No. 03-15-00025-CV 

______________________________________________ 

IN THE COURT OF APPEALS

FOR THE THIRD DISTRICT OF TEXAS

AUSTIN, TEXAS

______________________________________________ 

APPELLANTS, LAKEWAY REGIONAL MEDICAL CENTER, LLC AND 

SURGICAL DEVELOPMENT PARTNERS, LLC// CROSS-APPELLANT, 

LAKE TRAVIS TRANSITIONAL LTCH, LLC N/K/A LAKE TRAVIS 

SPECIALTY HOSPITAL, LLC 

v. 

APPELLEES, LAKE TRAVIS TRANSITIONAL LTCH, LLC N/K/A LAKE 

TRAVIS SPECIALTY HOSPITAL, LLC// CROSS-APPELLEES, LAKEWAY 

REGIONAL MEDICAL CENTER, LLC, SURGICAL DEVELOPMENT 

PARTNERS, LLC, BRENNAN, MANNA, & DIAMOND, LLC 

AND FRANK T. SOSSI

___________________________________________

BRIEF OF CROSS-APPELLANT

LAKE TRAVIS TRANSITIONAL LTCH, LLC N/K/A 

LAKE TRAVIS SPECIALTY HOSPITAL, LLC (“LTT”)

___________________________________________

Jane M.N. Webre

S. Abraham Kuczaj, III

Robyn B. Hargrove

SCOTT DOUGLASS 

& MCCONNICO LLP

 303 Colorado Street, 24th Floor

 Austin, TX 78701

 (512) 495-6300

 (512) 495-6399 Fax

 COUNSEL FOR LTT

ORAL ARGUMENT REQUESTED

1226029

ACCEPTED

03-15-00025-CV

7016623

THIRD COURT OF APPEALS

AUSTIN, TEXAS

9/21/2015 2:13:08 PM

JEFFREY D. KYLE

CLERK

 FILED IN 3rd COURT OF APPEALS AUSTIN, TEXAS 9/21/2015 2:13:08 PM JEFFREY D. KYLE Clerk
IDENTITY OF PARTIES AND COUNSEL

Defendants-Appellants/Cross-Appellees

Lakeway Regional Medical Center, LLC 

Surgical Development Partners, LLC 

Counsel for Defendants-Appellants/Cross-Appellees

Jeff Cody

Barton Wayne Cox

Norton Rose Fulbright

2200 Ross Avenue, Suite 2800

Dallas, TX 75201-2784

Joy Soloway

Norton Rose Fulbright

1301 McKinney, Suite 5100

Houston, TX 77010-3095

Additional Appellate Counsel for Surgical Development Partners, LLC 

Jessica Z. Barger

Raffi Melkonian

Wright &Close, LLP

One Riverway, Suite 2200

Houston, TX 77056

Plaintiff-Cross-Appellant/Appellee

Lake Travis Transitional LTCH, LLC n/k/a Lake Travis Specialty Hospital, LLC

Counsel for Defendant-Cross-Appellant

Jane M.N. Webre

S. Abraham Kuczaj III

Robyn B. Hargrove

Paige A. Amstutz

Steven J. Wingard

Scott Douglass & McConnico LLP

303 Colorado, Suite 2400

Austin, Texas 78701

ii

1245899
Defendants-Appellees 

Brennan, Manna & Diamond, LLC 

Frank T. Sossi

Counsel for Defendants-Appellees

Robert A. Bragalone

B. Ryan Fellman

Gordon & Rees LLP

2100 Ross Ave., Suite 2800

Dallas, TX 75201

iii

1245899
TABLE OF CONTENTS

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

INDEX OF AUTHORITIES................................................................................... vii

STATEMENT OF THE CASE................................................................................ xi

STATEMENT OF JURISDICTION....................................................................... xii

RECORD................................................................................................................. xii

APPENDIX............................................................................................................ xiii

ISSUES ON CROSS-APPEAL ............................................................................. xiv

OVERVIEW ..............................................................................................................1

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

A. The Hospital Defendants receive LTT’s confidential 

information subject to a confidentiality agreement for the 

purpose of evaluating a joint hospital project. ......................................2

B. Defendants use LTT’s confidential information to secure 

lucrative hospital mortgage insurance from HUD, then abandon 

the LTT project......................................................................................4

SUMMARY OF THE ARGUMENT ........................................................................7

ARGUMENT.............................................................................................................7

A. Standard of review on summary judgment. ..........................................7

B. There are significant material fact issues that preclude summary 

judgment on LTT’s claim for misappropriation of trade secrets. .........9

1. LTT submitted evidence that its confidential information 

was a trade secret. .....................................................................10

a. Texas law recognizes that trade secret status is 

generally a fact question.................................................10

iv

1245899
b. There is plenty of evidence of LTT’s trade secrets........13

2. There is evidence that Defendants acquired LTT’s trade 

secrets through breach of a confidential relationship or 

through improper means. ..........................................................18

a. Confidential relationship ................................................18

b. Improper means..............................................................20

3. There is evidence that Defendants disclosed or used 

LTT’s trade secrets without authorization................................22

a. Defendants “used” the trade secrets. ..............................22

b. Defendants “disclosed” the trade secrets........................26

4. There is evidence of damages as a result of the 

misappropriation. ......................................................................27

a. Loss of market value.......................................................28

b. Reasonable royalty damages ..........................................29

c. Benefits obtained ............................................................30

d. No HUD reliance necessary ...........................................31

C. Summary judgment was improper as to Section 2 of the LOI............32

1. Section 2 of the LOI is a binding agreement. ...........................32

a. The detailed provisions are more than an 

agreement to agree..........................................................32

b. The parties intended for all provisions of the LOI 

to be binding. ..................................................................35

c. Section 2 contains all essential terms. ............................36

2. The Hospital Defendants cannot rely on unsatisfied 

conditions precedent to avoid complying with Section 2 

because their own conduct prevented performance..................38

v

1245899
D. The trial court abused its discretion in sustaining objections to 

some of LTT’s summary judgment evidence......................................41

1. The court improperly sustained objections that had 

become moot.............................................................................42

2. LTT adequately cited to the entirety of the Project File...........45

3. The court erred in sustaining an objection to argument

that the Project File as a whole is a trade secret. ......................46

4. Berry’s testimony about the Project File was proper................48

CONCLUSION AND PRAYER .............................................................................51

CERTIFICATE OF SERVICE ................................................................................53

CERTIFICATE OF COMPLIANCE.......................................................................53

APPENDIX..............................................................................................................54

vi

1245899
INDEX OF AUTHORITIES

Cases

Bastrop Cent. Appraisal Dist. v. Acme Brick Co., 

428 S.W.3d 911 (Tex. App.—Austin 2014, no pet.).......................................8

Bertolli v. C.E. Sheperd Co., 

752 S.W.2d 648 (Tex. App.—Houston [14th Dist.] 1998, no writ)..............12

Bishop v. Miller, 

412 S.W.3d 758 (Tex. App.—Houston [14th Dist.] 2013, no pet.) ...... passim

Bohnsack v. Varco, L.P., 

668 F.3d 262 (5th Cir. 2012).........................................................................30

Bracey v. City of Killeen, 

417 S.W.3d 94 (Tex. App.—Austin 2013, no pet.).....................................7, 8

CKB & Assocs., Inc. v. Moore McCormack Petroleum, Inc., 

809 S.W.2d 577 (Tex. App.—Dallas 1991, writ denied)..............................33

Clear Lake City Water Auth. v. Friendswood Dev. Co., Ltd., 

344 S.W.3d 514 (Tex. App.—Houston [14th Dist.] 2011, 

pet. denied) ............................................................................................. 39, 41

Cudd Pressure Control, Inc. v. Roles, 

328 Fed.Appx. 961 (5th Cir. 2009) ....................................................... passim

Daniels Health Sciences, LLC v. Vascular Health Sciences, LLC,

710 F.3d 579 (5th Cir. 2013).........................................................................19

DTM Research, LLC v. AT&T Corp., 

245 F.3d 327 (4th Cir. 2001).........................................................................49

Foreca, S.A. v. GRD Dev. Co., 

758 S.W.2d 744 (Tex. 1988) .........................................................................36

Fuqua v. Fuqua, 

750 S.W.2d 238 (Tex. App.—Dallas 1988, writ denied)..............................38

vii

1245899
Geophysical Micro Computer Applications (Int’l) Ltd. v. Paradigm 

Geophysical Ltd., 

No. 05-98-02016, 2001 WL 1270795 (Tex. App.—Dallas 

Oct. 24, 2001, pet. denied).............................................................................37

Georgia–Pacific Corp. v. United States Plywood Corp., 

318 F.Supp. 1116 (S.D.N.Y. 1970), mod. and aff’d, 446 F.2d 295 

(2d Cir. 1971).................................................................................................30

Gonzales v. Zamora, 

791 S.W.2d 258 (Tex. App.—Corpus Christi 1990, no writ) .......................12

H.E. Butt Grocery Co. v. Moody’s Quality Meats, Inc., 

951 S.W.2d 33 (Tex. App.–Corpus Christi 1997, pet. denied).....................19

Haggar Clothing Co. v. Hernandez, 

164 S.W.3d 386 (Tex. 2005) ...........................................................................8

Hinojosa v. Columbia/St. David’s Healthcare Sys., L.P., 

106 S.W.3d 380 (Tex. App.—Austin 2003, no pet.).....................................46

Hyde Corp. v. Huffines, 

314 S.W.2d 763 (Tex. 1958) ...........................................................................9

II Deerfield Limited Ltd. P’ship v. Henry Bldg., Inc., 

41 S.W.3d 259 (Tex. App.—San Antonio 2001, pet. denied) ............... 38, 41

In re Bass,

113 S.W.3d 735 (Tex. 2003) .................................................................. 11, 18

In re Cayman Island Firm of Deloitte & Touche, 

No. 04-01-00491-cv, 2001 WL 1042233 (Tex. App.—San Antonio 

Sept. 12, 2001, no pet.)..................................................................................49

Investment Retrievers, Inc. v. Fisher, 

No. 03-13-00510-CV, 2015 WL 3918503 (Tex. App.—Austin 

June 25, 2015, no pet.)...................................................................................42

Johnson v. Brewer & Pritchard, P.C., 

73 S.W.3d 193 (Tex. 2002) .............................................................................9

viii

1245899
Jones v. Ray Ins. Agency, 

59 S.W.3d 739 (Tex. App.—Corpus Christi 2001, pet. denied)...................42

Karns v. Jalapeno Tree Holdings, LLC, 

459 S.W.3d 683 (Tex. App.—El Paso 2015, pet. denied)...................... 34, 35

King Ranch, Inc. v. Chapman, 

118 S.W.3d 742 (Tex. 2003) ...........................................................................8

Krainz v. Kodiak Resources, Inc., 

436 S.W.3d 325 (Tex. App.—Austin 2013, pet. denied)..............................44

Lamont v. Vaquillas Energy Lopeno Ltd., LLP, 

421 S.W.3d 198 (Tex. App.—San Antonio 2013, pet. denied) ....... 20, 25, 27

Loy v. Harter, 

128 S.W.3d 397 (Tex. App.—Texarkana 2004, pet. denied)........................44

McCalla v. Baker’s Campground, Inc., 

416 S.W.3d 416 (Tex. 2013) .................................................................. 34, 38

McCulley Fine Arts Gallery, Inc. v. “X” Partners, 

860 S.W.2d 473 (Tex. App.—El Paso 1993, no writ)............................ 37, 38

Metallurgical Indus., Inc. v. Fourtek, Inc.,

790 F.2d 1195 (5th Cir. 1986).......................................................................12

Nguyen v. Citibank N.A., 

403 S.W.3d 927 (Tex. App.—Houston [14th Dist.] 2013, pet. denied) .......51

Oryon Technologies, Inc. v. Marcus, 

429 S.W.3d 762 (Tex. App.—Dallas 2014, no pet.).....................................49

Phillips v. SACHEM, Inc., 

03-13-00346-CV, 2014 WL 7464035 (Tex. App.—Austin 

Dec. 31, 2014, no pet.).....................................................................................8

Reid Road Mun. Util. Dist. No. 2 v. Speedy Stop Food Stores, Ltd., 

337 S.W.3d 846 (Tex. 2011) .........................................................................29

Scott v. Ingle Bros. Pac., Inc., 

489 S.W.2d 554 (Tex. 1972) .........................................................................37

ix

1245899
Sharifi v. Steen Automotive, LLC, 

370 S.W.3d 126 (Tex. App.—Dallas 2012, no pet.).............................. 39, 41

Southwestern Energy Prod. Co. v. Berry-Helfand, 

411 S.W.3d 581 (Tex. App.–Tyler 2013, pet. granted)......................... passim

Taco Cabana, Int’l v. Two Pesos, Inc., 

932 F.2d 1113 (5th Cir. 1991)........................................................................12

Tewari De-Ox Systems, Inc. LLP v. Mountain States/Rosen, LLC, 

637 F.3d 604 (5th Cir. 2011).........................................................................12

Tex. Integrated Conveyor Sys., Inc. v. Innovative Concepts, Inc., 

300 S.W.3d 348 (Tex. App.—Dallas 2009, pet. denied) ..........................9, 18

Univ. Computing Co. v. Lykes-Youngstown Corp., 

504 F.2d 518 (5th Cir. 1974).................................................................. 27, 29

Wellogix, Inc. v. Accenture, LLP, 

716 F.3d 867 (5th Cir. 2013).........................................................................12

West Beach Marina, Ltd. v. Erdeljac, 

94 S.W.3d 248 (Tex. App.—Austin 2002, no pet.).......................................36

Woodhaven Ptnrs, Ltd. v. Shamoun & Norman, LLP, 

422 S.W.3d 821 (Tex. App.—Dallas 2014, no pet.).............................. 41, 50

Statutes

12 U.S.C. § 1715z-7(a) ........................................................................................4, 31

24 C.F.R. § 242.16 ...............................................................................................4, 31

Tex. Gov’t Code § 22.220....................................................................................... xii

x

1245899
STATEMENT OF THE CASE

Nature of the Case: This case involves claims for breach of contract and

misappropriation of trade secrets between two hospital 

projects in Lakeway, Texas. Lake Travis Transitional 

LTCH, LLC (“LTT”) sued Lakeway Regional Medical 

Center, LLC (“LRMC”) and Surgical Development 

Partners, LLC (“SDP”) (together, the “Hospital 

Defendants”), as well as certain Lawyer Defendants 

involved in the transaction, for improperly taking LTT’s 

confidential information obtained pursuant to a binding 

Letter of Intent and using it to secure a governmentbacked mortgage that allowed them to build a competing 

hospital. The Letter of Intent had contemplated that LTT

and Defendants would work together on the LTT project, 

and did not permit the use of LTT’s information for any 

other purpose. The Letter of Intent is attached at App. 1. 

Trial Court: 343rd District Court of Travis County, Texas. Hon. 

Steven Yelenosky rendered a pretrial partial summary 

judgment. Hon. Lora Livingston presided over the 

subsequent jury trial and rendered the final judgment.

Course of Proceedings: Judge Yelenosky rendered partial summary judgment as 

to (1) LTT’s claims against all Defendants for 

misappropriation of trade secrets; and (2) LTT’s claim 

that the Hospital Defendants breached section 2 of the 

Letter of Intent. App. 2, 3. Judge Yelenosky also 

sustained the Hospital Defendants’ (but not the Lawyer 

Defendants’) objections to some of LTT’s summary 

judgment evidence. App. 4. 

LTT’s remaining claims against the Hospital Defendants

were tried to a jury, which found that the Hospital 

Defendants breached the Letter of Intent. App. 5. Judge 

Livingston rendered judgment on the jury’s verdict 

against the Hospital Defendants for $7.9 million in actual 

damages, together with $2 million in attorneys’ fees, preand post- judgment interest, and costs of court. App. 6.

xi

1245899
LTT filed a notice of appeal. 6/18CR6-8. LTT’s crossappeal is limited to the rulings on partial summary 

judgment that Judge Yelenosky made before trial. App. 

2, 3, 4. 

STATEMENT OF JURISDICTION

This Court has jurisdiction over this appeal from a final judgment of a 

district court pursuant to Texas Government Code § 22.220. 

RECORD

The record on appeal includes a 3-volume Clerk’s Record and four 1-volume 

supplemental Clerk’s Records, only one of which is labeled “supplemental.”

Citations to the 3-volume Clerk’s Record will be to volume and page: ___CR___. 

Citations to the one-volume Clerk’s Records will be to date and page: 5/21CR___,

6/18CR___, 7/17CR___, or 7/21CR___. 

There is a 20-volume Reporter’s Record, a 1-volume supplemental 

Reporter’s Record, and a 1-volume Reporter’s Record that is not labeled 

“supplemental.” Volume 1 of the 20-volume Reporter’s Record is a Master Index. 

Volumes 2 and 3 are pretrial hearings held on 2/4/14 and 7/2/14, respectively. 

Volumes 4 through 15 include the jury trial. Volumes 16 and 17 include the 

exhibits from the 2/4/14 pretrial hearing. Volumes 18 through 20 include the trial 

exhibits. The Supplemental Reporter’s Record includes additional trial exhibits. 

The 1-volume Reporter’s Record (filed 1/22/15) is the same 7/2/14 hearing 

transcript as Volume 3 of the 20-volume Reporter’s Record. 

Citations to the Reporter’s Record will be to volume and page number: 

___RR___. Citations to trial exhibits will be to party and exhibit number: PX___, 

DX___. 

xii

1245899
APPENDIX

The following items are included in the Appendix to this brief: 

App. 1: Letter of Intent (PX2; 2CR7623-29)

App. 2: Order on summary judgment as to the Lawyer Defendants 

(7/17CR201-02)

App. 3: Order on summary judgement as to the Hospital Defendants

(3CR12266-67)

App. 4: Order on the Hospital Defendants’ objections to LTT’s summary 

judgement evidence (3CR12261)

App. 5: Charge of the Court (3CR12997-13009)

App. 6: Judgment (6/18CR3-5)

App. 7: Declaration of Robert Berry, without exhibits (2CR7604-7617)

App. 8: Confidentiality Agreement (2CR7619-21)

xiii

1245899
ISSUES ON CROSS-APPEAL

1. Did the trial court err in granting summary judgment as to LTT’s claims for 

misappropriation of trade secrets? 

2. Did the trial court err in granting summary judgment as to LTT’s claim 

against the Hospital Defendants for breach of section 2 of the Letter of Intent? 

3. Did the trial court abuse its discretion in excluding some of LTT’s summary 

judgment evidence? 

xiv

1245899
LTT files this Brief of Cross-Appellant addressing the trial court’s orders on 

partial summary judgment. 

OVERVIEW

This cross-appeal presents a simple, plain-vanilla question: did LTT adduce 

sufficient evidence to raise a fact issue and avoid summary judgment on its claims 

for misappropriation of trade secrets and breach of section 2 of the LOI? The 

summary judgment rulings, particularly regarding the claim for misappropriation 

of trade secrets, are wholly based on the evidence and do not turn on legal issues. 

And the evidence supporting LTT’s claims is substantial. The summary judgment 

record includes evidence that LTT’s confidential information is a trade secret, and 

that LTT developed it at substantial cost and takes measures to ensure that it is kept 

confidential. The record includes evidence that Defendants were given access to 

the confidential information subject to confidentiality agreements for the purpose 

of acquiring LTT’s hospital facility, but Defendants instead used the information to 

secure a government-backed mortgage to develop their own competing hospital 

and then abandoned the LTT project. There is substantial evidence supporting 

each element of a claim for misappropriation of trade secrets, more than enough to 

raise a fact question and overcome Defendants’ traditional and no-evidence 

motions for summary judgment. This Court should give the evidence its due 

regard and reverse the summary judgments.

1

1245899
STATEMENT OF FACTS

A. The Hospital Defendants receive LTT’s confidential information subject to a 

confidentiality agreement for the purpose of evaluating a joint hospital 

project. 

In 2009, LTT was developing Lake Travis Specialty Hospital (“Lake Travis 

Hospital”) in the Lakeway area. Lake Travis Hospital would compete directly with 

a larger hospital—called Lakeway Regional—that the Hospital Defendants hoped 

to develop nearby. During this time, the Hospital Defendants were represented by 

Frank Sossi and his law firm, Brennan, Manna & Diamond, LLC (together, the 

“Lawyer Defendants”). Sossi also co-founded SDP, served on SDP’s board of 

managers, was an officer of SDP, and served as general counsel for SDP while also 

serving as an officer and general counsel for LRMC. 2CR7743-52. 

In April 2009, Defendants approached LTT about acquiring Lake Travis 

Hospital to serve as Lakeway Regional’s initial campus. App. 7 ¶ 2. At the time, 

Lake Travis Hospital had a big head start on construction: it was almost 80% 

complete, while Lakeway Regional “was still just a lot.” Id. The parties 

anticipated Lake Travis Hospital would be completed up to two years before 

Lakeway Regional.

When initially approached by Defendants, LTT’s principals were reluctant 

to share any information about their plans with a competing hospital less than a 

half-mile away. App. 7. ¶2. To facilitate the discussion of a possible acquisition, 

2

1245899
SDP executed a Confidentiality Agreement with LTT on May 11, 2009. App. 8. 

The Confidentiality Agreement recited that “SDP has an interest in a potential 

development...opportunity as presented by LTT and will have access to certain 

Confidential Information regarding these opportunities,” so “SDP and LTT desire 

to memorialize their understandings regarding SDP’s disclosure and use of 

Confidential Information.” App. 8 at 1. The Confidentiality Agreement defined 

“Confidential Information” to mean “all information concerning the Project and 

LTT’s business.” App. 8 ¶1. SDP agreed to “use Confidential Information only for 

informational purposes to evaluate the participation in the Project....Both parties 

agree that...neither it nor its employees, agents, or business or professional 

associates will disclose or use any Confidential Information in any manner 

whatsoever.” App. 8 ¶2. 

After some information was exchanged pursuant to the Confidentiality 

Agreement, in September 2009, the parties executed a Letter of Intent (“LOI”). 

App. 1; App. 7 ¶¶4-5. Like the Confidentiality Agreement, the LOI confirmed that 

the sole purpose for providing LTT’s proprietary information was for Defendants 

to evaluate the hospital project. LOI §9.2. Pursuant to the LOI, and subject to its 

confidentiality provisions, LTT’s confidential, proprietary and trade secret 

information was provided to Defendants through March 2010. App. 7 ¶5. 

3

1245899
B. Defendants use LTT’s confidential information to secure lucrative hospital 

mortgage insurance from HUD, then abandon the LTT project.

Unbeknownst to LTT, weeks after executing the Confidentiality Agreement, 

Defendants met with officials at HUD in Washington, D.C. to discuss obtaining 

Section 242 hospital mortgage insurance for LRMC. Section 242 insurance is only 

available for hospitals in areas that are underserved. See 12 U.S.C. § 1715z-7(a); 

see also 24 C.F.R. § 242.16 (allowing HUD hospital mortgage insurance only 

where competing capacity and services “are clearly not adequate to meet the needs 

of the population in the service area.”). This requirement is important to help the 

federal government avoid risking taxpayer dollars to improperly influence 

competition where, as in the case of LRMC, HUD is asked to insure a $166.9 

million mortgage for a for-profit hospital.

In March 2010, Defendants terminated negotiations with LTT, making the 

deal—as Defendants described it—”effectively dead.” See 1CR208. Defendants 

nevertheless continued to use LTT’s confidential information in order to nail down 

the HUD guarantee when, soon after HUD’s preliminary approval of the guaranty 

for LRMC was announced, others began to question whether the needs of the 

Lakeway area justified a taxpayer-sponsored Section 242 guaranty. On May 8, 

2010, the CEO of an unrelated hospital wrote to HUD and informed it that LTT’s 

Lake Travis Hospital was nearing completion only a half-mile away from Lakeway 

Regional, and that “[t]his area is clearly NOT underserved.” 2CR8015-19 

4

1245899
(emphasis in original). That prompted HUD to contact LRMC’s lender to 

determine whether LTT’s Lake Travis Hospital was in fact a competitive facility. 

2CR8026. To convince HUD that it was not, and thereby secure the pending 

$166.9 million mortgage, the Lawyer Defendants, on behalf of the Hospital 

Defendants, emailed HUD on May 10, 2010 (“May 10th Email”).1

 2CR8024-25. 

In the May 10th Email, Sossi used the LTT confidential information and 

made the following representations to HUD about LTT’s Lake Travis Hospital: 

• “[t]he structure is very small and has numerous code issues related to 

the construction and design;”

• “any conversion from what was essentially a residential facility to a 

true acute care will cost a great deal of money;” and 

• “[o]ur issue with the facility was the ability to work out all the design 

issues, the need for major retro fits to get it to open, the lack of 

physician interest for the facility, the zoning issues to allow the 

conversion to acute care status and what to do with the facility when 

LRMC opens. ... [t]he costs and technical problems of conversion 

1 After receiving HUD’s questions about LTT’s Lake Travis Hospital, LRMC’s lender forwarded 

them to Sossi and SDP’s CEO Eddie Alexander. 2CR8026. Defendants do not dispute that 

Sossi’s May 10th Email to HUD was sent on behalf of LRMC. 2CR6032, 5614, 5254-55. Sossi 

also copied SDP CEO Eddie Alexander and LRMC CMO Sam Demaio on the May 10th Email. 

2CR8024. Sossi’s simultaneous roles at SDP and LRMC, his inclusion of both LRMC and SDP 

principals in the communication, and his admission that other correspondence with HUD was 

sent on behalf of both SDP and LRMC, raise a reasonable inference that the May 10th Email was 

sent on behalf of SDP as well as LRMC. Id. at 8024; see also 2CR8061-65. 

5

1245899

 
made the facility inappropriate to help LRMC or to be able to succeed 

as a separate facility.” 

2CR8024-25. 

The next day, HUD responded to the inquiring hospital CEO, repeating what 

HUD internally considered “Mr. Sossi’s facts” from the May 10th Email and 

stating that HUD did not believe the LTT facility was truly a competitor hospital 

because it could not meet “general acute licensing standards without expensive 

redesign/reconstruction and will not achieve general acute care zoning because of 

site limitations.” 2CR8021-22. Ten days later, HUD agreed to go forward on the 

loan insurance and issue the amendments Defendants had requested to their loan 

insurance commitment. 2CR8482-83. The next day, the LRMC hospital mortgage 

loan closed and funded. 2CR7729. 

Defendants’ use of LTT’s confidential information continued. For example, 

Sossi sent a letter to HUD about the LTT facility to convince HUD to defend its 

decision to insure LRMC’s mortgage. 2CR8108-11. Defendants again represented 

to HUD alleged code compliance issues Defendants developed after acquiring 

LTT’s confidential information: “the [LTT] facility requires numerous upgrades 

and modification to meet Texas licensing standards for providing true acute care 

services...” Id. They reiterated the alleged cost of conversion issues Defendants 

calculated after acquiring LTT’s information in confidence. Id. They also 

6

1245899
reminded HUD that “[t]he existence of the plans for [the LTT facility] were 

discussed in detail with the HUD Client Service team.” Id. As a result, HUD 

emailed Sossi, saying “be assured that HUD intends to defend the decision to issue 

a loan guarantee for the LRMC project...” 2CR8042. 

SUMMARY OF THE ARGUMENT

This court should reverse the partial summary judgment as to LTT’s claims 

for misappropriation of trade secrets. There is substantial summary judgment 

evidence of LTT’s trade secrets, that Defendants acquired LTT’s trade secrets 

pursuant to various confidentiality agreements for the express purposes of 

acquiring LTT’s Lake Travis Hospital, that Defendants used that trade secret 

information instead for their own benefit to secure the lucrative HUD federal 

mortgage insurance and build a competing hospital, and that LTT suffered 

damages as a result. 

Summary judgment was also improper as to LTT’s claims for breach of 

section 2 of the LOI. That provision contains all of the necessary elements of an 

enforceable contract and is not an agreement to agree. 

ARGUMENT

A. Standard of review on summary judgment.

An order granting summary judgment is reviewed de novo. Bracey v. City 

of Killeen, 417 S.W.3d 94, 103 (Tex. App.—Austin 2013, no pet.). Summary 

judgment is proper when there are no disputed issues of material fact and the 

7

1245899
movant is entitled to judgment as a matter of law. Id. Because LTT was the nonmovant, this Court must take as true all evidence favorable to LTT, and must 

indulge every reasonable inference and resolve every doubt in LTT’s favor.

Bastrop Cent. Appraisal Dist. v. Acme Brick Co., 428 S.W.3d 911, 915 (Tex. 

App.—Austin 2014, no pet.).

Defendants moved for both traditional and no-evidence summary judgment. 

A no-evidence summary judgment is proper “when (a) there is a complete absence 

of evidence of a vital fact, (b) the court is barred by rules of law or evidence from 

giving weight to the only evidence offered to prove a vital fact, (c) the evidence 

offered to prove a vital fact is no more than a mere scintilla, or (d) the evidence 

conclusively establishes the opposite of the vital fact.” Phillips v. SACHEM, Inc., 

03-13-00346-CV, 2014 WL 7464035, at *2 (Tex. App.—Austin Dec. 31, 2014, no 

pet.) (quoting King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750–51 (Tex. 

2003)). A no-evidence summary judgment is improper “if the nonmovant brings 

forth more than a scintilla of probative evidence to raise a genuine issue of material 

fact.” Id. More than a scintilla of evidence exists where the evidence, as a whole, 

“rises to a level that would enable reasonable and fair-minded people to differ in 

their conclusions.” Haggar Clothing Co. v. Hernandez, 164 S.W.3d 386, 388 

(Tex. 2005). 

8

1245899
B. There are significant material fact issues that preclude summary judgment 

on LTT’s claim for misappropriation of trade secrets. 

The elements of a claim for misappropriation of trade secrets are: (1) the 

trade secret existed; (2) the trade secret was acquired through a confidential 

relationship or discovered by improper means; (3) the defendant disclosed or used 

the trade secret without authorization; and (4) damages. Tex. Integrated Conveyor 

Sys., Inc. v. Innovative Concepts, Inc., 300 S.W.3d 348, 366-67 (Tex. App.—

Dallas 2009, pet. denied); see also Hyde Corp. v. Huffines, 314 S.W.2d 763, 769-

70 (Tex. 1958) (“One who discloses or uses another’s trade secrets, without a 

privilege to do so, is liable to the other if (a) he discovers the secret by improper 

means, or (b) his disclosure or use constitutes a breach of confidence reposed in 

him by the other in disclosing the secret to him.”). 

The Hospital Defendants and Lawyer Defendants moved for traditional and 

no-evidence summary judgment as to LTT’s misappropriation of trade secrets 

claim on essentially the same three grounds: (1) they did not disclose LTT’s trade 

secrets; (2) they did not misuse LTT’s secrets; and (3) LTT did not sustain injury 

from improper use of its trade secrets.2

 2CR5625-31 (LRMC); 2CR6045-52 

2 The Hospital Defendants’ motions create an odd wrinkle. They combine LTT’s claim for

misappropriation of trade secrets with its claim for breach of contractual confidentiality 

provisions into something the Hospital Defendants refer to as the “Proprietary Information 

Claim,” thereby unilaterally conflating separate causes of action into a new hybrid “claim” that

they then attack on summary judgment. 2CR5615, 6033; see Johnson v. Brewer & Pritchard, 

P.C., 73 S.W.3d 193, 204 (Tex. 2002) (court cannot grant summary judgment on grounds not 

presented in the motion). While not the model of clarity, the Hospital Defendants appear to seek 

9

1245899

 
(SDP); 2CR5248-49, 54-59 (Lawyer Defendants). The Lawyer Defendants also 

alleged that there is no evidence that “any of Plaintiff’s purported trade secrets are 

trade secrets” or that they “acquired Plaintiff’s trade secrets.” 2CR5249. 

Judge Yelenosky granted summary judgment as to LTT’s claim for 

misappropriation of trade secrets. App. 2, 3. That was error, because the summary 

judgment evidence—outlined above—raises genuine issues of material fact that 

preclude summary judgment. 

1. LTT submitted evidence that its confidential information was a trade 

secret. 

The critical threshold question is whether LTT brought forward some 

evidence that its confidential information is a trade secret. There was plenty of 

evidence.3

 

a. Texas law recognizes that trade secret status is generally a fact 

question. 

“A trade secret is any formula, pattern, device or compilation of information 

which is used in one’s business and presents an opportunity to obtain an advantage 

no-evidence summary judgment on the hybrid “Proprietary Information Claim” by alleging that 

there is “no evidence to support disclosure, use, or causation” in respect to LTT’s “Protected 

Information” (which the Hospital Defendants define as “Proprietary Information or trade 

secrets.”). 2CR5625-31, 6046-52. The trial court denied summary judgment as to the Hospital 

Defendants’ breaches of contractual confidentiality obligations comprising the remainder of the 

hybrid “Proprietary Information Claim.” 3CR12252 (Yelenosky letter explaining that 

“defendants conflate two distinct claims” regarding confidentiality); App. 3. 

3 Judge Yelenosky sustained some of the Hospital Defendants’ objections to LTT’s summary 

judgment evidence. App. 4. As is discussed more fully below in section D of the Argument, that 

ruling was in error, so the evidence should be fully considered in support of LTT’s summary 

judgment response. Even without the disputed evidence, summary judgment was improper.

10

1245899

 
over competitors who do not know or use it.” In re Bass, 113 S.W.3d 735, 739 

(Tex. 2003). Courts look at the following factors to determine whether 

information constitutes a trade secret: “(1) the extent to which the information is 

known outside the claimant’s business; (2) the extent to which the information is 

known by employees and others involved in the claimant’s business; (3) the extent 

of the measures taken by the claimant to guard the secrecy of the information; (4) 

the value of the information to the claimant and to its competitors; (5) the amount 

of effort or money expended by the claimant in developing the information; and (6) 

the ease or difficulty with which the information could be properly acquired or 

duplicated by others.” In re Bass, 113 S.W.3d at 739. Recognizing that trade 

secrets do not fit neatly into each factor every time, the Court held that the party 

claiming a trade secret need not satisfy all six factors. Id. at 740. 

Under Texas law, a compilation of distinct information may be protected as 

a trade secret, even if some of the components of that compilation are not, 

individually, confidential. See Bishop v. Miller, 412 S.W.3d 758, 767 (Tex. 

App.—Houston [14th Dist.] 2013, no pet.) (“[T]he fact that some or all of the 

components of the trade secret are well-known does not preclude protection for a 

secret combination, compilation, or integration of the individual elements.”) 

(quoting Restatement (Third) of Unfair Competition § 39 cmt. f). In addition, the 

fact that some aspects of a trade secret may be publicly available does not preclude 

11

1245899
the existence of a trade secret, since a “trade secret can exist in a combination of 

characteristics and components[,] each of which, by itself, is in the public domain, 

but the unified process, design and operation of which in unique combination[ ] 

affords a competitive advantage, is a protected trade secret.” Southwestern Energy 

Prod. Co. v. Berry-Helfand, 411 S.W.3d 581, 597 (Tex. App.–Tyler 2013, pet.

granted); Metallurgical Indus., Inc. v. Fourtek, Inc., 790 F.2d 1195, 1202 (5th Cir. 

1986). Consequently, courts have found that a wide array of information may 

qualify as a trade secret. See, e.g., Taco Cabana, Int’l v. Two Pesos, Inc., 932 F.2d 

1113, 1124 (5th Cir. 1991) (architectural drawings); Southwestern Energy, 411 

S.W.3d at 597-98 (compilation and analysis of technical information); 

Metallurgical Indus., 790 F.2d at 1203 (know how); Gonzales v. Zamora, 791 

S.W.2d 258, 265 (Tex. App.—Corpus Christi 1990, no writ) (business methods); 

Bertolli v. C.E. Sheperd Co., 752 S.W.2d 648, 654 (Tex. App.—Houston [14th 

Dist.] 1998, no writ) (market information); Cudd Pressure Control, Inc. v. Roles, 

328 Fed.Appx. 961, 965 (5th Cir. 2009) (financial information).

Given the breadth of information that can be a trade secret, it is not 

surprising that the “existence of a trade secret is properly considered a question of 

fact to be decided by the judge or jury as fact-finder.” Wellogix, Inc. v. Accenture, 

LLP, 716 F.3d 867, 875 (5th Cir. 2013); see also Tewari De-Ox Systems, Inc. LLP 

v. Mountain States/Rosen, LLC, 637 F.3d 604, 613 (5th Cir. 2011) (“[W]hether 

12

1245899
certain information constitutes a trade secret ordinarily is best ‘resolved by a fact 

finder after full presentation of the evidence from each side.’”). 

b. There is plenty of evidence of LTT’s trade secrets. 

The summary judgment record includes substantial evidence of the existence 

of LTT’s trade secrets. In its response to Defendants’ motions, LTT included 

(among other things) the Project File, which is a compilation of all the 

documentary evidence reflecting LTT’s trade secrets and proprietary information.

4

 

In addition, the summary judgment record includes a detailed declaration from 

LTT’s Chief Executive Officer and Managing Member, Robert Berry, which 

establishes that the materials contained in the Project File constitute LTT’s trade 

secrets. App. 7 ¶¶5-8. The Berry Declaration demonstrates that the trade secrets 

included in that compilation were “provided to Defendants during the course of the 

project review,” pursuant to either the Confidentiality Agreement or the LOI with 

its additional confidentiality provisions. Id. at ¶¶4-5. 

The Berry Declaration identifies the Project File by bates numbers and 

explains the categories of documents contained within it as including, among other 

things, “a deal subfile; correspondence; contracts; drawings and specifications; 

4 The Project File was Exhibit 33 in LTT’s combined summary judgment Appendix, and it 

includes subparts 33-A through 33-F. 2CR7598-7600. The Project File is out of order in the 

Clerk’s Record. The subparts appear in the Clerk’s Record at: Ex. 33-A (3CR8678-8810); Ex. 

33-B (3CR8811-54); Ex. 33-C (3CR8855-9020); Ex. 33-D (3CR9021-9269); Ex. 33-E 

(3CR9272-9298, 9708-10320); Ex. 33-F (3CR8581-8669). 

13

1245899

 
financial information and business plans; and other miscellaneous information 

pertaining to the Project.” App. 7 ¶6. Berry further identified the trade secret 

information in the Project File compilation as including “architectural plans; 

program design and operations; financial information; hospital organization; 

mission; staff recruitment and retention; physician support; sources and uses of 

funds and other ‘cost based’ information; preliminary financial feasibility and 

other information about projected revenues and costs for the initial operation of 

Lake Travis Hospital; current state of construction; and preliminary financial 

feasibility ratios and other information about projected key operational ratios of 

Lake Travis Hospital.” Id., ¶7. Based on those documents, Berry stated that the 

compilation “contains information that LTT used in its business that provided LTT 

with an advantage over competitors who did not know or use it.” Id. ¶7. 

LTT not only filed the Project File and Berry Declaration; its summary 

judgment responses also identified specific examples of trade secrets from within 

the compilation that were provided to, and misappropriated by, Defendants: 

The evidence shows this information was used by Defendants in their 

improper disclosures to HUD. For example, and without limitation, 

during the project review, LTT provided Defendants with 

confidential, proprietary, and trade secret information regarding MEP 

specifications (Ex. 33 at LTT008217-8393), architectural 

specifications (Id. at LTT008666-9088), architectural drawings (Id. at 

LTT008464-8521, LTT008541-8634 & LTT008652-8665), site 

inspection (Id. at LTT008032-8033), meetings with staff and 

contractors (Id. at LTT007911-7913), response to PSP issues (Id. at 

LTT009872-9885), and plat (Id. at LTT009100). Utilizing that 

14

1245899
information, Defendants internally drew conclusions about potential 

conversion costs: PSP plan of action (Id. at LTT008033); PSP Report 

and Drawings re: necessary changes (Id. at LTT009831-9854); and 

estimated costs for conversion (Id. at LTT009800-9806). Defendants 

then used that information in their improper May 10, 2010 use and 

disclosure to HUD regarding their view of conversion costs. 

Defendants also utilized the information identified above to internally 

draw conclusions about code compliance in their PSP Report and 

Drawings re: necessary changes (Id. at LTT009831-9854), and then 

used that information in their improper May 10, 2010 use and 

disclosure to HUD regarding their view of alleged code compliance 

issues (Ex. 12). Each of the documents above is contained in the 

Project File (Ex. 33) and is identified by Bates number for ease of 

reference. 

See, e.g., 3CR11919-20. 

As part of the confidential project review, LTT also provided its trade 

secrets to Defendants in other ways, during on-site inspections and meetings. App. 

7 ¶5; 3CR8836-37 (e-mail correspondence regarding site inspections); 3CR8714-

16 (e-mail correspondence reflecting meetings with staff and contractors). 

The Berry Declaration confirms that LTT’s trade secrets were not generally 

known or readily available to the public. App. 7 ¶8. They were valuable to LTT, 

which spent a great deal of time, energy, and money developing the information. 

Id. at ¶11. For example, Berry and LTT’s other principal, Keith McDonald, spent 

12,000 hours over six years and more than $2,650,000 in the development of LTT. 

Id. Berry explained that LTT’s trade secrets developed as part of that process 

“would be extremely difficult to duplicate, if possible at all.” Id.

15

1245899
LTT also took steps to protect the confidential nature of its trade secrets. 

App. 7 at ¶¶8 & 10. Internally, LTT limited employee access to the information. 

Id. at ¶10. Regarding outside parties, it was LTT’s practice to require those 

seeking access to LTT’s trade secrets to agree to keep the information confidential. 

Id. at ¶8. The Defendants agreed through the Confidentiality Agreement and the 

LOI to maintain the confidentiality of LTT’s trade secrets and other information 

provided during the project review.5

 2CR7619-21; LOI §9. In addition, LTT 

secured confidentiality agreements from the other parties involved in the financing, 

development, and construction of LTT’s facility, including LTT’s landlord, 

architect, and general contractor. App. 7 ¶8; 2CR7653-54, 7656-59. The parties 

understood that the information exchanged during the review process was to be 

kept confidential. For example, a representative of LTT’s landlord, William Hurd, 

e-mailed to SDP’s president Eddie Alexander, SDP’s Ed Bivins, LTT’s Berry and 

LTT’s contractor, stating: “This information is for the project review, please keep 

it confidential along with all of the information generated during this review 

process.” 2CR7631; see also App. 7 ¶ 8. Because Defendants had notice that 

5 The Lawyer Defendants were bound, as agents of the Hospital Defendants, to maintain the 

confidentiality of LTT’s trade secrets. Under the Confidentiality Agreement, each party agreed 

that, except for “evaluat[ing] participation in the Project,” neither that party “nor its employees, 

agents, or business or professional associates will disclose or use any Confidential Information in 

any manner whatsoever.” App. 8 ¶2. Similarly, the LOI imposed confidentiality obligations on 

“any director, officer, employee, member, shareholder, or agent of LRMC or SDP engaged in the 

evaluation of the Project.” LOI ¶9.1. At the relevant times, Sossi was an owner, member, and 

agent of SDP as well as an officer and agent of LRMC. 2CR7743-47. 

16

1245899

 
LTT’s information was provided in confidence, they are liable for any disclosure 

or use after such notice. See Restatement (First) of Torts §§ 757 & 758 (1939).

Defendants recognized that all the parties involved in the contemplated 

transaction were under a duty of confidence. For example, Sossi sent an e-mail to 

ensure Healthcare REIT (LTT’s landlord) knew that information exchanged during 

the project review was confidential:

Based on our Letter of Intent with your Tenant, including the payment 

of over $50,000 to your tenant, we are greatly concerned that the 

Section 6 (Standstill and Non-Circumvention) and Section 9 

(Confidentiality) provisions of that Letter of Intent, both of which 

survive any termination of that Letter of Intent, require your Tenant to 

have positive obligations to SDP and LRMC regarding any 

information exchanged related to that Letter of Intent. Those 

obligations specifically require that the Parties act in good faith and 

that any knowledge gained in the discussions not be used by the 

Parties for their own benefit. Further we believe that based on the 

nature of the discussions and negotiations these provisions also 

include any third party who was included in these discussions as 

agreed to by the Parties.

2CR8016 (emphasis added). 

Berry was personally involved in securing the Confidentiality Agreement 

and LOI, as well as LTT’s confidentiality agreements with third parties, and stated 

that even after Defendants terminated the transaction, LTT continued to require 

third parties to agree to keep LTT’s information confidential. App. 7 ¶8. Berry 

did not recall any instance in which LTT disclosed its trade secrets to a third party 

without an agreement to keep the information confidential. Id.

17

1245899
A plaintiff does not need to satisfy all six Bass factors to establish the 

existence of a trade secret; rather, trade secret status is “ascertained through a 

comparative evaluation of all the relevant factors,” and that “other circumstances 

could be relevant to the analysis.” In re Bass, 113 S.W.3d at 739-40. Here, LTT 

provided evidence supporting all six of the Bass factors. Viewing this evidence 

and indulging all reasonable inferences in LTT’s favor, there is, at the very least, a 

genuine issue of material fact as to whether LTT’s misappropriated information 

constitutes trade secrets. The trial court erred by ruling otherwise.

2. There is evidence that Defendants acquired LTT’s trade secrets 

through breach of a confidential relationship or through improper 

means. 

a. Confidential relationship

A misappropriation claim requires breach of a confidential relationship or 

that the trade secret was discovered by improper means. Tex. Integrated, 300 

S.W.3d at 366-67. In respect to breach of a confidential relationship, both SDP 

and LRMC were parties to the LOI, and the Lawyer Defendants fell within the 

definition of “Representative” of a “Party.” LOI at 1, §9.1. As such, each 

Defendant was subject to the nondisclosure and confidentiality obligations of that 

agreement as well as the earlier Confidentiality Agreement. App. 8 §2. 

In addition, it is well-settled that “[t]rade secret information disclosed 

pursuant to negotiations for the sale of a business are disclosed under a duty of 

18

1245899
confidence imposed as a matter of law.” H.E. Butt Grocery Co. v. Moody’s 

Quality Meats, Inc., 951 S.W.2d 33, 36 (Tex. App.–Corpus Christi 1997, pet. 

denied) (“HEB”); see also Daniels Health Sciences, LLC v. Vascular Health 

Sciences, LLC, 710 F.3d 579, 584 (5th Cir. 2013) (under Texas law, “[a]n express 

agreement [is] not necessary where the actions of the parties, the nature of their 

arrangement, the ‘whole picture’ of their relationship established the existence of a 

confidential relationship”) (citing HEB). The examples quoted by the Court in 

Hyde Corp. are instructive here:

A has a trade secret which he wishes to sell with or without his 

business. B is a prospective purchaser. In the course of negotiations, A 

discloses the secret to B solely for the purpose of enabling him to 

appraise its value. Or, A requests a loan from B, a banker, for the 

purpose of aiding the manufacture of a product by A’s secret process. 

In order to assure B about the soundness of the loan, A discloses the 

secret to him in confidence. In both cases B is under a duty not to 

disclose the secret or use it adversely to A. 

314 S.W.2d at 770 (quoting Restatement of Torts, § 757, cmt. (b)).

Here, the evidence shows that Defendants received LTT’s trade secrets in 

confidence in the course of negotiations for the acquisition of LTT’s primary asset 

(the Lake Travis Hospital facility), and the “whole picture” of the parties’

relationship establishes the existence of a confidential relationship between each of 

the Defendants and LTT as a matter of law. App. 7 ¶¶ 2-10, 12. Defendants 

recognized as much before this suit was ever filed. 2CR8016 (Sossi e-mail stating 

that LOI provisions applied to LTT, LRMC, SDP, and “any third party who was 

19

1245899
included in these discussions as agreed to by the Parties.”) Thus, while the LOI

and Confidentiality Agreement are each sufficient to establish a confidential 

relationship between all of the parties, even without those agreements, the context 

of the parties’ negotiations is sufficient, at a minimum, to create material fact issue 

as to the confidential relationship between each of the parties.

b. Improper means

In respect to acquiring a trade secret through improper means, courts 

recognize that “[a] complete catalogue of improper means is not possible. ... [i]n 

general they are means which fall below the generally accepted standards of 

commercial morality and reasonable conduct.” Lamont v. Vaquillas Energy 

Lopeno Ltd., LLP, 421 S.W.3d 198, 213 (Tex. App.—San Antonio 2013, pet. 

denied). “Improper means” includes, but is not limited to “theft, fraud, 

unauthorized interception of communications, inducement of or knowing 

participation in a breach of confidence, and other means either wrongful in 

themselves or wrongful under the circumstances of the case.” Wellogix, Inc., 716 

F.3d at 876.

Under Texas law, “the question is not ‘How could [Defendants] have 

secured the knowledge?’ but ‘How did [they]?’” Lamont, 421 S.W.3d at 213. 

There is more than sufficient summary judgment evidence to raise a fact question 

as to whether Defendants improperly acquired the trade secret information from 

20

1245899
LTT in addition to breaching their obligations of confidence. See App. 7 ¶¶4-5 and 

3CR11919-20 and evidence cited therein.

That fact question is not resolved by Sossi’s contention that he acquired LTT 

information through communications with LTT’s landlord, Healthcare REIT, when 

he provided legal advice to Healthcare REIT in respect to LTT.6

 At most, this 

evidence raises a fact question whether the Lawyer Defendants breached their duty 

of confidence by disclosing to the Hospital Defendants and HUD information 

provided confidentially by or on behalf of LTT during the course of the Lawyer 

Defendants’ representation of Healthcare REIT. In fact, the trial court noted that 

“[t]he existence of the confidential, attorney-client relationship between REIT and 

Mr. Sossi” meant that the Defendants “must prove the information was available 

from another, non-confidential source” to establish it was in the public domain and 

thus no longer proprietary. 3CR12252. 

In short, the evidence is sufficient to show a genuine issue of material fact as 

to whether Defendants acquired LTT’s trade secrets through a confidential 

relationship or improper means, and the trial court erred to the extent it granted 

summary judgment on this ground.

6 Notably, no Defendant tied the limited information Sossi claims he obtained through that 

confidential attorney-client relationship to any trade secret information identified in LTT’s 

summary judgment responses. Compare 2CR5238-39 to 3CR11912-20 and evidence cited 

therein. 

21

1245899

 
3. There is evidence that Defendants disclosed or used LTT’s trade 

secrets without authorization. 

Under Texas law, “one who discloses or uses another’s trade secrets, without 

a privilege to do so, is liable to the other if ... his disclosure or use constitutes a 

breach of confidence reposed in him by the other in disclosing the secret to him.” 

Hyde Corp., 314 S.W.2d at 770. Either disclosure or use is sufficient to impose 

liability. Id. Both apply here.

a. Defendants “used” the trade secrets.

As a general matter, “any exploitation of [a] trade secret that is likely to 

result in injury to the trade secret owner or enrichment to the defendant is a ‘use.’” 

Wellogix, Inc., 716 F.3d at 877 (emphasis added). “‘Use’ can include ‘activities 

other than the actual selling of the product.’” Id. “Any misappropriation of trade 

secrets, followed by an exercise of control and domination, is considered a 

commercial use.” Cudd Pressure Control, 328 Fed.Appx. at 965. This can include 

“an act that ‘lower[s] the market value’ of a trade secret.” Wellogix, 716 F.3d at 

877. Unauthorized use “need not extend to every aspect or feature of the trade 

secret; use of any substantial portion of the secret is sufficient to subject the actor 

to liability.’” Bishop v. Miller, 412 S.W.3d at 774. “Use of a modified ... version 

of the trade secret will not avoid liability if the version is substantially derived 

from the protected information.” Restatement (Third) of Unfair Competition § 40 

cmt. c (1995). Even if a final product “differs significantly from that of the 

22

1245899
plaintiff, substantial use of the trade secret in the course of the defendant’s research 

can be sufficient to constitute an appropriation.” Id.; accord Bishop v. Miller, 412. 

S.W.3d at 774.

In Cudd Pressure Control, the Fifth Circuit reversed summary judgment 

based on “use” analogous to this case. 328 Fed.Appx. at 965-66. The plaintiffs’

former employee, Roles, used some of the plaintiff’s financial information to 

create a business plan circulated to investors for his new company, Great White. 

Id. at 966. That financial information was false as it related to Great White. Id. 

Roles also showed investors plaintiff’s profit and loss statement “to validate [that] 

what I was telling them was true.” Id. Reversing the district court’s summary 

judgment based on an alleged lack of “use,” the Fifth Circuit held that Roles 

“exercised control over [plaintiff’s] confidential information to convince investors 

to finance Great White.... He therefore sought to profit from using the confidential 

information, and so ‘used’ it.” Id. Accordingly, the Fifth Circuit held there was a 

question of material fact as to “use.” Id. 

Defendants similarly exercised domination and control over LTT’s trade 

secrets in order to disparage LTT’s Lake Travis Hospital as a competitor and 

convince HUD to insure LRMC’s $166.9 million hospital mortgage. By doing so, 

Defendants obtained financing for their hospital (thus enriching themselves) while 

also diminishing the value of LTT’s trade secrets. Just as in Cudd, Defendants’

23

1245899
actions create a question of material fact as to “use.” Id. (“Use encompasses using 

a trade secret to procure financing.”). 

As is discussed more fully above in the statement of facts, during the project 

review, LTT provided Defendants with confidential, proprietary, and trade secret 

information it used to build and develop its hospital. App. 7 ¶¶6-7. This 

information, provided as documents or through site inspections and meetings,

included mechanical and electrical specifications, architectural specifications, 

architectural drawings, responses to Defendants’ architect PSP, and plats. See, 

e.g., 3CR11919-20 and evidence cited therein. The information was not publicly 

available, was created for the development of LTT’s hospital at considerable 

expense, and gave LTT a competitive advantage over those who did not know or 

use it. App. 7. This information, individually and in combination with each other, 

were trade secrets of LTT. See Southwestern Energy, 411 S.W.3d at 597.

After being provided LTT’s trade secrets in confidence for the limited 

purpose of evaluating the feasibility of acquiring the LTT facility (LOI §§6, 9), 

Defendants used that information to draw conclusions about alleged conversion 

costs associated with the LTT facility. The summary judgment evidence shows 

that the review process resulted in a lengthy report from the Hospital Defendants’

architect detailing alleged civil, architectural, mechanical, electrical, and other 

“noncompliance” issues and recommending various changes. 3CR8593-8616. 

24

1245899
This resulted in a detailed response from LTT’s architect, 3CR8637-47, as well a 

conference call among the Lawyer Defendants, the Hospital Defendants, PSP, and 

LTT’s architect addressing the issues. 3CR8648-52. Defendants then used the 

information from LTT to determine the pricing of their proposed modifications. 

To convince HUD that LTT was not a competitive facility, and thereby fund 

LRMC’s $166.9 mortgage, Defendants used LTT’s trade secrets in the May 10th 

Email and subsequent correspondence with HUD. 2CR8024-25. LTT did not 

consent to Defendants’ use of LTT’s trade secrets for that purpose. App. 7 ¶¶15-

16. Defendants used the trade secrets to obtain significant economic benefits for 

themselves, and LTT was injured as a result. At a minimum, this evidence raises a 

fact question as to “use” of the trade secrets. See Cudd Pressure Control, 328 

Fed.Appx. at 966; see also Wellogix, 716 F.3d at 877 (“any exploitation of [a] 

trade secret that is likely to result in injury to the trade secret owner or enrichment 

to the defendant is a ‘use,’” including “an act that ‘lower[s] the market value’ of a 

trade secret”); see also Lamont, 421 S.W.3d at 215 (despite defendants’ testimony 

that they did not use trade secrets, the circumstantial evidence of the defendants’

access to the information and conduct immediately afterward supported the jury’s 

finding of misappropriation); see also Bishop v. Miller, 412 S.W.3d at 773

(attempts to use misappropriated information to attract investors constitutes 

impermissible “use”). 

25

1245899
b. Defendants “disclosed” the trade secrets. 

Disclosure means making something known or public. See BLACK’S LAW 

DICTIONARY 562 (10th ed. 2014). The trial court justified its summary judgment 

ruling by stating “[a]ll of the alleged secrets, in LTT’s own presentation, are at 

least one step removed from any disclosure.” 3CR12252. The summary judgment 

evidence raises a fact question as to Defendants’ disclosure of LTT’s trade secrets.

Sossi testified that he “shepherded” the LRMC application through HUD 

and handled “any and all communications related to the HUD loan and LRMC.” 

2CR7776-77. As part of “shepherding” the application, the Lawyer Defendants 

participated in a number of in-person meetings and telephone calls with HUD. Id. 

at 7777-80, 7813, 7815. Sossi admitted that he discussed LTT in sufficient detail 

to allow HUD to determine whether LTT would be a significant competitor to 

LRMC’s proposed hospital:

The existence of the plans for the [LTT factility] were discussed in 

detail with the HUD Client Service Team and [they concluded] the 

facility as planned would not appear to meet the general acute care 

needs for the Lakeway Community. 

2CR8110. Sossi’s unequivocal admission raises a question of fact as to disclosure.

Sossi also asserted that he and the other Defendants “expect HUD to defend 

the decision to issue the Guarantee,” and that HUD’s due diligence process was 

“proper.” Id. Sossi’s May 10th Email was written in response to some of HUD’s 

due diligence. Given the substance of the May 10th Email, HUD’s parroted 

26

1245899
response in reliance on it, and the fact that HUD never communicated with LTT 

prior to making that response, it is reasonable to infer that SDP’s verification of 

“Mr. Sossi’s facts” included LTT’s confidential trade secrets. See Lamont, 421 

S.W.3d at 215 (circumstantial evidence of defendants’ access to the information 

and conduct immediately afterward supported finding of misappropriation). The 

evidence also shows that LTT never authorized Defendants’ disclosures. App. 7 

¶16. Judge Yelenosky erred to the extent he found no evidence of Defendants’

unauthorized disclosures.

4. There is evidence of damages as a result of the misappropriation. 

In respect to damages, “the established rule is that the plaintiff is not 

required to prove lost profits; rather it need only prove misappropriation of its 

valuable trade secret and prove that it was put to some commercial use.” Univ. 

Computing Co. v. Lykes-Youngstown Corp., 504 F.2d 518, 540 (5th Cir. 1974). As 

discussed above, there is evidence of Defendants’ misappropriation and 

commercial use of LTT’s valuable trade secrets. Once that showing is made, 

“[d]amages in trade secret cases can take a variety of forms.” Southwestern 

Energy, 411 S.W.3d at 608 (citing Univ. Computing, 504 F.2d at 535). For 

example, even if a plaintiff cannot prove that it suffered a specific injury caused by 

the defendant’s use (which is not the case here), the court may instead award 

damages based on the defendant’s actual profits gained by using the trade secret. 

27

1245899
Id. at 609. In addition, “a lack of profit from [defendant’s] misappropriation will 

not exempt the wrongdoer from liability in the amount of the trade secret’s value 

when it was misappropriated.” Id. Rather, the court may award a reasonable 

royalty, based on what the parties would have agreed to for the use of the trade 

secret at the time of the misappropriation if both had been reasonably trying to 

reach an agreement. Id.

a. Loss of market value

There is evidence that LTT suffered losses in market value to both itself and 

to its trade secrets as a result of Defendants’ misappropriation. Berry, CEO and 

Managing Member of LTT, was familiar with and had personal knowledge of LTT 

as an entity, its value, and the loss of market value suffered by LTT as a result of 

Defendants’ misappropriations at issue. App. 7 ¶15. Based on that knowledge, 

Berry stated that a conservative price a willing buyer would pay a willing seller in 

respect to LTT before Defendants’ misconduct would have been $13,794,834. 

App. 7 ¶19. As a result of Defendants’ misconduct, LTT lost nearly all of its value 

as an enterprise. Id. 

In addition, Berry was familiar with the trade secret information LTT 

provided to Defendants, and stated the price a willing buyer would pay a willing 

seller for LTT’s trade secrets at the time of the misappropriation was at least $7.9 

million. Id. This market value was based on Berry’s familiarity with the 

28

1245899
discussions between LTT and the Defendants, the value LTT placed on its trade 

secrets and its reluctance to disclose them to competitors, his review of 

communications from HUD raising questions about competition in the Lakeway 

area, and evidence suggesting uncertainty about whether Defendants could get 

other sources of funding. App. 7 ¶¶ 19, 11. As a result of Defendants’ conduct, 

LTT’s trade secrets lost nearly all of their market value. Id. This unchallenged 

evidence of trade secret damages is sufficient to create a question of material fact 

as to damages. See Reid Road Mun. Util. Dist. No. 2 v. Speedy Stop Food Stores, 

Ltd., 337 S.W.3d 846, 853 (Tex. 2011) (officer of a company may testify as to the 

value of a company and its assets). 

b. Reasonable royalty damages

The evidence of the market value also provides evidence of the amount of 

reasonable royalty damages. In measuring reasonable royalty damages, courts 

consider, among others, the following factors: the resulting and foreseeable 

changes in the parties’ competitive posture; prices paid by licensees in the past; the 

total value of the secret to the plaintiff, including the plaintiff’s development cost 

and the importance of the secret to the plaintiff’s business; the nature and extent of 

the use the defendant intended for the secret; and whatever other unique factors in 

the particular case might have been affected by the parties’ agreement, such as the 

ready availability of alternatives. Univ. Computing, 504 F.2d at 539; Southwestern 

29

1245899
Energy, 411 S.W.3d at 610 (citing Georgia–Pacific Corp. v. United States 

Plywood Corp., 318 F.Supp. 1116, 1120 (S.D.N.Y. 1970), mod. and aff’d, 446 

F.2d 295 (2d Cir. 1971), and the “fifteen factors considered in other leading cases 

in determining a reasonable royalty”). 

Berry considered many of these factors when determining the value of 

LTT’s trade secrets at the time of misappropriation to be “at the least the 

consideration of $7.9 million contemplated by the LOI.” App. 7 ¶15; see 

Bohnsack v. Varco, L.P., 668 F.3d 262, 275-76 & 280 (5th Cir. 2012) (reversing 

$600,000 benefit-of-the-bargain fraud award but upholding $600,000 reasonable 

royalty award for misappropriation since “terms negotiated between [the parties] 

are sufficient evidence to prove the value” of the confidential information to a 

reasonably prudent investor). 

c. Benefits obtained

Finally, Defendants profited handsomely from their misappropriation. They 

used the misappropriations in the May 10th Email to convince HUD to disregard 

LTT as a competitor and quickly fund the $166.9 million loan. See 2CR8017. 

Benefits obtained by the Defendants are recoverable as damages for LTT’s 

misappropriation claim. Southwestern Energy, 411 S.W.3d at 609.

30

1245899
d. No HUD reliance necessary

It is not necessary that LTT prove that HUD relied on the information in 

order to recover for trade secret misappropriation. Even if there was not sufficient 

evidence of HUD’s reliance (and there was), the evidence raises questions of fact 

as to reasonable royalty damages, which are not dependent on proof that HUD 

relied on Defendants’ improper disclosure of LTT’s trade secrets. Instead, 

royalties are based on the value of the trade secret information at the time it was 

misappropriated. Southwestern Energy, 411 S.W.3d at 609.

Moreover, the summary judgment evidence easily raises a question of fact 

on the issue of HUD’s reliance, as the trial court itself recognized: “LTT has met 

its summary judgment burden of providing circumstantial evidence that 

defendants’ communications with HUD resulted in receipt of the loan guarantee 

and some evidence that the loan guarantee resulted in damages to LTT.” 

3CR12252. By law, HUD may only insure mortgages for “urgently needed 

hospitals.” 12 U.S.C. § 1715z-7(a). It therefore can only insure mortgages for 

hospitals in underserved areas, 24 C.F.R. § 242.16, and information about 

potentially competing hospitals such as LTT was therefore material to whether 

HUD had the legal authority to insure the LRMC loan. Defendants’ HUD expert 

observed that it would be “negligent” for HUD not to consider the information

31

1245899
about LTT in authorizing the loan, and HUD “would have been crucified for not 

doing due diligence; taxpayers would demand full review.” 2CR8169-73. 

In sum, there is sufficient evidence to raise a genuine issue of material fact 

as to each challenged element of LTT’s claim for misappropriation of trade secrets. 

The trial court erred in granting summary judgment.

C. Summary judgment was improper as to Section 2 of the LOI. 

LTT alleged that the Hospital Defendants breached Section 2 of the LOI, 

which includes various provisions regarding the terms of the Project. LOI §2.7

 

Judge Yelenosky granted summary judgment as to LTT’s Section 2 claims. App. 3 

¶1. That was error. Section 2 is a binding provision, it includes all the terms 

necessary for its enforcement, and any alleged failure of conditions precedent to its 

enforcement was caused by the Hospital Defendants’ own conduct.

1. Section 2 of the LOI is a binding agreement. 

a. The detailed provisions are more than an agreement to agree.

LTT pled that the Hospital Defendants breached various terms of the LOI, 

including specifically Section 2. Section 2 of the LOI outlines the parties’

agreement on the key terms for the proposed lease assignment (“Project”) between 

LTT and LRMC. It includes detailed provisions regarding LRMC’s assumption of 

LTT’s lease, including the nature and intended legal effect of the assignment, 

terms of payment, and the reimbursement of costs. LOI §2. The LOI provides that 

7 The LOI is attached at App. 1.

32

1245899

 
the Section 2 terms are subject to the satisfaction of specific conditions, such as 

approval of LRMC’s Board, the approval of HCN (LTT’s landlord), and the 

mutual development of definitive documents “that fully reflect the intention of the 

parties expressed in this Letter of Intent.” LOI §3. And the LOI obligates the 

parties to “use their respective best efforts to satisfy each of the foregoing 

conditions as soon as reasonably practicable....” LOI §3. In other words, Section 

2 contains a comprehensive list of terms that were triggered by satisfaction of the 

five conditions precedent set out in Section 3 of the LOI.8

The Hospital Defendants moved for summary judgment that Section 2 of the

LOI was not enforceable because it was merely an “agreement to agree.”9

 

2CR5618. This argument fails under Texas law and the plain language of the LOI.

A recent opinion by the Supreme Court of Texas makes clear that an 

agreement is not an unenforceable “agreement to agree” simply because it 

8 Despite their argument that Section 2 was never intended to be enforceable, the Hospital 

Defendants also moved for summary judgment that “[c]onsummation of Section 2 of the LOI 

was based upon five conditions precedent” but “two of the five conditions were never satisfied.” 

2CR5622. If the parties intended for Section 2 to be “consummated” upon satisfaction of certain 

enumerated conditions, they necessarily also intended for Section 2 to be a binding contractual 

provision once those conditions were met. 9 Judge Yelenosky rejected the Hospital Defendants’ argument that the “best efforts” provision 

in Section 3 of the LOI was too vague, and thus rendered Section 2 of the LOI unenforceable. 

3CR12250 (“I will grant the motions with respect to LTT’s breach of Section 2 of the LOI, but 

not with respect to the “best efforts” provision in Section 3.”); App. 3 (Order). Best efforts 

clauses, such as the clause here, that “set some kind of goal or guideline against which best 

efforts may be measured” are enforceable. CKB & Assocs., Inc. v. Moore McCormack 

Petroleum, Inc., 809 S.W.2d 577, 581 (Tex. App.—Dallas 1991, writ denied). The Hospital 

Defendants have acknowledged that the confidentiality and noncircumvision provisions of the 

LOI are binding. See 2CR8016. 

33

1245899

 
contemplates future contracts. McCalla v. Baker’s Campground, Inc., 416 S.W.3d 

416 (Tex. 2013). The McCalla Court held that an “agreement that includes all of 

the terms necessary for the contract’s enforcement is an enforceable contract as a 

matter of law, even if some of its terms seem to imply that the parties contemplate 

forming an additional contract in the future.” 416 S.W.3d at 416. The Court 

repeated the well-settled principal that “[a]greements to enter into future contracts 

are enforceable if they contain all material terms.” Id. at 418. While the contract 

in that case stated that the parties agreed “to execute any documents that [were] 

reasonable and necessary to carry out the terms and provisions of this Agreement,”

the Court noted that the agreement also “stated that it ‘shall be binding upon ... the 

parties ....” Id. at 417 (ellipsis in original). The Court noted: “[i]f a court was 

trying to enforce the settlement agreement, it could find all the terms necessary for 

its enforcement,” and thus held that the agreement was binding. Id. at 418.

McCalla was recently applied in the context of a letter of intent for a 

complicated commercial transaction. See Karns v. Jalapeno Tree Holdings, LLC, 

459 S.W.3d 683, 691 (Tex. App.—El Paso 2015, pet. denied). The court of 

appeals held that if an LOI “contains all essential terms as contemplated by the 

parties and the only remaining issue is formalization of the agreement or 

negotiation of ancillary terms, then the LOI may be an enforceable contract if the 

34

1245899
parties intended to be bound.” Id. at 692 (emphasis added). The provisions of the 

LOI easily meet this standard.

b. The parties intended for all provisions of the LOI to be binding.

The LOI plainly reflects the parties’ intent to be bound. The introductory 

paragraph states, without exception, that it is a “Binding Letter of Intent.” LOI at 

1. And although Section 2 contains an “outline of terms” for the Project, its 

language makes clear that the detailed terms outlined therein were fully negotiated 

and agreed,10 and it does not state that its terms may later be altered in future 

negotiations. LOI §2. Section 3 contains conditions precedent to the terms in 

Section 2, again demonstrating that the parties intended for Section 2’s terms to 

become binding upon satisfaction of those conditions. LOI §3. The fact that one 

of the conditions was the “mutual development of definitive documents that fully 

reflect the intention of the Parties expressed in this Letter of Intent” further 

demonstrates the finality of the parties’ substantive agreement on the key Project 

terms, as does the parties’ agreement to use their “respective best efforts” to satisfy 

the conditions to consummation of Section 2. Id. 

10 See, e.g., Section 2.1 (“LRMC will assume the Lease . . . and become the tenant. . .LRMC 

shall ensure that all such liabilities in favor of any third parties are released . . .”); Section 2.2 

(“LRMC will refund at closing of the assignment of the Lease all deposits made by the Principals 

. . .[and] shall assume all liabilities and contractual obligations of the Principals . . .”); and 

Section 2.3 (“. . . LRMC will make a single lump sum cash payment at closing to the Principals, 

or their designated assignee, equal to $1.5 million.”) (emphasis added). 

35

1245899

 
In addition, Section 10 states that “if any Party to this Letter of Intent 

breaches any provision of this Letter of Intent” irreparable harm shall be presumed. 

And Section 10.6 states:

The persons executing this Letter of Intent personally represent and 

warrant that they have been duly authorized to do so by their 

respective Party and that, upon full execution hereof, this Letter of 

Intent shall be a binding obligation of said Party.

LOI §10.6 (emphasis added). 

In sum, through the provisions of the LOI itself, the parties recognized and 

intended all provisions of the “Binding Letter of Intent,” including section 2, to be 

binding and enforceable, not simply an “agreement to agree.” At a minimum, 

these provisions create a question of fact as to whether the parties intended for 

Section 2 to be binding, making summary judgment on that issue improper. See, 

e.g., Foreca, S.A. v. GRD Dev. Co., 758 S.W.2d 744, 746 (Tex. 1988) (holding that 

the question of whether a letter agreement that was “subject to legal 

documentation” was intended to be binding was a question of fact properly 

presented to the jury).

c. Section 2 contains all essential terms. 

To be enforceable, an agreement “must contain sufficient terms to determine 

the parties’ obligations but is not required to resolve all disputed issues.” West 

Beach Marina, Ltd. v. Erdeljac, 94 S.W.3d 248, 259 (Tex. App.—Austin 2002, no

pet.). The parties may agree upon certain contractual terms and leave other matters 

36

1245899
for later negotiations. See Scott v. Ingle Bros. Pac., Inc., 489 S.W.2d 554, 555 

(Tex. 1972). “It is only when an essential term of a contract is left open for future 

negotiations that there is no binding contract . . .” Geophysical Micro Computer 

Applications (Int’l) Ltd. v. Paradigm Geophysical Ltd., No. 05-98-02016, 2001 

WL 1270795, at *3 (Tex. App.—Dallas Oct. 24, 2001, pet. denied) (not designated 

for publication) (citing McCulley Fine Arts Gallery, Inc. v. “X” Partners, 860 

S.W.2d 473, 477 (Tex. App.—El Paso 1993, no writ)). 

Section 2 of the LOI contains all essential terms for its enforcement. Section 

2.1 states that LRMC “will assume the existing Lease,” relieve the Principals of all 

liability under the Lease, and indemnify the Principals and their affiliates of any 

liabilities after the assignment of the Lease. Section 2.2 states that LRMC “will 

refund at closing of the assignment of the Lease all deposits made by the Principals 

and their respective affiliates and reimburse to the Principals and their respective 

affiliates all reasonable and documented costs that have been advanced by them to 

develop the Facility.” Section 2.2 then further defines such costs to include, 

among other things, reimbursement of compensation of certain employees and 

other development-related expenses. Section 2.3 provides that, in exchange for 

assignment of the Lease, LRMC “will make a single lump sum cash payment at 

closing to the Principals or their designated assignee, equal to $1.5 million.” 

37

1245899
In short, Section 2 defines the specific obligations that must occur and 

explains when they must occur. “If a court was trying to enforce the [agreement], 

it could find all the terms necessary for its enforcement,” and, just as in McCalla,

the LOI contains the material terms for Section 2 to be enforceable.11 416 S.W.3d 

at 418. Section 2 of the LOI is thus a binding and enforceable provision, subject 

only to satisfaction of the conditions precedent in Section 3. As discussed below, 

the Hospital Defendants prevented these conditions from occurring, so they 

became legally responsible for failing to comply with Section 2.

2. The Hospital Defendants cannot rely on unsatisfied conditions 

precedent to avoid complying with Section 2 because their own 

conduct prevented performance.

It is an “elementary” rule of contract law that “one who prevents or makes 

impossible the performance of a condition precedent on which his liability under a 

contract is made to depend cannot avail himself of its nonperformance.” II 

Deerfield Limited Ltd. P’ship v. Henry Bldg., Inc., 41 S.W.3d 259, 265 (Tex. 

App.—San Antonio 2001, pet. denied). One court of appeals recently looked at a 

set of conditions precedent that the defendant claimed the plaintiff had not 

satisfied. Sharifi v. Steen Automotive, LLC, 370 S.W.3d 126, 146 (Tex. App.—

11 The Hospital Defendants’ argument below that the LOI does not contain specific amounts for 

compensation, severance, and reimbursement does nothing to prevent the enforceability of those 

obligations. First, such details relate to the form and not the substance of the transaction; they 

are not essential terms. See McCulley, 860 S.W.2d at 477. Second, under Texas law, such 

provisions are enforceable even without specific figures. See Fuqua v. Fuqua, 750 S.W.2d 238, 

245 (Tex. App.—Dallas 1988, writ denied) (holding that an agreement to pay rent at a 

“reasonable rate” is not too indefinite to be enforced).

38

1245899

 
Dallas 2012, no pet.). Three conditions in particular involved the defendant’s

payment of debts to a third party. Id. The court held the defendant could not rely 

on the non-occurrence of the conditions, which was due to the defendant’s “choice 

not to perform.” Id.

Similarly, in another case plaintiffs had an agreement with a water authority 

where plaintiffs would receive seventy percent reimbursement of certain costs if 

the voters passed a required bond measure. Clear Lake City Water Auth. v. 

Friendswood Dev. Co., Ltd., 344 S.W.3d 514, 517 (Tex. App.—Houston [14th 

Dist.] 2011, pet. denied). The defendants failed to include the measure on the 

ballot, thereby prevented the occurrence of the condition precedent, and argued 

that “nonoccurrence of this condition...is not excused if the [defendant] can 

establish that the voters would not have approved the 2004 bond measure had it 

been included on the ballot.” Id. The court rejected that argument and held that 

“the Authority cannot rely on a projected failure of voter approval, which it 

prevented or made impossible...to escape its liability to purchase the Developers’

facilities.” Id.

Here, the Hospital Defendants moved for summary judgment that “two of 

the five conditions” in the LOI were not satisfied.12 2CR5622. First, they claimed 

that “the approval of HCN as landlord under the Lease to the assignment thereof”

12 The Hospital Defendants did not allege that the parties’ failure to develop definitive 

agreements was an unsatisfied condition. 

39

1245899

 
was never satisfied. 2CR5623. “Lease” is defined as the lease for the LTT 

hospital facility. LOI at 1. Section 2 requires LRMC to “assume the existing

Lease” between LTT and the landlord. LOI § 2.1 Section 3 requires LRMC to 

make best efforts to secure approval from “the landlord under the Lease to the 

assignment thereof.” Sossi’s uncontroverted testimony, however, shows that 

Defendants never sought approval for assignment of the “existing Lease” as 

required by the LOI:

Q. Did you negotiate with HCN as landlord under the lease on behalf 

of LRMC to the assignment of Exhibit 1?

A. Yes. But for an amended and restated lease.

Q. As a lawyer, Mr. Sossi, do you understand the difference between 

the assignment of an existing document and the renegotiation and 

execution of a new document?

A. If a specific document is identified, yes.

*****

Q. Did you negotiate with HCN as landlord under the lease on behalf 

of LRMC to the assignment of Exhibit 1 without modification?

A. No, not without modification.

2CR7771-72; see also 7766-71.

In other words, the evidence shows that Defendants made no effort, much 

less a best effort, to get approval from the Landlord for the assignment of the 

existing Lease. The Hospital Defendants did not satisfy this condition, and cannot 

40

1245899
rely on its nonoccurrence to avoid liability for breach. See II Deerfield, 41 S.W.3d 

at 265; Clear Lake, 344 S.W.3d at 517; Sharifi, 370 S.W.3d at 146.

The Hospital Defendants alleged that one other condition was not satisfied, 

that of “full and formal approval by the Board of Managers of LRMC...” 

2CR5624. LRMC’s corporate representative Eddie Alexander admitted that 

LRMC’s Board never took a vote on approval of the project. 2CR7721. Just as in 

City of Clear Lake Water Authority, the Hospital Defendants cannot rely on the 

lack of a vote they failed to take to avoid compliance with Section 2 of the LOI. 

344 S.W.3d at 517 (holding defendant “cannot rely on a projected failure of voter 

approval, which it prevented or made impossible...to escape its liability”).

The evidence creates at least a question of fact on whether the Hospital 

Defendants prevented the two conditions precedent from occurring. These were 

the only conditions precedent that the Hospital Defendants relied on in moving for 

summary judgment. Judge Yelenosky erred in granting the Hospital Defendants’

motions and dismissing LTT’s claims for breach of Section 2 of the LOI.

D. The trial court abused its discretion in sustaining objections to some of 

LTT’s summary judgment evidence. 

This Court reviews rulings on summary judgment evidence for abuse of 

discretion. Woodhaven Ptnrs, Ltd. v. Shamoun & Norman, LLP, 422 S.W.3d 821, 

829 (Tex. App.—Dallas 2014, no pet.). Judge Yelenosky abused his discretion by 

41

1245899
excluding portions of LTT’s summary judgment evidence. App. 4.13 The excluded

evidence relates to LTT’s ownership of the proprietary and trade secret information 

(Exhibits 1, 33), and to Defendants’ misuse of that information in their 

communications with HUD (Exhibits 23-29). Because the evidence was not 

objectionable, this Court should consider it in ruling on summary judgments.

1. The court improperly sustained objections that had become moot. 

As a threshold procedural matter, the court erred in excluding portions of the 

Project File (Exhibit 33), as well as Exhibits 23-29, because LTT’s Amended MSJ 

Responses mooted some of the Hospital Defendants’ objections.14 

LTT responded to the Hospital Defendants’ motions for summary judgment 

(“Original MSJ Responses”) and filed an Appendix and Supplemental Appendix 

(“Appendix”) of supporting evidence.15 3CR9542-9626 (SDP), 9627-9706 

13 The trial court ruled on the Hospital Defendants’ objections to LTT’s summary judgment 

evidence, but it did not rule on the Lawyer Defendants’ objections. App. 4 (order addressed to 

the Hospital Defendants’ objections only). There are thus no rulings for LTT to appeal because 

the court did not exclude any evidence in connection with the Lawyer Defendants’ summary 

judgment motions. See Investment Retrievers, Inc. v. Fisher, No. 03-13-00510-CV, 2015 WL 

3918503, at *4 (Tex. App.—Austin June 25, 2015, no pet.) (mem. op.) (“[A] trial court’s ruling 

on an objection to summary-judgment evidence is not implicit in its ruling on the motion for 

summary judgment.”). Further, the Lawyer Defendants waived their objections to procedural 

defects in LTT’s evidence by failing to obtain a ruling. Jones v. Ray Ins. Agency, 59 S.W.3d 

739, 753 (Tex. App.—Corpus Christi 2001, pet. denied). Regardless, the Lawyer Defendants’

objections to the evidence fail for the same reasons as the Hospital Defendants’ Objections. 

14 Regarding Exhibit 23—the May 10th Email—the Hospital Defendants also filed that exhibit, 

so it is properly in the summary judgment record irrespective of any objection to it in LTT’s 

summary judgment appendix. Compare 2CR5716-19 (LRMC Ex. 8) and 8267-70 (LTT Ex. 23). 

15 The Appendix is out of order in the Clerk’s Record and appears in several non-sequential 

chunks: 2CR7598-8555, 3CR8580-9541, 3CR9707-11421, 3CR11882-98. Exhibits 23-29 

appear at 2CR8265-8480. 

42

1245899

 
(LRMC). The Appendix identified all of the evidence on which LTT relied in 

responding, including a detailed index of the categories of information in 

Exhibit 33, the Project File, and it stated that the “summary judgment evidence in 

this Appendix is hereby incorporated” into the responses. 2CR7598. 

The Hospital Defendants filed objections to LTT’s summary judgment 

evidence (3CR11486-524), arguing that LTT should have specifically cited to each 

page of the Project File, so the court should not consider any pages in the Project 

File “other than the 189 pages specifically referred to and identified in the”

Original MSJ Responses. 3CR11487 (Objection 2). The Hospital Defendants also 

objected to Exhibits 23-29 because LTT had not specifically cited to those Exhibits 

in its Original MSJ Responses. Id. at 11489 (Objection 5). 

LTT later filed amended responses to the Hospital Defendants’ motions for 

summary judgment (“Amended MSJ Responses”). 3CR11790-881 (SDP), 

3CR11899-982 (LRMC). In the Amended MSJ Responses, LTT added specific 

citations to hundreds of additional pages—totaling over 775 pages—in the Project 

File. See, e.g., 3CR11919-20 (identifying specific materials within the Exhibit 33 

Project File by bates number). LTT also added specific citations to Exhibits 23-29. 

See, e.g., 3CR11906 n.26, 11918 n.63, 11919 n.66. The Hospital Defendants did 

not file amended objections, even after LTT pointed out that the Amended MSJ 

Responses had mooted objections to the lack of page citations in the Original MSJ 

43

1245899
Responses. 3CR12017, 12022. Nevertheless, the court sustained the Hospital 

Defendants’ Objections 2 and 5, which were based solely on a lack of citation to 

the evidence in the Original MSJ Responses. App. 4.

The impact of the trial court’s ruling on this point is unclear. Given that the 

stated objections were only to pages and exhibits not cited by LTT, the ruling 

sustaining the objections cannot actually exclude any evidence because LTT cited 

to all the challenged evidence in its Amended MSJ Responses. However, if the 

ruling is construed to exclude any portions of these exhibits, then the trial court’s 

ruling was plainly in error. 

First, LTT’s Amended MSJ Responses mooted the Hospital Defendants’

objections to the lack of sufficient citation in the Original MSJ Responses. The 

trial court erred in sustaining objections that were based on a superseded pleading. 

See, e.g., Loy v. Harter, 128 S.W.3d 397, 407 (Tex. App.—Texarkana 2004, pet. 

denied) (holding the court erred in granting summary judgment based on pleading 

that had been superseded); Krainz v. Kodiak Resources, Inc., 436 S.W.3d 325, 328 

(Tex. App.—Austin 2013, pet. denied) (“When amended petitions are filed timely, 

trial courts must base their decision on the amended pleading, not any superseded 

petition.”). Second, LTT’s specific and detailed citations to the evidence in the 

Amended MSJ Responses cured the Hospital Defendants’ objections. 

44

1245899
2. LTT adequately cited to the entirety of the Project File. 

The court independently erred in sustaining the Hospital Defendants’

objection to “uncited references” within the Project File because LTT’s citations 

were sufficient. 

The Project File is a compilation of all documents that reflected LTT’s trade 

secret and proprietary information at issue in the case. The Index to the Appendix 

identified by bates number the categories of documents included within the Project 

File, and LTT’s Amended MSJ Responses gave specific references, by bates 

number, to about 775 individual pages within the Project File. LTT identified and 

described the nature of the Project File as a whole and explained the basis for its 

inclusion as summary judgment evidence. See, e.g., 3CR11922. LTT also 

provided detailed testimony on the contents of the Project File in the Berry 

Declaration. App. 7. The citations and descriptions in the Appendix, the Berry 

Declaration, and the body of the Amended MSJ Responses sufficiently directed the 

court to the evidence on which LTT relied.

Texas law does not require that each page of a documentary exhibit be 

individually cited in a summary judgment response. “A non-movant need not set 

out the exact evidence on which it relies or explain with specificity how this 

evidence supports the issues it raises; summary judgment is not a trial by affidavit 

or deposition. Evidence need only be referenced or attached in order for a court to 

45

1245899
consider it.” Hinojosa v. Columbia/St. David’s Healthcare Sys., L.P., 106 S.W.3d 

380, 387-88 (Tex. App.—Austin 2003, no pet.) (emphasis added)(citations 

omitted).

Here, the Project File, although by its nature a large exhibit, was well 

organized and supported by detailed testimony explaining why its contents 

supported LTT’s claims. Further, all the documents in the Project File collectively 

comprised LTT’s documentary evidence of its trade secret and proprietary 

information. This was not a situation where an entire deposition is generically 

referenced in a response without any citation to the relevant portions. All the 

documents in the Project File were relevant, they were relevant as a whole, and the 

Amended MSJ Responses explained in detail why this was the case. 

Judge Yelenosky’s conclusion—that only those pages in the Project File that 

were specifically cited by bates number were admissible—puts an unreasonable 

and unsupported obligation on the party responding to summary judgment. For 

example, must all the pages in a lengthy contract be individually discussed in order 

for the contract, as a whole, to be admissible? Of course not. LTT adequately 

cited to the entire Project File, and the trial court’s ruling was in error.

3. The court erred in sustaining an objection to argument that the Project 

File as a whole is a trade secret.

The Hospital Defendants objected to any “suggestion that Exhibit 33 [the 

Project File] constitutes a trade secret.” 3CR11486 at Objection No. 1. They 

46

1245899
argued that the Project File was a compilation of separate documents and objected 

“to any argument, suggestion, or purported evidence that the so-called Project File 

is itself a combination or compilation trade secret that is at issue in this case.” Id. 

at 11487. In other words, rather than objecting to the admissibility of Exhibit 33 

itself, the Hospital Defendants objected to any argument that the Project File, as a 

whole, was a trade secret.16 

The court sustained Objection No. 1 as follows: “Sustained to Exh. 33, 

except for those Bates numbered documents actually referenced in Plaintiff’s 

response.” App. 4. This ruling makes no sense in light of the objection presented 

to the Court, which had nothing to do with whether LTT had cited to individual 

pages. Further, the Hospital Defendants did not seek exclusion of any pages of the 

Project File, but rather sought to exclude any argument that the entirety of the 

Project File was a trade secret. The objection on its face is invalid—it was not an 

evidentiary objection but instead challenged the merits of Plaintiff’s claim. The 

question of whether the information contained in the Project File was really a trade 

secret, or a collection of trade secrets, was an appropriate issue for debate in the 

summary judgment briefing on the merits; it was not a proper basis for excluding 

any portion of Exhibit 33.

16 As is discussed in section B.1 of the Argument, the summary judgment evidence raises at least 

a fact question as to whether the Project File, taken as a whole, is a trade secret. 

47

1245899

 
4. Berry’s testimony about the Project File was proper. 

The court sustained the Hospital Defendants’ objection to the following two 

statements in the Berry Declaration: (1) LTT “owned the confidential, proprietary 

and trade secret information contained in the Project File,” and (2) LTT’s 

principals “had an ownership interest in the information as well, and were 

authorized to disclose it pursuant to the LOI on behalf of” LTT. 3CR11488 

(Objection No. 4); App. 4 (Order); App. 7 (Berry Declaration). The Hospital 

Defendants objected that these statements were conclusory because “Mr. Berry 

does not . . . actually provide any facts regarding Plaintiff’s purported acquisition, 

development, or ownership of [the information].” 3CR11488. It was error to 

sustain that objection, for two reasons: (1) it was based on an inaccurate 

assumption about how to prove ownership of a trade secret; and (2) Berry’s 

statements about ownership were based on his personal knowledge and supported 

by detailed facts regarding the information at issue.

First, proving ownership of a trade secret is different from proving fee 

simple title ownership of real or personal property: 

While trade secrets are considered property for various analyses, the 

inherent nature of a trade secret limits the usefulness of an analogy to 

property in determining the elements of a trade-secret 

misappropriation claim. The conceptual difficulty arises from any 

assumption that knowledge can be owned as property . . . While the 

information forming the basis of a trade secret can be transferred, as 

with personal property, its continuing secrecy provides the value, and 

any general disclosure destroys the value. As a consequence, one 

48

1245899
“owns” a trade secret when one knows of it, as long as it remains a 

secret. Thus, one who possesses non-disclosed knowledge may 

demand remedies . . . against those who ‘misappropriate’ the 

knowledge. 

DTM Research, LLC v. AT&T Corp., 245 F.3d 327, 332 (4th Cir. 2001) (emphasis 

added); see also In re Cayman Island Firm of Deloitte & Touche, No. 04-01-

00491-cv, 2001 WL 1042233, at *2-3 (Tex. App.—San Antonio Sept. 12, 2001, no 

pet.) (relying on DTM Research and holding that party who possessed confidential 

information could claim trade secret privilege irrespective of chain-of-title 

ownership rights); cf. Oryon Technologies, Inc. v. Marcus, 429 S.W.3d 762, 764 

(Tex. App.—Dallas 2014, no pet.) (citing DTM Research and noting that a central 

feature of a trade secret is the right to exclude others from the information). 

A party may therefore prove ownership of a trade secret in multiple ways, 

such as by proving that it created or developed the trade secret, Bishop v. Miller, 

412 S.W.3d at 771, or by proving that it possessed the non-disclosed information, 

and that the information remained a secret, DTM, 245 F.3d at 332. The Berry 

Declaration does both. 

For example, Berry details the time, effort, and expense that went into LTT’s 

development of the trade secrets. App. 7 ¶11. He also specifies, by detailed 

descriptive categories, the confidential information that LTT possessed and used in 

its business. Id. ¶7. He testifies that the documents reflecting this information 

were contained in the Project File, which he references and authenticates. App. 7 

49

1245899
¶¶5-7. Berry also explains that LTT took steps to preserve the secrecy of this 

information, both internally and externally, by limiting employee access to the 

information and requiring third parties to enter confidentiality agreements before 

accessing the information. App. 7 ¶¶7–10. 

Berry also describes the basis for his personal knowledge: he was the 

Managing Member and CEO of LTT, as well as one of its two owners. App. 7 

¶¶5-6. He states that he served in this position “[a]t all relevant times, including 

from the beginning of 2009 up to the present day.” ¶13. He indicates that he is 

familiar with all the information in the Project File, which he describes in detail. 

¶7. He testifies that he has reviewed that information, and that “[m]uch of the 

information in the Project File is or reflects confidential and proprietary 

information that provided LTT with a competitive advantage . . .” ¶7. Berry does 

not simply state that he, as a principal, owned the trade secrets. Instead, Berry 

explains that his ownership interest and his authority to disclose the information 

derive from his role as a Managing Member and CEO of LTT. ¶13.

Berry’s testimony regarding the basis for his personal knowledge is more 

than sufficient under Texas law. See Woodhaven, 422 S.W.3d at 842-43 (affiant 

demonstrated a sufficient basis for his personal knowledge via testimony about his 

position within a law firm, and his references to attached supporting documents); 

Nguyen v. Citibank N.A., 403 S.W.3d 927, 931 (Tex. App.—Houston [14th Dist.] 

50

1245899
2013, pet. denied) (affidavit testimony on Citibank’s ownership of an account was 

admissible and non-conclusory when based on affiant’s personal knowledge as 

custodian of records and her review of the records).

When read in context with the rest of Berry’s fourteen-page declaration, 

there is nothing conclusory about the two excluded statements. Berry’s statements 

regarding ownership of the confidential information in the Project File are 

admissible and should be considered by this Court in ruling on the merits of 

summary judgment. Given Berry’s detailed testimony on these matters, his 

Declaration as a whole establishes LTT’s ownership even if this Court affirms the 

trial court’s exclusion of the two challenged sentences. 

CONCLUSION AND PRAYER

As noted at the start of this brief, this cross-appeal presents simple, plainvanilla issues of summary judgment review and the existence of fact questions. 

LTT’s summary judgment evidence is more than sufficient to raise a fact question 

as to its claims for misappropriation of trade secrets and breach of Section 2 of the 

LOI. LTT therefore respectfully prays that this Court reverse the orders granting 

partial summary judgment as to those claims (App. 2, 3), as well as the order 

sustaining certain of the Hospital Defendants’ objections to LTT’s summary 

judgment evidence (App. 4), and remand those claims to the trial court. 

51

1245899
Respectfully submitted, 

SCOTT DOUGLASS 

& MCCONNICO LLP

303 Colorado Street, 24th Floor

Austin, TX 78701

(512) 495-6300

(512) 495-6399 Fax

By: /s/ Jane Webre_________

Jane M.N. Webre

State Bar No. 21050060

jwebre@scottdoug.com

S. Abraham Kuczaj, III

State Bar No. 24046249

akuczaj@scottdoug.com

Robyn B. Hargrove

State Bar No. 24031859

rhargrove@scottdoug.com

COUNSEL FOR LTT

52

1245899
CERTIFICATE OF SERVICE

I certify that the foregoing pleading was served on the following counsel of 

record via the CM/ECF electronic noticing system and e-mail, on September 21, 

2015.

Jeff Cody

Barton Wayne Cox

NORTON ROSE FULBRIGHT

2200 Ross Avenue, Suite 2800

Dallas, TX 75201-2784

Joy Soloway

NORTON ROSE FULBRIGHT

1301 McKinney, Suite 5100

Houston, TX 77010-3095

Robert A. Bragalone

B. Ryan Fellman

GORDON & REES, LLP

2100 Ross Avenue, Suite 2800

Dallas, TX 75201

Jessica Z. Barger

Raffi Melkonian

Wright & Close, LLP

One Riverway, Suite 2200 

Houston, TX 77056

 /s/ Jane Webre______

Jane Webre

CERTIFICATE OF COMPLIANCE

I certify that the foregoing instrument was prepared using Microsoft Word 

2010, and that, according to its word-count function, the sections of the foregoing 

pleading covered by TRAP 9.4(i)(1) contain 12,736 words. 

______/s/ Jane Webre________ 

Jane Webre

53

1245899
APPENDIX

The following items are included in the Appendix to this brief: 

App. 1: Letter of Intent (PX2; 2CR7623-29)

App. 2: Order on summary judgment as to the Lawyer Defendants 

(7/17CR201-02)

App. 3: Order on summary judgement as to the Hospital Defendants 

(3CR12266-67)

App. 4: Order on the Hospital Defendants’ objections to LTT’s summary 

judgement evidence (3CR12261)

App. 5: Charge of the Court (3CR12997-13009)

App. 6: Judgment (6/18CR3-5)

App. 7: Declaration of Robert Berry, without exhibits (2CR7604-7617)

App. 8: Confidentiality Agreement (2CR7619-21)

54

1245899
APP. 1 

 
SU RGICAl OEVEUJPMHH flARHIERS 

G. Edward Alexander John T. Prater 

Direct Number: 615-550-2600 ext 12 Direct Number: 615-550-2600 ext 13 

Cell Ph(me Number: 615-289-9896 Cell Phone Number: 6!5-714-1898 

Direct Telefax Number· 615-550-2601 Direct Telefax Number: 6 l 5-550 -260 I 

E-Mail: 

ealexander@surgicaldcveloprnenlpartners.co 

m 

E-Mail: 

jprater@surgica!developmentpartners.com 

VIA E-MAIL - September 15, 2009 

Mr. Robert F. Berry 

Mr. R Keith McDonald 

I 3 706 Research Blvd., Ste l 02 

Austin, TX 78750 

rfberryok@yahoo.com 

RE: Letter of Intent for the Acquisition of the Lakeway Hospital Lease 

Dear Robeti and Keith: 

Thank you for the opportunity to re-affirm our interest in the acquisition of the lease 

(the "Lease") for the hospital facility currently under construction in Lakeway, Texas (the 

"Facility") as the initial campus for Lakeway Regional Medical Center, LLC ("LRMC") and to 

serve as a key satellite facility for LRMC after the main campus for LRMC is developed (the 

"Project"). Stirgical Development Partners, LLC, ("SDP") is pleased to submit this Letter of 

Intent, as the agent for LRMC, to each of you (collectively, the "Principals") (each a "Party" 

and collectively the "Parties") for the Parties to work in good faith with each other to plan, 

form, develop, fw1d, acquire, open and operate the Project. The objective of this Binding Letter 

of Intent is to indicate SDP's interest in the Project and to establish the ground rules for the 

ongoing exchange of infonnation between the Parties to facilitate the development of the 

Project and the exchange of information required for such a process to succeed. To clarify this 

relationship and to best protect the interests of all of the Parties, the Parties hereto agree as 

follows: 

t. Discussions and Negotiation of the Project. Upon the execution of this Letter of Intent 

the Parties will enter into discussions and negotiations for a period of forty-five (45) days, 

may be by the of both 

and 

20 l 5~eaboay{/ ~Suit~ I Or). ff"ank!in1 'Tl·./ 3 7067 

Telephone. (615)550-2600 Fae (6! 5} 550-2601 

l Exhibit I 2 

I Berry 

I 818113 

LTT002154 

Confidential 
Lake Travis Specialty Hospital 

Binding Leiter of Intent 

September 15, 2009 

2 7 

as with any third 

of the Project 

as agreed to by tbe for the development and implementation 

2. The Pronosed Outline of the Terms of the Prolcct. As we have discussed the outline of 

the terms for the Project are as follows: 

2.1. _ Acquisition of the Lease. LRMC wi!J assume the existing Lease between Lake Travis 

Transitional LTCH, LLC (or its assignee controlled by the Principals) and HCN Interra 

Lake Travis LTACH, LLC ("'HCN") and become the tenant under the Lease. The 

Principals and each and every one of their respective affiliates will be relieved of all 

liability related to the Lease and the Facility upon the assignment of the Lease to 

LRMC, including, without limitation, the release of any guaranties relating to the Lease 

by the Principals or any of their respective affiliates, and LRMC shall ensure that all 

such liabilities in favor of any third parties are released in connection with the 

assignment of the Lease and shall indemnify and hold the Principals and their 

respective affiliates harmless from any and all such liabilities from and after the 

assignment of the Lease. 

2.2. Reimbursement of Deposits and Costs; Assumption of Obligations. LRMC will 

refi..md at closing of the assignment of the Lease all deposits made by the Principals and 

their respective affiliates and reimburse to the Principals and their respective affiliates 

all reasonable and documented costs that have been advanced by them to develop the 

Facility, including, without limitation, compensation and benefits paid to employees of 

the Principals and/or their respective affiliates responsible for the planning and 

construction of the Facility, all expenses incurred in connection with the planning and 

construction of the Facility, and interest expense associated with indebtedness incurred 

in connection with the facility. In addition to the foregoing, LRMC sha!I assume all 

liabilities and contractual obligations of the Principals and their respective affiliates 

incurred with respect to the Facility (whether relating to its development or its ongoing 

operations following its commencement of operations). In particular and without 

limiting the foregoing, LRMC shall either offer employment at their current 

compensation levels to, or shall reimburse Principals and their respective affiliates, as 

appiicable, for severance equai in the aggregate to six months' of such current 

compensation for, each of the following personnel relating to the Facility: Chief 

Operating Officer, Vice President of Facilities Management, Vice President of 

Ancillary and Support Services, Clinical Specialist (Infection Control Nurse}, Vice 

President of Medical Affairs, and Director of Facilities Management. 

2.3. Lump Sum Payment. In exchange for the assignment of the Lease to LRMC, LRMC 

will make a single lump sum cash payment at closing to the Principals, or their 

designated assignee, equal to $1.5 million. 

LTT002155 

Confidential 
Lake Travis Speciaf~v Hospital 

Binding Letter of lfltent 

September 15, 2009 

3 7 

3. Required Approvals for the Project. The above indicated terms in ~~~.::: 

subject to the conditions: (i) full and formal approval by the Board of 

of LRMC; (ii) the approval of HCN as landlord under the Lease to the assignment thereof; 

(iii) a reasonable due diligence process related to the foasibility of the Facility to serve as a 

campus for a general acute care hospital as configured or reasonably modified; (iv) the 

ability of LRMC to obtain appropriate funding to allow for this expansion of the operational 

plans for LRMC; and (v) the mutual development of definitive documents that fully reflect 

the intention of the Pruties expressed in this Letter of Intent. The Parties agree to use their 

respective best to satisfy each of the foregoing conditions as soon as reasonably 

practicable, subject to the other terms of this Letter ofintent. 

4. Eamest Monev. In consideration of the Principals' willingness to enter into this Letter of 

Intent and disclose Proprietary Information relating to the Lease and the Facility to SOP and 

LRMC, SOP shall cause LRMC to deposit as earnest money the amount of $50,000 with an 

escrow agent mutually acceptable to the Paiiies on or before the fifth day following 

execution of this Letter of Intent. In the event this Letter of Intent is terminated by or on 

behalf of LRMC for any reason, or in the event definitive agreements for the transactions 

contemplated herein arc not executed by the paities during the Negotiation Period (unless 

the failure to execute one or more definitive agreements lies with or is attributable to the 

unreasonable deiay of Principals or the Principals' unwillingness to agree to terms 

materially consistent with this Letter of Intent), the earnest money, including all interest 

thereon, shall be forfeited to Principals. If Principals terminate this Letter of Intent, or if 

definitive agreements for the transactions contemplated herein are not executed by the 

parties due to the unreasonable delay of Principals or the Principals' unwillingness to agree 

to terms materially consistent with this Letter of Intent, the earnest money, including all 

interest thereon, shall be returned lo LRMC. 

5. Term. This Letter of Intent will remain open for acceptance until September 17, 2009. 

After acceptance this LeHer of Intent may be tenninated by either Party, for any reason, 

with written notice to the other Party, subject to the provisions described above relating to 

the entitlement to the earnest money, and below related to the sharing of information gained 

in the negotiation and development process. 

6. Standstill and Non-Circumvention Provisions. Each of the Parties recognizes and 

acknowledges that in connection with such meetings and the exchange of information to 

discuss the Project, all Parties will need to act in good faith and not use any knowledge 

gained in the Project discussion process for their own benefit and exclusive of the rights or 

interests of the other Party. In order to accomplish that goal, the Parties agree: (i) that 

Principals will not enter into negotiations with any third party for the assignment of the 

Lease while this Letter of Intent is in force; (ii) LRMC wil! not enter into negotiations with 

any third party for the use of any site, other then the intended LRMC main campus site, as 

an alternative or satellite facility while this Letter of Intent is in force; and (iii) not to share 

any information with third parties gained in the negotiation and development process for the 

LTT002156 

Confidential 
Lake Travis Specialty llospital 

Binding Letter of fotent 

September 15, 2009 

4 

Project or to independently use any proprietary information of the other Party in any 

or regarding this Project with after the of 

this Letter of Intent. The parties agree that standstill to the 

continued work Principals on their plans for the operation of the Facility, the continued 

recruitment of potential investors by Principals lo be equity holders in the 

project, or other operational matters relating to the Facility during the term of this Letter of 

Intent, but no such discussions shal I preclude the Principals from entering into the definitive 

agreements contemplated in this Letter of Intent or from consummating the 

contemplated herein. 

7. Fees and Expenses. Each party will bear its own expenses associated with the 

development of the overall strategy and the interaction of the Parties in developing the 

definitive terms for the agreements contemplated by this Letter of Intent 

8. Relationshi11 Between the Parties. None of the provisions of this Letter of Intent are 

intended to create, nor shall be deemed or construed to create, any relationship between the 

Parties and any of the Parties' vendors or agents and any of the Parties, other than that of 

independent cntitii:s contracting with each other hereunder solely for the purpose of 

providing the services described in this Letter of Intent as independent contractors, and 

otherwise maintaining and carrying out the provisions of this Letter of Intent None of the 

Parties nor any of their respective agents or employees shall be construed to be the agent, 

employer, employee, p;:lrtner, joint venturer, or the representative of the other parties hereto, 

for any purpose of any kind or nature whatsoever. Both Parties agree to hold the other 

harmless from third-party liability resulting from acts of any Party. 

9. Confidcntialitv. The Parties desire to assure the mutual confidential status of any 

information which may be disclosed to or from any Party in the evaluation of this Project 

and the indicated approach to the Project: 

9.1. Proprietary Information. Except as provided in Subsection 9 .7 ., below, all 

information disclosed by any Party or its Representatives at any time to any other 

Party or its Representatives in connection with the Project in any manner shall be 

deemed "Proprieiary Information." The term "Representative(s)" means, in the case 

ofLRl\.1C or SDP, any director, officer, employee, member, shareholder, or agent of 

LRMC or SDP engaged in the evaluation of the Project, and in the case of 

Principals, Robert F. Berry and R. Keith McOonald. 

9.2. Permissible Use. Each Party that receives Proprietary Information (referred to as the 

"Receiving Party") shall use the Proprietary Information received from any other 

Party (referred to as the "Disclosing Party") solely to evaluate the feasibility of the 

Projcd or similar transactions between the Parties. No other rights are implied or 

granted under this Letter of Intent. 

LTT002157 

Confidential 
Lake Travis Specialty llmpitaf 

Binding Letter of Intent 

September 15, 2009 

5 7 

9.3. information received not be reproduced in any form 

except for internal use of the Receiving and only for 

the express purpose of evaluating the Project. 

9 .4. The Receiving Party shail use reasonable efforts to protect the 

Proprietary Information received with the same degree of care used to protect its 

own Proprietary Information from unauthorized use or disclosure, except that such 

Proprietary Information may be used or disclosed to the Receiving Party's 

Representatives as may be reasonably required to evaluate the Project. 

9.5. All Proprietary Information, unless otherwise 

m wnrmg, shall remain the property of the Disclosing and promptly upon 

of either Pa1iy shall be returned to the (including all whole 

or partial copies thereof and any written notes made regarding the Proprietary 

Information). 

9.6. No rights or obligations other than those expressly recited 

herein arc to be implied. No license is granted to tJ1e Receiving Party or otherwise 

implied. by estoppel or otherwise, with respect to any property or right of Disclosing 

Party, presently existing or acquired in the future, or for any use of or interest in the 

Proprietary fnformation except such use expressly contemplated by this Letter of 

Intent. 

9.7. Exclusions. It is understood that the term "Proptietary Information" does not 

include Information which: 

(a.) is now or herealier in the public domain through no fault of the Receiving Party; 

(b.) prior to disclosure hercllndcr, is properly within the t'ightful possession of the 

Receiving Party; 

(c.) is lawfully received from a third party with no restriction on further disclosure; or 

(d.) is obligated to be produced under applicable law or order of a court of competent 

jurisdiction, unless made the subject of a confidentiality agreement or protective 

order. 

10. Miscellaneous. 

10.1. Remedies. Based on the subject matter of this Letter of Intent and the mutual 

obligations and duties indicated herein and harm shall be 

presumed, if any Party to this Letter of Intent breaches any provision of this Letter of 

Intent. The Parties agree, that in the case of the breach of any of the non-circumvention 

LTT002158 

Confidential 
Lake Travis Specia!(p Hospital 

Binding Letter of flltent 

September 15, 2009 

?ll.g'!.§!![7 

or confidentiality provisions of this Letter Intent, the Party will have 

the right to that any court of competen! jurisdiction shall immediately enjoin the 

Party in breach in addition lo that Party entitled to all other rights and 

which the Party may have al lmv or in equity. 

l 0.2. Cornpeikd Disclosur~. ln the event a Party, any of its Representatives, or 

anyone to \·Vhorn any Party transmits the Proprietary Information, becomes legally 

compelled to disclose any of the Proprietary Information, prior to such disclosure such 

Party will provide the owner of the Proprietary Information with advance written notice 

and a copy of the documents and information relevant to such legal action, so the 

owner of the Proprietary Information may seek a protective order or other appropriate 

remedy to protect its interests in the Proprietary Information, and the compelled Party 

shal1 furnish only that portion of the requested Proprietary Information that the 

compelled Party is advised by a written opinion of counsel is legally required. 

l 0.3. There are no other understandings, agreements, or 

representations, express or implied, between the Parties, not herein specified until such 

time as definitive agreemen!s for proposals and letters of understanding can be 

developed ;,iml agreed to by the Parties for any individual Project. This Letter of Intent 

may not be amended except in a writing executed by all Parties. 

I 0.4. This Letter of Intent may not be assigned without the express 

written consent of all of the other Parties. 

10.5. Governing_ Law. This Letter of Intent and all transactions contemplated by this 

Letter of Intent shall be governed by the laws of the State of Texas, 

l 0.6. This Letter of Intent may be executed in any number of copies and 

by the different Pa11ies hereto on separate counterparts. Each counterpart shall be 

deemed an original, but all counterpa11s together shall constitute one and the same 

instrnmcnt fhe persons executing this Letter of Intent personally represent and warrant 

that have been duly authorized to do so by their respective Party and that, upon foll 

execution hcrcoi~ this Letter of intent shaii be a binding obligation of said Party. 

10.7. lennination. Termination of this Letter of Intent shall not relieve any of the 

Parties from !he obligations imposed by and above, with respect to 

Standstill, Non-Circumvention and/or Proprietary Information exchanged between the 

Parties, or as it relates to the terms, conditions, plans or discussions regarding the 

Project 

1 J. - If Principals are in agreement with the objectives indicated in Section 2 

and the conditions indicated in of this Letter of fntent and the te1ms and 

conditions contained here[n, please sign the RETURN COPY of this Letter of Intent and 

LTT002159 

Confidential 
Lake Travis Specialty llospilal 

Binding Letter of Intent 

September I 5, 2009 

!age 7 of 7 -~~- . ,__ .. ·-···--·····--····-····· ···················.·--··..-·-···•w·· 

return it to SDP. The terms of this Proposal are until 5:00 PM, Central 

l 7, 2009 and may be as indicated above. 

We look forward to our future meetings and the success of the Project which we can 

accomplish through om mutual efforts 

Sincerely, 

SURGICAL DEVELOPMENT PARTNERS, LLC 

G. Edward Alexander, President and CEO 

' Accepted this day of September, 2009 and effective September_;_, 2009. 

1/'l-

~/ / 4 ·--~/ Robert F Berry 

LTT002160 

Confidential 
APP. 2 

 
201

Jul 16 2814 16:49:89 214-461-4853 

Notice sent: final interlocutory ~·· 

Disp Parties: bf-3 l bf ....5 

Disp code: CVD !@ 'f b t{ 0 

Redact pgs:.---:-------=-=--

DC 

-> 

BK14204 PG1425 Paul Arnold Page 884 

Filed in }he District Court 

of Travis County, Texas 

JUL 1 7 2014 s(J, 

Judge_~__y __ Clerk S W G CAUSE NO. D-1-GN-12-000983 At 0,-'0'- AM 

Amalia Rodriguez-Mendoza, c~ 

LAKE TRAVIS TRANSITIONAL 1/fCJI, § 

LLC n/1</a LAK~: TRAVIS SPJ~CIALTY § 

HOSPITAL, LLC, § 

Plaintiff, 

v. 

LAKI<:WA Y REGIONAL MEDICAl. 

CENTI:R, I...LC, SUR(;ICAl, 

OEVRLOPMF~NT J> All.TNERS, L.LC, 

BRENNAN, MANNA & DIAMOND, 

LLC, BRENNAN, MANNA & 

DIAMOND, l'.L. AND FH.ANK T. 

SOSSI 

Defendants. 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

ORDER 

IN TH.}.: DISTRICT COURT 

345n1 JUDICIAl, DISTRICT 

TRAVIS COUNTY, TEXAS 

CAME: ON TO BE HEARD, this 19th day of June, 2014, DefendMts Brennan, Manna 

& J)iamond, LLC and Prank T. Sossi's Amended 11-cTclitional and No-Evidence Motion few . . 

Summary Judgment ("Motion"), and the Court, after reviewing the Motion, any written 

responses and replies thereto, and having heard oral argument from counsel for the parties, 

hereby AJ)JUJJGES, D.ECRimS, AND OROintS AS FOLLOWS: 

(A) The Motion is GlUNTE.I> in respect to the misappropriation of trade secrets claim and 

negligent misrepresentation claim alleged by Plaintiff Lake Travis Transitional L'TCH, 

LLC n/k/a Lake Truvis Specialty Hospital, LLC against Defendants Brennan, Manna & 

ORDF.It l'I\.GI~ l Of 4 
202

Jul lG 2B14 lG:49:21 214-4G1-4B53 DC -~ 

BK14204 PG1426 Paul Arnold Page BBS 

Diamond, LLC and Frank T. Sossi, and those two claims are l)lSMISSl~J) WITH 

PRJ!:,JUDICE:. 

(IJ) In all other respects, the Motion is I>·~Nlli~.D. 

f'"'- ~ 

SIGNE]) this _.L.b __ day orjv._ , 2014. 

AGREED AS TO FORM: 

S. Abraham Kuczaj, U · 

Attorney for Plaintiff L . e Travis 

Transitional L TCH, LLC n/kJa 

Lake Travis Specialty Hospital LLC 

rc) _f~z-----, ___ _t~;~~~:!. ... £.~.--.~~~'\,~-:::::::::;. B. Ryan Fellman 

Attorney for Defendants Bre!lllan, 

Manna & Diamond, LLC and 

Frank T. Sossi 

OROF.Tc 
APP. 3 

 
12266
12267
APP. 4 

 
12261
APP. 5 

 
12997
12998
12999
13000
13001
13002
13003
13004
13005
13006
13007
13008
13009
APP. 6 

 
3

DC BK14294 PG476 

Filed in The District Court 

of Travis County, Texas 

OCT 1 7 2014 RT 

At 1 :?Jc; 4 M. 

CAUSE NO. D-1-GN-12-000983 Amalia Rodriguez-Mendoza, Cieri<. 

LAKE TRAVIS TRANSITIONAL LTCH, § 

LLC n/k/a LAKE TRAVIS SPECIALTY § 

HOSPITAL, LLC, § 

§ 

v. § 

§ 

LAKEWAY REGIONAL MEDICAL § 

CENTER, LLC, SURGICAL § 

DEVELOPMENT PARTNERS, LLC, § 

BRENNAN, MANNA & DIAMOND, LLC, § 

AND FRANK T. SOSSI, § 

JUDGMENT 

IN THE DISTRICT COURT OF 

TRAVIS COUNTY, TEXAS 

345th JUDICIAL DISTRICT 

On August I I. 2014. this cause came on to be heard. Plaintiff Lake Travis 

Transitional L TCH, LLC n/k/a Lake Travis Specialty Hospital, LLC ("Plaintiff' or "L TT"), 

appeared in person and by attorney of record and announced ready for trial. Defendant 

Lakeway Regional Medical Center, LLC ("LRMC") and Defendant Surgical Development 

Partners, LLC ("SDP") (collectively, "Defendants" and each a "Defendant"), appeared in 

person and by their attorney of record and announced ready for trial. A jury having been 

previously demanded, a jury was duly empanelled and the case proceeded to trial. 

The jury heard the witnesses and the presentation of evidence. At the conclusion 

of the evidence, the Court submitted the questions of fact in the case to the jury. The 

charge of the court and the verdict of the jury are incorporated by reference herein for all 

purposes. On August 28. 2014, the jury returned a verdict to the Court. Because it 

appears to the Court that the verdict of the jury was for Plaintiff L TT and against 

1138876 
4

DC BK14294 PG477 

Defendants SDP and LRMC, judgment should be rendered on the verdict in favor of the 

Plaintiff L TT and against the Defendants SDP and LRMC. 

IT IS THEREFORE ORDERED, ADJUDGED, AND DECREED that Plaintiff 

L TT, in respect to its breach of contract claim, have and recover actual, past damages 

from Defendants SOP and LRMC. jointly and severally, in the amount of $7,900,000.00, 

as well as prejudgment interest on that amount at an annual rate of five percent (5.0% ). 

As of October 13. 2014. prejudgment interest on that amount, calculated as simple 

interest based on the date this case was filed on April 3, 2012, totals $998,863.01, which 

amount shall increase by $1,082. 19 per day until the date this judgment is signed. 

The Court finds that the parties have stipulated that the amount of reasonable 

attorney fees incurred by Plaintiff L TT in the prosecution of its breach of contract claim 

against Defendants SOP and LRMC is $2,000,000.00. IT IS THEREFORE ORDERED, 

ADJUDGED, AND DECREED that Plaintiff L TT have and recover from Defendants 

SDP and LRMC, jointly and severally, reasonable attorneys' fees incurred in the 

prosecution of L TT' s breach of contract claim in the sum of $2,000,000.00 pursuant to 

Chapter 38 of the Texas Civil Practice and Remedies Code. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that all costs of 

court incurred by Plaintiff L TT in this matter are adjudged against and shall be recovered, 

jointly and severally, from Defendants SDP and LRMC. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Plaintiff L TT 

have judgment against Defendants SDP and LRMC, and that the total amount of 

2 

1138876 
5

DC BK14294 PG478 

• 

judgment for Plaintiff L TT against Defendants SOP and LRMC, jointly and severally, 

shall be as follows: actual damages in the sum of $7,900,000.00; plus prejudgment 

interest on that sum as set forth above; plus attorneys' fees in the stipulated amount of 

$2,000,000.00; plus costs of court; plus post-judgment interest on the sum total of each of 

the foregoing, at an annual rate of five percent (5.0% ), compounded annually, from the 

date this judgment is rendered until paid. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that all writs and 

processes for the enforcement and collection of this judgment or the costs of court shall 

tssue as necessary. 

IT IS THEREFORE ORDERED, ADJUDGED, AND DECREED by the Court 

that the relief specified above is hereby granted and, as to all parties and issues in this 

case, all relief not specifically granted herein is expressly denied. This judgment is final, 

disposes of all claims and parties. and is appealable. 

SIGNED on October _ _il ~-.-

' ,:~~-/ - . 

' 

HONORABLE'LdRA .-- INGSTON 

' PRESIDINGJUDGE 

3 
APP. 7 

 
7604

CAUSE NO. D-1-GN-12-000983 

LAKE TRAVIS TRANSITIONAL LTCH, § IN THE DISTRICT COURT OF 

LLC n/k/a LAKE TRAVIS SPECIALTY § 

HOSPITAL, LLC, § 

§ 

Plaintiff, § 

§ 

v. § TRAVIS COUNTY, TEXAS 

§ 

LAKEWAYREGIONALMEDICAL § 

CENTER, LLC, SURGICAL § 

DEVELOPMENT PARTNERS, LLC, § 

BRENNAN, MANNA & DIAMOND, § 

LLC, BRENNAN, MANNA & § 

DIAMOND, P.L., AND FRANK T. § 

soss~ § 

§ 

Defendants. § 345th JUDICIAL DISTRICT 

DECLARATION OF ROBERT BERRY 

1. My name is Robert Berry. I am over twenty-one years of age, have never 

been convicted of a felony or misdemeanor involving moral turpitude, and I am otherwise 

competent and qualified to make this declaration. I am Chief Executive Officer and 

Managing Member of Plaintiff Lake Travis Transitional L TCH, LLC n/k/a Lake Travis 

Specialty Hospital, LLC, ("Plaintiff' or "L TT") in the above-styled litigation. This 

declaration is filed pursuant to Texas Civil Practice & Remedies Code § 132.001 in 

support of Plaintiff's Responses in Opposition to Defendant Lakeway Regional Medical 

Center, LLC's Amended Traditional and No-Evidence Motion for Summary Judgment and 

Brief in Support; Defendant Surgical Development Partners, LLC's Amended Traditional 

and No-Evidence Motion for Summary Judgment and Brief in Support; and Defendant 

1074813 
7605

Brennan, Manna & Diamond, LLC, Brennan, Manna & Diamond, P.L., and Frank T. Sossi's 

Amended Traditional and No Evidence Motion for Summary Judgment. In this Affidavit, I 

refer to Defendants Lakeway Regional Medical Center, LLC, Surgical Development 

Partners, LLC, Brennan, Manna & Diamond, LLC, Brennan, Manna & Diamond, P.L., 

and Frank T. Sossi collectively as "Defendants." I have personal knowledge of the facts 

asserted herein, which are true and correct. 

2. On or about April29, 2009, Surgical Development Partners, LLC ("SDP") 

and Lakeway Regional Medical Center, LLC ("LRMC") approached L TT about 

acquiring the Lake Travis Hospital facility to serve as the initial general acute care 

campus for LRMC' s hospital. At the time, L TT had a significant head start on 

construction, and was reluctant to share any of its confidential information with the 

developers of a competing general acute care facility. L TT was just months away from 

being over 80% complete, while LRMC was still just a lot. In order to allow the parties 

to discuss the possible acquisition of LTT's facility, SDP and LTT executed a 

Confidentiality Agreement dated May 11, 2009. A true and correct copy of the 

Confidentiality Agreement is attached as Tab A. 

3. In late May 2009, LTT informed LRMC and SDP that it wished to publicly 

announce LTT's plans to operate as a general acute care facility. LRMC and SDP asked 

L TT to not make the announcement and to give LRMC and SDP more time to complete 

their due diligence related to their potential acquisition of L TT' s facility. 

2 

1074813 
7606

4. On September 15, 2009, LTT and LRMC and SDP executed a Letter of 

Intent ("LOI"). The LOI obligated LRMC and SDP to keep confidential the information 

received in the course of evaluating the acquisition of the LTT facility (the "Project"). A 

true and correct copy of the LOI is attached as Tab B. Eddie Alexander, SDP's CEO, 

directed me to provide all due diligence information relating to the Project to him. LTT 

intended SDP to be a party to the LOI and to be bound by the terms of the LOI. When 

negotiating the terms of the Confidentiality Agreement and LOI, Defendants represented 

that they would keep all information provided in connection with the Lake Travis facility 

confidential and not use it for any purpose, other than to evaluate the Project. Both L TT 

and its Principals relied upon that promise to enter the agreements and provided its 

confidential, proprietary and/or trade secret information to Defendants including, but not 

limited to the information discussed below. 

5. LTT's confidential, proprietary, and trade secret information was provided 

to Defendants during the course of their project review. Some of the information was 

provided after SDP executed the Confidentiality Agreement. The majority of the 

information was provided after the LOI was executed. Some of the information was 

conveyed to Defendants verbally, through meetings, telephone calls, tours of the site, etc. 

To the extent the information is contained in written documents, it has been compiled 

into a "Project File" and produced to each of the defendants in this matter. The Bates 

range of the Project File is LTT 007875-LTT 009907. LTT owned the confidential, 

proprietary and trade secret information contained in the Project File. As the sole owners 

3 

1074813 
7607

of L TT, Keith McDonald and I had an ownership interest in the information as well, and 

were authorized to disclose it pursuant to the LOI on behalf ofLTT. 

6. In my role as Managing Member and CEO of L TT, I am familiar with and 

have personal knowledge of LTT's confidential, proprietary, and trade secret 

information, including the documents contained in the "Project File," which include: a 

deal subfile; correspondence; contracts; drawings and specifications; financial 

information and business plans; and other miscellaneous information pertaining to the 

Project. 

7. I have reviewed each of the documents in the Project File. The Project File 

contains information that L TT used in its business that provided L TT with an advantage 

over competitors who did not know or use it. Much of the information in the Project File 

is or reflects confidential and proprietary information that provided L TT with a 

competitive advantage, and L TT considered this information a trade secret. The trade 

secret information in the Project File includes, but is not limited to: architectural plans; 

program design and operations; financial information; hospital organization; mission; 

staff recruitment and retention; physician support; sources and uses of funds and other 

"cost based" information; preliminary fmancial feasibility and other information about 

projected revenues and costs for the initial operation of Lake Travis Hospital; current 

state of construction; and preliminary fmancial feasibility ratios and other information 

about projected key operational ratios of Lake Travis Hospital. Other information in the 

Project File contains some information that may, by itself, be in the public domain; 

4 

1074813 
7608

however, when used in unique combination with other information in the Project File, it 

provides LTT with a competitive advantage as well. In addition, the Project File contains 

certain confidential modified architectural plans that were not, at the time they were 

provided to defendants, on file with the City of Lakeway or with any other public entity. 

The trade secrets contained in, reflected in, and comprising ·the Project File were 

provided to Defendants during the course of negotiating with SDP and LRMC the 

acquisition of LTT's facility as LRMC's initial general acute care campus. In addition, 

LTT provided some of this information to Defendants verbally during the project review. 

8. L TT owned the trade secrets contained in the Project File and used them in 

its business. These trade secrets in the Project File were not generally known or readily 

available to the public. L TT took reasonable steps to preserve the confidential and secret 

nature of its trade secrets. For example, it was L TT' s practice to require parties seeking 

L TT' s confidential information and trade secrets to agree to keep the information 

confidential. L TT secured agreements to keep L TT' s information confidential from, 

among others: its landlord, HCN Interra; the joint venturers who formed the LTT's 

landlord, HealthCare REIT and Interra; the facilities' architect, MEDesign Architecture; 

and the contractor who built the facility, Drymalla- Beckford Construction Co., LLC. 

L TT also secured confidentiality agreements from SDP and LRMC. I was personally 

involved in securing each of these agreements to keep L TT' s information confidential. It 

was my understanding and belief that each of the parties would keep information 

developed during SDP's and LRMC's review process confidential. For example, 

5 

1074813 
7609

attached at Tab C is a true and correct copy of an email from Bill Hurd at HCN Interra to 

Eddie Alexander and Ed Bivins at SDP, Bob Becktell at Drymalla - Beckford 

Construction Co., LLC, and others involved in the discussions relating to the Project, 

informing everyone that "This information is for the project review, please keep it 

confidential along with all of the information generated during this review process." No 

party to the email contested Bill Hurd's understanding that all the information generated 

during the review process was to be kept confidential. 

9. After SDP and LRMC terminated the transaction in late March 2010, LTT 

continued to require interested parties to agree to keep LTT's information confidential. 

I cannot recall any instance in which L TT' s trade secrets were disclosed, voluntarily or 

otherwise, to a third party unless the third party had committed either orally or in writing 

to keep the information confidential. 

10. Because the trade secret comprised ofthe body of knowledge illustrated by 

the Project File is reflected in its unique combination, it is not discoverable by inspection. 

The same is true for the vast majority of its constituent parts. L TT took measures to limit 

access to this information, both externally by requiring recipients to agree to keep the 

information confidential, and internally by limiting employee access to the information. 

11. The trade secrets contained in the Project File are valuable to L TT. 

L TT spent a great deal of time, energy, and money developing the information. The 

Principals of LTT personally expended more than 12,000 man hours over 6 years in the 

development of LTT and more than $2,650,000 in personal funds, including over 

6 

1074813 
7610

$1,031,000 in development staff salaries. The information would be extremely difficult 

to duplicate, if it is possible at all. 

12. The hospital facility was LTT's primary asset. The transaction 

contemplated by the LOI, which included reimbursement for certain development costs 

and other expenses, was for all practical purposes the sale of LTT's business. It is my 

understanding that LTT, LRMC, and SDP each had an economic interest in the deal 

being negotiated to acquire the LTT facility. 

13. At all relevant times, including from the beginning of 2009 up to the 

present day, I have been the Chief Executive Officer of LTT as well as its Managing 

Member. As an officer in a management position at LTT, I am familiar with and have 

personal knowledge of the value of LTT and its assets. For the same reason, I am 

familiar with and have personal knowledge of the lost net income from third parties that 

LTT would have, with reasonably certainty, been able to earn but for defendants' 

wrongful conduct. In reliance on the misrepresentations made by SDP and the other 

defendants, L TT forewent the opportunity to earn this net income from third parties and 

was, instead, induced to delay its completion and beginning of operations as the first 

acute care facility in Lakeway, Texas. 

14. In my role as a managing officer ofLTT, I compiled a detailed pro forma 

that projected LTT's net income. The pro forma is based on objective, detailed facts and 

data, taking into account the experience of L TT' s management, as well as the historical 

performance of other hospital facilities operated and/ or administered by L TT' s 

7 

1074813 
7611

management. Among other things, the objective facts and figures utilized Federal rates 

for Medicare reimbursement, adjusted to the region's labor specific rate and utilizing case 

mix index developed through the analysis of numerous physician interviews and profiles 

compiled to provide an objective projection of the both the case mix index and projected 

occupancy rate with reasonable certainty The pro forma utilized historic payment rates 

for Medicaid, and current per diem rates negotiated by commercial carriers in the market. 

With respect to outpatient revenue, the pro forma utilized projections as quoted from the 

companies contracting to provide those services, which included, for example, imaging 

and emergency care. Expenses were projected based on third party surveys, vendor 

quotes, contracts, and other objective data. This pro forma was created long before this 

lawsuit was filed, and was used by L TT in its business. In fact, before this lawsuit was 

filed, the pro forma was supplied, in confidence, to L TT' s landlord, who vetted the pro 

forma as part of its own business dealings with LTT. Utilizing the objective facts and 

data that went into the detailed pro forma, and based on my familiarity with and personal 

knowledge of these objective facts and data and the development of LTT, as LTT's 

managing officer, LTT suffered, with reasonable certainty, approximately $34.5 million 

in damages relating to lost net income from business opportunities with third parties in 

reliance on SDP and the other defendants' misrepresentations. 

15. In addition, in reliance on the misrepresentations made by SDP and the 

other defendants, L TT provided its valuable trade secret Proprietary Information to SDP 

and the other defendants. As a managing officer of L TT, I am familiar with and have 

8 

1074813 
7612

personal knowledge of the trade secret information that was provided in reliance on the 

misrepresentations at issue, and the fair market value of that information at the time of 

the misappropriation by SDP and the other defendants is approximately $7.9 million. 

To determine the market value of LTT's confidential, proprietary and trade secret 

information, I considered the price that a willing buyer would pay to a willing seller for 

the information, and then reduced that amount by the reduction in the value of the 

information resulting from LTT's reliance on SDP and the other defendants' 

misrepresentations. Based on my personal knowledge of and familiarity with the 

negotiations and discussions between L TT, on the one hand, and SDP and the other 

defendants, on the other hand, which is additionally supported by my review of the 

publicly filed documents in this matter, including communications from HUD to 

defendants raising questions and concerns about competition in the Lakeway area and 

evidence suggesting uncertainty about whether defendants could get other sources of 

funding, and further based on my personal knowledge and familiarity with the value and 

importance L TT placed on its trade secrets and its reluctance to disclose them to a nearby 

competitor, at the time of the misappropriation, the fair market value of L TT' s 

confidential, proprietary, and trade secret information would conservatively be at least 

the consideration of $7.9 million contemplated by the LOI, if not more. As a result of 

L TT' s reliance on the misrepresentations, taking into account, among other things, the 

resulting changes· in the parties' competitive posture and the negative impact that has had 

on LTT's ability to attract investors, the value of LTT's confidential, proprietary, and 

9 

1074813 
7613

trade secret information declined in fair market value to nearly zero, making the loss in 

market value of this information at least $7.9 million. This reduction in fair market value 

is conservative given that, as a result of SDP and the defendants' wrongful conduct, a 

number of investors decided to not participate in LTT's project because of concerns 

about LTT's competitive posture with LRMC. 

16. I have reviewed the May 10, 2010 email that Frank Sossi sent to HUD 

regarding LTT. The information that was the subject of Mr. Sossi's email was LTT's 

confidential, proprietary, and trade secret information described above, specifically, 

information regarding LTT's current state of construction, zoning, parking, code 

compliance, operations, staffing, financing, and physician support. This information was 

not publicly available, was provided to Defendants during the confidential project review 

process, and was not available through any other source. I did not authorize Defendants 

to use or disclose the information underlying Defendants' May 10, 2010 email to HUD, 

nor did I authorize Defendants to use or disclose L TT' s confidential, proprietary or trade 

secret information in any of Defendants' subsequent communications with HUD. At no 

time did I, Keith McDonald, or anyone acting behalf ofLTT consent to Defendants' use 

or disclosure .of LTT's confidential, proprietary and trade secret information except for 

the limited purpose contained in the LOI. 

17. My understanding is that Defendants claim here that L TT' s architectural 

plans were not trade secrets because they were on file with the City of Lakeway. This 

claim is inaccurate because L TT' s trade secret information includes certain modified 

10 

1074813 
7614

architectural plans that were not, at the time they were provided to Defendants, on file 

with the City of Lakeway or with any other public entity. I am aware that Defendants 

contend that the old, pre-modification architectural plans, two short and general newspaper 

articles, and a powerpoint presentation with general information that was partially presented 

at a meeting in Lakeway were publicly available. This information does not form the basis 

of LTT's claims, other than to the extent it may relate to aspects of LTT's unique 

compilation trade secrets. I am not aware of any confidential, proprietary and trade secret 

information that forms the basis of L TT' s claims being publicly available before the 

misappropriation by SDP and the other Defendants. 

18. I am aware of no court order to produce L TT' s proprietary information before 

the misappropriation by SDP and the other Defendants took place. At no time has any 

Defendant informed me or anyone with L TT that there was a court order that would require 

the disclosure of L TT' s Proprietary Information. 

19. As an officer of LTT, I have personal knowledge of and am familiar with 

L TT as an entity, its value, and the loss of market value suffered by LTT as a result of 

Defendants' conduct. Based on my personal knowledge of LTT, including its assets and 

liabilities, the status of construction, and physician support, and taking into account the 

detailed pro forma discussed above and all of the research and analysis that went into it, a 

conservative valuation of L TT before Defendants' misconduct would have been 

$13,794,834. I calculated this number by looking at the post-provider number period, 

first year of financial performance statements as opined by Tom Glass. Based on my 

personal knowledge of L TT, I agree with this number. I then took total of monthly 

11 

1074813 
7615

EBIDTA for that year and used a fair market multiplier of 3 to identify an initial fair 

market value, Once I determined that initial fair market value, discounted the major 

moveable equipment that L TT retained by 60 percent and combined the residiual value 

with the initial fair market value for a total of $13,794,834. Based on my personal 

knowledge and familiarity with LTT, this conservatively reflects the price a willing buyer 

would pay a willing seller for L TT before Defendants' misconduct. As a result of 

Defendants' misconduct, L TT lost nearly all its fair market value. L TT seeks to recover, 

as one of its damage models, the loss in $13,794,834 in fair market value caused by 

Defendants. 

20. In the course of discovery after this case was filed, LTT learned that 

Defendants made numerous misrepresentations to L TT in the course of the transactions at 

issue that L TT relied on and that caused L TT harm. Those misrepresentations included, 

among other things, that Defendants were moving forward with closing on the Lake 

Travis facility; that they was seeking the necessary HUD approvals for the acquisition of 

the Lake Travis facility; that they would acquire the Lake Travis facility even in the 

absence of the HUD guaranty; that they were making best efforts to satisfy the conditions 

under the LOI; that they were negotiating, in good faith, with Health Care REIT for an 

assignment of the Lease. These misrepresentations all caused LTT, in reliance on the 

misrepresentations, to forego publicly announcing its plan to open the Lake Travis 

facility as a general acute care hospital. L TT also relied on the misrepresentations about 

Defendants provide its confidential, proprietary information and trade secrets, to allow 

12 

1074813 
7616

construction to be delayed during the due diligence process and to later extend the due 

diligence period. As a result, after Defendants terminated the LOI shortly after securing 

the HUD guaranty, LTT's construction had been on hold for approximately six months. 

21. Once Defendants terminated the LOI in late March 2010, LTT specifically 

requested that Defendants return all of the "Proprietary Information" provided to it 

pursuant to the LOI. Despite L TT' s demands, Defendants refused to do so. L TT 

ultimately filed a lawsuit in Oklahoma to secure return of the Proprietary Information. 

On May 10, 2010 Defendants represented that they had returned or destroyed all of 

L TT' s Proprietary Information. In reliance on Defendants representations, the lawsuit 

was voluntarily dismissed without prejudice. 

22. In late May 2010, when HUD closed on the guaranty in favor of LRMC 

and to the exclusion of LTT, questions first arose about what may have happened during 

the HUD application process. In late May, a CEO of another hospital forwarded an email 

to me in which HUD expressed opinions about L TT' s operations, zoning, licensing, and 

viability. Prior to that email, no one from HUD had ever communicated with LTT. The 

statements in HUD's email appeared to be conclusions that were incorrectly drawn from 

specific information that had been confidentially provided to Defendants during the 

project review. At that point, LTT's counsel sent a request to HUD under the Freedom of 

Information Act ("FOIA") to determine what information HUD had considered when 

evaluating whether Lakeway was underserved for the purpose of LRMC's loan 

application. By December 2010, HUD continued to refuse to provide any documents in 

13 

1074813 
7617

response· to the request. At that point. L 1T was forced to file a federal lawsuit to seek 

compliance with FOIA. After lengthy litigation, Judge Sam Sparks ordered HUD to 

produce the responsive documents. 

Further Declarant sayeth not.'' 

My name is Robert Berry, my date of birth is ~r:;J lt:f.../<J!j and my 

addresais,j~l}_~c-(,~l ~~~-1.,§7¥61/ 

I declare under penalty of perjury that the foregoing is true and correct. 

Executed in Williamson County, State orTexas, on the 21st day or May, 2014 • 

0~ / 

ROBERT _1(./ BERRY ····-~ 

t 

14 

1074113 
APP. 8 
7619

Surgical Development Partners, LLC 

AND 

Lake Travis Transitional L TCH, LLC 

CONFIDENTIALITY AGREEMENT 

THIS CONF1DENTTALITY AGREEMENT ("Agreement") is made this 11th day of 

May, 2009, to be effective May 11, 2009 by and between Surgical Development Partners, LLC 

an Ohio limited liability company ("SDP") and Lake Travis Transitional LTCH, LLC, a Texas 

limited liability company ("LIT"). 

WITNESSETH 

WHEREAS, SDP has an interest in a potential development and/or management 

agreement opportunity as presented by LTT and will have access to, certain Confidential 

Information regarding these opportunities; and 

WHEREAS, LTT is interested in making the above indicated opportunities available to 

SDP and will allow SDP to have access to, certain Confidential Information regarding LTT's 

business; and 

WHEREAS, SDP and LTT desire to memorialize their understandings regarding SDP's 

disclosure and use of Confidential Information. 

NOW, THEREFORE, In consideration of the foregoing premises in this Agreement, the 

parties agree as follows: 

I. Confidential Information. L TT may furnish SDP with certain confidential, non-public 

and/or proprietary information concerning a certain Project in Texas (the "Project"). SDP 

may furnish LIT with proprietary information concerning its business. All infonnation 

concerning the Project shaH be held by" SDP in confidence in accordance \Vith this 

agreement. All business infonnation concerning LTT's business shall be held by SDP in 

····------------------------ Surgical Development Parrners, LLC and LIT 

Co!1_/identiality Agreement- Mt1y /I. 2009 

Exhibit 

4 

Berry 

8/8/13 
7620

( 

<XJnfidencc in accordance with this Agreement. All information concerning the Project 

and LIT's business shall hereafter be referred to as the "Confidential Information". 

2. Use of Confidential Information. The parties hereto agree to use Conftdentiallnfonnation 

only for infonnational purposes to evaluate participation in the Project. Both parties 

agree not to disclose Confidential Information to any other person or entity except upon 

the written consent of the other party. Both parties agree that, as set forth above, neither 

it nor its employees, agents, or business or professional associates will disclose or use any 

Confidential Information in any matter whatsoever. 

3. Return of Confidential Infonnation. All Confidential Information is to remain the sole 

property of each respective party. All Confidential Information furnished in documentary 

form and any copies thereof shall be returned to each respective party immediately upon 

its request. 

4. Entire Agreement: Invalidity. This agreement contains the full and complete 

understanding of the parties with respect to the subject matter hereof. It supercedes all 

prior representations and understandings whether oral or written. In the event that any 

provision herein is tound invalid or unenforceable pursuant to judicial decree or 

discussion, any such provision or obligation shall be deemed and construed to extend 

only to the maximum permitted by law and the remainder of this agreement shall remain 

valid and enforceable according to its terms. 

5. Equitable Relief. Because of the unique and proprietary nature of the Confidential 

Information, it is understood and agreed that remedies at law for breach by a party of its 

obligations under this agreement will be inadequate and either party shall, in the event of 

such a breach, be entitled to equitabk: relief, (including without limitation, injunctive 

relief and specific perfom1ance) without any requirements to post bond as a condition for 

such relief~ in addHion to all remedies under this agreement or available at law. 

6. Legal Fees. The prevailing party and any action or proceeding brought to enforce the 

provisions of this agreement shall be entitled to recover its reasonable legal costs and 

expenses incurred in such action or proceeding, including but not limited to, any legal 

costs and expenses incurred to enforce any judgments rendered on this agreement. The 

provision regarding recovery of legal costs shall not be merged into any judgment on this 

agreement. 

7. No Rights. Nothing in this agreement shall give either party any right, title, license, or 

interest, whatever in or to the Confidential Information (which shall remain at all times 

the property of each respective party) or in or to any existing patents, know how, 

inventions or other intellectual property of each respective party. 

8. Non-Assignability. The rights and obligations of the parties under this agreement may not 

be assigned. 

Surgical Development Partners, /,LC and LIT 

Coiifidentiality Agreement- May 11, 2009 

. 2 
7621

( ( 

9. Amendment and Governing Law. This agreement can only be amended by subsequent 

written agreement between the parties. This agreement will be governed by the laws of 

the state of Ohio and the parties agree that the exclusive jurisdiction for any 

disagreement, dispute, claim, or matter arising hereunder shall be in the courts of the 

State of Ohio, or the United States located in Summit County, Ohio. 

IN WITNESS WHEREOF, the parties have executed this agreement as of the date above written. 

Surgical Development Partners, LLC 

G. Edward Alexander, its President 

LTT 

Surgical Development Farmers. LLC and LIT 

Confidenriality Agreement-- May 1 I, 2009 

3