Toth v. Sears Home Improvement Prods., Inc.

557 S.W.3d 142
CourtCourt of Appeals of Texas
DecidedMay 10, 2018
DocketNO. 14-17-00615-CV
StatusPublished
Cited by36 cases

This text of 557 S.W.3d 142 (Toth v. Sears Home Improvement Prods., Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Toth v. Sears Home Improvement Prods., Inc., 557 S.W.3d 142 (Tex. Ct. App. 2018).

Opinion

Kevin Jewell, Justice

Appellant John Toth brings this interlocutory appeal of the trial court's order denying his motion to dismiss under the Texas Citizens Participation Act ("TCPA").1 Toth is a former flooring independent contractor for appellee Sears Home Improvement Products, Inc. Sears sued Toth, alleging that Toth breached certain contract terms by engaging in communications with a Sears flooring customer. Contending that Sears's claims are based on or relate to Toth's free speech rights, Toth filed a motion to dismiss under the TCPA. Sears opposed the motion on grounds that: (1) the TCPA does not apply; (2) Sears's claims are exempted from the act under section 27.010(b)'s "commercial speech" exemption; and (3) clear and specific prima facie evidence supports each essential element of its breach of contract claim. The trial court denied Toth's motion to dismiss.

We conclude that the TCPA applies to Sears's lawsuit. Further, we agree with Toth that the "commercial speech" exemption is not established on this record. Finally, Sears did not present clear and specific prima facie evidence to support each essential element of its breach of contract claim. We accordingly reverse the order denying Toth's motion to dismiss and remand for proceedings consistent with this opinion, including a determination of attorney's fees and other costs.

Background

Sears sold various flooring home improvement products until approximately April 2014, when it discontinued its flooring business. Toth provides flooring services through his company, Artistic Flooring. In 2013, Toth and Sears entered into an "Independent Contractor Agreement,"

*147under which Toth agreed to provide flooring services and/or to install flooring merchandise on Sears's behalf.

Sears sold wood flooring to Winifred Langham. Sometime after Sears installed the flooring, Langham complained to Sears that moisture was rising through the floor and damaging the wood. Pursuant to its contract with Toth, Sears assigned Toth to inspect Langham's floor, determine the cause of the problem, and recommend a solution to Sears.2 Toth conducted an initial visual inspection and later performed certain diagnostic testing. Toth recommended that Langham's floor be re-installed. Toth also recommended to Sears that the re-installation process include the product Bostik, a membrane sealant designed to reduce moisture vapor emissions. Toth believed that Bostik would create a barrier underneath Langham's wood flooring and prevent the moisture problem from reoccurring.

The above described events occurred between December 2012 and approximately May 2014. Sears withdrew from the flooring business in or about April 2014. Toth provided Sears a termination notice under the contract on April 27, 2014, and the contract expired by its terms thirty days later on May 27, 2014.

Sears ultimately decided not to replace Langham's floor. Instead, Sears offered to fully reimburse Langham's initial purchase price. Langham rejected Sears's offer and filed suit against Sears in January 2015.

Langham deposed Toth in August 2015 as part of her suit against Sears. During his testimony, Toth described his involvement in Sears's attempt to resolve Langham's flooring complaint. Over one year after Toth's deposition, Langham hired Toth to replace her floor. Subsequently, Sears joined Toth as a third-party defendant in Langham's suit. Sears alleged that Toth's communications with Langham violated the following confidentiality provisions of the agreement between Toth and Sears:

18. Confidential Business Information
(a) 'Confidential Business Information' means any information, whether disclosed in oral, written, visual, electronic or other form, which Sears discloses or Contractor observes in connection with Contractor's performance of its obligations under this Agreement. Confidential Business Information includes, but is not limited to, work product; Sears business plans, strategies, forecasts and analyses; Sears financial information; Sears employee and vendor information; Sears software (including all documentation and code); hardware and system designs, architectures and protocols; Sears product and service specifications; Sears purchasing, logistics, sales, marketing and other business processes; and the terms and existence of the Agreement.
(b) Contractor shall use Confidential Business Information only as necessary to perform its obligations under this Agreement. Contractor shall restrict disclosure of Confidential Business Information to its employees, agents or authorized subcontractors who have a need to know such information to perform its obligations hereunder and who have first agreed to be bound by the terms of this Section 18....
19. Confidential Personal Information
(a) Contractor agrees that all information about Sears Customers provided by Sears to Contractor, including but not limited to names, addresses, telephone numbers, account numbers, customer lists, and demographic, financial and *148transaction information ("Confidential Personal Information"), shall be deemed confidential.
(b) Contractor shall use Confidential Personal Information only as necessary to perform its obligations under the Agreement. Contractor shall not duplicate or incorporate the Confidential Personal Information into its own records or databases. Contractor shall restrict disclosure of Confidential Personal Information to its employees, agents or authorized subcontractors who have a need to know such information to perform its obligations hereunder and who have first agreed to be bound by the terms of this Section 19....
(f) Contractor shall notify Sears promptly upon the discovery of the loss, unauthorized disclosure or unauthorized use of the Confidential Personal Information....
21. Sears Customers
All Customers and all leads and prospects resulting from Sears work belongs to Sears and the Contractor agrees to notify Sears of all such prospective jobs or Customers. All leads and prospects resulting from Contractor's non-Sears work remain the property of the Contractor. Furthermore, Contractor acknowledges and agrees that it shall be deemed a material breach of this Agreement for Contractor to solicit, recommend or sell a non-authorized Sears product or a non-authorized Sears service to a Customer.

In its Fourth Amended Third Party Petition, Sears alleged that Toth breached the contract when he: (1) used Sears's confidential business information to communicate with Langham without Sears's permission and authority; (2) used Sears's confidential business information to enter into a business relationship with Langham; (3) solicited a non-authorized product, Bostik, to Langham; and (4) failed to notify Sears of a disclosure of confidential information.

After Langham and Sears signed a settlement agreement, Langham dismissed her claims against Sears, leaving only Sears's breach of contract claim against Toth at issue.

Toth filed a motion to dismiss Sears's claim pursuant to the TCPA.

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Bluebook (online)
557 S.W.3d 142, Counsel Stack Legal Research, https://law.counselstack.com/opinion/toth-v-sears-home-improvement-prods-inc-texapp-2018.