William M. Bishop and Pinnacle Potash International, Ltd v. E. Barger Miller, III and Reunion Potash Company

412 S.W.3d 758, 2013 WL 4857891
CourtCourt of Appeals of Texas
DecidedSeptember 12, 2013
Docket14-12-00264-CV, 14-12-00318-CV
StatusPublished
Cited by19 cases

This text of 412 S.W.3d 758 (William M. Bishop and Pinnacle Potash International, Ltd v. E. Barger Miller, III and Reunion Potash Company) 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
William M. Bishop and Pinnacle Potash International, Ltd v. E. Barger Miller, III and Reunion Potash Company, 412 S.W.3d 758, 2013 WL 4857891 (Tex. Ct. App. 2013).

Opinions

OPINION

MARTHA HILL JAMISON, Justice.'

These cross appeals concern the alleged misappropriation of trade secrets relating to a process for mining potash in a particular area of Utah. In its appeal, Reunion Potash Company contends that the evidence is legally insufficient to sustain the jury’s finding that it misappropriated trade secrets belonging to William E. Bishop and Pinnacle Potash International, Ltd. In their cross appeal, Bishop and Pinnacle contend that the trial court erred in submitting a proportionate responsibility question, which asked the jury to apportion responsibility for the misappropriation between Reunion and E. Barger Miller III, because there was no evidence to support the question’s submission and because it was not properly predicated on a finding of independent conduct by Miller. Although Miller was found liable by the jury and assessed damages by the trial court, he does not join this appeal. We affirm.

I. Background

About twenty miles outside Moab in southeastern Utah lies a potassium-rich region known as Ten Mile Area. The rights to mine potash, or potassium-containing ore, in this area were originally leased in 1984 by. Buttes Resources Company from the United States Bureau of Land Man[764]*764agement (BLM).1 Although the potassium deposits in the area are recognized as quite significant, mining them has long been viewed as problematic in part because of the mild climate (for reasons discussed below, most potassium production occurs in colder climates) and because of the depth underground at which the deposits are found.

Bishop first learned of the Ten Mile Area around 1989, when the engineering firm he worked for at that time, Parsons Brinckerhoff-Kavernen Bau und Betrieb (PB-KBB), undertook on behalf of Buttes an evaluation of solution mining techniques which potentially could be utilized in the area. In his position at PB-KBB, Bishop learned from documents provided by Buttes various attributes of the Ten Mile Area potassium deposits, including that they existed at anomalously high temperatures.

Bishop, a geologist and mechanical engineer, possessed considerable experience in the solution mining of minerals contained in underground salt formations. At one point in his career, he also had developed a patented “pipe-in-pipe” or concentric-pipe heat exchanger. While working for PB-KBB and examining the materials from Buttes, Bishop began to formulate a process for “selective” solution mining of the Ten Mile Area. Among the documentation Bishop reviewed was a 1995 report from an outside consultant for PB-KBB, Norbert Gruschow, which concluded that selective solution mining could work in the Ten Mile Area. Selective solution mining involves injecting a mining solution (typically brine) underground and extracting a mineral in a crystallized form that is separated from the mining solution. The solution can then be returned underground. Selective solution mining requires a certain temperature differential between the deposit and the surface. This differs from the basic process, where the mineral is dissolved with the mining solution itself (usually freshwater) and later processed for separation, typically leaving large deposits of salt in retention ponds. When Bishop left his employment with PB-KBB, he negotiated for and obtained the rights to the mining process he was developing, apparently including the rights to the Gruschow report.

Bishop’s plan for mining in the Ten Mile Area capitalized on the fact of anomalously high temperatures where high concentrations of potash are found in the area. He envisioned achieving the necessary temperature differential for selective solution mining by using a mostly closed-loop system that included the pipe-in-pipe heat exchanger that he had designed. Basically, the mining process would entail injecting colder brine through an outer pipe into the high-temp potash deposits where the potash would be dissolved into the brine and then removed through a second pipe that surrounds the first pipe. The colder brine sent into the deposit through the outer pipe would cool the warmer brine carrying the potash in the second pipe, causing “cold-cracking” or the crystallization of the potassium out of the returning brine solution. One supposed economic benefit of such a closed-loop system is that artificial heating and cooling methods would not be required, and the supposed environmental benefits include that neither a continuous feed of fresh water nor large-scale salt-retention ponds would be required.

After leaving PB-KBB, Bishop began to look for potential investors, with an eye toward obtaining the potassium mining [765]*765rights in Ten Mile Area — then owned by Reunion, a' successor-in-interest to Buttes — and developing his plan for mining in the area. Bishop met Miller, a potential investor in the project, and the . two formed a partnership. In late 2000, Miller signed a confidentiality agreement before Bishop shared specific information regarding the selective mining process that he had developed. Miller then began soliciting other investors, and he and Bishop entered negotiations with Reunion Industries for the purchase of Reunion Potash and its potash leases in the Ten Mile Area. In 2002, Bishop and Miller signed a letter agreement pledging joint participation in the project.

However, when new investors did not materialize, Miller and Bishop both apparently sought investors on their own. In September 2003, Miller sent Bishop a letter regarding terms for Miller’s possible exit from the project. In late 2004 or early 2005, Miller informed Bishop that he (Miller) no longer took any responsibility for the joint project. In June 2005, Miller formed a new company, Carnallite Enterprises, LLC, with other investors. Miller also created a business plan for development of a mining project in the Ten Mile Area. He used this plan in an attempt to sell all or part of the project to BHP-Billiton. Miller also used the business plan to obtain a loan from Texas Community Bank, which he used to purchase Reunion (and its potash lease rights in the Ten Mile Area) on behalf of Carnallite. Miller then became president of Reunion. BHP ultimately rejected all overtures from Miller.

Miller further prepared a series of PowerPoint presentations regarding the possibilities for mining in the Ten Mile Area. He presented or sent these presentations to a number of potential investors, including Gordon Gray, owner of Allied Crude Purchasing. Allied eventually purchased Reunion from Carnallite on March 23, 2007 for $1.25 million. Out of this sum, Carnal-lite satisfied several accounts payable and made a distribution to shareholders, including to Miller’s company, E.B. Miller & Co. After the sale, Miller resigned as president of Reunion but remained as company secretary and continued to act as an agent of Reunion to develop an Operating Plan for the Ten Mile Area leases. Reunion submitted the plan to the BLM, but the BLM rejected it as incomplete. Reunion’s president, Gray, testified that Reunion still plans to develop the leases.

Bishop, meanwhile, was discussing investment possibilities with Randy Taylor.2 During their due diligence review, one of Taylor’s employees learned that Carnallite had purchased Reunion. Bishop thereafter filed the present lawsuit, alleging, among other things, fraud and breach of contract against Miller and misappropriation of trade secrets against Miller and Reunion. Bishop also sued on behalf of a purported partnership between himself and Miller.

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412 S.W.3d 758, 2013 WL 4857891, Counsel Stack Legal Research, https://law.counselstack.com/opinion/william-m-bishop-and-pinnacle-potash-international-ltd-v-e-barger-texapp-2013.