Affirmed in Part, Reversed and Rendered in Part, and Reversed and

Remanded in Part, and Memorandum Opinion filed July 6 , 2021
.

In The 

## Fourteenth Court of Appeals

NO. 14

- 19

- 00732

- CV
HOUSTON METRO ORTHO AND SPINE SURGERY, LLC ; ELITE AMBULATORY SURG ER Y CENTERS, LLC; LORI RAMIREZ; JAM ES ALBRIGHT, M.D.; CARL PALUMBO, M.D
. ; NAVIN SUBRAM ANIAN, M. D. ; ALAN RECHTER, M.D.; MARK PROVENZANO, M.D.; JUAN CARLOS BUSTOS, M.D.; ASIF CHAUDRY, M.D.; AND NEW TON

DUNCAN, M.D. , Appellant s

V. JUANSRICH, LTD. , AND RICHARD FR A NCIS, M.D. , Appellee s

On Appe al from the 215th District Court

Harri s County, Texas Trial Court Cause No. 2015

- 24460

MEMORANDUM OPINION Appellee Richard F rancis, M.D. , through his business entity, a ppellee Juansrich, Ltd. (collectively “ Juansri ch ” ) , ow n e d an interest in a ppellant Housto n Metro Ortho and Spine Surgery, LLC ( “ Metro ” ) , a n ambulatory sur gical ce nter.2

Juansrich shared ownership in Metro with several other surgeo ns, including appellants James Albright, M.D., Carl Palumbo, M. D. , Navin Subra ma n ian, M.D., Alan Rechter, M.D., Mark Provenza no , M.D., Juan Carlos Bustos, M. D., Asif Chaudry, M.D., and Newton Duncan , M.D. Appellant Elite Ambulat ory Surgery Centers, LLC ( “ Elite ” ) also o wned an interest in Metro and managed the daily operations of th e s urgery center. Appellant Lori Ramir ez was a n officer of Elite. As Class A members of Metro, the surgeons agreed , among other th ings , that each would conduct a certain percentage of the ir eligible procedures at Metro. A di spute began when appellants be l ieved Dr. Francis had stopped performing procedures at Metro

. Metro terminated Juansrich ’ s ownership interest in Metro. I t then filed su it against Dr. Francis seeking to e nforce a noncompe ti tion agreement contained in the “ Company Agreement of Houston Me t ro Ortho and Spin e S urgery Center LLC ” (the “ LLC A greement ” )

. Bel i eving it was owed significant sums as pa ym ent fo r its o wnershi p interest in Metro , as well as for missed dis tributions of earnings made while it was still a member of Metro , Juansrich fi le d counterclaims a lleging

numerous causes of action including br each of c ontract, conversion, a i d ing and abetting, and unjust e nrichment

. T he t rial court granted Dr. Francis ’ s motion for partial summary ju dg ment asserting that t he noncompeti tion agreeme n t w as unenforceable . It then realigned t he partie s making Juansrich the plaintiff. The trial court subse quently granted two Rule 166 motions fil ed by Juansrich and condu cted a bench trial o n the re maining issues

. At the con cl usion of the bench trial, t h e t rial court found in favor of Juansrich

. Juansrich elected to recover on its

con version cause o f action. The trial court signed a fin al judgment awarding (1) Juansrich $ 9,855,596.85 in damages on Juan srich ’ s conversion c ause of action an d $23,048.50 i n a t torney ’ s fees in connection with Juansr ich ’ s efforts to in spect3

Metro ’ s records , and (2) Dr. Francis $ 403,918.15 in att o rney ’ s fees and costs for defen ding against Metro ’ s noncompete claim

. Because Metro has not challenged the $23,048.50 attorney ’ s fee s a w ard on

a ppeal, we affirm that part of t he trial co u r t ’ s final judgment. Concluding that none of Juansrich ’ s tort claims c an support the final judgment, we rev erse the trial
court ’ s final judgment based on conversion and render judgment that Juansrich
t ak e nothing on those claims. In addition, be c ause the primary purpose of the LLC Agreement was not for the provision of personal services , we reverse a nd render judgment that Dr. Francis take noth ing on his request for attorney ’ s fees for defending again s t M etro ’ s suit seeking to enforce the non

- c ompete contained in the LLC Agreement

. W e conclud e that th e trial court erred when it granted Juansrich ’ s first and second Rule 166 motion s , which Juansrich relied on to support its breach of contra ct cause of ac ti o n. As a result, Juansr ich cannot now elect to rec over on its breach of contract claim seeking payment for its ow nership intere st

. W e therefore remand that cause of action to the trial court for further proceedings

. Finally, we conclude that the e v i denc e is leg a lly su fficient to support the trial court ’ s judgment on Juansrich ’ s claim for missed distributi on pay men ts. W e therefore affirm that part of the tri al court ’ s final judgment

. B ACKGROUND
Dr. Francis is an ortho pedic surgeon. D r. Fran cis and Dr. Rechter , an ot her ortho pedi c surgeon , were the original doctors involve d in the form ation of Me tro. Ramire z, Elite ’ s chief executive officer , was the moving force in the formation of Metro and the recruitment of doctors as investors in Metro . Metro is an ambulatory su rgery center t h at specializes in orthopedic, pain managem ent, spi ne, and pediatric ea r, nose, and th roat proce du res. As an ambula t ory surg ery center, M etro performs only outpatient surgery cases

. Metro ’ s Class A members consi st4

enti rely of d oc t ors and some o f those doctors ’ business or gan izations

. Juansrich is a Class A mem ber and it eventually own ed ab out 19. 50 units of Class A membership in Metro. 1 Juansrich paid a total of $195,000 for th ose units. The doctor appella nts a re all Class A mem bers of Metro . Elite is th e sole Class B member . Elite handles the day

- to

- day business operati ons of the surgical center , such as ma n ag ing the staff

. As with all limited liability compan ies, Metro is governed by a contract , the LLC A gr eement

. See T e x. Bus. Orgs. Code Ann. § 101.052

. Among the key
pr ovisions in the LLC Agreement are section s 2.3 , 4.3, and 10.7.
Sect ion 2.3
Section 2.3 (b)(iv) provides that e a ch Class A membe r “ shall perform at leas t

one
- third of such Class A M embe r ’ s procedures that require or can be performed at

a n ambulatory s urgery center at the [Metro] Center. ”
Section 4.3
Section 4.3 a ddresses re demption of m e mbers ’ ownership in terests

. Section 4.3 div ides te rminatin g events with respect to a m e mber ’ s ow n e r s h ip interest as ei t her “ Adverse Terminating Event s ” or “ Non

- Adverse Terminating Events. ” It f u rther provides that the redem ption pri ce for a Class A m ember ’ s u n its “ shall b e based on whether the Terminatin g Event is an Adverse Terminating Eve nt or a N o n
- Adverse Terminating Event. ” An Adverse Terminatin g Event occurs when , among other events not at iss ue here , a Class A M ember mat erially breaches the LLC Agreement. A Non

- Adverse Terminating Event occurs wi th respe ct to a Class A Member if , among other t hings , the Class A M e mber is removed “ for any

rea son or no reason, ” by “ Supermajori ty Approval. ” The redemption price is also

1 The LLC Agreement defines “ Unit ” as “ a unit or share of interest in the Co mp any. ”5

affected by whether Metro has become “ Operational ” as defined in the LLC Agreem ent. Metr o become s “ Op eration a l ” once it “ is Med i c are c ertified as an ambulatory surgical cent er
. ” If Metro is not “ Operational , ” or the terminat i on is

“ Adverse , ” then the redemption price for a departing Class A Member ’ s Units is limited t o the depa rting Member ’ s ca pital contribution. If Metro is “ Operational , ” and the t e rmi nation is “ Non

- Adverse , ” the redem ption price is determi ned by a f ormula found in section 4.3(g)(ii) of the LLC Agreement.
Section 10.7
S ection 1 0

. 7 of the LL C Agreement contains a non

- comp etition c lause

. It provides that [ d ] uring the t erm of a Cla s s A Mem ber ’s membership in [ Metr o ] , and for a perio d of one year the reafter, no Class A Member nor any of such Class A Member ’s Affiliat es, except as provided be low or through [Metro] , sha l l, without prior written Consent of the Class B Member , directly o r indirectly own, manage, operate , control, or partici pate in any manner in the ownership, management, operation, or control of, or serve as a partner , employee, principal, agent, consultan t , or other wise contra ct with, or have any financial in terest in, o r aid or assist any other person or entity that operat es a facility (including an ambulatory surgical center or office

- based or practice

bas ed facilit y or operating site or room that provid e s any of t he services offered by [Metro]) to provide o utpatient su r gical services, including a stat e
- licensed, Medicare

- certified or accredited surgery center or office

- based surgical facility, within 10 mi les of the location of [Metro’s ambulat ory surgic a l center ] (the “Restricted Terri tory ”) nor may a Class A Member pr o vide Facility Fee Procedures in such Class A Member ’s office

. T he preceding sentence shall not be construed to prevent a Class A Member or any of a Class A Member ’s Aff iliate ’s from (i) m a in t aining staff privileges at any facility, (ii) provi ding profess i onal surgical services and earni ng a profess ional fee thereon (but not actin g as an owner or having a compensation o r financial relation shi p ) in an y other ambulatory su rgical cen ter or hos p ital , (iii) p erforming any in

- office procedures under l ocal anesth e sia that does not require the pr esence of a n an esthe s i ologist or6

a cer tified re gistered nurse an e sthetist, or (iv) having any financial rela tionship or owning an i ntere st in an y hospital w i thin the Re stricted Terri t ory. For purposes of this Se ction 10.7, it shal l be presumed that a pers on or entity comp etes with [Metro] and violates this provision if such person or entity has any interest in any f acil ity or center of any type whatso ever fo r the co nduc t of, or c ompensation relationship with, any outpatient surgery center wit hin the Restri cted Terri tory. T he beginning of the Pra ctice
In a “ C onfidential Private Offering Memo randum for Ac credited Investors On ly , ” dated May 6, 2011, Metro notified potential investors t hat
THERE IS NO CURRENT S URGERY CENTER. C O NSEQUENTLY, TH E SURG ERY C E N TER HAS NO OPERATIONAL HIS TORY AND CURR ENTLY CONDUCTS NO BU SINESS. IT IS C ONTEMPLATED THAT THE SURGERY CENTER WILL NOT CONDU CT ANY OPERATIONS OR BUSINESS UNLESS AND UNTIL S U FFICIENT SU B SCRIPTIONS ARE RECEIVED AND ACCEPTED PUR S U A NT TO THI S OFF ER ING (THE MINIM UM AMOUNT OF WHICH IS YET TO BE DETE RMINED BY THE COMP ANY). That same offe ring memorand um further wa rned pot ential inv estors that Metro di d

“ not intend to s e rvice Medic are or Medicaid patients. ” Me tro repeated t hose same

wa r nings in a second confi dential mem orand um for potential investors dated January 1, 2012

. Metro ’ s business m o del was to operate as an out

- of

- network facil i ty unaffiliated with managed care providers. Under this mo del, Metro did not
cont ract with insuranc e compan ies on the rates that would be charged for
pro cedures, instead the d octor s would s ubmit th eir normal charges and wait on reimbursement

. By choosing this model, the doctors ex pected “ t o have reimbu rsement, in most cases, that is significantly hi ghe r than what they mi ght be able to receive on a contra cted basi s. ” Metro open ed its do ors to pati ents in April 2012. Metro was initially very

success ful. Dr. Francis was one of th e main reasons for that s ucce ss. H e7

perf ormed the most procedures at the M etro surgery center and a s a resul t, he was

co nsistently responsible for more than t w ent y pe rcent of Metro ’ s revenues. Dr. Fra ncis also ser ved as cha irman of Metro ’ s board

. The Change in the Practice and the Board vote
Pr oblems began to arise in 2014 wh e n two large insurance companies stopped paying Me tro for services rendered to their insureds. As a result, Dr

. Francis began performing more of his pro ced ures at o th er facilities. Concerned, his fellow surgeo ns and Ramirez attempted to communicate with D r. Fran cis

. Those effo rts were generally uns uccess ful

. Dr. Francis d i d , however, talk with Dr. Rechter

. Dr. Francis told Dr. Rechter that while he was committed to Metro, he was not going to co n ti nue perform ing s u rgeries at the c e nter if payment would n ot be received. I n add it ion, Dr. Franci s ’ s appear ances at the surgery c enter noticeably decl ined and he stopped atte nding board meetings. The Met ro board voted unanimou sly on October 31, 20 14 , to remove Juans rich as a mem ber

. Ramirez notified Juansrich of the board ’ s decisi on. Several days later, Dr. Fran cis

re s p onded that he ac knowl edged and accepted the board ’ s decision

. Juansrich ’ s

m embership un its went back into Metro ’ s tr easu ry. Metro placed $195,000, Juansrich ’ s capital c ontribution to obta in i t s membership units , in e scrow. M e tro eventuall y tender ed the $195,000 payment to Juansri ch, but it was rejected

. S everal of the re maining C la ss A members acqu ired those former Juansrich

mem bership units out of th e Metro treasur y in 2015

. Each purch a s e w as authorized by a vote of the Metro board. Metro made no dis tr i butions for earnings in September or October 2 0 1 4. 2 Distri butions resumed in December 2014 when M etro distributed $1 ,043,600 .37

. I n late 2017 , th e Me t r o members sold 50.1

2 Metro h ad h istorica lly made distributions of a mo nth ’ s earning s in the middle of the fol lowing month. Septe mber and Octobe r 2 0 14 were the first mo nths where no distribut ions occurred.8

p ercent o f their i nt erest in Metro to Nobilis Healt h Corporation for $21,446,364.
The La wsuit
Metro f iled suit against Dr. Francis in 2015 alleging that he had violat ed the

non compet e cont ained in the LLC Agreement. Jua n s ric h inte rvened

. Juansrich

a lle ged a breach of con t ract cause of a ction seeking payment for the re d em p tion of it s un its and it s propo rtionate share of the December 2014 dis tribut ion . Juan sric h also a lleged conversion , aidin g and abett i n g, and un just enrichment claims based on the same facts. Dr. F rancis moved f or summary j udgment arguing that the noncompete f

ound in th e LLC Agreement was une nfor ceable

. The trial court granted D r. Francis ’ s motion. In add i t i onal rul ings, the trial court (1) awarded Dr. Francis $ 403,918.15 in attorney ’ s fees and costs pu r suant to the n oncompete
sta tute ; (2) awarded Juansrich $2 3,048. 50 in attorney ’ s fees in connecti on wi th Juan srich ’ s ef

forts t o inspect Metro ’ s c o mpa ny rec ords ; and (3) granted Juansrich ’ s

no
- evidence motion on all o f Metro ’ s remaining affi rmati ve claims f o r rel ief. In addi ti on, the trial court realigned the parties making Juansrich the plaintiff

. As the tr i a l d ate ap pr oached, Juansrich filed two motions pur suant to Rule 166 of the Texas Rules of Civil Procedure

. See T ex. R. Civ. P

. 166 ( auth orizing tria l court to sc hedule a pre
- trial conference during whic h it may c onsider , am ong other things, “ contested i s s ues of fa ct and sim p li fi cation of the issues, ”

“ identificati on of legal matters to be ruled on or decid ed by the court, ” and “ such other matters as m a y aid in the dispo sition of the action. ” )

. The first 166 motion
The first motion argued that Metro ’ s termination of Juansric h was non
adverse. Juansrich then argue d that the undisputed facts showed that it had not vi olated the LLC Agreement. The moti o n relied on Metro ’ s corporat e deposition9

which identified tw o allege d breache s , vi o lating the one
- third procedures r ule and vi olat ions of the non

- compete in the LLC Agreemen t

. Juansrich argued that there

wa s no violatio n of the one

- third of pro cedures rul e because the period for

mea suring compliance wit h the ru le was M etro ’ s prior fiscal year , and Metro ha d admitted F r ancis had compl i ed with the rule for that year

. Juansrich then argu ed there could be no br each of the n on
- compete because the tria l court h a d granted Dr. Francis ’ s motion for su mmary judgment arg uing the non

- compete was

un enforceable. The t

r ial court granted Juansrich ’ s first Rule 166 motion.
T he second 166 motion
In the second Ru le 166 motion , Juansrich arg ued that the trial court could

ru l e as a matter of law that at the t ime of Juan srich ’ s termination, Metro was

“ Op eratio nal ” as defined in the Me t r o A greem ent. In other words, Metro had been Medicare ce rtified as an ambulatory surgical cent er. Juansric h based this argument

on alleged judi c ial admission s by Me tro admitting that Metro became

“ Operationa l ” o n May 22, 2011. According to J uansrich , this occurred three separate times, all in relation to Metr o ’ s summary j ud gment motion arguing that Juansrich ’ s terminat ion was adverse : (1) a s ent e nce in a supplemental moti on f or summary judgment on the s ubjec t filed by Metro stating that “ He r e , Metro became operational on May 22, 2011 ; ” (2) a Metro lawyer stating during the s ummary judgment hea ri ng that Ju ansrich “ wit hdrew within five years after M et ro became operat ional ; ” and (3) a P ower P oint slid e stating that “ Metro became operatio nal on May 22 , 2011

. ” The trial court granted this Rule 166 motion as we ll.
The Bench Tr ial The case proceeded t o a contentious trial before the bench

. At the concl u sion of the evi dence, the trial co u r t found i n favo r of Juansrich

. It subsequently signe d fin dings of fact and conclusions o f law supporting reco very on10

theories of conversion, aiding and abetting, unj ust enrichment, and br each of
contract

. Juansrich e l e cted to r e cover for conve rsion. The trial court ’ s final judgme nt awarded Ju ansrich $ 9,855,596.85 on Juan sri ch ’ s conversion c a use of action, plus attorney ’ s fees and costs for defen ding against Metr o ’ s nonc ompete cl aim

. The judgment also ordered that Jua n sric h re c o ver $2 3.048.50 in attorney ’ s fees aw ar ded pursuant to section 3.15 2(c) of the Texas Business Organi zations Cod e. See Tex. Bus. Orgs. Code Ann. § 3.152(c ) (authorizing award of atto rney s ’ fe es “ in a suit t o require a filing entity to open its bo o ks and r e c ords ” )

. This appeal followed

. A NAL YSIS
M etro raises numerous is sues on appeal challe n ging most o f the trial court ’ s judgment. It does not challenge the trial cou rt ’ s award of att orney ’ s fee s awarded
pur suant to the statute regu l a ting access t o a company ’ s financial records. See id

. Metro also does not d isp ute that it owes Juansrich some thing ; it argues the recovery is lim ite d to the re turn of Juansric h ’ s ca pital contribution. W ith that intr o duction , we turn t o Metro ’ s issues

. I
. Because an e xpress contract covers the dispute, Jua nsrich cannot recover under tort theories
. A. Conversion Metro argues in its first issue that the trial court erred when i t f ound that Metro and sever al of its members had converted Juansrich ’ s Metr o m embership uni t s because the dispute is governed by a cont ract, the LLC Agreement

. Metro then asserts that a case f r om th is court, Exxon Mobil Co rporation v. Ki nder Morgan Opera ting, L. P. , controls the out come here . 192 S .W.3d 120, 126

– 27 (Tex. App.

— Ho u st on [14th Dist

. ] 2006, no pet.).
In Exxon Mobil , we ex plained that the independent injury rule provides that11

“when the only loss or damage is to the subject matt er of the contrac t, the plain tiff ’s action is o rdinarily o n the contra ct

. ” Id. at 127. We f u rt her explained that “ when the contract spells out the parties ’ re sp ective rights about a s ubject matter, the contract

– not common l aw tort theories

– governs any di spute about the

s ubject matter. ” Id. We the n rejected Exxon Mobil ’s conversion claim becaus e

“ (1) the only l oss Exxon Mobil complains of is the pro pane, whi ch i s the subject of the con tract, and (2) the contract spells out the parties ’ respective rights r egarding the pro ce ssing of the propane. ” Id

. at 128 (internal citations omitted). This rul e

w as recognized by the Supreme Cour t of Tex as in Chap ma n Custom Home s, Inc

.
v. Dallas Plumbing Comp any , 445 S.W.3d 716, 718 ( Tex. 2014). There, the Court

s tated that “the econom ic loss rule generally precl udes recovery in tort for economic losses result i ng from a party ’ s failure to perform under a contract w hen the harm consists on ly of the economic loss of a contractual expectanc y
. ” Id. It
went on to explain tha t the economic loss r ule d oes not bar all t ort cla ims arising out of a contract ual setting. I d. The court observed that “ a party states a tort cl aim when the duty alleged ly bre ached is independ ent of the contra ctual undertaking and the h arm suffer ed is not merely the economic loss of a contr actua l benefit. ” I d. Here, we a re prese nted with th e former situat i on rather than the latter . Th e LLC Agr eement c overs the field of th is dispute. It created Juan srich ’ s ownership in ter est, defined the parti es ’ righ ts and duties under t he agreement , and est ablished the remedies a vailable when a party fail ed to per form t h ose duties. In addition , Ju ansrich ’ s a lleged loss i s the receipt of a contractual benefit, reimburs ement for the loss of its ownership interest in Metro. As a result, J uan sric h ’ s conversion claim fails as a m atter of law. See Exxon Mobil , 192 S.W .3d at 128 ( “ The very nature of the dispute be tween the par ties was whe ther appe llee s legally perfo r med their con tractual obligations under the GPA. Appellees have conclusivel y12

demonstrated that Exx on Mobil ’ s conversion claim s were bar red by appli cation of the i n dependent injury rule. ” )

. B e cause Juans rich cannot r ec over on a c onv ersion theo ry, its aiding and abetting theor y of imposing joint and several liability also fails. See Jessen v. Du vall , No . 14

- 1 6

- 00869

- CV, 2018 WL 1004659, at *7 (Tex. Ap p.

— Housto n [14t h Dist.] Feb. 22, 2018, no pet.) (mem. o p.) ( “ There fo re, if the underlying tort fails, an aiding and abetting claim related to the failed tort likewise fails. ” ) . In addit ion , to the extent Ju ansrich asserts aid ing and abetting a s an indepen de nt tort suppo r ting recovery against certain appellan t s, we have pr eviously rejected aiding and abetting as a valid legal theory. Solis v. S.V.Z. , 566 S.W

. 3d 82, 102

– 03 (Tex. App.

— Hous ton [14th Dist.] 2018 , pet. denied) (refusing to reco gnize aiding and abetting as a v a lid theory of recovery in Texas). We on ce again do s o here.
We sustain Metro ’s first is sue and reverse the trial court ’ s judgment based

on conversion and render judgment that Juansrich take n oth ing on either its conversion or its aiding and abett ing caus e s of action

. B. Unjust enrichment
The trial court also m a de findings supporting a rec overy by Juansrich for unjust enrichment. Metro argues in its second issue that t here can be no recover y f or unju st en richm ent because a con tract covers all aspe ct s of t h e cla im. We agree. Here, as pointed out above, t he LLC Agreement covers all aspects of Juansrich ’ s unjust enrichment claim. In addition , there w as a l egitimate disp ute regarding the

amou nt owed under the LL C Agreemen t, whic h forecloses an unjus t enrich m ent

re c overy. See Industrial III, In c. v. Burns , No. 14

- 13

- 00386

- CV, 2014 WL 4202495, at * 6 (Tex. App

. — Houston [14th Dist.] Aug. 26, 2014, pet. denied) (mem. op.) ( “ Generally speaking, a p arty may not re cover under qua ntum me ruit or unju st enrich me nt if a n express contract c overs the service s or material s13

fu rnished. ” ). As a result, we ho ld that Juansrich cannot recover under an unjust enrichment cause of action. Id.
II. The tr ial court er red whe n it granted Juansrich ’ s first and se con d R ule 166 m otion s r eq uiring a new trial o n Juan srich ’ s b re ach of contract claim s seeking payment for its ow nership interest in Metro.
As previously stated, Juansrich elected to recover under its c onversion c ause of act ion. T he trial cour t , however, also found that M etro b r eac hed the LLC Agreement. It det ermi ned that Juansrich ’ s bre ach o f contract dam ages t otaled (1) $7,844,676 for Metro ’ s breach of its obligation to pay Jua nsrich for its membership units , a nd (2) $191,764.21 for member di stributio ns for September an d Octo b er of 2014. The first amoun t was initially based on the trial court granting the two Rule 166 motions and thereby determin in g that Juansrich ’ s termination was non
- adverse and that Metro w as “ Operation al ” as defined in the LLC Agreeme nt when the terminati o n oc cu rred

. Bo th are req uir ements that mus t be met before Juansrich can recover anything more than its initial capital contribution. The second amou nt was based on (1) undisputed evidence that Juansrich was still a m ember of Metro in September and Octob e r of 2014 an d was entitled t o a prop ortionate s hare of any distri b utions that occurred for those months , an d ( 2) evidence admitted during the bench tria l al legedly esta bli shing the amount of those distrib utions

. Met ro argues in its third issue that neith e r am ount can stand.
A. The trial court could use R ule 166 in appropriate cir c umstances to resol ve legal issues.
We turn first to Metr o ’ s argument that Juansrich ’ s use of Rule 166 here wa s improper. We con clude that th e trial cour t had the authority unde r Rule 166, in
appro priate circumstances, to resolve legal issues that c ould streaml ine a trial. See Tex. R. Civ. P. 166(g) (p) ; JP M organ Chase Bank v. Orca Ass e ts G.P., LLC. , 546 S.W.3d 648, 653 (Tex. 201 8) ( stating t hat Rule 166 (g ) author izes trial cou r t s to14

de c ide matters that, though ordinaril y fact questions, have become questions of law

“ because reasonable m inds cannot differ on the outcome. ”) . Therefore, the question before us is not whether the pro cedu re wa s a u thorized, bu t whether the circumstan c es were appropri ate for such a ruling. We review a trial court ’s Rule 166 order de novo. JP M organ Chase Bank , 546 S.W.3d at 653

. B. The trial court erred when it granted Juansrich ’ s fi rst Ru le 166 motion.
To be entitled to a return of an yt hing more t ha n its in itial capital contribution , Juansrich initially had to establi s h that Juans rich ’ s termination by Metro was non
- adverse as defined in the LLC Agreement. An adver se termination

occ urs if the member materially breached the LLC Agreement. I f the term i nation

was “ adver se , ” then Juansrich would only be entitled to a return of its in itial cap ital contribution of $195,000. If the t erminati on was non
- adverse , then the r edemption price for Juansrich ’ s ow nership interest would be determined by whether t he
t e rmination o ccur

red before or after Metro bec ame “ O peration al ” as defin ed in the LLC A greement

. If the termination occur s before Metro bec o mes “ Operationa l , ” Juansrich would only be entitled to a re t u r n of its initial capital co ntribution , $195,000. If a f

ter, then the payment would be determined by performing a calculation lai d o ut in article 4.3(g) (ii)(B) of the LLC Agreement

. Metro had alleged that Juansrich ’ s termination was adverse because it had materially b reached the LLC Agre ement by vi o lating (1) t he non
- compete , and ( 2) the one

- third procedures rule

. Ju ansrich argued tha t the trial court should grant its first Rule 166 motion because (1) the undisputed facts showed that it had compl ied with the one
- third procedures rule , and (2) its prior summary judgment order had determined that the non

- compete agreeme nt was un enforcea b le. Juansrich argued

com pliance with the one

- third procedures requirement was m easure d by the prior15

fiscal year and Metro had admitt ed that Juansrich h ad complied with th a t

re qui r ement for 2013. J uansrich based this a rgument on the fac t that the LLC Agreement required that compliance with the one

- third of medical

- income rule be measured “ for the pr evious fisca l year or previous 12

- mon th period. ” The tri al court agree d and grant e d Juansrich ’ s first Rul e 166 motion. On appeal, Metro argues , in par t , that the trial court erred when it granted Juansrich ’ s f

irst Rule 166 motion because the LLC Agreeme nt did not specify that ,
un like the one

- third of medical

- income rule , compliance wit h the one
- third
pr oc edures rule was measured by the prior fiscal year
. Metro ass erts this omi ssion was intention al and the trial court erred when it added the ann u al compl iance language into the number of procedures rule. We agree.
Courts are not authoriz e d to re wr ite agre e ments to insert p rovisions that the parties could have included or to imply terms for which they have not bargained. Tenneco , Inc. v. Enterpri se Prods. Co. , 925 S. W.2d 640, 646 (Tex. 1996) ; Ben nett v. Comm ’ n for Lawyer Discipline , 489 S

. W.3d 58, 68 (Tex. App.

— Houston [14th Dist.] 2016, no pet.). Here, because the parties c ho se to include an annual
measurement period for determining compliance w ith the one

- third of medical

income r ule, we mus t accept that the pa rties ’ omi ssion of that la n guage fro m the

one
- third of procedures rule was intentional. See George Joseph Assets, LLC v. Chenevert , 557 S .W.3d 755, 771 (Tex. App.

— Houston [14th Dist.] 201 8, p et. denied) ( “ We will not read language into the agreement that the parties did not includ e
. ” ) ; Benn ett , 489 S.W.3d at 70 ( “ W e are not authorized to rew rite the parties ’ contract under the guise of interpreting it, even if one of the parties has
come t o dislike one of its pro visions. ” ). Therefore, because the parties did not include a n annual t ime

- perio d for meas uring com pliance with the one

- third procedures rule, we construe the contr act to requir e the measurement to occur over16

a re asonable time perio d. See H ewlett

- Packard Co. v. Benchmark Electronics, Inc. , 14 2 S.W.3d 554, 56 3 (Tex. App.

— Hou s ton [14th Dist.] 2004, pet. denied) ( “ [W]hen a contrac t is silent regarding the date f or an action to be taken, the courts will construe the contract as requirin g su ch action be taken within a rea sonable time. ” ). “ The question of reasonablene ss is usuall y one f o r the trier of fac t. ” Id. We therefore hold that there was a fact question on whether Juansrich compli ed with the one

- third p rocedures rule to be resol v ed b y the trier of fact . Accordi ngly, the trial court erred when i t ruled as a matter of law t hat Juans ric h ’ s termi nation

was non
- adverse and it granted Juansrich ’ s first Rule 166 motion. Metro also argues that the trial court erred when it partially base d its first Rule 166 order on its previ ous summary judgment order declaring the covenant not
t o compete fo und in the LLC A gree ment unenforceable. The trial court had previo usly de termined th at the co venant not to compete in the LLC Agreement wa s

une nfo rceable because it fa iled to comply with the requirements set f orth in sub s ection 15.50(b) of the Business and Commerce Code. See Tex. Bus. & Com. Code Ann. § 15.50(b) ( establishing requirement s that a co venant not to c ompete relating to t he pract i ce of medicine mu s t c om ply with to be enforceable). Metro did not deny t hat the covenant not to compete found in the LLC Agreement did not include those restrictions. Metro instead argued that the LLC Agr eement did not need to comply w ith the sub section 15.50 (b) requirements because the le gis lat ure had amended the stat ute by add ing subsection (c) , which pr o vides that “ subsection (b) does not apply to a physician ’ s business ownership interest in a licensed hospital or licensed ambulatory surgical center. ” Id. at § 15.50( c )

. As a res ult o f this add ition to the stat ute , Metro argued the covenant not to c ompe t e did not n eed
to compl y with s ubsection 15.50(b) and was othe rwise enf orceable against Dr. Francis. W e a gree with Metro.17

This is s ue present s a quest ion of sta tutory construc tion , whic h we review de

novo
. Texas D ep ’ t o

f Transp. v
. Nee dham , 82 S.W.3d 314 , 318 (Tex. 2002). When construing st at utes , our primary object ive is to give effe ct to the l egislature ’s in tent. Willacy C ty . Apprai sal Di s t . v. Seb astian Cotton & Grain , Ltd. , 555 S. W

. 3d 29, 38 (Tex. 2018). We rely on the plain mea n ing of the text as e xpressing legislative intent unless a different meaning is supp lied by legislative definition or is apparent from the context, or the pla in m eaning le ads to absurd results. Id.
Here , it is un disputed that the covenant not to co m pete at issue h ere was contained in the LLC Agreement forming Metro , the entity owning and operati ng

an ambulatory surg ical center

. As a result , purs uant to the plain language of the

s tatute, the co venant not to compete in the LLC A greement was not r equi r ed to

co mply with the limitations fou nd in subsection (b) of the stat ute. See Tex. Bus. & Com. Code Ann. § 15.50( c ) ( providing that subsection 15.50 ( b ) of the Business and Commerce Cod e “ does not app ly to a physician ’ s business owner s hip interest in a li c en se d hospital or license d ambulatory surg ical cen ter ” ); Novamed Surgery Ctr . of Tyler, L.P. v. Bochow , No. 12

- 12

- 00159

- CV, 2013 WL 2725544, at *4 (Te x. App.

—

Tyler June 12, 2013, no pet .) (mem. op.) ( “ Before the [2009] amendment, a noncom peti tion covenant involv ing a physician ’ s ownership interest in an [ambulatory s urgical c en ter ] required a b uyout provisi on. Following the amendment, it did no t. It i s more than a ‘ clarification

. ’ It is a ch ange in the law. ” ) (in ternal citations omitted). We therefore h old that the trial c ourt erred when it ruled that the covenant n ot to comp ete in the LLC Agreement was unenforceable because it did not contain the li mitations found in subsection 15.5 0 (b) of the Business and Commerc e Code and then relied on that ruling i n p art to determine that Metro ’ s termination of Dr. Francis and Juansrich was no n
- adverse.
C. The trial court erred when it granted Juansrich ’ s second Ru le 16 6 motion.18

A judicial admission results when a party makes a stat eme nt of fact which conclusively d i sprov es a r ight of recovery or a defense. In r e Esta te of Guerrero , 465 S.W. 3d 693, 705 (Tex. App.

— Houston [14th Dist.] 2015, pet. denied). A judici al admi ssion is a fo rmal waiver of proof that dispenses with the production of evidence on an issue and b a rs th e ad mi tting p a rty from disputing it. Id. The elem ents required for a j udicial admission are : (1) a statement made during a judicial proceeding; (2) th at is contra ry to an ess ential fact or defense asserted by the person making the admission; (3) th a t is deli be rate, cl ear, and u nequivocal ; (4) that if given conclusive effect, would be con sistent wi th public policy; and (5) that is not destructive of the op posing party ’ s theory of recovery. Id. at 705

– 06. An attorney ’ s statements on behalf of a cl ie n t ma y ser ve as a ju dicial admission. Id. at 705.
Juansrich argued that Metr o ’ s judicial ad mission occurred three separate times, all related to Metr o ’ s mot ion for summary jud gment a sserting that Juansrich ’ s terminat ion was adverse because Juansrich h a d m ateri ally b reach ed the LLC A greement . According to Juansrich , the first inst ance occurred in a supplemental moti on for summary judgment which provide d that “ Here, Metro became operat ional on May 22, 2011

. ” The sec ond occurred when a Metro lawyer stated d uring the s ummary j udgment hea ring that Juansrich “ withdrew within five years after Met ro became operat ional. ” The third occurred in a P ower P oint slide stating that “ Metro bec a me operati onal on May 22, 2011. ” As explained above,

“ O perational ” (emphas is added) was a defined term in the LLC Agreement. O peratio nal however, also has a generic m eaning when applied to a b usiness , meaning the state of being f unct iona l. Here, none of Metro ’ s alleged jud icial admissions use d “ oper ational ” with a capital ized “ O

. ” Based on the se dual meanings, an d th e fact Metr o used the uncapita lized version of operational, we19

hold tha t it is not clear in what sense Metro used the term

. T herefore, the three alleged admissions do not meet the requirement o f being deliberate, cl e ar, and

un equiv ocal

. See Estate of Guerrer o , 465 S.W.3 d at 706. We conclude that none of the statements rise to the lev e l of a judicial admission as to the con trac tually defin ed term and therefore t he trial cou rt erred w hen it gran ted Juansrich ’ s se cond Rule 166 motion.
B ecause we have determined that the t rial court erred when it grant ed Juan srich ’ s second R ule 166 motion, we need not rea ch Metro ’ s argument that Francis waived the judicial admis sion by not objecting to all cont rary ev idence offered du r ing the bench trial. Having determined that the trial court erred when it granted bot h of Juan srich ’ s Rule 166 Motions, we sustain Metro ’ s t hird issue in
pa rt , and conclude that Jua nsrich cannot si mply elect to recov e r under its bre ach of
cont ract cause a ction seeking p ayment on the value of its membersh ip units

. Instead, the breach of contract claim seeking payment for J uansrich ’ s ownership interest mu st be remanded to the trial court f or further proceedings.
B. D istribu tions
As s tat ed abov e, the tr i al court fo und that Jua ns rich w as entitled to $ 191, 764.21 as i t s proporti onate share of the December 2014 distribution allegedly made by Metro for earnings in S eptember and October 2014 , a time

- period when Juansrich wa s still a M etro member

. Met ro argues that the evidence is legally ins ufficient to suppor t the trial court ’ s finding

. When a n appe llant chall enge s the legal sufficiency of the evidence on an adverse finding on an issue on which it did not have th e burde n of proof it must demonstr ate on appeal that there is no evidence to support the adverse finding. Univ. Gen. Hosp., L.P. v. Pre xus Health Cons ulta n ts, LLC , 4 03 S.W.3d 547, 550 (Tex. App.

— Ho uston [14th Dist.] 2013, no pet.)

. In conducting a legal

- suffici ency20

review, we must consid er all the re c ord evidence in the light most favorable to the appealed finding and indulge every reaso nabl e inference tha t supports it. Id. at 550

– 51 (citing City of Keller v. Wilson , 168 S.W.3d 802, 821

– 22 (Tex. 2005)). The ev idence is legally sufficient if it would enable reasonable and fair

- minded people to reach the deci sion under review. Id . at 551

. Th is C ourt m ust c redit favo rable evidence if a reasonable tr ier of fact could, and disregard contrary evidence unless a reas onable trier of fact could n ot. Id

. Th e trier of fact is th e sole judge of the w itnesses’ credibi lity and the weigh t to be give n the ir testimo ny. Id

. We s ustain a legal sufficiency (or no

- e vidence) issue only if the record reveals one of the fo llowing : (1) the complete absence of evidence o f a vital fact; (2) the court is barred by rules of law or evidence from givi ng weight to the only evide nce o ffered to prove a vital fact; (3) the evidenc e offered to prove a vital fact is no more than a scint illa; o r (4) the evidence established conclusiv e ly the opposite of the vital fact. Id

. Evidence that is so weak as to do n o more than
creat e a mere s urmi s e or suspi cion that the fact e xists is less t han a scintilla. Id. “The Texas Supreme Court has hel d that conclusory or speculative opinion testim o ny is incompetent evidence and cannot sup port a judgment.” Hong v. Integrat ed Eng’g, In c. , N o. 14

- 06

- 0 0579

- CV, 2008 W L 660650, at *4 (Tex. App.

— Houston [14t h Dist.] Ma rch 11, 2008, pet. denied) (mem. op.) (i nternal quotations omitted)

. Shelia Enriquez te s tified that she reviewed Metro ’ s financial documents , i ncluding financial statements, bank records , and Metro’s distribution schedule. T h e se documents were admitted in to evidence for the trial judge to revie w. Dis tributions for a part icular month were n o rmally made around the middle of the following month. Metro made a distribution fo r every month in 2014 e xcept for the months of September and October. Enriquez opined that the November21

distribution , made i n Decem ber , included revenue attributable to th e months of September and October. Enriquez reviewed Metro ’ s records and determin ed that there was sufficient cash in the company in both September and October to make distributions, yet none were made. En ri quez th en looked at the November distribution ( m ade in December) and concluded that $801,600 of the total distribution of $1,043,600.37 was attributable to income earned in September and October

. According to Enrique z, Juansrich ’ s percentage share of thos e earni ngs was 23.92268, which yields a payment for Juansrich of $191,764.21. During her trial testimony, Enriquez explained , in a step

- by

- step manner , how she arrived at this amount , a number der ived from Metro’s own records

. We hold this testimony is n ot

con c lusory and is le gally sufficient to supp o rt the trial court ’ s award of that e xact amount in the final judgment

. We theref

o re overrule this part of Metro ’ s thi rd issue on appea l and affirm the final judgment ’ s award of $191,764.51 for misse d distr ibutions.
III. T h e trial court erred when i t awa r ded Dr. Francis attorney ’ s fees pursuant to the Covenant Not to Compete A c t
. In it s final issue on appeal , Metro challe nges the trial co urt ’ s award of attorneys ’ fees to Dr. Francis pursua nt to t he Covenant Not to Compete A ct. 3 See Tex. Bus. & Com. Code Ann. § 1 5.51(c) (auth orizing a trial court to award
attor ney ’ s fees in ce r tain circ u mstances)

. Th e judgment ’ s fee award was based on the trial court (1) granting Dr. Francis ’ s motion for summary judgment decla ring the non

- c ompetition provisio n in th e LLC Agreemen t unenforceable ; a nd (2) a

3 There is no d ispute on appeal that the Co venant Not to Compe te Act is th e sole ba sis pur suant to which the t rial co urt awarded the $ 403,918.15 in a ttorney ’ s fees and costs because Dr. Francis con c eded on appeal “ that the fees and costs were not recoverable under the [ L LC ] Ag reement

. ”22

subsequent pretrial order granting D r
. Francis ’ s motion seeki ng att o rney ’ s fees pursuant to S ubsection C of the statute. See id. The trial court ordered Metro to pay Dr. Francis $ 380,471

. 50 in attorney ’ s fe es plus $23, 4 46.65 in costs

. Th e p re
trial order s w ere then merged into t h e final j udgment. Metro argues in its final issue on ap peal that the trial court err ed when it awarded the at torney ’ s fee s because (1) t he primary pu rpose o f the L LC Agreem ent w as not to ob liga t e Dr. Fra ncis to render perso nal s ervices ; and ( 2 )

even if the primary purpose was to render per sonal services, Dr. Francis failed to establ ish th at Metro knew at the time of the execution of the LL C Agreement that the co ven a nt did not con t ain reason able l imitation s as t o time, geo graphic al area, and th e scope of activity to be restrained

. 4 Dr. Francis respon ds that the trial co urt did no t abuse its discretion wh en it aw arded the attorney ’ s fees because he

a d equ ate l y established both statutory re quirement s
. S u bsection 15.51(c) of the Covenan t Not to Co mpete Act provides that a

“ court ma y a ward the promisor the costs, including reasonable att orney ’ s fees, actually and rea sonab ly incurred by the pr omisor in def ending the action to enforce the covenant, ” but only if the promisor can establish tha t “ th e pri mary purpose of the agreement to which the covenant is ancillary is to obligate the pr omisor to render personal s er vices. ” S ee Tex. Bus. & Com. Code Ann. § 15 .51(c )

. We conclude that Dr. Francis failed to meet this in itial , statutory requireme n t for the recovery of fees

. This issue requires us to review the trial court ’ s construction of the Covenants Not to Compet e Act

. Statutory interpre tation presents a que stion o f law

4 As stated above, the final judg me nt also includes a secon d award of attorney ’ s fees totali ng $23 , 048.50 p u r suant to section 3.152(c) of the Texas Business Organi za t ions Cod e
. Metro affirmatively stated in its appellate bri efing that it d oes no t ch allenge this award on ap peal

. We therefore affi r m th is part of the final ju d gment.23

su b ject to de n ovo review. Texas L aw Shield, LLP v. Cr owley , 513 S.W.3d 5 82, 588 ( Tex. App.

— Houston [14th Dist.] 2016, pet. d enied). Th is issue also requires
us to review the trial court ’ s const r uction of the LLC Agreeme nt , the contract at i ssue in this dispute. If a contract is not amb i guous, it is constr ued as a matter of l aw
. Am. Mfrs. Mut. Ins. Co. v. Schaefer , 124 S.W.3 d 1 54, 157 (Tex. 2003). We review a t rial cou rt ’ s legal con clusions de novo. Trelltex, Inc. v. Intecx, L.L.C. , 494 S .W.3d 7 81, 790 (Tex. App.

— Houston [14th Dist.] 2 016, no pet. ). When performing a de n o vo review , we exercise ou r own judgment and redetermine e ach le gal issue. Id. Neither side has argued the LLC Agreement is amb iguous and we
agree that it is not. See Lane

- Va lente Indus. ( Nat ’ l), Inc, v. J.P. Morga n Chase Bank, N.A. , 468 S.W.3d 200, 205 (Tex. App

. — Houston [14th Dist.] 2015, no pet.) (stating that deciding whether a contract is ambiguous is a question of law ). We theref ore review th e trial court ’ s impli ed lega l conclusion t hat the primary purpose of the LLC Agreement was to obligat e the m embers to provid e pe rsonal services de novo.
H ere, it is undisputed that Dr . Francis was never an employee of M etro and

ne ver had a n employ ment c ontract with Metro . Ins tead, t he only contra ct at issue here is the LL C A greement, which the parti es signed i n o rder “ t o develop, own , and operate an ambulatory surgical center. ” The LLC Agreement ha s len g thy provision s establishing how doct or s cou ld become and rem ain mem ber s of the

co mpany
. The LLC Agreement also covered t he management o f the surg i cal
cente r. We conclude that the primary purpose of the LLC Agreemen t , as its title and content impl ies, was to create an d the n regulate a limit ed liability comp any for the pu rpose of devel oping and operating an ambulat ory surgi c al center from which its m embers co uld ultimately derive profits. See Rimkus Consulting Grp. , Inc. v. Cammarat a , 688 F.Supp.2d 598, 678 (S. D . Tex. 2010) ( “ The languag e of the24

Agreemen t shows th at the primary purpos e was not to obligate Bell to render

se r vices to Rimkus. ” ) ; CSL P r op. Mgmt. Co. v. Thyssenkrupp Elevator, Co

. , No. 01

- 11

- 00665

- CV, 2013 WL 396252, at *6 (Tex. App.

— Houston [1st Dist.] Jan. 31, 2013, no pet.) (mem. op.) ( “ A primary p urp ose of the assumptio n agreement, as eviden ce d on the face of the agree ment, is to prot e ct Thysse nkrupp from the risks associated with Greatland ’ s removal of Emergency Services as the general contractor for the project a fter the p roject commenced , especiall y with respect to
t h e payment of the contr act price. ” ) ; Swin e hart v. Stubbeman, McRae, Sealy, La ughlin & Browder, Inc. , 48 S.W.3d 865, 877 (Tex. App.

— Houston [14th Dist.] 2001, pet. denied) ( holding in a legal malpracti ce c ase th at the S tatute of Frauds
ap plied t o underlying c ontract because , aft er “ considering all the te rms of the third

co n tract, it is clear that the primary purpos e of the contract was to secure interests in oil and gas lease ” rather than the acquisition of geolo g i c information gathered by a petr oleum geologi s t )

. We conc lude that the pr imary purp o s e of the LLC A greement wa s not to o bligate its members to render personal services

. Accordin gly, we hold that Dr. Francis failed to meet the first requirement for t he

reco very of attorney ’ s fees pur s ua nt to the Cove nant Not to Com p ete Act

. S ee Tex. Bus

. & Com. Code Ann. § 15.51( c ) ( “ If th e primary purpose of the agreement to which the co venant is ancillary is to obligate the promisor to render perso nal services .

. . the court may award the prom i sor th e costs, i nclu ding reasonable attorney ’ s fees , actua l l y and rea sonably incurred by the pr omisor in defending the action to enforce the cove nant. ” )

. We sustain Metro ’ s fourth issue , reverse the trial

co urt ’ s award of at torne y ’ s fees and costs pur sua nt to t he Covenants N ot to Compete A ct and render judgment t h at Dr . Fran cis take nothi n g on that claim.
C ONCLUSION
B ecause Metro has not challenged the trial court ’ s a ward of $23, 04 8.50 in25

attorney ’ s fees pu rsu ant to section 3.152(c ) of th e Texas Busines s Org an izations Code , we affirm that part of the trial court ’ s final judgment. Hav ing s ustained Metro ’ s first and second iss ue s o n appeal, we reverse the trial c ourt ’ s final jud g ment based on Juansrich ’ s conv ers ion cause of action and render judgment that Juansr ich take nothi ng on its conv ersion, aiding and abetti n g, and unjust enrichme nt c ause s o f action

. Having reversed and r endered a take

- n oth ing judgment on Juansrich ’ s tort causes of a ction a nd having sust ained the part of Metro ’ s t hird issue challenging the trial co urt ’ s Rule 166 order s which prevent Juansric h from electing to recover on its breach of contract cause of a c tion seekin g p aym ent for the value of its member ship unit s , we r ema nd that clai m to the trial court for further proceedings. Having overruled the part of Metro ’ s third issue challenging the s u fficien cy of the evidence supporting th e award of $191,764.21 for missed distribution pay ments, we affirm that part of t he fina l judg ment. Having sustaine d M e tro ’ s fo urth issue challenging the par t of the trial court ’ s final judg ment award ing attorney ’ s f ees to Dr. Francis pur sua nt to the Covenants Not to Com pete Act, we reve rse and render judgme nt that Dr. Francis take no thing o n that clai m.

/s/ Jerry Zim merer Justice

Pane l cons ist s of Chief Justice Chr i stopher and Justices Jew ell an d Zimmerer.