (Tex. App.—Dallas 2015, pet. denied) (citing TEX. CIV.
PRAC. & REM. CODE § 27.001(4) and concluding that Sutterfield’s contested case
hearing before Texas Department of Insurance, Division of Worker’s
Compensation, was qualifying governmental proceeding for “petition” purposes);
see also Adams v. Starside Custom Builders, LLC, 547 S.W.3d 890, 894 (Tex.
2018) (“The TCPA casts a wide net.”).
Similarly, Porter-Garcia and Martin made the requisite showing that the
instant lawsuits are based on, relate to, or are in response to their right to petition.
The TCPA’s “is based on, relates to, or is in response to” language captures, at a
minimum, a “legal action” that is factually predicated upon or relates to alleged
conduct that would fall within the TCPA’s definition of exercise of the right to
petition. See Adams, 547 S.W.3d at 894. Thus, the TCPA covers, for instance, a
lawsuit that relates to “a communication in or pertaining to: . . . an official
proceeding, other than a judicial proceeding, to administer the law” or a
“proceeding before a department of the state or federal government or a
subdivision of the state or federal government.” See TEX. CIV. PRAC. & REM. CODE
§ 27.001(4)(A)(ii), (iii).
Porter-Garcia and Martin argue that (1) the direct result of their TWC claims
was that the Law Firm owed them $439.32 and $682.66, respectively, for unpaid
wages and (2) as damages in these lawsuits, the Law Firm seeks the amount of
13 back wages awarded by the TWC. In other words, had they “not filed the wage
claim[s], the Firm would not have been legally compelled to pay the unpaid
wages” and “thus there is a direct connection between the damages claimed by the
Firm in its breach of contract, fraud, and theft claims and [the] administrative
proceeding conducted by [the] TWC.” Moreover, Martin averred that “[d]uring the
investigation of the wage claim, an agent of the [Law Firm] stated to [her] that he
would sue [her] for various claims if [she] continued with [her] claim.”
The Law Firm’s first amended petitions support Porter-Garcia’s and
Martin’s contentions that the Law Firm’s claims are based on, relate to, or are in
response to their wage actions before the TWC.3 The Law Firm seeks the return of
wages that the Law Firm asserts it wrongfully paid to Porter-Garcia and Martin.
Moreover, in support of its claims, the Law Firm references Porter-Garcia’s and
Martin’s post-resignation efforts to collect wages.4
3 We focus our review on the Law Firm’s live pleadings. 4 In support of its breach-of-contract claims, the Law Firm alleged that Porter- Garcia and Martin “breached the[ir] contract[s] by seeking to be paid for additional days of work after the conclusion of [their] employment.” Further, in support of its theft claims against both women, the Law Firm alleges that they “lied to get benefits and wages from Travis Law Firm that [they] were not entitled to, and [they] continue to lie about [their] obligations to Travis Law Firm showing [their] intention all along of depriving Travis Law Firm of its property.”
14 Porter-Garcia and Martin met their burden of showing, for these purposes,
that the TCPA applies.5
2. Did the Law Firm establish by clear and specific evidence a prima facie case for each element of its claims?
Yes for breach of contract, but no for the Law Firm’s other claims. Because
Porter-Garcia and Martin satisfied their initial burden under the TCPA, the burden
shifted to the Law Firm to establish “by clear and specific evidence a prima facie
case for each essential element of” its claims. TEX. CIV. PRAC. & REM. CODE
§ 27.005(c). Accordingly, we examine the pleadings and the evidence in a light
favorable to the Law Firm to determine whether it marshaled “clear and specific
evidence” to support each element of its claims. See id. §§ 27.005(c), 27.006(a);
Lipsky, 460 S.W.3d at 587; Deuell, 508 S.W.3d at 685.
5 The TCPA’s text and recent case law preclude the dissent’s narrower view of the TCPA’s application. It does not follow from the fact that the TCPA professes to safeguard the exercise of certain First Amendment rights that it should only apply to constitutionally guaranteed activities. Because the Legislature explicitly defined the term “exercise of the right to petition,” injecting such a requirement into the TCPA would be disloyal to its enacted text. Whether that definition maps perfectly onto the external constitutional rights it aims to protect is irrelevant; we are bound by the statutory definition for the purposes of the TCPA. Youngkin v. Hines, 546 S.W.3d 675, 681 (Tex. 2018) (emphasis in original); see also Collins v. Collins, No. 01-17-00817-CV, 2018 WL 1320841, at *4 (Tex. App.—Houston [1st Dist.] Mar. 15, 2018, pet. filed) (mem. op.) (interpreting “[e]xercise of the right to petition” according to what it plainly says does not lead to absurd result).
15 Neither the TCPA nor the common law defines “clear and specific
evidence”; consequently, we give these terms their ordinary meaning. Lipsky, 460
S.W.3d at 590. “Clear” means “free from doubt,” “sure,” or “unambiguous.”
Lipsky, 460 S.W.3d at 590 (citing this definition of “clear” from BLACK’S LAW
DICTIONARY). “Specific” means “explicit” or “relating to a particular named
thing.” Id. (citing this definition of “specific” from BLACK’S LAW DICTIONARY).
“The term ‘clear and specific evidence’ refers to the quality of evidence required to
establish a prima facie case, while the term ‘prima facie case’ refers to the amount
of evidence required to satisfy the nonmovant’s minimal factual burden.” Warner
Bros. Entm’t, Inc. v. Jones, 538 S.W.3d 781, 799 (Tex. App.—Austin 2017, pet.
filed).
“[Prima facie case] refers to evidence sufficient as a matter of law to
establish a given fact if it is not rebutted or contradicted.” Lipsky, 460 S.W.3d at
590. Although this standard exceeds mere notice pleading, it requires only the
“minimum quantum of evidence necessary to support a rational inference that the
allegation of fact is true.” See id. at 590–91 (“Though the TCPA initially demands
more information about the underlying claim, the Act does not impose an elevated
16 evidentiary standard or categorically reject circumstantial evidence.”); Warner
Bros. Entm’t, 538 S.W.3d at 799.6
Thus, we must decide whether the pleadings and affidavits contain a
minimum quantum of clear and specific evidence necessary to support a rational
inference establishing each essential element of the Law Firm’s claims. We
address each of the Law Firm’s claims in turn.
a. Breach of contract
The elements of a claim for breach of an oral contract are (1) the existence
of a valid contract between plaintiff and defendant, (2) the plaintiff’s performance
or tender of performance, (3) the defendant’s breach, and (4) the plaintiff’s
damages as a result of the breach. See Prime Prods., Inc. v. S.S.I. Plastics, Inc., 97
S.W.3d 631, 636 (Tex. App.—Houston [1st Dist.] 2002, pet. denied).
Porter-Garcia and Martin argue that the Law Firm failed to present sufficient
evidence of a valid contract or damages. They do not challenge the Law Firm’s
position that it performed under the contract or, to the extent that the Law Firm’s
alleged oral contract existed, that they breached the terms of that contract.
6 For instance, “[i]n a defamation case that implicates the TCPA, pleadings and evidence that establish[] the facts of when, where, and what was said, the defamatory nature of the statements, and how they damaged the plaintiff should be sufficient to resist a TCPA motion to dismiss.” Lipsky, 460 S.W.3d at 591.
17 i. Existence of a valid contract
Porter-Garcia and Martin deny that the parties entered into an oral contract.
To establish the existence of a valid contract, a party must establish (1) an offer,
(2) an acceptance, (3) a meeting of the minds, (4) each party’s consent to the terms,
and (5) execution and delivery of the contract with the intent that it be mutual and
binding. Id. “In determining the existence of an oral contract, the court looks to the
communications between the parties and to the acts and circumstances surrounding
those communications.” Id.
The Law Firm submitted Woods’s affidavit in which he averred the
following:
▪ He personally witnessed Porter-Garcia and Martin agree to the Law Firm’s policy that they “would not be entitled to any paid time-off, including but not limited to, sick days, personal days, holidays, or other non-compensable time off from work until [they] worked ninety (90) days with Travis Law Firm.”
▪ Porter-Garcia and Martin agreed to the term that, “[u]pon completion of working ninety (90) days with Travis Law Firm, [they] would have been entitled to three (3) days of paid sick leave.”
▪ They agreed that if they did not work a full eight hours per day, the Law Firm would still pay them as if they had worked a full day, but they were required to make up the time later.
▪ Woods was present when Porter-Garcia and Martin agreed to this payment arrangement.
Woods’s testimony provides clear and specific evidence, for these purposes,
of a prima facie case of the existence of a contract. It sets forth evidence of an offer
18 by the Law Firm to pay for missed time in exchange for that time being made up at
a later date. It provides that both Porter-Garcia and Martin accepted the terms of
the agreements. Similarly, it asserts that both parties consented to the terms of the
agreements with the mutual intent to be bound by the agreements’ terms. As such,
the Law Firm met its burden of establishing, for these purposes and with the
evidence construed in its favor, the existence of valid and enforceable oral
agreements. See TEX. CIV. PRAC. & REM. CODE § 27.005(c); Lipsky, 460 S.W.3d at
590 (prima facie case requires only minimum quantum of evidence necessary to
support rational inference that allegation of fact is true).
Porter-Garcia and Martin argue that the existence of any oral contract
requiring them to make up missed time contravenes the law and the Law Firm’s
written policies requiring any agreement contrary to the at-will-employment
standard to be in writing. But we have no basis to conclude that the purported
agreements changed their at-will status. See, e.g., Gonzalez v. Methodist Charlton
Med. Ctr., No. 10-11-00257-CV, 2011 WL 6091255, at *8–10 (Tex. App.—Waco
Dec. 7, 2011, no pet.) (mem. op.) (holding that tuition-reimbursement agreement
between sonography student and hospital did not “unequivocally manifest[] a
definite intent on behalf of [hospital] to modify or alter the at-will employment
relationship between it and [student] in a meaningful or special way”).
19 Porter-Garcia and Martin also argue that the statute of frauds renders the
alleged oral payment agreements unenforceable. But the statute of frauds would
render the alleged oral payment agreements unenforceable only if they could not
be performed within one year, and an “employment contract for an indefinite term
is considered performable within one year.” See Montgomery Cty. Hosp. Dist. v.
Brown, 965 S.W.2d 501, 503 (Tex. 1998). Here, the payment agreements, as
alleged, could have been performed within one year. See id.; Miller v. Riata
Cadillac Co., 517 S.W.2d 773, 776 (Tex. 1974) (where contract to pay employee
bonus after about one year could theoretically be performed before year expired,
statute of frauds did not apply); Young v. Ward, 917 S.W.2d 506, 509 (Tex. App.—
Waco 1996, no writ). Thus, on this record, the statute of frauds did not render the
alleged agreements unenforceable.
ii. Performance by the Law Firm
The Law Firm submitted Woods’s testimony that it performed “by paying
[Porter-Garcia and Martin] for all of the days that [they] worked, as well as for
days that [they] did not work and w[ere] not eligible for paid time-off.” Porter-
Garcia and Martin have not challenged the Law Firm’s assertion that it performed
under the terms of the alleged oral agreements. Accordingly, we conclude, for
these purposes, that the Law Firm offered clear and specific evidence supporting a
20 prima facie case of performance under the agreements. See Lipsky, 460 S.W.3d at
590.
iii. Breach by Porter-Garcia and Martin
Porter-Garcia and Martin also have not challenged the assertion that, if the
parties orally agreed to the terms alleged by the Law Firm, they breached the terms
of those agreements. Woods averred that he had personal knowledge of Porter-
Garcia’s and Martin’s absences, and he contended that they did not make up their
missed time. The Law Firm offered clear and specific evidence supporting a prima
facie case of breach of the alleged oral agreement. See Lipsky, 460 S.W.3d at 590.
iv. Damages
Porter-Garcia and Martin argue that the Law Firm failed to allege sufficient
specific damages. We disagree. The Law Firm submitted Woods’s testimony that
its damages could be measured by “out-of-pocket financial injury to Travis Law
Firm from the monies paid to [them] for time that [they] did not work. . . . [T]he
injury is in excess of $682.66” as to Martin and “$500.00” as to Porter-Garcia. The
Law Firm submitted their pay records, which reflect their pay rates, and the Law
Firm alleged the number of days for which it seeks reimbursement. It thus
provided a quantifiable method to calculate damages. This constitutes clear and
specific evidence supporting a prima facie case: “[P]laintiff . . . provide[s] enough
detail to show the factual basis for its claim.” See Lipsky, 460 S.W.3d at 591;
21 Schlumberger, 472 S.W.3d at 894–95 (testimony regarding diminished value of
investments and request for specific performance constituted clear and specific
evidence of actual damages from alleged breach of contract).
b. Fraud
The Law Firm did not establish by clear and specific evidence a prima facie
case for each essential element of fraud. The elements of fraud are:
(1) the defendant made a material misrepresentation,
(2) the defendant knew the representation was false or made the representation recklessly without any knowledge of its truth,
(3) the defendant made the representation with the intent that the other party would act on that representation or intended to induce the party’s reliance on the representation, and
(4) the plaintiff suffered an injury by actively and justifiably relying on that representation.
Exxon Corp. v. Emerald Oil & Gas Co., 348 S.W.3d 194, 217 (Tex. 2011); accord
James, 446 S.W.3d at 148 (same).
The Supreme Court has concluded that the “clear and specific” evidentiary
standard does not exclude circumstantial evidence—i.e., “indirect evidence that
creates an inference to establish a central fact.” Lipsky, 460 S.W.3d at 589. And
Texas law acknowledges that “intent to defraud is not susceptible to direct proof
[and] invariably must be proven by circumstantial evidence.” Id. at 588 (quoting
Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 435 (Tex. 1986)).
22 Where, as here, the allegedly fraudulent representation involves a
defendant’s promise of future performance, mere breach of contract or failure to
perform is not, standing alone, evidence of fraud. Formosa Plastics Corp. USA v.
Presidio Engineers & Contractors, Inc., 960 S.W.2d 41, 48 (Tex. 1998); Chevron
Phillips Chem., 346 S.W.3d at 66. Breach “combined with ‘slight circumstantial
evidence’” may demonstrate that the promisor intended to defraud or had
knowledge of the falsity of her representations when made. Tony Gullo Motors I,
L.P. v. Chapa, 212 S.W.3d 299, 305 (Tex. 2006); see Spoljaric, 708 S.W.3d at
435.
But for circumstantial evidence to establish any material fact, including
knowledge or intent, there must be “a logical bridge between the proffered
evidence and the necessary fact.” IKON Office Sols., Inc. v. Eifert, 125 S.W.3d
113, 124 (Tex. App.—Houston [14th Dist.] 2003, pet. denied) (“Although
circumstantial evidence may be used to establish any material fact, it must
transcend mere suspicion.” (quotation omitted)). Fraud cannot be inferred from the
“vague, indefinite, and inconclusive” testimony of interested witnesses. Lipsky,
460 S.W.3d at 588–89 (circumstantial evidence “is admissible unless the
connection between the fact and the inference is too weak to be of help in deciding
the case.”). And evidence “so weak that it creates only a mere surmise or
23 suspicion” of intent not to perform “constitutes no evidence.” Chevron Phillips
Chem., 346 S.W.3d at 66 (citation omitted).
The Law Firm’s evidence is silent about whether Porter-Garcia and Martin
knew, at the time, that their alleged promises to make up missed work time were
false. No evidence shows they had the present intent to deceive, and no intention of
performing, when they allegedly represented to the Law Firm that they would
make up missed time.
The Law Firm repeats its breach of contract allegations. It contends that
Porter-Garcia and Martin committed fraud by representing that they would make
up missed time and then failing to do so. It is well settled, however, that evidence
of an alleged failure to perform alone is insufficient to support a claim of fraud.
See, e.g., Formosa, 960 S.W.2d at 48; Chevron Phillips Chem., 346 S.W.3d at 66.
As other alleged “evidence” concerning Porter-Garcia, Woods averred that
her resignation letter stated that she should be paid for September 1–4, 2015, but
she later (post-resignation) demanded payment for September 7–8 too. This does
not constitute slight circumstantial evidence of knowledge or fraudulent intent at
the time Porter-Garcia allegedly represented that she would make up missed time.
As explained, evidence “so weak that it creates only a mere surmise or suspicion”
of intent not to perform is no evidence, and fraud cannot be inferred from “vague,
indefinite, and inconclusive” testimony. Chevron Phillips Chem., 346 S.W.3d at
24 66; see also Lipsky, 460 S.W.3d at 588–89; T.O. Stanley Boot Co. v. Bank of El
Paso, 847 S.W.2d 218, 222 (Tex. 1992). Although “subsequent acts” may shed
light on prior fraudulent intent, see Spoljaric, 708 S.W.2d at 434, Porter-Garcia’s
post-resignation payment request for wages for two additional days does not
suggest that she made any alleged pre-resignation representations about making up
missed work time with knowledge that her representations were false. There is no
“logical bridge between the proffered evidence and the necessary fact.” IKON, 125
S.W.3d at 130–31.
So too for Martin. The Law Firm (and Woods) alleged that she was tasked
with documenting employee absences yet failed to do so. The Law Firm contends
that this constitutes evidence that she knew, at the time of her alleged
representations that she would make up missed time, that the representations were
false. But there is again no “logical bridge between the proffered evidence and the
necessary fact.” Id. The Law Firm does not explain (or produce evidence about)
the relationship between the alleged task of recording employee absences and a
separate alleged promise to make up her missed time. The Law Firm also included
no explanation of when Martin allegedly failed to track employee absences, when
she allegedly misrepresented that she would make up missed work time, and how
the two were temporally related. The evidence creates no more than a mere
surmise or suspicion as to Martin’s knowledge or intent at the time of her alleged
25 representations. See id. (“IKON’s post-acquisition conduct does not provide more
than a scintilla of evidence IKON did not intend to perform under the Agreements
at the time it entered into them. The conduct Eifert cites is not material to the
specific promises created by the job description . . . .”); Chevron Phillips Chem.,
346 S.W.3d at 66.
We cannot conclude that Porter-Garcia’s post-resignation payment request
or Martin’s alleged failure to track employee absences creates an inference—much
less one constituting clear and specific evidence supporting a prima facie case—
that the appellants knew, at the time, that any alleged representations about making
up missed time were false (or relatedly that they made the representations with
fraudulent intent). See IKON, 125 S.W.3d at 130–31; see also Lipsky, 460 S.W.3d
at 588–93 (although affidavit states that Range “suffered direct pecuniary and
economic losses,” it is devoid of any specific facts illustrating how Lipsky’s
alleged remarks about Range’s activities actually caused such losses); Burbage v.
Burbage, 447 S.W.3d 249, 262 (Tex. 2014) (jury could not reasonably infer that
cancellations for a funeral home business were caused by defamation when any
number of reasons could have caused the cancellations); T.O. Stanley, 847 S.W.2d
at 222; Chevron Phillips Chem., 346 S.W.3d at 66 (citation omitted) (“Because CP
Chem’s denial of the promise is insufficient to demonstrate intent not to perform,
Kingwood CrossRoads cites no evidence that, coupled with CP Chem’s failure to
26 perform, constituted “slight circumstantial evidence” and created more than “mere
surmise or suspicion” of intent not to perform).
Because the Law Firm failed to establish by clear and specific evidence a
prima facie case of fraud, the trial courts erred by denying appellants’ motions to
dismiss as those claims.
c. Violations of the Theft Liability Act
The Law Firm’s Theft Liability Act claims similarly fall short. The Act
provides a civil remedy for damages sustained by a theft victim. See TEX. CIV.
PRAC. & REM. CODE §§ 134.002(2), 134.003(a), 134.005. Under the Act, “theft”
means “unlawfully appropriating property or unlawfully obtaining services as
described by Section 31.03 . . . Penal Code.” Id. § 134.002(2). Penal Code
section 31.03 provides that “[a] person commits an offense if he unlawfully
appropriates property with intent to deprive the owner of property.” Appropriation,
as relevant here, means to exercise control over property, and it is unlawful when it
is without the owner’s effective consent. TEX. PENAL CODE §§ 31.01(4),
31.03(b)(1).
When a claim of theft is made in connection with a contract, there must be
“proof of more than an intent to deprive the owner of property and subsequent
appropriation of the property.” Wirth v. State, 361 S.W.3d 694, 697 (Tex. Crim.
App. 2012). The additional evidence must show that the appropriation was a result
27 of a false pretext or fraud. Id.; see also Arcturus Corp. v. Espada Operating, LLC,
2016 WL 4272381, at *5 (Tex. App.—Corpus Christi Aug. 11, 2016, no pet.)
(mem. op.) (analyzing civil theft); Jacobs v. State, 230 S.W.3d 225, 229–30 (Tex.
App.—Houston [14th Dist.] 2006, no pet.) (“If no more than intent and
appropriation is shown in a contract claim, nothing illegal is apparent, because
under the terms of [a contract] individuals typically have the right to ‘deprive the
owner of property,’ albeit in return for consideration.”) (citation omitted).
Woods averred that both Porter-Garcia and Martin unlawfully appropriated
the money that the Law Firm paid them in wages by deceiving the Law Firm to
obtain it. He described their deception as lying about intending to make up missed
work time so that they could be paid for the missed time now. This is the same
factual basis that the Law Firm provided regarding its fraud claims, and for the
reasons that the Law Firm failed to make a prima facie case of fraud by clear and
specific evidence, it likewise fails to make a prima facie case of theft by clear and
specific evidence. See Wirth, 361 S.W.3d at 697; Arcturus, 2016 WL 4272381, at
*9 (theft liability claims failed: “Arcturus points to no evidence in the record that
shows either Espada, Bengal, Michelson, or Billington retained Arcturus’s
payment pursuant to the forbearance letter but also knew it was not entitled to the
money.”).
28 To the extent the Law Firm relies on the wages awarded by the TWC for its
theft claim, these wages were not “unlawfully appropriate[d].” Cf. TEX. PENAL
CODE § 31.03(a). Rather, the TWC determined that Porter-Garcia and Martin were
legally entitled to the wages awarded them. Plus, the Law Firm presented no
evidence that it has paid the wages. See TEX. PENAL CODE § 31.01(4)(A), (B)
(property is appropriated once it is transferred or acquired).
Because the Law Firm failed to establish by clear and specific evidence a
prima facie case under the Theft Liability Act, the trial courts erred by denying
appellants’ motions to dismiss as those claims.
***
Viewing the evidence in a light favorable to the Law Firm, and applying the
standard set forth in the TCPA and binding case law, we conclude that the Law
Firm met its burden to proceed with its breach of contract claims but not its claims
for fraud and theft. The burden shifts back to Porter-Garcia and Martin on the
contract claims, and we must determine if they proved any of their defenses by a
preponderance of the evidence. See TEX. CIV. PRAC. & REM. CODE § 27.005(c), (d).
3. Have Porter-Garcia and Martin established any of their defenses by a preponderance of the evidence?
No. Porter-Garcia and Martin have not established their defenses by a
preponderance of the evidence. See TEX. CIV. PRAC. & REM. CODE § 27.005(d). On
29 appeal, they allege two defenses to the contract claims: waiver and ratification.7
a. Waiver
“Waiver is the intentional relinquishment of a right actually known, or
intentional conduct inconsistent with claiming that right.” Ulico Cas. Co. v. Allied
Pilots Ass’n, 262 S.W.3d 773, 778 (Tex. 2008).
Porter-Garcia and Martin argue that if the Law Firm “actually intended to
deprive [them] of pay in connection with sick days, holidays, or other
miscellaneous days, the time to do that would have been during and for the
applicable pay period, not months later when [they] ultimately resigned.” In
support, they argue that the Labor Code requires agreements to withhold wages to
be in writing. See TEX. LAB. CODE § 61.018(3). The Law Firm responds that it
never agreed to waive its right to have Porter-Garcia and Martin make up the days
that they missed. The Law Firm further argues that the TWC was barred from
considering the firm’s claims and could address only the narrower issue of whether
it was entitled to withhold wages from Porter-Garcia’s and Martin’s paychecks.
On this record and for these purposes, Porter-Garcia and Martin have failed
to establish by a preponderance of the evidence that the Law Firm intentionally
waived its right, under the parties’ alleged oral agreements, to have Porter-Garcia
7 Because the Law Firm failed to carry its burden under Civil Practice and Remedies Code section 27.005(c) for any claim except breach of contract, we need not reach Porter-Garcia’s and Martin’s defenses to other claims. See TEX. R. APP. P. 47.1.
30 and Martin make up work time that they missed. See Ulico Cas., 262 S.W.3d at
778.
b. Ratification
A party asserting a ratification must establish (1) approval by act, word, or
conduct, (2) with full knowledge of the facts of the earlier act, and (3) with the
intention of giving validity to the earlier act. Motel Enters., Inc. v. Nobani, 784
S.W.2d 545, 547 (Tex. App.—Houston [1st Dist.] 1990, no writ).
As with their waiver defenses, Porter-Garcia and Martin argue that if the
Law Firm “intended to reduce [their] pay for those hours [they] missed work due
to illness or other appointment, the time to do so would have been each work week
during which [they] took time off.”
The Law Firm does not contend that it intended to “reduce [Porter-Garcia’s
and Martin’s] pay for those hours [they] missed” but rather that Porter-Garcia and
Martin agreed to make up the missed time later. Porter-Garcia and Martin have not
established by a preponderance of the evidence that the Law Firm approved
(through its acts, words, or conduct) their failure to make up missed time.
31 Conclusion
We affirm the trial courts’ orders insofar as they denied Porter-Garcia’s and
Martin’s motions to dismiss the Law Firm’s breach of contract claims. We reverse
as to fraud and theft, and we remand to the trial courts for dismissal of those claims
and consideration of additional relief under Texas Civil Practice and Remedies
Code section 27.009. We remand the cases to the trial courts for further
proceedings.
Jennifer Caughey
Justice
Panel consists of Justices Jennings, Massengale, and Caughey.
Jennings, J., concurring in part in the judgment and dissenting in part