1 

## NO. 12

- 20

- 00106

- CV

IN THE COUR T OF APPEALS

TWELFTH COURT OF APPEALS DISTRICT
TYLER, TEXAS

PETROCHOICE HOLDINGS, LLC & PETROCHOICE HOLDINGS, INC. , APPELLANT S

V.

MARY PEA RCE , APPELLEE §

§

§ APPEAL FROM THE 402ND

JUDICIAL DISTRICT COURT

WOOD COUNTY, TEXAS

MEMORANDUM OPINIO N
PetroChoice Holdings, LLC and PetroChoice Holdings, Inc. ( PetroChoice unless separately demarcated ) appeals the trial court ’ s summary judgme nt order in favor of Mary
Pearce. PetroChoice raises three issues on appeal. We reverse and remand.

B ACKGROUND From 2000 to 2016, Universal Lubricants employed Pearce as a salesperson in the
industrial lubricant industry. Her job required her to trave l , maintain customer relationships, and sell lubrication products to Universal’s customers in her territory, whic h consisted of large portions of Texas , Northern Louisiana, and part of Mi ssissippi

. In April 2016, PetroChoice acquired Universal Lubricants

. 1 Pearce received an email of the acquisition containing a mandatory meeting notice at PetroChoice ’s warehouse i n Dallas, Texas. PetroChoice extended
an offer of at

- will employment to some Universal e mployees such as Pearce. As a condition of employment , PetroChoice required Pearce to sign an employment agreement containing , among other items, a noncompetition cov enant and confidentiality agreement. According to Pearce, she

1 Pearce understood that either PetroChoice Holdings, LLC or PetroChoice Holdings, Inc. acquired Universal Lubricants. The record as it is curre ntly developed does not definitively establish w hich entit y acquired Universal and em ployed Pearce.2 wanted tim e to review the agreement, but was told that she must sign the agreeme nt or be immediately terminated . Pearce reluctantly signed the agreement.
On October 12, 2018, Pearce attended a nother mandatory meeting at PetroChoice ’s
warehouse

. At the meeting, she was terminated. Pearce began looking for work in the industrial
lub ricant industry, but had difficulty obtaining employment because of her PetroChoice noncompet ition agreement

. Ho wever, SB Fleet

– Lube, LLC , learned that she had been
terminated at PetroChoice

. Fleet Lube owner Lisle Budden called Pearce to set up a meet ing to
discuss the matter. Pearce described Fleet Lube as a customer she worked with while employed

at PetroChoi ce

. Pearce began working at Fleet Lube on January 2, 2 019. Prior to accepting employment at Fleet Lube, Pearce filed the instant suit in Wood County, Texas on November 8, 2018

. 2 In her petition, Pearce sought a declaration that the

covenant not to compe te was unenforceable because at no point did PetroChoice provide any consideration in exchange for its execution

. Pearce also alleged that the covenant was unreasonable as to the geographic territory covered by the agreement

. PetroChoice Holdings,
LLC su bsequently filed an answer a nd counterclaim denying Pearce ’ s allegations and claiming
that Pearce , in violation of their agreement, became empl oyed by Fleet Lube , which it alleged is

a PetroChoice competitor

. PetroChoice also alleged that she possessed an d used its confidential
info rmation , along with allegations that she improper ly solicit ed its clients, interfer ed with those relationships, and conducted business with its clients in violation of their noncompetition

covenant

. During this litigation, Petr o C hoice Holdings, Inc. filed a separate claim against Pearce in Wood County. After its efforts to obtain a temporary restraining order (TRO) t o temporarily enforce the agreement were unsuccessful, it nonsuited its claim against Pearce and filed suit again st Flee t Lube in Collin County. It also joined Pearce as a defendant in the Collin County litigation, alleging the same claims against her as in its earlier nonsuited Wood County claim. After successfully obtaining a n ex parte TRO temporarily enforcing t he agre ement in Collin County, it settled its claim with Fleet Lube, the terms of which included that Fleet Lube terminate Pearce’s employment , and nonsuited the claim against Pearce. PetroChoice Holdings, Inc. then filed a counterclaim against Pearce in her or iginal declaratory judgment action against

2 Pearce filed suit in Wood County pursuant to a clause in her PetroChoice employment agreement requiring that disputes arising from the agreement be litiga ted there

.3 it and PetroChoice Holdings, LLC. The basis for the counterclaim was the same as PetroChoice Holdings, LLC’s earlier counterclaim, Petrochoice Holdings, Inc.’s nonsuited Wood County suit , and its Collin Co unty su it against Pearce. Based on this perceived forum shopping, Pearce filed a motion for sanctions under Chapter 10 of the Texas Civil Pract ice and Remedies Code. The
trial court ordered that PetroChoice pay Pearce a total of $ 18,231.67 as sanctions

. The tr ial court recited in its order that the purpose of the sanction was to reimburse Pearce for expenses incurred against PetroChoice’s “abus e of the judicial process designed and employed in an attempt to place [Pearce] in a financial stranglehold in h opes th at she would eventually become financially unable to continue to pursue her remedies and continue litigation

. ” Thereafter, the parties filed competing motions for summary judgment regarding the enforceability of the employment agreement’s noncompe tition covenant. Pearce contended that the agreement was unenforceable because PetroChoice failed to provide consideration for its
execution an d that the agreement’s geographic limitation was unreasonable. Conversely,
PetroChoice contended that the agree ment was enforceable because it provided Pearce confidential information and training and that the agreement’s geographic limitations were

reaso nable. The trial court granted Pearce’s motion and denied PetroChoice’s motion. Pearc e also filed a motion for costs and attorney’s fees, which the trial court granted in the amount of $53,362.50 through trial, as well as contingent appellate attorney’s fees. Having disposed of all parties and all issues , the trial court signed a final ju dgment and this appeal fo llowed.

S COPE OF S UMMARY J UDGMENT I SSUES C ONSIDERED O N A PPEAL
In Pearce ’ s brief, she contends that the trial court properly granted summary j udgment in part because PetroChoice materially altered the agreement by changing the ide ntity of the parties.
S pecifically, Pearce argues that “ PetroChoice Holdings, LLC ” was the party that executed the agreement. After the agreement ’ s execution, PetroCh oice representatives drew a line through that name, replaced it with “PetroChoice Holdin gs , Inc.,” and initialed the change. Pearce argues
that this is a material change to the agreement that renders it null and void. With respect to this argument , we n ote that this ground was not presented to the trial court in support of Pearce ’ s motion f or summary judgment or in opposition to PetroChoice ’ s competing motion for summary judgment. All theories in support of or in opposition to a motion for summary judgm ent must be presented in writing to the trial court. See T EX

. R. C IV

. P.4 166a(c). A motion for summary judgmen t must itself expressly present the grounds upon which it is made, and must stand or fall on these grounds alone. See id. ; Science Spectrum, Inc . v. Martinez , 941 S.W.2d 910, 912 (Tex. 1997). A court cannot grant summary judgment on grounds that were not presented. Johnson v. Brewer & Pritchard, P.C. , 73 S.W.3d 193, 204 (Tex . 2002). This court can only address grounds for summary judgment that w ere raised in writing in the trial court. See T EX

. R. C IV

. P. 166a(c); Kaye/Bassman Intern. Corp. v. Help
Desk Now, Inc. , 321 S.W.3d 806, 818 (Tex. App.

— Dallas 2010, pet. denied); Ha ckberry Creek Country Club, Inc. v. Hackberry Creek Home Owners Ass ’ n , 20 5 S.W.3d 46, 50 (Tex. App.

— Dallas 2006, pet. denied). In determining whether the grounds are expressly presente d, we look only to the motion itself; we do not rely on briefs or summa ry judgment evidence. Science Spectrum, Inc. , 941 S.W.2d at 912.
Pearce did not advance the argument that PetroChoice materially altered the employment agreement in her motion for sum mary judgment or in response to PetroChoice ’ s competing
motion for summary judgment. Because the trial court cannot grant a motion for summary judgment on grounds not presented in the motio n or in opposition thereto , we cannot consider this ground for the affirmance of the trial court ’ s summary judgment. See T EX

. R. C IV

. P. 166a(c); Johnson , 73 S.W.3d at 204; Science Spectrum, Inc. , 941 S.W.2d a t 912; Kaye/Bassman Intern. Corp. , 321 S.W.3d at 818; Hackberry Creek Country Club, Inc. , 205
S.W.3d at 50.

S U MMARY J UDGMENT

– C OVENANT N OT T O C OMPETE PetroChoice contends in its first issue that the trial court erred in granting summary judgment in Pea rce ’s favor , because the employment agreement containing the noncompetition
covenant is enforceable as a matter of law, or alternatively, that underlying factual issues rema in
unresolved

. Standard of Review The movant for traditional summary judgment has the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a m atter of law. See T EX

. R.
C IV

. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co. , 690 S.W.2d 546, 548 (Tex. 1985). When reviewing traditional summary j udgments, we perform a de novo review of the record in the light most favorable to the nonmovant, indulging ever y reasonable inference and resolving any doubts5 against the motion. See Sudan v. Sudan , 199 S.W.3d 291, 292 (Tex. 2006); KPMG Peat
Marwick v. H arrison Cty. Hous. Fin. Corp. , 988 S.W.2d 746, 748 (Tex. 1999). When, as here, competing motions for summary ju dgment are filed, e ach party bears the burden of establishing that it is entitled to judgment as a matter of law. Tarr v. Timberwood
Park Owner s Ass ’ n , 556 S.W.3d 274, 278

– 79 (Tex. 2018). When the trial court grants one motion and denie s the other, w e re view the summary judgment evidence presented by both sides, determine all questions presented, and may revers e the trial court ’ s judgment and re nder such judgment as the trial court should have rendered, including rendering judgment for the other

movant. See Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding , 289 S.W.3d 844, 848 (Tex. 2009)

. If, however, a genuine fact issue exists, summary judgment for either party is inappropriate, and we reverse and remand. McCreight v. City of Cleburne , 940 S.W.2 d 285, 288 (Tex. App.

— Waco 1997, pet. denied). A fact issue may be created either by disputed or ambiguous facts. Id. Applicable Law
The enfo rceability of a covenant not to compete agreement is a question of law. Powerhouse Prods., Inc. v. Scott , 260 S .W.3d 693, 696 (Tex. App.

— Dallas 2008, no pet.); see also Gorman v. CCS Midstream Servs., L.L.C

. , No. 12

– 09

– 00204

– CV, 2011 WL 1642624, at *3 (Te x. App.

— Tyler 2011, no pet.) (mem. op.). Likewise, what constitutes sufficient
consideration for a contract is generally a question of law, but can be a question of fact. Roark v. Stallworth Oil and Gas, I nc. , 813 S.W.2d 492, 496 (Tex. 1991) (holding fac tual questions remained on consideration issue in summary judgment case due to failure to produce conclusive

pro of) ; Burges v. Mosley , 304 S.W.3d 623, 629 (Tex. App.

— Tyler 2010, no pet.) (question of law)

. A covenant not to compete is enforceable if it is (1) ancillary to or part of an otherwise enforceable agreement at the time the agreement is made and (2) reason able, not imposing a greater restraint than is necessary to protect the goodwill or other busine ss interest of the employer. See T EX

. B US

. & C O M

. C ODE A NN

. § 15.50(a) (West 2011). The first element can be broken down into two inquiries: (1) whether there is an “otherwise enforceable agreement,” and (2) whether the covenant not to compete is “ancill ary to or part of” that agreement at the time th e otherwise enforceable agreement was made. See Mann Frankfort , 289 S.W.3d at 849.6 With regard to the first in quiry, “otherwise enforceable agreements” can emanate from

at

- will employment so long as the cons ideration for any promise is not illusory. Id. Moreover, a unilateral contract formed when an employer performs a promise that was illusory when the

contract was formed can satisfy the requirements of the statute. See Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson , 209 S.W.3d 644, 651 (Tex. 2006). T hu s, when an employer makes an illusory promise of consideration and, later, performs in accord with the promise , the consideration is no longer illusory. See id. A ddition ally , even in the absence of an express promise to provide conf idential information , when the nature of the employee’s work requires confidential information to be provided for him to perform the work , the employer impliedly promises the information will be provided. See Mann Frankfort , 289 S.W.3d at 850. Concerning the second inquiry, fo r a covenant not to compete to be “ancillary to or part of” an otherwise enforceable agreement, the employer must establish both that (a) the consideration given by the employer in the agreement is reasonably related to an interest worthy of protection and (b) the covenant not to compete was designed to enforce the employee ’ s consideration or return promise in th e agreement. See Marsh USA Inc. v. Cook , 354 S.W.3d 764, 775 (Tex. 2011). “The covenant cannot be a stand

- alone promise from the employee
lack ing any new consideration from the employer.” Sheshunoff , 209 S.W.3d at 651. The consideration from the employ er “must give rise to the employer ’ s interest in restraining the employee from competing.” Id. at 648

– 49. Business goodwill, confidential or p roprietary information, trade secrets, customer information, and specialized training are examples of
interests that can be, in appropriate circumstances, worthy of protection by a covenant not to compete. See, e.g., Ma rsh USA Inc. , 354 S.W.3d at 777; She shunoff , 209 S.W.3d at 651; Neurodiagnostic Tex, L.L.C. v. Pierce , 506 S.W.3d 153, 163

– 64 (Tex. App.

— Tyler 2016, no pet.)

. Discussion Pearce contended in her motion for summary judgment and supporting affidavits that
Pe troChoice never promised or actually furnished her with any confidential information or training that would satisfy the “ancillary to or part of a n otherwise enforceable agreement” requirement sufficient to render the agreement enforceable. PetroChoice ar gued in its competing
motion that he r former supervisor established in his affidavit that the company provided
confidential information and traini ng to Pearce after she began her employment there, and that in7 any event, Pearce admitted she received such co nfidential information from PetroCho ice in her deposition, rendering the agreement enforceable. Pearce explained in her initial affidavit that PetroChoice did not furnish her an office, that she worked mainly in her automobile, traveled to visit her cust omers, maintained a home office,

an d had a cell phone and company issued iPad. Pearce stated that PetroChoice never furnished
her a lead about a new customer, and that all customers developed while working for PetroChoice were based entirely on her effort s, most of which came to her by ref errals from
other customers. Pearce continued that PetroChoice did not furnish her any confidential
informati on, and that it was unnecessary to do her job, because she had worked in the lubricant
business for more than t hirty years. She stated that she c ould go online to obtain names of potential customers, which she had done on a regular basis. She further exp lained that she neither needed nor received any assistance from PetroChoice in that regard, and that she
develo ped her sales contacts on her own. Finally, she explained that when she was terminated, she surrendered her phone that contained the names and c ontact information for customers that she serviced for many years while working at Universal and PetroChoice, a nd that she shipped
all material ba ck to PetroChoice, including her iPad and any documents or sales material she possessed at the time of her ter mination. Pearce clarified in her deposition that she only had a
customer list of the customers she serviced w hile working for PetroChoice, many of whom she had developed prior to PetroChoice’s acquisition of Universal. She testified that she did not
hav e a master list of PetroChoice’s customers or access to a company computer containing such information, and tha t any information she received from PetroChoice was not confidential but was instead available to the general public. In response to Pearce’s mo tion, PetroChoice relied on an affidavit from Rick Palmore, PetroChoice’s former Western Regional Vice President and Pearce’s supervisor, along wi th admissions by Pearce as to certain confidential information she held. The entirety of the relevant portion of the affidavit stated only as follows:

Specifically, during her employment with PetroChoice , PetroChoice pro vided Pearce access to PetroChoice ’s confidential information including, among other things, names of PetroChoice ’s clients, client contact and decision maker information, pricing information, profit margins, sales volume and history, types and amounts of products purchased, terms and cond itions of contracts, accounts receivable information, and whether PetroChoice ’s clients had bulk storage equip ment on loan and the terms of the arrangements. PetroChoice also provided Pearce access to confidential informa tion concerning PetroChoice ’s prod ucts including chemical analyses and comparisons of8 PetroChoice ’s products with competitors’ products. Furthe r, PetroChoice provided Pearce with sales training including PetroChoice ’s proprietary methods for competing with other distributors.

Palmore’s affidavit was unaccompanied by any other facts or evidence explaining the factually conclusory laundry list o f alleged confidential information. See T EX

. R. C IV

. P. 166a(f);
Atmos Ener gy Corp. v. Paul , 598 S.W.3d 431, 467

- 68 (Tex. App.

— Fort Worth 2020, n o pet.) (party’s summary judgment affidavit containing unexplained factually conclusory statements
held insuff icient on appeal); Miner, Ltd. v. Anguiano , 383 F. Supp. 3d 682, 698 (W.D. T ex. 2019) (finding similar laundry list recitation of confidential inf ormation allegedly provided to former employee, unaccompanied by further explanation or proof , insufficient un der Texas law to establish enforceability of noncompetition covenant for pur poses of preliminary injunction). Other than Palmore’s affidavit, Pe troChoice relied on statements in Pearce’s deposition wherein she made certain admissions concerning the natur e of the information she received
while at PetroChoice. Specifically, the fo llowing exchange took place:

Q. Okay. The information that we ’ ve ju st talked about, we ’ ve talked about client names, addresses, product information, we ’ ve talked about the names of the people that you dealt with and their phone numbers that were in your cell phone, we ’ ve talked about quarterly reports that had total sales information, gallons, margins, reserve price list. With respect to that information , when you were at PetroC h oice , were you free to share that information with PetroChoice’ s competitors? A. No. Q. Did it

— would you have thought that would have been an a ppropriate thing to do? A. No. Q. I assume Fleet

- Lube has similar information like th at pertaining to its cust o mers? A. As far as pricing? Q. Well, just all the stuff that a company would have; names of clients, client contact information, product informat ion, sales history, sales volume, pricing, margins, Fleet

- Lube has to have all that, too, right? A. Sure. Q. A n d I assume that you wouldn ’ t think it would be appropriate to share that with a Fleet

- Lube competitor, would it? A. Correct.

. . . . Q. Okay. That ’ s all I was trying to get you to say. So, some of the information we just discus sed is confidential. A. S u re. Q. Tell me what that would be. A. The sales volume, pricing. Q. Sure. What about contact person, who to call? A. No. It ’ s public knowledge. Q. Okay. Total

— okay. Sales volume, pricing. Okay. Am I right in thinking that sales volume and pricing i nformation with respect to clients changed over time, right? In other words, you might look in the beginning of 2019 and see a number on sales v olume, but t hen you might look at9 the end of 2019

— I ’ m sorry, 2018

— the beginning of 2018 and see a number a n d sales volume, then you look at the end of 2018 and see a different number, right? It would change over time. A. Yes. Q. And I assume pricing w ould, too. It has to change a lot, right? A lot of fluctuation on the price of oil and lubricants, and so fo r th. Am I right about that? A. Yes.

Prior to the summary judgment hearing, Pearce filed a motion for leave to file a supplemental affidavit , w hich the trial court granted

. The purpose of the supplemental affidavit

was to (1) further expound upon her p r ior affidavit alleging that she received no confidential
information from PetroChoice , (2) ex plain her admissions in her deposition testimony, an d (3)
reb ut the alleged confidential information Palmore stated that PetroChoice provided in his
affidavit. 3 F or example, she explained in her supplemental affidavit that even though she admitted some of the information was confidential, it was actually h er that provided the
information to PetroChoice. In relevant part, Pearce stated in her supplemental affidavi t as follows:

At the time I was forced to sign the Employment Contract with PetroChoice Holdings, LLC/Inc., I was promised nothing except what I was alre ady entitled to receive. When Rick Palmore says that while I was at PetroChoice I was provided confi de ntial information, the truth is that I was furnished no confidential information that I had not received for the past 16 years. PetroChoice nev er furnished me with any training, specialized or otherwise, that taught me how to sell the same products I ha d been selling for the past 16 years. PetroChoice continued to sell Universal’s products with Universal’s logo on them. An example is shown on E xhibit “A” attached hereto. All of their products continued to bear the Universal name and logo until around Ma y of 2018. PetroChoice never came to me and said we have a new product that you are going to be selling for us. Nothing like that ever hap pene d. I sold the same products and services I had been selling for 16 years. In fact, Rick Palmore told me that P etroChoice wanted to learn our way (Universal’s) of selling because of our success with customer retention and overall market success. Insof ar as sales volume is concerned, that is confidential but that was furnished by me to PetroChoice and not the oth er way around. Product pricing is something that every salesperson is given on a regular basis. Universal and PetroChoice would tell their sa les person what prices they could quote. That is standard in the industry. It is nothing unusual and product pri cin g continued

3 PetroChoice did not provide argu ment or au thorities in its appellate brief t hat Pearce’s affidavit violated the “sham affidavit” rule. It did make that argument in the trial court and briefly at oral argument. Under the sham affidavit rule, if a party submits an affidavit that conflict s with the affiant’s prior sworn test imony a nd does not provide a sufficient explanation for the conflict, a trial court may disregard the affidavit when deciding whether the party has raised a genuine fact issue to avoid summary judgment. See Lujan v. Na vistar, In c. , 555 S.W.3d 79, 82 (Tex. 2018). Here, Pearce filed the supplemental affidavit to establish her own right to summary judgment, not only to avoid a competing motion for summary judgment. To the extent that her supplemental affidavit can be vie wed in the context of opposing PetroC hoice ’s competing motion for summary judgment, we hold that, as we have described, the affidavit is not in direct conflict with her deposition testimony. Rather, the supplemental affidavit further expounds upon her sta tements in her earlier affidavit that PetroC hoice did not provide her any confidential information or training. It was also made in response to the conclusory assertions in Palmor e’s affidavit concerning the nature and extent of any confidential informati on PetroCh oice allegedly provided to her. A ccordingly, we hold that Pearce’s supplemental affidavit does not violate the “sham affidavit” rule. See id.10 as it had been for 16 years before I was forced to sign the Employment Agreement with PetroChoice

.

Pearce also stated elsewhere in her deposition that her employment at Fleet Lube would violate the covenant based on the language used in t he agreement. However, when understood in context, she contended that the covenant was unenforceable, and that it was thus irrelevant
whether sh e violated the technical language in the agreement.
PetroChoice relies on McKissock, LLC v. Martin , where a c ont inuing education course provider for real estate professionals sought to enforce a noncompetition agreement against one
of its former employees

. See 267 F. Supp. 3d 841, 846

- 48 (W.D. Tex. 2016)

. The former employee argued that her former employer did not provide her with any confidential information.
See id. at 853

- 54

. Despite the parties ’ dispute concerning whether the company actually provi ded any information that was confidential, t he federal district court granted a preliminary injunction in the emp loyer ’ s favor. See id. Conversely , with respect to whether PetroChoice provided confidential information, other
similar cases have different results than McKissock

. See, e.g., Miner, Ltd. v. Anguiano , 383 F. Supp. 3d 682 , 698 (W.D. Tex. 2019)

. In Miner , t he employer wa s in the business of se ll ing , install ing , and servic ing material handling equipment and loading dock products

. Id. at 689.
The company alleged that its former employee, a high

- ranking account executive , possessed
confidential informatio n re quired for the work to be performed. Id. at 688

- 89. Texas courts have acknowledged that various types of consideration such as confidenti al inform ation ca n, in appropriate circumstances , satisfy the “ ancillary to or part of ” element to constitute an inte rest worthy of protection. See , e.g. , Neurodiagnostic Tex , 506 S.W.3d at 164

. In Miner , the federal
district court examined the record an d c oncluded as follows:

Plaintiff has not persuaded this court that this case involved the dissemination of “co nfide ntial information.” In DeSantis v. W ackenhut Corporation , the Texas Supreme Court rejected the plaintiff ’ s claim that its supposed confid ent ial information

— the identity of their customers, pricing policies, cost factors, and bidding strategies

— was pr otect able under the confidentiality agreement. It explained that the plaintiff “failed to show that its custom ers could not readily be identif ied by someone outside its employ, that such knowledge carried some competitive advantage, or that its customers ’ need s could not be ascertained simply by inquiry addressed to those customers themselves.” Additionally, the Texas Supreme Court noted the pl ain tiff “ failed to show that its pricing policies and bidding strategies were uniquely developed, or that informa tion about its prices and bids could not, again, be obtained from the customers themselves.” Like Wackenhut , Pl aintiff has not shown its busin ess practices, pricing, margin, or strategy were uniquely developed or not readily accessible. Furthermore, Plai ntiff ’ s alleged11 “confidential information” is vague at best. Plaintiff struggles to identify and expand upon th e alleged confidential informat ion

. The court will not infer a fact into existence. The Employment Agreement lacks consideration and is unenfo rceabl e.

Miner , 383 F. Supp. 3d at 698 (internal citations omitted). Palmore’s affidavit contains a similar
l evel of detail as the evidence in Miner

. In any event, McKissock and Miner are preliminary injunction case s , where the chief
issue is whether t empora ry enforcement of the agreement pending resolution of the matter at trial is necessary to prevent irreparable injury in the face of a sub sta ntial probability of recovery. See
Miner , 383 F. Supp. 3d at 698 ; s ee also McKissock , 267 F. Supp. 3d at 853

- 54

. T hat is distinct
from the procedural posture and issue presented here , namely whether the record as it is currently developed conclusively es tablishes the covenant ’ s (un) enforceability for the purpose of rendering
a full and final summary judgment wit hout t he need to resolve fact issues at trial

. A more procedurally and factually analogous case comes from one of this Court’s prior opinions

. See generally Gorman v. CCS Midstream Services, L.L.C. , No. 12

- 09

- 00204

- CV, 2011 WL 1642624, at *1 (Tex. App.

— Tyler Apr. 29, 2011, no pet.) (mem. op.)

. There, Gorman worked for Mobley, a company eventually acquired by CCS , which wa s in the business of

tra nsporting, managing, and disposing of oilfield fluids and liquids. Id. at *1. CCS acquired Mobley because it had s pecific expertise in an area in which CCS sought t o expand. Id. During the acquisition, it offered certain high

- level employees such as Go rman a written at

- will employment agreement that contained a noncompetition covenant. Id. Although Gorman si gned

t he agreement, CCS began to diminish Gorman’s responsibilities. Id. Dissatisfied, Gorman resigned and became employed by a CCS competito r. Id. CCS filed suit to enforce the covenant and obtained a TRO and a temporary injunction. Id. at *1

- 2. CCS then filed a motion for summary judgment, alleging that the record conclusively showed that it provided Gorman
confidential information , which th e trial court granted. Id. at *2.
We reversed and remanded the suit because Gorman ’s eviden ce raised a fact issue as to whether CCS actually provided the consideration in the form of confidential information that

was reasonably related to an interest wor thy of protection

. 4 Id. at *8. On the one hand, CCS

4 Although Gorman contended that the covenant was enforceable as a matter of law on appeal, he did n ot file a competing motion for summar y judgm ent, and we noted that, even if Gorman had established that the covenant was not enforceable as a matter of law, we could at most remand the proceeding. See Gorman , 2011 WL 1642624, at * 8

- 9. In any event, we he ld that fa ctual issues remained. Se e id.12 pointed to evidence that Gorman admitt ed in his depositi on tha t he received various pieces of confidential information, including pricing information and other financial information

. Id. at
*4

- 5. O n t he other hand, Gorman produced deposition testimony from Robert Miracle, Gorman’s supervisor at both Mobley an d CCS

. Id. at *5. Miracle admitted that CCS acquired Mobley and its valuable employees because of their preexisting expertise in an area tha t CC S
lacked

. Id. at *5. Miracle testified that Gorman had knowledge of CCS’s financial statements
that detailed its e xpenses , and each category of expense makes up a percentage of the total operating cost, which is then used to formulate the bid based o n th e acceptable profit margin. Id. He testified that Gorman’s knowledge of this information would have given hi m and his new employer a competitive advantage in formulating bi d s against CCS

. Id. at *5

- 6. He stated that
the actual dollar amount of the e xpe nses fluctuated, but the percentages and margins remained
the same. Id. at *6. However, Miracle admitted tha t Gorm an acquired this knowledge at Mobley, and that it largely remained the same after CCS acquired Mobley. See id. Both parties disagreed a s t o whether the evidence established the enforceability of the covenant as a matter of law, but we held that thi s conf licting evidence raised a fact issue. See id. at *8. Here, as in the similarly situated parties in Gorman , PetroChoice acquired Univer sal

. PetroChoice admits that the purpose of the purchase was at least in part to acquire Universal’s goodwill an d cust omers it had accumulated. Pearce also provided evidence consistent with this

purpose. For example, PetroChoice claimed that it provided he r with training, but Pearce pointed to emails from Palmore and other high

- level PetroChoice employees after th e acqu isition showing that they treated her as the “expert in Lifelines applications and would be the best person to talk to , ” they were presen tin g the program “and don’t have a complete understanding of the entire program . . ., [that they would] love to pick [Pearce ’s] brain, . . . [and] would like to

g et [her] in front of a handful of key pro spects, [secure the program, and provide some] demo

tr aining.” The e

- mail communication chain continued, saying that Pearce would provid e a

“ mentoring role ” at the train ing as “best in class

. ” In other words, this evidence tends to show that Pearce was the former Universal employee providing the knowledg e a nd training to
PetroChoice employees after the acquisition. PetroChoice points to the Texas Supreme Court ’s statem ent that “ [t] he enforceability of
the covenant should not be decided on ‘ overly technical disputes ’ of defining whether the
covenant is a nci llary to an agreement. ” See Marsh USA Inc. , 354 S.W.3d at 777

. However,13 given the procedural posture of this case at this juncture , we note that it must still e stablish its entitlement to summary judgment on the covenant’s enforceability , of which thi s i nquiry is a component. Palmore’s conclusory affidavit does little to negate Pearce’s evidence that
PetroChoic e prov ided her no new information that she did not already know prior to its acquisition of Universal

. But t his does not end our inquiry. In Pe arce’s deposition, she admitted that the “ sales volume” and “pricing” were confidential. She explained in her s uppl emental affidavit that she provided the “ sales volume” information to PetroChoice , which is consistent with the evidence
that PetroChoice ac quired Universal due to its customer base and goodwill

. And it was Pearce
who either serviced the same Univers al cli ents as she had over the past several years or developed new clients herself while at PetroChoice after the acquisition. With respect t o “ pricing” though, the evi dence is ambiguous

. She admitted in her deposition that the “pricing” information was co nfi dential as in Gorman

. In her supplemental
affidavit though , Pearce claimed that PetroChoice provides pricing information to her , just as it does to every salesperson on a regular basis, which , according to her, is an industry standard

. She stated t hat Un iversal and PetroChoice would tell the salesperson what prices they could quote to a customer, but that product pricing is the same as it ha d been for the prior sixteen years
before her employment at PetroChoice

. Pearce admitted in her deposition th at “pr icing”
fluctuated. Therefore, at least as to “pricing,” the facts are ambiguous, and she failed to conclusively establish that PetroChoi ce did not provide her with that information that she
admitted was confide ntial. On the other hand, PetroChoice provi ded no evidence showing how its “pricing” is reasonably related to an interest worthy of protection. Pearce stated generally that this
i nfo rmation was consistent over time and that PetroChoice did not really pro vide her with
information she did not alread y possess prior to signing the agreement , but in her deposition,
Pearce admitted that “pricing” fluctuated over time

. PetroChoice failed to explain the nature of its pricing structure or otherwise show that “pri cing” was actually “confidential” and an int erest worthy of protection as those terms are used in the covenant not to compete context

. For example, in DeSantis , the Texas Supreme C our t explained that the employer “failed to show that its customers could not readily be identified by someone ou tside its employ, that such knowledge carried some competitive advantage, or that its customers’ needs could not be ascertained simply14 by inqui ry addressed to those customers themselves.” DeSantis v. Wackenhut Corp. , 793 S.W.2d 670, 684 (Tex. 1990). Addi tional ly, it stated that the employer “failed to show that its pricing policies and bidding strategies were uniquely developed, or that informa tio n about its prices and bids c ould not, again, be obtained from the customers themselves.” See id. ; see also
M iner , 383 F. Supp. 3d at 698. Therefore, without any evidence in this regard, along with its
failure to rebut Pearce’s evidence claiming that Pet roChoice did not provide her any other confidential information and training , PetroChoice has not shown its en titlem ent to summary judgment. In conclusion, o n the record before us, Pearce failed to establish that the agreement was
unenforceable as a m att er of law. Moreover, PetroCho ice neither conclusively negated an
element of Pearce’s claim nor established in its c ompeting motion that the covenant was
enforceable as a matter of law. The record as it is currently developed shows only that disputed

o r a mbiguous facts remain concerni ng whether PetroChoice provided confidential information worthy of protection to Pearc e that would render its otherwise illusory implied promise to provide confidential information enforceable. In other words, a lthough the en forcement of the

covenant is a question of law, we hold that the record is not sufficiently developed at this junctu re for us to evaluate that matter as a question of law , because factual issues remain unresolved, and neither party met their summary jud gme nt burden. See Roark , 813 S.W .2d at 496; Gorman , 2011 WL 1642624, at *8

. Finally, Pearce contends that the c ovenan t was unreasonable as to it s geographic scope. However, since we have held that factual issues remain regarding the threshold issue of w het her the covenant was ancillary t o an otherwise enforceable agreement, we need not examine this
issue. See T EX

. R. A P P

. P. 47.1; Fielding , 289 S.W.3d at 849 (citing Light v. Centel Cellular Co. of Tex. , 883 S.W.2d 642, 644 (Tex. 1994) ) (noting that whet her agreement is “ancillary to or part of an otherwise enforceable agreement” is threshold inquiry made prior to d etermi ning convenant’s reasonableness as to time, geographical area, scope of activity to be restrained, and
that it does n ot impose greater r est raint than necessary to protect employer’s goodwill or other business interest). Furthermore, even if Petro Choice satisfied its burden on this threshold issue, yet Pearce prevailed on her contention that the geographic territory covered by the covenan t i s unreasonable, it would not result in a disposition that the agreement is u nenforceable. See T EX

.15 B US

. & C O M

. C ODE A NN

. § 15.51 (c) (West 2011). Rather, the trial court would be required to
reform the covenant and enforce it as reformed. See id

. Pet roC hoice’s first issue is susta ined insofar as the trial court erred in granting summary judgment in Pearce’s favor because fact issues remain to be resolved.

A TTORNEY ’ S F EES PetroChoice contends in its second issue that the trial court erred in awardi ng attorney ’ s fees to Pea rce be cause the C ovenant N ot to C ompete Act preempts her recovery of such fees under the circumstances presented in this cas e. See T EX

. B US

. & C OM

. C ODE A NN

. §§ 15.51(c) , 15.52 (West 2011 ). Because we have held that underlying fa ct issues remain concerni ng the enforceability of the covenant , and consequently reversed the trial court ’ s summary judgment in
Pearce ’ s favor, we ne ed not address this issue , as it is unripe for review

. See T EX

. R. A PP

. P.
47.1

.

S ANCTIONS
In PetroChoi ce ’ s third issue, it cont ends t hat the trial court abused its discretion in assessing sanctions in the amount of $18,231.67 against it.
Standard of Review
We review a sanctions order for an abuse of discretion. Brewer v. Lennox Hearth Products, LLC , 601 S. W.3d 704, 717 (Tex. 20 20); A m. Flood Research, Inc. v. Jones , 192 S.W.3d 581, 583 (Tex. 2006). A trial court abuses its discretion if it acts without reference to guiding rules and principles such that the ruling is arbitrary or unreasonable. Brewer , 601 S.W.3d at 717; Jones , 192 S .W.3d at 583. When reviewing a sanctions order, we are not bound by the trial court ’ s fact findings or conclusions of law; instead, we must review the entire record independently to determine if the trial court abused its di scr etion. Brewer , 601 S. W.3d a t 717;
Jones , 192 S.W.3d at 583. Applicable Law Chapter 10 of the Civil Practice and Remedies Code authorizes sanctions for filing a pleading or motion “for any improper purpose, including to harass or to cause unnecessary del ay or needless increas e in t he cost of litigation.” T EX

. C IV

. P RAC

. & R EM

. C ODE A NN

. § 10.001(1) (West 2017 ). The sanction must be limited to what is sufficient to deter repetition of the conduct16 and may include an order to pay to the other party the amo unt of the reasonable expens es incurred by the other party because of the filing of the pleading or motion, including reasonable attorney ’ s fees. Id. § 10.004(b), (c)(3) (West 2017 ). The trial court shall describe in its
sanctions order the conduct th e c ourt has determined vi olated Section 10.001 and expla in the basis for the sanction imposed. Id. § 10.005 (West 2017 ).
A court also has the inherent power to impose sanctions for the bad faith abuse of the judicial process that may not be covered by ru le or statute. See In re Benne tt , 960 S.W.2d 35, 40 (Tex . 1997)

. This inherent power to impose sanctions may arise on the trial court ’s own motion in appropriate cases

. See id. T his inherent power includes sanctions imposed for interference
with a cour t ’ s traditional core f unctio ns, such as hearing evidence, deciding issues of fact raised by the pleadings, deciding questions of law, rendering final judgment, enforcing its judgment, managing its docket, and issuing and enforcing its orders. Liles v. Con tr e ras , 547 S.W.3d 280 , 290

- 91 (Tex. App.

— San Antonio 2018, pet. denied). As part of this power, a court may also use its inherent power to impose sanctions for conduct that, if tolerated, “breeds disrespect for and threatens the integrity of our judicial s y stem.” In re Benne tt , 96 0 S.W.2d at 40.
The S upreme C ourt recently emphasized that “[b]ecause inherent powers are shielded from direct democratic controls, and because of their very potency, inherent powers must be exercised with restraint, discretio n, and great caution [, ] ” and to that end necessitates a finding of
bad faith. Brewer , 601 S.W.3d at 718 (internal quotations and footnotes omitted). The inherent authority to sanction is also limited by due process, so such sanctions must be just and not

ex cessive. Id. (citi ng Tra nsAmerican Nat. Gas Corp. v. Powell , 811 S.W.2d 913, 917 (Tex. 1991)). First, in order for the sanction to be “just,” a direct relationship must exist between the offensive conduct and the sanction imposed. American Flood , 192 S. W.3d at 583. This means that a just sanction must be directed against the abuse and toward remedying the prejudice caused the innocent party. Id. Second, sanctions must not be excessiv e , meaning that “ the punishment should fit the crime. ” TransAmeri can , 811 S.W.2d at 917

. A s anction should be no more severe than necessary to satisfy its legitimate purposes. Id. It follows that courts must

c onsider the availability of less stringent sanctions and whether such lesser sanctions would fully promote co mpl iance. Id.17 Discuss ion
A fter PetroChoice Holdings, LLC filed its answer and counterclaim to Pearce’s Wood County suit , admitting that Wood County had proper venue, PetroChoice Holdings, Inc. filed its separate claim against Pearce in Wood County , als o a verring that Wood Cou nty wa s a place of

pro per venue concerning the enforceability and alleged breach of Pearce’s employment agreement. Immediately after unsuccessfully seeking a TRO, PetroChoice Holdings, Inc. nonsuited its Wood County claim against P ear ce and filed suit aga inst F leet Lube and Pearce in Collin County, Texas. After obtaining the TRO in Collin County that it unsuccessfully sought in Wood County, and after settling with Fleet Lube, PetroChoice Hol dings, Inc. nonsuited the Collin County c lai m and filed its count erclai m to Pearce’s original Wood County declaratory judgment action. All of these suits concern the same issue as it pertains to Pearce

— the enforceability and breach of the noncompetition covenant in her employment agreement. Th e

s ame attorneys represe nted b oth PetroChoice entities through this phase of these lawsuits

. Based on this perceived forum shopping, Pearce filed a motion for sanctions under Chapter 10 of the Texas Civil Practice and Remedies Code, alleging that this co urs e of conduct
was take n for a n improper purpose, including to harass or to cause unnecessary delay or needlessly increase the cost of litigation. Pearce sought to recover its attorney’s fees and hourly charges for paralegal services incurred in defendin g t he Collin County acti on

. Af ter a hearing, 5 the trial court signed an order granting sanctions against PetroChoice, requiring it to pay Pearce $18,231.67. The trial court, in its order found as follows:

The Cou rt reviewed and considered the pleadings, mo tions, testimony and exhibit s filed by the parties and arguments by counsel. The Court weighed the credibility of the evidence presented giving [consideration to the ] assertions and defenses of the parties. The parties to the original contract were aw are that venue was prope r in Wo od County, Texas. The Court is of the opinion that despite venue was agreed and made an integral part of the contract, Defendant employed legal tactics that placed extreme financial h ardship on Plaintiff by naming her as a p art y in a lawsuit in Col lin Cou nty, Texas. It is the opinion of the Court that the procedural maneuvering by Defendant in filing a non

- suit against Plaintiff in Wood County, naming her as a party in Collin County, and filing suit against her again in Wood Co unty, was an abuse of the ju dicial process designed and employed in an attempt to place Plaintiff in a financial stranglehold in hopes that she would eventually become financially unable to continue to pursue her remedies and continue litigation. As su ch, sanctions are impose d again st Defendants in the amount of $18,231.67 to reimburse expenses incurred by Plaintiff.

5 It is unclear whether the trial court conducted an oral hearing. Although the parties contend there was a heari ng, the record contains no reporter’s record. In any event, w e recognize the trial court may base its sanct ions assessment “on the pap ers fil ed and the arguments of counsel” without an oral hearing or the need for a reporter’s record. See Otis Elevator Co. v. Parmelee , 850 S.W.2d 179, 181 (Tex. 1993).18 A s PetroChoice points out, the Wood County trial court was without authority to impose sanctions under Chapter 10 for imper missible con duc t occurring in the Co llin Co unty lawsuit

. See, e.g., Mantri v. Bergman , 153 S.W.3d 715, 718 (Tex. App.

— Dallas 2005, pet. denied) (holding that only court with jurisdiction where allegedly frivolous litiga tion was pending had jurisdiction to impose sanc tio ns under Chapter 10). There fore, we may not affirm the sanctions order under Chapter 10. See id. However, the trial court retains inherent power to sanction the parties and attorneys in appropriate case s , even on its own motion. See In re Bennett , 960 S.W.2d at 40. Even though
Pearce ’ s motion invokes only Chapter 10, the trial court ’ s order granting sanctions is silent as to the basis upon which it assessed sanctions. Furthermore, it states that it was based on an “abuse of the judicial process,” whi ch is often recited a s a bas is for an inherent power
- based sanctions
order. Although the preferred practice is to explain the authority relied upon for assessing sanctions in the order, reviewing courts have examined whether the sanction order may be j ust ified under the court ’s inhe rent authority when the order is silent

. See Houtex Read y Mix Concrete & Materials v. Eagle Const. & Envtl. Services, L.P. , 226 S.W.3d 514, 523

– 24 (Tex. App.

— Houston [1st Dist.] 2006, no pet.)

. Moreover, sanctions ordered u nde r the court’s inheren t autho rity are not necessarily limited to conduct occurring sole ly within the sanctioning court

. See Howell v. Tex. Workers’ Comp. Comm’n , 143 S.W.3d 416, 447 (Tex. App.

— Austin 2004, pet. denied) (concluding that a court may impos e s anctions for conduct in anot her court pursuant to its inherent power to impose
sanctio ns) ; see also Finlan v. Peavy , 205 S.W.3d 647, 652

- 53 (Tex. App.

— Waco 2006, no pet.) (where plaintiff filed action in Waco court consisting of counts severed from prio r c omplaint already pend ing in Dallas district court and over which that court had assert ed jurisdiction, Waco court had inherent power to dismiss action without prejudice in order to protect Dallas court ’s jurisdiction to adjudicate entire dispute pending be fore it)

. Other co urts ha ve examined similar conduct to that in the instant case and upheld inherent power

- based sanction s

. See, e.g., In re Bennett , 960 S.W.2d at 39

- 40 (upholding
inherent power
- based sanction for similar forum shopping c onduct tha t was not s anction able
when viewed in a vacuu m, such as filing suit and nonsuiting parties, but when viewed in entire course of litigation , showed bad faith abuse of judicial process and interference with traditional19 core functions of court) ; Lil es , 547 S. W.3d at 294

– 95 (up holding sanctions based on otherwise permissible conduc t in another court that is part of overall litigation between parties)

. Importantly, as recently explained by the Texas Supreme Court, such sanctions must be predicated on an express bad faith finding

. Brewer , 601 S.W.3d at 718

- 19. T he trial court’s description of the conduct justifying sanctions here is tantamount to a bad faith finding. 6 But as we have stated, inherent power

- based sanctions must be just and not excessi ve. See i d. at 718

. Assumi ng without deciding that the trial court could have concluded that PetroChoice’s forum shopping was such an abuse to warrant san ctions under its inherent authority , we conclude that the order fails to satisfy the required due pr ocess stan dards

. In its
ord er, the trial court impos ed sanctions in the amount of $18,231.67 to reimburse expenses incurred by Pearce for defending the Col lin County action , without any explanation as to how it
arrived at that amount

. Furthermore, Pearce ’s attorne y , without support ing documentation,
identified in his motion only $15,172.50 in curred in connection with the Collin County litigation

. 7 W ithout any explanation showing the basis for its sanctions amount or any supporting basis in the record jus tifying th e trial cou rt’s hi gher sanctio n in excess of Pearce ’s requested amount , we must conclude that the sanction is unjust and excessive , and we therefore
cannot affirm the sanctions order. See Low v. Henry , 221 S.W.3d 609, 621

– 22 (Tex. 2007) (revers ing $50,00 0 sanction where t rial court did not identify bas is for imposing that sanction amount); State Office of Risk Mgmt. v. Foutz , 279 S.W.3d 826, 837

– 38 (Tex. App.

— Eastland 2009, no pet. ) (when sanction does not explain basis for calculating amount, i t constitu tes an impe rmissib le arbitrary fine) ; IFC Credit Corp. v. Specialty Optical Sys., Inc. , 252 S.W.3d 761,
772

– 73 (Tex. App.

— Dallas 2008, pet. denied) (reversing inherent power

- based sanction for attorney fee sanction in amount unsupported by eviden ce and une xplained by trial court , holding

6 Bad faith i n the sanctions context is not just intention al conduct but intent to en gage in conduct for an impermissible reason, willful noncompliance, or willful ignorance of the facts. Brewer v. Lennox Hearth Products, LLC , 601 S.W.3d 704, 718. (Tex. 2020) (interna l citations omitted)

. It includes “conscious doing of a wrong for a dis honest, discriminatory, or malicious purpose.” Id. Improper motive, not perfection, is the touchstone. Id. at 719. The trial court found in its order that PetroChoice ’s legal tactics were an “ abuse of the judicial pro cess desig ned and employed in an atte mpt to place [Pearce] in a financial stranglehold in hopes that she would eventually become financially unable to continue to pursue her remedies and continue litigation. ” This findin g is tantamount to bad faith.

7 P earce’s at torney alleged that his fir m incur red $9,990.00 in attorney’s fees and $5,182.50 for paralegal services in his motion, but did not provide evidence of billing records or other documentation explaining the basis for this amount of charges.20 that “ we are unable to determine a relationship between the sanction, the conduct, and the abuse sought to be remedied”).
PetroChoice ’ s third issue is sustained.

D ISPOSITION Having determined that neither part y met thei r summary j udgment burden , that unresolved fact issues remain, and that the trial court ’ s order granting sanctions against
PetroChoice contained reversible error , we reverse the trial court ’ s judgment in Pearce ’ s favor
and remand for further proc eedings co nsistent wi th this opinion.

J AMES T. W ORTHEN Chief Justice

Opinion delivered January 13, 2021. Pan el consisted of Worthen, C.J., Hoyle, J., and Neeley, J.21 

## COURT OF APPEALS

TWELFTH COURT OF APPEALS DISTRICT OF TEXAS

JUDGMENT

JANUARY 13 , 2021

N O. 12

- 20

- 00106

- CV

PETROCH OICE HO LDINGS, LL C & PETROCHOICE HOLDINGS, INC. , Appellant s V. MARY PEARCE , Appellee

Appeal from the 402nd District Court
of Wood County, Texas (Tr.Ct.No. 2018

- 611 )

THI S CAUSE came to be heard on the oral arguments, app e llate record and
briefs filed her ein, an d the same being considered, because it is the opinion of this Court that there was error in judgment of the court below, it is ORDERED, ADJUDGED and DECREE D by this Court that the judgment be reversed and the ca use remand ed to the trial court for f urther proceedings in accordance with the opinion of this Court; and that t his decision be certif ied to the
court below for observance.
J ames T. Worthen , Chief Justice

. Panel consisted of Worthen, C.J., Hoyle, J., and N eeley, J.